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LEGAL LIGHTS • ISSUE 19

FEATURES

CONTENTS

32 Hybrid Bonds: Debt Without The Downside

Author profile

The Full spectrum of Common Law

ALSO INSIDE 4 WELCOME 5 FEATURE Copyright in the United Arab Emirates in the Digital Age 10 AUTHOR PROFILE Christopher Walton on The Authority on the Law of Negligence Vincent Kessler/REUTERS

Description: Flags of European Union member states fly in front of the European Parliament building in Strasbourg July 13, 2009, on the eve of the election of its new president.

12 PRODUCTS The Full Spectrum of Common Law 14 ARTICLE The Law Lords and the European Union 18 AUTHOR PROFILE Dr Angelo Venardos on the World’s Leading Financial and Trust Centres 20 ARTICLE The Creation of European Union Law 23 ARTICLE The Next Big Thing 26 BOOKSHOP All the best from the Thomson Reuters Legal Library 34 LEGAL BREAK

LEGAL LIGHTS • ISSUE 19

WELCOME

REUTERS/ Hazir Reka

WELCOME TO LEGALLIGHTS...

Cover image: REUTERS/ Kimimasa Mayama Commuters check stock prices on an electronic board at a Tokyo securities office, near Tokyo railway station, August 22, 2005.

It’s been a busy few months at Sweet & Maxwell with all our new Common Law Library, Intellectual Property Library, Arbitration and City and Financial titles publishing, but we have still found the time to deliver a packed issue with articles from authors across the world. Just in time for those cold nights indoors. In this issue we hear from Christopher Walton, a Circuit Judge who has contributed to Charlesworth and Percy for over 20 years, on the Authority on the Law of Negligence. Anthony Arnull swims with the incoming tide and explains The Law Lords and the European Union. Dr Angelo Venardos speaks to us about his new book, World’s Leading Financial and Trust Centres, just published from our Sweet & Maxwell Asia office. Find out what the next big thing is. And as always we look at the latest and greatest new titles and editions from our publishers around the world and we highlight some of the major new books that have already published this year. We hope you enjoy it.

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WRITERS Professor Brian Fitzgerald, Rami Olwan, Christopher Walton, Anthony Arnull, Dr Angelo Venardos, Dr P Mathijsen, Chris Hendry and Christopher Elias

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LEGAL LIGHTS • ISSUE 19

FEATURE

COPYRIGHT LAW IN THE UNITED ARAB EMIRATES IN THE DIGITAL AGE Professor Brian Fitzgerald (QUT), Rami Olwan (QUT) The following article is a shortened version of an article of the same name that appears in European Intellectual Property Review (E.I.P.R). 2010, 32(11), 565-574 This article gives an overview of copyright law in the United Arab Emirates (UAE) and critically evaluates its operation in the digital era, providing suggestions for reform.

Since joining the World Trade Organisation (WTO) and signing the associated Trade-Related Aspects of Intellectual Property Agreement (“TRIPS agreement”) many countries throughout the world have amended or passed new laws on copyright. As part of this process, in 2002, the UAE promulgated a new copyright law titled Federal Law (7) of 2002 (UAE) Pertaining to Copyrights and Neighbouring Rights (“UAE Copyright Law”). This article seeks to overview and evaluate the provisions of the UAE Copyright Law especially in the context of an increasingly digital and networked world.

COPYRIGHT FUNDAMENTALS Article 3 of the UAE Copyright Law confirms the fundamental principle that copyright protects the expression of ideas, not simply the idea. Furthermore the sale of an item embodying copyright such as a book does not transfer economic or financial rights but it will transfer ownership of the physical item, namely the book. Pursuant to art.4, “no prejudice shall be caused to the aspects of protection

or the rights prescribed” under the law if the work has not “been filed nor the rights thereof and disposals therein” registered.

COPYRIGHT SUBJECT MATTER Copyright subject matter is defined in art.2 of the UAE Copyright Law in much the same way as in many other countries. It covers literary works such as books, computer software, databases, lectures and speeches, dramatic works, musical works, audio, visual and audio-visual works, architectural works, drawings, paintings, sculptures, works of applied art, photographs, maps and derivative works. This subject matter is extended by later sections to sound recordings (art.18), broadcasts (art.19) and performances (art.17).

ECONOMIC AND MORAL RIGHTS Economic or financial rights The core financial rights (or exclusive economic rights) of the “author and his successors or the holder of the right of the author” are specified in art.7 to include the right to grant licences for the exploitation of the work, in any manner, particularly for:

“[R]eproduction, electronic storage or downloading, public performance or communication, broadcasting, re-broadcasting, acting a play, transmission, translation, alteration, modification, rental, lending and publication by any means including provision of publication through computers or information nets or communication nets or other means.” Rental of software and audio-visual works is narrowed by art.8. Under art.8 the right to rental “will not apply to computer software unless such software is the essential subject of a rental” and, “will not apply to audio- visual works unless such rental is prejudicial to the normal exploitation of such works”. Article 18 outlines the financial rights of the producers of phonograms or sound recordings which include the right to prevent any exploitation in any manner without authorisation and the right to disseminate recordings via wire, wireless, computer or other means. Third parties are prohibited from, “exploiting such sound recordings by reproduction, rental, broadcasting, rebroadcasting and making available to the public through computers or other

>> LEGAL LIGHTS • ISSUE 19

ARTICLE – FEATURE

REUTERS/Daniel Munoz

means”. Under art.19 broadcasting organisations have the right, “to grant licenses for the exploitation of the recordings and broadcast thereof” and to prevent “any communication to the public” without authorisation. Third parties are prohibited from exploiting broadcasts by, “recordation, copying, rental, rebroadcasting or communication to the public in any manner”. Pursuant to art.7 performers have financial rights to transmit and communicate unfixed performances, fix the performance on phonograms and the right to reproduce the performance fixed on the phonograms. Third parties are prohibited from the: “[F]ixation of such live performance on a phonogram for direct or indirect, commercial revenue, rental, transmission or availability to the public on any medium by others without authorization of the right holder.” Article 17 is expressed to apply, “to fixation of performances in audiovisual work, by their performers unless agreed otherwise”. This seems to suggest that use of the sound recording in an audio visual work will not impact on its level of protection.

MORAL RIGHTS In many countries copyright law provides authors with the moral rights of integrity and attribution (paternity) and this is the case in the UAE where the additional rights to decide to first publish the work (divulgation) and “to withdraw the work from circulation if serious reasons justifying such have occurred” (retraction) are also protected. Under the UAE Copyright Law moral rights “are not liable for prescription or assignment”.

AUTHORS An author under art.1 of the UAE Copyright Law is deemed to be “the person who creates the work”. A person publishing anonymously or under a pseudonym shall also be deemed as an author provided that no doubt is raised in respect of their true identity. Where doubt exists: “[T]he publisher or producer of the work, whether a natural or juridical person, shall be deemed representative of the author in exercising the rights thereof, until the true identity of the author is recognized.” Pursuant to art.26 of the UAE Copyright Law: “Any natural or juridical person who directed the creation of a work of

collective-authorship may solely assume the moral and financial copyrights thereon; unless otherwise agreed upon.” Pursuant to art.25 of the UAE Copyright Law: “In [the] case of works of jointauthorship, in which the shares of authors may not be separated, all the jointauthors shall be deemed equal authors of the work; unless otherwise agreed upon in writing.” In this case “no author may singularly exercise the copyrights” unless there is a written agreement stating otherwise.

