Cash-rich funders; conflict-free boutiques; class actions aplenty. While some predict another economic downturn on the horizon, providing an uptick in conventional litigation work, these themes have defined the more eye-catching disputes of the past year. Add to the mix an increase in cyber-related litigation and accusations of fraud and regulatory missteps against some of the leading firms’ key institutional clients, and a kinetic disputes scene emerges.
Many of these developments are US imports, particularly class actions and a more aggressive approach to accusations of fraud. These US-style claims are often being pursued by disputes boutiques increasingly allying themselves with external funders. As a result, the stranglehold City bluebloods have over big-ticket litigation has loosened, while some feel only two or three of the smaller players are of sufficient quality to cause real disruption (see our boutiques report).
Nonetheless, the sway many financial institutions once held over some of the City’s most established firms – because of the conflict with their corporate and finance ambitions – has weakened. This means there is more evidence of the larger players going toe-to-toe with the disputes specialists, many of which were founded by their former partners hungry to take on institutional clients.
However, warring oligarchs, troubled takeovers and patent disputes are all still rife in the City disputes scene and London remains as desirable as ever – even with political uncertainty, a stretched judiciary (see our piece on the recruitment crisis at the bench) and over-worked courts.
‘We have a very strong judiciary and a very strong legal profession so we remain the destination of choice for most sophisticated clients,’ says RPC head of commercial litigation Tom Hibbert, while conceding that the courts need investment.
To assess all these trends, Legal Business spoke with over 30 disputes partners in the City and researched more than 40 cases subject to significant hearings in 2019 and 2020. Are the usual suspects dominating or are new entrants disrupting as novel cases hit the English courts?
More of the same?
Almost all the partners Legal Business interviewed for this feature expect an economic downturn is on the horizon. The received wisdom is that as transactional practices slow in anticipation of a slump, litigators rub their hands.
While such a downturn would undoubtedly be significant, the majority stressed that other, more cutting-edge developments are more likely to become apparent in 2020. ‘There is an anticipated downturn where we’d expect litigation, but that’s from the cycle we’ve always seen,’ says the head of the UK public law practice at Allen & Overy, Andrew Denny. ‘What will be more interesting is, as the economy changes, we will see more AI disputes. How do you determine the liability for an algorithm? AI is huge.’
More pressing in the short term will be data abuse and data security, which relates heavily to the emerging group actions in the City. Fountain Court Chambers senior clerk Alex Taylor anticipates that cyber incidents could make up the majority of fraud cases in five years, a point Graham Huntley, founding partner of Signature Litigation, echoes: ‘It is one theme that will undoubtedly develop. Soon, the majority of fraud will be cyber fraud.’
‘We have a very strong judiciary and a very strong legal profession so we remain the destination of choice for most sophisticated clients.’
Tom Hibbert, RPC
And perhaps of more immediate interest is the future of litigation funding. Prominent cases, such as Merricks v Mastercard and the truck cartel litigation, are funded in part. If these cases go badly for the claimants, litigation funders will find their fingers burned. The attack on Burford Capital by Muddy Waters last summer has raised questions – the short-seller launched a broadside against the listed funders’ accounting practices in August 2019, resulting in more than £1bn being wiped off Burford’s value. Unsurprisingly, the resulting acrimony has been far from civil, but many in the market consider it an isolated case and that the wider rise of litigation funding remains assured.
It is also no accident that the emergence of litigation funding has coincided with boutiques becoming an established part of the disputes landscape over the last decade. ‘They’re now part of the terrain,’ says Fountain Court’s Bankim Thanki QC. Another City disputes partner at a US firm puts it in less diplomatic terms: ‘There’s a lot of ambulance-chasing law firms pursuing group action claims. You’ll see more of that. They have a bit of a formula and go out there and hunt claims.’
This may have come at the expense of the elite City firms. Many observers, particularly at the Bar, feel these players are less frequent litigators than they once were. Quinn Emanuel Urquhart & Sullivan, White & Case and Latham & Watkins are all cited as making significant inroads. Kirkland & Ellis, meanwhile, is seen as a sleeping giant for City disputes work.
However, it is class actions that many see as the key trend to watch for the next five years. The Supreme Court has opened the floodgates to foreign claims being exported to English courts, it is argued. And with boutiques and funders primed and ready, traditional firms and the courts themselves will have to be equally ready.
Additional reporting by Muna Abdi
TRUCK CARTEL INVESTIGATION
‘The first case that comes to mind is the one we call around here “trucks”,’ says Allen & Overy (A&O)’s Andrew Denny when asked for the year’s standout cases. Sprawling, complex and potentially very valuable, the case has absorbed many of the City’s best disputes counsel.
The origins of the claim lie in the European Commission’s €2.9bn fine in July 2016 for price fixing among six of the world’s largest truck manufacturers. The decision paved the way for compensation claims from those who had purchased or leased trucks from 1997 onwards. The six manufacturers are now facing a collective action claim brought by the Road Haulage Association (RHA) and UK Trucks Claims, and have lined up an array of disputes heavyweights to defend them.
