Feature article

Headlines (News updates & analysis)

The Economic Secretary to the Treasury, Simon Kirby, has issued a statement confirming the government has decided not to opt in to the provision requiring information sharing between competent authorities where the criminal sanctions regime within the proposed Prospectus Regulation is adopted.

Article 31(1) of the Prospectus Regulation provides that where Member States have chosen to lay down criminal sanctions for infringements of this provision, they shall ensure that appropriate measures are in place so that competent authorities have all the necessary powers to liaise with judicial authorities within their jurisdiction to receive specific information related to criminal investigations or proceedings commenced with regard to such possible infringements. They must also have appropriate measures in place to share such information with other competent authorities across the EU and ESMA in order to fulfil their obligations to co-operate with each other and ESMA.

The Economic Secretary to the Treasury feels there are no significant benefits for the UK in opting in to this Justice and Home Affairs provision. The obligation to share information will fall on Member States that have a criminal sanctions regime in place and the UK competent authorities will have access to such data irrespective of whether or not they opt-in.

Payment practices

Draft guidance aims to help firms with gender pay reporting

Draft guidance launched by the Advisory, Conciliation and Arbitration Service (Acas) and the Government Equalities Office aims to help large businesses abide by new gender pay gap regulations. Under the new law, coming into force in April 2017, large companies are required to take a salary snapshot of male and female employees and report on gender pay gaps within their organisations.

Around 8,000 businesses and voluntary and charitable organisations in Great Britain with more than 250 employees will have to abide by the new law. Business benefits for companies that have a smaller pay gay between men and women include higher productivity and an enhanced reputation as a fair employer.

New guidance to help large businesses with late payment reporting

The Department for Business, Energy and Industrial Strategy (BEIS) has issued guidance to help large businesses report on how quickly they pay their suppliers. Latest figures show that SMEs are owed £26.3bn in overdue payments. The new measures, laid in Parliament on 31 January 2017, aim to highlight bad practice by making large businesses publish details on the time taken to pay their suppliers. The guidance has been published ahead of measures coming into force in April 2017 which aim to boost transparency of payment practices to help small and medium sized businesses (SMEs).

From April 2017, large companies and limited liability partnerships (LLPs) will have to release public reports twice a year on their payment practices and performance, including the average time taken to pay supplier invoices. Failure to report this information will be a criminal offence. The BEIS guidance is aimed at helping large businesses and LLPs prepare for these measures coming into force.

Case analysis

When can a parent company be responsible for acts of its subsidiary? (HRH Emere Godwin Bebe Okpabi v Royal Dutch Shell Plc)

In its judgment in HRH Emere Godwin Bebe Okpabi v Royal Dutch Shell Plc [2017] EWHC 89 (TCC), the High Court considered the circumstances in which a parent company could be liable in tort for the acts and/or omissions of its subsidiary.

Proceedings were brought in the High Court against Royal Dutch Shell plc (RDS), the ultimate holding company of the Shell Group, and its operating subsidiary, Shell Petroleum Development Company of Nigeria Ltd (SPDC). The claimants were seeking damages arising as a result of ongoing pollution and environmental damage caused by oil spills emanating from the defendants' oil pipelines and associated infrastructure in Nigeria.

The defendants argued that the English courts did not have jurisdiction to hear the case and that the approach of bringing a claim against the parent company, RDS, was a device being used cynically by the claimants to bring claims, that would otherwise have no connection whatsoever with England, to trial in the English courts. A central issue in the case was therefore whether RDS could be liable in tort for the acts/omissions of its subsidiary.

Following consideration of existing case law Fraser J concluded that it was not reasonably arguable that there was a duty of care upon RDS for the acts and/or omissions of its operating subsidiary, SPDC. Fraser J therefore concluded that the claims against both RDS and SPDC would fail and should not be allowed to proceed in the English courts.

Relevant updates from other practice areas

Dispute Resolution

Default judgment refused (Buchanan v Metamorphosis Management)

The Chancery Division has refused to grant an order for default judgment in Buchanan v Metamorphosis Management [2016] EWHC 3386 (Ch) where the defence had been served late. Instead, relief from sanctions were granted. This was an unusual case because the first defendant company had to be restored to the Companies Register which resulted in issues being raised in respect of timings for the first defendant file a defence. It was deemed that the lack of co-operative approach by the claimant resulted in a failure to agree a timetable and therefore caused its default judgment application to be dismissed and an extension of time to be granted to serve the defence.

This case reminds practitioners that: proceedings are not valid against a company that has been struck of the Companies register, and that claimant solicitors need to act quickly to restore the company (which may take three or more months); the effect of restoring a company to the register is that it is deemed to have been in existence as at the date that it was effectively struck off and the proceedings are therefore retrospectively validated; and by the time a company is so restored, the deadline for acknowledgement of service may have already passed.

Public Law

The Brexit Bill―bound to pass?

In response to the Supreme Court ruling that Parliament must legislate before Article 50 TEU is triggered, the government duly published the European Union (Notification of Withdrawal) Bill (the Bill) outlining its intentions. As the Bill progresses through Parliament, James Libson, partner at Mishcon de Reya, who represented Gina Miller in her litigation, assesses a matter now moving from the realm of law back into politics. Since publication of this News Analysis, MPs have voted approving the Bill by 498 votes to 114. The Bill will be considered in a Committee of the whole House next week. The Report Stage and Third Reading of the Bill are provisionally scheduled to take place on 8 February 2017.

Ending the jurisdiction of the EU courts in the UK post-Brexit

Prime Minister Theresa May’s invocation of a ‘Global Britain’ outside the EU single market and free from the authority of the Court of Justice of the European Union offered some headline clarity on the government’s current intentions in managing Brexit. With a forecast of growing divergence, in this analysis Adam Cygan, Professor of Law at the University of Leicester, considers the mechanisms by which the UK will de-couple itself from EU courts.