Dispute resolution & litigation

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How Shoosmiths helped navigate a complex post-Brexit insolvency involving multiple jurisdictions, competing proceedings and one of the world's best-known luxury brands.

Published: 6 November 2026
Authors: Lee Sennett & Lisa Bricknell

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Imagine being appointed over the owner of a globally recognised luxury brand, only to discover that insolvency practitioners in another country have also been appointed over the same company.

Who has authority? Which court takes precedence? How do you sell assets when different insolvency regimes have different objectives? And, in a post-Brexit world, what do you do when the rules that once governed those questions no longer apply?

Those were just some of the challenges facing the team advising the liquidators of La Perla Global Management UK Limited, part of the internationally renowned La Perla luxury lingerie group. Corporate restructuring & advisory partner, Lee Sennett, who led the matter, spoke about one of the most unusual cross-border insolvencies the team has encountered.

"What started as a relatively straightforward liquidation became anything but"

At first glance, the position appeared relatively simple. The UK company held the group's intellectual property, and the expectation was that the liquidators would realise that asset for creditors.

But La Perla's structure was far from straightforward.

"The intellectual property sat in the UK, but manufacturing was carried out in Italy, most employees were based there, and the brand itself was inextricably linked to Italy," says Lee.

The complexity increased when Italian proceedings were opened over the same company, while a key manufacturing business entered an Italian extraordinary administration process. Suddenly, multiple officeholders across different jurisdictions were involved in different parts of the same group.

"What we thought would be a relatively straightforward asset realisation became significantly more complicated," Lee recalls.

The post-Brexit challenge

Before Brexit, practitioners would have looked to the European Insolvency Regulation framework to help resolve many of these issues.

This time, there was no playbook.

"The old framework wasn't there anymore," says Lee. "You couldn't simply point to a set of rules that told everybody how these competing proceedings should interact."

A lengthy jurisdictional battle was possible, but it wasn't attractive.

"There was a real risk that we'd spend years arguing about jurisdiction while value continued to disappear. The business needed a practical solution, not a perfect legal answer."

That thinking shaped the team's approach from the outset.

Building cooperation instead of conflict

Rather than focusing on who should prevail, the team worked with officeholders in Italy to develop a bespoke cross-border protocol. The aim was simple: create a framework that allowed everyone to fulfil their duties while preserving value.

The protocol dealt with how the parties would communicate, realise assets, allocate costs and ultimately distribute proceeds. It drew on concepts familiar to insolvency practitioners from the old European regime but adapted them for a post-Brexit world.

"Everybody had different obligations and different stakeholders," says Lee. "The challenge wasn't deciding who was right. It was finding a structure that allowed everybody to move forward."

More than an intellectual property sale

One of the key lessons from the matter was that value sat in far more than the intellectual property alone.

The brand, manufacturing capability, workforce and heritage were all closely connected. At the same time, the various insolvency processes were driven by different statutory objectives, including preserving employment and protecting an iconic Italian brand.

"The value wasn't simply in an isolated asset," says Lee. "The wider business and brand story mattered."

That meant a conventional disposal process was unlikely to produce the best outcome.

Thinking creatively

The solution required a degree of innovation.

Different jurisdictions imposed different restrictions on how assets could be realised, making a straightforward sale problematic. To overcome those obstacles, the intellectual property was transferred into a dedicated vehicle and made available through a long-term licence with future acquisition rights.

"We had to think differently," says Lee. "The challenge wasn't just identifying the legal position. It was finding something that would actually work in practice."

The structure enabled the transaction to progress while balancing the commercial and legal concerns of stakeholders across multiple jurisdictions.

The people side of cross-border restructurings

One of Lee's strongest reflections is that some of the biggest challenges weren't legal at all.

Cross-border matters inevitably involve different cultures, working practices and expectations.

"You learn very quickly that not every jurisdiction approaches these issues in the same way," he says. "Part of the challenge is understanding those differences and finding a way to work through them constructively."

For Lee, that ability to balance technical expertise with commercial pragmatism was ultimately what made the project successful.

Looking ahead

While La Perla involved a famous luxury brand, the lessons are increasingly relevant across all sectors. Businesses are more international than ever assets are held across multiple jurisdictions and insolvencies rarely fit neatly within national boundaries.

"Cases like this remind you that there isn't always an answer sitting in a textbook," says Lee. "Sometimes the real value comes from bringing people together and creating a solution that otherwise wouldn't exist."

For Shoosmiths, La Perla showcased the team's ability to navigate novel cross-border challenges, coordinate stakeholders across competing insolvency processes and develop practical solutions in situations where there is no obvious roadmap.

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Building safety in focus: Why is Government ignoring internal fire safety defects?

Thu, 5 Nov 2026 00:00:00 GMT

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Building safety in focus

Why is Government ignoring internal fire safety defects?

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The introduction of the Building Safety (Remediation of Unsafe Cladding etc) Bill (Remediation Bill) marks the latest stage in the Government's efforts to accelerate remediation across England. The Bill imposes duties to assess and remediate external wall fire safety risks, introduces remediation compliance plans, expands enforcement powers and creates mechanisms for regulators to step in where responsible entities fail to act. The policy objective is clear: unsafe cladding must be identified and fixed.

Published: 5 November 2026
Authors: Sam Mullender

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Yet the Bill also exposes an increasingly difficult question: what about internal fire safety defects?

Almost every recent Government initiative has focused overwhelmingly on external walls. The Building Safety Fund, Cladding Safety Scheme and now the Remediation Bill are all directed primarily towards the assessment and remediation of external wall systems.

That focus is understandable, but it risks creating a misleading impression that external wall defects are synonymous with building safety. They are not.

A building does not become safe simply because its cladding has been replaced. Internal fire safety defects can be equally serious. Missing compartmentation, defective fire-stopping, inadequately protected structural elements, defective fire doors, poorly designed means of escape and failures within smoke control systems may all materially increase the risk to life. In many cases, those defects are capable of allowing fire and smoke to spread throughout a building even where the external wall system is fully compliant.

Indeed, many of the failings exposed by the Grenfell Tower Inquiry were internal rather than external. Any suggestion that external walls alone define building safety risks therefore oversimplifies the lessons of Grenfell.

The difficulty is that Government policy now appears inconsistent.

On the one hand, and as noted above, public funding schemes generally exclude internal fire safety defects from recovery. The new Remediation Bill likewise concentrates almost entirely on external wall remediation.

On the other hand, the remediation of internal defects falls within the scope of other Government measures. The Developer Remediation Contract requires developers to address both internal and external fire safety defects. Likewise, the Building Safety Act 2022 permits remediation orders, remediation contribution orders and building liability orders in respect of both categories of defect.

The result is an uncomfortable question: are internal fire safety defects important enough to remediate, or not?

The Remediation Bill creates further uncertainty in respect of this question by only focussing on the remediation of external defects rather than approach each individual building’s defects holistically.

This is not merely an academic question. Internal defects have, in numerous cases, led to waking watches, enforcement action, major remediation projects and even the temporary decant of residents. Responsible entities are routinely told that such defects present life-safety risks requiring urgent attention. Yet the Government's latest flagship legislation largely proceeds as though they are peripheral.

Nine years after Grenfell, few would argue that unsafe cladding should not be fixed. The more pressing question is why the same clarity has not been provided for internal fire safety defects. If those defects are sufficiently serious to justify developer liability, Building Safety Act recovery claims and regulatory intervention, the Government should explain why they are largely absent from its remediation legislation. Responsible entities, housebuilders and residents alike deserve a coherent answer.

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Supreme Court clarifies the scope of directors’ duty of good faith

Thu, 29 Oct 2026 00:00:00 GMT

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Supreme Court clarifies the scope of directors’ duty of good faith

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The Supreme Court's judgment in Saxon Woods v Costa provides important guidance on the scope of a director's statutory duty to promote the success of a company.

Published: 29 October 2026
Authors: Lauren Moroney

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The Supreme Court’s decision in Saxon Woods Investments Ltd & others v Costa provides important guidance on the scope of a director’s duty to promote the success of the company under section 172 of the Companies Act 2006 (the 2006 Act). The judgment addresses the relationship between a director’s business judgment, collective board decision-making, and the fundamental fiduciary duty of good faith owed to the company.

The decision confirms that a director cannot avoid liability under section 172 simply because they honestly believed that their actions were in the company’s best interests. Where a director secretly acts to undermine or circumvent decisions that properly fall within the authority of the board, they may be acting in breach of their duty of good faith, even if they subjectively considered that their actions were beneficial to the company.

The judgment will also be of interest to insolvency practitioners considering breach of duty claims against directors on behalf of the companies to which they are appointed.

Facts

The dispute arose from the management of a company (Spring Media Investments Limited) (the Company) in which Saxon Woods Investments Ltd (Saxon Woods) was a shareholder and Mr Costa was a director.

In 2016, a shareholders’ agreement was entered into under which the parties (including Saxon Woods and various other investors) agreed to work towards a sale of the Company (or its shares) by the end of 2019. Mr Costa, however, believed that postponing a sale beyond that date would ultimately produce a better financial outcome. Acting on that belief, he covertly pursued a strategy designed to delay the sale process.

That strategy did not produce the intended result. Following the significant impact of the Covid-19 pandemic on the Company’s business, the anticipated increase in value failed to materialise. Saxon Woods subsequently presented an unfair prejudice petition under section 994 of the 2006 Act.

Earlier judgments

The first instance Judge held that Mr Costa’s conduct amounted to unfair prejudice. However, the court was not satisfied that his actions constituted a breach of section 172 or involved dishonesty.

Both parties appealed. Saxon Woods challenged the finding on section 172, whilst Mr Costa cross-appealed against the unfair prejudice findings. The Court of Appeal allowed Saxon Woods’ appeal and dismissed Mr Costa’s cross-appeal.

