Dr Aygün Mammadzada

The Singapore Convention on Mediation: The UK’s Serious Commitment to ADR

Following the public consultation on the United Nations Convention on International Settlement Agreements Resulting from Mediation (the “Singapore Convention on Mediation”), which ran from 2 February to 1 April 2022, the UK Government signed the treaty on 3 May 2023. Once the UK has implemented the Convention into domestic legislation and deposited the instrument of ratification, it will enter into force six months later as provided in Article 14.1 of the treaty. To date, 56 countries have signed the Singapore Convention, and 11 of the signatories have also ratified it.

The Singapore Convention on Mediation was adopted by UNCITRAL in 2019 as a multilateral treaty providing a uniform and efficient framework for the enforcement and invocation of international settlement agreements resulting from the mediation of commercial disputes. Mediation is the most common form of alternative dispute resolution (ADR) and probably the quickest way of resolving disputes. As for the settlement of disputes, a neutral third party facilitates a negotiated agreement without any decision-making power.

There is a tendency in the UK to stimulate parties to mediate their arisen or potential disputes instead of litigating in courts, therefore, to immerse mediation as an integral step in the court process. In this regard, the Ministry of Justice’s Call for Evidence on Dispute Resolution in England and Wales set out the goals of the civil justice system to integrate dispute resolution processes, including resolving disputes consensually through mediation. Following this, the Government made proposals on the automatic/mandatory mediation of civil disputes valued up to £10,000 by Her Majesty’s Courts and Tribunals Service (HMCTS) as part of the court process. The latter is at the consultation stage.

By signing the Singapore Convention, the UK has demonstrated its serious outlook for becoming a leader in the promotion of mediation as an essential part of the civil justice system. In the absence of such an international treaty, there is a process to be followed for a settlement agreement to get enforced. A party would need to make a claim for breach of contract and get a judgment that is to be enforced first unless the terms of the settlement have been recorded in a “Tomlin order”.

With the UK’s membership to the Singapore Convention, international mediation agreements or iMSAs (settlement agreements qualifying under the Convention) as well as settlements will become directly enforceable without any further need to issue a claim for breach of contract or to litigate the case on the merits. Having the Singapore Convention together with the New York Arbitration Convention and Hague Convention on Choice of Court Agreements in its armoury will enhance the UK’s credibility as an attractive dispute resolution hub as well as promote its relations with global trading partners. Furthermore, membership in these fundamental Private International Law instruments will also have serious Brexit implications. Needless to say, the UK’s plans to ratify the Hague Judgments Convention significantly contribute to these ends (for more on this see the blogpost here: The Ball is Rolling: The UK to ratify the Hague Judgments Convention? – The Institute of International Shipping & Trade Law (IISTL) Blog.

The next step in the reform of the Arbitration Act 1996

Recently, the Law Commission for England and Wales published the Second Consultation Paper on the Review of the Arbitration Act 1996 containing provisional law reform proposals to ensure that the arbitration law remains state of the art. Back in 2021, the Ministry of Justice asked the Law Commission to undertake a review of the Arbitration Act 1996. Following this, the Commission published its first public consultation paper unfolding provisional law reform proposals. The consultation period was open by December 2022. See the previous post about the first consultation paper here: Law Commission to review the Arbitration Act 1996

The consultation questions in the previous paper were around the shortlisted aspects of the arbitration, including confidentiality, independence of arbitrators and disclosure, discrimination, immunity of arbitrators, summary disposal of issues that lack merit, interim measures ordered by the court in support of arbitral proceedings (section 44 of the Act), jurisdictional challenges against arbitral awards (section 67), and appeals on a point of law (section 69). In addition, the Commission encouraged consultees to suggest and comment on any other topics which were not covered but might need reviewing.

