International disputes ending up in London courts

International trade – disputes end up in London

Post by Gannons, who are specialist partnership agreement solicitors.

Is it because London is one of the top financial centers, is it the English language, is it a reflection of the global economy which now intertwines us all or is it that the English legal system is genuinely seen as the best in the world ? Whichever, or a combination of these factors, it seems that London is at the centre of litigation matters with an international element.

Government figures suggest that 9 out of 10 commercial cases involving London based law firms now have an international aspect.

The Ministry of Justice said a new high court building in London is the biggest dispute resolution centre in the world which deals with commercial disputes.  It seems that much of this litigation emanates from arbitration clauses in big commercial contracts, and that such clauses commonly nominate the English legal system for arbitrating high value and/or complex disputes, often involving shipping or insurance issues, which ties in with the pre-eminent position of London as a financial and insurance hub.

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E-commerce law

E-commerce

The exponential growth in the World Wide Web in the last decade and a half, the developments in Internet shopping and the general adaptation to online contracting by commercial parties and the consumer alike, arguably may be the most fundamental change to commercial activities in centuries.

The very real difficulty with e-commerce is that parties can come to agreements without regard to national frontiers or distance; so can the parties simply forget about law and have a fine old time trading together? Clearly that would never work, because there would no legal way in which the parties could either enforce the contract or settle disputes.

Consequently, all the major trading countries of the world have had to wrestle with the problem of applying legal systems to e-commerce, but there are still very wide differences in the approaches taken under different national legal systems.

A distinction that should be raised is between the use of websites and the use of simple communication between the parties by electronic means, such as e-mails. Most of the controlling legislation in this area is aimed at the former, by reference to ‘information society services’ (ISS’s) which covers most of the business activity being carried out by the use of websites.

Although the internet is supra-national, every contract requires an applicable law before it can be legally analysed. If the applicable jurisdiction is to be the UK, the law of offer and acceptance in contract, works in exactly the same way in e-commerce. Thus the important features of a contract in relation to e-commerce will be:

Offer or invitation to treat?

If the matter is transacted by e-mail, this is decided by whether the communication is an expression to contract on specified terms, made with the intention that it becomes binding as soon as it is accepted by the person to whom it is addressed. If it is anything less than this it is seen as an invitation to treat not an offer.

With a website, the details displayed by the supplier are much more likely to have been designed as an invitation to treat. Therefore the customer is required to make the offer, usually establishing their identity and receiving payment assurance, before the seller will enter into the contract by acceptance.

Acceptance

In exchanges by e-mail, acceptance occurs when the offeree does the last act that is seen as contemplated by the parties; if that is acceptance by letter, the last act is posting the letter; if it is during a course of e-mails, the last act is the sending of the acceptance message

In relation to a website it is seen that acceptance may take place at the earliest time at which the customer can access the supplier’s acknowledgment of the order/offer, regardless of whether the customer actually does so.

Incorporation of terms

In general the same rules are likely to be applied to the incorporation of terms as in other contractual circumstances, including the court’s jurisdiction to decide about the ‘battle of forms’ where standard-form contract terms are involved.

Most commercial transactions do not require formal execution by signature as a matter of law, but there are circumstances in which a signature may be required, either by the terms of the contract, or by common law or by statute. Some statutory requirements for a ‘signature’ and ‘writing’ can, it seems, be met by e-mail exchanges as was in the case of Mehta v J Pereira Fernandes SA [2006] although on the facts of the case an e-mail address not contained in the body of the message did not comprise a ‘signature’ for the purpose of the Statute of Frauds 1677 s.4.

The security aspects of many online contractual arrangements and negotiations can be of extreme importance, and the problem may become even greater where bank details or the availability of a person’s electronic signature are concerned.

In relation to jurisdiction in an e-commerce contract, primacy is given to the choice of law of the parties, subject only to the interposition of mandatory rules of law.

More can be found on this topic on this site.

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Watch your tweets !

Watch what you tweet or post online

Whilst there is not a high volume in libel cases in England & Wales (primarily because it is so expensive and risky to litigate for libel, so it is largely the preserve of the rich and famous), the number is comparatively rising fast as a result of ill-considered posts online in social media.

Many people seem to think that :-

  • There is safety in numbers i.e if others are saying the same thing you are safe
  • That they will be anonymous online
  • If newspapers hint at something this means it can be taken as fact

In addition, the speed at which people communicate online means that often people forget natural caution and don’t stop to think whether they should hit their internal “pause button”.

Sweet & Maxwell, the legal publisher, has reported that libel cases relating to online libel in the UK have doubled recently from from 3 in 2008-09, to 7 in 2009-10. We believe these figures will be dwarfed by this year where there have been numerous incidences highlighted and the pace of online chatter and gossip has risen sharply.,

It should also be noted that companies and individuals have become very aware of the possibility of their reputations being damaged online and are monitoring much more closely, which again indicates that unless a  more prudent approach is taken online, this could be the tip of the iceberg.

