In London Arbitration 19/21 the bunker clause in a trip time charter from the Far East to Egypt provided:
“8. BUNKER CLAUSE:
BOD about 830 metric ton IFO 380 CST about 78 metric ton LSMGO.
Prices both ends: USD425 PMT for IFO 380 and USD685 PMT for LSMGO.
BOR about same as BOD of IFO and BOR as onboard of LSMGO.”
The vessel was delivered with 888.56 mt of IFO on board and redelivered with 686.07 mt. The owners were prepared to allow a margin of 2 per cent for the term “about” but submitted that even on that basis the charterers had redelivered with a shortfall of 184.7188 mt of IFO. They said that the prevailing market price of IFO at the place of redelivery in Egypt was US$510 per mt, and claimed the difference between that price and the charterparty price of US$425 per mt on the shortfall, a total of US$15,701.10.
The Tribunal held that the word ‘about’ without further clarification imported a 5 percent margin for both delivery and redelivery. Owners argued that this was not the case on redelivery because the charterers had the opportunity of supplying further bunkers to make up the shortfall but deliberately decided not to do so. Although the Tribunal could see the attraction of the argument it rejected it as adding such a gloss to the usual understanding of the term ‘about’ would cause uncertainty and leave the parties in the dark as to the nature and extent of their obligations.
The Tribunal then held that the charter prices on redelivery only applied to legitimate quantities on delivery and redelivery and not to any quantities as submitted by the charterers. The appropriate comparison to be made was between the charterparty price and prevailing market price at the place of redelivery. Speculation as to where and at what price the owners might have taken on bunkers after redelivery had to be discounted as a matter of an independent commercial decision of the owners after redelivery.
The Tribunal rejected Charterer’s argument that they had requested the owners to load more bunkers at Singapore but were told that the vessel did not have sufficient tank capacity to load the quantity proposed by the charterers. The charterers had not then taken on additional bunkers in Egypt because the supply of bunkers there was unreliable both in terms of service and quality. There was no warranty as to the bunker capacity of the vessel and/or its ability to take on board any quantity of bunkers required by the charterers at any time at Singapore, or elsewhere, during the course of the trip.
The civil enforcement of intellectual property (IP) rights, was altered fundamentally when the Civil Enforcement Directive 2004/48/EC or IPRED, came into force. It was implemented to address the disparities between EU Member States for the enforcement of IP rights. The objective was to approximate legislative systems, so as to ensure a high equivalent and homogenous level of protection in the internal market. The Directive contains detailed obligations concerning final sanctions, preliminary measures and the disclosure and preservation of evidence, but the greatest effect upon UK IP law has been in relation to awards of damages and injunctive relief. However, since the UK exited the EU, with Brexit finally taking effect on 31 December 2020, it is wrong to assume that the remedies of the Enforcement Directive may no longer apply, as the civil enforcement regime for IP is now contained within the Post Brexit Trade and Co-operation Agreement (TCA), a 1246 page document, with the IP provisions set out at Title V and which came into effect on 1 January 2021, although the general principles of EU law now no longer apply to the UK, with EU regulations only continuing to apply in domestic law by virtue of the European Union (Withdrawal) Act 2018, which repealed the European Communities Act 1972, to the extent that they are not modified or revoked by regulations under that Act.
The object of Brexit was to ‘Take Back Control’, but the UK will still have to comply with some aspects of the EU aquis communautaire, since every EU Free Trade Agreement with other non EU countries, such as Australia or New Zealand, has a detailed IP Chapter and these countries are bound by bi-lateral agreements with the EU.If the UK wants to take back control of its IP laws it should redraft the Copyright, Designs and Patents Act 1988 (CDPA 1988). Brexit has made the need for a new Act more pressing, not less so.
Under the CDPA 1988, damages are awarded for infringement under section 97(2). There is no provision for an award of damages under section 97(1) where the infringer did not know and had no reason to believe, that copyright subsisted in the work to which the infringement action relates. However, without prejudice to any other remedy, section 97(2) allows the court to make an award of additional damages, after having regard to all the circumstances and in particular, to the flagrancy of the infringement and any benefit accruing to the defendant by reason of the infringement, thereby creating an implied punitive, or at least deterrent basis for a further award. Section 97 was not the most lucid legislative provision prior to 2004 and it was further complicated by the application of Article 13(1) of the Enforcement Directive. Under Article 13(1), the IP right holder can apply to the court for damages against an infringer who has the requisite knowledge that they were engaging in an infringing activity. The basis for such awards are compensatory, in that the damages must be appropriate to the actual prejudice suffered as a result of the infringing activity.
Under Article 13(1), the court has two alternative options for assessing the level of damages where the requisite knowledge is present. The first alternative under Article 13(1)(a), directs the court to take into account, all appropriate aspects, which include the negative economic consequences, including lost profits, which the right holder has suffered, unfair profits made by the infringer and, in appropriate cases, elements other than economic factors, such as moral prejudice. The second alternative under Article 13(1)(b), allows the court, in appropriate cases, to set the damages as a lump sum on the basis of elements such as, at least the amount of royalties or fees which would have been due if the infringer had requested authorisation to use the IP right in question. Where the infringer did not have the requisite knowledge, Article 13(2) gives the court the discretion to order the recovery of profits or the payment of damages which may be pre-established. Recital 26 of the Directive expands on Article 13, by stating that the aim is not to introduce an obligation to provide for punitive damages, but to allow compensation based upon an objective criterion, while taking account of the expenses incurred by the right holder, such as the cost of identification and research.
