Class actions

In January, the Australian Law Reform Commission (the ALRC) released its final report on class actions and litigation funding, with broad recommendations aimed at realigning the current landscape with the regime's original objectives.

Read more here and, for key case developments in 2019, here, here, here and here.

Multilateral instrument

The multilateral instrument (the MLI) came into force for Australia on 1 January 2019 for dispute resolution procedures and withholding taxes on income derived from that date, and on 1 July 2019 for all other taxes. The modifications of Australia's tax treaties, and the application dates, will depend on the positions adopted by treaty partners. Some articles are mandatory (eg. the prevention of treaty abuse and improved mutual agreement procedures), but most are optional. While many of Australia's treaty partners have signed the MLI (and modifications are already in effect for large trading partners, such as Japan, New Zealand and the United Kingdom), others (eg South Korea and the United States) have not.

New Companies and Associations Code – Real seat theory abandoned

The Act introducing the New Companies and Associations Code has modified the Code of Private International Law in order to replace the real seat by a new criterion.

Up to May 2019, legal persons having their “principal establishment” (or “real seat”) in Belgium were governed by Belgian law and Belgian courts had jurisdiction over their validity, functioning, dissolution and winding-up. The applicable law and competent courts are now determined by the seat provided for by the legal person’s articles of association (the “registered office”), regardless of where the legal person actually operates.

“Foreign” legal persons adopting a Belgian registered seat must comply with the cross-border conversion procedure set out by the New Companies and Associations Code. In opting for the incorporation theory, Belgium joins several neighbouring countries (including Germany, the Netherlands, Switzerland and the UK).

Parent company liability

In Vedanta Resources Plc and another v Lungowe and others [2019] UKSC, the Supreme Court made important observations on parent company liability in negligence for the activities of subsidiaries. It rejected suggestions that a duty of care was novel, emphasising that the facts of any situation are crucial. The SC also considered the effect of mandatory jurisdiction over a UK domiciled parent company in establishing jurisdiction over a "necessary and proper" (non-EU) party under CPR PD6B 3.1(3). The SC held that while staying proceedings against the subsidiary may lead to irreconcilable judgments, where the local jurisdiction was available for a trial against both parent and subsidiary, irreconcilable judgments should not be a trump card.

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Arbitration-related role for the International Chamber of the Paris Court of Appeal

Since January 2019, set aside proceedings relating to international arbitral awards rendered in Paris and appeals of recognition or enforcement orders for foreign arbitral awards have fallen under the jurisdiction of the recently created International Chamber of the Paris Court of Appeal (CICAP) The chamber also has jurisdiction over appeals of court judgments in international economic and commercial disputes and in domestic disputes involving commercial contracts, transportation, competition and financial instruments.

The CICAP accepts the use of English for certain aspects of the proceedings and authorises the use of certain common law inspired evidentiary techniques in appeals, such as the oral examination of witnesses.

First Model Declaratory Action Proceedings

Since the new Model Declaratory Action Act came into force at the end of 2018, seven actions have been listed in the official register. The case against Volkswagen relating to the diesel scandal has been at the focus of attention with the oral hearings starting in September. Decisions relating to other cases brought important clarifications regarding the new law.

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Reform of the Code of Civil Procedure

A new law amending and modernising various provisions of the Code of Civil Procedure is aimed at increasing the quality and efficiency of civil court proceedings. It regulates the value limit for appeals to the Federal Court of Justice in civil cases, increasing specialisation in the courts and amending other provisions of civil procedural law.

Hong Kong SAR Mainland mutual judicial assistance

In April, the Hong Kong Government and the Mainland Supreme People’s Court signed the Arrangement Concerning Mutual Assistance in Court-ordered Interim Measures in Aid of Arbitral Proceedings by the courts of the two territories (the “Arrangement”).

The Arrangement, which became effective in October, allows parties to arbitral proceedings seated in Hong Kong SAR to apply, at any time before an arbitral award is made, to Mainland courts for interim measures including property preservation, evidence preservation and conduct preservation. Equally, any party to arbitral proceedings in Mainland may apply to the Hong Kong SAR courts for interim measures pursuant to Hong Kong law — a remedy that is already available to parties to foreign-seated arbitral proceedings.

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Netherlands Commercial Court

On 1 January 2019 the Netherlands Commercial Court (NCC) opened its doors. The NCC is competent to hear international civil and commercial matters in the English language if the Court of Amsterdam is competent and parties agree to submit their case to the NCC in English.