In October 2019, the Competition Appeal Tribunal (CAT) laid down a marker, giving the go-ahead for the claimants to bring their case to court through litigation funder Therium. The defendants had argued the funding agreement entered into by the RHA was an unlawful damages-based agreement, but their grievances were dismissed by the CAT. However, the group action order is on ice until a decision is made in the Mastercard group action, which came first (see page 43).
For the defendants: Jonathan Hitchin (A&O); Bea Tormey and Nicholas Frey (Freshfields Bruckhaus Deringer); Caroline Edwards (Travers Smith); Kim Dietzel and Gregg Rowan (Herbert Smith Freehills); Boris Bronfentrinker (Quinn Emanuel Urquhart & Sullivan); Richard Swallow, Damian Taylor and Holly Ware (Slaughter and May).
Kelyn Bacon QC, Mark Hoskins QC and Sarah Ford QC (Brick Court Chambers); Brian Kennelly QC (Blackstone Chambers); Daniel Beard QC and Meredith Pickford QC (Monckton Chambers); Nicholas Bacon QC (4 New Square).
For the claimants: Mark Molyneux (Addleshaw Goddard); Tristan Feunteun (Weightmans); Edward Coulson (Bryan Cave Leighton Paisner); Scott Campbell and Anna Morfey (Hausfeld); Steven Meyerhoff (Backhouse Jones); Euan Burrows and James Levy (Ashurst).
James Flynn QC and Marie Demetriou QC (Brick Court), Rhodri Thompson QC (Matrix Chambers); Tim Ward QC (Monckton).
MERRICKS v MASTERCARD
While group-action claims are becoming more common in the UK market, Merricks v Mastercard could propel them into the mainstream of marquee disputes.
The £14bn consumer claim has been brought by former Financial Ombudsman Service head Walter Merricks, who hopes to reclaim funds for people aged over 16 who had used Mastercard and were overcharged on transaction fees between 1992 and 2008. The case is also the first US-style opt-out class action in the UK.
‘The Mastercard case will set the framework for class actions,’ says Travers Smith head of disputes Rob Fell. ‘It’s a really significant piece of litigation.’
In April 2019, Quinn Emanuel Urquhart & Sullivan landed victory for the claimants in the Court of Appeal – a win that overturned a previous decision by the Competition Appeal Tribunal, which stymied Quinn’s attempts to bring the consumer class action on behalf of Merricks.
The Mastercard case will set the framework for class actions.It’s a really significant piece of litigation.
Rob Fell, Travers Smith
In another twist, in July the Supreme Court granted Mastercard’s lawyers at Freshfields Bruckhaus Deringer the right to challenge the Court of Appeal’s decision. The keenly-awaited case now rumbles on into 2020 with hearings in May.
For Mastercard: Freshfields partners Jonathan Isted, Nicholas Frey and Mark Sansom, instructing Brick Court Chambers’ Mark Hoskins QC, Jon Lawrence and Hugo Leith, and One Essex Court’s Matthew Cook.
For the claimants: Quinn Emanuel partners Boris Bronfentrinker and Nicola Chesaites, instructing Monckton Chambers’ Paul Harris QC, and Brick Court’s Marie Demetriou QC and Victoria Wakefield QC.
LLOYDS BANKING GROUP/HALIFAX BANK OF SCOTLAND
Over the last decade, the fear factor associated with suing a bank has diminished. One standout example of this was the case brought against Lloyds Banking Group and five of its former directors by 5,800 of its shareholders over Lloyds’ acquisition of Halifax Bank of Scotland (HBOS) in 2008, as well as its participation in the UK Government’s bank recapitalisation scheme.
The claimants alleged Lloyds had been negligent in recommending the acquisition of HBOS was in the best interests of shareholders and it failed to disclose material or made misstatements about the merits of the acquisition. The information in question relates to a shareholder circular published by Lloyds in November 2008, which recommended shareholders vote in favour of the acquisition at an extraordinary general meeting.
The case was the first civil claim for compensation that has been brought by shareholders against the directors of a company regarding the contents of a circular or announcements. The claim was backed by Therium, supporting the oft-given view that litigation funders are responsible for an uptick in claims against banks. However, in November, the High Court rejected a £385m claim from investors after a five-month hearing and a prolonged wait for judgment. A complete victory for the bank.
‘People have become more courageous in taking on banks,’ says Travers Smith head of disputes Rob Fell. ‘For a long time, judges adopted the default position of assuming banks are the good guys, but that has changed.’
For Lloyds: Herbert Smith Freehills fielded head of litigation Damien Byrne Hill and partner Harry Edwards, who instructed Brick Court Chambers’ Helen Davies QC, Tony Singla and Kyle Lawson.
