Travis Perkins: Commercial Focus – Summer 2022

Case Law

• Shell UK Oil Products Ltd v Persons Unknown [2022] EWHC 1215 (QB)
• Esso Petroleum Co Ltd v Persons Unknown [2022] 4 WLUK 278
• INEOS Upstream Ltd and others v Persons Unknown and others [2022] EWHC 684 (Ch)

 

Legislation

Our latest updates in relation to the impacts on businesses as a result of Brexit, the Coronavirus pandemic and the Russian invasion of Ukraine, can be found in the Freethinking Hub on the Freeths website, in the Brexit Exchange, the Coronavirus Exchange and the Ukrainian Crisis Exchange. This review does not replicate the wealth of guidance on our website in respect of those issues.

• Building Safety Bill becomes the Building Safety Act 2022
• EU and US announce new Trans-Atlantic Data Privacy Framework
• New Modern Slavery Bill announced in Queens Speech
• Introduction of the Procurement Bill
• New Vertical Agreements Block Exemption Order

 

News

• Further Guidance on Extended Producer Responsibility
• ICO publishes new international data transfer tools
• Data Protection and Cybersecurity in relation to the Crisis in Ukraine
• Online order processes – the obligation to pay
• Duty to report on payment practices and performance
• Modern Slavery in the Construction Industry
• Bribery and corruption in trade: Reducing the Risk
• The Value of In-House Lawyers

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Case Law

Shell UK Oil Products Ltd v Persons Unknown [2022] EWHC 1215 (QB)

Shell UK Oil Products Ltd (Shell), the Claimant in this case, sells fossil fuels to those who run Shell branded petrol stations. The Defendants are climate and environmental activists who say that Shell’s activities are destroying the planet. On various dates in 2022, the Defendants engaged in protests to draw attention to their cause and to encourage governmental and societal change.

An emergency injunction was granted on 5 May 2022 to restrict the Defendants from undertaking certain activities such as damaging petrol pumps, preventing motorists from entering petrol station forecourts and affixing or locking themselves to any part of the Shell branded petrol stations, among other things. A public hearing was scheduled on 13 May 2022 so that the Court could reconsider the continuation of the order and its terms.

Issues:

Nancy Friel (an environmental activist) expressed concern that the terms of the order made on 5 May 2022 require that any person who wishes to apply to vary or discharge the order must first apply to be joined as a named Defendant. Mrs Friel did not consider that to be appropriate, because she is not taking part in any unlawful activity and does not therefore come within the scope of the description of the Defendants.

In the order, the Defendants are described as those who are “damaging, and/or blocking the use of or access to any Shell petrol station…or to any equipment or infrastructure upon it…with the intention of disrupting the sale or supply of fuel to or from the said station.” The order does not impose a blanket prohibition on the conduct described above. It only applies where the Defendant has the intention of disrupting the sale or supply of fuel to or from a Shell petrol station. Whilst it was recognised that the injunction interfered with rights of assembly and expression, it was contended that the interference was proportionate and justified to protect its rights to trade. The terms of the injunction are therefore deliberately drafted so as only to capture conduct that amounts to the tort of conspiracy to injure.

Decision:

Shell was successful in maintaining the injunction. The Court held that the continuation of the order should be granted so as to restrain, for a period of up to a year, at any Shell branded petrol station, the specified acts of the Defendants that amounted to a conspiracy to injure the claimant.

Comment: This judgment is of particular interest as it discusses the drafting of the operative paragraphs of the injunction, in particular with reference to the definition of persons unknown and the test to be applied to such cases, as well as the clear application of such test to the facts.

For further details, contact Louise Wilson.

 

Esso Petroleum Co Ltd v Persons Unknown [2022] 4 WLUK 278

In this case, the applicant oil companies, who imported and processed oil, applied for an injunction to prevent unknown persons from trespassing at eight of their sites. In April 2022, four of the applicants’ oil terminals had been subject to protests from Just Stop Oil and Extinction Rebellion, who had cut through fences and blocked entrances at their sites.

The oil companies applied for an injunction to restrain those it was anticipated may take part in further protests at their sites.

Issues:

The Court had to consider, in particular, whether it had the jurisdiction to grant the injunction, as section 12(2) Human Rights Act 1998 limits the Court’s ability to grant injunctions in cases where freedom of expression is involved and the respondents are not present or represented, unless the applicants had taken all practical steps to notify the respondents of the proceedings. In this case, the Court was satisfied that the applicants had taken all such practical steps.

