In house counsel update seminar 17 april
Transcript of In house counsel update seminar 17 april
In-house counsel update seminars
A mixture of topics to keep you
up-to-date
Chaired by Mark Davenport
Eversheds LLP
London, 17 April 2012
The in-house legal department
Andy Moody
Eversheds LLP
17 April 2012
Can it move from being a cost centre to
an income generator?
Eversheds LLP – Eversheds Consulting
• One of the largest full service law firms in the world with over 4,326 people including more than 560 partners and almost 2,500 legal advisers
• 46 offices in major cities across Europe, the Middle East, Africa and Asia
• Relationship lawyers – pioneers of partneringin the legal market
• Providing control over costs - championing the cause closest to clients‟ hearts. Practising proactive legal and risk management: prevention not cure
Eversheds LLP – Eversheds Consulting
• Eversheds Consulting – A team of lawyers, certified project managers, auditors, IT and marketing specialists which delivers tailor made solutions to legal departments
• Drivers of change experience of outsourcing and off-shoring
Cost centre to profit centre
• Today‟s environment for Legal Departments:
– Budgetary pressures
– Drive to achieve more for less
– Search for optimum effectiveness
– Focus on added value
– Outsourcing pressures
– Showing the value of internal teams
Re-aligning your legal team to achieve success
With the above in mind, this presentation can help move your teams move from a cost centre to a profit centre
Cost centre to profit centre
• Analyse the effectiveness of your internal team
• Reducing external costs
• Working efficiently through project management
• Developing cultural change
• Integration of legal and business units
• Identifying revenue streams
• Profitable legal department
Steps to success – giving you the tools
Re-aligning to achieve success
Your legal team
• Review of internal department
• Process mapping
• Focused KPI‟s linked to objectives/strategy for the team
• Benchmarking
• Clear management information relating to financial performance
• Monthly reporting on KPI, strategy
and legal spend
Process analysis
A gatekeeping process is necessary to keep a check and balance on the inputs from the business, which drive the negotiation process.
Introducing this new step in the process and ensuring its implementation will drive efficiencies throughout the rest of the process by reducing the level of rework and administrative burden placed on the negotiators by inaccurate and incomplete information.
RECOMMENDATIONS
Reduction ofadmin burden and rework
Accurate and full information
GatekeepingIs info
received accurate & complete?
Yes
No
ImprovedInputs fromthe business
Negotiatorsreceive fullaccurate
information
Process maps
Incomplete and inaccurate information received by legal team
Currently done by negotiators. Transfer responsibility to admin team?
No unique identifier for cases transferred between systems
Delays in starting and considerable rework required due to missing or incomplete documentation
Process maps
We recommend that this task is done by the admin team
The team has automated much of this workflow to produce TMA within 2 working days
Missing a step for the allocation process
Missing a „gatekeeping‟ step which checks documentation is correct
BenchmarkingCURRENT PROCESS
10
26
46
66
78
90100
17
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48
76
8692
100
0
20
40
60
80
100
< 30
days
30-60
days
60-90
days
90-180
days
6-9
months
9-12
months
> 1 year
2004
2006
Cumulative mean percent of agreements executed by given time buckets*
*Source: International Swaps and Derivatives Association www.isda.org(ISDA Master Agreement Negotiation Survey
5
10
1718
10 10
5
7
10 10
20
5
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0
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< 30
days
30-60
days
60-90
days
90-180
days
6-9
months
9-12
months
> 1 year
2004
2006
Comparison of negotiation times between 2004 and 2006 Surveys. Median percent by time bucket*
0
10
20
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40
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Firm Firm Firm Firm Firm Firm Firm Firm Firm Firm Firm Firm Firm Firm Firm Firm
BL
ING
EC
II
EH
DOR
ESC
NR
TR
NI
PI
CL
BAU
IR
The legal department – metrics
Steps to success
$ Exposure $ Legal spend vs budget
Business strategic
level
Budget
Offshoring/outsourcing
Highcomplexity
Moderatecomplexity
Lowcomplexity
Skill set
req
uir
em
en
ts
High
Low
Billin
g r
ate
s (
£ p
er h
ou
r)
High
Low
Title Hourly price
Monthlyrate
FTE rateper annum
Paralegal £20 £3,200 £35,000
Onshore LPO Bristol Paralegal Support
Title Hourly price
Monthlyrate
FTE rateper annum
Junior Lawyer(India)
£16 £2,600 £31,000
Senior Lawyer(India)
£25 £4,000 £47,000
Junior Lawyer(Philippines)
£19 £3,000 £36,000
Senior Lawyer(Philippines)
£29 £4,500 £55,000
Offshore LPO Lawyer Support
• We scoped the matter fully; understood key issues; agreed expected outcome with the client
