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Dispute Resolution Round-up - March 2023


Welcome to the latest edition of our quarterly disputes newsletter, which covers key developments in the dispute resolution world over the last three months or so.

The last quarter has seen a raft of interesting cases in the financial markets and crypto space, with the Supreme Court considering issues arising from an alleged breach by a bank of its Quincecare duty, a High Court decision in the long running Italian municipality swaps saga which pulls somewhat against what has gone before, and the Court of Appeal opening the door to the imposition of novel fiduciary duties on software developers who take on a role in relation to cryptocurrencies.  We also consider below a number of cases raising interesting points of contractual construction, with the courts wrestling with the true construction of a force majeure clause, the meaning of an express contractual duty of good faith, and the perennial issue of whether a buyer has validly notified a seller of potential warranty claims under a notification provision in a Sale and Purchase Agreement.  If that isn't enough to pique your interest, on the competition litigation front we continue to see a rise in creative collective proceedings applications in the Competition Appeal Tribunal, plus some interesting proposals emanating from the European Parliament on the regulation of litigation funding in the EU.

We hope that you continue to enjoy reading this round-up, whether a litigator by trade or a generalist, and whether in-house or in private practice, and that you will share it with any of your colleagues who may also find it useful.

Rob Fell.

Now Reading


SRA issues warning on SLAPPS

Late last year the SRA issued a warning to practitioners on the use of Strategic Lawsuits Against Public Participation (SLAPPs), with a particular focus on pre-action letters.  There is presently no legal or statutory definition of a SLAPP, but the term is most often used to describe a form of retaliatory litigation intended to deter freedom of expression.  The SRA's warning states that it expects practitioners to identify when a proposed cause of action could be a SLAPP and, if such a situation is identified, to "decline to act in this way".  The SRA suggests several "red flags" which although "might not by themselves be evidence of misconduct" may aid practitioners in identifying when this may be the case, including: (i) identifying the target of the suit (e.g. a journalist or academic); (ii) the nature of the instructions (e.g. if the instructions only relate to "public relations"); and (iii) the nature of the strategy (e.g. if a client requests that a cause of action target individuals in circumstances where a corporate entity is the more appropriate defendant).  The scope for interpretation of the guidance will mean that reaching an assessment of whether a proposed action is indeed a SLAPP will not always be straightforward (although in practical terms it often will be), and practitioners will await further guidance with interest.

The SRA's warning also addresses the use of pre-action correspondence in circumstances where a recipient may be vulnerable or unrepresented, including warning against the use of terms such as "private & confidential" and "without prejudice" in circumstances where those terms are in fact incorrect.  This guidance applies to all correspondence, not just correspondence in a defamation context, and so lawyers who deal with vulnerable or self-represented litigants (including in pro bono matters) should review the guidance carefully.

Update on collective proceedings in the Competition Appeal Tribunal

The collective proceedings (CPO) regime in the Competition Appeal Tribunal (CAT) continues to be used creatively with an increasing number of applications for CPOs being filed which look quite different to the traditional competition law claims the regime was intended to facilitate.

In a particularly striking example, on 24 November 2022, the claimant law firm Leigh Day announced that they had secured funding from Bench Walk Advisors, a third-party litigation funder, to pursue collective proceedings by a "significant class" of UK bill-paying households against water and sewerage companies in England in relation to alleged "unlawful discharges of untreated sewage and wastewater".  Leigh Day's announcement indicates that the claim will, notwithstanding the use of the CPO regime, address claims of environmental harm. 

Separately, as previously reported in this newsletter, on 14 February 2022, Dr. Liza Lovdhal Gormsen as proposed class representative (PCR) filed an application in the CAT to bring collective proceedings against Meta, alleging that Facebook had abused its dominant position by making its users' access to the social media platform contingent on their provision of personal data, which Facebook then aggregated and profited from through advertising revenues.  The application is of interest because it represents an attempt, following the Supreme Court's 2021 decision in Lloyd v Google to close the door to data privacy mass claims brought by way of the CPR 19.6 "representative action" procedure, to create an avenue for such claims to instead be pursued as breaches of competition law.

The much-anticipated hearing of Dr. Gormsen's application took place from 30 January to 1 February 2023.  At the start of the hearing, the President of the CAT, Mr. Justice Marcus Smith, explained that, although the Tribunal is content to assume, for the purposes of certification, that Meta is dominant and that its conduct was abusive, the CAT would not certify a claim unless the applicant could make clear how the CAT could manage the cost and timing of the litigation to trial and how it will then try the claim.  During the hearing, the CAT also focussed intensely on assessing the robustness of the proposed methodology to calculate the class's loss.  The judgment, which was handed down remarkably quickly, on 20 February 2023, followed through on those concerns.  It found the methodology of the PCR's economic expert, Mr. James Harvey, to be unclear, subject to significant flaws, and in need of "root and branch re-evaluation…mere tinkering with the methodology will not do."  On this basis the CAT concluded that the PCR had not put forward a satisfactory blueprint to trial, and declined to grant certification, instead requiring that the PCR file updated evidence within six months to address the deficiencies in its position.  In recent certification applications claimants have generally (although not always) had little difficulty satisfying the Tribunal that their methodology to calculate damages was satisfactory at that stage, and there will likely be much discussion over whether this judgment is a straw in the wind as to how data privacy claims might be dealt with under the CPO regime, or simply the product of a particularly weak expert methodology.   

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European Parliament proposals to regulate litigation funding

In September 2022, the European Parliament voted in favour of new regulation of the EU's litigation funding sector, potentially to include a 40% cap on the amount funders can take from damages or settlement sums and a requirement for claimants to tell the court when they are supported by funding, and to reveal the identity of their funder. Some commentators consider that these proposed new rules, if implemented, could reduce the availability of litigation funding in EU jurisdictions, in particular for collective actions, and push funders to support claims in England and Wales instead.

Update on the 2019 Hague Judgments Convention

Following Brexit, there is no longer a comprehensive overarching framework in place between the UK and the EU governing the recognition and enforcement of civil court judgments.  This less streamlined position may ultimately be resolved to some degree by the Hague Convention on the Recognition of Foreign Judgments in Civil and Commercial Matters 2019 (the 2019 Hague Judgments Convention), an international convention which provides a relatively full framework for the recognition and enforcement of civil and commercial judgments as between contracting states.

On 29 August 2022, the EU acceded to, and the Ukraine ratified, the 2019 Hague Judgments Convention.  It has also been signed (but not ratified) by Costa Rica, Russia, Israel, the US and Uruguay. As the first two contracting parties, it will come into effect between the EU (except Denmark) and Ukraine on 1 September 2023.

On 15 December 2022, the UK government announced that it is consulting on its plan for the UK to join the 2019 Hague Judgments Convention.  If the UK does join the Convention, as most practitioners hope will be the case, then it will apply as between the EU and the UK and provide greater certainty in this area than presently exists. 

UAE to enforce England and Wales judgments

On 13 September 2022, the UAE Ministry of Justice issued a directive confirming that England and Wales court judgments may be enforced in onshore UAE courts on the basis of reciprocity. The impact of the directive in practice remains to be seen but it nonetheless represents a step forward for the enforcement of English court judgments by onshore UAE courts. 


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