In this matter, the applicants sought the injunction in relation to anticipatory breaches by the respondents. The Court applied the two-stage test set out in Vastint Leeds BV v Persons Unknown [2018] EWHC 2456 (Ch), namely: (i) whether there was a strong probability that unless restrained by injunction the Defendant would act in breach of the Claimant’s rights; and (ii) whether the resulting harm would be so grave and irreparable that damages would not be an adequate remedy.

The Court also had to balance the limits that should be imposed upon the protestors’ right to freedom of expression under the European Convention of Human Rights (ECHR), Article 10, against the applicants’ rights to peaceful enjoyment of their property under ECHR Article 1.

Decision:

The Court determined that there was a serious issue to be tried, as there was a strong case of trespass, and public and private nuisance. The Court concluded that damages would not be an adequate remedy in light of the significant sums involved in the oil industry and impracticality of obtaining damages from the protestors – many of whom could not be identified. There was also deemed to be a strong possibility that the protestors would infringe the applicants’ rights if not restrained by the injunction and that such infringement would cause grave and irreparable harm.

Comment: There are two key practical takeaways from this case, namely:

• If applying for an injunction, the applicant must ensure that it takes all practical steps to notify the respondents of the proceedings; and
• In relation to injunctions against persons unknown, the terms of an injunction must not be so wide that it prohibits lawful conduct. The prohibited acts must correspond to the threatened tort (see Canada Goose UK Retail Ltd v Persons Unknown).

For further details, contact Louise Wilson.

 

INEOS Upstream Ltd and others v Persons Unknown and others [2022] EWHC 684 (Ch)

When an interim injunction has been obtained, the claimant must progress the proceedings as rapidly as possible. Failure to do so expeditiously may, in exceptional cases, amount to an abuse of process. Claimants also have a duty to apply to the Court to discharge the injunction should there be a material change in the circumstances. This must be done within a reasonable period of time.

Issues:

In 2017, INEOS commenced a Part 8 claim for an injunction against persons unknown to protect against public protests at proposed fracking sites. In 2019, on the application of some of the Defendants, the Court of Appeal discharged the injunction against some of the persons unknown categories. The injunction was maintained against the other persons unknown categories. “Hardly anything” happened since the Court of Appeal’s decision.

Upon the Seventh Defendant’s application to strike out the claim, INEOS filed a witness statement informing the Court that it had become aware of a material change in circumstances necessitating an application by INEOS to amend or discharge the injunction. The material change related to a lapse in planning permission of the relevant sites.

Decision:

Notwithstanding an “inexcusable delay” by INEOS to progress the claim, the Court declined the Seventh Defendant’s application to dismiss the claim. Instead, the Court discharged the injunction on the grounds of material change in circumstances. The Court did impose a costs sanction however, for INEOS’s improper conduct.

Comment: There are several practical implications to consider in response to this case:

• The fact that injunctions against persons unknown rarely go to trial is not an excuse for failing to progress such claims;
• Be alert to any material changes in circumstances which might lead to a reasonable prospect of any injunction being amended or discharged; and
• The success of an application to strike out on the grounds of abuse of process will take into account any prejudice suffered by either party.

For further details, contact Louise Wilson.

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Legislation

Building Safety Bill becomes the Building Safety Act 2022

On 26 April 2022, the Building Safety Bill passed through Parliament and received Royal Assent on 28 April 2022. The Bill will now be referred to as the Building Safety Act 2022 (Act) which the Government proposes will come into force over a transitioning period of up to 18 months.

The Act gives the right to any person who owns a property or has a leasehold interest in a property to bring a claim against: i) a person who fails to comply with a construction product requirement in relation to a construction product; or ii) a person who markets, supplies or manufactures construction products, that leads to a building becoming unfit for habitation.

There is no explanation within the Act as to what would constitute a building to be ‘fit’ or ‘unfit’ for habitation. However, recent case law suggests that for a dwelling to be ‘fit for habitation’ within the meaning of Defective Premises Act 1972, it must, on completion (without any remedial works being carried out): a) be capable of occupation for a reasonable time without risk to the health or safety of the occupants; where a dwelling is part of a newly constructed building, what is a reasonable time will be a question of fact (it may or may not be as long as the design life of the building); and b) be capable of occupation for a reasonable time without undue inconvenience or discomfort to the occupants.

The Act sets out four conditions (A to D) that will need to be met for this section of the Act to apply. These are:

1. Condition A – at any time after the section came into force, a person:
   • Fails to comply with a construction product requirement in relation to a construction product,
   • Markets or supplies a construction product and makes a misleading statement in relation to it; or
   • Manufactures a construction product that is inherently non-compliant.
2. Condition B – once Condition A is met, the construction product is installed in, or applied or attached to, a relevant building in the course of works carried out in the construction of, or otherwise in relation to, the building. Requirement for cladding products for Condition B states that the cladding product is attached to, or included in, the external wall of a relevant building.
3. Condition C – when those works are completed the relevant building is unfit for habitation
4. Condition D – requires that the relevant building is unfit for habitation due to the factors contained in Condition A.

