Did you know...? Some practical points for companies - October 2014

This article was produced by Olswang LLP, which joined with CMS on 1 May 2017.

Did you know...?

………..that the Commercial Court has recently held that a time limited obligation to engage in "friendly discussion" before proceeding to arbitration was enforceable? In a departure from long-standing case law to the effect that agreements to negotiate are void for lack of certainty, the Court held that the clause was indeed enforceable and that the obligation constituted a condition precedent which had to be satisfied before the parties could start arbitration proceedings.

The clause in Emirates Trading Agency LLC v Prime Mineral Exports Private Ltd provided that:"11.1 In case of any dispute or claim arising out of or in connection with or under this [contract]… the Parties shall first seek to resolve the dispute or claim by friendly discussion. Any party may notify the other Party of its desire to enter into consuLTCion [sic] to resolve a dispute or claim. If no solution can be arrived at in between the Parties for a continuous period of 4 (four) weeks then the non-defaulting party can invoke the arbitration clause and refer the disputes to arbitration." The Judge attached significance to the use of the word "shall" in the clause, which he concluded rendered the obligation mandatory (as opposed to the provision for notification which was held to be voluntary, on the basis of the use of the word "may") and also to the constraining time limit of four weeks, which he considered added to the certainty of the clause. He rejected the claimants' suggestion that the clause required the parties to engage in four weeks of discussions, holding instead that the proper construction was that four weeks had to elapse before the parties could initiate arbitration proceedings.

It remains to be seen whether the Court's approach will be followed in future cases, or whether higher courts will revert to the previous assumption that agreements to negotiate are void for uncertainty. For more information, see our article here.

………..that, as companies respond to pressure to recruit more women to their boards, the Equality and Human Rights Commission has issued timely guidance on the steps companies can take within the boundaries of equality law. The guidance looks at how unlawful discrimination can occur in the recruitment process, the limited circumstances in which gender can be taken into account, the lawfulness of female only shortlists and the liabilities that can arise where executive search firms or recruitment agencies are involved. The guide is intended for companies, nomination committees, search firms and recruitment agencies and can be found here.

………..that the Finance Act 2014 has now received Royal Assent, meaning that the second major set of changes to employee share incentive arrangements in successive years is now on the statute books. For a summary of the key changes, see our article here.

Any information contained in this article is intended as a general review of the subjects featured and detailed specialist advice should always be taken before taking or refraining from taking any action. If you would like to discuss any of the issues raised in this article, please get in touch with your usual Olswang contact. This article was included in our Olswang Corporate Quarterly Autumn 2014 publication.