• We agreed a written fee quote, including scope of work and assumptions which must be reasonable
• We controlled costs, updated client as appropriate, agreed revised scope of work and constantly revised fee quote
• Updated client as to progress
• Obtained feedback
Project management of legal work
Working efficiently
Service excellence means that for all client matters, we must be able to say YES to all of the following:
Getting value from your external law firms
Reducing external costs
20** Panel reduction process 20**
Existing firms
Firm Firm
Firm Firm
Firm Firm
Firm Firm
Firm Firm
Firm Firm
Firm Firm
Firm Firm
Firm Firm
Firm Firm
Communication to business
Create jurisdiction panel firms
Implement instruction protocol to panel firms
Review historical work with non-panel firms
Introduce invoice validation management system and global measuring against budget
Commence use of matter manager for new matters
New matters only to be instructed to panel firms by legal team
Implement value added strategy
General contractor model
Implementation of [* *] Legal Model
New external
panel
H.O.
Firm
Firm
Europe
Firm
Firm
Asia
Firm
Firm
N. America
Firm
Firm
Case study 1
The DuPont Legal Model “is an integrated approach for managing change within the
law department and for continuously improving how legal
services are provided to DuPont businesses in terms of
quality, cost and efficiency”
Founded on strategic partnering
Requires ongoing re-engineering of work processes
Focus on the bottom line has led to cost effective and client-centred legal services
350 to 40 law firms in US, UK, Canada and Mexico
Total savings exceed $75 million
Case study 2
• Gap analysis of internal resources and external needs
• Eversheds replaced 285 existing law firms in EMEA and seconded lawyers to Tyco
• Legal costs reduced by 30% and Evershedsreappointed after two years
To achieve significant cost reduction and improve legal representation Tyco held a competitive tender for its legal needs in EMEA
Before
No way of showing team‟s value
Under pressure from wider business
How to adapt to needs of business?
After
Financial & Customer
validation of team performance
Identified improvements for
next stage of evolution
Case study 3
Result: Report suitable for sharing with wider business showing legal team value, and identifying areas for improvement
• Case study: FTSE 100 CompanyOnline business survey with face-to-face interviews. Benchmarking of legal team value to business units, as well as strategies for legal/business protocols
Proving value
Demonstrating value of legal team
with key metrics?
Before
No processes
no decision criteria
ad hoc
After
sophisticated decision tree
risk/quality/capacity assessment applied to different work areas in different ways –
rigidly applied
Case study 4
Result: Provision of detailed breakdown of £6m legal spend, enabling benchmarking of internal v external legal spend and convergence programme of legal panel
In-source v outsource
• Case study: Fortune 500 manufacturing multinational Eversheds Consulting was approached to analyse and assess existing legal management and risk and compliance functions over 39 jurisdictions
Managingspend
Before
No KPI‟s
No MI
No regular meetings
No clear strategy
After
Focused KPI linked to
objectives/strategy
1:1 and team meetings
Monthly reporting
Clear strategy
Case study 5
Result: We achieved a 32% reduction in the team caseload as part of the project
Managing internal teams
• Case study: FTSE 50 financial services Engaged on a legal spend and process engineering project – the starting point being the wholesale banking legal team. Eversheds Consulting were responsiblefor delivering process improvements, optimal team structures, data integrityand quality checking, as well asteam KPI‟s
Reducingspend
The challenge of contract management
Getting the value from your contracts
Contract
Management
Lifecycle
• Maximise the value of your in-house legal work
• Manage your suppliers effectively
• Reduce your risks
• Reduce your costs and get full value from your contracts
• Make your legal team profitable – recoveries
The profitable legal department
• How to create a revenue stream
• Identification of legitimate claims thatotherwise might be missed
• Money on the table which is not picked up
• Proactive management of transactions, agreements, patents and other contracts to discover wrongdoings. Eg warranties and indemnities in M&A
• Not a Litigation Programme
• But needs a cultural change –proactive not reactive
Achieving the ultimate goal
Case study 6
A legal recovery is defined as:“any recoupment in the form of cash (royalty payments,
settlements and adjustments), products, services or other
quantifiable rights obtained for a company or its affiliates,
through the intervention by legal professionals beyond a
normal business transaction”
DuPont have recovered $1.6 billion since it started its programme 5 years ago
• Not simply obtaining a favourablesettlement
• Capturing value in contracts
