In house counsel update seminar 17 april

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In house counsel update seminar 17 april

  1. 1. In-house counsel update seminars A mixture of topics to keep you up-to-dateChaired by Mark DavenportEversheds LLPLondon, 17 April 2012
  2. 2. The in-house legal departmentCan it move from being a cost centre toan income generator?Andy MoodyEversheds LLP17 April 2012
  3. 3. 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 partnering in the legal market• Providing control over costs - championing the cause closest to clients‟ hearts. Practising proactive legal and risk management: prevention not cure
  4. 4. 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
  5. 5. Cost centre to profit centreRe-aligning your legal team to achieve success • 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 teamsWith the above in mind, this presentation can help moveyour teams move from a cost centre to a profit centre
  6. 6. Cost centre to profit centre Steps to success – giving you the tools• 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
  7. 7. Your legal team Re-aligning to achieve success• 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
  8. 8. Our process
  9. 9. Legal Work – Cost/Risk/Quality MatrixThe starting point
  10. 10. Process analysis RECOMMENDATIONSA gatekeeping process is Improvednecessary to keep a check Inputs fromand balance on the inputs the businessfrom the business, whichdrive the negotiation process. NoIntroducing this new step inthe process and ensuring itsimplementation will drive Is infoefficiencies throughout the received accurate Gatekeepingrest of the process by & complete?reducing the level of reworkand administrative burdenplaced on the negotiators byinaccurate and incomplete Yes Accurate and fullinformation. information Negotiators Reduction of receive full admin burden accurate and rework information
  11. 11. Process maps Incomplete and inaccurate information received by legal team Currently done by negotiators. Transfer responsibility to admin team? Delays in starting and considerable rework required No unique identifier due to missing or incomplete for cases transferred documentation between systems
  12. 12. Process maps The team has automated much of this workflow to produce TMA within 2 working days Missing a step for the allocation process Missing a We recommend that „gatekeeping‟ step this task is done by which checks the admin team documentation is correct
  13. 13. Benchmarking CURRENT PROCESS BL 70 ING 60 EC II 50 EH 40 DOR ESC 30 NR TR 20 NI 10 PI CL 0 BAU Firm Firm Firm Firm Firm Firm Firm Firm Firm Firm Firm Firm Firm Firm Firm Firm IRComparison of negotiation times between 2004 and 2006 Cumulative mean percent of agreements executed Surveys. Median percent by time bucket* by given time buckets* 20 10010020 18 100 90 92 17 86 76 78 8015 2004 66 2004 10 10 10 10 10 60 2006 46 48 200610 7 40 33 5 5 5 265 3 17 2 20 100 0 < 30 30-60 60-90 90-180 6-9 9-12 > 1 year < 30 30-60 60-90 90-180 6-9 9-12 > 1 year days days days days months months days days days days months months *Source: International Swaps and Derivatives Association www.isda.org (ISDA Master Agreement Negotiation Survey
  14. 14. The legal department – metricsSteps to success Business Budget strategic level $ Exposure $ Legal spend vs budget
  15. 15. Offshoring/outsourcingHigh High Onshore LPO Bristol Paralegal Support Title Hourly Monthly FTE rate price rate per annum High Paralegal £20 £3,200 £35,000 complexity Skill set requirementsBilling rates (£ per hour) Offshore LPO Lawyer Support Title Hourly Monthly FTE rate Moderate price rate per annum complexity Junior Lawyer £16 £2,600 £31,000 (India) Senior Lawyer £25 £4,000 £47,000 (India) Junior Lawyer £19 £3,000 £36,000 Low (Philippines) complexity Senior Lawyer £29 £4,500 £55,000 (Philippines)Low Low
  16. 16. Working efficientlyProject management of legal work Service excellence means that for all client matters, we must be able to say YES to all of the following:• 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
  17. 17. Working efficiently – “DealTrack”Project managing your success
  18. 18. Reducing external costsGetting value from your external law firms 20** Panel reduction process 20** New Existing firms Implementation of [* *] Legal Model external panel Firm Firm H.O. Communication to business Firm Firm Firm Create jurisdiction panel firms Firm Firm Firm Implement instruction protocol to panel firms Europe Firm Firm Review historical work with non-panel firms Firm Introduce invoice validation management system Firm Firm Firm and global measuring against budget Firm Firm Asia Commence use of matter manager for new matters Firm Firm Firm New matters only to be instructed to panel firms by legal team Firm Firm Firm Implement value added strategy N. America Firm Firm General contractor model Firm Firm Firm Firm
  19. 19. Case studies
  20. 20. 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
  21. 21. Case study 2To achieve significant cost reduction and improvelegal representation Tyco held a competitive tenderfor its legal needs in EMEA• 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 Eversheds reappointed after two years
