Insights

The amount of litigation regarding environmental and climate change issues is, perhaps unsurprisingly, growing worldwide.[1] A significant portion of that litigation relates to so-called ‘greenwashing’, ‘climate-washing’ or ‘social-washing’ disputes. In other words, legal cases where people or organisations (often NGOs and consumer groups) accuse companies, banks, financial institutions or others, of making untrue statements. They argue these companies or financial institutions are pretending their products, services or operations are more environmentally-friendly, sustainable, or ethically ‘good’ for society – than is really the case. Perhaps more interestingly, of all the litigation in the environmental and climate change space – complainants bringing greenwashing and social washing cases have, according to some of these reports, statistically the most chance of winning. So, in a nutshell, not only is greenwashing and social washing litigation on the rise, companies and financial institutions are most likely to lose cases in this area.

On 29 June 2023, the long-awaited Financial Services and Markets Act 2023 (the “Act”) received Royal Assent, clearing the Act’s final hurdle prior to its implementation. The Act is the framework for the UK’s post-Brexit financial legislative and regulatory landscape.  Focusing on the promotion of competition, innovation and investor protections, it hopes to ensure the UK’s continued leadership in the global economy by providing “a smarter financial services framework”. While the Act is 349 pages in length, we have set out some of the key themes and regulations currently making headlines.

It has been over two years since the UK Financial Conduct Authority (FCA) announced that all LIBOR settings will cease to be provided and market participants will not be permitted to reference LIBOR in their contracts. Since that announcement, various regulators, industry bodies and market participants have worked to transition from LIBOR to using risk free rates (RFR) in contracts.

Following a meeting of the G7 Summit Leaders, on May 19, 2023, the United States and the United Kingdom announced a new round of sanctions and export controls against the Government of the Russian Federation (“Russia”) to continue their efforts against key sectors of Russia’s military-industrial base. These actions target procurement and evasion networks to curtail the flow of necessary resources Russia needs to maintain and fund its campaign against Ukraine. In this alert, Crowell & Moring attorneys based in our U.S. and UK offices provide a comprehensive overview of the recent multi-jurisdictional actions taken by the respective countries’ government agencies.

Over a decade after Lehman’s insolvency, the English High Court handed down a key judgement in Grant v FR Acquisitions Corporation (Europe) Ltd [1] on 11 October 2022. The judgement provides commentary on when certain Events of Default have occurred and are “continuing”.

Only four months after the the United Kingdom’s Office of Financial Sanctions Implementation (OFSI) issued a £20.47 million penalty against Standard Chartered Bank (SCB) for alleged violations of the U.K.’s Ukraine- and Russia-related sanctions (see our alert here), another bank is in the news for regulatory breaches. This time it is the London arm of Commerzbank AG (Commerzbank), which was hit by the United Kingdom’s Financial Conduct Authority (FCA) on 17 June with a fine of £37.8 million ($47.4 million) for failures in its anti-money laundering controls.

In May 2020, the UK Cabinet Office published a document entitled “Guidance on responsible contractual behaviour in the performance and enforcement of contracts impacted by the COVID-19 emergency.” The Guidance is available here. Its stated purpose is to encourage parties whose contracts have been affected by COVID-19 to act responsibly and fairly, to support the government’s response to COVID-19, and to protect jobs and economy.

On February 18, 2020, the United Kingdom’s Office of Financial Sanctions Implementation (OFSI) announced a £20.47 million penalty against Standard Chartered Bank (SCB) for alleged violations of the U.K.’s Ukraine- and Russia-related sanctions. The penalty is more than 140 times larger than any of OFSI’s previous penalties. It provides a number of important lessons for companies subject to U.K. jurisdiction, and suggests how the U.K. programme may evolve post-Brexit. The penalty also reflects important differences in approach from how the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) has approached enforcement.