DURATION/TERM The term or length of protection that copyright law provides will depend on the type of copyright subject matter that is in issue. For example in the UAE copyright in a book or musical composition will last for the life of the author plus 50 years, a sound recording 50 years and a broadcast 20 years. In some countries, like Australia, moral rights last for the duration of the copyright while in other countries such as France and China moral rights are “unlimited” or “perpetual”--they last forever. It is unclear from the UAE Copyright Law what the position is in the UAE.

LEGAL LIGHTS • ISSUE 19

ARTICLE – FEATURE

“THE UAE COPYRIGHT LAW CONTAINS NO PROVISION DEALING EXPRESSLY WITH SECONDARY LIABILITY.”

LIMITATIONS AND EXCEPTIONS

educational institute against no direct or indirect remuneration”;

Under copyright laws throughout the world the exclusive economic or financial rights of the copyright owner are normally subject to limitations and exceptions.

7. “[p]resenting the fine arts, applied and plastic arts works or architectural works in broadcasting programmes, if such works are permanently present in public places”; and

Article 22 provides for eight exceptions to the author’s financial or exclusive rights under the UAE Copyright Law. They can be summarised as follows:

8. “[r]eproduction of written, sound or audio-visual short excerpts for cultural, religious, educational or vocational training purposes, provided that copying be in the reasonable limits of its purpose and that the name of the author and the title of the work be mentioned wherever is possible and that the copying authority does not aim at direct or indirect profit and that license for copying was unobtainable in accordance with the provisions of this law”.

1. “[t]o make a sole copy from the work for the merely personal and non-commercial or professional but personal use of the copier” (not applicable in certain cases to fine and applied art, architectural works and software (subject to 2 below)); 2. making a sole copy of a computer software programme with the acknowledgement of the person lawfully in control of the software within the limits of the licence or for the purpose of back-up or replacement for when the original is lost, destroyed or unusable provided the, “reserve or derived copy must be destroyed even if it was stored in a computer as soon as the right of acquisition of the original copy” is no longer valid; 3. copying of works for judicial proceedings; 4. making a sole copy of the work with the acknowledgement of libraries, archives or documentation offices and not for profit, for preservation or research and study; 5. quotations and analysis for criticism and review; 6. “[p]erforming the work in family meetings or by students in an

Article 23 of the UAE Copyright Law (which is also extended to neighbouring rights through art.24) also provides other limitations and exceptions for newspapers, periodicals or broadcasting organisations that are allowed to reproduce certain works for publication purposes provided that, “the limits are justified by the objective thereof”.

INFRINGEMENT AND REMEDIES The UAE Copyright Law like any other copyright law has provisions on infringement and remedies. In practice, judges usually appoint experts to help them determine whether a copyright infringement has taken place, but the final decision is left to the judge presiding over the case. Chapter 7 (arts 34-41) of the UAE Copyright Law (entitled “Precautionary Measures and Penalties”) deals with enforcement.

It provides the author or the rights holder or their successors with various remedies against infringers including, precautionary measures, administrative sanctions, civil redress and criminal penalties. Article 34 gives the author or their successors the right to request the Head of the Court of First Instance to take precautionary measures against infringers of copyright. Customs authorities may also order on their account or upon the request of the author or the rights holder or their successors: “[T]he suspension of the release of goods that have been counterfeited in contradiction with the provision of the law herein, for a period not exceeding twenty days.” Pursuant to art.37, without prejudice to any severer penalty provided for in any other law, infringers of copyright shall be penalised by imprisonment for not less than two months and a fine of not less than 10,000 dirhams (US $2,700), and not exceeding 50,000 dirhams (US $13,600) or either of both penalties.

ISSUES TO CONSIDER Having outlined the core provisions of the UAE Copyright Law it is now possible to reflect upon how this law might meet the challenges of innovation and development in the digital age. Intermediary liability and the need for safe-harbour provisions The UAE Copyright Law contains no provision dealing expressly with secondary (or what is called in other jurisdictions--contributory/vicarious/ inducement or authorisation) liability.

>> LEGAL LIGHTS • ISSUE 19

ARTICLE – FEATURE

>> In most jurisdictions in the absence of a provision in the copyright act this issue would be dealt with under general tort law and principles of joint liability. The UAE needs to consider legislating safe-harbour provisions (including notice and takedown provisions) that will sensibly protect intermediaries especially if it wants to develop industries providing information services. Such provisions should also cover caching which is a key ingredient of the provision of network services. It is important to carefully and sensibly define who is protected by the safe harbours, as in Australia, for example, there is uncertainty as to whether content hosts like YouTube are covered.

this is not necessary as there is already wide scope for reusing copyright material under the personal use exception under UAE Copyright Law. The key question will be the extent to which the personal use exception will operate in the digital environment? In testing the efficacy of its law in the digital environment the UAE should ask to what extent its law allows activities such as the: • right to reuse copyright material (for non commercial purposes) in circumstances where there is no financial • detriment to the copyright owner; • right to engage in transformative and fair use;

THE ADEQUACY OF CURRENT LIMITATIONS AND EXCEPTIONS

• right to reuse government funded copyright (for non-commercial purposes); and

The UAE Copyright Law has a number of limitations and exceptions as outlined above.

• right to engage in format shifting, e.g. changing material from analogue to digital format or changing material from one digital format (CD) to another (mp3).

These limitations and exceptions are critical to a vibrant education, research and innovation system. Therefore they should be closely considered in this context. While free-trade agreements provide many benefits too often countries who are net importers of IP (such as Australia) have struck deals that see a narrow limitations and exceptions regime put in place. This serves to privilege US copyright interests but has the potential to slow down the development of education and research as the cost of accessing copyright material increases. Any free trade agreement with the United States should expressly permit the UAE to embed in its law the “freedom to reuse” copyright material to the same extent as the fair use principle allows. Some may suggest

The usefulness of limitations and exceptions is seriously undermined if they can be overridden through contractual licences or agreements. This is a practice that arises where books, journals or software are licensed rather than sold to the consumer and the licence provides that the freedoms like those provided under arts 22, 23 and 24 are not permitted. Which is more powerful--the public interest of the copyright legislation or the private interest of the contractual agreement? There are cases in the United States that uphold the contractual ouster of copyright exceptions yet in Australia our Copyright Law Review Committee recommended that copyright should trump contract and in relation to reverse engineering of

software this is expressly stated. Best practice would suggest that UAE Copyright Law should contain a section that expressly provides that copyright limitations override any attempt to oust them by contract.

TERM EXTENSION There are strong arguments to suggest that there is no sensible economic reason for extending the term of copyright in any country and therefore the UAE should be wary of and investigate closely any proposal for extending copyright term. Term extension has occurred in a number of Arab countries that have signed an FTA with the United States including Bahrain, Morocco and Oman.

ANTI-CIRCUMVENTION LAW While the actual or dealing in devices designed for the circumvention of “technological protection” is prohibited under art.38 of the UAE Copyright Law this provision only provides for criminal (not civil) redress and importantly there are no specific exceptions listed. Breach of art.38 of the UAE Copyright Law will result in a penalty of imprisonment for not less than three months and a fine of not less than 50,000 dirhams and no greater than 500,000 dirhams and in case of recurrence, the penalty shall be increased to imprisonment for a period of not less than nine months and a fine not less than 200,000 dirhams. It is critically important to include appropriate exceptions and limitations in any anti-circumvention provisions. By failing to include such exceptions and limitations in the copyright law countries like the UAE, Qatar, Kuwait and Jordan run the risk of impeding the development of education, research and the IT sector in their jurisdictions.