A significant aspect of the Court of Appeal’s reasoning concerned the nature of “prejudice” for the purposes of section 994.

The Court held that prejudice need not be financial in character. Although it could not be established that a sale would necessarily have been achieved by the end of 2019, Mr Costa’s actions had deprived the company of the opportunity to pursue the agreed strategy and attempt to achieve such a sale.

That lost opportunity was itself capable of constituting prejudice. By deliberately causing the company to depart from its agreed obligations, Mr Costa had engaged in conduct that was unfairly prejudicial to Saxon Woods as a shareholder.

The Court of Appeal also concluded that section 172 encompasses a core fiduciary requirement of honesty and loyalty towards the company.

The Court found that Mr Costa had acted contrary to that duty by secretly pursuing a course of conduct designed to frustrate the agreed corporate strategy. His conduct therefore breached the statutory duty to promote the success of the company.

Supreme Court decision

Mr Costa appealed to the Supreme Court, where his appeal was dismissed unanimously. The Supreme Court upheld the Court of Appeal’s reasoning and ordered an unconditional buy-out of Saxon Woods’ shares by Mr Costa.

In doing so, the Court provided substantial clarification on the proper interpretation of section 172(1). Section 172(1) provides that:

“A director of a company must act in the way he considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole.”

The central issue was whether the requirement of good faith governed only the director’s state of mind and decision-making process, or whether it also extended to the director’s conduct.

Mr Costa argued that section 172 focused solely on the director’s subjective belief as to what would promote the company’s success. On that analysis, a director who genuinely believed their actions would benefit the company could not be in breach even if they acted covertly.

Saxon Woods contended that the statutory obligation was broader, requiring not only honest thought processes but also conduct consistent with a director’s fiduciary obligations.

Although the Supreme Court accepted that a strictly grammatical analysis might lend some support to Mr Costa’s interpretation, it concluded that Saxon Woods’ construction was clearly preferable for three principal reasons:

consistency with the previous common law around directors’ fiduciary duties which the 2006 Act sought to codify, under which conduct of the nature of Mr Costa’s was “so obviously disloyal” that there was no previously reported case on the point
consistency with the broader statutory context and purpose of Chapter 2 of the 2006 Act as a whole, which aims to codify directors’ duties in a way that promotes harmony with the governance of a company in accordance with its constitution
it strained credulity to think that the drafters of the 2006 Act intended section 172 only to require a director to think, but not act, in good faith, since this “would be a recipe for chaos and paralysis in corporate governance”.

Key takeaways

Corporate disputes

The Supreme Court’s decision serves as a significant restatement of the importance of collective board governance and fiduciary loyalty.

Whilst directors retain broad discretion to exercise their own commercial judgment, that discretion must be exercised within the framework established by the company’s constitution and through proper board processes. Directors are not entitled to circumvent those processes by secretly implementing their own preferred strategies.

The judgment makes clear that section 172 is not solely concerned with what a director thinks; it is equally concerned with how a director behaves. Even where a director genuinely believes that they are acting in the company’s best interests, they may still breach their statutory duties if they act covertly, undermine board authority, or pursue objectives that conflict with decisions that should be made collectively.

For directors and shareholders alike, the decision provides welcome clarity that the duty of good faith remains rooted in the traditional fiduciary concepts of honesty, loyalty and adherence to proper corporate governance.

Insolvency claims

The Supreme Court’s decision will also assist Insolvency Practitioners who bring breach of duty claims either on behalf of the companies to which they are appointed, or pursuant to section 212 of the Insolvency Act 1986. Broadly, these claims are made further to a breach of duty by the directors of a company, including section 172 of the 2006 Act, and seek repayment of any loss flowing from that breach from the misfeasant director(s).

It is important to note that the underlying action to claims arising out of insolvency will often take place when the company was already insolvent. If a company is solvent, what constitutes ‘the success of the company’ is by reference to its members and their interests. If a company is insolvent, the directors must instead consider the interests of the company’s creditors.

Therefore, when considering whether a breach of duty has occurred in an insolvent scenario, the Court will consider whether the directors’ actions were, in good faith, in the interests of creditors. The Supreme Court’s decision may widen, or at least simplify, insolvency practitioner claims where directors have tried to hide over optimistic decisions or gambles in the hopes of saving the company and paying off creditors.

It is invariably sensible for directors to seek both legal and insolvency advice when their company begins to struggle financially. The Supreme Court’s decision has only amplified the importance of advice to ensure that directors do not inadvertently breach their duties, despite their best intentions.

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Commercial Court clarifies the procedure on letters of request

Thu, 29 Oct 2026 00:00:00 GMT

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Commercial Court clarifies the procedure on letters of request

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A recent Commercial Court decision provides significant guidance on the procedural requirements for letters of request where a witness is out of the jurisdiction.

Published: 29 October 2026
Authors: Aimee Cook

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The Commercial Court's decision in IPJSC United Company Rusal v Whiteleave Holdings Ltd & Ors¹ provides significant guidance on the operation of CPR 34.13 and the 1970 Hague Evidence Convention (1970 HEC). Whilst the judgment does not change the substantive test for obtaining a letter of request, it serves as a reminder that letters of request are a mechanism by which, assuming the relevant procedural requirements are satisfied the English court may ask a court in another jurisdiction to obtain evidence using the foreign court's own procedures, rather than a means of exporting English litigation practices abroad.

For commercial litigators, the decision highlights the practical and procedural realities of obtaining evidence from overseas witnesses: there are no shortcuts, and parties must be prepared to place themselves in the hands of the foreign court and its procedures when seeking overseas evidence.

What are the rules?

CPR 34.13 allows a party to apply to the High Court for a letter of request seeking evidence from a witness located abroad for use in English proceedings. The procedure operates alongside the 1970 HEC.

The starting point is that a letter of request is a request from the English court to a court, or “judicial authority”, in another jurisdiction asking the receiving court to obtain evidence and transmit it back for use in the English proceedings. The foreign court is ordinarily responsible for executing the request in accordance with its own procedural rules.

As held by the Court of Appeal in Honda², in considering whether to order that a letter of request be issued, the Court should ask two preliminary questions:

whether the intended witness can reasonably be expected to have relevant evidence to give on the topics set out in the relevant letter of request
whether the intention underlying the formulation of those topics is an intention to obtain evidence for use at the trial or is some other impermissible intention – e.g. mere general investigation.

If both those preliminary questions are answered in the affirmative, then in principle the application should be granted, subject to four further points also set out in Honda:

whether the request is oppressive
whether the request is too wide
other case management considerations, including proportionality and whether the evidence is necessary for the fair determination of the issues
whether there has been delay in making the application.

What happened in Whiteleave?

The Claimant sought two letters of request:

a request to Cyprus seeking evidence from four witnesses
a request to Germany seeking evidence from one witness.

The Commercial Court accepted that the witnesses could reasonably be expected to have relevant evidence. Indeed, the Defendants did not resist the application on relevance grounds. Instead, their challenge focused on the potential case management burden and timing of the application, which (if granted) they contended would cause “such extreme disadvantage ... as to be oppressive”.

The dispute therefore centred on how the proposed evidence-gathering exercise would be conducted. As drafted, both requests envisaged a significant degree of involvement by English lawyers in the overseas examination process. That approach led Bright J to consider the purpose and operation of CPR 34.13 and the 1970 HEC.

What did the court decide?

The Cyprus request

The Cyprus request was extensive.

It comprised 3,605 pages of materials, included very substantial lists of questions, sought documentary evidence and envisaged a lengthy examination process involving English legal representatives.

The Court refused the request in its existing form, emphasising that, under CPR 34.13 and the 1970 HEC, the normal position is that the foreign court obtains the evidence according to its own procedures and in its own language.

The most significant issue was that the letter did not ask the Cypriot court to examine the witnesses itself or even ask local counsel to; instead it proposed English counsel questioning witnesses and the exercise being carried out largely in English.

The request also had not been translated into Greek. The Court considered that it was inappropriate to expect the Cypriot court to operate using vast quantities of English-language material solely for the convenience of the English litigants.

The scale and timing of the proposed exercise was also relevant. The Court accepted that requiring parties and lawyers to participate in what could amount to several days of overseas examinations shortly before trial risked creating a disproportionate burden.

The Germany request

The Germany request differed in several important respects.

It concerned only one witness, had been translated into German, did not propose that the examination be led by English counsel, and did not contain a request for documents. Nevertheless, it still contemplated participation by English counsel in the examination process, including by way of asking supplementary questions of the witness.

The claimant relied on information published under the 1970 HEC suggesting that parties' representatives may, in some circumstances, ask limited follow-up questions following examination by the German judge. Bright J accepted that such limited participation might be permissible, however he concluded that this did not justify the extensive involvement of English advocates proposed by the Claimant and emphasised that any questioning should proceed through the German process and in German.

While substantially more compliant than the Cyprus request, the Germany request was also refused in its existing form and required amendment.

A refusal of form, not substance

Importantly, the Court did not conclude (and the Defendants did not argue) that the evidence was irrelevant or that letters of request were inappropriate in principle.

While the Defendants expressed concerns around timing/delay, and the Court accepted it was possible the letters (once amended and issued) may not be executed in time for trial, it considered that, on the evidence, there was a realistic chance or probability that the evidence would be available in time. (The 1970 HEC practical information indicated a 3-5 month execution period for the Cyprus request, and a 6 month period for the Germany request. At the time judgment was handed down, trial was 8 months away, in April 2027).

Instead, the applications failed because the Claimant sought to use the letters of request procedure in a manner inconsistent with the role of the receiving court. Bright J requested both letters be revised in accordance with his judgment.