On May 14, 2020, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC), the U.S. Department of State, and the U.S. Coast Guard issued a long-awaited “Sanctions Advisory for the Maritime Industry, Energy and Metals Sectors, and Related Communities” (the “Advisory”). The Advisory substantially expands on previous shipping advisories that OFAC and other U.S. agencies have issued that were specific to the Iran, Syria, and North Korea programs (see our previous summary) by not only offering global guidance, but also by issuing more than a dozen pages of detailed industry-specific recommendations across 10 sectors that touch the maritime industry. In many cases, these recommendations go substantially beyond the compliance expectations that OFAC or its peers had previously articulated.

Business disruptions caused by the global COVID-19 pandemic have demonstrated the importance of including clauses in contracts to appropriately govern the parties’ rights and obligations when such disruptions occur. Even as many U.S. jurisdictions begin the process of loosening the restrictions imposed to stop the spread of the pandemic, it is to be expected that business disruptions will continue. Accordingly, before you enter into any new contracts, you should consider carefully the force majeure and/or hardship clauses you include to address such business disruptions.

The coronavirus pandemic (COVID-19) has had a significant impact on M&A activity globally. Amongst other things, the pandemic has given rise to issues of valuation and funding and caused certain possible buyers and sellers to defer ongoing transactions in order to focus on mitigating the effect of the virus on their business operations. Where parties nevertheless continue to pursue M&A transactions in the current climate, they are advised to consider the impact of COVID-19 on their contractual protections and exposure and on transaction logistics and timing. This note briefly considers certain key areas of relevance from a U.S. and U.K. standpoint.

COVID-19 has and will naturally lead many contracting parties to consider declaring that a force majeure event has occurred when performance becomes impossible or significantly more difficult. But that is not the only way in which contracts may be affected by the current crisis. In this article, we consider force majeure and a range of other contractual clauses in which risk may have been planned for and allocated between the parties, and which are likely to be highly relevant during the current crisis, as well as other remedies.

In these unprecedented times, all businesses will be facing issues they have never encountered before. The disruption caused by the measures imposed to combat the COVID-19 outbreak are significant and wide-reaching, impacting every business and its suppliers, customers, workforce, investors and lenders. Companies find themselves operating in the shadow of potential bankruptcies along the supply chain, in their customer base and their trading partners globally and are facing a myriad of issues related to business disruption, salvaging relationships and restructuring liabilities and business structures to facilitate ongoing trading. To ensure an ability to recommence trading when the current lockdown is over, clients may need to take a number of steps to keep their business alive. Some of the key questions arising are set out below:

The COVID-19 pandemic is unprecedented in modern times, and its economic impact is likely to be measured in years rather than months.  Against that backdrop, in our recent bulletin, An English Law Perspective on COVID-19 and Contractual Disruption, we provided guidance to businesses on invoking and responding to force majeure clauses.

In the last few weeks the United Kingdom Government has introduced a variety of relief measures for businesses as the COVID-19 crisis escalates. Not all these measures are yet in force e.g. insolvency measures and annual general meeting formalities, as the legislation to implement these measures has not yet been adopted.

As the COVID-19 pandemic causes unprecedented disruption to global businesses, certain temporary measures have been introduced in order to reduce the financial reporting and other regulatory obligations that apply to Main Market listed and AIM quoted companies. This note provides a brief summary of the measures relating to financial reporting, disclosure obligations, company meetings and capital raisings.

We are in extraordinary times.

On March 20, 2020, the Chancellor of the Exchequer, Rishi Sunak, unveiled the U.K.  government's further £350bn package of fiscal measures to mitigate the severe economic downturn caused by the COVID-19 outbreak. One of the most significant measures is the launch of the Coronavirus Business Interruption Loan Scheme (the Scheme) which went live on March 23.

As everyone is aware, the recent COVID-19 outbreak has been declared a global pandemic by the World Health Organization and business disruption is accelerating around the world.

It is clear from the announcements issued by the U.K. Government over the last few hours and days that we are living through incredibly challenging times. It goes without saying that we hope that you, our clients, are well and that you continue to be. This note is an offer of help as it is entirely clear that to weather this storm, we need to work together like never before.