Litigation Update | July 2016

Written on 15 Jul 2016

Welcome to the latest edition of Osborne Clarke’s quarterly Litigation Update.

Since 24 June, a great deal has been spoken and written about what Brexit might mean, economically and politically. We include in this Update three articles looking at what this means for disputes. For the key legal implications that we see for business please visit our Brexit hub, which you can access here.

We also discuss two recent Court of Appeal judgments, concerning priority of terms in complex contracts and the imposition of implied contracts between group companies.

With much debate about what Brexit will mean for the economy, we look at a tool that is increasingly being to free up capital from legal budgets and reduce the risks associated with major disputes: third party funding.

If you would like to discuss any of the content in this Update, please get in touch with your usual litigation contact or the author of the article.

Brexit: what will it mean for disputes?

As part of our Brexit hub, we discuss what Brexit is likely to mean for litigation in the UK, including the issues that are most likely to lead to disputes and what this will mean for principles of choice of law and jurisdiction.

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We also ask whether parties uncertain as to the effect of Brexit on cross-border litigation will be looking to settle more disputes by arbitration.

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Finally, we focus on the issue of cartel damages claims and ask where claimants should bring claims in the future.

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Get your priorities straight: inconsistencies and priority between contract clauses

Commercial contracts often comprise a number of separate documents, which taken together form the contractual bargain. This is typically the case for complex, technical contracts such as construction, IT or financial services agreements, but can equally apply to consumer contracts such as mortgages. Priority clauses are used to set out the order of importance of those documents in the event of inconsistency, for example, so that specially agreed terms can be imposed on top of general terms and conditions.

The recent case of Alexander v West Bromwich provides guidance on what constitutes inconsistency and when terms can be read together.

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Implied contracts: have you formed contracts between group companies without knowing it?

In today’s global economy, most businesses operate through group structures organised on various different, often overlapping, bases. Group companies often have informal arrangements, such as sharing or seconding an employee’s time between different parts of the business.

In the first reported case on this issue, the Court of Appeal has held that a legally binding contract between group companies could be inferred from conduct, in the absence of any written contract. The implied contract imposed significant pensions liabilities on one of the group companies after the other went into administration.

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Managing risk using third party funding

Third party funding has been attracting a great deal of attention recently, not least with the announcement last week that the largest ever consumer class action in the UK (£19bn) is being funded by third party funders putting up £40m to cover the costs of the case.

We go back to basics to explain what third party funding is, what a funding arrangement will typically cover and what funders will be looking for in deciding whether to fund a case (and if so, what they will base their success fee on).

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Interested in other areas?

As well as our quarterly litigation update, we produce regular updates on a number of other topics, including Asset Tracing and Enforcement, IP and Business Crime. Please let us know if you would like to receive either of these in the future.