Section 97(1) of the CDPA 1988 does not explicitly refer to the compensatory principle where damages can be awarded for infringement with knowledge, although like Article 13, the court may order damages which are arguably implicitly punitive in nature, even though there is an absence of requisite knowledge. The courts are now grappling with the contrasting provisions of section 97 and Article 13, when there is a recognised need to compensate the right holder based upon the infringer’s lack of respect for the law and also as a dissuasion to the infringer in question, as well as to other potential infringers, to prevent them from committing such acts of infringement in the future.
Several cases have illustrated the interpretation and interplay between section 97 and Article 13. The first case is Absolute Lofts South West London Limited v Artisan Home Improvements Limited,  EWHC 2608 (IPEC), a case in which the dispute was about the quantum of damages for the defendant’s infringement of the Claimant’s copyright in 21 photographs of loft conversions undertaken by Absolute in the course of their business as providers of home improvements. There was no dispute that Artisan had used the photographs on their website, infringing the copyright held by Absolute. The issue for the court was the level of compensatory damages due to Absolute and whether they were also entitled to additional damages in accordance with section 97(2) of the CDPA 1988, the level of those damages, or whether the Absolute was entitled to a claim under Article 13 of the Enforcement Directive.
The parties had agreed the ‘user principle’ for the basis of calculating the compensatory damages, being the licence fee of £300.00 that Artisan subsequently paid for the use of the photographs. The court, with Hacon J sitting, went on to determine the issue of additional damages, which creates difficulties, as both regimes, under section 97(2) and Article 13 fall to be considered. Section 97(2) requires the court to assess whether the infringement is flagrant and the Article 13 criteria for assessment is the right holders lost profits, the infringer’s unfair profits and any moral prejudice caused to the right holder. The court accepted that the Director of Artisan had the requisite knowledge for the infringement and found that his ‘couldn’t care less’ attitude was sufficient to merit an award under section 97(2). However, the court’s conundrum did not end there, as Hacon J had to assess whether in fact, section 97(2) still applied, or whether Article 13 took precedence. In doing so, he referred back to his own decision in the case of Jodie Aysha Henderson v All Around the World Recordings Limited  EWHC 3087 (IPEC), a case involving performers rights and liability for additional damages under section 191J(2) of the CDPA 1988 which is equivalent in all material respects to section 97(2). In that case, Hacon J had questioned whether the CDPA 1988 provisions continued to apply, but he had not been required to decide the point, whereas in Absolute v Artisan, the continuing applicability of section 97(2) was unambiguously in issue and had to be determined.
The complexity required in the court’s assessment of this issue cannot be understated and can only be briefly summarised here. Regulation 3(3) of the UK Intellectual Property (Enforcement etc) Regulations 2006, provide that this Regulation does not affect the operation of any enactment or rule of law relating to remedies for the infringement of intellectual property rights except to the extent that it is inconsistent with its provisions. The court found that this suggested that existing national law with regard to knowing infringement is preserved unless it is inconsistent with Regulation 3. Hacon J dismissed the proposition that either national law is consistent with Regulation 3 of the 2006 Regulations and therefore must be taken to have the same effect as Article 13(1) of the Directive and so to apply it in parallel is pointless, or it is contrary to the Regulations and should not be applied, with the implication that any national provision that falls short or goes beyond the relief contained within the Directive, is contrary to EU law. The court found that Article 2(1) of the Enforcement Directive preserves national legislation that provides for more favourable remedies than the Directive, which went no further than setting out a minimum level of EU wide remedies, it remained the position that a successful right holder can rely on either section 97(2) or Article 13(1), whichever provides the higher level of damages.
The court considered the distinction between punitive and compensatory damages, as English law is compensatory in nature, putting the Claimant back into the position they would have been in, but for the wrongful act. However, it was held that it would be wrong to limit the award of damages to a purely compensatory level under Article 13(1), as that provision allows the concept of unfair profits to be awarded. These can be indirect, as well as direct. In the case of Absolute and Artisan, Artisan suffered reduced profits leading to liquidation after it was forced to remove the infringing photographs from its website. The court implied that the company may have been liquidated sooner had it not relied upon the photographs and to that extent they had profited from the infringement on the back of Absolute’s intellectual creativity, whilst Absolute had not lost profits in the true sense. The strictly compensatory award of £300.00 would therefore lack the dissuasive element required by Article 3(2) of the Enforcement Directive and an award of £6,000 was made. A second assessment based on flagrancy was then made under section 97(2) and the same figure of £6,000 was awarded, but not on a cumulative basis, the total award being £6,300.
Hacon J revisited the the relationship between section 97(2) and Article 13 again, in the case of Phonographic Performance Limited v Raymond Hagan  EWHC 3076 (IPEC) (PPL v Hagan). PPL brought a claim against Hagan for additional damages under section 97(2) to include a claim for unfair profits under Article 13(1), the issue of compensation having been dealt with at an earlier hearing. Both provisions require requisite knowledge, but whilst this is explicit under Article 13(1), it is not under section 97(2), where the court has to take flagrancy into account, which implied knowledge. Hacon J considered that it would be difficult to imagine circumstances in which additional damages would be appropriate without that knowledge. This case made the important point, in that it identified as an important factor, the extent to which an award of damages is likely to be dissuasive, the dissuasive element being to deter the infringer from infringing again and that other, potential infringers should be dissuaded from engaging in infringing activities.