CONTINUED ON PAGE 17 >>

LEGAL LIGHTS • ISSUE 19

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LEGAL LIGHTS • ISSUE 19

AUTHOR PROFILE

THE AUTHORITY ON THE LAW OF NEGLIGENCE Christopher Walton

Could you tell us about your professional background? It would be too strong to say that my work with Charlesworth & Percy has involved a number of coincidences, but, looking back, it certainly seems to form part of a pattern. To start with it was one of the (few) books that made an impression when I read law as an undergraduate at Cambridge in the late ‘60’s. It was a particularly vivid and readable textbook, setting out sufficient of the facts of the cases that lay behind the summaries of principle to give some human interest. Back then, Rodney Percy was the sole editor, having inherited responsibility for the book some ten years before on the death of his former master in the law, Dr John Charlesworth. Rodney was head of a set of barrister’s Chambers in Grainger Street, Newcastle upon Tyne. And, quite without recalling his involvement in the book, it was from him I received my first experience of the Bar. There was for then a novel scheme by which students spent a week with a member of the Bar seeing what the job involved and I applied to Rodney. It seemed a grand life in Chambers, some days going to court; some doing paperwork at a desk encumbered with briefs tied up in red tape, when there would be tea and biscuits mid morning and afternoon, with often a conference thrown in when an instructing solicitor would attend and hang on one’s wise words. The attractions were irresistable and I was duly called to the Bar in 1973, also practising in Newcastle from another set of Chambers nearby. Subsequently, I became a circuit judge, sitting again principally in Newcastle, and after 2000 I had the good fortune to be appointed Designated Civil Judge for the area between Berwick upon Tweed in the north and

Sunderland and Durham in the south. That allowed me to concentrate on the type of work I know best and again gave the opportunity to test out in daily practice those parts of Charlesworth & Percy which are likely to be of greatest interest to the practical lawyer. How has the practice changed from when you first started out? The daily bread and butter of someone starting out at the Bar in those days was undefended divorce and, if you were lucky, pleas of guilty in the Crown Court and the more straightforward accident cases in the County Court. What do you think are the key challenges facing practitioners today? How to survive in a hugely challenging environment. There is immense competition now no matter what area of work someone is involved in. The economic background means everyone is cutting back, or wants more for less. One of the key challenges is to remain committed to the idea of being a professional with all that brings with it in terms of values, while striving to give a service better than one’s competitors. Can you describe the most interesting case you have been involved with? Recently I have had to deal with a large number of cases where the claimants alleged they had devloped asbestosis as a result of exposure to asbestos. In these particular cases the effects were either marginal or symptomatic only at a relatively low level. The question raised was whether post Rothwell they had suffered damage sufficient to complete a cause of action. There was a lengthy hearing in which evidence was received from consultant chest physicians and radiologists relied upon on both sides of the question. As seems inevitable in this kind of situation the evidence became pretty detailed but standing

LEGAL LIGHTS • ISSUE 19

AUTHOR PROFILE

“The book can never pretend to be a work of comparative jurisprudence, but some cross referencing, some seeing how a problem has been worked through elsewhere,is invaluable.”

back the basic question was not complicated : how much effect upon an individuals breathing would have to be proved for it to be more than minimal. In fact where the claimants each had other physical conditions contributing to the symptom, getting to an answer was not straightforward. I was probably fortunate there was no appeal! You have worked on Charlesworth & Percy for over 20 years. What led you to become involved? In due course, Rodney became a circuit judge sitting in the Crown and County Courts in Newcastle, Durham and Sunderland and I appeared in front of him on many occasions. He was a merciful judge in crime and a sympathetic one in civil. Although memory does not quite serve perhaps I too placed a copy of Charlesworth & Percy prominently on counsel’s bench in front of me when appearing in the county court, as hopeful advocates do with me today. So by the time Rodney asked me if I would become involved, I had known both him and the book for many years, and no doubt the resulting goodwill fed into the decision as well as more than a little vanity. By then I had what might be described as a typical provincial common law practice with a heavy emphasis on personal injuries’ claims. The economic well-being of the North East had long depended on heavy industry and while coal mining and shipbuilding had declined they had left a legacy of injury to many former employees. Industrial deafness, miner’s lung, vibration white finger as it was known, mesothelioma and asbestosis were among the many conditions which led to claims, as well as the road traffic accident and running down cases that are a feature of many personal injuries’ practices. Causation problems, limitation issues, assessment of damages, were part of my daily diet and I thought I could bring something fresh to the book based on that experience.

LEGAL LIGHTS • ISSUE 19

What are the key recent developments that have affected the contents of Charlesworth & Percy on Negligence? For the present edition it was decided that in order to preserve and enhance what might be seen as the balance the book strikes between the needs of the practising lawyer and the student, it would be helpful to have some assistance from the academic world and we were fortunate that Professor Stephen Todd agreed to help. What Stephen particularly brings to the book, as well as his knowledge as a teacher, is his familiarity with the development of the tort of negligence in the common law jurisdictions overseas. The book can never pretend to be a work of comparative jurisprudence, but some cross referencing, some seeing how a problem has been worked through elsewhere, is invaluable. Charlesworth & Percy always contained some references of this kind because Rodney was himself interested in them, but the reader will find far more in the newly-written Chapter 2 on the Duty of Care than before. How do you relax in your spare time? In the end working on the book is more a pleasure for me than a labour. Since I do it in my spare time, I doubt I would do it otherwise. But I retain my ambition for the work. Sadly as soon as you complete an edition you are faced not simply with the onward march of case law, but an awareness of what might be better said or done. It is important that the work should not fossilise, but evolve, albeit retaining the elements that will help both those learning the law, and those practising it. Do you have any other projects on the horizon? Retirement-counting down.

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LEGAL LIGHTS • ISSUE 19

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LEGAL LIGHTS • ISSUE 19

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FEATURE

THE LAW LORDS AND THE EUROPEAN UNION: SWIMMING WITH THE INCOMING TIDE

Anthony Arnull is Barber Professor of Jurisprudence and was Head of Birmingham Law School between 2006 and 2009. He is Consultant Editor of the European Law Review, having been its co-editor from 1996 to 2007.

The first of October 2009 was a milestone in the United Kingdom’s legal and constitutional history. On that day, the jurisdiction of the Appellate Committee of the House of Lords passed to the Supreme Court of the United Kingdom created by the Constitutional Reform Act 2005. Whereas the Lords of Appeal in Ordinary (or Law Lords as they were commonly known) functioned as a Committee of the second chamber of the United Kingdom’s Parliament, the Supreme Court is institutionally

as well as functionally distinct from the legislature. Its creation prompts reflection on the role played by the Appellate Committee of the House of Lords (hereafter the House of Lords) and its contribution to the development of the law, both in the United Kingdom and overseas. Perhaps the most famous decision of an English court on EC law was delivered, not by the House of Lords, but by one of England’s most remarkable judges sitting in the Court of Appeal. HP Bulmer Ltd v J

LEGAL LIGHTS • ISSUE 19

FEATURE

“...IT IS POSSIBLE THAT THE SUPREME COURT WILL OVER TIME BECOME MORE ASSERTIVE.”