• 35% outside USDuPont 2009 recoveries by cases
Commercial/Contracts $248.9 million
Intellectual Property $60.4 million
Bankruptcy/Collection, Commercial/Sourcing $16.9 million
Trade/Customs $7 million General Torts, Antitrust, Pioneer
Trade/Antidumping $941 million Solae $659 million
<1%: Insurance $492 million; Tax $240 million; Environment $114 million; Corp. Securities $77 million
Action
• Evaluate litigation history and define profit and loss
• Implement structured programme between legal,finance and business units
• Educate and inform on the possibilities, eg:
– Supply contracts
– Over-billing
– Power cuts
– IP/Licensing fees
• Establish a programme to assert legal rights
• Change the culture
• Communicate success
Developed to meet challenges faced by in-house teams
EvershedsConsulting
Legal spend and legal
management
International records
management
Environment, health and
safety
Global corporate secretarial
Risk and
compliance
Recoveries
Helping your department to
generate income
Corporate Governance update
How does this impact you and your business?
Mark Spinner
Eversheds LLP
17 April 2012
What we will cover today
• History of Corporate Governance
• The Stewardship Code
• Davies Review
• “Boards and Risk”
• “Comply or Explain”
• Executive remuneration
• What next
History
2003
Higgs
Tyson
Smith
2005
Turnbull
2009
Walker
1992
Cadbury
1995
Greenbury
1998
Hampel
Combined
Code
More recently
2010 • FRC publishes Corporate Governance
Code
February 2011• Davies Review on diversity
March 2011• FRC Guidance on Board Effectiveness• Economic Affairs Committee
September 2011• FRC discussion on Boards and Risk
October 2011• Davies Report –interim review
February 2012
• FRC consultation on“Comply or Explain”
• BIS consultation onExecutive Pay
• Davies Report –one year on
• Kay Review
UK Corporate Governance Code
• This is the new name for the Combined Code and applies to accounting periods beginning on or after 29 June 2010
• The FRC found no serious failings with the present system; the code remains fit for purpose
• Refocus on underlying principles
• Moving away from box ticking to behavioural activity
• Focus on board quality and accountability
• Linked to new Stewardship Code
• Entire board should stand for annual re-election
• Emphasis on appropriate balance at board level including diversity and gender
• External evaluation of the board at least every 3 years
• Emphasis on leadership of independent directors and chairman
• Explanation in the annual report of business model strategy
• Further emphasis on remuneration linked
to performance
Key Changes
Stewardship Code
• Aim
• Who does it apply to
• Optional not mandatory
• Reporting:
– how the principles of the Code have been applied
– disclosure of information
– explanation for non-compliance
Stewardship Code
• Disclosure of how stewardship responsibilities are discharged
• Robust conflicts policy
• Monitoring of investee companies
• Guidelines on when and how activities escalated
• Acting collectively
• Policy on voting
• Regular reporting
The principles
Davies Report
• FTSE 350 Chairmen to set targets for female representation at board level for 2013 and 2015
• Listed companies to disclose proportion of women on the board, holding a senior management position and female employees across the whole organisation annually
• FRC to amend Corporate Governance Code to require publication of policy on Boardroom diversity
• Companies to report on above recommendations in 2012 Corporate Governance Statement
• Meaningful information on how appointments process addresses diversity to be provided
Recommendations
Davies Report
• Investors to consider compliance with recommendations when considering company reporting and appointments to the Board
• Periodic advertising of NED positions
• Executive Search firms to draw up Voluntary Code
• Extend search criteria outside the traditional talent pools
• Steering board to be maintained and meet every six months to monitor progress
Recommendations
Gender diversity post Davies
• Percentage of FTSE 100 female directors up to 15.6% from 12.5%
• 47 new female appointments representing 27% of all FTSE 100 appointments up from 13%
• Majority of new appointees had no previous FTSE 100 or FTSE 250 board experience
• No change to size or turnover on boards
• Only 11 all male boards at FTSE 100 companies down from 21
• At current rate of change will hit 26.7% female representation by 2015
• Similar but slower progress in FTSE 250
Women on Boards – one year on
Board diversity
• FRC has proposed amendments to the UK Corporate Governance Code to strengthen the principle of
boardroom diversity
• In particular, a company‟s annual report will need to include:
“…a description of the board’s policy on diversity, including gender, any measurable objectives that it has set for implementing the policy, and progress on achieving the objectives”
• Changes will come into effect on 1 October 2012
• If you have not already made a statement on board diversity, consider doing so!