It is worth reiterating the main points of my response to the first consultation paper:

As of the status quo based on the existing legislation and authorities, relitigation and reconsideration by the court following the challenges brought under Section 67 not only double the waste of time and expenses by the repetitive proceedings and potential parallel or inconsistent judgments but also go against the whole idea of arbitration and the fundamental principle “Kompetenz-kompetenz”.
The courts’ powers to grant interim injunctions derive from the two fundamental legal frameworks – Arbitration Act 1996, Section 44 and Senior Courts Act 1981, Section 37. The revision of the existing legal frameworks to reflect the interrelationship and boundaries of the instruments with regard to the court’s powers to make orders in support of arbitral proceedings would be in line with the objectives and general principles of the Arbitration Act 1996 to improve the law relating to arbitration, in general. Indeed, the revision would bring clarity about the application scope of the Act (see the Introductory Act to the Arbitration Act 1996) and contribute to the fair resolution of disputes by an impartial tribunal without unnecessary delay or expense.

Based on the suggestions made by the consultees involved in the first round of the reform project, in its second consultation paper, the Commission has made new proposals about the proper law of the arbitration agreement. Furthermore, the Commission considers the following two issues as the most controversial ones among the others and seeks the views of consultees on the revised proposals: (1) challenges to awards under section 67 on the basis that the tribunal lacked jurisdiction; and (2) discrimination in arbitral appointments.

The second consultation paper will be open by 23:59 hours on 22 May 2023. The responses of consultees to this second consultation paper will be taken along with responses to the first consultation to inform the final report and recommendations. All the details of the project and relevant consultation documents are available here: Review of the Arbitration Act 1996 – Law Commission

The Ball is Rolling: The UK to ratify the Hague Judgments Convention?

On 15 December 2022, the UK government published a public consultation paper on the possible ratification of the Hague Judgments Convention 2019 on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (HJC). With the UK-wide call open in all three jurisdictions by 9 February 2023, the Government is seeking expert views from practitioners, academics, businesses, and any other persons with an interest in or who may be affected by cross-border civil and commercial litigation in the UK on its very welcome plan to become a Contracting State to the Convention. Besides the open call and public responses, the officials including experts from the Lord Chancellor’s Advisory Committee on Private International Law will get involved in the consultation before the publication of the outcomes.

The Hague Conference on Private International Law (HCCH) adopted the HJC on 2 July 2019 – 27 years after the initial proposal of a mixed instrument covering both jurisdiction and recognition and enforcement rules. Indeed, to guarantee the effectiveness of court judgments similar to what the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (the New York Convention) ensured for arbitral awards, the HJC has become a game-changer in the international dispute resolution landscape. As the HCCH announced, “the Convention will increase certainty and predictability, promote the better management of transaction and litigation risks, and shorten timeframes for the recognition and enforcement of a judgment in other jurisdictions.”

In August 2022, with the subsequent ratifications of the Convention by the EU and Ukraine, its entry into force became a long-awaited reality and indeed, the Convention is about to enter into force from 1 September 2023 (see my earlier blog post here: Hague Judgments Convention to enter into force! – The Institute of International Shipping & Trade Law (IISTL) Blog).

As the jurisdiction is well-known for its strong legal traditions and robust private international law rules, the UK instantly enhances its routes of international judicial cooperation to ensure certainty and predictability for citizens and businesses involved in cross-border commercial relationships. Most likely, the EU’s opposition to the UK’s application to ratify the Lugano Convention will impede the ratification of the HJC for the provision of continuing civil judicial cooperation.

The HJC provides recognition and enforcement of judgments given in civil and commercial cases excluding the carriage of passengers and goods, transboundary marine pollution, marine pollution in areas beyond national jurisdiction, ship-source marine pollution, limitation of liability for maritime claims, and general average. As a complementary instrument to the Hague Convention on Choice of Court Agreements 2005 (HCCCA), the HJC shares the same goals to ensure commercial certainty and access to justice, serve legal certainty and uniformity by providing free circulation of judgments and parties’ autonomy, also, advances multilateral trade, investment, and mobility. The HJC also aims at judicial cooperation and recognition and enforcement of judgments given by the courts designated in the parties’ agreement, other than an exclusive choice of court agreement whereas the HCCCA applies to exclusive jurisdiction agreements and resulting judgments.

The HJC is the only global instrument for mutual recognition and enforcement of judgments in civil and commercial disputes. It will significantly contribute to legal certainty in the post-Brexit era with its sister instrument HCCCA. Indeed, it is the UK’s turn to take appropriate measures to accede to the treaty for facilitating the free movement of judgments in civil and commercial cases between the UK and the EU.