REUTERS/ Fatih Saribas

Bollinger SA is notable chiefly for the judgment of Lord Denning, in which he memorably said that the EEC Treaty “ is like an incoming tide. It flows into the estuaries and up the rivers. It cannot be held back.” Lord Denning sat in the House of Lords from 1957 to 1962 before becoming Master of the Rolls, the head of the Civil Division of the Court of Appeal, a position he thought would give him more influence on the development of the law. It was in that capacity that he sat in the Bulmer case. His judgment revealed a certain ambivalence about the new legal order which Parliament, the courts and the legal profession would now have to assimilate. On the one hand, he appeared to welcome the intellectual challenge posed by EC law and the vindication it seemed to offer, in cases where it applied, of the purposive approach to interpretation he had for so long championed. On the other hand, the judgment betrayed anxiety about the Treaty’s capacity to subvert the established order. Not only was the Treaty “ equal in force to any statute” , but, on questions of Community law, “ the European court is supreme. It is the ultimate authority. Even the House of Lords has to bow down to it.” The Bulmer case arose out of a dispute between English producers of cider and French producers of champagne over the use of the name “champagne”. The French producers asked for two points

of Community law to be referred to the Court of Justice for a preliminary ruling. The judge at first instance refused and the French producers appealed to the Court of Appeal. There Lord Denning laid down guidelines for English courts to follow when considering whether or not to ask the Court of Justice for a preliminary ruling. He then applied those guidelines to the case before him and concluded that the judge at first instance had been right to refuse a reference. Lord Denning’s essentially negative guidelines--emphasising such matters as the time it is likely to take to get a ruling, whether the point is sufficiently difficult and important, the expense to the parties and the importance of not overwhelming the Court--were hard to reconcile with the case law of the Court of Justice and attracted criticism. Nonetheless, they had a considerable influence on the early practice of the English courts. Although they have now been supplanted by the more encouraging guidance given by Sir Thomas Bingham M.R. in R. v Stock Exchange Ex p. Else (1982) Ltd, they help to explain the historically low reference rate of the English courts. It seems likely that their tendency to discourage references was intended, for Lord Denning was undoubtedly alert to the dynamics that might emerge if the reference procedure were embraced too enthusiastically by English judges.

>> LEGAL LIGHTS • ISSUE 19

REUTERS/ Hugh Gentry

It was not long after UK accession that the House of Lords made its first reference to the Court of Justice. The case was a relatively specialised one turning on the interpretation of two fundamental provisions of the EEC Treaty, so was a natural candidate for transmission to Luxembourg. In the event, the House of Lords got the ruling it expected and the exercise proved a gentle introduction to the procedure. The principle of consistent interpretation was potentially more disruptive because it effectively required the national courts to apply the purposive or “ teleological” approach adopted by the Court of Justice. This encountered some hostility in the House of Lords, but it was eventually realised that such an approach could weaken the capacity of the legislature to fetter the courts and give them more freedom to shape the law. The House of Lords was undoubtedly aware of the capacity of Community law to reinforce its role as guardian of the rule of law and fundamental constitutional principles. It would

also have known that, if it did not come to an accommodation with the Court of Justice and Community law, it might find itself marginalised by lower national courts entering into direct dialogue with Luxembourg. But the House of Lords was never an enthusiastic interlocutor of the Court of Justice, put off by the delay caused by references and the form of the Court’s judgments, which are often seen as superficial by lawyers trained in the common law tradition. This seems to have inhibited the development of a healthy dialogue between the Court and the House of Lords. Although it exercises essentially the same jurisdiction as the House of Lords and all its first judges bar one were Law Lords immediately before its creation, it is possible that the Supreme Court will over time become more assertive. It may want to show that the expense and upheaval involved in setting it up made a difference. Its new name and physical separation from Parliament may encourage it to regard itself as the custodian of values implicit in the common law,

perhaps hitherto unarticulated, and to ensure that those values are observed by the other branches of government. Through the preliminary rulings procedure and the European Convention on Human Rights, Europe has made a major contribution to the emergence of a “ global community of courts” characterised by increasing levels of international judicial exchange, particularly in the areas of constitutional law and fundamental rights. As a member of that global community, the Supreme Court may compare itself with other Supreme Courts, some of which may have assumed powers not expressly conferred on them. Under the scrutiny of those courts, it may wonder whether it can where necessary find equivalent powers in the interstices of the common law. Adapted from an article originally published in Issue 1, 2010 of the European Law Review, available in full-text on Westlaw UK.

LEGAL LIGHTS • ISSUE 19

CONTINUED FROM PAGE 8>>

THE PROMOTION OF VOLUNTARY MECHANISMS LIKE CREATIVE COMMONS The task of making copyright law more suitable for the digital age will--as outlined above--involve looking at and reforming the provisions of the copyright law. However many people have realised that a more immediate route is to try and use the copyright system as it currently exists along with voluntary mechanisms to improve the situation. The Creative Commons and Free and Open-Source Software projects are key examples of this. Creative Commons (CC) is a worldwide project that aims to build a distributed information commons by encouraging copyright owners (who wish to share their material) to licence use of their material through open content licensing protocols and thereby promote better identification, negotiation and reutilisation of content for the purposes of creativity and innovation. It aims to make copyright content more “active” by ensuring that content can be reutilised with a minimum of transactional effort. Free and open-source software (FOSS) is software which is liberally licensed to grant to users the right to study, change, and improve its design through the availability of its source code. This approach has gained both momentum and acceptance as the potential benefits have been increasingly recognised by individuals, government and corporate players. The UAE represent a fertile ground for the development of information communication technologies (ICT) for the Arab region in general and FOSS in particular. The UAE Government should explore the potential of using FOSS to develop its governmental institutions. In doing so it is also critical to understand the legal issues associated with the use of FOSS in government. Jordan is the first country in the Middle East to start a creative commons (CC) project. Creative Commons (CC) has been working with AbuGhazaleh Intellectual Property (AGIP), a law firm specialising in IP issues since March 2004 to port the CC licence into the Jordanian civil legal system and copyright law. Version 01 of the CC licence was translated into Arabic and

LEGAL LIGHTS • ISSUE 19

posted over the internet on March 30, 2004 and Version 03 was finalised and will be launched in late 2010. There is currently no CC initiative in the UAE. The possibility that the UAE will open its own chapter on CC was discussed in the meeting of “CC Arab region” that took place in Doha, Qatar on March 14, 2009 with the support of Al Jazeera. In August 2008 one of, if not the most, influential intellectual property courts in the United States known as the Court of Appeals for Federal Circuit upheld the validity of an open-source software licence known as the “Artistic Licence”. The case is significant because up until this point there had been little judicial discussion of the legal operation of this new type of copyright licensing that is sweeping across the world fuelled by the ubiquity of the internet. The decision in Jacobsen v Matthew Katzer and Kamind Associates Inc provides a unique and welcome insight into the legal operation of free and open-source software licences and by analogy creative-commons styled open-content licences.

CONCLUSION The rise of digital networked technologies has meant that copyright is now central to most everything we do from recreation to research. Every time we use networked digital technologies--which inherently reproduce and communicate as part of their operation-we automate the possibility of copyright infringement. In every country copyright law and not just patent law should be seen as a key ingredient of the innovation system. It is fundamental to the generation and transfer of knowledge. In further developing its copyright law and practice UAE needs to be mindful of the importance of “information flow” in the modern economy. It needs to be alert to the fact that overly-restrictive copyright law will slow down development and innovation whereas copyright law that can harness the power of technology will provide a competitive advantage.

Footnotes have been omitted.