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Opportunist fraud

Be aware of a new potential fraud to face the misery of Londoners reeling from London riots.

This type of fraud is known as Opportunist Fraud.

If it was not enough that those who have been humiliated, defiled, and have lost their homes and businesses from those looters who felt that it was their right to take what was theirs because society somehow owed them, groups are set up for you to give money to aid those in need who are not what they seem.

Whilst there are truly good and genuine organisations who have responded to the call for aid, there are a number of fake organisations arising whose intentions are to give nothing to those in need, but instead to line their pockets because an opportunity has arisen to do so.

What to look out for :

1. Is the organisation a registered charity?

2. Are they known to you, locally?

3. Do you have a specific name, number, and address?

4. Does the organisation have a Bank account, or are they simply asking for cash?

5. Are the people who approach you, doing so via an unsolicited telephone call, or a knock on your door?

6. Are those callers pushy to obtain payment, and over-dramatic in their plea for funds?

If in doubt, contact your local Police Station, and/or your local Trading Standards Officer and make a complaint. If possible, make appropriate business checks before entering intro any significant financial transaction.

According to the Association of Certified Fraud Examiners, 1 in 100 fraudulent calls, are reported, and 1 in 20 fraudulent calls are successful in obtaining funds from you for ulterior motives.

The writer is Partner and Head of Litigation at Darlingtons, a working member of the Fraud Advisory Panel, and an Associate member of the Association of Certified Fraud Examiners.

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Commercial agent regulations

Commercial Agents (Council Directive) Regulations 1993

The Commercial Agents (Council Directive) Regulations 1993 (Commercial Agents Regulations) were introduced in 1993 as an E.U. directive, to be applied along with all other member states. The dominant purposes of the Commercial Agents Regulations are to provide some clarity and protection to agents during the relationship and upon termination.

It is often the case that principals are not fully aware of the Commercial Agents Regulations and their obligations/liabilities. Seeking advice once they have terminated an Agent’s contract is simply too late. It is important to seek advice at the time of entering into and/or drafting an agreement with the Agent. Failure to do so can lead to very substantial liabilities.

Commercial Agents Regulations apply to anyone who is a self employed intermediary, with continuing authority to negotiate the sale or purchase of goods on behalf of another person (the Principal) or to negotiate and conclude the sale and purchase of goods on behalf of the Principal.

If a business has contracted with an Agent, then they must understand the obligations prior to terminating such an agreement. If they do not, the Agent will be entitled to either an indemnity or compensation under Regulation 17. Generally speaking, it is in the principal’s favour to have an agreement which states that the Agent will only be entitled to an indemnity.

If there is no agreement, or there is an agreement but it is silent on this point, then the agent shall be entitled to be compensated rather than be indemnified. Often a more onerous provision for the Principle.

The indemnity amount should not exceed a figure equivalent to one year of the Commercial Agents average annual remuneration. There is no such limit on the amount of compensation and generally speaking it will be tested by the value of the business lost by the agent. This will obviously turn on the facts and be dependent on the specific circumstances and the value of each specific agency.

Compensation to Agents had previously been assessed following a decision in the French Courts, with a level of compensation being 2 years gross commission. This decision however is no longer binding and the Courts would have to determine an assessment for the loss of the Agency business, including goodwill.

If a business does not have a properly and carefully drafted Agency Agreement then it is not a simple task to assess the value of compensation due to Agents. It may be that experts will need to appointed and further expense incurred to assess the loss. It is certainly clear that there will often be a great deal of negotiation between the parties to attempt to resolve this, failing which the Courts will have to make a ruling.

Under Regulation 4, the principal’s duty is to provide the Agent with the necessary documentation relating to the goods concerned and obtain the information necessary for the proper performance of the Agency Contract, and in particular notify the Agent within a reasonable period once they anticipate that the volume of commercial transactions will be significantly lower than that which the Agent can normally have expected.

In return the Agent must look after the interest of its principal and act dutifully and in good faith. In particular, an Agent must (a) make proper efforts to negotiate, and where appropriate conclude the transaction he has instructed to take care of; (b) communicate to his principal all the necessary information available; (c) comply with reasonable instructions given by his principal.

On termination, the Agent will be entitled to compensation on any orders which can be attributed to their work during the agency. It is important for both parties that proper records are kept to avoid disputes at a later date.

It is imperative that businesses seek advice to ensure that they are properly protected and avoid unnecessary liabilities which can run into hundreds of thousands in certain circumstances.

Many thanks for this article to Ben Jones, an employment lawyer at Darlingtons solicitors.

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Passing Off

What is passing off ?

Passing off is in essence where another individual or business seeks to “piggy back” on your business good will by giving the impression to a 3rd party that they are your business or are connected with it.

A claim for passing off is a right of legal action which is not based on ownership of any registered trademark but which may be a secondary claim brought in a legal action by an organization which has a registered trademark.