Following the analysis, the Government will make its final decision on becoming a Contracting State to the HJC and on whether to make any reservations. If signed and ratified, the Convention would be implemented in domestic law under the terms of the Private International Law (Implementation of Agreements) Act 2020, subject to appropriate parliamentary scrutiny. As provided in Articles 28 and 29 of the HJC, the Convention would enter into force for the UK 12 months after the date it deposits its instrument of ratification.

Further details of the paper and consultation questions are available here: Consultation on the Hague Convention of 2 July 2019 on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (Hague 2019) – GOV.UK (www.gov.uk).

ANTI-SUIT INJUNCTIONS: BACK IN STOCK?

On 18 November 2022, the English High Court handed down a judgment in Ebury Partners Belgium SA v Technical Touch BV [2022] EWHC 2927 (Comm) in favour of an anti-suit injunction against the Belgian proceedings breaching the English exclusive jurisdiction agreement. Mr. Justice Jacobs provided some welcome clarification and confirmation of the principles applicable upon breaches of exclusive jurisdiction agreements in the altered legal landscape post-Brexit. Indeed, the decision might be considered a continuing development following the anti-suit injunction granted by the English Commercial Court against the Spanish court proceedings in QBE Europe SA/NV and another v. Generali Espana de Seguros y Reaseguros [2022] EWHC 2062 (Comm).

A brief glimpse of the factual background

The dispute arose between Ebury Partners Belgium SA/NV (Claimant) and Technical Touch and Jan Berthels (Defendants) in April 2021 following their Relationship Agreement for foreign exchange currency services which was consented to electronically through the claimant’s website. The hyperlink attached to the box ticked by Mr. Berthels (director of the company) would have taken onto the webpage containing a pdf file with the terms and conditions of the claimant applicable to their business dealings. Indeed, Clause 27 entitled “Other important terms” included governing law and exclusive jurisdiction clauses as follows:

“[27.11] This Agreement and any dispute or claim arising out of or in connection with it or its subject matter or formation, interpretation, performance and/or termination (including non-contractual disputes or claims) shall be exclusively governed by and construed in accordance with the laws of England and Wales.

[27.12] Each party irrevocably agrees that the courts of England shall have exclusive jurisdiction to settle any dispute or claim arising out of or in connection with this Agreement or its subject matter or formation, interpretation, performance and/or termination (including non-contractual disputes or claims). For such purposes, each party irrevocably submits to the jurisdiction of the English courts and waives any objection to the exercise of such jurisdiction. Each party also irrevocably waives any objection to the recognition or enforcement in the courts of any other country of a judgment delivered by an English court exercising jurisdiction pursuant to this Clause 27.12.”

The parties further concluded a Guarantee Agreement signed by Mr. Berthels as a guarantor regarding TT’s obligations to Ebury. The latter agreement also contained English law and choice of court clauses as follows:

“[15] This guarantee and any dispute or claim arising out of or in connection with it or its subject matter or formation (including non-contractual disputes or claims) shall be governed by, and construed in accordance with, the law of England and Wales. If any provision hereof or part thereof shall be held invalid or unenforceable no other provisions hereof shall be affected and all such other provisions shall remain in full force and effect.

[16] Each party irrevocably agrees that subject as provided below, the courts of England and Wales shall have exclusive jurisdiction over any dispute or claim arising out of or in connection with this guarantee or its subject matter or formation (including non-contractual disputes or claims). Nothing in this clause shall limit the right of Ebury to take proceedings against the Guarantor in any other court of competent jurisdiction, nor shall the taking of proceedings in any one or more jurisdictions preclude the taking of proceedings in any other jurisdictions, whether concurrently or not, to the extent permitted by the law of such other jurisdiction.”

When TT failed to pay a margin call and further sums under their Relationship Agreement and no amicable settlement was achieved, TT brought the Belgian proceedings to seek negative declaratory relief and challenge the validity of the two agreements under Belgian law. In response to the Belgian proceedings, Ebury brought an action in England as agreed between the parties. In addition, Ebury also applied for a grant of an anti-suit injunction in breach of the exclusive jurisdiction clause.