It would have been reasonable to assume, having considered the inherent complexities involved when the courts award damages for IP infringement and the stated need to dissuade infringement, that greater consideration would have been given to the IP provisions of the TCA. IP Article 47 of that Agreement is materially the same as Article 13 and the UK has failed to take back control of its ability to determine how damages for IP infringement shall be awarded, with both regimes still requiring consideration and assessment.
The time has now come, when the CDPA 1988 is torn up and placed in the legislative shredder and the remedies for IP infringement are clarified and simplified. For example, there should be two elements to an award of damages, with compensation determined first and a dissuasive element second. The requisite knowledge and issues such as flagrancy and unfair profits should go to the assessment of the level of the award and any new legislation should reflect the basis of Article 13 or Article IP 47 of the TCA in the new Act, thereby negating the need to balance one provision against the other, as the courts are currently having to do. Only then, will we go some way to taking back control of our IP and exercise some damage limitation.
The Marquessa (Giorgis Oil Trading Ltd v AG Shipping & Energy PTE Ltd)  EWHC 2319 (Comm) involved repudiation of a time charter on Shelltime 4 form (as amended). Following repeated non-payment of instalments of hire, owners eventually accepted this conduct as Charterers’ repudiation and terminated the charter. The vessel was then carrying a cargo, loaded on the orders of Charterers, for sub-sub-charterers, and having exercised a lien, as an act of mitigation, Owners agreed with Voyage Charterers to complete the voyage in exchange for payments to escrow.
Owners applied for summary judgment in respect of:
i) unpaid hire accrued due prior to the termination of the Charterparty (the “Pre-Termination Claim”), and,
ii) damages consequent upon Owners’ termination of the Charterparty on the basis of Charterers’ repudiation or renunciation (the “Post-Termination Claim”), but excluding damages in respect of the period after the discharge of Charterers’ cargo from the Vessel.
Henshaw J rejected Charterers’ assertion that Owners had failed to allow for off-hire periods, presumably for the periods during which Owners suspended performance. Suspension of performance was permitted by the following clause in the charter.
“… failing the punctual and regular payment of hire … [Owners] shall be at liberty to at any time withhold the performance of any and all of their obligations hereunder … and hire shall continue to accrue …”
Owners’ right to suspend performance was not a penalty. Nor was it arguable that Owner’s exercise of the right to suspend performance was an unlawful exercise of a contractual discretion. The nature of the right is such that owners could reasonably have regard purely to their own commercial interests. In any event, the suspension of performance in the present case was not arguably irrational, arbitrary, or capricious. Neither were Owners obliged to mitigate. Their claim was for liquidated sums due under the contract, not damages for breach. Further, any obligation to mitigate did not require them to refrain, while the Charterparty remained on foot, from exercising their right to suspend performance. In any event, Owners did subsequently take reasonable steps to mitigate by means of their arrangement with the Voyage Charterers.
Henshaw J agreed that by the time Owners treated the Charterparty as having come to an end by reason of Charterers’ breaches a reasonable owner would have concluded from Charterers’ conduct that they would not pay hire punctually in advance as required by the Charterparty:
i) Charterers had failed to pay hire from the outset, and this continued over the ensuing months.
ii) At most, Charterers expressed a willingness to perform, but repeatedly proved unable or unwilling to do so.
iii) Charterers’ conduct in the present case deprived Owners of “substantially the whole benefit” of the Charterparty, and they were seeking to hold Owners to an arrangement “radically different” from that which had been agreed.
It was not arguable, that Owners themselves were in repudiatory breach, for suspending performance and then reaching an agreement with Voyage Charterers: The charter entitled Owners to suspend performance, and the arrangement with the Voyage Charterers was a lawful step in mitigation, realising value from the exercise of Owners’ lien, and in any event post-dated the contract having come to an end upon their acceptance of Charterers’ breaches.
When the Charterparty came to an end in November 2020, the Vessel was laden with cargo and until discharge, no replacement charterparty at the current market rate was possible, and therefore there was no scope for entering into a mitigation charterparty. Accordingly damages ran at the charter rate up until discharge, from which Owners gave credit for address commission, Charterers’ payments and relevant sums received from the Voyage Charterers. Credit was also given credit for the value of bunkers remaining on board at the date of discharge at the contractual rate in the absence of any evidence from Charterers as to the actual sums paid for the bunkers.
The correct date for assessing the credit for bunkers remaining on board was that of discharge on completion of the voyage for which Charterers had given orders, and not the date of termination. Clause 15 of the Shelltime 4 form (as amended) provides that “… Owners shall on redelivery (whether it occurs at the end of the charter or on the earlier termination of this charter) accept and pay for all bunkers on board …”.
The relevant date must, logically, be the date of actual redelivery, even if it was in fact later than the (natural) end of the charter or the date on which it was contractually brought to an end. In any event, even if clause 15 were not construed in that way, owners would be still entitled to recover the bunkers used to complete Charterers’ voyage on a different basis, viz as damages or in bailment – as in The Kos  UKSC 17.