AUTHOR PROFILE

AUTHOR INTERVIEW

DR ANGELO VENARDOS Author of World’s Leading Financial And Trust Centres – Published by Sweet & Maxwell Asia

1. Could you tell us about your professional background and how you came to be the Founder of the Heritage Trust Group? I am a banker by training, with many years of experience in corporate and offshore banking. Founding the Heritage Trust Group was an opportunity I discovered at around the year 2000 when the wealth management industry was going through an intense review of the international regulation of offshore financial centres. This was driven by the OECD (Office of Economic and Co-operative Development) and the FATF (Financial Action Task Force). They were looking into particular issues like money laundering and terrorism financing. The increase regulations being applied throughout the world were creating a crisis to the ease of doing business. So taking the Chinese proverb, “Where there is crisis, there is opportunity,” I started to think about two things. One, which direction will the industry be heading and two, I had a vision to create a truly independent Singapore trust company. 2. How has the legal profession changed from when you first started out? To clarify, I do not practice law directly. I read law in university where I obtained a Master of Jurisprudence (Corporate & Commercial Law) and a Doctorate of Legal Science. I nevertheless deal with lawyers all the time and have observed that the legal profession has evolved along with the growth of the wealth management industry. We have law firms today with departments dedicated to wealth management. We have private banks hiring

lawyers straight from school and from law firms to work with their private clients. We have international law firms arriving on our shores to set up joint ventures. The legal profession has certainly internationalized and the lawyer with the ability to structure across jurisdictions is most highly in demand. 3. What are some of the major trends that affect trust practitioners today? This question is best answered by examining international trends that influence trusts, the most obvious of which are the tremendous growth of wealth in Asia, and global ageing which has increased the need for succession and trust planning. For the wealthy, trusts are attractive because they help ensure that assets will ultimately be used in a certain way while allowing flexibility in how those assets are managed before they are distributed. Families are frequently concerned about ensuring that the interests of an ageing parent or grandparent are protected during a period of their lives when the ability to make important decisions may become clouded. A generation that has often managed to accumulate significant assets over its lifetime is also naturally concerned about how those assets will be passed on to future generations. These are all precisely the sorts of issues trusts were developed to address. The flexibility of trusts is particularly useful in an international context. 4. What do you think are the key challenges facing practitioners today? In my view, the key challenge facing

LEGAL LIGHTS • ISSUE 19

AUTHOR PROFILE

“TRUST IS WHAT ENGENDERS CREDIBILITY AND REPUTATION. “ practitioners such as trust advisers is having to compete for the client’s mind and attention. Clients today are very knowledgeable. They are well-educated, have access to sophisticated products and are spoilt by a wide choice of service providers. Importantly, practitioners have to ensure that structures and solutions are compliant in terms of cross-border tax and legislation. The liability factor for practitioners has certainly risen because of the amount of wealth that is managed and the complexity of client situations that tend to be multijurisdictional. This means that the trust practitioner must be competent in his work through continuing education, seminars and professional networking. Lastly and above all, this is a service-oriented business. To succeed, earning the customer’s trust is paramount. Trust is what engenders credibility and reputation, the basis on which business thrive and expand.

7. Take us through a typical day in the life of Dr Angelo Venardos. When I am not traveling (on average, twice a month) to Europe, Middle East and Southeast Asia, I arrive at the office by 8am, and by 9am, I would have read three newspapers including the Financial Times. The day is spent either in client meetings or dealing with management issues of a business that employs 45 professionals located in Singapore and Hong Kong. I am also President of the Singapore chapter of STEP (Society of Trust and Estate Practitioners) and am on the Management Committee of the Australian Alumni of Singapore (AAS), which means most other evenings are committed to industry and professional body events. 8. How do you relax in your spare time? I enjoy brisk walking, reading and collecting art.

5. What inspired you to write “World’s leading Financial and Trust Centres?” My doctoral thesis was on “The Global Regulation of Offshore Financial Centres with Reference to Singapore”. It is a topic I have been keenly fascinated with for the past 10 years. The “World’s Leading Financial and Trust Centres” is really a follow up to my initial research. 6. Do you have any other projects on the horizon? I have a keen interest in Islamic finance. I wrote “Islamic Banking & Finance in South East Asia: Its Development & Future” in 2006. Then in 2010, “Current Issues in Islamic Banking and Finance: Resilience and Stability in the Present System” was published in which I was the general editor and invited world renowned practitioners and scholars to contribute chapters. My next project will also be a collaborative one – “Estate Planning for Muslims using Islamic Trusts.”

WORLD’S LEADING FINANCIAL AND TRUST CENTRES First of its kind in the world, the book provides an indispensible guide on 46 most popular offshore investment jurisdictions globally in a practical and insightful manner. The offshore and trust centers featured include: Anguilla; Antigua and Barbuda, Bahamas, Bermuda, Cook Islands, Delaware, Gibraltar, Isle of Man, Hong Kong, Labuan, Mauritius, Singapore, Switzerland, and many more. Along with a comprehensive index, standard chapter headings and a summary fact sheet at the end of each chapter, searching and comparing across jurisdictions have never been made easier.

September, 9789810860455

LEGAL LIGHTS • ISSUE 19

£186/ €260

FEATURE

THE CREATION OF EUROPEAN UNION LAW Dr P S R F Mathijsen, Advocaat, is Professor of Law at the University of Brussels; and Former Director-General with the Commission of the European Communities. He is the author of A Guide to European Union Law. In the following article he examines how European Union law is created. The process is more fascinating than one may first imagine… TAKING A CLOSER LOOK Whether barrister, judge, lawyer, professor or student, the European institutions seem to keep everyone ‘on the ball’, the year long. The moment you think you have mastered the subject of your choice, and ‘they’, once again, introduce changes or new issues. But, who are ‘they’? To answer that question it is necessary to have a closer look at the Union’s institutional framework and the way it operates. If you are not an ‘expert’ on European matters, you will probably answer the ‘who are they’ question with: ‘Brussels’. But, don’t we all know that ‘Brussels’, not only means the thousands of Union officials who reside, and work there within the European institutions, but also those thousands of people who regularly arrive there for meetings and…’decision making’. Did you read this correctly: ‘decision making’? since from this, it would appear that the latter: the ‘short-stay’ people, are the ones that make the decisions, rather than the ones who work there, mainly

within the European Commission; is that really so? Is it then not the European Commission that decides, changes and introduces new legislation all the time? Who then are these ‘short-stay’ people? They are, practically all of them, nationals of the twentyseven Member States of the Union: central government ministers (to start whith the most ‘important’ ones!), Secretaries of State and regional ministers from federal States (Germany and Belgium, for instance) and, more often than not, officials from the national government departments. In fact, the latter come to Brussels to help prepare the decisions to be taken by the former. Important here is the word ‘decision’, or rather ‘binding decision’, or even better ‘legislative acts’ (see the Treaty on the Functioning of the European Union (hereafter ‘TFEU’), Article 289(3)). These are referred to as: directives, regulations and decisions. When they are adopted by ‘legislative procedure’,

they bind those to whom they are addressed; and that can be you and me.

THE EUROPEAN COUNCIL ‘Legislative procedure’ means ‘joint adoption by the European Parliament and the Council’ (TFEU Article 289(1)). This definition requires a word of warning and an explanation: indeed there are, within the European Union, two Councils! One is the ‘European Council’, and the other, simply, the ‘Council’ [of ministers]. These two must not be confused, as so many still do, after all these years. It will have been noticed that the European Council was not mentioned above among those who come to Brussels to make binding decisions. Why is that? Isn’t that Institution powerful enough to take binding decisions? No, lack of power is not the reason, but it follows from the fact that the European Council is composed of Heads of State or of government (in other words, they are not mere

LEGAL LIGHTS • ISSUE 19

REUTERS/ Sharif Karim

’ministers’ in charge of legislation!). And why do we find ‘Heads of State’ among simple Heads of government? The reason is that, in France, the President of the Republic, i.e. the Head of State, is also the Head of the government, and it is as such that he is present among the other Heads of Government within the European Council. More important, of course, is the question ‘why does the European Council not make binding decisions?’ The answer is: that this is not its role: after all adopting regulations, directives and decisions is not what you would call a ‘regal’ occupation, it is normally left to more technical instances. And indeed, the Treaty on European Union determines that “the European Council shall provide the Union with the necessary impetus for its development and shall define the general political directions and priorities thereof” (EU Article 15(1). With the European Council we are thus

LEGAL LIGHTS • ISSUE 19

in the ‘political’ (strato)sphere, far away from mere legislation and execution, the latter being left to the simple ‘legislative’ and ‘executive’ instances. Anyway, in order to avoid confusion, the EU Treaty adds that the European Council “shall not exercise legislative functions” (ibidem).