A short recap of the judge’s legal reasoning and decision

As expressed by Mr. Justice Jacobs, the arguments brought by the parties – Ebury’s application for an anti-suit order, and the Defendants’ applications challenging the court’s jurisdiction or inviting the court not to exercise it, were pretty much different sides of the same coin.

Indeed, by considering the claimant’s application first, the judge swept away the defendant’s counter arguments. It was emphasised that, while it would not have been possible to grant an anti-suit relief upon the presence of the proceedings at an English and any other European Member State court pre-Brexit, the principles applicable upon such a request were already well-settled. In this context, the court particularly underlined Mr. Justice Foxton’s reasonings in QBE Europe SA/NV v Generali España de Seguros Y Reaseguros [2022] EWHC 2062 (Comm) at para [10]. Indeed, the judgment was based on Section 37(1) of the Senior Courts Act 1981 giving power to the court to grant an anti-suit injunction for restraining foreign proceedings when it was required by the ends of justice, therefore, was “just and convenient”, furthermore, a “high degree of probability” about the existence of a jurisdiction was established.

Being the touchstone of the reasoning, and referring to already established prior authorities, the judge rejected the defendants’ application challenging the English court’s jurisdiction and seeking a stay or a relief to that end. It was confirmed that there was a good arguable case for service out (in line with CPR 6.33 (2B) (b), also pursuant to the application of the Hague Convention on Choice of Court Agreements 2005) and the English court had exclusive jurisdiction per the agreements between the parties. Accordingly, there were no strong reasons for the English court to decline its jurisdiction – in contrast, the court was bound to accept its jurisdiction per Article 5 of the Convention.

Significance of the judgment

This decision is of high importance for several reasons: It reiterates the emphasis that has been traditionally placed on party autonomy and authentic consent in English law and practice be it in a conventional or an electronic form by incorporation of the standard terms and conditions which would bring a useful reference point for businesses. Indeed, the Court asserted the principles of English law regarding the dealings in e-commerce and particularly click-wrap agreements.

The judgment also reasserts the termination of the prior authorities preventing the English courts from granting anti-suit injunctions against the proceedings at the European Member State courts (re: West Tankers and Turner Grovit). Indeed, the judgment follows up the Qbe reasoning which was a grand opening of a fresh chapter for anti-suit reliefs post-Brexit. It is worth noting that the availability of such reliefs might also stimulate the European courts to issue similar orders against the English courts bringing the effects of a double-edged sword.

Last but not least, the high value of the judgment derives also from the fact that it addresses the Hague Choice of Court Agreement 2005. While there is still an unreasonable lack of relevant authorities referring to this global convention, the judgment brings hope about more case law and precedents built upon by virtue of the HCCCA 2005.

One more move: Decentralised Autonomous Organisations (DAOs)

Over the last couple of years, the Law Commission for England and Wales has successfully launched several law reform projects related to digital assets, smart contracts, and electronic trade documents. With the UK’s target of becoming a tech leader, yesterday, on 16 November 2022, the Commission published a public call for evidence to be delivered by stakeholders on the characterisation and legal regulation of decentralised autonomous organisations (DAOs) – emerging organisational entities.

A DAO, a concept first developed in 2016, is a legal structure without any central governing body that enables the members with a common target to manage the entire entity on the basis of blockchain technology, smart contracts, software systems, and the Ethereum network. As automated and decentralised bodies functioning without human intervention, DAOs serve for transparency and efficiency. Indeed, the use of DAOs is dramatically expanding in today’s financial markets, banking, and corporate governance. With this increasing significance and progressive application amidst to inevitable practical uncertainties and ambiguities, it is getting a more crucial task than ever to seriously ponder upon their operation under the existing legal systems. That is the precise target of the Government asking the Commission to investigate what exactly constitutes a DAO and what are encompassed by their structure.