Accordingly, Henshaw J found that Owners were entitled to summary judgment for a sum equivalent to hire from when they accepted Charterer’s repudiation to the date of discharge on the laden voyage in progress at that date, less credit for commission and bunkers remaining on board at the latter date.
What if the insurer ends up charging less premium and non-disclosure of material facts is a contributory factor? Could it be said in that case that inducement is established as a matter of law? This was essentially the thrust of the insurer’s appeal in Zurich Insurance plc v. Niramax Group Ltd EWCA Civ 590 against the judgment of Mrs Justice Cockerill, J (which also was reported on this blog last year). Reminding readers the facts briefly: the assured ran a waste collection and waste recycling centre and obtained an insurance policy from the insurer in December 2014. In September 2015 a fixed shredding machine, known as Eggersmann plant, was added to the policy with an endorsement. On 4 December 2015, a fire broke out at the assured’s premises and the Eggersmann plant along with the other plant was destroyed. The assured made a claim, which, at trial was valued at around £ 4.5 million, under the Policy. The majority of the claim related to the loss of the Eggersmann plant, which was valued around £ 4.3 million. The insurer refused to pay stating that the assured’s non-compliance with risk requirements under the buildings policy with another insurer and the fact that special terms under that policy were imposed on the assured were materials facts which needed to be disclosed under s. 18(1) of the MIA 1906. Mrs Justice Cockerill agreed that these were material facts and needed to be disclosed. However, it was held that the insurer failed to demonstrate that, if the facts had been fully disclosed, the original Policy for the plant (effected in December 2014) would not have been renewed. On the other hand, the insurer was able to demonstrate that, if the facts had been fully disclosed (especially imposition of special circumstances for the assured company by another insurer), the extension of cover for the Eggersmann plant would have been refused. Accordingly, it was held that the insurer was entitled to avoid the cover for the endorsement under the Policy and no indemnity was due for the loss of the Eggermanns plant. Otherwise, the original Policy stood and the insurer was bound to indemnify the assured for the items of mobile plant which were covered by the original Policy (as renewed in December 2014) and damaged in the fire.
On appeal, the assured was essentially arguing that they should have been allowed to avoid the original policy as well as the Eggersmann endorsement as they ended up charging less premium as a result of the assured’s non-disclosure with regard to special conditions imposed on them by another insurer due to non- compliance with risk requirements. Before evaluating the legal position on “inducement”, it is worth highlighting facts that led the insurer to charge premium less than it would have normally done. When rating risks, the particular insurer normally apply a “commoditised and streamlined” process that take into account three aspects, namely the amount of the cover, the nature of the trade, and the claims experience. A junior employee of the insurer when entering these variables, instead of categorising the risk as waste, with an automatic premium of 6 %, categorised it as contractor’s portable plant, with a premium of 2.25, to which a loading of 40 % was applied. The argument of the insurer is that if full disclosure had been made, the risk would have been referred to the head underwriter who would have noticed the mistake and accordingly priced the premium correctly. The non-disclosure therefore fulfills a “but for” test of causation in that it provided the opportunity for a mistake to be made in the calculation of premium that would not otherwise have been made.
Popplewell, LJ stressed in his judgment, at , that
“in order for non-disclosure to induce an underwriter to write the insurance on less onerous terms than would have been imposed if disclosure had been made, the non-disclosure must have been an efficient cause of the difference in terms. If that test of causation is not fulfilled, it is not sufficient merely to establish that the less onerous terms would have not been imposed but for the non-disclosure.”
To support this finding, he made reference to several legal authorities, including the judgment of the House of Lords in Pan Atlantic Insurance Ltd v. Pine Top Ltd  1 AC 501, but perhaps the words of Clarke, LJ, in Assicurazioni Generali SpA v. Arab Insurance Group  EWCA 1642, at  emphasised in the clearest fashion the accurate legal position:
“In order to prove inducement the insurer or reinsurer must show that the non-disclosure or misrepresentation was an effective cause of his entering into the contract on the terms on which he did. He must therefore show at least that, but for the relevant non-disclosure or misrepresentation he would not have entered into the contract on those terms. On the other hand, he does not have to show that it was the sole effective cause of doing so.”
The Court of Appeal’s judgment in the present case, and the line of authority on the subject of inducement, is a good reminder that in most cases if an insurer cannot satisfy the effective cause test he will also be unable to satisfy the “but for test”. But the opposite is not always true. There could be cases, like the present one, where it is possible to satisfy the “but for test” but the non-disclosure or misrepresentation could still not be the effective cause leading the insurer to enter into the contract on the terms it did. Here, the reason for the insurer charging less premium for the risk underwritten in December 2014 was the error of the junior employee mistakenly categorising the risk. The insurer has, therefore, failed to prove that non-disclosure of the condition imposed by another insurer had any impact on the premium charged or the decision to insure the assured. Accordingly, the judgment of the trial judge on this point (lack of inducement to enable the insurer to avoid the original policy) was upheld.
The case was considered under the Marine Insurance Act 1906 (s. 18). The law in this area was reformed by the Insurance Act 2015 especially with regard to remedies available in case of breach of the duty to make a fair representation. There is no indication, however, that the law reform intended to alter the “inducement” requirement (and in fact the Law Commissions stated clearly in the relevant reports published that this was not the case). It can, therefore, be safely said that the decision would have been the same has the case been litigated under the Insurance Act 2015.