For HBOS: Harcus Sinclair partner Damon Parker instructed 4 Stone Buildings’ Richard Hill QC and Lara Hassell-Hart, as well as One Essex Court’s Sebastian Isaac and Erskine Chambers’ Jack Rivett.
HEWLETT-PACKARD v AUTONOMY
‘It’s a whopper of a case that’s been ongoing for a while,’ says Clifford Chance (CC) disputes veteran Jeremy Sandelson. As new trends make their creep into disputes, Hewlett-Packard vs Autonomy is an old-fashioned, high-value commercial tussle.
The case relates to Hewlett-Packard (HP)’s controversial acquisition of Autonomy in 2011 for $11.1bn, when entrepreneur Michael Lynch was chief executive of Autonomy and Sushovan Hussain was its chief financial officer. HP alleges that the reported financial performance of Autonomy was distorted by improper transactions and false accounting, meaning it overpaid by a hefty $5bn. The defendants, however, have argued the issues merely relate to differences between US and UK accountancy practices.
While judgment is eagerly awaited in the UK, a Californian court has already found Hussain guilty, jailing him for five years and fining him $4m in addition to forfeiting $6.1m. Hussain is currently on bail pending an appeal. Lynch has similarly faced criminal charges in the US and is currently pursuing a $160m claim in reputational damages from HP. In February of this year, Lynch vowed to fight an extradition request after handing over a £10m security to obtain bail.
Michael Lynch spent 20 days in the witness box in July, which is a long time for one individual.
Helen Carty, Clifford Chance
‘Lynch spent 20 days in the witness box in July, which is a long time for one individual,’ says CC’s head of City litigation Helen Carty. ‘There’s nothing particularly novel about the case – it’s the size and scale that makes it important.’
Deloitte has also come under fire for issues relating to the case. The Financial Reporting Council alleged in October that Deloitte failed to properly audit Autonomy. With the trial overrunning into January 2020, it is set to become the largest British civil fraud trial in history, while judgment is not expected before May.
For Autonomy: For Michael Lynch, CC fielded partner Kelwin Nicholls on the case, instructing 4 Stone Buildings’ Robert Miles QC and Richard Hill QC. Fountain Court’s Paul Casey, meanwhile, has been instructed by Simmons & Simmons partner Ian Hammond for Hussain.
For Hewlett-Packard: Travers Smith partners Toby Robinson, Andrew King, Jan-Jaap Baer and Stephanie Lee instructed One Essex Court’s Laurence Rabinowitz QC and Fountain Court’s Patrick Goodall QC.
TESCO FACES INSTITUTIONAL INVESTORS
In September 2014, Tesco was rocked by a financial reporting scandal after the supermarket’s senior management revealed it had identified an overstatement of its expected profit for the first half-year of 2014/15 to the tune of over £250m. The scandal caused £2bn to be wiped off Tesco’s market value, and institutional investors MLB and SL Investment Management are now pursuing an action against Tesco, with the pair claiming they have suffered significant losses as a result. The case is one of the first to be brought under new legislation designed to address serious corporate misstatements. The case is being bankrolled by a subsidiary of litigation funder IMF Bentham.
In September 2019, Freshfields Bruckhaus Deringer sought to have the case struck out, after filing in the High Court that Tesco was not liable for untrue or misleading statements. Tesco is rolling the dice one last time in early 2020, hoping the Court of Appeal will throw out the case. However, it is looking increasingly likely Freshfields will be pitted against Stewarts and Morgan, Lewis & Bockius in an 11-week trial in June.
For Tesco: Freshfields partner Ian Taylor instructed Maitland Chambers’ David Mumford QC and One Essex Court’s Michael Watkins and Niranjan Venkatesan.
For SL and MLB: Stewarts partner Sean Upson instructed One Essex Court’s Neil Kitchener QC. Morgan Lewis partner Peter Sharp was enlisted by MLB, with 3 Verulam Buildings’ Peter De Verneuil Smith QC among those instructed.
OKPABI & ORS v SHELL
‘Actions against parent companies in relation to the actions of their subsidiaries in developing regions is on the rise,’ observes Allen & Overy’s Andrew Denny. ‘I expect to see more of that with group actions, for example, for major environmental disasters.’
Royal Dutch Shell is facing one such case, brought against it by large groups of individuals alleging pollution from pipelines laid by Shell’s subsidiary in Nigeria. The claim is led by King Okpabi, the ruler of the Ogale community in Nigeria, who has sought to demonstrate Shell has a duty of care to those affected.
The claim suffered a major setback in February 2018 when the Court of Appeal held that the English court did not have jurisdiction to hear the claims. However, a decision this year means the case will be appealed at the Supreme Court in June 2020.
For Shell: Debevoise & Plimpton partner Lord Goldsmith QC instructed Sophie Lamb QC of Latham & Watkins.
For Okpabi: Leigh Day partners Martyn Day and Daniel Leader instructed Matrix Chambers’ Richard Hermer QC.
