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Skadden closes sole office in Sydney

Skadden, Arps, Slate, Meagher & Flom has confirmed it is closing its Sydney office – the US firm’s only base in Australia. The six-staff office will shut down in the first half of this year with all staff understood to be departing from the firm aside from co-head of Skadden Arps corporate finance group Adrian Deitz who will remain based in Sydney and operate as part of the firm’s Singapore and Hong Kong team.

The rest of the corporate-focused team, which comprises one partner, one retired, two counsel and one associate are understood to be reviewing their options.

Skadden Arps first launched in Sydney in 1989 and since represented Australian and New Zealand clients on the US aspects of cross-border transactions, such as corporate finance and M&A deals.

Highlight deals for the office, listed on the firm’s website date back to 2014 and include representing the Commonwealth of Australia and Medibank Private on Medibank’s A$5.679bn initial public offering and listing on the Australian Stock Exchange; and advising Meridian Energy in its partial privatisation and $1.6bn initial public offering by the government of New Zealand, which was done in 2013.

The news follows two of the founders of Clifford Chance’s Australian arm, including the firm’s Sydney managing partner, confirming they are stepping down from their roles at the Magic Circle firm on Tuesday (9 February).

Elsewhere down under, Clyde & Co hired two partners from Norton Rose Fulbright in a bid to build up its occupational health and safety team in Sydney, with Michael Tooma and Alena Titterton joining along with eight other lawyers. This followed the firm’s appointment of a 30-lawyer team late last year, also in the Sydney office after it picked up five partners who joined the firm with another 25 lawyers, all from Lee & Lyons.

Latham & Watkins

Clifford Chance loses Korea head

Kim Hyun-suk, the head of Clifford Chance’s Korea office, will soon leave the firm, marking the latest in a series of exits from the UK firm’s Seoul operation. The Korea practice will now be led by Hong Kong-based partner Richard Lee and Seoul-based counsel Bong-Sang Cho, Clifford Chance confirmed to ALB. Kim has been based in Seoul since Clifford Chance established an office there in 2012, becoming one of the first international firms to do so.  He began his relationship with the firm in 2009 while based in Hong Kong, where he progressed to partner.

Since last year, Clifford Chance has lost four lawyers who focus on the Korea market, including Kwangwoo Kim, a former associate who is now an executive director at Goldman Sachs, and Angela Ryu who was based in Hong Kong, but is now with Allen & Overy in the UK. The firm, which assists international corporations, banks and financial institutions, and regulatory bodies in Korea, now has three counsels based in Seoul, according to its website. There has been a fair amount of movement with Seoul’s legal market recently.

Last year, Simpson Thacher & Bartlett closed its Seoul office, while US firms Shearman & Sterling and Arnold & Porter have also reportedly gained licenses to establish Korea offices this year. Korea opened up its legal market in 2012, following free trade agreements with the US and the European Union – agreements which are now under scrutiny as the possibility of no-deal Brexit approaches.  There are currently five UK-headquartered firms operating in Korea.

handshake deal

U.S. legal/tech provider Elevate acquires NewLaw firm Cognatio in HK

Elevate, a U.S.-headquartered provider of legal and technology services has acquired Cognatio Law, a Hong Kong-based contract-lawyer firm.

Cognatio Law was founded in February last year by Lesley Hobbs, previously the head of client solutions in Hong Kong for Lawyers on Demand together with Tim Fawcett, formerly the interim COO of boutique family law firm CRB. Elevate provides consulting, technology, tech-enabled managed services and flexible lawyering support to the legal sector. ‘

It recently also acquired legal AI technology consultancy LexPredict, contract lifecycle management provider Sumati Group, UK NewLaw legal resourcing firm Halebury, and Yerra Solutions, company providing consulting, technology and managed services.

Litigation Funding in Asia – Where are we now?

Last year saw a swathe of reforms and proposed reforms in Asia in relation to litigation and arbitration funding.  In January 2017, Singapore’s parliament passed the Civil Law Amendment Act and the Civil Law (Third Party Funding) Regulations 2017.  Hot on Singapore’s heels, in June 2017, Hong Kong approved the Arbitration and Mediation Legislation (Third Party Funding) Amendment Bill 2017 and supplemented the Arbitration and Mediation Ordinance.  And earlier this year, presumably in an attempt to keep pace with Singapore and Hong Kong, Malaysia announced proposed amendments to its Arbitration Act 2005 to allow third-party funding of arbitration.

