Litigation Update: July 2015

Written on 28 Jul 2015

Welcome to the first edition of Osborne Clarke’s new look quarterly litigation update. In this update we look at the latest developments on privilege, the role of contractual common sense in contracts, mitigation of damages and new regulations on alternative dispute resolution.

As well as highlighting some key upcoming
developments, this update includes a spotlight on cartel damages claims and our
recent specialist updates on Asset Tracing & Enforcement and on IP.

If you would like to discuss any of the content, please let one of us know. Our contact details are set out below.

Easy come, easy go? Legal privilege in internal and regulatory investigations

Legal privilege can be deployed to powerful effect, allowing parties to withhold documents from opponents in litigation or from regulators. Increasingly, assertions of privilege are being challenged, which can raise difficult issues, particularly when it comes to documents created for internal investigations or regulatory proceedings.

In Property Alliance Group v The Royal Bank of Scotland, the High Court considered claims for legal advice privilege, litigation privilege and without prejudice protection. Businesses will welcome the Court’s finding that without prejudice protection can extend to settlement discussions with regulators, but should beware just how easily this can apparently be waived. The judge’s comments on privilege over internal investigation materials are also of interest, and possibly concern.

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Commercial common sense: Not as common as you might think

In the world of contractual disputes, battles between semantics and commerciality are commonplace. Parties frequently fall into dispute over clauses which one party considers plain and obvious on their face, but which the other argues fly in the face of commercial common sense.

In a decision which produced an “alarming” commercial outcome (Arnold v Britton & Ors), the Supreme Court pushed the balance back towards commercial certainty and away from commercial common sense. The case is a useful reminder of the key factors that a court will take into account when interpreting a clause that may on one reading seem commercially unrealistic.

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Mitigating your loss: What’s the harm?

If you have suffered a loss, you have a duty to take steps to mitigate that loss. But what if the action that you take to stem your losses actually generates a profit? The High Court in Thai Airways International Public Company v KI Holdings considered when those profits should be taken into account to reduce the amount you can recover.

In Swynson v Lowick Rose, the Court of Appeal considered a case where, rather than a profit being made, losses had been avoided, but through the actions of a third party. Could those prospective losses still be claimed? The Court thought yes, since the third party’s actions were not brought about either by the defendant or in the ordinary course of business by the claimant.

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The ADR Regulations: What do you need to do?

There are many benefits to using Alternative Dispute Resolution (ADR), instead of or before resorting to formal court proceedings. The EU ADR Directive, which has been implemented in the UK this year through two sets of regulations, aims to improve access to ADR schemes for consumers.

From 1 October 2015, all businesses that sell goods, services or digital content to consumers must provide consumers with details of an accredited ADR provider. For businesses in some sectors, participation in an ADR scheme is mandatory.

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Cartel damages claims: Open season?

Antitrust claims have long been a feature of US litigation, and can result in huge awards of damages, exceeding the losses suffered by the victims of cartels. Private competition claims have been far less common in the EU, where competition law has traditionally been the domain of EU and national competition authorities.

However, the landscape is shifting. Cartel damages claims are on the rise, particularly in jurisdictions such as England and Wales, Germany and the Netherlands. The EU Damages Directive aims to create a level playing field to promote so-called “follow-on” damages claims throughout the EU, and national and European courts have recently been grappling with some of the more difficult features of follow-on damages claims. Where a cartel is found, it seems increasingly likely that damages claims will follow.

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What’s coming up?

With cost budgeting and management firmly established in English litigation, parties have for some time been focussing on reducing the cost of litigation. The courts are also now looking at ways of reducing the time taken to get to trial, improving the efficiency of court processes and dealing with low value claims in new ways.

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Interested in other areas?

As well as our quarterly litigation update, our disputes team produces regular updates on a number of other topics, including Asset Tracing and Enforcement and IP. Please let us know if you would like to receive any of these updates as they come out in the future.