The Commission has drafted the following questions encouraging everybody with relevant expertise to respond, but not necessarily to all of them:

“When would a DAO choose to include an incorporated entity into its structure?
What is the status of a DAO’s investors / token-holders?
What kind of liability do or should developers of open-source code have (if any)?
How does / should the distinction between an incorporated company (or other legal form or incorporated entity) involved in software development and an open-source smart contract-based software protocol operate as a matter of law?
How do DAOs structure their governance and decision-making processes?
How do money laundering, corporate reporting and other regulatory concepts apply to DAOs, and who is liable for taxes if the DAO makes a profit?
Which jurisdictions are currently attractive for DAOs and why?”

The Law Commission aims at reaching a final report which will define the relevant issues under the existing laws of England and Wales as well as determine the potential for further legal reforms.

The call for evidence will last for 10 weeks from 16 November 2022 with the closing date of 25 January 2023. Further details of the project are available at Decentralised Autonomous Organisations (DAOs) | Law Commission.

PAPERLESS TRADE: ANOTHER STEP FURTHER

Charles Darwin had a point. It was not, he said, the strongest of the species that survived, nor the most intelligent, but that most adaptable to change. So too with law and digital transformation. The government recognises this well. As G7 President, the UK has been actively leading the process to achieve the legal environment for the full digitisation of trade documents. It has now put its money where its mouth is, with its swift introduction in the Lords (on 12 October, only five months after it appeared) of the Law Commission’s draft Electronic Trade Documents Bill.

The Bill is the outcome of consultations and a later report on how to achieve the digitisation of trade documents and thereby enhance paperless commerce. It aims to cement the legal recognition of electronic trade documents, including most importantly bills of lading, mate’s receipts, ship’s delivery orders, warehouse receipts, marine insurance policies and cargo insurance certificates. (It also includes provisions dealing with commercial paper such as bills of exchange and promissory notes, though these today are a good deal less important.)

Quite right too. Digitisation is an inevitable part of today’s global economy, with big data and cloud-based computing the driving force of industry and its supply chains and the smooth running of trade dependent not only on commercial operations but also to a great extent on the instantaneous turnaround and exchange of the relevant documents. Yet a huge number of the underlying processes and operations still rely “on practices developed by merchants hundreds of years ago.” This matters for us: under the latest statistics from the Department of Trade, international trade is worth around £1.266 trillion annually to the UK.

The problem arises in particular with the paper documentation traditionally used for proving shipment of the goods and their quality, and for their handover while in transit. Pre-eminent among these are bills of lading which not only act as receipts and furnish parties with significant data about the goods, but also serve as documents of title. The problem is a big one: the Digital Container Shipping Association has estimated that ocean carriers issued 16 million original bills of lading in 2020, more than 99% in paper form, quite apart from the myriad other documents that accompany goods in transit. The exercise in paper-shuffling that this involves is mind-blowing; its threat to the smooth operation of commerce was thrown into stark relief by COVID-19 lockdowns that forced the paper-shufflers to be sent home. No wonder this accelerated digitisation across the world. As the Law Commission observed, it was partly in response to the complexities brought by the pandemic that the International Chamber of Commerce asked governments to take immediate steps remove legal requirements for hard-copy trade documentation, and to consider longer-term plans for establishing legal frameworks applicable to electronic documents.

The Bill is commendably brief, consisting of only seven clauses. It starts (cl.1) with definitions of “paper trade document” and “qualifying electronic document” before presenting a non-exhaustive list of trade documents affected by it (excluding some more exotic instruments subject to the Uncertificated Securities Regulations 2001, and curiosities such as bearer bonds). Further provisions relate to what is to be regarded as possession, transfer and indorsement of electronic documents (cl.3), and deal with the change of a paper form to an electronic one or vice versa (cl.4).

The nub of the problem is, of course, possession: in English law you cannot in any real sense “possess” a mere stream of electrons. Therefore, in order for an electronic trade document to have similar effects and functionality as its paper equivalent, the Bill in cl.2 lays down gateway criteria. These consist of content requirements, and stipulations about the reliability of the underlying digital system, the “integrity” of an electronic trade document as regards originality and authenticity, the possibility of exclusive control, divestibility of that control, and the reliable identification of the persons in control of a document at any time.