Key takeaways

1. There are no shortcuts

The principal lesson from the decision is that parties cannot use the 1970 HEC to recreate an English cross-examination abroad. Parties seeking to maintain control over the process by avoiding instructing foreign counsel will receive pushback.

A letter of request is not simply a mechanism for relocating an English evidential hearing to another country. It is a request for the foreign court to obtain evidence using the procedural framework available in that jurisdiction.

Practitioners should therefore begin by asking: "How would this evidence be obtained under local law?" necessarily requiring the instruction of foreign counsel.

2. Foreign courts are not administrative assistants to English proceedings

The judgment reflects a strong emphasis on judicial harmony.

The receiving court is not expected to facilitate an English procedure; the foreign court's processes, language requirements and procedural rules must be respected.

In practical terms, that is likely to require:

translated requests
translated supporting documents
local lawyer
local procedural advice
acceptance that the process may unfold differently from an English witness examination.

It follows that the procedure is reciprocal. Where foreign litigants seek evidence from witnesses in England, the English court similarly expects the evidence-gathering exercise to be conducted in English, in accordance with English procedural requirements and by English-qualified lawyers.

3. Proportionality matters

The judgment also demonstrates that the court will scrutinise the practical burden of a proposed request.

Large document sets, lengthy question schedules and extensive overseas examination processes may all influence the court's exercise of discretion, even where the evidence sought is relevant.

Applicants should therefore consider carefully whether the scope of a request can be narrowed and simplified.

4. Witness burden is becoming increasingly important

A notable feature of the judgment is the Court's concern about the burden imposed on witnesses themselves.

Applicants need to address not only why the evidence is relevant and to comply with local law, but also how the process will operate in practice for the individuals being examined.

Conclusion

While Rusal v Whiteleave does not alter the established principles governing letters of request, it provides an important reminder about their fundamental nature. A letter of request is not a tool for extending English litigation procedures across borders. It is a request for assistance from a foreign court, and that assistance must be sought on the foreign court's terms.

For litigants, the message is straightforward: if evidence is required from an overseas witness, there is no procedural shortcut. Parties must be prepared to engage with the legal system of the requested state, comply with its procedural requirements and trust the foreign court to carry out the evidence-gathering exercise. Attempts to retain control of the process through English lawyers, English-language materials or English procedures will likely lead to the court requiring revision of the letters. The practical information published under the 1970 HEC must be consulted.

Parties must also ensure they do not delay in their applications to the English court; while the Court in this case acknowledged that letters of request are often regarded as a “last resort”, and may not always know until a relatively late stage in proceedings (as was the case here) whether another party is intending to call the relevant witnesses, the prospect of a proposed letter of request causing prejudice to any trial date will be a key consideration for the court generally and in relation to the third and fourth Honda points in particular.

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Break conditions and last minute demands decided in the High Court

Mon, 26 Oct 2026 00:00:00 GMT

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Break conditions and last minute demands decided in the High Court

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In Sterling House Ltd v International Baccalaureate Organisation (UK) Ltd [2026] EWHC 2680 (BP), the High Court considered whether a tenant had successfully exercised a break clause where sums remained outstanding at the break date.

Published: 26 October 2026
Authors: Nick Wilcock

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The lease required annual rent and insurance rent to be paid as conditions of the break. Although the tenant asked the landlord’s agents for the sums required before handing back the premises, the rent invoice issued by the agents only covered the period up to the break date. The tenant paid that amount, leaving approximately £45,000 outstanding in respect of the balance of the quarter which fell after the break date.

The Court held that the landlord was prevented from relying on that shortfall. It was accepted that clear wording was required to allow the parties to depart from the position under the lease. However, the Court found that the landlord’s invoice amounted to a clear representation of what the landlord wanted paid before handover. The tenant had reasonably relied on it, having specifically sought the invoice well before the break date because it wanted to ensure that all necessary sums were paid.

The landlord had also demanded approximately £2,300 of insurance rent at 3pm on the Friday before the Monday break date. The Court found that this did not give the tenant a reasonable opportunity to complete the mechanics of payment. The payment was subsequently made within a reasonable period.

The landlord’s claim was therefore dismissed. Both landlords and tenants will retain a keen interest in whether permission to appeal is granted.

Practical significance

The decision is an important warning for landlords administering conditional break options. Although tenants must comply strictly with break conditions, a landlord's communications may prevent it from relying on non-compliance. Rent demands and correspondence issued shortly before a break date should therefore accurately reflect the sums contractually due, while demands for additional sums should allow a reasonable opportunity for payment.

For tenants, this decision provides a possible shield in circumstances where a conditional break option is challenged. However, it is anticipated that tenant’s focus will remain on avoiding these circumstances arising in the first place. It seems more likely that tenants will continue to ensure any break conditions are strictly complied with, rather than rely on landlord’s conduct to (as in this case) mitigate a missed payment.

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Product liability in the digital age: Law Commission proposes sweeping reforms

Fri, 23 Oct 2026 00:00:00 +0100

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Product liability in the digital age: Law Commission proposes sweeping

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Published: 23 October 2026
Authors: Claire Kershaw, Paul Eccles, Luke Coleborn, Nick Sheerin

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The Law Commission has published a consultation on significant proposed reforms to the UK’s product liability regime under the Consumer Protection Act 1987 (the CPA) .

Introduction

Acknowledging that the law has “not kept pace” with how modern technologies have “transformed everyday life”, the Commission’s central proposal is to expand the definition of “product” to bring software, AI systems and aspects of social media/other online platforms within scope. Amongst other things, the definition of “supply” and categories of potentially liable persons will also be expanded to reflect digital delivery methods and the increasing complexity of modern supply chains.

The consultation follows in the footsteps of the EU’s new Product Liability Directive and wider consideration of liability for AI-related harm by the UK Jurisdiction Taskforce, both of which were previous explored in Product liability redefined: EU Directive reshapes digital risk and New tech, old law: UKJT confirms its position on liability for AI harm. This sits alongside rising public sentiment around the risks of certain technologies, partly reflected in the enactment of the Online Security Act 2023 and the subject of developing case law particularly in the US.

The Commission describes the proposals as seeking to strike an appropriate balance between the interests of consumers and businesses, by providing consumers with a straightforward route to compensation while giving businesses legal certainty to manage the risk of liability for harm.

Interested stakeholders should consider responding to the consultation, which closes on 14 January 2027, as soon as possible.

Summary of key proposals

Definition of “product” to include software, AI and social media/online platforms

the Commission proposes to expand the definition of “product” to include software and AI systems, identifying some core features of each to help clarify boundaries (for example, in relation to AI, the possibility of self-learning after deployment). The case for this is described as particularly strong given the evidential difficulties claimants face in establishing how and why these technologies may have caused harm – the type of complexity the CPA’s strict liability regime is intended to address
design components and features of social media and other online platforms would also be brought within scope, giving individuals the right to seek compensation for harm suffered (which the Online Safety Act 2023 does not provide). Features identified by the Commission include recommender algorithms, ‘infinite scroll’, personal notifications, age verification processes and illegal/harmful content reporting mechanisms
in order to “future-proof” the definition of “product”, the Commission proposes that it should extend to any other thing (digital or otherwise) that is designed or developed to perform a specific function for users, irrespective of how it is supplied or made available.

Meaning of “supply” to capture digital delivery

the Commission proposes this also be expanded to include (i) any means of delivery (such as digital download) and (ii) circumstances where products are made available for no consideration at the point of use, but in the course of business and/or with a view to profit - for example a freely available social media platform which generates revenue from advertising and/or users’ personal data.

Potentially liable persons to include tech developers, online marketplaces and fulfilment service providers

the definition of “producer” would be expanded to include developers of software, AI systems and design components/features of online platforms (which themselves would fall within the expanded definition of “product” as noted above)
greater clarity would be provided around the allocation of liability (i) as between producers of component parts and producers of finished products, to reflect the range of circumstances in which a component may be integrated, and (ii) as between original producers and persons carrying out “substantial modifications”
the categories of other person who may be liable would also be expanded to include fulfilment service providers (such as warehousing, packaging and dispatching), “core participants” including online marketplaces, and UK authorised representatives. The existing approach to supplier liability would be retained, with suppliers able to avoid liability by reference to the expanded list of ‘primarily’ liable persons.

Greater clarity on what constitutes a “defect”

the Commission aims to retain the breadth and flexibility of the current approach (based on an ‘entitled level of safety’), while providing greater clarity on its application through:
- a new non-exhaustive list of principles for assessing the entitled level of safety, such as presentation of risk, and the relationship between risks and benefits
- supplementing the existing list of relevant circumstances to which a court must have regard, for example to include the product’s ability to learn/acquire new features after supply, and the reasonably foreseeable effects of interaction with other products
- clarifying and elaborating the stated purpose of the CPA (currently only expressed in terms of compliance with the EU’s original product liability directive of 1985)

Easing evidential challenges for claimants in proving defect and causation

noting difficulties around the evidential burden on claimants – likely to be compounded by the increasingly digital/AI-driven range of in-scope products – the Commission is considering introducing:
- certain rebuttable presumptions of fact relevant to defect and/or causation, where there is an asymmetry of information and it would be fair for the defendant to bear the burden of rebutting
- a rebuttable presumption of defect, subject to strict thresholds: namely that it is arguable the product is defective, the facts relied on are not fanciful, the claimants faces exceptional evidential difficulties, and the risk of harm is not so widely known as to be socially accepted. The defendant could then either accept the alleged defect or try to rebut the presumption, with consequential guidance for the court on assessing any damages as may be awarded thereafter.