MORRISONS GROUP LITIGATION
Wm Morrison Supermarkets is on the wrong end of a large data and privacy claim, with around 5,000 employees taking action following the unlawful disclosure of their personal information by a rogue employee of the company.
In October 2018, the Court of Appeal upheld the High Court’s decision that Morrisons was vicariously liable for the employee’s actions. The implication is that an organisation can be responsible for data breaches even if it has taken appropriate measures to comply with data protection legislation.
However, the case was heard again in the Supreme Court in November 2019 – having been pending alongside the Okpabi v Shell and Mastercard disputes due to all three having legal similarities.
For Morrisons: DWF’s Andrew Harris instructed Anya Proops QC and Rupert Paines from 11KBW, while Blackstone Chambers’ Lord Pannick QC was instructed on the appeal.
For the claimants: JMW Solicitors partner Nick McAleenan is instructing 5RB’s Jonathan Barnes and Victoria Jolliffe.
POST OFFICE GROUP LITIGATION
In another significant group action, The Post Office has faced claims from workers responsible for running branches who were required to use a computerised electronic point-of-sale and accounting system called Horizon. The claimants alleged that the Horizon system contained a significant number of software coding errors and defects, which resulted in apparent shortfalls and discrepancies in the accounting of different branches.
The High Court handed down its first significant judgment on the matter in March 2019, with the decision upheld against The Post Office in November. However, in December The Post Office settled the case, choosing to pay £55.8m in damages after days of mediation after the Court of Appeal upheld a previous judgment.
For the claimants: Freeths disputes partner James Hartley instructed Patrick Green QC of Henderson Chambers.
For the Post Office: Womble Bond Dickinson partner Andrew Parsons and Herbert Smith Freehills partner Alan Watts instructed Helen Davies QC of Brick Court.
PCP CAPITAL v BARCLAYS
‘There’s a trend of increased allegations of fraud,’ says Bryan Cave Leighton Paisner litigation partner Graham Shear. ‘Fraud is engaging and overlapping with regulatory issues. People used to be very conservative about pleading fraud, but I almost don’t see a case without it now.’
Barclays Bank is facing one such instance of a serious fraud allegation. The case is a $1bn claim brought by City dealmaker Amanda Staveley on behalf of her firm PCP Capital Partners. Staveley is suing for alleged fraudulent misrepresentation and deceit over arrangements made with Qatar in 2008, which helped the bank avoid a taxpayer bailout.
Fraud is overlapping with regulatory issues. People used to be very conservative about pleading fraud, but I don’t see a case without it now.
Graham Shear, BCLP
The case will now be subject to an eight-week trial in the High Court in June.
For Barclays: Richard East of Quinn Emanuel Urquhart & Sullivan instructed Joe Smouha QC of Essex Court Chambers.
For PCP Capital: Simmons & Simmons senior partner Colin Passmore instructed 3 Verulam Buildings’ Ewan McQuater QC.
SINGULARIS HOLDINGS v DAIWA CAPITAL
In October 2019, the Supreme Court handed down a significant decision concerning the ‘Quincare duty’ – the duty a bank owes to a customer in relation to payment instructions that give rise to a suspicion of fraud.
The case concerns whether a stockbroker who made payments to third parties out of a designated account held on behalf of a company was liable in negligence after the company went into liquidation. In 2017, the High Court found against Daiwa Capital Markets Europe for in excess of $150m for its failure to prevent misappropriations out of Singularis Holdings’ account – a breach of Daiwa’s Quincare duty of care to Singularis. This decision was then upheld in the Court of Appeal in 2018.
In October 2019, the Supreme Court upheld the decision once more. This remains the first and only case in which a bank has been found liable for breach of this duty, and sets the bar high for responses to a Quincare claim.
For Daiwa: Jenner & Block partners Christian Tuddenham and Kelly Hagedorn instructed Jonathan Crow QC and Andrew de Mestre QC of 4 Stone Buildings.
For Singularis: Ashurst partners James Levy and Jon Gale instructed John McCaughran QC of One Essex Court.
JET2 v CIVIL AVIATION AUTHORITY
Airline Jet2.com has requested a judicial review against the Civil Aviation Authority (CAA) for alleged abuse of power over adverse publicity arising from a press release and contact by the CAA with newspaper the Daily Mail.
The matter arose after the CAA published a press release alongside a review of its new alternative dispute resolution scheme for customer complaints, criticising airlines and Jet2 in particular. Jet2 has sought disclosure of internal communications, including a draft of a letter sent by the CAA to Jet2 that formed the basis of the press coverage.
In a very significant ruling for the nature of legal privilege, the High Court last year ruled that, as the letter had been sent internally to lawyers and non-lawyers, any response from the non-lawyer is not privileged. The CAA asked for permission to challenge the ruling, resulting in the Court of Appeal conducting hearings in early December 2019. However, the Court of Appeal upheld the judgment following a decision in January of this year.
For the CAA: Mayer Brown partner William Glassey instructed Fountain Court Chambers’ Tamara Oppenheimer.