Changes to the Code
Effective risk management and control
“The board is responsible for determining the nature
and extent of the significant risks it is willing to take in
achieving it’s strategic objectives. The board should
maintain sound risk management and internal control
systems.”
Corporate Governance Code, Main Principle C.2
Effective risk management and control
“The board should establish formal and transparent
arrangements for considering how they should apply
the corporate reporting and risk management and
internal control principles and for maintaining an
appropriate relationship with the company’s auditor.”
Corporate Governance Code, Main Principle C.3
Effective risk management and control
• Identify risks
• Use of risk matrices
• Not just internal controls
• Increasingly complex
• “Think the unthinkable”
• Appropriate to company‟s scale, strategy and regulatory situation
Effective risk management and control
• Focus on strategic and reputational risks
• Increased focus on regulatory/legal risk
• Increased focus on risk management
• Separate Risk Committee
• Barriers
• Behavioural issue?
• Chief Risk Officer or whole Board issue?
• Auditors – a job for life?
“Comply or Explain”
• Principles rather than Rules based regime
• Proportionate
• Benefits
• The facts
• European Green Paper
• FRC consultation
Executive remuneration
“Levels of remuneration should be sufficient to attract,
retain and motivate directors of the quality required to
run the company successfully, but a company should
avoid paying more than is necessary for this purpose.
A significant proportion of executive directors’
remuneration should be structured so as to link
rewards to corporate and individual performance.”
Corporate Governance Code, Main Principle D.1
Principles of executive remuneration
• The ABI published revised principles for executive remuneration (Sept 2011)
• The ABI recommends that companies should:
– support appropriate reward for exceptional performance
– strongly resist any payment for failure
– understand that excessive/undeserved remuneration:
• undermines the company‟s efficient operation
• undermines its reputation and
• is not aligned with shareholder interests
– not engage in crude benchmarking when seeking to justify increases
Executive remuneration
• New guidelines place emphasis on need for:
– link between pay and long-term value creation, i.e. careful balance of fixed and variable pay
– alignment of remuneration with company‟s strategic objectives and a proper reflection of risk
– high degree of deferral in measurement of performance over the long term
– executives to build up personal shareholdings to ensure alignment of interests with those of other shareholders
ABI‟s Guidelines
• Quantum – for the first time, ABI gives guidance on amount of remuneration
• Clawback – the new Guidelines say that shareholders expect to see “malus and clawback” in remuneration arrangements
• Pay below board level – suggestion that Remuneration Committee should have an overseeing role, particularly where risks or remuneration are significant
Key changes
• Link between executive pay and long term performance increasingly hard to discern over last 10 years
• Median remuneration of FTSE 100 CEOs has risen from £1m in 1998 to £4.2m in 2010
• Over same period the FTSE 100 rose 1.6% pa
• No clear reason, but commonly cited factors include:
– increased company size
– structure of remuneration
– transparency
– competition for talent
November 2011
BIS Consultation into executive pay
BIS Consultation
• Companies should provide clear and accessible information, but remuneration reports becoming increasingly lengthy and complex
• Options for change put forward in the BIS consultation included:
– clarity on pay – currently no requirement to state total aggregate remuneration figure
– increased clarity on link between pay, shareholder returns and long-term objectives
– increased information about pay of employees across the group
– greater clarity on remuneration proposals for the coming year and transparency on the process of setting remuneration
Improving Transparency
BIS Consultation
• Shareholders currently have a non-binding advisory vote on directors‟ remuneration report
• Are there other ways to engage shareholders?
