Tag: London

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Third-Party Funding of Construction Disputes: An Overview of Litigation and Arbitration Finance
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Materials Available: 2015 Legal Update – Construction and Engineering Seminar
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Update on Legal Advice Privilege
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Adjudicator Has No Jurisdiction Because Of “A Very Strong Prima Facie” Case Of Fraudulent Misrepresentation At Appointment Stage

Third-Party Funding of Construction Disputes: An Overview of Litigation and Arbitration Finance

By Ian Meredith, Benjamin T. Mackinnon, K&L Gates, London

Introduction

Over the last decade, financing for commercial and investor-state arbitration / litigation claims has grown into a significant industry in certain jurisdictions with hundreds of cases now being funded by specialist investment funds (known as ‘third-party funders’). The benefits of third-party funding go well beyond solely the provision of funds to claimants who may otherwise be unable to bring worthy claims, and many commercial parties now use third-party funding as a means of managing risk. The increased availability of third-party funding and the potential to negotiate tailored solutions means that it is now becoming a routine issue for consideration at the outset of disputes and often before they even exist.

Over the course of several articles, we will examine some of the specific issues relevant to determining whether third-party funding is appropriate for your dispute, how best to approach third-party funders, and some of the issues that can arise during the course of a claim being supported by a third-party funder.

This article will provide an overview of third-party funding and highlight why it is becoming increasingly relevant for in-house lawyers dealing with construction disputes. The next articles in the series will examine some of the specific issues that can arise in respect of third-party funding and how best to approach funders.

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Materials Available: 2015 Legal Update – Construction and Engineering Seminar

On 7 October 2015, the K&L Gates London office held a 2015 Legal Update – Construction and Engineering breakfast seminar.  The seminar featured the following topics:

  • CDM 2015: The End of the Transition – Nicola Ellis, Special Counsel
    The Construction (Design and Management) Regulations 2015 came into force on 6 April. This session highlights the key changes that were introduced, the practical effects of those changes and the consequences of the transitional provisions coming to an end on 6 October.
  • Construction Law UpdateInga Hall, Special Counsel
    A summary of some of the recent key construction and engineering cases that have come before the courts, and the implications of those decisions.
  • The NEC3 Suite: Beyond the ECC – Matthew Smith, Partner
    This session looks at the true range of options the NEC3 suite of contracts offers and gives an insight into which issues are addressed consistently across the suite, and highlights the key differences between specific forms.

To view a copy of the materials from this seminar,  please click here.

Update on Legal Advice Privilege

By Mike R. Stewart and Nita Mistry, K&L Gates London

In common law jurisdictions, legal professional privilege prevents communications between a professional legal adviser and their clients from being disclosed.  There are two main types of privilege:

  • Legal advice privilege, which protects confidential communications between lawyers and their clients; and
  • Litigation privilege, which protects confidential communications, provided that such communications have been created for the dominant purpose of obtaining legal advice for litigation.

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Adjudicator Has No Jurisdiction Because Of “A Very Strong Prima Facie” Case Of Fraudulent Misrepresentation At Appointment Stage

By Mike R. Stewart and Mary E. Lindsay, K&L Gates, London

Eurocom Limited v Siemens PLC

[2014] EWHC 3710 (TCC)

http://www.bailii.org/ew/cases/EWHC/TCC/2014/3710.html

It is never easy to resist an action for enforcement of an adjudicator’s decision.  Speed and certainty are central tenets to the adjudication mechanism provided by the Housing Grants Construction and Regeneration Act 1996.  However, the judgment in the recent case of Eurocom Limited v Siemens PLC shows that the courts will not put enforcement of the adjudicator’s decision above basic legal principles.

The dispute arose in relation to a sub-contract allowing for the installation of communication systems in the London Underground.  Siemens terminated the sub-contract in August 2012.  A first adjudication took place and the decision made on 27 September 2012.  That decision provided that a net sum was due from Eurocom to Siemens.  Eurocom served a second notice of adjudication on 21 November 2013 and it was that adjudication that gave rise to these enforcement proceedings.

In the enforcement proceedings the judge considered, amongst other things, whether appointment of the second adjudicator was valid.

The adjudicator was appointed under the RICS’s nomination procedure.  This required Knowles, acting for Eurocom, to complete a form in which it was asked to identify “any Adjudicators who would have a conflict of interest” in the case (who would not thereby be appointed).  A number of adjudicators, the adjudicator in the first adjudication (who might very well and sensibly have been appointed as adjudicator in the second adjudication) and a firm of solicitors were listed in this section of the form.  The form was not initially shared with Siemens. 

However, it subsequently came to light and it transpired that the adjudicators identified did not in fact have a conflict of interest in the case.  Knowles accepted they did not “properly” answer the question asked by the RICS about conflicts of interest, but merely referred to people without any conflicts who they did not want to be appointed. 

Siemens’ primary case was as follows:

  • The application form sent to the RICS by Knowles seeking the appointment of an adjudicator misrepresented to the RICS that a number of individuals had a conflict of interest;
  • This was a false statement, made deliberately and/or recklessly by Knowles; and
  • A nomination based upon such a fraudulent misrepresentation is invalid and a nullity, such that the adjudicator has no jurisdiction.

The Court decided the point as follows (at para 65 of the judgment):

“… there is a very strong prima facie case that [Knowles] deliberately or recklessly answered the question “Are there any Adjudicators who would have a conflict in this case?” falsely and that therefore he made a fraudulent representation to the RICS as the adjudicator nominating body.”

The Court said that the consequence of this was as follows (at para 75 of the judgment):

“… I conclude that the fraudulent misrepresentation would invalidate the process of appointment and make the appointment a nullity so that the adjudicator would not have jurisdiction.”

The Court also agreed with Siemens’ alternative case that the completion of the form gave rise to a breach of an implied term to act honestly.  Here the Court referred to the judgment in Makers v Camden (at [29(7)]) that there might be an implied term “by which the party seeking a nomination should not suborn the system of nomination”.  Eurocom, through its advisors, had sought through fraudulent misrepresentation to influence the discretion to be applied by the appointing body, the RICS.  Eurocom should not benefit from this benefit and the appointment of the adjudicator was invalid.

The ramifications of this decision will be keenly monitored by the industry. 

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