For Jet2: Charles Béar QC and Nicolas Damnjanovic, also of Fountain Court, were instructed by Norton Rose Fulbright’s Robin Springthorpe.
SLATER AND GORDON v WATCHSTONE
The long-running saga around Slater and Gordon (S&G)’s troubled Quindell acquisition settled on the eve of trial in October, for a slither of the original claim. The dispute arose from the deal in 2015, with S&G issuing a claim for breach of warranty and/or fraudulent misrepresentation of the whole amount paid for the professional services division. The settlement between the pair saw S&G receive less than 2% of the original £637m claim – with Watchstone Group receiving £39m of the £50m that had been held in escrow.
The apparent turning point was when Watchstone was granted permission to pursue a counter claim in September 2019, alleging an ‘illicit back channel’ S&G corporate finance adviser Greenhill & Co had used to get confidential information about the company from Watchstone’s restructuring adviser, PwC.
For Watchstone: Tim Maloney and Matthew Blower of Dorsey & Whitney instructed Tim Lord QC of Brick Court Chambers.
For S&G: CMS Cameron McKenna Nabarro Olswang partner Jeremy Mash instructed Simon Salzedo QC of Brick Court.
HUAWEI v CONVERSANT
Chinese telecoms business Huawei has teamed up with Chinese co-defendant ZTE Corporation to challenge US marketing company Conversant on jurisdictional grounds relating to a number of essential patents that the defendant holds. Crucially, a Supreme Court case rests upon whether an English court has power or jurisdiction to enforce fair, reasonable and non-discriminatory terms by reference to a global portfolio of standard essential patents. In November 2019, a technical trial in the High Court ruled in favour of Conversant that two patents were essential and infringed.
For Huawei: Allen & Overy partners Mark Heaney, Neville Cordell and Mark Ridgway are instructing 8 New Square’s Daniel Alexander QC and Michael Tappin QC, as well as Monckton Chambers’ Daniel Beard QC among others.
For Conversant: EIP partners Robert Lundie Smith and Gary Moss instructed 8 New Square’s Adrian Speck QC and Brick Court Chambers’ Sarah Ford QC.
RGL MANAGEMENT v CLYDESDALE BANK AND NATIONAL AUSTRALIA BANK
Another class action has seen around 150 companies launch a lawsuit in the High Court against Britain’s Clydesdale Bank and its former owner, National Australia Bank (NAB), alleging they were deceived when they took business loans from the bank up to 18 years ago.
RGL Management is managing the group claim for the small and medium-sized businesses. Litigation funder Augusta Ventures, meanwhile, has previously put £2.7m into the group claim against Clydesdale. The issue of whether banks are entitled to charge break costs on early termination by customers of fixed rate loans is one of wider interest to UK banks.
Though no trial date has been set, both NAB and Clydesdale have filed their defences after claims were filed with the High Court in May. The claimants have since served a reply on 31 January 2020.
For Clydesdale Bank and NAB: Herbert Smith Freehills partner Simon Clarke is representing NAB, instructing Patrick Goodall QC and Natasha Bennett of Fountain Court Chambers. DLA Piper partners Adam Ibrahim and Chris Harvey are acting for Clydesdale, with Ian Wilson QC of 3 Verulam Buildings instructed.
For the claimants: Michelmores partner Garban Shanks is representing RGL, with Andrew Onslow QC and Lisa Lacob instructed, also of 3 Verulam Buildings.
PRIVATBANK v KOLOMOISKY AND BOGOLYUBOV
In a case concerning the jurisdiction of English courts, the Court of Appeal decided in October that PrivatBank’s fraud and conspiracy claims against its former shareholders Igor Kolomoisky and Gennadiy Bogolyubov could proceed to trial in England.
The decision overturned a previous judgment in 2018 and opens the way for the bank to recover $1.9bn, which it alleges was lost due to fraudulent activity by its former owners. The Court of Appeal also declared that the decision over jurisdiction could not be appealed, with defendants ordered to have their case ready by the end of November 2019.
For Kolomoisky and Bogolyubov: Fieldfisher’s Andrew Lafferty and Arik Aslanyan are instructing Mark Howard QC of Brick Court Chambers; Enyo Law’s Simon Twigden and George Maling turned to Daniel Jowell QC of Brick Court; while Stuart McNeill and Alan Sheeley at Pinsent Masons have instructed Sonia Tolaney QC of One Essex Court.
For PrivatBank: Hogan Lovells’ Richard Lewis and Rebecca Wales have instructed Lord Pannick QC and Andrew Hunter QC of Blackstone Chambers.
UKRAINE v RUSSIA EUROBOND CASE
In late 2013, Ukraine was on the verge of signing an association agreement with the EU. However, the agreement was never signed, with Ukraine instead accepting Russian financial support under what it alleges was ‘massive, unlawful and illegitimate’ economic and political pressure from Russia.
