The US Supreme Court has unanimously held that the Convention on the Recognition and Enforcement of Foreign Arbitral Awards does not prohibit US courts from applying the domestic law doctrine of equitable estoppel when determining whether an international arbitration clause can be enforced by a non-signatory to compel arbitration. In doing so, the court effectively extended the holding in Arthur Andersen LLP to international arbitrations under Chapter 2 of the Federal Arbitration Act.
Existing dispute resolution proceedings are inevitably experiencing the impact of the COVID-19 outbreak. Where possible, hearings have been delayed or relocated. However, with many lockdowns extended for the foreseeable future, some hearings will still need to be held. Notably, the American Arbitration Association acknowledges that these are appropriate times to permit (and indeed require) the use of viable alternatives to in-person hearings.
The New York Appellate Division has reaffirmed that the manifest disregard doctrine is a "severely limited… doctrine of last resort" that requires more than a mere error of law to warrant vacating an arbitral award. This case involved the acquisition contracts between Daesang and NutraSweet, under which NutraSweet could rescind the deal if it was sued for antitrust law violations. After NutraSweet exercised this right, Daesang commenced an arbitration proceeding for breach of contract.
Unbeknown to many, Section 1782 of Title 28 of the US Code permits parties to obtain discovery in the United States in aid of non-US legal proceedings, including – in some instances – international arbitrations. Such discovery can include documents and sworn testimony (eg, depositions). In conducting an arbitration seated outside the United States (or other non-US legal proceedings), it is useful to understand the mechanics, requirements and key issues of Section 1782 discovery.
California Governor Jerry Brown recently signed into law Senate Bill (SB) 766, Representation by Foreign and Out-of-State Attorneys. The bill, which was passed 69-to-zero by the legislature, clarifies that foreign (ie, not licensed in the United States) and out-of-state (ie, licensed in a US jurisdiction, but not in California) attorneys can represent parties in international arbitrations in California, subject to certain conditions. SB 766 will take effect on 1 January 2019.
The US Department of Transportation (DOT) recently issued a consent order assessing a $70,000 civil penalty against Volaris, the Mexican low-cost airline, for alleged violations of the DOT's regulations governing lengthy tarmac delays. The facts of the case and the DOT's rationale for assessing violations did not break new ground, but aspects of the DOT's order may provide insights into how it is approaching enforcement during the COVID-19 pandemic.
The Departments of Transportation, Health and Human Services and Homeland Security recently issued a non-binding guidance document which recommends that airports and airlines implement specific measures to mitigate public health risks associated with COVID-19, prepare for increased travel volume and ensure that aviation safety and security are not compromised.
As airlines seek to restore consumer confidence in air travel, they are urging the Transportation Security Administration (TSA) to administer temperature screenings of all passengers at TSA airport security checkpoints. Some have questioned whether the TSA has statutory authority to do so. For its part, the TSA appears to have answered that question in the affirmative because it is reportedly preparing to administer temperature checks at more than a dozen US airports.
Passengers who no longer wish to travel due to COVID-19 concerns or who have had their flights cancelled are demanding refunds from airlines. Airlines, on the other hand, are grappling with a difficult truth: if they refund all tickets, including those purchased under the condition of being non-refundable or those cancelled by a passenger, this will result in negative cash balances that will lead to bankruptcy.
President Trump has announced that the US Department of Homeland Security will delay the 1 October 2020 deadline for compliance with the REAL ID Act 2005 due to the COVID-19 pandemic. The postponement is welcome news for US airlines and the US travel industry, which had grown increasingly concerned (well before COVID-19) that a significant number of US nationals had not yet obtained a REAL ID.
The Alternative Reference Rates Committee (ARRC) recently published best practices for completing the financial industry's transition away from the US dollar London Interbank Offered Rate (USD LIBOR). With 19 months remaining before the anticipated cessation of USD LIBOR at the end of 2021, the ARRC's recommendations should provide market participants with further guidance as they continue to prepare for the transition.
As the markets continue to react to the COVID-19 pandemic, the trading prices of many corporate loans and bonds have fallen dramatically. As a result, many companies (or their private equity sponsors) are looking at repurchasing their debt at a discount. In addition, many companies are concerned that the impact of the COVID-19 pandemic will result in covenant breaches or other defaults and are engaging in discussions with their lenders and investors to obtain needed modifications to their debt agreements.