What will you need to prove ?

To succeed in a claim for passing off, you  will need to satisfy the court that :-

  • There is goodwill attached to your goods and services
  • The defendant has made a misrepresentation in the course of trade
  • your business has suffered consequential loss and damage.

Passing off actions are expensive, common tactics are to clearly alert the alleged wrongdoer and obtain an undertaking to stop the activity immediately. This is done generally via a solicitor’s letter. Another possibility is an injunction, which is generally expensive but often results in scoring a knockout blow against the defendant and avoiding a long drawn out litigation case.

More litigation related topics on this site.

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New law on privacy and cookies

New Developments to the Privacy & Electronic Communications Regulations

The Privacy and Electronic Communications Regulations have been in force since 2003. This is an EU Directive that regulates Data Protection and electronic communication, including how websites operate in using and collecting data from their users.

Major changes in the last few weeks

On 26 May 2011 several changes came into effect including:

  • Enhancement of the powers of the Information Commissioner.
  • Changes to the regulations relating to “cookies” which are stored on a persons device when they access a particular website.
  • Additional specific security requirements placed on internet service providers.
  • Requirements for communications providers to establish internal procedures for responding to requests for access to user’s personal data for reasons of national security, legal requirements or law enforcement.

The change that has the biggest privacy law consequence is that relating to the “cookie”, as it affects many website providers. A ‘cookie’ is a small file of letters and numbers downloaded onto a device, whether a computer or phone, when the user accesses certain websites. The purpose of this file is to allow that website to recognise the user’s device.

E commerce law

Previously the regulations required that the website informs the user how they used such a ‘cookie’ and also tell them how they could opt out if they wanted to. The new regulations require that a websites obtains the users official consent before they can store a ‘cookie’ on the user’s device. Once the user consents, the site doesn’t need to ask again for any further ‘cookies’ it might store.

The regulations allow for one exception to this rule; where the service that the website is providing requires the ‘cookie’ to be downloaded and this is “strictly necessary for a service requested by a user”. A basic example of this would be an online shopping service that would need to ‘remember’ what has been chosen on the previous page. Continue reading

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Data protection top tips

Compliance: Top tips for data guardians

  • Data should not be kept any longer than necessary, procedures should be set up to archive and delete data
  • Data must be kept secure from unlawful or unauthorised processing, accidental loss or deletion. Ensure adequate firewalls and other security measures in place commensurate with the type and size of your business. Take adequate steps bearing in mind requirements will differ from organisation type, size and risk factors
  • Establish different access levels to data for staff, so that staff only have permission to access data they need for their job.
  • Give thought to (and act accordingly) the risks associated with portable devices which will be taken off business premises such as laptops, smartphones and USB devices.
  • Ensure you have adequate written policies, procedures and training processes for staff. Make sure they are complied with consistently and that this is documented. Having these things in place will help to protect you from any criticism or worse should there be a data loss or other issue arising.
  • Be extra vigilant (and take suitable extra precautions and security measures) if your business accepts financial information such as credit card details or other highly sensitive financial details from customers.
  • Data should not be transferred to countries outside the European Economic Area (EEA) unless such countries have an adequate level of protection.
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Hargreaves Review

Hargreaves intellectual property review

Just a very quick post for the benefit of visitors, hopefully serious if not spammers, to this blog.

The Hargreaves review makes very important and sensible recommendations for radical changes to current intellectual property law in England & Wales. Useful information on the review can be found here. We will post a summary and our views on the proposed changes to copyright law when we have had a chance to read through it !

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Technology law faqs

Technology Law FAQs

What are some of the main obligations under the Data Protection Act 1998?

Under the Data Protection Act 1998, information and data must be:

  • Processed fairly, lawfully and for lawful purposes.
  • Adequate, relevant and not excessive.
  • Current and accurate.
  • Protected against unauthorised or unlawful processing.
  • Protected against destruction, accidental loss or damage.

In addition, information must not be:

  • Stored for longer than necessary.
  • Transferred to a country outside the EU unless that country protects the rights and freedoms of the data subjects.

Employers are under an obligation to make sure that their employees are fully aware of their responsibilities under the law and receive adequate training to carry out their responsibilities under the law.

To who do the E-commerce Regulations 2002?

The regulations apply to businesses that:

  • Sell goods or services on the internet, by email or text messages
  • advertise on the internet, by email or text messages
  • Convey or store electronic content for customers
  • Provide access to a communications network

What are my duties under the E-commerce Regulations 2002?

You must:

  • Include certain bits of information about your business on your website, such as your physical address.
  • Include your terms and conditions on your website and customers must be able to print them off.
  • Clearly state that advertisements or commercial communications are for commercial purposes.
  • Clearly state the purpose of unsolicited email in the subject line i.e. recipients should not have to read the body of the email to ascertain what the purpose of the email is.
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