When Russia invaded Crimea in 2014, Ukraine could not meet its obligations to repay the $3bn Eurobond at maturity due to the conflict’s adverse effects on tax revenues. Russia then brought proceedings against Ukraine in England. In 2018, the Court of Appeal overturned a previous ruling in favour of Russia, which decided Ukraine had not offered a defence that was justiciable. The Supreme Court will now decide if the case will go to full trial, after both parties made their case for four days in December.
For Ukraine: Quinn Emanuel Urquhart & Sullivan partner Alex Gerbi instructed Bankim Thanki QC of Fountain Court Chambers and Ben Jaffey QC of Blackstone Chambers.
For the Russian government: Norton Rose Fulbright partner Michael Godden instructed Brick Court Chambers’ Mark Howard QC. Cleary Gottlieb Steen & Hamilton is acting for the Russian government with a team featuring partners David Sabel and Jonathan Kelly.
NIGERIA V JPMORGAN CHASE
In another alleged breach of ‘Quincare’ duties (see Singularis v Daiwa, above) the Federal Republic of Nigeria alleges JPMorgan Chase & Co enabled the misappropriation of state funds totalling $875m. In October 2019, the Court of Appeal upheld the lower court’s decision that Nigeria has ‘reasonable grounds’ for pursuing a claim in the High Court.
The bank had hoped to have the case struck out, arguing the Nigerian authorities had received sufficient approval before permitting the funds be transferred from a government. A trial will now go ahead in due course.
For JPMorgan Chase: Freshfields Bruckhaus Deringer partner Sarah Parkes instructed Rosalind Phelps QC of Fountain Court Chambers.
For the Federal Republic of Nigeria: RPC partners Tom Hibbert, Jonathan Cary and Alan Williams instructed Roger Masefield QC of Brick Court Chambers.
INGENIOUS MEDIA v HMRC
A series of Ingenious Media LLPs are locked in a long-running dispute with HMRC over a series of investment schemes promoted by the Ingenious group. The schemes involved investments in a series of blockbuster films, including Avatar, Life of Pi and Die Hard with a Vengeance between 2000 and 2013. The dispute relates specifically to whether certain tax reliefs were available to investors in these schemes, with the Upper Tribunal Tax and Chancery Chamber finding they were not.
The latest instalment was a three-week hearing in spring 2019, resulting in a victory for HMRC that could see as much as £450m recovered in unpaid tax. In total, approximately £1bn is at stake. The LLPs have sought permission to appeal the ruling at the Court of Appeal, with a decision expected early in 2020.
For HMRC: HMRC Solicitor’s Office instructed One Essex Court’s Malcolm Gammie QC, Wilberforce Chambers’ Jonathan Davey QC and Maitland Chambers’ Catherine Addy QC.
For Ingenious Media: White & Case’s Hannah Field-Lowes has instructed Brick Court Chambers’ Mark Howard QC the lead counsel.
IPCom v VODAFONE
In a high-stakes intellectual property dispute, German patent licensing firm IPCom is taking Vodafone to court, alleging the British mobile operator infringed on its 4G/LTE patents.
The patent in question relates to how mobile phones access the 4G network and describes the way in which emergency service calls are prioritised on the network. IPCom has previously taken Nokia to the High Court, resulting in a partial victory for IPCom. The case was scheduled for a trial in November, while the proceedings have been expedited since the patent in question expires in February 2020.
For IPCom: Bristows partner Myles Jelf instructed 11 South Square’s Piers Acland QC.
For Vodafone: Daniel Brook of Hogan Lovells instructed Jemima Stratford QC of Brick Court Chambers.
ENRC v SFO AND DECHERT
Extending an existing saga between the trio, in spring 2019 the Eurasian Natural Resources Corporation (ENRC) filed a £70m High Court claim accusing the Serious Fraud Office (SFO) of misfeasance in public office, while a separate claim exists against law firm Dechert.
The claim centres on the relationship between the SFO and Dechert, which had previously advised ENRC. It is alleged that Dechert partner Neil Gerrard passed confidential information to senior officials at the SFO while ENRC was subject to investigations of fraudulent activity.
The ENRC alleges the SFO failed to act in accordance with its powers and objectively, and also claims any documents obtained by the SFO from Dechert and/or Gerrard should not be published. The misfeasance claim was heard over the summer of 2019. The case presents a serious reputational risk to the industry’s regulator.
For ENRC: Hogan Lovells partner Michael Roberts instructed Stephen Smith QC of Erskine Chambers and Richard Lissack QC of Fountain Court Chambers.
For the SFO: Simon Colton QC of One Essex Court was instructed by the SFO.
ASDA EQUAL PAY LITIGATION
With gender pay disparities increasingly receiving attention across multiple industries, Asda is facing allegations that the work performed by women in its supermarkets is of equal value to that of men who work in warehouses. In August 2019, Asda was given permission to appeal in the Supreme Court the decision that the work is of equal value. Previously, Asda has lost the claim three times across the Employment Tribunal, Employment Appeal Tribunal and the Court of Appeal.