Where the above Conditions A to D are met, the persons referred to in Condition A will be liable to pay damages for direct and indirect costs including costs for personal injury, damage to property or economic loss suffered by that person. It is anticipated that there will be much argument about Condition D on the basis of causation given the complexities of decision making on product specification and the involvement of other professionals in the specification process.

For cladding products, the Act introduces a separate 30-year retrospective limitation period from the date of when the right of action accrued, if the right of action accrued before the commencement date of the Act. Where the right of action accrued after the Act came into force, the limitation of liability for all construction products including cladding products is 15 years.  It is important to note that the cladding product is defined widely as a cladding system or any component of a cladding system attached to or included in an external wall. External wall is defined to include any part of a roof pitched at an angle more than 70 degrees to the horizontal if that part of the roof adjoins a space within the building to which persons have access otherwise than for the purpose of carrying out repairs or maintenance. We would, therefore, consider that ‘cladding system’ would include rainscreen panels and insulation materials contained within the external wall systems.

The Act introduces cost contribution orders to be paid to those with an interest in the building or a dwelling, to be issued by either the court or the Secretary of State. These will be paid by ‘defaulters’, that is those who fail to comply with any of the regulations on construction/cladding products. Conditions A-D will need to be met for these orders to be made and the amount will need to be a just and equitable amount in respect of the costs of making the building or dwelling fit for habitation.

In addition, the Act potentially enables defendants, contractors and consultants to pursue cladding manufacturers and suppliers for contribution pursuant to section 1(1) of the Civil Liability (Contribution) Act 1978 on the retrospective provisions of section 149 of the Act. This allows a claim for a contribution to be made if the parties are liable for the ‘same damage’.

Our Construction team recently published an article covering the below areas in relation to the Act’s introduction:

• The definition of “higher-risk buildings”, which will need to be monitored and controlled by the building safety regulator
• The three key stages of a Development
• Details on the Occupation Stage, Golden Thread Rule and Rights of Redress
• The Regulation of Construction and Cladding Products

You can visit the full Freeths article here.

Comment: The BSA now gives a right to anyone who has suffered a loss as a result of a dwelling being ‘unfit for habitation’ to bring a claim against construction manufacturers and suppliers, if it can be shown that the product failed to comply with construction product requirements or, for suppliers, if they marketed or supplied construction products and made misleading statements in relation to those products. This could include the product’s fitness for a particular purpose. The limitation period for such claims has also been extended (depending on when the cause of action accrued) from six years to:

• 15 years prospectively; and
• 30 years retrospectively (in respect of cladding products only)

For further details, please contact Amy Morley for construction queries or Louise Wilson for a sale of goods angle.

 

EU and US announce new Trans-Atlantic Data Privacy Framework

On 25 March 2022, the European Commission and the United States published a joint statement on their agreement in principle to a new Trans-Atlantic Data Privacy Framework.

The Framework, when implemented, will provide a legal basis for personal data flows from the EU to the US. It would not apply to transfers from the UK to the US. The UK has previously announced that the US is a priority for an adequacy partnership of its own.

For further details on this, visit the European Commission’s website here.

Comment: Whilst this news is a step in the right direction for organisations that transfer personal data from the EU to the US, it is a tentative one. It remains to be seen how the parties will implement this agreement in principle, and whether the resultant agreement will attract challenge from data rights activists.

For further details, please contact Luke Dixon.

 

New Modern Slavery Bill announced in Queens Speech

The new Modern Slavery Bill is hoped to strengthen the protection and support of victims and increase the accountability of companies through further corporate transparency. The main changes will include:

• Strengthening the requirement on businesses with a turnover of £36million and more, to publish a modern slavery statement
• Additional duties for publication for the above statements; and
• Strengthening Slavery and Trafficking Prevention Orders and Slavery and Trafficking Risk Orders

Comment: The proposals for the new Modern Slavery Bill will make it mandatory to include all six content categories when producing your Modern Slavery statement, with a single deadline for submission set for all. The six content areas are:

• Organisation structure and supply chains
• Policies
• Due diligence processes
• Risk assessment and management
• Effectiveness of the above; and

Modern slavery statements will then need to be published in the specified government registry.

The new Bill heightens scrutiny on Modern Slavery protection and policies as, by publishing directly to the Government reporting service, statements can be compared to competitors and used to assess progress over time.