In typically proactive fashion, earlier this year the Singapore Institute of Arbitrators carried out a survey of professional litigation funders operating in Singapore, including Woodsford, to ascertain how matters had developed since the change in law. The general consensus amongst funders, and Woodsford’s own experience, is that the number of funding opportunities in Asia is gradually increasing and that, whilst some arbitrations were being funded, many had failed to meet the investment criteria applied by professional litigation funders.  The most significant issue with the opportunities considered by funders to date appears to be ‘recoverability’, as funders struggle to get comfortable with the prospects of enforcement against parties with assets in jurisdictions such as mainland China, India and Indonesia.  However, as parties arbitrating in Asia become more accustomed to the availability of third-party funding and the enforcement prospects in Asian jurisdictions improve, it is likely that significantly more cases will be backed by third-party funders.

Funding in Singapore isn’t exclusively available for arbitration.  Earlier this month, Singapore lawmakers passed the Insolvency, Restructuring and Dissolution Act, which enshrines in statute a liquidator’s or judicial manager’s power to assign the proceeds of an insolvent estate’s claim to a third party.  This provision is said to have been introduced expressly to facilitate third-party funding of such claims.

This legislative change follows the Singapore Court’s decisions in Re Vanguard in 2015, in which the Court permitted funding by former shareholders in an action arising out of an insolvency, and last month in Trikomsel, in which the Court permitted the funding by a third party of investigations and potential claims in the context of a major corporate collapse which cost Singaporean retail investors hundreds of millions of dollars.

Collectively, these changes cement the availability of third party funding for insolvency claims in Singapore and, given the current momentum towards accepting funding as an integral part of the legal landscape in Singapore, it can only be a matter of time before Singapore decides to allow it in respect of all of its court litigation and arbitration.  Perhaps the next step will be to allow it in claims before Singapore’s forward-thinking International Commercial Court.

In Hong Kong, progress has unfortunately not been as impressive.  Although Hong Kong’s lawmakers first commenced the process of allowing third party funding for arbitration before Singapore, in 2013, Hong Kong has long since been left in Singapore’s wake. Although Hong Kong formally passed legislation permitting third-party funding for arbitration in June last year, over a year later the legislation has still not been formally implemented.  As matters stand, therefore, funding of arbitration in Hong Kong remains an offence with civil and even criminal penalties.

Unlike Singapore, the Hong Kong judiciary has on occasion shown itself reluctant to permit third party funding even in circumstances where a case appears to fall within one of the permitted exceptions to the prohibition outlined in the case of Seeberger v Unruh.  In the recent case of Raafat Imam v Life, the claimant sought a declaration from the Hong Kong Court that the funding arrangement he proposed to enter into did not constitute maintenance or champerty or, alternatively, that his claim fell within the access to justice exception identified by the Court in Unruh.  The Hong Kong Court of First Instance denied the application and held that the claimant’s application was effectively for a “declaration of non-criminality to fend off potential or possible criminal prosecution” and that such a declaration could only be made in exceptional circumstances.  The Court further held that such exceptional circumstances are limited to situations where the integrity of criminal proceedings already instituted is questionable or critical life or death situations, and that neither arose in Raafat’s case.

This decision is disappointing and appears to close the door on the ‘access to justice’ exception, which was the product of careful deliberation of competing public policies by Hong Kong’s highest civil Court in Unruh.  Given that there will always be the ‘possibility’ of criminal prosecution as long as champerty and maintenance remains a criminal offence in Hong Kong, and that litigants requiring funding to achieve access to justice are rarely (if ever) likely to fulfil the exceptional circumstances requirement, it is difficult, on the basis of the decision in Raafat, to see how any party will ever be able to avail itself of the ‘access to justice’ exception.  Indeed, the Raafat decision appears to undermine the decision in Unruh and render the ‘access to justice exception’ somewhat nugatory.  Is the ‘exceptional circumstances’ test really what the Court of Final Appeal intended when it devised the access to Justice exception in Unruh?  What if a litigant lacks the financial means to bring a meritorious claim?  Does he or she fall within the access to justice exception or does his or her perfectly good claim founder because he or she is not facing a questionable criminal prosecution or in a life or death situation?

Notwithstanding the position in Hong Kong, the global trend towards the erosion of the archaic doctrines of champerty and maintenance looks set to continue as other Asian jurisdictions, like Malaysia, sit up and take notice of developments in Singapore and Hong Kong, presumably conscious of the need to remain a competitive arbitral venue of choice.

Although the introduction and take-up of funding in Asia thus far has to some degree at least been a ‘slow burn’, the signs for the future are promising.  One by one, the common law jurisdictions in Asia are ridding themselves of the shackles of champerty and maintenance and beginning to appreciate the very significant benefits that third-party funding can bring, both in terms of enabling access to justice and promoting risk- and cost-efficient dispute resolution.

For more information please visit woodsfordlitigationfunding.com or follow on Twitter: @WoodsfordLF or LinkedIn

India

India Attracts Largest E-Commerce Deal

India’s potential for high growth in retail came to the forefront with the acquisition of its biggest homegrown online retail company. The high economic growth prospects were reaffirmed by the IMF. There will be a new system for monitoring of foreign investment in listed entities. The current policy for external commercial borrowings has been further liberalized.