THE COUNCIL OF MINISTERS What then about the ‘Council’ [of ministers]? This one is, in fact, part of the Union’s ‘legislator’, and is comparable to a Senate in a federal State; this is not mentioned, in so many words, anywhere in the European Treaties, but simply follows from the attribution of specific competences to the various European institutions. It will be remembered that, as was mentioned above, the Union’s legislative acts are adopted “jointly by the European Parliament and the Council”; these two together, therefore, form, generally speaking, the Union’s legislator. This adoption of legislative acts by

these two institutions acting together is done according to a very complicated process, since it is, within the Council, based on a ‘qualified majority’, which changes over time. It, probably, suffices to know that both institutions are equals and need each other in order to legislate. As mentioned already, the ministers only come to Brussels for meetings, while the members of the European Parliament meet once a month in Strasburg (although the real work, that of the committees, is done in Brussels). Nevertheless, it is these ministers and parlemantarians, who make the binding European decisions. This is important, since it should be clear, by now, that the so often heard accusation that ‘Brussels’ has decided so and so, or done this or that, is very far indeed from reality. When you reproach the European Union for having taken such or such decision, which utterly displeases you, don’t forget that it is your own minister and the members of Parliament, which you have elected, that are the culprits; not ‘Brussels’!

“...WHY DOES THE EUROPEAN COUNCIL NOT MAKE BINDING DECISIONS?” THE TASK OF THE EUROPEAN COMMISSION

17 of the EU Treaty, the Commission “shall exercise coordinating, executive and management functions.” Furthermore, “a legislative act may delegate to the Commission the power to adopt non-legislative acts of general application to supplement or amend certain non-essential elements of the legislative act” (TFEU, Article 290(1)). Much more important, since it gives the Commission a leading role in Union affairs, is the rule according to which: “Union legislative acts may only be adopted on the basis of a Commission proposal, except where the Treaties provide otherwise.” In other words, the Union legislator described above is powerless to act, unless the Commission submits a proposal for action!

the Commission has a good chance to convince enough national representatives to form the necessary majority to adopt the proposal. But there also is very often someone who wants to introduce changes or proposes new (modifiying) legislation. These whishes have to be accommodated and there, partly, lays the answer to the question raised at the onset: why all these changes and who is responsible? Why all these changes and novelties anyway? The answer is simple: EU law is mainly economic law, which, by definition, is extremely evolutive, as the financial events of the last weeks have shown. Therefore the existing rules must constantly be adapted, supplemented or replaced.

WORKING TOGETHER

FUTURE IN THE MAKING

One might retort that when you open the Official Journal of the European Union, in which all the Union acts are published, you encounter hundreds of Commission directives, regulations and decisions, without speaking about the numerous “recommendations”, “opinions”, etc. Are these not Union binding acts?

And here we come back to the thousands of officials from the Member States who come to Brussels for meetings: what kind of meetings? In fact, as was also mentioned already, they prepare the decisions to be taken by the Union legislator (Council and Parliament). They do this in close cooperation with the European Commission, which has prepared proposals for legislative acts. The purpose of these meetings is to find a common ground, so that the European Parliament and the Council [of ministers] can take the necessary decisions.

The institutional structure described above is far from perfect, but...it works, and that’s, after all, what counts. The EU has given sufficient proof of its dynamism and adaptability: when one thinks of it: twenty-seven independent States building their future together, harmonising their laws and regulations, giving up some of their most precious national prerogatives (think about the euro) and progressing towards a closer and closer Union.

We find the answer, once more, in the European Treaties. According to Article

And when there are twenty-seven representatives around the table,

But then what about these thousands of Union officials who work and live in Brussels, do they not issue legislative acts? The answer simply is “no”. That is not the task of the European Commission: the latter has more important things to do, among others, and in the first place, make sure that the Treaty rules are correctly applied by all: governments, institutions, undertakings and individuals. Furthermore, it executes the budget and ensures the Union’s external representation. It is, what is known in all the Member States, as the ‘Executive’, i.e. the second branch of any democratic State structure, the first one being the legislative, and the third one being the Judiciary, i.e. the European Courts (Court of Justice, the General Court and the Civil Service Tribunal). The latter make sure that the law is observed and understood by all.

Isn’t this History in the making?

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eBooks have been the next big thing for some time, but so far, the printed book has proved remarkably resilient to the challenge from its upstart younger sibling. Portable, durable, easy to use; the printed book, whether Harry Potter or Chitty on Contracts, has a lot going for it. But how much longer can print hold out against a tide of new technology? In the following article, we look at the rise of the eBook and how it might improve life for the legal profession.

BIG

THE NEXT

THING

Written by Chris Hendry Business Manager, Sweet & Maxwell NPD, Practice Area Solutions

An eBook is an electronic version of a book which can be read on a computer screen or hand held device such as a dedicated eReader, tablet or smart mobile phone. For years, law publishers have produced e-versions of their leading titles via CD Rom and online subscription, but it is the experience of reading on dedicated hand held devices which may drive people away from print for good. In 2007, Sweet & Maxwell conducted a trial with a brand new reading device, the iRex iLiad. The iLiad was one of the first e-ink reading devices on the market. It could hold hundreds of books which would be read on an e-ink screen that replicated the experience of reading ink on paper. There was none of the subtle flickering or glare which can spoil the experience of reading on a computer monitor whilst the battery would last almost all day. In the hands of our volunteers, the device was put through its paces as a tool for legal research. The concept of the eReader was popular because it could

>> LEGAL LIGHTS â&#x20AC;˘ ISSUE 19

FEATURE

“...EBOOKS WILL HAVE A SIGNIFICANT IMPACT ON THE PUBLISHING INDUSTRY AND THE WAY WE CONSUME INFORMATION.” >>

reduce a whole library down to the weight of a paper-back, but in practice it was just too slow to respond to commands and navigation was a touch clunky. On balance, the overall experience of the print was still better and the iRex device is no more. Fast forward 3 years and the technology has improved enormously. Amazon’s e-ink Kindle now offers the user experience and price point which makes a dedicated reading device a tempting option. Apple’s iPad offers an excellent reading experience and its launch has been incredibly successful, creating a multibillion dollar market for tablet computers in a matter of weeks. Even large screened smart mobile phones can offer a decent reading experience. In the last twelve months, more smartphones were sold worldwide than laptop computers. Given current rates of growth, it is likely that these ‘untethered’ devices will collectively exceed the combined sales of laptop and desktop computers in just a couple of years’ time. Suddenly, mobile technology can offer a user experience which is a viable alternative to print and device adoption is rapid. These improvements to device technology have very quickly brought fresh demand for electronic law books. To students, eBooks bring an end to back breaking journeys from home to campus with several kilos of text books. Practitioners see the benefits of being able to access a library of eBooks whilst working from home or on the train. The answers to obscure legal problems can be in your pocket rather than tucked away in the library. Pushed updates can automatically merge with the original text. Searches through whole books or even entire libraries can be done in fractions of a second and case and legislation citations can be linked to online databases. When the basics of navigation are mastered, these additional benefits build a compelling case for eBooks.

