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

Our process

Legal Work – Cost/Risk/Quality Matrix

The starting point

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

33

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

23

0

5

10

15

20

< 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

30

40

50

60

70

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

http://www.isda.org/

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:

Project managing your success

Working efficiently – “DealTrack”

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 studies

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


“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


• Identify risks

• Use of risk matrices

• Not just internal controls

• Increasingly complex

• “Think the unthinkable”

• Appropriate to company‟s scale, strategy and regulatory situation


• 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

What’s new?

Clive Jones & Danny Blum

Eversheds LLP

17 April 2012

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

An overview of consumer law

Overview of consumer law

• Unfair terms are regulated by:

– UCTA 1977; and

– The 1999 Regulations

Unfair terms and consumers


• Implied terms are provided by:

– Sale of Goods Act 1979; and

Supply of Goods and Services Act 1982

Implied terms


• Distance Selling Regulations

• E-commerce Regulations

Trading online


• Cancellation of Contracts made in a

Consumer‟s Home or Place of Work etc

Regulations 2008

Doorstep selling


• 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


• 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


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


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


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


• 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

Introducing the team

Consumer law team

Matthew

Gough

Vicky

Mann

Kelly

Holmes

Alison

Walton

Introducing the teamConsumer law team

Susy Flavell Mary Kelly Eve England

Any Questions?

Please see us during the lunch break

© EVERSHEDS LLP 2012. Eversheds LLP is a limited liability partnership.

www.eversheds.com

Contract law update

Keeping your business one step ahead

Alison Brearey

Eversheds LLP

17 April 2012

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


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 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)


“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


• 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


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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.

Questions for the panel

Please help yourself to our international guides to dispute resolution


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Career

In house counsel update seminar 17 april