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DLA fails in effort to stay €12m negligence claim

A High Court judge has refused international firm DLA Piper’s request to stay a €12m professional negligence claim brought against it by a Russian cruise ship company.

Applying principles of Russian law, David Edwards QC, sitting as a High Court judge, said that an arbitration agreement between Premier Cruises Ltd (PCL) and DLA Piper Russia did not apply retrospectively to the subject of the negligence action.

PCL entered into a contract with a Croatian shipyard, Brodosplit, in June 2013 for the construction and purchase of a cruise liner to be called Volga Dream II. The delivery date was March 2015 and the purchase price was €20m.

The judge said the relationship between the shipyard and PCL deteriorated when, towards the end of 2014, the shipyard sought to postpone the delivery date.

With advice from DLA Russia, under what PCL says was an implied retainer, PCL sent a notice of rescission to the shipyard in April 2015.

The shipyard responded by alleging that PCL did not have a contractual right to terminate the shipbuilding contract and PCL had failed to pay the fifth instalment of the purchase price.

The shipyard said it was rescinding the contract or treating PCL’s notice of rescission as a repudiatory breach, which it accepted, bringing the contract to an end.

DLA Russia then contacted the law firm’s London office and a formal engagement letter was sent to PCL, including an arbitration clause for all disputes and disagreements arising under it.

Hill Dickinson, the shipyard’s solicitors, commenced arbitration proceedings later in 2015 and, following a hearing in London in May 2016, the tribunal ruled that PCL must pay the fifth instalment and compensation. PCL paid the shipyard €4.4m in July 2019.

PCL launched proceedings against DLA Piper for professional negligence in January last year, with separate claims against DLA Russia and DLA UK.

Delivering judgment in Premier Cruises Limited v DLA Piper Rus Limited and another [2021] EWHC 151 (Comm), Mr Edwards said PCL claimed it had been given negligent advice by DLA Russia between December 2014 and April 2015 in relation to the termination provisions of the shipbuilding contract and in drafting the notice of rescission.

PCL’s claim against DLA UK was for negligence from May 2015 in failing to advise PCL of the risks in defending the shipyard’s claims. The damages claimed was “in excess of €12m”.

Mr Edwards said DLA Russia applied for a stay of the claim under section 9 of the Arbitration Act 1996, relying on the dispute resolution section of its engagement letter.

Meanwhile DLA UK, which was not a party to the arbitration agreement, applied for a case management stay.

The judge said that, under section 9(1), a party could apply for a stay “in respect of a matter which under the agreement is to be referred to arbitration”.

He said “matter” had been defined as “any issue which is capable of constituting a dispute or difference which may fall within the scope of an arbitration agreement”.

The question was whether the agreement extended to “advice allegedly given and the work allegedly carried out” by the law firm before the engagement letter and arbitration clause, which was governed by Russian law, came into effect.

The High Court heard expert evidence from two Moscow lawyers on the principles of construction applicable to the arbitration agreement – both managing partners of Russian law firms.

Mr Edwards concluded that “the matter which is the subject of the present proceedings against DLA Russia” was not within the scope of the arbitration agreement. He dismissed DLA Russia’s application for a stay.

The judge also dismissed DLA UK’s application for a case management stay.

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DLA Piper Boosts Australian Restructuring Practice

DLA Piper has hired restructuring partner Lionel Meehan for its Melbourne office ahead of an expected spike in pandemic-related restructures.

Meeham, who starts on August 1, joins from his own boutique insolvency and restructuring firm Edwin Legal. He has experience in financial restructuring, large-scale insolvency and commercial law, and knowledge across the resources, construction, financial services and fintech sectors, DLA Piper said.

Before founding Edwin Legal in October last year, Meehan was a partner at Ashurst in Australia for a decade and a senior associate at Freshfields Bruckhaus Deringer in London for five years.

“Given the current global economic conditions and the recently announced temporary changes to Australian insolvency laws in response to the COVID-19 pandemic, we expect to see an increase in global restructuring activity,” said DLA Piper’s managing partner in Australia, Amber Matthews.

“Lionel will form a key part of our international restructuring practice, supporting clients across the Asia Pacific region.”

Meehan’s experience in front-end restructuring and special situations, as well as transactional banking and back-end insolvency, will be a valuable addition to DLA Piper’s Australian and global Restructuring practice, said firm’s Australia head of finance, projects and restructuring in Onno Bakker.

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DLA Piper’s 2018 Global Technology Summit

On Day 1 of DLA Piper’s 2018 Global Technology Summit, Louis Lehot, co-managing partner of DLA Piper’s Silicon Valley office and co-chair of the firm’s Emerging Growth and Venture Capital practice, gave a shout-out to the “super heroes of tech” while leading a discussion on the “Rule of 40,” what to anticipate in an exit and the role of talent in an acquisition, among other hot topics. #DLAPiperTech18