Wide-ranging framework for assessing compensable psychiatric harm

the Commission proposes a new framework to clarify the (highly topical and emotive) issue of the circumstances in which psychiatric harm may be compensable as a form of personal injury, distinguishing between direct and indirect victims of such harm
for direct victims:
- where the psychiatric harm results from physical injury/impairment, it would be compensable where it amounts to a medically ”recognisable” psychiatric illness
- where psychiatric harm is the sole injury, as well as being medically recognisable, the harm must also “fall within the natural range of reactions of a person of ordinary fortitude”.
for indirect victims:
- the psychiatric harm must be medically recognisable and result from the physical and/or psychiatric injury, physical imperilment or death of a direct victim
- the harm suffered must fall within the natural range of reactions of a person of ordinary fortitude, having regard to all the relevant circumstances
- the indirect victim must have a “close tie of love and affection” with the direct victim.
in principle therefore this new framework would extend, for example, not only to a child who (as a direct victim) develops a psychiatric condition as a result of a defective social media platform, but also to a parent who (as an indirect victim) also suffers psychiatric harm as a result of the psychiatric injury to their child

Compensable property damage extended to mixed private/professional use property

the circumstances in which damage to property may be compensable would be expanded to include damage to property used for both private and professional purposes (reflecting flexible/home-working arrangements), and destruction or corruption of data (including data used for mixed private and professional purposes)

Extended 25-year ‘long-stop’ for latent harm claims and modifications to other defences

currently a claimant must bring a claim within three years of either (i) the date on which the damage arose or (ii) the date on which the claimant acquired the relevant knowledge of the damage – whichever is the later. This is subject to a “long-stop” of 10 years from the “relevant time”, usually the time of supply
the Commission makes two proposals in relation to the long-stop period:
- substantial modifications: Where a product has been substantially modified after supply (for example through software upgrades), the 10-year long-stop would reset. If the modification occurs within the original producer’s control, time would restart from when the modified product is made available. If it is modified outside the original producer’s control, time for the original producer would not restart, but time for the modifier would (re)start from the point of supply
- latent injuries: The long-stop period would be extended to 25 years for latent personal injury claims, where it was not possible for the claimant to initiate proceedings within the 10-year period due to the latent nature of the injury – to be assessed by reference to criteria “inspired” by s.14A of the Limitation Act 1980, which provides a special time limit for negligence claims where facts relevant to the cause of action were not known when the cause of action accrued.
the Commission also proposes modifications to other existing defences, in particular:
- the ‘no supply to another’ defence would not be available where a defective product is used in the provision of commercial or publicly funded services
- the ‘defect arose after supply’ defence would not be available to a defendant who caused the defect post-supply, for example by introducing a faulty software update
- the ‘development risks’ defence should involve an objective assessment of the state of the art and, where applicable, should operate to reflect a producer’s ongoing role in a product’s safety after supply, again for example through software updates.

Shoosmiths comment

If enacted, the Law Commission’s proposed reforms would represent a ‘once-in-a-generation’ shift in the UK’s product liability landscape.

The core proposals around the definitions of product, supply, and potentially liable persons, would vastly expand the scope of the regime to a huge range of products and businesses, across multiple sectors, which were previously unaffected. The potential consequences of being in scope have an equally ‘long tail’, not least given the concept of indirect victims of psychiatric harm, and the extended 25-year long-stop for latent harm.

While they are of course subject to consultation, given the EU’s recent action in this area, other relevant domestic legislative developments (such as the Online Safety Act 2023), and the acknowledgement by the Commission that the law has been out of date for some time, it seems relatively likely that substantial reforms will indeed be pursued, albeit there will doubtless be a process of evolution before any resulting legislation is brought in.

It is worth noting in particular that some aspects of the Law Commission’s proposals arguably go further than the new EU Directive. For example, the Directive makes no express reference to social media platforms or indirect victims of psychiatric harm, although its application in those respects may be a matter of interpretation and/or implementation by Member States. The treatment of fulfilment service provider and online marketplaces also differs as between the Directive and the Commission’s proposals. While the Commission seeks to explain its reasons for these areas of divergence, they could prove obvious ‘sticking points’ in consultation responses.

Stakeholders may also be aware that earlier this year the Law Commission issued an initial scoping questionnaire as part of its new consumer class actions project, looking at whether the way consumer laws are enforced could be strengthened through the introduction of a ‘purpose-built’ consumer class actions regime. It would be advisable for businesses to monitor developments on this front and consider how they may interact with the present proposals for product liability.

The consultation closes on 14 January 2027. If you would like to discuss how the proposals could impact you or your business, don’t hesitate to reach out to your usual Shoosmiths contact(s).

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Register your rental property: What Build to Rent (BTR) operators need to know

Mon, 19 Oct 2026 00:00:00 +0100

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What Build to Rent (BTR) operators need to know

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The Renters’ Rights Act 2025 establishes a Private Rented Sector Database, now presented by government as the “Register your rental property” service.

Published: 19 October 2026
Authors: Simon Foster

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The Renters’ Rights Act 2025 establishes a Private Rented Sector Database, now presented by government as the “Register your rental property” service. Draft Regulations 2026 have been published setting out the requirements for registration, and although there is a chance that the detail of the proposals will change before they are made law, landlords should take note of the relevant deadlines for registration and start preparing now.

What are the changes?

The service first opens for business on 15 December 2026 for properties let on assured or regulated tenancies in the West Midlands, and will roll out region by region across England, with the final deadline falling on 14 November 2027.

Region

Registration opens

Deadline

West Midlands

15 December 2026

14 March 2027

East of England

15 January 2027

14 April 2027

East Midlands

15 February 2027

14 May 2027

South East

15 March 2027

14 June 2027

Yorkshire and Humber

15 April 2027

14 July 2027

North West

15 May 2027

14 August 2027

North East

15 June 2027

14 September 2027

London

15 July 2027

14 October 2027

South West

15 August 2027

14 November 2027

Landlords will have three months from the date registration opens for the relevant region to complete their entry. The relevant deadline is linked to the location of the property, so operators with geographically diverse portfolios may need to manage several registration windows in parallel (although in practice details for any property can be submitted from 15 December 2026).

For now, only properties which are let (or which become let during the rollout period) must be registered. Future legislation is anticipated to also require all landlords to register unoccupied properties before marketing them for rent, and to require the landlord and property identifiers to be included in advertisements.

What are the consequences of breach?

Failure to register the landlord or the dwelling, and to keep the entry updated, will mean that:

the landlord cannot market the dwelling to let – if it does so in breach, it may be liable for a fine of up to £7,000 for a first offence, with additional penalties for continuing breaches
the court cannot make an order for possession, unless the landlord is relying on Ground 7A or 14 (where the tenant has committed an offence or engaged in anti-social behaviour)

Landlords will also be liable for a fine if they knowingly or recklessly provide information which is false or misleading in a material respect. If the landlord is a company, an officer of the company can also be liable as an individual.

What are the issues?

Each landlord and each dwelling requires registration separately, including copies of in-date EPC, electrical and gas safety certificates. We set out in full the information required, below.

Registration is not a one-off exercise, however. Entries must be renewed annually, with a fee payable on each occasion.

In addition, where information or documents relating to a landlord or dwelling become inaccurate, expired or otherwise out of date, the entry must be updated within 28 days. This includes renewal of EPCs, gas safety certificates and electrical safety reports. There does not appear to be a fee for updating information.

This is a reasonably simple task for landlords with one or two properties. However, the practical significance of this new unit-by-unit compliance obligation lies in scale.

For professional BTR operators who may have thousands of units in scope, this presents a significant administrative burden:

volume: every dwelling requires its own entry, so a single scheme may generate hundreds of registrations.
delegation: while managing agents and property managers can add and update limited tenancy details and relevant compliance documents, responsibility for registration remains with the landlord. The landlord must create a landlord entry, create the entries for each dwelling, verify the information submitted by its agents and pay the relevant fee.
consistency: whether registration is managed by the operator or its agents, data concerning the landlord, property, occupancy, tenancy and rent will need to be accurate and readily retrievable.
cost: the annual fee is £65 per property, which will not fall within the Tenant Fees Act 2019 and so is not recoverable from tenants. A 1,000-unit portfolio would therefore face £65,000 each year if every unit is in scope. There is no suggestion yet that any bulk discount will be available, although we are aware that industry bodies such as RE:UK are lobbying for this to be considered before the final form of the regulations is brought into force.

How could the system be improved for BTR operators?

The point of the database, and the RRA in general, is protection of residential tenants. It will allow local authorities and tenants to easily see which landlords are complying with their legal obligations. However, for those landlords with huge numbers of tenancies, is there a better way to structure this protection?

Those familiar with the RRA will be aware that there is an exemption from many of its provisions for some providers of purpose-built student accommodation (PBSA) where the provider or its agent managing the property is an active member of a registered code of practice. The Codes are national accreditation schemes which set and check compliance with professional standards of management for PBSA buildings.

The BTR Alliance, formed in 2025 between the Association for Rental Living and Real Estate: UK (then the British Property Foundation), is in the process of developing a similar code for the BTR sector. Compliance with such a Code could provide the basis for an exemption for operators who are members of a BTR-focussed professional framework, which would remove red tape without compromising standards.

What to do now

We do not anticipate any major changes to the draft regulations, so operators should start mapping their units and testing their data now. Accurate and consistent record-keeping (and confirming the responsibility and accountability) will speed up the process of registration, and certificates must be current, readily retrievable and correctly matched to the relevant dwelling.

It will be well worth planning now for the operational changes required for new lettings, renewals and future pre-marketing requirements, to embed these into business-as-usual processes.

Information required

Who can enter information

Landlord details (where landlord is an individual):

Name
Date of birth
Residential address
Telephone number
Email address.