The Commission were rightly aware of the possible impact of the latest innovations and emergent technologies brought by the fourth industrial revolution. In Appendix 6 to its report, it assessed the use of distributed ledger technology (“DLT”) to support trade documents in electronic form. Indeed, it points out that DLT, involving distribution of data among nodes accessible only by secured keys in order to render it effectively tamper-proof, offers very significant possibilities for the acceptance, validity, and functionality of electronic documents in international trade equivalent to that accorded to their paper counterparts.

These reforms can only be welcomed. If passed, the Bill will undoubtedly facilitate cross-border commerce by cutting unnecessary costs and reducing processing times and delays. Digitising documentation also contributes to sustainability, eco-efficiency, and environmental values by mitigating harmful carbon emissions, quite apart from boost the UK’s reputation as a global centre for international commerce and trade.

If there is a criticism of the Bill, it is its lack of detail. It does not contain any provisions on the procedural aspects of digitisation of documents, the use and exploitation of digitised documentation, or the mechanics of changing its form. In addition, the effectiveness of the gateway criteria might be achieved only upon the adoption of the specific protocols regarding the digital systems, their control mechanisms, and accreditation standards. One suspects in practice that if the bill becomes law, a detailed commentary will become essential for its practical application. This matters: unless such matters are satisfactorily sorted out, an electronic trade document that is effective in one jurisdiction might not be treated in the same way in another.

Moreover, while trade documents are being transferred across borders, cross-border disputes are at least to some extent inevitable. This means that we will need to give attention to the private international law rules specific to such documents: even if they contain an English choice-of-law clause, this will not necessarily ensure the application of English law to all their aspects. The Law Commission, to its credit, has recognised this. It has already launched a follow-up project on the Conflict of laws and emerging technology to ensure the rules of applicable law and jurisdiction in an increasingly digitised world. This issue is still at the pre-consultation stage – this might mean that unless private international law rules applicable to the related matters are achieved, the current Bill might not be operable or practically effective.

Some other tidying up may also be necessary. There may be a need, for example, to clarify matters by a few further amendments to the Carriage of Goods by Sea Act 1992 and the Bills of Exchange Act 1882 over and above those in cl.6 of the Bill. which are not in line with the latest technological and legal developments and in particular, the new Bill. But even if there is some way to go the Bill is a very important development. We, for one, welcome it.

Professor Andrew Tettenborn

Dr Aygun Mammadzada

Artificial Intelligence, Inventions and Patents: New Enhanced Guidance by the UK IPO

On 22 September 2022, the UK Intellectual Property Office (IPO) published the Guidance on Examining Patent Applications Relating to Artificial Intelligence Inventions. The Guidance consists of two parts:

The Guidelines on the practice of examining patent applications for inventions relating to artificial intelligence (AI), and
The Scenarios illustrating and reflecting a non-binding assessment of how the IPO would apply the Guidance to the patentability of an AI invention

Following the UK Government’s response to the Call for Views on Artificial Intelligence and Intellectual Property which ran from 7 September 2020 to 30 November 2020, the IPO was committed to publishing this Guidance. Indeed, the benchmark of this project was the Refreshed Industrial Strategy (“Strategy for Growth”) and the government’s wider ambition for the United Kingdom to be at the forefront of the technological revolution and a leader in AI technology.

In its response to the AI and IP calls, the government defined AI as “technologies with the ability to perform tasks that would otherwise require human intelligence, such as visual perception, speech recognition, and language translation”. Accordingly, the Guidelines rely on the basis that in the UK, patents are available for AI inventions in all fields of technology provided the conditions for the grant of a valid patent are met. According to Section 1(1) of the Patents Act 1977, a patent may be granted only if: (a) the invention is new, (b) it involves an inventive step, (c) it is capable of industrial application, and (d) the grant of a patent for it is not excluded by the relevant provisions. These four conditions apply to all inventions in all fields of technology. Thus, a patent may be granted for an AI invention when it is new, involves an inventive step, is capable of industrial application, and is not excluded from patent protection.

AI inventions can be either computer-implemented relying on mathematical methods or computer programs in some way. Indeed, the guidelines apply whether the invention is categorised as “applied AI” or “core AI” or it relates to training an AI invention in some way. The IPO practice is to examine whether such an invention makes a contribution that is technical in nature by considering what task or process it performs when run on a computer. The latter excludes inventions relating solely to a mathematical method “as such” and/or a program for a computer “as such”. An AI invention is excluded from patent protection if it does not reveal a technical contribution.