Walmart Acquires Flipkart – Earlier this month, Walmart Inc. announced that it would pay $16 billion for an initial stake of approximately 77% in homegrown e-commerce company Flipkart. The deal valued Flipkart at about $20.8 billion. “India is one of the most attractive retail markets in the world, given its size and growth rate, and our investment is an opportunity to partner with the company that is leading the transformation of e-commerce in the market,” said Doug McMillon, Walmart’s president and chief executive officer, in a statement. This is Walmart’s biggest acquisition and the biggest e-commerce deal globally. The deal will need to be approved by India’s anti-trust regulator. The deal will redraw the retail landscape in India as Walmart takes its battle in the US with arch-rival Amazon to the world’s fastest growing major economy. It will also give a massive boost to entrepreneurship and the start-up ecosystem in India, which has struggled to provide exits.

International Monetary Fund – In a reaffirmation of India’s growth forecast made by International Monetary Fund (IMF) in last month’s World Economic Outlook, as reported by Asia Law Portal, the Regional Economic Outlook: Asia Pacific report published by same agency this month, states that in India, growth is expected to rebound to 7.4 percent, following temporary disruptions from the November 2016 currency exchange initiative and the July 2017 rollout of the new Goods and Services Tax (GST). The report further stated that growth rebounded strongly to 7.2 percent in the third quarter of FY2017/18, up from 6.1 percent in the first half of the fiscal year. India’s growth, projected at 6.7 percent in FY2017/18, should recover to 7.4 percent in FY2018/19, making India once again one of the region’s fastest-growing economies. The recovery is expected to be underpinned by a rebound from transitory shocks as well as robust private consumption. Medium-term headline CPI inflation is forecast to remain within but closer to the upper bound of the Reserve Bank of India’s inflation-targeting band (4 percent ±2 percent). Medium-term growth prospects remain positive, benefiting from key structural reforms, including the landmark national GST reform. The current account deficit in FY2017/18 is expected to widen somewhat but should remain modest, financed by robust foreign direct investment inflows.

Growth Estimates in previous quarterIndia’s economy may have expanded by 7.1-7.5% in the January-March quarter – driven by manufacturing and construction – compared with 7.2% in the third quarter. The Central Statistics Office will put out the growth estimates for the fourth quarter and for 2017-18 in the coming days. It pegged FY18 GDP growth at 6.6%, which would suggest growth of 7.1% in the last quarter. The economy expanded 7.1% in FY17. India’s industrial output expanded 4.3% in FY18, with manufacturing growing 4.5%, according to the Index of Industrial Production (IIP). The IIP is a quantity-based measure while GDP is assessed on value added, which means that manufacturing GDP growth can be higher than that measured by IIP.

Monitoring of Foreign Investment in Listed Entities – The Reserve Bank of India (RBI) has recently mandated a new system for monitoring of foreign investment limit in Indian listed companies. In order to enable listed Indian companies to ensure compliance with the various foreign investment limits, RBI in consultation with Securities and Exchange Board of India (SEBI), has decided to put in place a new system for monitoring foreign investment limits, for which the necessary infrastructure and systems for operationalizing the monitoring mechanism, shall be made available by the depositories. The same has been notified by SEBI. The RBI circular further stated that all listed Indian companies are required to provide the specified data/ information on foreign investment to the depositories. The requisite information was required to be provided before May 15, 2018. The listed Indian companies, in non-compliance with the above instructions will not be able to receive foreign investment and will be non-compliant with Foreign Exchange Management Act, 1999 (FEMA) and regulations made thereunder.

Changes to External Commercial Borrowings Policy – The RBI has recently liberalized the External Commercial Borrowings (ECB) policy. ECBs are commercial loans raised by eligible resident entities from recognised non-resident entities and should conform to parameters such as minimum maturity, permitted and non-permitted end-uses, maximum all-in-cost ceiling, etc. A uniform all-in-cost ceiling of 450 basis points over the benchmark rate. The benchmark rate will be 6 month USD LIBOR (or applicable benchmark for respective currency) for Track I and Track II, while it will be prevailing yield of the Government of India securities of corresponding maturity for Track III (Rupee ECBs) and RDBs. The ECB Liability to Equity Ratio for ECB raised from direct foreign equity holder under the automatic route was increased from 4:1 to 7:1. This ratio will not be applicable if total of all ECBs raised by an entity is up to USD 5 million or equivalent. The eligible borrowers’ list for the purpose of ECB has been expanded. There will be only a negative end-use list for all tracks instead of positive end-use list for Track I and negative end-use list for Track II and III.