Landlord only

Landlord details (where landlord is a company):

Name of organisation, or description by which it is known.
Type of legal entity.
Address (which may not be a PO Box number).
Telephone number.
Email address.
Name, date of birth, email address and telephone number of the individual making the entry on behalf of the organisation.
Name of nominated contact within the organisation for the purposes of the database, and their email address and telephone number.
Companies House Registration number, if applicable.
Charity number, if applicable.
Where a Companies House registration number is not provided, the names, dates of birth and addresses of all directors, trustees, partners or members of the governing body of the organisation.
Where the organisation is constituted as a trust, the name, date of birth, address, email address and telephone number of the lead trustee.

Additional landlord details (for all landlords):

Whether the person making the entry is doing so in their capacity as any of the following in relation to the person who is, or intends to become, a residential landlord: (a) a donee of a power of attorney; (b) a personal representative of a deceased person’s estate; (c) a court appointed deputy; (d) a guardian; (e) a receiver; (f) a trustee in bankruptcy; (g) a liquidator or provisional liquidator; (h) an administrator; (i) an administrative receiver; (j) a person acting in a similar or corresponding capacity to those in sub-paragraphs (a) to (i) under the law of a country or territory outside England and Wales; (k) a mortgagee or a person appointed by the mortgagee to act on their behalf.
The name, address, telephone number and email address of any person specified in accordance with paragraph 17 that is making the entry.
A copy of a certified or sealed copy (as appropriate) of the relevant evidence of the authority of the person specified in accordance with paragraph 17 to act in relation to a dwelling which is, or is intended to be, let under a residential tenancy, as follows: (a) the document granting the power of attorney; (b) the grant of probate or grant of letters of administration; (c) the deed, certificate, notice or instrument of appointment; (d) the mortgage deed; (e) a court order; (f) a bankruptcy order; (g) a document issued under the law of a country or territory outside England and Wales which is similar to, or corresponds to, a document listed in sub-paragraphs (a) to (f).

Landlord only

Dwelling information:

Address of dwelling.
Name of the person who is the residential landlord, or who intends to become the residential landlord, of the dwelling and a correspondence address (which may not be a PO Box number) in England and Wales and an email address for that person in relation to the dwelling.
Ownership type.
Dwelling type.
Number of bedrooms in the dwelling.
Whether the dwelling is currently under let.
Name and email address of any of the following: (a) the owner of the freehold property which includes the dwelling; (b) any other superior landlord; (c) the property manager for the dwelling.

Landlord only

Tenancy and health and safety information and documents:

Number of occupants of the dwelling.
Number of households occupying the dwelling.
Information as to whether the dwelling requires an HMO licence, an additional licence or a selective licence, and if so, the numbers of those licences, if available.
If the dwelling has a gas supply— (a) a copy of the gas safety record, if one exists, and (b) the gas safety record issue date.
Electrical safety information as follows— (a) a copy of the EICR, if one exists, or appropriate EIC, and (b) the EICR expiry date, or the EIC issue date.
Information as to whether the landlord was required to give a valid EPC to the person who is the tenant currently occupying the dwelling, and if so, a copy of the most recent EPC, if one exists.
If the most recent EPC for the dwelling is no longer valid, the date the current tenancy started.
If the most recent EPC for the dwelling gives an energy performance rating of below the minimum level of energy efficiency, information as to whether the dwelling has a registered MEES exemption, and if so, what types of exemption apply.
Rent information, as follows: (a) rent charged and frequency of payment, and (b) whether the rent is inclusive of utilities and if so, what utilities are included.
Whether the dwelling is let furnished, partly furnished or unfurnished.

Can be delegated to management / letting agent

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Wrong advice, right penalty? The Upper Tribunal on reasonable excuse

Wed, 30 Sep 2026 00:00:00 +0100

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Wrong advice, right penalty? The Upper Tribunal on reasonable excuse

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Hill and another v HMRC [2026]: a cautionary reminder that instructing advisers does not, of itself, absolve a taxpayer from potential liability for penalties.

Published: 30 September 2026
Authors: Kate Garcia

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Summary

In Hill and another v HMRC [2026] UKUT 306 (TCC), the Upper Tribunal held that two taxpayers did not have a reasonable excuse for failing to comply with HMRC information notices, even though a professional adviser had concluded that no action was required.

Background

The taxpayers were the scheme administrators of separate pension schemes. In January 2018, HMRC issued information notices requiring them to provide certain information. After receiving the notices, an intermediary (the scheme operator) instructed tax advisers to advise on the appropriate response.

The advisers concluded that, because the relevant pension schemes had been wound up, the taxpayers were not obliged to provide the information or documents requested. That view was relayed to HMRC on the taxpayers’ behalf. HMRC responded that the notices had been issued to the taxpayers, rather than to the pension schemes, and that the taxpayers therefore remained responsible for complying with them.

HMRC ultimately imposed penalties on the taxpayers for failing to comply with the information notices. The taxpayers appealed against the penalties, arguing that they had a reasonable excuse: they had relied on the consistent advice given to them that they did not need to comply with the notices.

The First-tier Tribunal (FTT) rejected that argument and upheld the penalties. It found that the taxpayers’ reliance on the advice was not objectively reasonable because they had failed to take reasonable care to check or question it.

Upper Tribunal decision

The Upper Tribunal (UT) upheld the FTT’s approach to the question of reasonable reliance on an adviser and dismissed that ground of the taxpayers’ appeal.

The UT held that the FTT was entitled to conclude that the taxpayers’ behaviour fell short of a reasonable excuse. They had failed to check or ask questions of the advice and relied on it without a reasonable basis for believing that the advice was correct.

Essentially, it was too narrow simply to ask whether a taxpayer knew, or ought to have known, that the advice was wrong. That question alone did not determine whether the taxpayer’s reliance on the advice was reasonable.

Instead, a wider assessment was required, including the degree of independent judgement exercised by the taxpayer. In this case, the taxpayers’ lack of engagement meant that they had not taken reasonable care. For example, they had failed to ask obvious questions of their adviser or to request copies of key correspondence. Their reliance on the adviser’s advice therefore did not amount to a reasonable excuse for failing to comply with the information notices.

Practical implications for taxpayers

The outcome may appear harsh. The taxpayers received incorrect advice and were then penalised for acting on it. Taxpayers who seek professional advice, rather than dealing with a matter themselves, may instinctively consider that following that advice provides a reasonable excuse for any liability arising from that advice.

The position is, however, more nuanced. The ultimate question is whether a taxpayer’s reliance on professional advice is objectively reasonable.

To reduce the risk that reliance on an adviser will be regarded as unreasonable, a taxpayer should engage actively with both its advisers and the matter itself. In practice, this should include:

reading key correspondence relating to the matter
asking for clarification if anything appears unusual or is unclear
checking that the factual assumptions underpinning technical advice are accurate. A taxpayer is not expected to understand or verify every aspect of complex technical advice, but should be able to identify and question any factual assumption that appears incorrect or inaccurate
asking for an explanation if legal arguments or strategy change
questioning advice that is expressed only in brief terms.

In short, taxpayers are not expected to second-guess their advisers. Blind reliance on them, however, is likely to be viewed unfavourably by HMRC and the tribunals.

A taxpayer who has paid for professional advice may be less inclined to engage closely with the issues or monitor the progress of the matter, on the basis that the advisers are dealing with it. The UT’s decision is therefore a cautionary reminder that instructing advisers does not, of itself, absolve a taxpayer from potential liability for penalties. A taxpayer should remain appropriately engaged with the matter and exercise reasonable care when acting on the advice it receives.

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Under pressure: Is your AIM board ready for shareholder activism?

Tue, 29 Sep 2026 00:00:00 +0100

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Under pressure: Is your AIM board ready for shareholder activism?

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How should boards respond to shareholder activism? Shoosmiths' Corporate and Dispute Resolution experts unpack the key strategic points below.

Published: 29 September 2026
Authors: Emma Carr

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Shareholder activism is no longer confined to the largest listed companies.

For AIM companies, the combination of concentrated shareholdings, lower liquidity, valuation pressure and a relatively lean investor relations function can mean that an activist shareholder acquires influence quickly. What begins as a private challenge to strategy, management or capital allocation can rapidly become a public campaign for board change.

For directors, the difficult question is rarely whether a shareholder is entitled to disagree with the board. It is how the board should respond when that disagreement starts to gather momentum.

The first 90 days can be critical.

So, what should boards be thinking about when an activist appears on the register? Emma Carr, Commercial Litigation Partner, and Ed Nisbet, Corporate Partner, consider the key issues during the first 90 days: from initial engagement and governance through to preparing for the possibility of a shareholder dispute.

Days 1-30: Understand the challenge before responding to it

An activist approach can create an understandable instinct to defend the company’s existing position outright. That can be a mistake.

The first task is to understand what is really driving the challenge. The stated demand may be for a strategic review, disposal, return of capital or change of directors. The underlying concern may be simpler: disappointing performance, a valuation discount, executive remuneration or a loss of confidence in management.

Boards should establish a small response team (including independent directors), consult with their nominated adviser, take legal and, where appropriate, financial PR/IR advice and map the shareholder register. Who is likely to support the activist? Which shareholders remain undecided? Is the activist raising a concern that other investors have expressed privately?

The nominated adviser should be involved early where the campaign touches on strategy, board composition, financial performance, expectations or market messaging. The company should also consider whether specialist shareholder identification work, including the use of section 793 Companies Act 2006 notices, is needed to understand beneficial ownership behind nominee positions.

Early engagement can be valuable. Meeting an activist does not mean accepting its case. It gives the board an opportunity to test the argument, understand the level of support behind it and avoid being forced into a reactive position later.