Read more and watch here…

Collective Damages Act

The Collective Damages Act (WAMCA) entered into force on 1 January 2020. The key element introduced by the WAMCA is the possibility of claiming monetary damages in a collective action based on Section 3:305a of the Dutch Civil Code. It also includes stricter requirements for the representative organisations filing the collective action, such as transparency regarding their funding. In addition, there are some procedural changes introduced, with the aim of more efficiency and effectiveness of the proceedings. For example, an Exclusive Representative will be appointed, collective actions relating to similar events will be dealt with together and there is a focus on the (collective) settlement of the claims.

Read more and here…

Innovations in civil procedure 

In July 2019 legislation which required mandatory digital litigation before the civil courts of Gelderland and Midden-Nederland was repealed. Now the obligation to litigate digitally remains only for proceedings at the Dutch Supreme Court. The Act also continues the process of the simplification of civil procedural law, making a number of important substantive procedural innovations mandatory for all courts. Judges will have more scope to direct the proceedings and will be able to better attune the oral hearings to what is necessary for the case and the parties in order to reach a solution to the dispute. 

Hong Kong SAR Mainland mutual judicial assistance

In April, the Hong Kong Government and the Mainland Supreme People’s Court signed the Arrangement Concerning Mutual Assistance in Court-ordered Interim Measures in Aid of Arbitral Proceedings by the courts of the two territories (the “Arrangement”). The Arrangement, which became effective in October, allows parties to arbitral proceedings seated in Hong Kong SAR to apply, at any time before an arbitral award is made, to Mainland courts for interim measures including property preservation, evidence preservation and conduct preservation. Equally, any party to arbitral proceedings in Mainland may apply to the Hong Kong SAR courts for interim measures pursuant to Hong Kong law — a remedy that is already available to parties to foreign-seated arbitral proceedings.

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Major reform of Civil Procedure

On 4 July 2019 the Polish Parliament passed several new laws which introduce major reforms to civil procedure rules. The changes officially entered into force on 7 November 2019, although some were already in effect. The changes are designed to improve the procedure and shorten the time required to resolve a civil court case. One of the major changes is the re-introduction of a separate procedure for commercial court cases (those between businesses), with a much stricter procedure and much shorter deadlines than in regular cases.

The stricter requirements of the Civil Procedure in commercial cases, both at the initial stage and throughout the whole process should mean that cases are resolved faster but there is a risk that procedural error could potentially lead to an unfavourable court decision.

Read more (in Polish)…

Russia: changes to mediation and other settlement proceedings

New rules on judicial settlements

Judicial settlement is a new procedure included in procedural legislation for settling disputes. It is carried out in the course of state court proceedings and is considered as the main alternative method of dispute resolution to mediation. Judicial settlement is not obligatory for the parties and may be used upon the proposal of the party or the court.

Under a judicial settlement an agreement can be officially concluded in relation to a wider range of issues than previously, including a partial or complete waiver/admission of the claim, agreement of acceptance of the facts of the case (removing the need for another party to prove those facts), a partial or complete waiver of the need to file an appeal and/or cassation claims, and consent to registration of a trade mark.

New power of a mediation agreement

An agreement reached through mediation will be enforceable as a writ of execution provided that it was concluded in the course of mediation proceedings, it is notarized, and the dispute has not been heard at court/arbitration.

Previously, the enforcement of mediation agreements was regulated by the same procedure as for the settlement agreement and required court approval. The new option of immediate enforcement for a notarized mediation agreement should make it more useful for parties.

Enforcement of foreign judgments

With effect from October 2019, the statutory regimes for reciprocal enforcement of Commonwealth and other foreign judgments have been unified under a single statute, the Reciprocal Enforcement of Foreign Judgments Act. The new regime expands the types of foreign judgments enforceable in Singapore to include non-money judgments, judgments of lower courts, interlocutory judgments, consent judgments and settlement orders.

Review of scope of Mareva injunctions

In Bi Xiaoqiong v China Medical Technologies, Inc (in liquidation) and another [2019] SGCA 50, the Singapore Court of Appeal held that a Mareva (freezing) injunction may be granted in aid of foreign proceedings but the Court must have jurisdiction over the defendant whose assets are targeted and there must be a substantive claim against the defendant in Singapore. The decision departs from previous authority holding that Mareva injunctions would only be granted in aid of domestic court proceedings.

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Setting aside a SIAC arbitral award

The Singapore International Commercial Court (SICC) issued its first decision on international arbitration (BXS v BXT [2019] SGHC(I) 10), relating to the setting aside of an arbitral award issued under the expedited procedure of the Singapore International Arbitration Centre Rules.

