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In our latest publication, we explore the following key themes:
There is a growing consensus that climate change and sustainable development are this century’s major challenges. Increased scrutiny by key stakeholders such as regulators and institutional investors, as well as retail customers and activists, has prompted banks to give ESG factors greater prominence in their business strategy. The UK government published its ‘Roadmap’ to sustainable investing in October 2021 - following developments in Europe, the UK is considering its own taxonomy regime that will set clear expectations in relation to what constitute sustainable economic activities.
In this section, we discuss some of the key areas where these dynamics may give rise to potential liability and litigation risk.
On 5 March 2021, the Financial Conduct Authority announced the cessation (or loss of representativeness) of all 35 LIBOR benchmark settings published by the administrator of LIBOR, ICE Benchmark Administration (“IBA”), many of which ceased after 31 December 2021. Also covered in this section is the UK Government’s proposed response and residual issues. The UK Government has introduced legislative measures to give the FCA enhanced powers to help manage an orderly wind-down of critical benchmarks such as LIBOR, and to help deal with these tough legacy contracts.
It has been over three decades since the High Court acknowledged the existence of the Quincecare duty of care, which places an obligation on a bank not to execute a payment instruction where it reasonably believes that the instruction is an attempt to misappropriate the customer's funds, albeit that this duty is subordinate to the bank’s primary duty to act on the valid instructions of its customer. There has only been limited judicial guidance on the scope of the duty since then.
The UK’s autonomous sanctions regime came into effect on 31 December 2020. Regulations made to date cover country-specific regimes (including recently Belarus, Somalia and Myanmar) and thematic regimes (including in relation to cyber-crime, human rights violations and corruption). The UK has had the opportunity to make a number of substantive changes to its approach to sanctions which we explore more in this section.
The impact of Brexit on the law and regulation is still being worked through. In particular negotiations are still underway about possible changes to the Northern Ireland Protocol. This section also examines the impact of Brexit on civil litigation where we identify that there has been some speculation that Brexit might reduce the number of disputes being litigated in English Courts. Though as yet, we have seen no seismic shift.
The benefits of technology also come with a downside in the form of increased litigation risk for banks. We explore four such existing and future litigation risks here, including cyberattacks, IT failures and increasing regulation, unregulated use of shadow IT, on the horizon: Online Safety Bill.
Over the past year, large hedge funds, investment banks, custodians, and asset managers have increasingly entered markets for cryptoassets and are forming critical mass. The Bank of England considers that this could “increase the interlinkages between cryptoassets and other systemic financial markets and institutions.” As these “interlinkages” between the cryptoasset world and traditional financial markets grow, so does legal risk.
Group litigation, as every defendant knows and fears, makes it economic for claimants to pursue claims which are individually modest in financial terms but which in aggregate make it worthwhile for litigation funders to support litigation on a basis which is cost and risk free to claimants but can be highly problematic for defendants. In this section, we explore the following areas which we think are particularly in focus for group proceedings in the short to medium term: ESG, fintech, anti-competitive behaviour, LIBOR and cybercrime.
The civil court system has coped surprisingly well with the challenges presented by the Covid-19 pandemic and consequent closure of nearly all court buildings in England and Wales. In particular, the courts’ response to the pandemic has caused shifts in the approach to dispute resolution, which are likely to impact parties engaged in civil litigation at all levels of the court system for years to come.