– improve quality of information available & introduction of a binding vote for shareholders
• concerns have been raised however surrounding the expectations of shareholders, the effect of voting down a report and the employment and contractual relationship with executive directors
• two thirds of respondents were against introduction of a binding vote
– shareholder representation on nomination committees
• there is evidence that this has had a positive impact in Sweden
• over half of respondents saw no advantage
Role of Shareholders
BIS Consultation
• Currently a requirement for all listed companies to have a Remuneration Committee on a “comply or explain” basis
• Remcos have been under increased scrutiny since the financial crisis
• Composition of the Remuneration Committee
• Possible changes put forward in the BIS consultation include:
– increased diversity/background of members, for example independent members who are not on the board
– give employees a say on remuneration, either by the appointment of a representative or a separate employee vote
– increased transparency on the use of remuneration consultants, currently used by both committees and executive directors
Role of Remuneration Committees
• Kay Review
• Stewardship Code – FRC review
• Focus upon narrative reporting
• Auditors – compulsory retendering
• Risk
• Comply or Explain
What next
Tax/VAT Update
Some Finance Act 2012 Changes
• Rate changes
• Controlled Foreign Company regime
• SDLT & residential property
• Capital allowances
• REIT changes
• VAT cost sharing
• EIS and VCTs
• Employee incentives & benefits
Tax Update
• Rate changes
• New General Anti Avoidance Rule
• Residence test changes
• New Patent Box and R&D Tax Credit
• Withholding tax on interest
• Integration of income tax and NICs & RTI
• Personal services companies
• Employee incentives and benefits
Some Potential Future Changes
Consumer law update
Understanding the fundamental changes
ahead
Matthew Gough & Vicky Mann
Eversheds LLP
17 April 2012
Outline of this presentation
• Consumer law in the news
• Some examples of our work
• When does consumer law apply?
• An overview of consumer law
• The Consumer Rights Directive
• Reform of UK consumer law
• Introducing the consumer law team
Consumer law
• The OFT recently found that the overall annual value of consumer detriment in the UK economy was £6.6 billion
• It has been estimated that the total annual volume of reported and unreported consumer complaints is 120 million each year
• The average cost for a business is over £200 for dealing with each complaint
• OFCOM has recently banned rollover telephone contracts
• Groupon has agreed to change its business practices following a complaint by the OFT
in the news
Some examples…
• Anyone who deals with consumers
• Energy – utilities and renewables
• Retail – traditional and online
• TMT
• Financial Services
• Holiday operators and transport
• Education
Our work
Consumer law
• Different rules apply depending on whether the trader deals with a „consumer‟ or a business
• Businesses have considerable flexibility in B2BTransactions and are able to impose a range of terms on their business customers based on freedom of contract principles
• Consumers, however, enjoy significant statutory protection
• A key issue is whether the contract is entered into with a „consumer‟
When does it apply?
