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Five Business Dispute Trends To Look Out For In 2022

With COVID-19 and Brexit bringing a range of issues to businesses across the UK, this article looks at what the knock-on effects are with regards to business disputes that could be faced in 2022.

They say that the path of true love never runs smoothly; the same can be said for business. A company is made up of many moving parts and often involves relationships with suppliers, clients, collaborators, and partners.

While these relationships are extremely beneficial, they can also bring bumps in the road in the form of disputes.

In the last couple of years, we’ve seen some major global changes which have had a knock-on effect on commercial litigation in the UK. Keep reading and we’ll take a look at five business dispute trends to look out for this year…

Cybersecurity addressed in court

Cyber-attacks and hacking increased by 11% in 2021. Fueled by the pandemic and the fact that more people than ever were working from home, cyber criminals had a field day in 2020 and 2021.

Alarmingly, during the pandemic, there was also an increase in cybercrimes being committed to company employees. Although, at present, only about 0.3% of cybercrimes are actually prosecuted.

However, the growing focus on ESG (Environmental, Social and Governance) factors means that more and more cybercrime cases are now making their way to court in the UK.

Employment issues caused by COVID-19

The COVID-19 pandemic has impacted on almost every single aspect of our lives, and business are no exception. As businesses were forced to close their doors and furlough their staff, an inevitable knock-on effect was that deadlines were missed, meaning terms of commercial agreements were broken.

Although the pandemic was, of course, out of the hands of the businesses involved, there has been an increased number of cases brought by clients looking to recoup the losses that they experienced due to non fulfilment of contracts.

While many companies have managed to find solutions to these problems through a commercial litigation solicitor, many more will still find themselves in court in 2022. On top of this, many businesses are finding themselves having to deal with the quagmire which is staffing issues which may end in a dispute.

One example of this is that some businesses either furloughed staff during the pandemic, or paid them out of pocket, only to find that those staff are handing in their notice once they are instructed to return to the workplace.  Understandably, a lot of employers have been angered by this and have sought to make a claim against those employees.

Commercial property rent

In the UK, a significant number of businesses were forced to move to remote working for up to 18 months to slow the spread of COVID-19 and protect their staff. Subsequently, lots of businesses found that they were working at a limited capacity which, although unavoidable, led to specific problems with rent and mortgage payments on commercial property.

In many cases, businesses simply did not have the funds to keep paying their commercial rent or mortgage and found themselves slipping into arrears. This has led to an increase in claims by landlords and mortgage companies looking to get hold of the cash that they’re owed.

Insurance loopholes

Insurance is an essential part of any business, and many companies spend a significant amount of money on their business interruption insurance. This protects them against factors out of their control which may mean that they have to cease trading for a period of time.

Of course, one important factor was the pandemic, and many businesses were relying on their business interruption insurance to dig them out of a considerable financial hole.

Unfortunately, as with other kinds of insurance, many insurers have worked hard to find loopholes when it comes to COVID-19. This has forced a lot of companies to resort to legal action in order to claim what they believe they are owed.

The insurance sector was increasingly under fire during the pandemic as many companies such as wedding insurers refused to pay out on claims, stating that COVID-19 was not covered in the contract.

Changes to auditing

The Accounts and Audit regulation changes of 2021, relating to the 2020/2021 and 2021/2022 financial years, mean that we’re likely to see an increase in claims against directors and unfair prejudice.

A company’s shareholders tend to take a deep interest in the way that a company is being run. The shareholders usually won’t hesitate to take legal action if they feel that their investment has been prejudiced in some way.

For company directors who may be caught out by the new rules, this could be disastrous. Particularly as a growth in litigation funding for third parties will make claims easier to pursue than ever before.

A challenging year ahead for businesses

As we navigate our way out of Brexit wrangling and the COVID-19 pandemic, a huge number of businesses are still struggling to recover from what has been a devastating couple of years, with many more which have since gone under.

For most of these surviving businesses, the prospect of a legal dispute is disheartening to say the least. Any business facing legal action of any kind should always kit themselves out with a great commercial litigation solicitor as soon as possible.

 

Neil Brydges Joins Leaders in Law as the Exclusive Tax Services Member in Australia

Leaders in Law, the leading platform in its field, is delighted to welcome Neil Brydges as our exclusively recommended & endorsed Tax Services expert in Australia.