Similar actions are now being brought against Tesco and Wm Morrisons Supermarkets.
For the claimants: Leigh Day partners Chris Benson and Michael Newman instructed Andrew Short QC of Outer Temple Chambers.
For Asda: Gibson, Dunn & Crutcher partners Philip Rocher and Osma Hudda instructed Christopher Jeans QC of 11KBW.
ASSETCO v GRANT THORNTON
Grant Thornton is among those embroiled in a dispute at a time when the audit industry is under intense scrutiny, with the accounting firm in an ongoing conflict with fire and emergency provider AssetCo. AssetCo had sought damages of around £30m (in addition to interest and costs) against Grant Thornton, alleging negligent conduct over AssetCo’s audits in 2009 and 2010. In January 2019, the High Court found against Grant Thornton, with ‘loss of chance’ principles part of the assessed damages.
Grant Thornton was subsequently given permission to challenge the decision at the Court of Appeal, with the Court now preparing a judgment following a hearing in January.
For AssetCo: Mishcon de Reya partner Mark Davis instructed Mark Templeman QC of Essex Court Chambers, and Tom Pascoe and Richard Blakeley of Brick Court Chambers.
For Grant Thornton: James Roberts of Clyde & Co instructed Brick Court’s Simon Salzedo QC.
THE FINANCIAL REPORTING COUNCIL v SPORTS DIRECT
Sports Direct again is under heavy scrutiny, this time with two regulators criticising its accountants and compliance with rules on inside information.
The retailer’s latest accounts have been questioned by The Financial Reporting Council (FRC) about how its auditor, Grant Thornton, valued its holding in Debenhams, which collapsed in 2019. The regulator has also contacted Sports Direct querying its disclosure information involving a possible bid for the department store chain last year.
In a significant decision for legal privilege, the High Court held that an audit client could not withhold documents on grounds of privilege when responding to a notice requiring the production of documents involving an investigation into the auditor’s conduct. However, the Court of Appeal has subsequently overruled the High Court’s decision, agreeing with Sport Direct’s position. But the victory was only partial, as the court did not support the retailer’s secondary claim that non-privileged documents attached to a privileged email were subject to legal privilege. Both parties are now seeking permission to appeal the decisions at the Supreme Court.
For the FRC: Fountain Court Chambers’ Mark Simpson QC was instructed by David Salcedo, senior enforcement lawyer of the FRC.
For Sports Direct: Fountain Court’s Richard Lissack QC was instructed by Jonathan Cary, Lucy Kerr and Jeremy Drew at RPC.
AVONWICK HOLDINGS v TARUTA & ORS
‘Oligarch v oligarch litigation is coming to an end,’ says Stephenson Harwood partner John Fordham. ‘But there’s still some of it about.’
One such case sees three billionaires who accumulated wealth from one of the largest industrial corporations in Ukraine face off. The claim arises from Avonwick alleging misrepresentation, deceit and conspiracy to injure against corporate vehicles Azitio Holdings and Dargamo Holdings over the purchase price paid to the claimant for its interest in Industrial Union of Donbass.
Accumulatively the claims are worth in excess of $1bn. The case was listed for a seven-week trial in October 2019 in the Commercial Court.
‘Oligarch v oligarch litigation is coming to an end, but there’s still some of it about.’
John Fordham, Stephenson Harwood
For Avonwick Holdings: Quinn Emanuel Urquhart & Sullivan partners Nick Marsh and Khaled Khatoun instructed Neil Calver QC and Stephen Midwinter QC of Brick Court Chambers.
For Taruta & ors: Hogan Lovells partner Michael Roberts instructed David Foxton QC and Nathan Pillow QC of Essex Court Chambers. Covington & Burling partners Craig Pollack and Greg Lascelles instructed David Wolfson QC of One Essex Court.
LLOYD v GOOGLE
In October 2019, the Court of Appeal allowed Which? executive director Richard Lloyd to pursue a claim against Google, in a case that could open the floodgates for privacy class actions.
The claim relates to Google’s use of a technical workaround to bypass the cookie settings on the Safari internet browser and place tracking cookies without an individual’s knowledge or consent. This clear breach of privacy laws by Google meant the company was fined by US regulators.
The breach opened the way for Lloyd to launch an ‘opt-out’ representative action against Google. With more than four million affected individuals in England and Wales, the claim could lead to a liability for
Google in excess of £3bn. The Court of Appeal’s judgment overruled a decision laid down by the High Court, which had dismissed the claim as ‘officious litigation, embarked upon on behalf of individuals who have not authorised it and have shown no interest in seeking a remedy for, or even complaining about, the alleged breaches’.
There’s an increase in cases that see a small harm to a large number of people.
Rupert Lewis, Herbert Smith Freehills
However, the Court of Appeal decided the case should proceed due to the wholesale and deliberate misuse of personal data without consent. Google will now have to go toe-to-toe with Lloyd in a high-stakes dispute, with the court treating privacy matters with a new sense of severity. Therium is once again funding
the dispute.