The Guidelines also touch briefly on the requirement for sufficiency of disclosure concerning AI inventions.

It is worth noting that the recent guidelines do not have any mandatory effect and they are not a source of law. The current legal framework in the field includes the Patents Act 1977, as amended by subsequent legislation, and the Patents Rules 2007. While deciding on the relevant issues the case law and UK courts’ interpretation of the legislation should be considered. Furthermore, judicial notice must be taken of international conventions (such as the European Patent Convention) and of decisions and opinions made under these conventions.

The opinions on the patentability and practical illustrations of the possible scenarios drafted by the IPO shall not be binding for any purpose under the Patents Act 1977. Regardless of their advisory character, the Guidance is quite helpful and supplements the comprehensive Guidance about the patent practice at the IPO set out in the Manual of Patent Practice. The constructive feature of the guidelines is particularly evident in the explanations referring to the fundamental case law and judicial interpretations where relevant. More details of the Guidance and the full documents are available at Examining patent applications relating to artificial intelligence (AI) inventions – GOV.UK (www.gov.uk).

Law Commission to review the Arbitration Act 1996

Yesterday, on 22 September 2022, the Law Commission for England and Wales published a public consultation paper unfolding provisional law reform proposals to ensure that the Arbitration Act 1996 remains state of art. After the Ministry of Justice asked the Commission to undertake a review of the Arbitration Act 1996 in 2021, the work began in January 2022. While consulting with a wide range of stakeholders in the field and assessing the current legal framework, the Commission has concluded that the Arbitration Act works very well, without any need for substantial reforms. However, it has been revealed that several discrete topics might necessitate amendments to ensure that the Act fits its purpose and continues to promote the UK as a leading destination for commercial arbitration. The Commission has drafted the consultation questions around the shortlisted aspects of arbitration:

1. Confidentiality

2. Independence of arbitrators and disclosure.

3. Discrimination.

4. Immunity of arbitrators.

5. Summary disposal of issues that lack merit.

6. Interim measures ordered by the court in support of arbitral proceedings (section 44 of the Act).

7. Jurisdictional challenges against arbitral awards (section 67).

8. Appeals on a point of law (section 69).

In addition, the Commission encourages consultees to suggest and comment on any other topics which are not covered in the consultation paper but might need reviewing.

The Commission welcomes responses to the paper between 22 September 2022 and 15 December 2022 using an online form, email, or post. After the consultation has been completed, the Commission will analyse the responses and ensure further stakeholder engagement as appropriate. The follow-up report of the final recommendations for law reform will be published by the Commission, and the Ministry of Justice together with other interested departments will decide whether to implement them.

More information on the reform project and the consultation paper are available at Review of the Arbitration Act 1996 | Law Commission.

Harmonised cybersecurity rules? The EU proposes Cyber Resilience Act 2022

On Thursday, 15 September 2022, the European Commission proposed the first-ever EU-wide Cyber Resilience Act regulating essential cybersecurity requirements for products with digital elements and ensuring more secure hardware and software for consumers within the single market.

According to the Commission, cybersecurity of the entire supply chain is maintained only if all its components are cyber-secure. The existing EU legal framework covers only certain aspects linked to cybersecurity from different angles (products, services, crisis management, and crimes), which leaves substantial gaps in this regard, and does not determine mandatory requirements for the security of products with digital elements.

The proposed rules determine the obligations of the economic operators, manufacturers, importers, and distributors to abide by the essential cybersecurity requirements. Indeed, the rules would benefit different stakeholders; by ensuring secure products, businesses would maintain customers’ trust and their established reputation. Further, customers would have detailed instructions and necessary information while purchasing products which would in turn assure data and privacy protection.