You may be wondering whether even eBooks have a long term place in a future driven more and more by technology. For hundreds of years, publishers of legal content have been trying to answer the same question: what is the authority for that point? Lawyers now have access to thousands of databases and can conduct endless research to answer that question, but books remain the place where they can understand and appreciate the relationship between the authority and practice, between content and meaning. Books are ideal for quick ‘look-ups’ where one needs to double check recollections or confirm knowledge. Books are also great for gaining an initial orientation to a new area of law which may then lead to subsequent electronic searches. In short, books offer a quick and familiar way into an issue. We believe that books will continue to have an important role to play in the life of lawyers. Many will continue to use their print versions, but in the next few years you will notice more and more eBooks in daily use and in 5, maybe 10 years, you may even wonder, whatever happened to print? Almost everyone now agrees that eBooks will have a significant impact on the publishing industry and on the way we consume information; what is unclear is the speed and the magnitude of the change. As the technology develops and the market emerges, it will be fascinating to see this transition take place. Across Thomson Reuters, more and more books are publishing in electronic formats and we are investing in technology which will enhance the user experience of eBooks. Electronic bookmarking, personal notes, highlighting and linked cross references will all be possible in our eBooks. Watch out for eBooks from Sweet & Maxwell and watch out for the demise of the tree-book.

LEGAL LIGHTS • ISSUE 19

REUTERS/Susan Baaghil

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LEGAL LIGHTS • ISSUE 19

PRODUCTS

REUTERS/ Toby Melville

EMERGING TITLES FROM SWEET & MAXWELL CITY AND FINANCIAL A PRACTITIONER’S GUIDE TO ALTERNATIVE INVESTMENT FUNDS 2E Timothy Spangler • Gives comprehensive coverage of the law and regulation of alternative investment funds, including hedge funds, private equity funds and other unregulated collective investment schemes • Includes in-depth coverage of stress testing and liquidity of alternative fund structures • Covers litigation risk, enforcement and rights and duties of management • Contains numerous case studies and practical examples to illustrate and explain to issues October 2010, 9780414043107 26

COMPETITION LAW

A PRACTITIONER’S GUIDE TO DERIVATIVES Jonathan Marsh; Patrick Fell; Abhijeet Kulkarni • Gives practical advice and guidance on the rationale and use of derivative instruments

COMPETITION CASES FROM THE EUROPEAN UNION Ioannis Kokkoris

• Deals in depth with risk issues

• Provides detailed summaries of the most important competition case law and legislation for the all the EU Member States, all in one book

• Presents the legal and regulatory context

• Lays out cases and legislation by country, making comparisons easy

• Advises on how to deal with difficulties and disputes

• Clarifies how competition law has been applied by the authorities and courts in each of the 27 EU member states and European Commission, EFTA Secretariat, General Court, Court of Justice

October 2010, 9780414043053

£125 / €175

November 2010, 9780414043305

£245 / €343

£125 / €175 LEGAL LIGHTS • ISSUE 19

PRODUCTS

EU LAW

ARBITRATION

TAX LAW

EU ANTI DUMPING LAW AND PRACTICE

HANDBOOK OF UNCITRAL ARBITRATION

INTERNATIONAL TAX SYSTEMS AND PLANNING TECHNIQUES

Edwin Vermulst

Tom Weber

Roy Saunders

• Helps you to understand how antidumping law is applied in practice

• Explains the core principles behind the UNCITRAL Rules

• Shows you how the EC anti-dumping regime works within the larger international trade framework of GATT and WTO anti-dumping rules

• Reviews the UNCITRAL arbitration process from start to finish

• Provides detailed coverage of the legislation and planning techniques for investments and business opportunities in over 30 jurisdictions worldwide

• Provides you with comprehensive tables of Commission decisions to help you build your own cases October 2010, 9781847038906

£189 / €265

• Gives you the resources to handle any UNCITRAL arbitration in Model law countries • Includes the French Arbitration Law 2010 November 2010, 9781847038982

£195 / €273

EU COMPETITION LAW HANDBOOK 2011

INTERNATIONAL ARBITRATION IN SWITZERLAND

Professor Marc van der Woude; Christopher Jones

Bernhard Berger; Franz Kellerhals

• Provides a complete digest to every published EU competition law case, regulation, notice, judgment and decision • Updated to include all EU competition law developments since the last edition, as well as a selection of more than 500 leading national cases • Highly regarded among competition lawyers as a research tool for the identification of the key competition cases and legislation, and the location of decisions, commentaries and documentation November 2010, 9780414045101

£190 / €266

• Covers many new double tax treaties and information exchange agreements that impact this area, along with amendments to enactments relating to companies, electronic transactions, insurance, trusts, etc • Updated to include the latest legislation, tax treaties, information exchange agreements and new vehicle principles

• Contains a detailed review of Swiss and Swiss-based dispute resolution institutions and rules, as well as a chapter on mediation

September 2010, 9780414041967

• Translated and updated from the first edition originally in German

BANKING AND FINANCE

• Takes into consideration international “best practice” standards for arbitral tribunals such as the IBA Rules on Taking of Evidence and IBA Guidelines on Conflicts of Interest • Makes extensive reference to the UNCITRAL Model Law and to widely accepted rules of arbitration such as the Swiss Rules of International Arbitration, the ICC Rules of Arbitration, the LCIA Arbitration Rules and the UNCITRAL Arbitration Rules November 2010, 9781847035684

£299 / €419

LAW OF BANK PAYMENTS Michael Brindle, QC; Raymond Cox, QC • Provides analysis of the practical and legal problems that arise from the making of payments by and through banks • Examines the law relating to the entire range of payment methods currently in use in banking transactions • Covers all the key cases and legislative developments November 2010, 9781847035516

£245 / €343

£185 / €259

>> LEGAL LIGHTS • ISSUE 19

PRODUCTS

>> FINANCIAL LITERACY FOR

LAWYERS, DIRECTORS AND INVESTORS Andrew McRobert, Ronnie Hoffman • Includes the three key financial statements: their interdependence, what they reveal and what they cannot reveal • Historic financial statements, and their reliability as estimates of a company’s future performance and position • The key accounting concepts, which are the bedrock of financial statements, explained in accessible terms and their relevance made clear to lawyers and directors November 2010, 9780864606839

£186 / €261

INTELLECTUAL PROPERTY

MODERN CONTRACT OF GUARANTEE Professor John Phillips; Professor James O’Donovan • A practical treatise on the law of suretyship in modern commercial practice. • Includes analysis of the factors affecting the validity of the guarantee such as duress and undue influence and the liability of the lender for the acts of the principal borrower. • Examines the construction of guarantees and the meaning of clauses commonly inserted in guarantee. • Provides in-depth analysis of the relevant case law and legislation.