Practical steps for the board

identify the activist, its holding, its historic voting behaviour and any known support from other shareholders
agree who will speak for the company and how internal and external communications will be controlled
consider carefully how communications with advisers will be managed to preserve privilege in any legal advice obtained at this stage
stress-test the activist’s stated concerns against the company’s own performance, strategy and market messaging
keep a clear record of board discussions and the reasons for decisions taken
consider how likely it is that the challenge will evolve into a dispute and the company’s preparedness for that. As soon as litigation is contemplated, relevant documents must be preserved.

Days 31-60: Pressure test the board’s own case

The uncomfortable part of an activist campaign is that the activist may have a point.

Once the immediate position has been stabilised, the board should test its own strategy with the same rigour it applies to the activist’s proposals. Is capital being allocated effectively? Does the board have the right composition? Is there a credible explanation for persistent underperformance or a valuation discount?

Directors must continue to exercise their own judgment. Their duties are owed to the company, and the interests of shareholders cannot simply be equated with the demands of the loudest or largest investor.

Communication becomes particularly important at this stage. For an AIM company, statements made during an activist campaign sit within an existing framework of AIM Rule 11 disclosure obligations and market abuse restrictions, including the need to manage inside information and avoid selective disclosure. Assertions about performance, strategy or future prospects therefore need to withstand market, regulatory and shareholder scrutiny. The defensibility of such assertions, if they are challenged in due course, will largely rise or fall on the company being able to ‘show its working’ in the paper trail.

When activism becomes contentious

Boards should also prepare for the possibility that what starts as shareholder engagement becomes a dispute.

Documents created in the early stages may assume considerable importance later. Board minutes should properly record the decisions taken and the reasons for them, while directors and executives should exercise appropriate discipline over emails, messages and other communications. Legal advice should also be taken on preserving privilege where potentially contentious issues are being considered, particularly where a blend of legal and other more commercial (e.g. brand/reputation management) advice is being sought.

Emma Carr comments: “An activist campaign can become contentious very quickly. The emails, board papers and messages created in the first few days may later be scrutinised in a shareholder dispute or contested meeting. Good decision-making and good record-keeping need to start before positions become entrenched.”

Days 61-90: Prepare for the campaign to become a contest

If private engagement fails, the focus can shift rapidly from persuasion to votes.

Shareholders holding at least 5% of the company’s paid-up voting share capital can require directors to call a general meeting and may ultimately seek the removal and replacement of directors. By the time a requisition arrives, a board which has not already considered voting scenarios, communications and procedural requirements may be operating at a significant disadvantage.

Preparation does not mean assuming that confrontation is inevitable. Settlement may produce a better commercial outcome than a public contest. A board appointment, governance change or strategic review may address legitimate shareholder concerns while ensuring that the board remains able to discharge its duties without surrendering complete control of the company’s strategy – or becoming tied up in a complex and management time-intensive dispute.

What matters is that any compromise can be justified as advancing the interests of the company, rather than protecting individual directors from challenge.

Practical steps for the board

review the company’s articles and the procedural requirements for requisitioned meetings
model likely voting outcomes and identify the shareholders whose position may decide the result
prepare consistent, stress-tested messaging for shareholders, employees and the market
consider whether a negotiated outcome could address legitimate concerns while preserving the board’s strategic control
consider seeking legal and any other relevant advice on negotiation strategy, wider consequences of potential outcomes, and documenting any terms agreed.

The 90-day question

Shareholder activism ultimately tests more than a company’s legal defences. It tests the board’s understanding of its shareholders, its confidence in its strategy and its ability to make decisions under scrutiny.

A well-prepared AIM board should therefore ask one question before an activist ever appears:

If a shareholder publicly challenged our strategy tomorrow, could we explain, not simply assert, why our present course remains the right one?

If the answer is uncertain, the best time to address that vulnerability is before the 90-day clock starts.

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New right to work rules widen business risk

Tue, 22 Sep 2026 00:00:00 +0100

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New right to work rules widen business risk

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From 1 October 2026, immigration compliance obligations will extend beyond traditional employment relationships to cover a wider range of working arrangements.

Published: 22 September 2026
Authors: Hannah O'Brien & Rory Stone

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Background: What is changing?

The UK’s right to work regime is set for a significant expansion. From 1 October 2026, immigration compliance obligations will extend beyond traditional employment relationships to cover a wider range of working arrangements, including certain personal service arrangements, subcontracting models and online matching services.

The changes are introduced by section 48 of the Border Security, Asylum and Immigration Act 2025, which amends the Immigration, Asylum and Nationality Act 2006 and expands the circumstances in which civil penalty liability may arise.

Arrangements in scope

Historically, right to work obligations have focused on employees working under traditional contracts of employment. The new regime broadens that approach by treating certain non-employment working arrangements as employment for illegal working purposes.

In practice, the following arrangements are likely to be most relevant.

Direct employees are already within scope under the existing regime. Organisations must continue to complete compliant right to work checks before employing an individual under a contract of employment.

Personal service arrangements may also be caught where an individual undertakes to perform work or services personally, unless they are genuinely operating an independent business and providing services to a client or customer.

Subcontracting chains will require closer scrutiny. Where labour is supplied through a contractual chain, liability may extend beyond the organisation that directly engages the individual carrying out the work.

Online matching services may be brought within scope where they introduce or match service providers with potential clients or customers. This is likely to be particularly relevant to businesses operating platform-based labour models.

The practical effect is that immigration compliance will no longer be solely an HR issue. Procurement, legal, operations and commercial teams may all need to understand where right to work obligations can arise.

Practical examples

Subcontracting

Company A contracts with a local authority to provide highway maintenance services and subcontracts part of the work to Company B. Company B supplies workers to perform the maintenance work, one of whom is later found not to have the right to work in the UK.

Company B may be liable as the party directly engaging or supplying the worker. Company A may also face extended liability, although it may be able to rely on a statutory excuse if it had appropriate contractual controls and compliance measures in place before the work began.

Online matching

Company A operates an online matching service that connects businesses needing plumbing services with service providers. Through the service, Company B agrees to provide plumbing services and sends Plumber C to carry out the work. Plumber C is later found not to have permission to work in the UK.

Company B may be liable as the service provider. Depending on how the platform operates, Company A may also be exposed if it is treated as an online matching service involved in supplying the details of the individual service provider to potential clients or customers.

Substitution

Company A contracts with Worker A, an IT consultant, to provide software development services. The contract allows Worker A to appoint a substitute. Worker A sends Worker B to perform the work, and Worker B is later found not to have permission to work in the UK.

Company A may be exposed to liability even though it did not contract directly with Worker B. To mitigate that risk, Company A would need robust substitution controls requiring right to work checks before any substitute starts work.

Internal business services

The extended liability provisions are not designed to capture every commercial relationship. The focus is on arrangements where an individual is personally providing work or services through labour-supply, subcontracting, online matching services or substitution arrangements.

By contrast, where a business purchases services for its own internal operations and there is no labour-supply chain involved, the new regime is unlikely to apply. Examples may include engaging external accountants, instructing solicitors, purchasing software services, or contracting with a cleaning company to clean the business’s own offices. In these cases, the business is receiving a service for its own internal purposes rather than supplying labour onwards to a third party.

Businesses should nevertheless assess arrangements carefully. The distinction will depend on the contractual structure and, in particular, whether individuals are being supplied to perform work or services within the scope of the legislation.

Statutory excuse: What businesses need to show

A compliant right to work check can establish a “statutory excuse”, protecting a business from a civil penalty where an individual is later found not to have permission to work.

The draft guidance also introduces additional prescribed requirements aimed at protecting businesses from extended liability in contractual chains, substitution arrangements and online matching services. These requirements are likely to require both appropriate contractual wording and practical compliance controls.

Contractual controls. Contracts should require relevant parties to carry out compliant right to work checks, prevent unauthorised subcontracting and flow down equivalent obligations through any permitted subcontracting chain.

Substitution controls. Where substitution is permitted, businesses should ensure that substitutes are checked before work starts and that responsibility for those checks is not left to the original worker.

Identity assurance. Businesses should have processes to confirm that the person performing the work is the same individual whose right to work has been verified.

In short, contractual wording alone is unlikely to be sufficient. Businesses will need to show that the relevant controls are implemented and followed in practice.

Non-compliance risks

The consequences of non-compliance remain significant.

Where an individual is found to be working unlawfully under an arrangement covered by the expanded regime, a business may face a civil penalty of up to £60,000 per worker. Other enforcement action may also follow, including:

criminal prosecution
closure of business premises
revocation of a sponsor licence.

The key change is that liability may arise even without a direct contractual relationship with the individual. Organisations should therefore consider not only who they employ, but also how labour is supplied across their wider business and supply chain.

Preparing for the new regime

Businesses should use the lead-in period before 1 October 2026 to assess where the expanded regime may affect their workforce, supplier and online matching arrangements.

Key preparatory steps include:

Map labour engagement models. Identify how labour is sourced across the organisation, including contractors, consultants, subcontractors, casual workers and online matching arrangements.

Update policies and procedures. Existing right to work policies may not address the new categories of working arrangement or the extended liability provisions.

Train relevant teams. HR, recruitment, procurement, legal, compliance and commercial teams should understand when checks are required and how liability may arise.

Review contracts. Supplier, subcontractor and consultancy agreements should be checked to ensure they contain appropriate right to work obligations, subcontracting controls and audit rights.

Check digital verification arrangements. Businesses using digital identity verification should confirm that their provider is registered on the relevant register and authorised to conduct right to work checks when the new regime takes effect.

Key takeaway

The reforms mark a clear shift in the UK’s approach to illegal working compliance. Businesses should not wait until October 2026 to assess their exposure. Mapping labour supply routes, updating contracts, strengthening verification processes and training relevant teams now will put organisations in the best position to reduce risk and establish a statutory excuse where needed.

Publication note: This article reflects the draft guidance currently available and should be checked against the final Home Office guidance once published.