If something looks like a duck, but doesn’t swim like a duck or quack like a duck, then there’s a fair chance it may not actually be a duck. A salutary decision last Friday from Singapore made just this point about bills of lading. You can’t simply assume that a piece of paper headed “Bill of Lading” and embodying the kind of wording you’re used to seeing in a bill of lading is anything of the sort if the circumstances show that the parties had no intention to treat it as one.
The Luna  SGCA 84 arose out of the OW Bunkers debacle, the gift that goes on giving to commercial lawyers with school fees to pay. In brief, Phillips was in the the business of acquiring and blending fuel oil in Singapore, and then supplying it to bunkering companies that would ship it out in barges to ocean-going vessels in need of a stem. One of those companies was the Singapore branch of OW. Phillips sold barge-loads of bunkers to OW on fob terms, with ownership passing to OW when the oil went on board the barge, payment due in 30 days and – significantly – not so much as a smell of any retention of title in Phillips.
When OW collapsed in 2014 owing Phillips big money, Phillips, having given credit to the uncreditworthy, looked around for someone else to sue. Their gaze lighted on the barge-owner carriers. For each barge-load, the latter had issued a soi-disant bill of lading to Phillips’s order with the discharge port designated rather charmingly as “Bunkers for ocean going vessels or so near as the vessel can safely get, always afloat”. The modus operandi, however, had been somewhat at odds with everyday bill of lading practice. The bunkers had in normal cases been physically stemmed within a day or so; OW (while solvent) had paid Phillips after 30 days against a certificate of quantity and a commercial invoice; and the bill of lading had remained at all times with Phillips, and no question had ever arisen of any need to present it to the carriers to get hold of the goods it supposedly covered.
On OW’s insolvency Phillips totted up the bunkers sold by it to OW and not paid for, took the relevant bills of lading out of its safe, and on the basis of those documents formally demanded delivery of the oil from the issuing carriers. When this was not forthcoming (as Phillips knew perfectly well it would not be) Phillips sued the carriers for breach of contract, conversion and reversionary injury, and arrested the barges concerned.
Reversing the judge, the Singapore Court of Appeal dismissed the claim. The issue was whether these apparent bills of lading had been intended to take effect as such, or for that matter to have any contractual force at all. Whatever the position as regards the matters that could be regarded when it came to interpretation of a contract, on this wider issue all the underlying facts were in account. Here the practice of all parties concerned, including the acceptance that at no time had there been any question of the carriers demanding production of the bills before delivering a stem to a vessel, indicated a negative answer.
Having decided that there could be no claim under the terms of the so-called bills of lading, the court then went on to say – citing the writings of a certain IISTL member – there could equally be no claim for conversion or reversionary injury.
This must be correct. Further, given the tendency of businesses to issue documents without being entirely sure of their nature or import, the result in this case needs noting carefully by commercial lawyers throughout the common law world.
A note of caution may also be in order, however, as regards carriers. You must still be careful what documents you do issue. True, the carrier in The Luna escaped liability because all parties accepted that the so-called bill of lading didn’t mean what it seemed to say (indeed, it doesn’t seem to have meant very much at all). But imagine that a bill of lading issued in these circumstances which ends up in the hands of a bank or other financier who is not aware of the circumstances and who in all innocence lends against it. The betting there must be that, as against the financier, the carrier issuing it would take the risk of being taken at its word. And this could be a very expensive risk, particularly since the chances of it being covered by any normal P&I club are pretty remote. Carriers, you have been warned.
In his latest judgement in Fetch.ai v Persons Unknown & Others  EWHC 2254 (Comm) His Honour Judge Pelling QC makes clear that not all claims in equity under Breach of Confidence will fall within the scope of the Rome II Convention, “[S]ome will where they involve unfair competition and acts restricting free competition, but many others will not.”[para.12]
The case relates to confidential information in the form of an access key code, allowing an operator to trade in assets nominally credited to a cryptocurrencies Exchange Account. This confidential information had been acquired by persons unknown and used to perpetrate alleged fraud against the account holder, generating losses in excess of $2.6m.
It was contended that the decision of the Court of Appeal in Shenzhen Senior Technology Material Company Limited v Celgard, LLC  EWCA (Civ) 1293;  FSR 1 would lead one to the conclusion that all breach of confidence actions come within the scope of Rome II, Chapter II, Article 4.1., because the principles in Article 6 apply. Judge Pelling noted, however, what Article 6 is concerned with is anti-competitive practices and anti-competitive conduct, “Celgard had sought to restrain the defendant from placing its rival lithium-ion battery separators on the market in the UK or importing them into the UK on the basis that the defendant had obtained access to the claimant’s intellectual property in relation to its product; and, thus, what the defendant in that case was seeking to do was not merely a breach of confidence in equity, but was also contrary to reg.3.1 of The Trade Secrets (Enforcement, etc) Regulations 2018.” [para.11]
Applying the Rome II Convention in this instance allowed Judge Pelling to provide injunctive relief and various orders for disclosure in favour of the account holder.
Life in lugubrious legal lockdown was briefly relieved when last year the Supreme Court in Sevilleja v Marex Financial Ltd  A.C. 39 pruned back the luxuriant growth of the reflective loss rule. To remind you, the reflective loss rule is the principle that you cannot sue X for damages in so far as (i) you are a shareholder in Y Ltd; (ii) Y Ltd could itself have sued X; and (iii) the loss you seek to have made good simply reflects the depreciation in your shareholding due to the damage wrongfully caused by X to Y. Marex had the effect of limiting this restrictive rule rule to claims by shareholders, and scotching the heresy that it extended more generally to any case where X was guilty of a wrong against Y which incidentally cased loss to some third party Z (the claimant in that case being not a shareholder but a mere creditor).