For further details, please contact Paul Burnley or Lisa Gilligan.

 

Introduction of the Procurement Bill

The Procurement Bill has been introduced to Parliament. This is intended to streamline the UK’s procurement processes following Brexit. As such, it could have a material impact in areas such as Managed Services.

Comment: The extent of the Government’s ambition to change the law from previously EU governed positions has been mixed to date (see, for example, the cautious approach taken to the recently proposed data protection reforms). However, procurement law has long been a target of Conservative reformers and think-tanks and this Bill is therefore likely to be seen as a tool for driving growth. We will continue to track its development as it moves through Parliament.

For further details, please contact Rebecca Howlett.

 

New Vertical Agreements Block Exemption Order

The UK’s new Vertical Agreements Block Exemption Order (VABEO) came into force on 1 June 2022.

While the new regime does not involve a complete overhaul of the rules that previously applied to vertical agreements (i.e., agreements entered into between businesses operating at different levels of the distribution chain) under the EU’s Vertical Agreements Block Exemption Regulation, there are some notable changes to be aware of.

Comment: Importantly, ‘wide retail parity obligations’ (i.e., obligations requiring that a product or service is not offered on better terms on any other sales channel) are now categorised as ‘hardcore’ restrictions. Retaining (or including) such obligations in vertical agreements will remove the benefit of the VABEO, leading to a presumption that the agreement restricts competition and potentially resulting in enforcement action.

Separately, the new regime provides greater flexibility to businesses in the design of their distribution systems. It also introduces more opportunity to treat online and offline sales differently. For example, it allows: (i) the combination of exclusive and selective distribution in the same or different geographical areas; and (ii) ‘dual-pricing’ – where a supplier decides to charge a higher price for products intended to be sold online than for products intended to be sold offline by the same distributor.

There will be a transition period of one year, providing businesses the opportunity to review their agreements and ensure that they comply with the new rules.

For more detail or information on the other changes that will be introduced, or for advice in relation to specific agreements, please do not hesitate to contact us.

For further details, please contact Andrew Maxwell.

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News

Further Guidance on Extended Producer Responsibility

The Government has produced further guidance on the upcoming “Extended Producer Responsibility” obligations – see Packaging waste: prepare for extended producer responsibility – GOV.UK (www.gov.uk) Businesses should consider if they are impacted by the new obligations and, if so, take steps to collect the correct packaging data from 1 January 2023. Relevant packaging activities includes “importing own-brand and third-party packaged products into the UK to sell to consumers”.

Comment: As per the guidance, under the new regulations, you may need to:

• collect and submit data on the packaging you handle and supply;
• pay a waste management fee; and
• buy packaging waste recycling notes (PRNs) or packaging waste export recycling notes (PERNs) to meet your recycling obligations.

The steps you must take to comply with the regulations will depend on whether you are classed as a ‘small’ or ‘large’ organisation. This is based on:

• your annual turnover
• how much packaging you handle and supply each year

Details of these thresholds are set out within the guidance.

For further details, please contact Rebecca Howlett.

 

ICO publishes new international data transfer tools

The ICO has published new tools to document and facilitate the international transfer of personal data, this came into force on 21 March 2022. Businesses transferring personal data outside the UK can still use the old EU “Standard Contractual Clauses” in any new contract entered into until 21 September 2022, but all existing contracts will need updating to reflect one of the new transfer tools by 21 March 2024.

Comment: Whilst it seems that businesses may start using the IDTA and Addendum, they will have to wait a little longer for detailed guidance from the ICO on how best to use them. The ICO has promised a clause by clause walk-though of both documents, in addition to further commentary on how to use the IDTA. Businesses should note that legitimising data transfers does not stop with the IDTA or the Addendum. They also need to do a transfer risk assessment before proceeding to transfer their data internationally. We await the ICO’s further guidance on how to conduct such assessments with interest.

For further details, please contact Luke Dixon.

 

Data Protection and Cybersecurity in relation to the Crisis in Ukraine

The ongoing crisis in Ukraine has caused an increased cybersecurity risk to organisations outside that country, including in the UK. The UK’s National Cyber Security Centre has issued guidance advising UK businesses to act in the wake of the crisis.

It has advised businesses that they should act on improving their cyber resilience in response to the increased threat of cyber-attacks from Russia.

For further detail on their recommendations, see here.

Comment: Whilst the NCSC is not currently aware of any specific threats to UK organisations, it notes that there has been a history of cyber-attacks on Ukraine that have had international consequences.  For example, we note from media reports that a “wiper” malware has been discovered in Ukraine that deletes data from infected computers. There is concern that this type of malware could spread to other countries.