  22. 22. Case study 3 Proving valueDemonstrating value of legal teamwith key metrics? Before  No way of showing• Case study: FTSE 100 Company team‟s value  Under pressure Online business survey with face- from wider business to-face interviews. Benchmarking  How to adapt to of legal team value to business needs of business? units, as well as strategies for legal/business protocols After  Financial & CustomerResult: Report suitable for sharing validation of teamwith wider business showing legal performanceteam value, and identifying areas  Identifiedfor improvement improvements for next stage of evolution
  23. 23. Case study 4 Managing spendIn-source v outsource• Case study: Fortune 500 Before manufacturing multinational  No processes Eversheds Consulting was  no decision approached to analyse and assess criteria existing legal management and  ad hoc risk and compliance functions over 39 jurisdictions After  sophisticatedResult: Provision of detailed decision treebreakdown of £6m legal spend,  risk/quality/capacityenabling benchmarking of internal assessment applied tov external legal spend and different work areas in different ways –convergence programme of legal rigidly appliedpanel
  24. 24. Case study 5 Reducing spendManaging internal teams Before• Case study: FTSE 50 financial services  No KPI‟s Engaged on a legal spend and process  No MI engineering project – the starting point  No regular being the wholesale banking legal team. meetings Eversheds Consulting were responsible  No clear for delivering process improvements, strategy optimal team structures, data integrity After and quality checking, as well as  Focused KPI team KPI‟s linked to objectives/strategy  1:1 andResult: We achieved a 32% team meetingsreduction in the team caseload  Monthly reportingas part of the project  Clear strategy
  25. 25. The challenge of contract managementGetting the value from your contracts• Maximise the value of your in-house legal work• Manage your suppliers effectively• Reduce your risks Contract Management• Reduce your costs and get Lifecycle full value from your contracts• Make your legal team profitable – recoveries
  26. 26. The profitable legal departmentAchieving the ultimate goal• How to create a revenue stream• Identification of legitimate claims that otherwise 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
  27. 27. 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
  28. 28. • Not simply obtaining a favourable settlement • 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
  29. 29. 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
  30. 30. Developed to meet challenges faced by in-house teams International records management Legal spend Risk and legal and management compliance Environment, Global health and Eversheds corporate safety Consulting secretarial Helping your department to Recoveries generate income
  31. 31. Corporate Governance updateHow does this impact you and your business?Mark SpinnerEversheds LLP17 April 2012
  32. 32. What we will cover today• History of Corporate Governance• The Stewardship Code• Davies Review• “Boards and Risk”• “Comply or Explain”• Executive remuneration• What next
  33. 33. History 1992 1995 1998 Cadbury Greenbury Hampel Combined Code 2003 2005 2009 Higgs Turnbull Walker Tyson Smith
  34. 34. More recently 2010 February 2012 • FRC publishes Corporate Governance Code • FRC consultation on February 2011 “Comply or Explain” • Davies Review on diversity March 2011 • BIS consultation on • FRC Guidance on Board Effectiveness Executive Pay • Economic Affairs Committee September 2011 • Davies Report – • FRC discussion on Boards and Risk one year on October 2011 • Davies Report –interim review • Kay Review
  35. 35. 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
  36. 36. Key Changes• 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
  37. 37. 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
  38. 38. Stewardship CodeThe principles• 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
  39. 39. Davies ReportRecommendations• 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
  40. 40. Davies ReportRecommendations• 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
  41. 41. Gender diversity post Davies Women on Boards – one year on• 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
  42. 42. Board diversityChanges to the Code• 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!
  43. 43. Effective risk management and control “The board is responsible for determining the natureand extent of the significant risks it is willing to take in achieving it’s strategic objectives. The board shouldmaintain sound risk management and internal control systems.” Corporate Governance Code, Main Principle C.2
  44. 44. 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 anappropriate relationship with the company’s auditor.” Corporate Governance Code, Main Principle C.3
  45. 45. 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
  46. 46. 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?