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Supreme Court upholds Right to Manage claim despite procedural breach

Fri, 28 Aug 2026 00:00:00 +0100

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Supreme Court upholds Right to Manage claim despite procedural breach

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Readers with an interest in leasehold management will be aware of the long-running dispute in Avon Freeholds Ltd v Cresta Court E RTM Co Ltd where a freeholder challenged the validity of an RTM notice on the basis of a procedural irregularity.

Published: 28 August 2026
Author: Laura Kent

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We now have the final word from the Supreme Court, confirming that a Right to Manage company can give a valid claim notice even where it has failed to serve a Notice of Participation on all qualifying tenants.

Background

The facts of the case are simple. Avon, the freeholder of Cresta Court, granted Ms O’Connor a long lease of Flat 17 on 17 April 2020. As is not uncommon, it was some time before the new lease was registered with HM Land Registry – with the consequence that, during the registration gap, there was no express mention of the lease on the freehold title (although there were pending applications for registration against the title, which were not investigated).

In the meantime, the RTM company was formed to acquire the right to manage a self-contained part of Cresta Court – including Flat 17.

Under s.78(1) of the Commonhold and Leasehold Reform Act 2002 (CLRA), at least 14 days before giving a claim to acquire the right to manage, an RTM company must first give notice (a notice of invitation to participate or NIP) to each person who, at the time the notice is given:

(a) is the qualifying tenant (QT) of a flat contained in the premises,

but

(b) neither is nor has agreed to become a member of the RTM company.

The NIP enables QTs who are not already part of the RTM company to make an informed choice about whether to join in the acquisition of the right to manage the premises in which their flat is located. QTs do not need to respond to the NIP.

In this case, the RTM failed to give notice on Ms O’Connor, because it had no record of her interest. It then gave Avon notice of its claim to acquire the right to manage.

Section 79(2) of the Act states that:

“The claim notice may not be given unless each person required to be given a notice of invitation to participate has been given such a notice at least 14 days before.” [our emphasis]

There was some dispute in the lower courts as to whether, as an equitable tenant during the registration gap, Ms O’Connor was a qualifying tenant under s.75 CLRA. It was determined by the courts that she was and therefore entitled to receive an NIP.

The remaining question, decided differently in each court, was therefore: did the procedural failure by the RTM company to give a NIP to every qualifying tenant mean that the claim notice couldn’t be validly given?

1) The First-tier Tribunal decided that the claim could be validly given: because the RTM had no actual knowledge of the existence of Ms O’Connor’s lease, and had served NIPS on all other QTs.

2) The Upper Tribunal agreed: but on the basis that the claim was neither wholly valid nor wholly invalid, but voidable at the instance of the tenant. Here, Ms O’Connor had subsequently given her consent to become a member of the RTM, but after notice of the claim was given to Avon.

3) The COA decided that the claim notice was invalid: because it considered that the clear effect of s.79(2) CLRA was that a failure to give a NIP to all QTs meant the claim notice may not be given, and that such an interpretation didn’t give rise to any absurdity.

Supreme Court decision

The decision of the Supreme Court (SC), handed down yesterday, confirms that the RTM company’s failure to give Ms O’Connor a NIP did not invalidate its claim.

The SC was willing to take a more broadbrush approach, focussing on the interplay of the provisions of CLRA – an Act in which various other inaccuracies are expressly stated not to give rise to invalidity (for example incorrectly including persons who are not QTs).

The difference between the SC and COA decisions was the narrowness of their readings of s.79(2). The SC distinguished the obligation to give a NIP to all QTs (s.78(1)) from the separate obligation to leave 14 days before serving the claim in s.79(2).

The SC put particular weight on the overall purpose of the statutory scheme, noting that, if (as the COA held) the claim were a complete nullity for all purposes, the whole RTM process would fall down: the landlord would not be able to give a valid counter-notice because there was no valid claim, and the RTM company would not be able to invoke the FTT’s jurisdiction to resolve a dispute about its entitlement to acquire the right to manage – not least because entitlement must be shown at the ”relevant date”, which is the date that the claim notice is given.

Instead, following the UT decision, the Court relied on the Soneji principle: where there is no express statement of the consequences of a failure to comply with a statutory procedural requirement, the court must infer Parliament’s intentions.

On the facts of this case, the SC held that there was no basis for saying that the defaults in procedure caused Avon, Ms O’Connor or anyone else any prejudice. Maintaining a narrow interpretation would have enabled persons to defeat the transfer of the right to manage on strict procedural technicalities.

Comment

Interpretation of leasehold legislation is generally tilted in favour of qualifying tenants, in order to ensure that the process is just and fair towards what are often individuals seeking better management of the buildings in which their homes are located. Lord Briggs, giving the main judgment, describes invalidity as “taking a blunderbuss to a shooting gallery” [para 59], considering that giving discretion to the court whether to impose any sanction on minor procedural defaults would be more appropriate.

Limited importance was placed on the fact that Ms O’Connor later joined the RTM, but it is worth wondering whether there would have been a different decision if she had opposed or been neutral. As the SC decision notes however, the lateness of the addition of one member – or a decision by a member not to join – would do nothing to improve or weaken the RTM’s claim if the requisite number of QTs are in favour, as QTs have no statutory right to object.

For those of us at the front line, it also is worth noting Lord Briggs’s comments at para.35(v). It can be complicated to work out which parties are qualifying tenants, but limited weight was given to the “much ink [spilt] and time spent in advocacy” arguing over the ways in which one might determine the correct QTs. Whilst prospective applicants will still need to check the identity of relevant QTs before starting an RTM claim, the decision shows that a minor oversight is not fatal.

If you have any questions on right to manage claims, or residential leasehold management more widely, please contact Lucy Walsh, Legal Director.

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Working Load Limit: can your supply contracts carry market forces?

Fri, 14 Aug 2026 00:00:00 +0100

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Working Load Limit

Can your supply contracts carry market forces?

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The consumer and retail sector has faced relentless strain in recent years. How can in house legal teams ensure supply chain contracts are both robust and flexible enough for their business to thrive in the current - and future - commercial landscape?

Published: 14 August 2026
Authors: Emma Carr

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Over the past five years, few sectors have faced more relentless strain than consumer and retail. Inflation, geopolitical instability, supply chain disruption, cyber-attacks, tariff uncertainty and margin compression have become recurring features of the commercial landscape.

For many businesses, disruption is no longer the exception. It is the operating environment.

For in-house legal teams, that creates a dual challenge: ensuring contracts are prescriptive enough to allocate risk clearly, but flexible enough to allow the parties to adapt to changing market forces.

Those challenges often require different legal perspectives.

In this article, Simon McArdle, a Partner in the Commercial team and co-head of the Consumer and Retail Sector considers what effective supply contracts should achieve, while Emma Carr, a Partner in the Commercial Litigation team, examines how those contracts are tested when commercial relationships come under pressure. Together, they look at some of the contractual provisions that matter most, not just when a deal is negotiated but also when it is put to the test.

Simon: “The best supply agreements aren’t designed to predict every possible disruption; they’re designed to give businesses a practical framework for managing change without renegotiating the relationship every time market conditions shift”

1. Price review clauses: Certainty and flexibility

What the contract should achieve

In a volatile market, pricing mechanisms need to do more than just state the price. They should establish a clear process for dealing with increases in raw materials, freights, energy, tariff or currency costs, identifying what can trigger a review and how negotiations will be conducted if agreement cannot be reached.

When commercial pressure tests the contract

Many disputes do not begin with a refusal to perform. They begin with suppliers issuing revised invoices, seeking temporary surcharges or asking customers to absorb part of an unexpected increase in costs.

Commercial teams quite rightly focus on keeping product moving. Temporary arrangements are agreed, payment terms are relaced and pricing concessions made.

Those decisions are often commercially sensible. The difficulty however is that unless they are carefully documented, they may later become the subject of disputes about contractual variation, waiver or estoppel.

Emma: “The difficult cases are rarely those where the contract has been followed, they’re the ones where sensible commercial decisions were made under pressure, but nobody stopped to consider how those decisions might be interpreted if the relationship later broke down”

Risk management

Commercial concessions may often be the right answer, however the risk is allowing them to evolve without recording exactly what has been agreed and on what basis. Temporary pricing arrangements should identify their duration, who approved them and whether both parties intend to preserve their underlying rights.

2. Force majeure: The clause is only the starting point

What the contract should achieve

Force majeure provisions should identify the relevant events, prescribe notice requirements, allocate responsibility for mitigation and explain what happens if disruption continues beyond a specified period. Under English law, force majeure is contractual rather than statutory; the wording therefore matters.

When commercial pressure tests the contract

Whether disruption falls within the clause is only the beginning. The debate quickly mores to whether notice was given on time, whether reasonable mitigation steps were taken and whether performance was genuinely prevented, rather than simply made more difficult or expensive.

These issues are often determined as much by contemporaneous evidence as the wording of the clause itself.

Risk management

Operational teams should be primed to anticipate when legal input is needed. A missed notice or poor record of mitigation can undermine an otherwise strong contractual position before any formal dispute has begun.

3. Termination rights: Commercial urgency and legal entitlement

What the contract should achieve

Termination provisions should distinguish clearly between material breach, persistent breach, insolvency and termination for convenience, while setting out the procedural steps required before the agreement can be brought to an end.

When commercial pressure tests the contract

When a supplier cannot perform, procurement teams understandably want certainty and alternative supply. The legal risk is different. Some of the most protracted disputes arise because a party terminates before the contractual or common law right to do so has arisen.