The Alternative Reference Rates Committee (ARRC) recently unveiled its 2020 objectives for facilitating the industry's transition away from the US dollar London Interbank Offered Rate (LIBOR) to the Secured Overnight Financing Rate. These goals and projected timelines build on the ARRC's previous transitioning work and aim to account for both the impact of COVID-19 on financial markets and the expectation that LIBOR will still be discontinued at the end of 2021.
The Commodity Futures Trading Commission (CFTC) recently issued three no-action letters providing relief for swap transactions (and amendments to swap transactions) in connection with the expected market transition from using the London Interbank Offered Rate and other interbank offered rates. The approach is consistent with an increasing focus at the CFTC and other regulators on facilitating an orderly transition to alternative rates.
The Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation recently announced that they will stop accepting London Interbank Offered Rate-indexed adjustable-rate mortgages by the end of 2020. Additionally, the two government sponsored agencies announced that they will soon accept mortgages tied to the Secured Overnight Financing Rate later in 2020.
In the wake of COVID-19, public officials across the United States have expressed a willingness to prosecute price gougers and companies that facilitate sales of goods with inflated prices. In this video, Vic Domen, government antitrust investigations and prosecutions lawyer and partner at Norton Rose Fulbright, discusses various consumer protection issues that are arising in the United States as a result of COVID-19.
In the wake of COVID-19, some sellers of essential goods and services have tried to greatly increase the cost of their products to take advantage of increased demand. However, sellers should be aware that public officials across the United States have expressed a willingness to prosecute price gougers and companies that facilitate sales of goods with inflated prices. State attorneys general are at the forefront of investigating and prosecuting instances of price gouging.
As the United States reacts and adjusts to the developing COVID-19 situation, the two federal antitrust agencies – the Federal Trade Commission and the Department of Justice Antitrust Division – have revised certain rules and procedures relating to their civil merger investigation processes to address these new challenges. Although both agencies have shifted most of their personnel to remote working arrangements, agency staff have demonstrated a willingness to be reasonable and accommodating.
While antitrust and consumer protection laws provide flexibility for firms to respond to changing market conditions, such as those created by the COVID-19 pandemic, it is important to remember that certain conduct will remain prohibited by antitrust and consumer protection laws no matter the circumstances.
Until recently, the Federal Trade Commission's (FTC's) ability to seek monetary equitable remedies (particularly disgorgement and restitution) for alleged antitrust violations went virtually unchallenged. However, the most recent appellate case that interprets the FTC's monetary equitable remedies under Section 13(b) of the FTC Act leaves open many questions about the FTC's ability to seek monetary equitable remedies in antitrust cases pursuant to Section 13(b).
The Financial Reporting Council recently published an updated version of its guidance for companies on corporate governance and reporting during the COVID-19 crisis to include new sections on exceptional or similar items and alternative performance measures.
While company managements have long engaged with shareholders at annual meetings and investor presentations, the notion of director engagement with shareholders is a more recent development. But why is shareholder engagement increasingly being added to corporate director job descriptions? This article posits several theories for the trend and identifies the most common engagement topics, provides data on the frequency of engagement and highlights emerging practices relating to director engagement.
A recent discussion on the Business Roundtable's adoption of a new statement on the purpose of a corporation concluded by observing (rhetorically) that the question raised by the statement was what all of the signatories would actually do to fulfil their corporate social responsibility commitments. Apparently, some non-governmental organisations are now asking that question for real and, ironically, one of the first recipients is a well-known leader of the pack on commitments to all stakeholders.
In July 2019 Representative Carolyn Maloney contacted Securities and Exchange Commission Commissioner Robert Jackson to solicit his views on legislation that would require public companies to disclose their corporate political spending. In his recent response, Jackson declared that the absence of transparency about political spending has led to a lack of accountability, allowing executives to spend shareholder money on politics in a way that serves the interests of insiders, not investors.
A recent Rock Centre for Corporate Governance paper suggests that the disconnect between observed pay levels and the public's view of executive compensation is stark. The paper was based on a survey conducted in October 2019 of 3,078 individuals – nationally representative by gender, age, race, political affiliation, household income and state residence – to understand the views that US citizens have on executive compensation.