Part 1: What’s new for in-house counsel — corporate and commercial

Part 1: What’s new for in-house counsel — corporate and commercial

In our May 2021 monthly session for in-house counsel, over 190 professionals came together to hear Iain Larkins, Radius Law’s founder and CEO and Sandra Martins, Radius Law’s head of employment, provide an update on essential topics.

Iain spoke of what’s new in the corporate and commercial sphere, as well as providing listeners with an update on ESG and data security (see part 2) trends and decisions.

Sandra then took over to provide an overview of topical issues in the employment sector, covering the Uber case and other decisions on worker status, IR35, looming Brexit deadlines and coronavirus (COVID-19) uncertainties (see part 3).

As always our speakers asked for your input via polls on Slido and are keen to continue the conversation on the Radius Law Slack channel.

After an introduction from Sophie Gould from Flex legal, Iain took listeners on a rattle stop tour of some key stories that have emerged in the past six months.

Limiting supplier liability

First off, Iain picked up on the topic of limiting liability in supply contracts.

He highlighted three key cases, zooming in on the second one:

  • Balmoral Group Ltd v Borealis [UK] Ltd [2006] EWHC 1900 (Comm);
  • Goodlife Foods Ltd v Hall Fire Protection Ltd [2018] EWCA Civ 1371;
  • Ltd v Jowat (UK) Ltd [2021] NIQB 3.

He told listeners that the Goodlife decision that concerned exclusion of liability has followed a trend that courts have been pursuing of non-interference in business to business contracts.

However, in the recent decision of B A Kitchen Components, a similar clause was found to fall within the scope of the Unfair Contract Terms Act 1977 (UCTA 1977). This confirmed that (similar to the Balmoral decision)— a limitation clause which limited supplier liability to the exchange of defective products with non-defective products or the price paid for the defective products, was held to be incompatible with UCTA 1977.

In-house counsel dealing with suppliers’ contracts will need to pay close attention to the distinguishing features in these cases and should consider other ways in which they can seek to reduce levels of liability, potentially through:

  • limiting liability to multiples of the contract price;
  • offering insurance to cover potential  losses;
  • including tiered provisions to provide alternative levels of protection in the event any primary exclusions are found to be unreasonable.

Parent company liability

Iain then shifted the focus towards two Supreme Court cases concerning environmental damage abroad for which the claimant sought damages from the English parent.

  • Vedanta Resources Plc and another v Lungowe and others [2019] UKSC 20
  • Okpabi and others v Royal Dutch Shell Plc and another [2021] UKSC 3

The cases found that a parent company may be liable for a subsidiary in an expansive range of circumstances, leading Iain to expect to see more ‘forum shopping’ cases.

Business interruption insurance

Iain highlighted the ‘very mainstream’ decision of The Financial Conduct Authority v Arch Insurance (UK) Ltd [2021] UKSC 1, in which the court ruled that insurers had been wrong to refuse to pay business interruption claims that arose from the pandemic.

For further information on the case see News Analysis: Coronavirus (COVID-19)—FCA non-damage business interruption insurance test case.

Iain took care to specify that the decision is only binding on those eight insurers so, further litigation is likely to arise. He pointed listeners to the FCA’s detailed guidance on the business insurance interruption test case. For an overview, see News Analysis: FCA finalised guidance on the coronavirus (COVID-19) business interruption insurance test case.

Restrictive covenants

Iain also touched on January’s decision Travel Counsellors Ltd v Trailfinders Ltd [2021] EWCA Civ 38.

Here, the Court of Appeal found that it is not acceptable for a company to turn a blind eye to staff recruited from competitors bringing customers lists or other confidential information with them. They will be bound by a duty of confidentiality if it was reasonable for them to have made enquiries as to the confidential nature of the information but did not do so.

See our summary of the case here.

ESG

In his update on topical issues in ESG, Iain considered:

  • greenwashing
  • green clauses—highlighting The Chancery Lane Project’s new model clauses, which can be used for corporate transactions, supply agreements and construction procurement
  • modern slavery

In relation to greenwashing, Iain highlighted the worrying trends brought to light by the Competition and Markets Authority’s (CMA) investigations into companies’ green claims (see: LNB News 28/01/2021 59)—showing that 40% of green claims made online could be misleading. To avoid investigation and potential prosecution, in-house counsel should:

In relation to modern slavery, Iain reminded listeners of Alison Levitt’s independent report into Bohoo’s supply chain, which reached the mainstream media. The report supported the government’s plans to strengthen modern slavery reporting requirements (see: LNB News 22/09/2020 62), so in-house counsel should take care to ensure their policies are up to scratch.

Click here for parts 2 and 3 in this series, for an overview of hot issues in data security and employment law.

Upcoming Senior Counsel event

Join us for the next dedicated session for in house counsel:

The power of an effective learning, development and training strategy

Wednesday 23rd June, 10:00 – 10:45

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About the author:
Gloria is a Paralegal in the Lexis®PSL Paralegal Hub. She graduated in International Law and Globalisation from the University of Birmingham in 2019 and has been at LexisNexis UK since March 2020. She has experience working for US, UK and Italian law firms on a range of matters, including IP, financial services and immigration law.