  47. 47. “Comply or Explain”• Principles rather than Rules based regime• Proportionate• Benefits• The facts• European Green Paper• FRC consultation
  48. 48. 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
  49. 49. 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
  50. 50. 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
  51. 51. ABI‟s GuidelinesKey changes• 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
  52. 52. BIS Consultation into executive payNovember 2011• 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
  53. 53. BIS ConsultationImproving Transparency• 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
  54. 54. BIS ConsultationRole of Shareholders• 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
  55. 55. BIS ConsultationRole of Remuneration Committees• 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
  56. 56. What next• Kay Review• Stewardship Code – FRC review• Focus upon narrative reporting• Auditors – compulsory retendering• Risk• Comply or Explain
  57. 57. Tax / VAT updateWhat’s new?Clive Jones & Danny BlumEversheds LLP17 April 2012
  58. 58. Tax/VAT UpdateSome 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
  59. 59. Tax UpdateSome Potential Future Changes• 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
  60. 60. Consumer law updateUnderstanding the fundamental changesaheadMatthew Gough & Vicky MannEversheds LLP17 April 2012
  61. 61. 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
  62. 62. Consumer law in the news• 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
  63. 63. Some examples…Our work• Anyone who deals with consumers• Energy – utilities and renewables• Retail – traditional and online• TMT• Financial Services• Holiday operators and transport• Education
  64. 64. Consumer lawWhen does it apply?• Different rules apply depending on whether the trader deals with a „consumer‟ or a business• Businesses have considerable flexibility in B2B Transactions 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‟
  65. 65. Meaning of…Consumer• 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
  66. 66. Meaning of… Consumer• 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
  67. 67. An overview of consumer law
  68. 68. Overview of consumer lawUnfair terms and consumers• Unfair terms are regulated by: – UCTA 1977; and – The 1999 Regulations
  69. 69. Overview of consumer lawImplied terms• Implied terms are provided by: – Sale of Goods Act 1979; and Supply of Goods and Services Act 1982
  70. 70. Overview of consumer lawTrading online• Distance Selling Regulations• E-commerce Regulations
  71. 71. Overview of consumer lawDoorstep selling• Cancellation of Contracts made in aConsumer‟s Home or Place of Work etcRegulations 2008
  72. 72. Overview of consumer lawUnfair Practices Directive and Regulations• Consumer Protection from Unfair Trading Regulations 2008
  73. 73. 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
  74. 74. The Consumer Rights DirectiveScope of the CRD• 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
  75. 75. The Consumer Rights DirectiveKey Provisions of the CRD1.“Cooling Off” Period: 14 days under the CRD. This maybe different to national legislation in the various jurisdictionse.g. current period under UK law = 7 days. Model form forwithdrawing from sales contract2.Pre-contractual information: Clear set of informationrequirements e.g main characteristics of product,geographical address and identity of trader, delivery charges3.Rules on delivery and passing of risk: Maximum of 30days from date of signing the contract (or time of formationfor online contracts) for the trader to deliver the goods tothe consumer. Trader bears risk and cost of damage/lossuntil consumer receives goods
  76. 76. The Consumer Rights DirectiveKey Provisions of the CRD4.Harmonised rules on refunds: 14 day period toreimburse consumers who cancel contracts including, ifapplicable, the costs of delivery. Period begins on the dayon which the seller is informed of the consumer‟s decisionto withdraw from the contract5.Digital Content: Clearer information at point of sale,e.g. compatibility with hardware/software and limitationson consumers right to make copies. Will apply to video andmusic downloads6.Online Sales: Consumers have a right to refuse to payif not properly informed of the prices before a purchase.Online auction sites like “e-bay” must meet standardinformation obligations
  77. 77. The Consumer Rights DirectiveKey Provisions of the CRD7.Ban on pre-ticked boxes on websites: EuropeanCommission cited example of online sales of airline ticketswhich may offer “pre-ticked” extras such as car rental ortravel insurance. Consumers will be exempt from any costsof which they were not properly informed8.Payment Card Charges: Prohibition under the CRDfrom charging consumers fees that exceed the cost borneby the trader9.Pressure selling protection increased: Salestransactions negotiated away from business premisescovered, not just doorstep sales
  78. 78. The Consumer Rights Directive Dangers of non-compliance• 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
  79. 79. Reform of UK Consumer Law• 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
  80. 80. Reform ofUK Consumer Law• 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
  81. 81. Reform ofUK Consumer Law• 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
  82. 82. Introducing the teamConsumer law teamMatthew Vicky Kelly AlisonGough Mann Holmes Walton
  83. 83. Introducing the teamConsumer law team Susy Flavell Mary Kelly Eve England
  84. 84. Any Questions?Please see us during the lunch break
  85. 85. www.eversheds.com © EVERSHEDS LLP 2012. Eversheds LLP is a limited liability partnership.