RUSSELL-CLARKE AND HOWE ON INDUSTRIAL DESIGNS Martin Howe, QC • Provides you with a comprehensive treatise to all the law surrounding designs • Offers expert analysis of each of the five legal rights protecting design: UK registered designs, UK unregistered design right, artistic copyright, the Community registered design and the Community unregistered design right • The leading text in this field October 2010, 9781847038913

£235 / €329

• Gives guidance for drafting contracts of guarantee. • Includes discussion of developments in England and in the Commonwealth November 2010, 9781847035691

CONTRACT LAW SALE AND SUPPLY OF GOODS & SERVICES Richard Christou

£250 / €350

• Complete guide to the principles, practice and procedure for all aspects of the supply of goods and services • Covers pre-contractual issues, the formation of contracts, the discharge of contracts and defective performance • Looks at the legal principles, the practical issues relating to making and refuting claims, and the use of third parties to resolve them December 2010, 9780414042889

£195 / €273

LEGAL LIGHTS • ISSUE 19

PRODUCTS

CONSTRUCTION

PARTNERSHIP LAW

DELAY AND DISRUPTION IN CONSTRUCTION CONTRACTS

LINDLEY AND BANKS ON PARTNERSHIP

Keith Pickavance

Roderick I’Anson Banks

• Covers each potential stage of delay and disruption from inception and risk assessment through to dispute and settlement

• Considered the leading work on partnership law, first published in 1860 by the eminent Lord Lindley

• Provides commentary and comparison on 95 standard forms • Completely updated with new sections on planning and scheduling risk, GMP, target cost, partnering and alliancing contracts, notices, pacing and total time claims, forensic schedule analysis, visualisations, settlement and dispute resolution • Deals with the comparative law in this subject for England, Scotland, Australia, Canada, Hong Kong, New Zealand and the United States

• Contains a very detailed account of the contents of a partnership agreement, discussing the function, importance and effect of various different clauses • Detailed overview of discrimination law as it affects partnership • Considers the new CPR rules affecting claims by and against partnerships December 2010, 9781847037480

£380 / €532

£295 / €413

SHAREHOLDER’S RIGHTS Robin Hollington, QC • Provides in-depth commentary and practical guidance on shareholders’ rights • Offers guidance and advice as to best practice specifically when making a derivative claim or when dealing with the Unfair Prejudice Remedy £218.76 / €306.27

FLEMINGS: THE LAW OF TORTS Carolyn Sappiddeen and Prue Vines The Law of Torts by Professor John Fleming is distinguished throughout the world of tort scholarship as a work of enormous significance. This text is known for its distillation of the essence of tort legal principles and its critical evaluation of them. Major new developments include the impact of tort reform processes; the impact of human rights instruments on tort law; the contraction of liability, with the impact of civil liability legislation with its emphasis on personal autonomy; the new consumer law legislation; and the new uniform defamation code. December 2010, 9780455217987

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HYBRID BONDS: DEBT WITHOUT THE DOWNSIDE REUTERS/Nicky Loh

By Christopher Elias, UK Legal Editor

A controversial form of borrowing popular prior to the financial crisis, is gaining momentum across Europe once again, as companies seek to leverage capital without jeopardizing credit ratings. Promising to do all things for all people, hybrid bonds are back in Europe and it isn’t just banks that are using them. Companies such as UK energy company Scottish and Southern Electric, and French water treatment company Suez as well as Australian energy firm Santos are all trying their hands at this form of financial cloning in recent weeks. Hybrid bonds are created from the cross breeding of bond and equity features to create a financial instrument that combines the best features of debt and equity without their downsides. And with credit rating agencies treating these bonds (partially and completely) as equity they provide debt whilst crucially preserving credit ratings. In the case of banks they may also provide flexible and valuable

capital to help top up tier one capital adequacy should economic conditions deteriorate.

CLONING DEBT FROM EQUITY As their name would suggest, hybrid bonds splice together features of both equity and debt. They combine the tax advantages of bonds; the ability to offset tax on interest payments, for example, with the flexibility of payment that equity provides; hybrid bonds may provide that a company is under no obligation to pay interest. This gives companies the ability to take the tax benefits of bonds without committing to the balance sheet risk of interest payments or the potential credit rating downgrade a conventional bond issue carries. They also avoid diluting share capital as hybrid bonds can be created to have no convertible equity stake in a company. Recently, however, some European commentators have expressed fears over the nature of hybrid bonds in that the flexibility they give companies

may indeed be just a little too good to be true. With “call” dates rather than maturity dates they give companies the elasticity to make payment at their own discretion and subordinate payment obligations to senior debt holders. This preserves credit rating as it puts little debt strain on the issuer’s balance sheet but has led some to criticise hybrid bonds as being equity in disguise. The apparent similarity of hybrid bonds to equity has led some to question the validity of the bond-like tax deductable nature of hybrids. With questions flying, regulators are taking a close look at hybrid bonds which has created doubt over how much longer tax breaks will remain. This hasn’t stopped astute borrowers, however, who are proving they are ahead of the game by introducing adverse tax call options into their hybrid offers.

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FEATURE

“TAXATION EVENTS INCLUDE CHANGES TO UK TAXATION LAWS THAT WOULD NO LONGER ALLOW SCOTTISH AND SOUTHERN TO CLAIM A TAX DEDUCTION...” SCOTTISH AND SOUTHERN The benefits of hybrid bonds were recognised recently by Scottish and Southern Energy, the UK and Ireland based energy company, who have become the latest company to enter the financial lab with some debt splicing. It issued a split trance €500 million and £750 million hybrid bond issue with a coupon of 5.025 per cent. per annum on the Euro securities and 5.453 per cent. on the Sterling tranche. With no fixed redemption date, the securities are perpetual securities that (subject to buy back options) are redeemable in full on the First Call Date, the Second Call Date or any Interest Payment Date. The trances carry a fixed interest rate that converts into a floating rate above swap rates (Euro and Sterling) from October 2015 onwards. With controversy surrounding the ability of companies to use interest payments in hybrid bonds as tax deductible, Freshfields Bruckhaus Deringer, Scottish and Southern’s legal adviser, have included a get out of jail free provision within the issue. Should the bonds lose their taxation benefits then under clause 6(c) Scottish and Southern is entitled to redeem the notes at its option. Taxation events include changes to UK taxation laws that would no longer allow Scottish and Southern to claim a tax deduction for interest payments or that withholding tax becomes chargeable on interest payments. Also worthy of note is that under the

LEGAL LIGHTS • ISSUE 19

terms of the subordination clause although the debt securities are not convertible into shares they will be treated as notional preference shares on the winding up of Scottish and Southern and as such will rank ahead of ordinary shareholders.

bonds go further and even allow for early redemption where rating methodologies change so as to treat hybrid bonds in a less favourable manner. Not only is Suez covered, therefore, for adverse tax risks but also for adverse credit risks.

EUROPEAN HYBRIDS

CONCLUSION

Elsewhere in Europe, Suez Environnement Company, the French environmental company, issued a €750 million “Deeply Subordinated” hybrid bonds (titres subordonnés de dernier rang) on the Euronext Paris.

The benefits behind hybrid bonds have long be recognised by companies that wish to raise capital but the market for hybrid bonds has been effectively closed since the onset of the credit crisis. Risk adverse investors have shunned these uncertain debt instruments as companies started to make use of flexible interest payments to cushion repayments.

Unlike Scottish and Southern’s note programme that provides that Scottish and Southern may delay interest payments but will otherwise be in default if it fails to pay interest, the Linklaters drafted Suez Environnement programme provides that interest payments are entirely optional for the issuer and that failure to pay interest will not constitute a default for any purpose. This takes away the messy necessity of providing the paying agent with notice of intention to default and frees up Suez to pay interest at its leisure. Similar to Scottish and Southern hybrid bonds, the bonds contain a fixed rate of interest payable up until September 2016 before converting to a Floating Rate of three month EURIBOR plus 3.90 per cent. per annum.

Low interest rates across the world and the higher yields of hybrids are once again drawing investors into these complicated products and European companies are capitalizing on this strong demand. With some hybrid bonds, such as Santos’ €650 million subordinated notes, achieving a 100% equity credit from ratings agencies, they provide significant amounts of capital without diluting share capital or undermining credit ratings. With astute drafting to allow for potential adverse tax or rating methodological changes these too good to be true products look like they may be around for some time.

In addition to a call option for early redemption where a change to French law would result in the loss of tax deductibility, Suez’s hybrid

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