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New legislation to modernise the Arbitration Act

The Swedish Arbitration Act (Sw. lag (1999:116) om skiljeförfarande) was amended in March. The new rules apply to arbitral proceedings seated in Sweden that have been initiated after 1 March 2019. The amendments include: rules on multi-party arbitration; the possibility to appeal decisions relating to an arbitrator’s competency; and the reduction of the time period during which a party may challenge an arbitral award. The main purpose of the revision is to make Swedish arbitration law more accessible, especially for non-Swedish parties, and to ensure that Stockholm continues to be an attractive venue for international dispute resolution.

The SCC launches a new platform to digitalise arbitration proceedings

The Arbitration Institute of the Stockholm Chamber of Commerce (SCC) introduced a new digital platform for arbitration proceedings. As of September, all SCC arbitrations have access to the new platform where the SCC, the parties and the tribunal can share case-related documents. The platform eliminates the need to share sensitive or bulky files and documents by email or other channels. The introduction of the platform is part of SCC’s continued ambition to provide the best tools to safeguard the integrity and efficiency of arbitral proceedings.

The long-awaited Mediation Act 2019 came into force

The Mediation Act 2019 which became effective on 23 May 2019 allows for a system of private mediators to be set up to mediate:

• (i) civil disputes such as disputes concerning land (except land ownership), disputes relating to inheritance, other disputes prescribed in the regulations or any other dispute not exceeding Baht 5 million and

• (ii) limited types of criminal cases that satisfy the criteria.

Specialised committees to resolve insurance disputes

Specialist committees are to be established to resolve retail and commercial insurance disputes resulting from complaints against insurers, according to Decision No.33 of 2019 relating to the regulation of Insurance Disputes Resolution Committees, made under the UAE Insurance Law (Federal Law No.6 of 2007). The process of resolving these kinds of disputes should be quicker and easier as a result.

The new regime is effective from December.

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Quicker enforcement process for foreign court judgments and arbitral awards

Enforcing foreign court judgments and arbitral awards in the UAE should now be quicker and cheaper. Pursuant to UAE Cabinet Resolution No.57 of 2018 concerning the Executive Regulations of Federal Law No.11 of 1992, enforcement applications are made directly to the enforcement judge, who decides whether the conditions to enforce are met within three days. An enforcement order is then immediately enforceable.

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Expanding SEC enforcement jurisdiction

In affirming a grant of injunctive relief, the U.S. Tenth Circuit Court of Appeals issued a decision in SEC v. Scoville and Traffic Monsoon that makes it easier for the SEC to bring enforcement actions in connection with securities law violations that take place outside the United States.

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OFAC issues “root causes” sanctions guidance

In May 2019, the U.S. Department of the Treasury’s Office of Foreign Assets Control ("OFAC") published guidance on the “root causes” of recent sanctions violations and the five essential components of a U.S. sanctions compliance program – management commitment, risk assessment, internal controls, testing and auditing, and training.

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FCPA’s extraterritorial reach remains uncertain

In June 2019, a US Court of Appeals for the Seventh Circuit denied a motion to dismiss federal bribery charges by a Ukrainian businessman and a Hungarian businessman. In doing so, the court explicitly declined to follow the Second Circuit’s decision in U.S. v. Lawrence Hoskins, which rejected the U.S. government’s attempt to use conspiracy and accomplice liability to reach conduct by a non-U.S. person that occurred outside the United States.

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DOJ announces False Claim Act cooperation credit guidelines

The DOJ issued guidance in May 2019 on awarding cooperation credit to corporate defendants in False Claim Act ("FCA") matters. Similar to the DOJ Criminal Division’s Corporate Enforcement Policy, the FCA Guidelines provide that defendants may earn partial or maximum credit by (i) voluntarily disclosing misconduct unknown to the government; (ii) cooperating in an ongoing investigation; or (iii) undertaking remedial measures in response to a violation.

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Press freedom reform

Following Australian Federal Police raids on media organisations, and challenges in the Federal Court and the High Court, press freedom was a matter of great discussion in 2019. With two parallel Parliamentary inquiries into press freedom due to report in early 2020, reform in this area is likely to be a key element of the 2020 legislative agenda.

Read more here and here

On 2 December 2019, the Australian government reintroduced the Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2019 in the Senate which, if approved, would bring Australia into line with the US and the UK on foreign bribery enforcement and introduce deferred prosecution agreements (DPA).

The proposed law would empower the Commonwealth Director of Public Prosecutions to negotiate DPAs with corporations suspected of engaging in serious corporate crime, in addition to pursuing prosecution in the event of any breach of terms. Other amendments include introducing the new corporate offence of failure to prevent foreign bribery and broadening the existing definition of a foreign official to include those running for office.