‘There’s an increase in cases that see a small harm to a large number of people,’ says HSF partner Rupert Lewis. ‘We’re seeing the real start of group litigation becoming a big thing in this jurisdiction.’
For Lloyd: Mishcon de Reya partner James Oldnall instructed Matrix Chambers’ Hugh Tomlinson QC, Henderson Chambers’ Oliver Campbell QC and Brick Court Chambers’ Victoria Wakefield QC.
For Google: Pinsent Masons partner David Barker is working with Google, instructing Matrix duo Antony White QC and Edward Craven.
AMJAD RIHAN v EY
In a case that will increase scrutiny of accountancy firms, former EY partner Amjad Rihan has brought a claim against EY alleging he was forced out of the Big Four firm after identifying violations committed by audit client Kaloti Jewellery International.
Rihan alleges his findings uncovered cash transactions worth billions of dollars, transactions with countries such as Iran without due diligence and the importation of large quantities of gold from Moroccan suppliers which had been made to look like silver to avoid export restrictions.
According to Rihan, EY was complicit in letting the Dubai authorities intervene in the audit of Kaloti and helped ensure that the major audit findings were not reported to the relevant authorities. EY denies the allegations. The firm claims the audit was conducted in a lawful and consistent manner against the standards laid down by the Dubai regulator.
The case is regarded as an illustration of the growth in litigation based on employee whistleblowing.
For EY: Orrick Herrington & Sutcliffe partner Simon Willis instructed One Essex Court’s Daniel Toledano QC.
For Amjad Rihan: Leigh Day partner Daniel Leader instructed 4 New Square’s Ben Hubble QC and Matrix Chambers’ Zachary Douglas QC among others.
CIS GENERAL INSURANCE v IBM UNITED KINGDOM
While data breaches have been partly responsible for some notable group actions, the wider adoption of technology has also resulted in more conventional commercial disputes.
CIS General Insurance vs IBM United Kingdom is one such instance. The £130m dispute relates to claims that IBM was responsible for the failed implementation of a major cloud-based insurance platform for the Co-op group, which CIS had belonged to.
However, IBM alleges the responsibility for the failed adoption of the technology lies with CIS, making for an acrimonious case study into who is liable for failures in technology adoption. The case is set for a seven-week hearing in the High Court in March.
For IBM United Kingdom: CMS Cameron McKenna Nabarro Olswang partner Guy Pendell instructed 4 Pump Court’s Nigel Tozzi QC and Twenty Essex’s Lawrence Akka QC among others.
For CIS General Insurance: Addleshaw Goddard partner Susan Garrett instructed 4 Pump Court’s Alex Charlton QC.
FOREX RIGGING LITIGATION
‘It’s not that class actions are on the rise particularly,’ says Quinn Emanuel Urquhart & Sullivan co-London managing partner Ted Greeno. ‘But you are seeing a lot of follow-on cases, and we’re acting on many of the larger ones.’
Group actions may remain very much the exception, not the rule, in major litigation, but when the cases do hit, they tend to be barnstormers.
One such case relates to three separate claims against a group of banks, which is due to hit the courts this year. The dispute has parallels with the trucks litigation, with two separate decisions from the European Commission (EC) opening the way for claimants to pursue follow-on damages.
The EC decided in May 2019 to fine five banks for taking part in two cartels in relation to the Spot Foreign Exchange market; accusing them of rigging forex rates in the aftermath of the 2008 financial crisis. The defendant banks are Barclays, The Royal Bank of Scotland, Citigroup, JP Morgan and MUFG Bank. The EC stated the decision sent ‘a clear message that the Commission will not tolerate collusive behaviour in any sector of the financial markets’.
As a result three group claimants – comprised of pension funds, asset managers, hedge funds and corporates – are now taking the banks to court to prove they have been impacted by the alleged rigging.
Quinn Emanuel is representing one of the claimants and has filed its case in the High Court, while Scott+Scott and Hausfeld have filed claims in the Competition Appeal Tribunal (CAT). Both the CAT and High Court proceedings seek permission for claims for damages in light of the competition law infringements determined by the EU.
For the defendants: Tom Usher (Macfarlanes), Ewan Brown (Slaughter and May), Philip Rocher and Doug Watson (Gibson, Dunn & Crutcher), Philip Mansfield and Arnondo Chakrabarti (Allen & Overy).
Daniel Jowell QC (Brick Court Chambers), Dinah Rose QC and Brian Kennelly QC (Blackstone Chambers), Daniel Beard QC (Monckton Chambers) and Richard Handyside QC (Fountain Court) are among those instructed.
For the claimants: David Scott (Scott + Scott), David Lawne (Hausfeld), Boris Bronfentrinker (Quinn Emanuel).
Aidan Robertson QC, Victoria Wakefield QC and Marie Demetriou QC all of Brick Court are among those instructed.