• It is necessary to consider this definition in each particular circumstance that you are contracting in
• Consideration of the applicable consumer legislation and the need to check the meaning of “consumer” under such legislation
Meaning of…
Consumer
Meaning of…
• The legal definition of “consumer” can vary. For example:– Section 12 Unfair Contract Terms Act 1977 (“UCTA
1977”): To deal as a consumer, the person must neither make the contract in the course of a business nor hold himself out as doing so. It is also necessary to consider the role of the retailer, and the retailer must be making the contract in the course of a business
– Unfair Terms in Consumer Contracts Regulations 1999 (the “1999 Regulations”) states that a consumer is a “natural person who is acting for purposes which are outside his trade, business or profession”
– The main difference between UCTA and the 1999 Regulations is that the 1999 Regulations only apply to “natural” persons
Consumer
Overview of consumer law
• Unfair terms are regulated by:
– UCTA 1977; and
– The 1999 Regulations
Unfair terms and consumers
Overview of consumer law
• Implied terms are provided by:
– Sale of Goods Act 1979; and
Supply of Goods and Services Act 1982
Implied terms
Overview of consumer law
• Cancellation of Contracts made in a
Consumer‟s Home or Place of Work etc
Regulations 2008
Doorstep selling
Overview of consumer law
• Consumer Protection from Unfair Trading Regulations 2008
Unfair Practices Directive and Regulations
The Consumer Rights Directive
• CRD adopted by EU on 11 October 2011
• Member states to implement equivalent provision in to their national laws by 13 December 2013 and business now has an 18 month period to ensure readiness
• The intention is greater consistency in consumer law across EU and the harmonisation of existing laws
The Consumer Rights Directive
• Contracts for sales of goods and services from business to consumer
• A consumer is defined as any natural person who is acting for purposes which are outside his trade, business, craft or profession
• Does not cover financial services
Scope of the CRD
The Consumer Rights Directive
Key Provisions of the CRD1.“Cooling Off” Period: 14 days under the CRD. This may be different to national legislation in the various jurisdictions e.g. current period under UK law = 7 days. Model form for withdrawing from sales contract
2.Pre-contractual information: Clear set of information requirements e.g main characteristics of product, geographical address and identity of trader, delivery charges
3.Rules on delivery and passing of risk: Maximum of 30 days from date of signing the contract (or time of formation for online contracts) for the trader to deliver the goods to the consumer. Trader bears risk and cost of damage/loss until consumer receives goods
The Consumer Rights Directive
Key Provisions of the CRD
4.Harmonised rules on refunds: 14 day period to reimburse consumers who cancel contracts including, if applicable, the costs of delivery. Period begins on the day on which the seller is informed of the consumer‟s decision to withdraw from the contract
5.Digital Content: Clearer information at point of sale, e.g. compatibility with hardware/software and limitations on consumers right to make copies. Will apply to video and music downloads
6.Online Sales: Consumers have a right to refuse to pay if not properly informed of the prices before a purchase. Online auction sites like “e-bay” must meet standard information obligations
The Consumer Rights Directive
Key Provisions of the CRD
7.Ban on pre-ticked boxes on websites: European Commission cited example of online sales of airline tickets which may offer “pre-ticked” extras such as car rental or travel insurance. Consumers will be exempt from any costs of which they were not properly informed
8.Payment Card Charges: Prohibition under the CRDfrom charging consumers fees that exceed the cost borne by the trader
9.Pressure selling protection increased: Sales transactions negotiated away from business premises covered, not just doorstep sales
The Consumer Rights Directive
• Non compliance could mean:– Increased costs in dealing with more consumer claims
– Negative public relations
– Action by the relevant national authority, OR
– The consumer may not have to pay for good/services received!
• Rights under CRD cannot be contracted out of, any contract which attempts to do so is not binding
Dangers of non-compliance
Reform of
• BIS published a paper in November 2010
• BIS plan to issue a consultation paper on consumer law in June 2012
• The possible reforms include a number of changes we shall now mention
UK Consumer Law
Reform of
• The possible reforms are likely to include:
– An integrated statute bringing all the relevant laws together
– Implied terms applying to goods to become statutory standards
– Services to be subject to an outcome-based standard
UK Consumer Law
Reform of
• One consistent set of remedies for all
supply of goods transactions
• A clear distinction between the laws that
apply to B2B and B2C transactions
• Digital products are likely to have specific
laws applying to them and may be treated similar to goods
UK Consumer Law
Right of first refusal
(and NetTV)
•AstraZeneca UK Limited v Albemarle International Corporation and other [2011] EWHC I574 (Comm)
•H-Switch to Propofol
•In the event that at any time Buyer [AZ] reformulates or otherwise changes its Diprivan brand to substitute propofol for the Product, Buyer will so notify Seller and will give Seller the first opportunity and right of first refusal to supply propofol to Buyer under mutually acceptable terms and conditions
Right of first refusal
AstraZeneca UK Limited v Albemarle International Corporation and other [2011] EWHC IS74 (Comm)
• What is meant by “right of first refusal”
– construction in the light of the context
– is the clause too uncertain?