The 2019 Bill will be considered in detail by the Senate early during the year and is likely to progress through the Parliamentary process during 2020.

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The ATO and legal professional privilege 

The Australian Tax Office has signalled that it will take a tougher stance on taxpayers resisting disclosure of information to it in review and audit procedures under the legal professional privilege (LPP) doctrine. This area of focus has gained momentum since the High Court found in favour of the ATO in the 2019 Glencore International case, where the taxpayer sought to rely on LPP to prevent the Commissioner from using information in the leaked 'Paradise Papers' in the assessment of the company's tax affairs. The court found that the documents were not 'confidential' for LPP purposes, as they were already in the public domain.

Reform of the Criminal Code

A draft bill introducing a new Criminal Code is expected to enter into force on 1 October 2020. This recast of the Criminal Code aims to enhance the readability, consistency and modernity of criminal law concepts.

The reform encapsulates a new sentencing regime with sentences categorised in eight levels and a clear distinction between the sentences applicable to legal entities and those applicable to individuals. Just as with the current code, the new Criminal Code includes two books. The first book is devoted to definitions and general principles of criminal law while the second book sets out the offences and has been entirely restructured in order to reflect the shift of social values.

New evidence rules (Book VIII of the Civil Code)

Book VIII of the new Civil Code is the first book of the new Civil Code to have been adopted in 2019 and will come into force on 1 November 2020. Book VIII adapts the Belgian rules on evidence to the needs of the legal world. It codifies concepts developed by case law and legal authors (such as the duty to collaborate in the administration of evidence), provides for a contemporary definition of crucial concepts (such as signature and document), relaxes the evidentiary formalism and introduces new approaches (such as the reversal of the burden of proof in exceptional circumstances).

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SFO’s powers to order production of overseas documents – appeal scheduled

The Supreme Court is due to hear an appeal in the case of SFO v KBR, which concerns the ability of the Serious Fraud Office (SFO) to order the production of documents held outside the UK jurisdiction by foreign companies. In April 2018 the SFO’s power under section 2 of the Criminal Justice Act 1987 to do so was affirmed by the High Court, where there is a “sufficient connection” between the company and the UK.

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Brexit: Applicable law, jurisdiction and recognition of judgments in the UK

The UK officially left the EU on 31 January 2020 and the Transition Period began. The UK’s exit from the EU stands to bring about a change to the face of private international law in civil and commercial matters in the UK. In the short term, generally speaking, much will remain the same but, following the end of the Transition Period (and assuming no other arrangements are concluded as part of the UK/EU27’s future relationship) the landscape will have significantly changed.

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The Gauvain proposals for the protection of French companies in extraterritorial judicial proceedings and investigations

Submitted to the French Government in June 2019, the Gauvain report sets out pragmatic legislative proposals to protect French companies in the context of extraterritorial judicial proceedings and investigations. Two key proposals which may be passed into law in 2020 are:

(a) extending legal privilege to the work of in-house lawyers by allowing them to register with the Bar and;

(b) strengthening the French Blocking Statute by

• (i) creating a binding exante obligation to report any document/information request from a foreign court or authority to the SISSE (the French Strategic Information and Economic Security Service) which would be entrusted with supporting French companies in their dealings with such courts and authorities, and
• (ii) increasing the financial sanctions for violation of the French Blocking Statute, from €18,000 to €2M for natural persons, and up to €10M for legal entities.

Corporate liability for criminal offences

The Ministry of Justice presented a “draft law on combating corporate crime” in August 2019. The law is expected to be further discussed between the legislative bodies in 2020 and, as currently drafted, will introduce amendments to available sanctions, procedural changes, and new regulations on internal investigations.

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Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters

In January 2019, the Supreme People’s Court of the PRC and the Hong Kong Government entered into an Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters (the “Arrangement”). The Arrangement seeks to establish greater clarity and certainty for the recognition and enforcement of judgments between Hong Kong SAR and the Mainland, through a bilateral legal mechanism, and for a wider range of civil and commercial matters than previously provided for.

It will be implemented by local legislation in Hong Kong and will come into effect when both jurisdictions have implemented the necessary procedures to enable implementation. It will apply to judgments made on or after the commencement date. Until then, the existing Choice of Courts Arrangement will continue to apply and including any choice of court agreement in writing made before the commencement of the Arrangement.

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Class Actions

On 18 April 2019, Law No. 31 of 12 April 2019 was published in the Italian Official Gazette. The law introduces a new set of rules relating to class actions in Italy (formerly regulated by law n. 244/2007). It is aimed at expanding the right of individuals who have homogeneous rights to obtain compensation for damages arising from conduct carried out by commercial entities. The new class actions regime was due to come into effect on 19 April 2020 but entry into force has been postponed until 19 November 2020.