Neil is a Principal Lawyer in the business law area of Sladen Legal, with a particular focus on taxation advice and disputes.

Taxation law is a complex area. Neil’s aim is to provide technical expertise to clients, commercially applied and in a friendly and approachable manner. Neil’s practice involves advice, audits, disputes, and transactions. The client mix includes both family groups and business enterprises. Neil also regularly assists professional advisors, including tax agents, accountants and financial advisors, to understand complex legal issues and help them to better assist their own clients.

Neil is a Chartered Tax Advisor with The Tax Institute and accredited as a specialist in taxation law with the Law Institute of Victoria. Since 2019 Neil has been named one of Australia’s “Best Lawyers of the Year” in the practice of tax law. The list is compiled by United States peer-review company Best Lawyers and published in the Australian Financial Review. Neil was also recognised in Doyles Guide as a recommended tax lawyer in 2021.

Jose de Pierola Joins Leaders in Law as the Exclusive Patent Law Member in Peru

Leaders in Law, the leading platform in its field, is delighted to welcome Jose de Pierola as our exclusively recommended & endorsed Patent expert in Peru. Jose’s office is located in Lima.

Jose de Pierola is a Intellectual Property Attorney; admitted to Lima Bar Association (Peru) and Alava Bar Association (Spain). His practice include; Patent and Trade Mark Prosecution, Oppositions, Appeals, Cancellation Actions, Nullity Actions, Infringement Actions at the Peruvian Trade Mark Office, Legal Actions at the Peruvian Courts, Intellectual Property, General and Procedural Law and Domain Name Dispute Resolution.

He studied at Universidad de San Marcos (Bachelor at Law; Lawyer’s Degree; Doctor in Law) McGill University, Montreal, Canada (Diploma in International Air and Space Law) and The Southwestern Legal Foundation, Dallas, Texas (Diploma in Comparative Law).

Dr. Ahmed Khedr Joins Leaders in Law as the Exclusive Corporate Affairs and Mediation Law Member in Egypt and Saudi Arabia

Leaders in Law, the leading platform in its field, is delighted to welcome Dr. Ahmed Khedr as our exclusively recommended & endorsed Corporate Affairs and Mediation Law expert in Egypt and Saudi Arabia.

Ahmed is Advisory of Law and Corporate Affairs, Managing Partner of KLCCA Legal & Corporate Affairs (Egypt) and Chairman Board of Advice House – KLCCA (Saudi Arabia). He has a mixed background as he was an Assistant Professor of Commercial & International Commerce Law, Taibah University in KSA and the British University in Egypt and he has a background in business administration, he is a graduate of the continuing and executive education program at Harvard Business School. This background made him aware of business law with a deeper concept that targets corporate affairs services as he merged the law with business for the sake of the continuity and development of companies.

Donato E. Tagliavia Joins Leaders in Law as the Exclusive Employment Law Member in Spain

Leaders in Law, the leading platform in its field, is delighted to welcome Dr. Donato E. Tagliavia as our exclusively recommended & endorsed Employment Law expert in Spain. Donato’s office is located in Madrid.

Prof. Dr. Donato E. Tagliavia practices in Employment Law and Tax Law. He Studied at the Universities of Deusto (Bilbao), Madrid/León and Dissertation at the University Complutense Madrid. Donato was a Professor of Employment Law and Social Security at the University Complutense Madrid and Lecturer for postgraduate courses on European Employment Law and Sports Law.

Notice of Establishment of “AMT Metaverse Legal Study Group”

We are pleased to inform you that AMT Law Firm have decided to establish the “AMT Metaverse Legal Study Group”.

Due to the prolonged Korona-ka, the use of “virtual space” including “metaverse” has rapidly penetrated, and “virtual space business” is attracting worldwide attention as a new economic zone. On the other hand, the legal aspect of the “virtual space business” is finally at the stage where the need for full-scale examination is being recognized.

Based on this situation, AMT will continue to organize and examine legal issues related to “virtual space business” from various perspectives such as the Intellectual Property Law, Data Protection Law, Electronic Commerce Law, Financial Regulation Law, and Tax Law. They have set up this study group, which is composed of lawyers specializing in each field, across fields.