According to the proposal, manufacturers must ensure that cybersecurity is taken into account in the planning, design, development, production, delivery, and maintenance phase, and cybersecurity risks are documented, further, vulnerabilities and incidents are reported. The regulation also introduces stricter rules for the duty of care for the entire life cycle of products with digital elements. Indeed, once sold, companies must remain responsible for the security of products throughout their expected lifetime, or a minimum of five years (whichever is shorter). Moreover, smart device makers must communicate to consumers “sufficient and accurate information” to enable buyers to grasp security considerations at the time of purchase and to set up devices securely. Importers shall only place on the market products with digital elements that comply with the requirements set out in the Act and where the processes put in place by the manufacturer comply with the essential requirements. When making a product with digital elements available on the market, distributors shall act with due care in relation to the requirements of the Regulation. Non-compliance with the cybersecurity requirements and infringements by economic operators will result in administrative fines and penalties (Article 53). Indeed, market surveillance authorities will have the power to order withdrawals or to recall non-compliant devices.

The Regulation defines horizontal cybersecurity rules while rules peculiar to certain sectors or products could have been more useful and practical. The new rules do not apply to devices whose cybersecurity requirements have already been regulated by the existing EU rules, such as aviation technology, cars, and medical devices.

The Commission’s press release announced that the new rules will have an impact not only in the Union but also in the global market beyond Europe. Considering the international significance of the GDPR rules, there is a potential for such an expected future. On another note, attempts to ensure cyber-secure products are not specific only to the EU, but different states have already taken similar measures. By comparison, the UK launched consultation ahead of potential legislation to ensure household items connected to the internet are better protected from cyber-attacks.

While the EU’s proposed Act is a significant step forward, it still needs to be reviewed by the European Parliament and the Council before it becomes effective, and indeed, if adopted, economic operators and the Member States will have twenty-four months (2 years) to implement the new requirements. The obligation to report actively exploited vulnerabilities and incidents will be in hand a year after the entry into force (Article 57).

Hague Judgments Convention to enter into force!

On 29 August 2019, the European Union deposited its instrument of accession to the Hague Judgments Convention 2019 on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (HJC). On the same day, Ukraine ratified the Convention.

According to Articles 28 and 29 of the HJC, the Convention shall enter into force on the first day of the month following the expiration of the twelve months after the second State has deposited its instrument of ratification, acceptance, approval, or accession. On this occasion, the Convention has already two Contracting States, and as a practically effective tool, it will be utilised by commercial parties for the swift resolution of international disputes from 1 September 2023.

The Hague Conference on Private International Law (HCCH) adopted the HJC on 2 July 2019 – 27 years after the initial proposal of a mixed instrument covering both jurisdiction and recognition and enforcement rules. Indeed, with the aim of guaranteeing the effectiveness of court judgments similar to what the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (the New York Convention) ensured for arbitral awards, the HJC has become a game-changer in the international dispute resolution landscape. As the HCCH announced, “the Convention will increase certainty and predictability, promote the better management of transaction and litigation risks, and shorten timeframes for the recognition and enforcement of a judgment in other jurisdictions.”

The HJC provides recognition and enforcement of judgments given in civil and commercial cases, excluding the carriage of passengers and goods, transboundary marine pollution, marine pollution in areas beyond national jurisdiction, ship-source marine pollution, limitation of liability for maritime claims, and general average. As a complementary instrument to the Hague Convention on Choice of Court Agreements 2005 (HCCCA), the HJC shares the same goals to ensure commercial certainty and access to justice, serves legal certainty and uniformity by providing free circulation of judgments and parties’ autonomy, also, advances multilateral trade, investment and mobility. The HJC also aims at judicial cooperation and recognition and enforcement of judgments given by the courts designated in the parties’ agreement, other than an exclusive choice of court agreement whereas the HCCCA applies to exclusive jurisdiction agreements and resulting judgments.

The HJC is the only global instrument for the mutual recognition and enforcement of judgments in civil and commercial disputes and it will significantly contribute to legal certainty in the post-Brexit era together with its sister instrument HCCCA. Now, it is the UK’s turn to take appropriate measures to accede to the treaty for facilitating the free movement of judgments in civil and commercial cases between the UK and the EU. Indeed, the EU’s opposition to the UK’s application to ratify the Lugano Convention will most likely impede the ratification of the HJC for the provision of the continuing civil judicial cooperation.