By common consent, Marex left a fair number of loose ends to be tidied up later. In a Cayman appeal today, Primeo Fund v Bank of Bermuda & Ors  UKPC 22, the Privy Council neatly knotted one such, namely that of timing. Granted that a shareholder in Y Ltd cannot sue X for loss reflecting the diminution in his holding in Y Ltd, what is the relevant time: is it when the cause of action arises, or when the claimant sues?
Simplifying as far as possible, Primeo was the Cayman Islands investment arm of the Bank of Austria. In the 1990s it appointed as custodians and investment advisers a couple of companies connected with the Bank of Bermuda, R1 and R2. It was then unlucky enough to be introduced to BLMIS LLC, in effect a unit trust operated by the redoubtable Ponzi fraudster Bernie Madoff. Large sums of money were entrusted by Primeo to BLMIS, most of which (it was found) were immediately appropriated by Mr Madoff and his pals.
In 2007 Primeo’s investment was restructured: its interests in BLMIS were transferred to a separate corporate vehicle, Herald Fund SPC, and in exchange Primeo got shares in Herald. At the same time R1 and R2 agreed to function as custodians and investment advisers to Herald.
Just before Christmas 2008 the Madoff house of cards collapsed, and with it BLMIS. As part of the ensuing litigation, Primeo – itself by then in liquidation – sued R1 and R2 for failing in the years before 2007 to alert it to indications that Mr Madoff was an obvious crook, and thus causing it to entrust more money to him and not to withdraw what it had while the going was good. One defence was reflective loss. R1 and R2 argued that, in so far as Herald could have sued them for loss caused to it (on the basis that they had negligently allowed it to take over assets from Primeo which it was now clear had been of very doubtful value all along), and that because as a result of events in 2007 Primeo’s loss now fell to be reckoned by the diminution of the value of its holding in Herald, the case fell squarely within the reflective loss rule.
The Cayman courts agreed, but the Privy Council was having none of it. It rightly pointed out that since Marex it had been clear that reflective loss was a rule of substantive law, rather than one of damages or title to sue. If so, it followed that the relevant time for seeing whether it applied was the time of the wrong for which compensation was sought. In Primeo, at that time there could have been no question of reflective loss: it was simply a case of allegedly bad advice leading to direct investment in a fraudulent scheme. It was at that moment that Primeo’s rights had crystallised, and nothing that happened later could take them away. It followed that the case was outside the reflective loss principle entirely.
In deciding as it did, the Privy Council had to deal with one awkward decision of the Court of Appeal, Nectrus Ltd v UCP Plc  EWCA Civ 57. In that case, essentially a mirror image of Primeo, a claimant had as a result of allegedly negligent advice invested in securities through a wholly-owned subsidiary. Since the subsidiary could also have sued the adviser, the claim was fairly and squarely within the principle. However, by the time the action was brought the claimant had divested itself of the subsidiary and its holding; and the Court of Appeal had held that this removed the reflective loss bar. However, the Privy Council rightly held that such reasoning could not stand scrutiny, and that Nectrus had been wrongly decided on the point.
It may be that this open discountenancing of Nectrus as wrongly decided will be taken as an express statement that English courts should no longer follow Nectrus, something which since 2016 has been possible in the Privy Council: see Lord Neuberger in Willers v Joyce (No 2)  A.C. 843 at . This blog certainly hopes so. It would be very unfortunate were a judge at first instance to feel constrained to follow Nectrus on the basis that this bound him, whereas a mere decision of the Privy Council (which is not technically an English court) did not. But only time, and the inclination of litigants to put their money where their mouth is, will tell.
Corporate/industrial espionage has been a fact of business life since time immemorial, but as Adam Bernstein notes in his latest article for The Company Secretary’s Review ,”It’s just that modern technology has made the process so much simpler…[and]…firms that don’t understand what’s at risk are playing with fire.”
By its very nature corporate/industrial espionage, along with corporate spying, can be hard to define but typically involves the illegal or unethical use of trade secrets to achieve commercial advantage. Be it hard or otherwise to define cyber espionage is with us and an ever-growing threat. Ian Bremmer of Time Magazine has recently warned, “Among the world’s most powerful countries, each government knows that an attack on the critical infrastructure of another invites retaliation…[which is]…why most of the action in cyberspace among cyber sophisticated nations is focused on stealing secrets and intellectual property.”
In addition to attacks on intellectual property, corporate/industrial espionage targets more general aspects of online activity. Unethical reviews, be they fake negative reviews about a rivals products or fake positive reviews to establish an undeserved market position, are an obvious example. Less obvious would be utilising negative search engine optimisation (SEO) tactics to impact adversely on a competitors search engine rankings, the illegality of which is open to question. Indeed, firms looking to protect themselves by countering such threats can, without prior recourse to professional advice, make matters worse for themselves by inadvertently generating even more adverse negative publicity.