– does it simply give an opportunity to negotiate?
(and NetTV)
Right of first refusal
• Right to be given opportunity to match any third party offer which AstraZeneca is minded to accept; and
• if Albemarle matches offer, right to be awarded the business
• AstraZeneca must act in good faith, setting out precise terms of offer
• Albemarle must be allowed to match offer before AstraZeneca accepts third party offer
(and NetTV)
Right of first refusal
“No claim by Buyer of any kind, whether as to the products
delivered or for the non-delivery of the products, or
otherwise, shall be greater in amount than the price of the
product in respect of which such damages are claimed; and
failure to give written notice of claim within sixty (60) days
from the date of delivery, or in the case of non-delivery, from
the date fixed for delivery, shall constitute a waiver by Buyer
of all claims with respect thereto. In no case shall Buyer or
Seller be liable for loss of profit or incidental or
consequential damages”
(and NetTV) M-Claims
Right of first refusal
• Deliberate repudiatory breach or genuine but mistaken belief on the basis of legal advice?
• Judge rejects NetTV – exclusion clause to be construed strictly
• Second sentence leaves Albemarle without remedy for breach of clause H
• Court construes second sentence to apply only to losses of type in first sentence
(and NetTV)
Construction
Chalabi and others v Agha-Jaffar and another [2011] EWCA Civ I535
Rainy Sky SA v Kookmin Bank [2012] 1 ALL ER 1137
• Commercially sensible/business common sense
• “Fairness”
• If there is only one construction, Court gives effect to it.
• If there are two possible constructions, the more commercially sensible solution is to be preferred.
or judicial discretion?
Construction of Contracts
ENER–G Holdings plc v Philip Hormell [2011] EWHC 3290
“Any such notice may be served by delivering it
personally or by sending it by pre-paid recorded
delivery post to each party (in the case of the Buyer,
marked “for the attention of the directors”) at or to the
address referred in the Agreement…… Any notice
delivered personally shall be deemed to be received
when delivered (or delivered otherwise than between
9.00am and 5.00pm on a Business day, at 09.00am on
the next Business Day)……
Construction of Contracts
• ENER–G Holdings plc v Philip Hormell [2011] EWHC 3290
• Service is good service, even if not personal, if notice actually received by addressee.
• Notice clause not mandatory – “may”.
• Service is not good service if delivered by hand but not received personally by addressee.
Gross Negligence
ICDL GCC Foundation FZ-LLC v The European Computer Driving Licence Foundation Ltd [2011] IEHC 343
“The Licensee’s exclusive remedy and the total liability
of ECDL-F in respect of any cause of action relating to
or arising out of this Contract will, to the extent that it
is not caused by a wilful act or gross negligence by
ECDL-F, not exceed 10% of the total amounts paid to
ECDL-F by the Licensee or £50,000, whichever is the
lesser amount.”
ICDL GCC Foundation FZ-LLC v The European Computer Driving Licence Foundation Ltd [2011] IEHC 343
• Is gross negligence different from negligence?
• Gross negligence must mean more than negligence
• But how to apply to breach of contract clause:-
– business efficacy
– gross negligence here includes doing a deal contrary to existing legal relationship and a significant degree of carelessness
Gross Negligence
Workshop session
International differences in contractual
interpretation - lost in translation?
Richard Little
Eversheds LLP
17 April 2012
Introducing the International Panel
Remi Kleiman Antonio Bravo
Yang Zhao Suzannah Newboult
France Spain
China Qatar
What does it all mean?
ABC Ltd. shall use its best endeavours to supply andlicence to DEF Ltd. fit for purpose process control software(“Software”). Following supply of the Software, ABC Ltd.shall diligently provide support services and actively ensurethat the Software is appropriately maintained. DEF Ltd.shall use all reasonable endeavours to ensure that theSoftware is operated in appropriate environmentalconditions for the operation of the Software otherwise ABCLtd. shall not be liable for any losses whatsoever, howevercaused. Prior to either party terminating this agreementon grounds of force majeure or breach, the parties shallnegotiate in good faith an amendment to the agreement toallow it to continue.