In the future, they plan to hold a study meeting for each theme about once a month, with the first meeting on Thursday, April 7, 2022.
The results of this study group will be widely announced through seminars hosted by their office and various media.

AMT Metaverse Legal Study Group
Ken Kawai / Shunsuke Aoki / Takeshi Nagataki / Takashi Nakazaki / Hiroshi Shimoo / Inoue Inoue / Rinsuke Kazama / Miko Nakamura / Yuko Triangle / Takugo Tsunoda /Hiroki Tsue

Katie Lau Joins Leaders in Law as the Exclusive Medical Aesthetics Member in Hong Kong

Leaders in Law, the leading platform in its field, is delighted to welcome Katie Lau as our exclusively recommended & endorsed Medical Aesthetics expert in Hong Kong.

For Katie, Founder of Dr. Katie Clinic, principles are of paramount importance, and the sole principle she has staunchly followed since the onset of her professional career is to help people in need. This principle of Katie has been one of the key factors that has made her one of the most admired and influential doctors in and around her space in Hong Kong. Katie graduated from the University of Hong Kong in 2006 and later completed three years of surgical training at its teaching hospital. Katie still needed hands-on experience as a practitioner to prover her mettle and absorb the knowledge of a professional practice, which led her to work in many organisations and helped her gain her initial clinical aesthetic experience. “After 3 years of basic surgical training, there were a few opportunities which led me into private practice. Before my clinic, I started off as a general practitioner, and after a few months I got involved in the study of cosmetic medicine”, says Katie.

Emerging Damage and Loss of Earnings. The Revenue Agency Returns to the Taxation to be Applied.

With its response to question no. 185 of April 8, 2022, the Revenue Agency provided clarification about demotion and damages for loss of chance, stating that the sums awarded on an equitable basis by the Court, to compensate for the injury to the employee’s professional capacity, are to be considered non-taxable, in that they can be configured as consequential damages and, therefore, are not subject to withholding tax.

Before going into the merits of the Revenue Agency’s ruling, in terms of demotion, we can distinguish:

  • the pecuniary damage, deriving from the impoverishment of the professional capacity of the worker or from the failure to acquire greater capacity, with the related loss of chances, that is, of further possibilities of earning,
  • non-asset damage, including, inter alia, (i) damage to the worker’s psychological and physical integrity, (ii) existential damage, such as any prejudice that is not merely emotional and inner, but objectively ascertainable, that alters the worker’s habits and relational assets, inducing him/her to make different life choices as regards the expression and realization of his/her personality in the outside world, (iii) damage to the professional image and (iv) damage to the worker’s personal dignity.

The case that involved the tax authority originated from the request of a company that, having already paid to the Revenue Agency the withholding tax – operated on an amount awarded as compensation for damages to an employee – wanted to understand

  • whether the interest was intended to make up for the damage suffered and, therefore, was to be considered as having no relevance to income and improperly subjected to withholding tax or, differently, as being intended to make up for the loss of profit, with full relevance to income and, therefore, correctly subjected to withholding tax,
  • the procedures for recovering the withholding tax potentially considered to have been paid in error, assuming that this can be done when submitting the supplementary 770/2021 form, relating to the 2020 tax year.

In 2020 the petitioner had paid in two tranches to a former employee, the entire sum awarded as compensation for demotion by a sentence of the Court appealed by the same employee.

Specifically, a first instalment as an amount net of withholding tax, then, at the official request of the former employee, who had claimed the non-taxability of the sum in question, a second instalment by paying the difference between what was settled with the judgment and what was received.

In response to the question, the tax authorities point out that, based on Article 6, paragraph 2 TUIR, income earned in lieu of income and indemnities received, including in the form of insurance, as compensation for damages consisting in the loss of income, excluding those dependent on permanent disability or death, constitute income of the same category as that replaced or lost.

In this regard, in practice it has been specified that the indemnities paid by way of compensation must be taxed, provided that they have a replacement or supplementary function for the income of the recipient; in substance, the sums paid in order to replace lost earnings (so-called loss of profit), both present and future, of the person who receives them, are taxable.