In summary Bernstein concludes,”Competition is natural, but all firms of all sizes need to be on their guard for abuse. They shouldn’t be misled into thinking that espionage is all highbrow and involves spying that 007 would be proud of…”. The world of spying today has a much more anonymous face.
The use of ADR to resolve intellectual property (IP) conflicts is a subject that “lies at the intersection of two rapidly growing branches of law.” IP comprises exclusive rights to novel ideas as contained in tangible products of cognitive effort, which, due to its complexity and need for expert evidence, creates a lengthy and expensive litigation process. Mediation has the potential to offer an inexpensive, faster and more user friendly solution for the protection of IP rights and also for the defence against claims that can be brought or threatened by larger corporations against SME’s or individuals, by way of intimidation due to the threat of extensive legal costs and it should be mandatory.
The evolution of the Intellectual Property Enterprise Court (IPEC) in london, has gone some way to reducing the burden of IP litigation, since its inception. The court is run by a specialist IP judiciary, who manage the cases, so that discovery and the use of expert evidence is kept to a minimum. There are three case Tracks, the Multi-Track (MT) for cases with a value in excess of £50,000, a Fast Track (FT) for cases valued between £25,000 and £50,000 and a Small Claims Track (SCT), for cases worth £10,000 and £25,000. Damages and costs are capped. The SCT in particular, is of particular benefit to holders of IP rights that are valuable to the holder, but which do not have extensive commercial value, as there are fixed costs of £260 and IP owner can conduct the case as a litigant in person. The IPEC also sits on circuit in a number of court centres around the country, where the specialist judges hear these cases. The weakness in the SCT is that injunctive relief is not yet available, unlike in the MT and FT. This undermines the benefit of these reforms to IP litigation, as the Claimant in an IP case is more often seeking an injunction than an award of damages, the object being to bring the infringing act to a conclusion.
An alternative way to bring a swift end to infringing activity is to mediate. In a global world where the markets are chasing ‘The Next Best Thing’ most businesses cannot afford to litigate, either time wise or cost wise. Once a product is successful in getting to market, other creators are looking to cash in on that success by creating something newer and better. IP must be enforced in an efficient, effective and proportionate way. When a report to evaluate the IPEC was published in June 2015, all respondents stated that litigation was typically a last resort, but there were a number of negative comments on the usefulness of ADR/mediation and the Report did not find strong support for expanding its role. There was however, a view that the Allocation Questionnaire could be redesigned to force parties to take further steps to convince the court that they had engaged in settlement or mediation negotiations before commencing litigation. This is insufficient and shortsighted and contrary to the findings of the 2006 Gower’s Review which focused on the use of alternative methods of dispute resolution, which not only provide a low cost alternative to litigation but could help to avoid the negative aspects of conflict, such as damage to reputation, lost customers, damage to company morale, as well as the large costs implications.
At the date of the Gower’s Review, the cost of mediating was £3,000 with a high proportion of cases, 70%, referred to mediation, going on to reach settlement. The World Intellectual Property Organisation (WIPO) established the WIPO Arbitration and Mediation Centre in 1994 on a not for profit basis. This has been recognised as an international and neutral forum and the Centre also works as a resource centre to raise awareness of the valuable role that ADR can play in different sectors. As the Gower’s review pointed out, mediation and other ADR methods are currently poorly used and understood for IP. The old Department for Constitutional Affairs (DCA) promoted the use of ADR for years, but some judges were reluctant to encourage parties to mediate and large companies were also reluctant to engage, in case they were perceived as being weak. The Gower’s Review recommended strengthening the Practice Directions to provide greater encouragement for parties to mediate, which would raise the profile of mediation with the judiciary. The Review hesitated to impose further incentives to mediate, such as mandatory mediation as individuals have a right of access to the courts under Article 6 of the Human Rights Act 1998. This view does not bear scrutiny because mediation does not prevent access to the court system, it is an alternative method or resolution or an early step in the overall litigation process.
A working example can be found in the Philippines, where the Intellectual Property Office (IPOPHL) has taken steps to establish a strong and balanced IP regime that is conducive to business and industry. One of the challenges to the enforcement of IPR’s in the Philippines was the speedy disposal of cases and to address that concern, a number of reforms were introduced and implemented. One of these reforms was the introduction of the mandatory referral of IP cases for mediation. Once a case had been filed in the Originating Office, it was referred to ADR Services and the parties can choose between IPOPHL or WIPO mediation. Amongst the Best Practices in Mediation identified by the IPOPHL, was the mandatory referral for mediation, which gives the parties an opportunity to explore their own option for settlement without necessarily limiting their position in the litigation process. There is also the benefit that as the mediation is mandatory, parties such as large corporations will not see themselves as being weak by participating in it, as they have no choice.
Mediation has been described as the ‘sleeping giant of IP disputes’ and in the US, its use in patent disputes has been lauded. In addition to the many benefits that ADR provides to the parties, judges are seriously looking for new ways to reduce their caseloads and are turning to ADR to assist with case management, as referring a case to ADR means that between 60 to 80% of the time, the case will settle, thereby relieving the judges caseload. In the UK, the use of mandatory mediation may be the best method of early case management for IP judges, who then have the benefit of taking the case once the issues have been narrowed down, prior to the pleading stage. The Gower’s Review and subsequently, the Hargreaves Review in 2011 both missed a valuable opportunity to encourage this scheme in the UK.