The ongoing crisis has heightened cybersecurity risk such that UK organisations cannot proceed on a “business as usual” basis. That risk may increase, should the crisis escalate further. UK businesses should therefore benchmark their cyber threat response against the NCSC’s guidance and keep an active watching brief as the situation develops.

For further details, please contact Luke Dixon.

 

Online order processes – the obligation to pay

There was a useful reminder from the ECJ recently regarding website operators’ obligations in respect of how and when consumers complete online purchases.

It confirmed that it is the button which consumers select to complete the order process, and make payment, which itself must explicitly state that that will be the consequence of clicking it. Website operators cannot rely on the customer’s checkout journey as providing enough context for consumers to decide for themselves at which point payment is going to be taken.

In this case, it is booking.com’s use of “complete booking” which is being considered, a question that will be settled by a German Court following the ECJ’s ruling.

Comment: Businesses should consider whether any “payment” buttons on their websites make it clear that they create an obligation to pay. They have flexibility as to how they meet this requirement. Commission guidance suggests “buy now”, “pay now” or “confirm purchase” would be acceptable options. Whilst “register”, “confirm” and “order now” would be less likely to work.

As post-Brexit case law, this decision is not binding on UK courts, but it is likely to be considered.

For further details, please contact Rebecca Howlett.

 

Duty to report on payment practices and performance

At the beginning of April 2022, the Government published its Statutory Review of the Reporting on Payment Practices and Performance Regulations. The Regulations require the UK’s large companies and LLPs to report on a half-yearly basis on their payment practices, policies and performance. This applies to companies and LLPs (regardless of whether they are private, public or quoted) which exceed certain size criteria. Businesses are in scope of the requirement for a financial year if, on their last two balance sheet dates, they exceeded two or all of the thresholds for qualifying as a medium-sized company under the Companies Act 2006. These thresholds are:

• £36 million annual turnover
• £18 million balance sheet total
• 250 employees

The aims of the regime are to increase transparency and public scrutiny of large businesses’ payment practices and performance. It will also give small business suppliers better information, so they can make informed decisions about who to trade with, negotiate fairer terms and challenge late payments.

The full publishing on this duty can be found via the Government website here.

Comment: The report is a timely reminder of the Government’s ongoing commitment to improving payment practices. However, whilst the increased transparency the Regulations afford is praised by many respondents to the Government’s consultation, it is clear that work remains to be done to improve those practices. This will be all the more important given the challenging economic climate. A further report will be produced in time to determine whether the Regulations should be extended beyond 6 April 2024.

For further details, please contact Zoë Robertson.

 

Modern Slavery in the Construction Industry

The independent Anti-Slavery Commissioner has published a report on modern slavery in the construction industry. This can be found here.

The report identifies a range of good practices within the sector, including:

• Cross-departmental modern slavery working groups
• On-site worker engagement initiatives and worker interviews
• Deeper dives into supply chains through audits, visits and targeted training
• Multi-stakeholder projects, where competitors share data and intelligence to improve audit strategy, enhance training and identify other practical interventions
• Ethical management systems – a systemic approach to labour management, encompassing internal operations, supplier relationships and the site workforce
• Strategies and targets to reduce reliance on temporary labour

Comment: Whilst this principally concerns the risk of labour exploitation on sites, this report may inform changes to customer’s premises in the future, such as the approach taken to vetting delivery personnel.

For further details, please contact Rebecca Howlett.

 

Bribery and corruption in trade: Reducing the Risk

The Government has produced further guidance on steps businesses can take to manage the risk of bribery within their supply chains. This can be found at Bribery and corruption in trade: reducing the risk – GOV.UK.

Comment: This helpfully consolidates references to a number of potential training courses and resources, to help develop expertise internally and vet existing processes. These include:

• The OECD’s guide for conducting due diligence
• The World Economic Forum’s third party due diligence guidance for researching existing and potential business partners
• Transparency International’s bribery diagnosis kit
• The UN’s Fight Against Corruption Training Course
• The Institute of Business Ethics “Say No” Training toolkit
• Transparency International’s Doing Business Without Bribery training module

For further details, please contact Rebecca Howlett.

 

The Value of In-House Lawyers

PLC has published a useful blog post regarding how to promote the value of an in-house legal team, this can be found at Consultation board round table: measuring and communicating the value of the legal department | In-house Blog (practicallaw.com).

For further details, please contact Rebecca Howlett.

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The content of this page is a summary of the law in force at the date of publication and is not exhaustive, nor does it contain definitive advice. Specialist legal advice should be sought in relation to any queries that may arise.