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Confiscation regime

A proposed new law (draft law 7452) would complement the law of 1 August 2018 in relation to the Luxembourg confiscation regime. If adopted, it will enlarge the scope of assets that can be seized in relation to money laundering and terrorist financing and enable the detection and tracing of property to be frozen and confiscated even after a final conviction for a criminal offence.

Modernising rules of evidence in civil proceedings

It is expected that a draft bill which simplifies and modernises the rules on collection of information and evidence prior to and during civil proceedings will be submitted in 2020. The different types of evidence transactions will be brought more in line with each other and the judge will have more control over evidence issues in the proceedings.

Modernising Dutch insolvency law

Several amendments of the Dutch Insolvency Act have recently been implemented (notably as part of efforts to modernise the existing legal framework). Bills are currently pending which further this process by introducing (i) a statutory framework for pre-pack arrangements and the appointment of a silent administrator prior to the commencement of formal insolvency proceedings; and (ii) the introduction of a pre-insolvency scheme.

The latter initiative draws substantially on various elements of the UK scheme of arrangement and Chapter 11 proceedings in the United States. The Bill provides for a (cross-class) cram down mechanism in respect of dissenting and non-participating creditors and/or shareholders.

Foreign arbitral institutions in mainland China

From 2020, eligible international arbitral institutions from countries and territories outside mainland China, including Hong Kong SAR, Macau SAR and Taiwan, will be entitled to apply to establish offices in Lingang in the Shanghai Free Trade Zone to administer foreign related arbitration proceedings in the international commercial, maritime and investment sectors. The enforceability of such internationally administered arbitration proceedings had previously been recognised only in ad hoc judicial decisions. The market anticipates that the new rules, which are stated to have a term of three years, will spark a new era of international arbitration.

Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters

In January 2019, the Supreme People’s Court of the PRC and the Hong Kong Government entered into an Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters (the “Arrangement”).

The Arrangement seeks to establish greater clarity and certainty for the recognition and enforcement of judgments between Hong Kong SAR and the Mainland, through a bilateral legal mechanism, and for a wider range of civil and commercial matters than previously provided for. It will be implemented by local legislation in Hong Kong and will come into effect when both jurisdictions have implemented the necessary procedures to enable implementation. It will apply to judgments made on or after the commencement date. Until then, the existing Choice of Courts Arrangement will continue to apply and including any choice of court agreement in writing made before the commencement of the Arrangement.

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Amendment of the International Arbitration Act

The International Arbitration Act (IAA) may be amended in 2020 to include the introduction of a default mode of appointment of arbitrators in multi-party arbitrations, allowing parties to jointly request that the Tribunal rule on its jurisdiction at a preliminary stage, providing the Tribunal and the Courts with powers to support the enforcement of confidentiality obligations in arbitration, and an option for parties to incorporate a right to appeal to the Singapore Courts on a question of law arising out of the award (arbitral awards are currently not subject to appeal).

Reforms to the Appellate Court and Appellate Process

A new appellate division is to be introduced to the High Court of Singapore to ease the growing appeals caseload. The division will hear civil appeals which are not allocated to the Court of Appeal, which remains the apex court. The Court of Appeal will continue to hear all criminal appeals. Reforms are also being introduced to allow parties to consent to their appeals being conducted without oral arguments or heard by a two rather than three judge bench, so as to reduce the cost of the appellate process.

Third party funding

Third party funding is currently permitted only in international arbitration proceedings and court or mediation arising from such proceedings. The Ministry of Law has announced that it intends to amend legislation to allow third-party funding in domestic arbitration, certain proceedings in the Singapore International Commercial Court ("SICC"), and mediations connected with these proceedings.

Conditional Fee Agreements

Conditional Fee Agreements (CFAs) are currently prohibited in Singapore. The law may be reformed to allow CFAs in domestic and international arbitration, certain SICC proceedings, and mediation relating to such proceedings. These reforms, if implemented, will bring Singapore’s regulatory regime in line with that of dispute resolution hubs such as England and Wales (where CFAs are permitted) and Australia, US and China (which allow CFAs in various forms).

Supreme Court to rule on whether disgorgement is equitable relief in SEC actions

The U.S. Supreme Court is expected to issue a decision in 2020 in Liu v. SEC, answering whether the SEC may seek and obtain disgorgement from a court as “equitable relief” for a securities law violation, following Kokesh v. SEC, in which the court held that such disgorgement is a penalty.

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