Whilst the IPEC may be less overburdened than other sections of the legal system after the Covid 19 lockdowns, there will undoubtedly be a backlog of cases. On a positive note, the use of remote hearings has proliferated in the last 18 months and this cannot be underestimated in the overall reduction of costs. The UK Intellectual Property Office (IPO) which has long offered a mediation service, now offers that service online. The IPO website sets out details of the service, but the cost of mediation is about £250 per person for an eight hour mediation session, with the price reduced accordingly for shorter sessions. This compares to just over £400 per person plus room hire, for the same period of time.
The IPO mediation service represents a particularly cost effective way for individuals and SME’s in particular, to settle IP disputes with the assistance of an experienced IP mediator. The IPO has the independence, expertise and resources to provide mediation in a cost effective way, if the Government were to make it mandatory. This would reduce the burden on the IPEC and the judiciary and ensure that IP right holders could obtain maximum benefit from their IP. There is no detriment to the parties from engaging in this process and there is everything to gain. There will still be cases that proceed to litigation, but early independent intervention has the potential to take the heat out the situation and identify what exactly the parties are hoping to achieve, whether that is injunctive relief or a financial settlement.
Hot on the heels of the bumper 581 page communication from the EU Commission on its decarbonisation plans comes a mere 221 page communication from the Department for Transport Decarbonising Transport: A Better, Greener Britain.
This deals with various sectors, and contains various commitments as regards the domestic maritime sector.
Commitment. “We will plot a course to net zero for the UK domestic maritime sector, with indicative targets from 2030 and net zero as early as is feasible We will establish, following public consultation in 2022, an ambitious ‘Course to Zero’. This consultation will explore the technical, operational and policy options available for Government to accelerate decarbonisation in this sector to achieve net zero by no later than 2050 or earlier if possible. Following consultation, we will establish ambitious indicative targets for the domestic maritime sector recognising that we have ground to make up, covering 2030 and onwards. These targets will guide the design and enable us to measure the success of future policy interventions. We will embed this course in our Clean Maritime Plan (CMP), as part of a planned review and refresh which is due to start in 2022 and include within the CMP the long term interventions needed to achieve full decarbonisation.”
Commitment. “We will consult on the potential for a planned phase out date for the sale of new non-zero emission domestic vessels Following the conclusion of the current Clean Maritime Demonstration Competition and the Course to Zero consultation, we will consult in mid-2022 upon the potential for long term decarbonisation to be accelerated through carefully designed, well signposted measures to phase out the sale of new, non-zero emission domestic vessels, building on the experiences of the steps being undertaken today in other modes of transport.”
Commitment. “We will accelerate the development of zero emission technology and infrastructure in the UK We have recently launched a £20 million funding package – the Clean Maritime Demonstration Competition (CMDC) – to support and accelerate research, design and development of zero emission technology and infrastructure solutions for maritime and accelerate decarbonisation.”
Commitment. “We will consult this year on the appropriate steps to support and, if needed, mandate the uptake of shore power in the UK
We will consult in winter 2021 on how government can support the wider deployment of shore power, including consideration of regulatory interventions, for both vessels and ports, that could drive deployment as we transition to a net zero world, and bring forward appropriate measures.”
Commitment. “We will extend the Renewable Transport Fuel Obligation (RTFO) to support renewable fuels of non-biological origin used in shipping We consulted in March 2021, on a potential expansion of the RTFO to include some advanced maritime fuels in order to support their deployment.109 The RTFO mandates that a certain proportion of road fuel must be from a sustainable renewable source. Maritime fuels currently have no equivalent system, which we aim to change. We recently announced that we will make renewable fuels of non-biological origin used in shipping eligible for incentives under the RTFO.”
Commitment. “Internationally, the UK will press for greater ambition during the 2023 review of the International Maritime Organisation Initial Greenhouse Gas Strategy and urge accelerated decarbonisation.
The IMO will review its strategy in 2023 and as set out in the recent G7 Climate and Environment Communique112 the UK will be seeking to increase ambition to ensure that international shipping plays its part in delivering decarbonisation. We will promote close alignment with the Paris temperature goals and challenge the international community to deliver on the IMO initial strategy commitment to ‘phase out’ emissions from the international sector as soon as possible.”
Commitment. “We will ensure we have the right information to regulate emissions, and to judge the effectiveness of the steps we are taking in the UK and at the IMO We will review, and if appropriate amend, the operation of the UK’s existing monitoring, reporting and verification system for greenhouse gas emissions from international shipping, to ensure it is fit for purpose and delivering the information we need to decarbonise the maritime sector. We will keep the measurement approach to the UK’s international shipping emissions under review and consider the appropriateness of fuel or activity-based measures. Additionally, we will consider how similar information can be collected for the domestic fleet, in order to provide a better evidence base for future policy interventions.
We will include the UK international aviation and shipping emissions in the Sixth Carbon Budget The Government has set the Sixth Carbon Budget to include the UK’s share of international aviation and shipping emissions, as recommended by our independent climate advisors, the Climate Change Committee (CCC). This allows those emissions to be accounted for consistently with other emissions included within the Sixth Carbon Budget. In line with the CCC’s recommended method for CB6 and UNFCC reporting, the projections for international shipping emissions represent the estimated emissions from fuel sold in the UK for use in international shipping.”
It is noteworthy that shipping is not included in the UK’s ETS and international shipping enters the stage only in the last of the above mentioned commitments.