On the other hand, the indemnities paid in order to restore the assets of the subject, or in order to compensate the economic loss suffered by the assets (so-called “emerging damage”) do not assume income relevance.

In view of the above, the Agency concludes that the sums settled on an equitable basis by the Court, following the injury to the professional capacity of the worker, are to be considered non-taxable, in that they can be configured as emerging damage and, therefore, aimed at compensating the economic loss suffered by the assets.

Therefore, as the petitioning company has already returned the withholding tax to the former employee, it may recover this amount by submitting the supplementary declaration for Form 770/2021 relating to tax year 2020.

With the response to the rulling , therefore, the Revenue Agency reiterates not only that, in terms of demotion and loss of chance, the sums settled on an equitable basis by the Court, following the impairment of the employee’s professional capacity, are to be considered non-taxable, but also that the chance represents a value that can be independently assessed from an economic point of view, making its loss a current and compensable damage.

Bird & Bird Advises Equistone Partners on the Acquisition of Eperi GmbH

Bird & Bird has advised Equistone Partners Europe on its recent acquisition of Eperi GmbH as a new portfolio company.

Based in the Rhine-Main area of Germany, Eperi GmbH is a leading provider of data security and compliance as well as cybersecurity solutions. Through its secured gateway, the company enables it customers to use cloud applications such as MS365 and Salesforce safely and legally compliant with e.g. GDPR and Schrems II while preserving the functionality of the secured applications. The company’s solutions are easy to deploy in on-premise, hybrid-, and multi-cloud environments. Eperi GmbH has a particular focus on data encryption for cloud applications for their international customer base consisting of large companies from the financial, healthcare and industrial sectors.

Equistone is currently expanding its traditional company portfolio with the additions of high-growth and future-oriented IT companies. The goal of this partnership is to enhance the strong market position of Eperi GmbH through scaling the organization, a dedicated buy-and-build strategy, and further internationalising Eperi GmbH. The seller and founder of Eperi GmbH will continue to act as managing director and will retain a significant stake of shares in the company.

Bird & Bird advised Equistone in cooperation with P+P Pöllath + Partners in the legal due diligence and the negotiation of the transaction documentation. Bird & Bird’s main focus was on the complex IT and IP related matters due to the leading expertise in this practice as well as the FDI assessment for the fund’s long-term strategy with the acquisition and the FDI clearance with the German Department of Economics.

Equistone Partners was advised by the following Bird & Bird lawyers: lead partner Dr. Hans Peter Leube, LL.M. and associate Michael Maier (both Corporate/ Private Equity, Frankfurt); partner Dr. Alexander Duisberg and associate Gökhan Kosak (both IT/Data Protection, Munich); partner Dr. Stephan Waldheim and Tamy Tietze (both Competition & EU, Dusseldorf); partner Dr. Christoph Maierhöfer (IP, Munich); partner Dr. Catharina Klumpp, LL.M. and associate Julia Neuper (both Employment, Düsseldorf); as well as partner Guido Bormann and associate Johannes Woltering (both Public Commercial and Regulatory law, Dusseldorf).

 

Jacy Whittaker Joins Leaders in Law as the Exclusive Commercial Litigation Law Member in the Bahamas

Leaders in Law, the leading platform in its field, is delighted to welcome Jacy Whittaker as our exclusively recommended & endorsed Commercial Litigation Law expert in the Bahamas. Jacy’s office is located in Freeport.

For Jacy Whittaker, the key to winning cases is being abundantly overprepared. As an attorney, Jacy gears up for war on everything. The litigator never walks into a courtroom without more research, more evidence, and more potential angles than warranted. This over-preparation allows him to think on his feet, building confidence—and the court’s regard—through each winning application, writ, submission, and hearing. Rather than being exhausted by sheer volume, the youthful lawyer becomes even more invigorated. After all, he lives to argue—and win.

Jacy got his start in 2000, working as a legal assistant for Frederick R.M. Smith, QC, a legendary attorney in the Bahamas. Mr. Smith had been intrigued by a brand of intelligence that has since served Jacy well in the courtroom. Even then, a talent analysis showed Jacy’s strengths as a future litigator.

If you require any assistance in this area, please use the contact details provided in Jacy’s profile below or contact us at info@leaders-in-law.com & we will put you in touch.