  86. 86. Contract law updateKeeping your business one step aheadAlison BreareyEversheds LLP17 April 2012
  87. 87. Right of first refusal (and NetTV)•AstraZeneca UK Limited v Albemarle InternationalCorporation and other [2011] EWHC I574 (Comm)•H-Switch to Propofol•In the event that at any time Buyer [AZ] reformulatesor otherwise changes its Diprivan brand to substitutepropofol for the Product, Buyer will so notify Seller andwill give Seller the first opportunity and right of firstrefusal to supply propofol to Buyer under mutuallyacceptable terms and conditions
  88. 88. Right of first refusal(and NetTV)AstraZeneca UK Limited v Albemarle InternationalCorporation 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?
  89. 89. Right of first refusal(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
  90. 90. Right of first refusal(and NetTV) M-Claims“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”
  91. 91. Right of first refusal(and NetTV)• 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
  92. 92. Constructionor judicial discretion?Chalabi and others v Agha-Jaffar and another[2011] EWCA Civ I535Rainy Sky SA v Kookmin Bank [2012] 1 ALL ER1137• 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.
  93. 93. Construction of ContractsENER–G Holdings plc v Philip Hormell [2011] EWHC3290“Any such notice may be served by delivering itpersonally or by sending it by pre-paid recordeddelivery post to each party (in the case of the Buyer,marked “for the attention of the directors”) at or to theaddress referred in the Agreement…… Any noticedelivered personally shall be deemed to be receivedwhen delivered (or delivered otherwise than between9.00am and 5.00pm on a Business day, at 09.00am onthe next Business Day)……
  94. 94. 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.
  95. 95. Gross NegligenceICDL GCC Foundation FZ-LLC v The EuropeanComputer Driving Licence Foundation Ltd [2011]IEHC 343“The Licensee’s exclusive remedy and the total liabilityof ECDL-F in respect of any cause of action relating toor arising out of this Contract will, to the extent that itis not caused by a wilful act or gross negligence byECDL-F, not exceed 10% of the total amounts paid toECDL-F by the Licensee or £50,000, whichever is thelesser amount.”
  96. 96. Gross NegligenceICDL GCC Foundation FZ-LLC v The EuropeanComputer 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
  97. 97. www.eversheds.com © EVERSHEDS LLP 2012. Eversheds LLP is a limited liability partnership.
  98. 98. Workshop sessionInternational differences in contractualinterpretation - lost in translation?Richard LittleEversheds LLP17 April 2012
  99. 99. Introducing the International Panel Remi Kleiman Antonio Bravo France Spain Yang Zhao Suzannah Newboult China Qatar
  100. 100. What does it all mean? ABC Ltd. shall use its best endeavours to supply and licence to DEF Ltd. fit for purpose process control software (“Software”). Following supply of the Software, ABC Ltd. shall diligently provide support services and actively ensure that the Software is appropriately maintained. DEF Ltd. shall use all reasonable endeavours to ensure that the Software is operated in appropriate environmental conditions for the operation of the Software otherwise ABC Ltd. shall not be liable for any losses whatsoever, however caused. Prior to either party terminating this agreement on grounds of force majeure or breach, the parties shall negotiate in good faith an amendment to the agreement to allow it to continue.
  101. 101. Questions for the panel
  102. 102. Please help yourself to our internationalguides to dispute resolution
  103. 103. www.eversheds.com © EVERSHEDS LLP 2012. Eversheds LLP is a limited liability partnership.

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