Emma: “Some of the most expensive supply chain disputes we see aren’t caused by the original breach. They’re caused by the otherwise innocent party terminating before it was legally entitled to do so”

Risk management

Before issuing a termination notice, ask whether the business is exercising a specific contractual right or simply reacting to commercial frustration. The distinction may well determine who ultimately becomes claimant and who becomes defendant (or receives a counterclaim).

4. Limitation of liability: Understanding the real value of the dispute

What the contract should achieve

Liability caps and exclusions should reflect the commercial allocation of risk agreed by the parties and should be tested against realistic disruption scenarios, not just negotiated in the abstract.

When commercial pressure tests the contract

The question is often not whether there has been a breach but whether the losses that matter commercially are recoverable (either at all, or up to a capped amount).

Emergency procurement costs, production downtime, retailer penalties and lost profits may all arise from the same disruption. Whether they can be recovered depends on the contractual allocation of risk. That in turn will shape litigation strategy, settlement discussions and the commercial value of the claim.

Risk management

Review limitation and exclusion clauses at an early stage, considering how they would be interpreted by the Courts if tested, how they operate in practice, and whether statutory restrictions¹ might be engaged. These clauses often – assuming they are enforceable - determine the commercial value of pursuing a claim long before proceedings are contemplated.

5. Change control: Today’s solution can become tomorrow’s dispute

What the contract should achieve

Supply agreements should contain clear, practical mechanisms for agreeing changes to specifications, delivery schedules, volumes or substitution arrangements as commercial circumstances evolve.

When commercial pressure tests the contract

Periods of disruption often require pragmatic solutions. Alternative products are supplied, delivery schedules change and operational teams reach sensible commercial compromises.

Problems arise where those changes are never formally documented. Once relationships deteriorate, parties may fundamentally disagree about which version of the agreement governs their obligations.

Risk management

Ask a simple question. If this relationship ended tomorrow, could someone unfamiliar with it understand why the parties have departed from the contract? If not, document the current position and how the parties got there.

6. Notice provisions: Small details with significant consequences

What the contract should achieve

Notice provisions create certainty around price reviews, claims, termination and force majeure.

When commercial pressure tests the contract

Notice provisions are often the easiest contractual requirements to overlook. However, failure to adhere to their terms can scupper the execution of an otherwise legally and commercially sound response to a challenging situation.

By the time lawyers become involved, opportunities to preserve important contractual rights may already have been lost.

Risk management

Ensure procurement and operational teams know which contractual issues require immediate legal escalation.

7. Evidence: The contract is only half of the story

What the contract should achieve

Well-drafted contracts remain essential, but disputes are rarely won on contractual wording alone.

When commercial pressure tests the contract

Internal emails explaining why a commercial decision was taken, records of mitigation supplier performance data and correspondence with customers frequently become the documents that determine the outcome of a dispute.

Emma: “By the time external lawyers are instructed, the most important evidence has usually already been created, the question is whether it has been preserved and whether the business’s communications support the position it ultimately wants to take.”

Risk management

Document presentation should begin when a significant contractual issue emerges, not just when proceedings are threatened. Encourage disciplined communications and involving legal early enough to preserve privilege where appropriate.

Looking ahead

Supply chain disruption is unlikely to disappear. Whether driven by geopolitical events, energy market turbulence, cyber incidents or continuing economic uncertainty, commercial pressure will continue to test long-term contractual relationships.

For in-house legal teams, effective risk management therefore has two stages.

The first is ensuring that contracts allocate foreseeable risks clearly and provide practical mechanisms for managing change.

The second is equipping operational teams to recognise when a commercial issue is becoming a legal one. At that point, the quality of the business’s response often becomes just as important as the quality of the drafting.

As Simon observes:

“A good contract gives the business options when circumstances change”

Emma’s experience is that what happens next is equally important: “It is rarely the wording of the contract alone that determines the outcome of a dispute. More often, it’s how the parties exercised those contractual options once the relationship came under pressure”

For in house legal teams, that is where commercial drafting and dispute management meet. The objective is not simply to have a well drafted contract, but to ensure that when commercial reality requires the business to depart from it, those departures are managed in a way that preserves both the commercial relationship and the business’s legal position.

¹ In particular the Unfair Contract Terms Act 1977

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New tech, old law (part 2): UKJT confirms its position on liability for AI harm

Tue, 11 Aug 2026 00:00:00 +0100

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New tech, old law (part 2)

UKJT confirms its position on liability for AI harm

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What's new in the UKJT's final legal statement on civil liability for AI harm, and what does this mean for businesses in the supply chain and/or as end users?

Published: 11 August 2026
Authors: Alex Bishop, Peter Richards-Gaskin, Alex Kirkhope, Sarah Reynolds, Claire Kershaw & Stefanie Hughes

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The UK Jurisdiction Taskforce (UKJT) has published its final legal statement on liability for AI harm, following consultation on its draft legal statement published earlier this year. While the UKJT’s core conclusions (as discussed in our previous article) remain largely unchanged, the final statement incorporates some further analysis in certain areas. This article focusses on those developments and the key takeaways for businesses, both in the AI supply chain and as end users.

Summary of key updates

Vicarious liability and non-delegable duties

the final statement discusses a further important aspect of potential liability for harm caused by another, namely where there is a non-delegable duty to protect against that harm¹. Giving the example of an NHS Trust procuring an AI diagnostic tool from a third-party developer, the statement notes the Trust would not be able to avoid liability for any harm caused to a patient as a result of a defect in the tool by arguing the defect was the developer’s fault. The Trust would, however, likely consider seeking a contribution from the developer under the Civil Liability (Contribution) Act 1978 – subject to the usual analysis on causation, contributory negligence and so on.

Factual causation and material contribution to damage

the final statement also includes a new discussion around the principle of ‘material contribution to damage’ – to date predominantly applied in cases involving industrial disease and clinical negligence, but arguably of general application. The principle essentially fills a gap left where, through multiple wrongdoers, harm was caused, but on a strict ‘but for’ analysis no single wrongdoer’s act or omission caused the harm. An example is given of two waste plants, one using human employees only and the other an AI system, negligently discharging equal amounts of waste into a river which together take the pollution level above a particular threshold.

Contributory negligence

the potential impact of contributory negligence was not addressed in the draft statement – the final statement now considers how such arguments may play part of the assessment of liability for harm caused by AI. The statement does not suggest that any particular new principles or analysis need apply, but emphasises that the question will always be highly fact specific, and the nature of the user (commercial or non-commercial) and the level of verification of the AI output will be key themes.

Defamation

the expanded discussion in the final statement emphasises that the extent to which anyone in the AI supply chain may be considered a publisher is highly fact specific. This may be most straightforward to establish in the case of commercial publishers using AI tools to generate content for their website. At the other end of the scale, the UKJT suggests that a Foundation Model Developer, with no involvement in publication of a statement beyond having licensed the use of their model, may potentially be deemed a publisher of a defamatory statement generated by it - if they have sufficient practical ability to prevent further publication.
the final statement also acknowledges that how the defences available under s.1 of the Defamation Act 1996 and s.5 of the Defamation Act 2013 may apply in relation to AI-generated content is unclear. In relation to s.5 of the 2013 Act for example (Operators of websites), the potential defence is predicated on the basis of there being a ‘poster’ of a statement with whom the website operator must seek to correspond, but query whether/who a court would consider to be a ‘poster’ of an AI-generated statement.

What does this mean for businesses?

As noted in our previous article, in most commercial contexts the contractual arrangements between the parties in an AI supply chain will be the most important legal framework governing liability for any harm arising. For businesses operating in this space and their advisers negotiating commercial contracts, meticulous attention to detail must go hand in hand with a thorough understanding of the technology (both as it stands and how it may evolve) as well as its intended/likely deployment downstream.

For businesses as end users of AI tools the key points to note include:

generally speaking, an organisation could not be held vicariously liable for harm caused by an AI tool it is using since the tool itself, in the absence of its own legal personality, could not be held primarily liable. An organisation could however be held vicariously liable for wrongdoing, such as negligence, by an employee in connection with their use of an AI tool. Moreover, an organisation using an AI tool in the performance of a non-delegable duty could not avoid primary liability to anyone harmed as a result of a defect in the AI tool, but could seek to recoup (at least partially) any such liability incurred by way of a contribution claim against the tool developer (subject of course to the usual analysis and any contractual arrangements preventing or limiting their ability to do so).
more particularly, organisations using chatbots may potentially be liable for false statements made by it if the chatbot is held out as communicating on the organisation’s behalf, if there is an express or implied representation that the chatbot’s output is accurate, and/or if the chatbot makes a defamatory statement. Such organisations should make clear to users that the chatbot is AI-powered, that its output may be inaccurate/contain hallucinations, and that any views expressed do not represent those of the organisation. Those organisations in scope of the EU AI Act are likely to be familiar with these types of requirements, given their alignment with the Act’s transparency obligations.
for professional services firms, consideration of whether, when and how to deploy AI tools must form part of their ongoing assessment, exercising reasonable care and skill, of how to carry out their client’s instructions. While any guidance from relevant regulators and professional bodies will be instructive in this respect, given the implications for their own liability, amongst other good reasons, professionals must exercise their own judgment in the context of the particular matter and their client’s objectives. In some scenarios, a client may prefer to forego a potential benefit of using AI in order to avoid a potential risk. The critical foundational step is to identify and explain competently the potential options and the risks and benefits of each.

¹ Such duties are rare and their defining features were articulated by the Supreme Court in Woodland v Essex County Council [2013] UKSC 66 (23 October 2013) at paragraph [23]. In short where it is established that Party A owes a non-delegable duty of care to Party B and outsources an integral part of its functions to Party C, if Party B suffers harm as a result of Party C’s negligence in the performance of that particular function, Party A will still be liable to Party B. Non-delegable duties may arise for example in the context of prisons, care homes and schools.

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Shein v Temu: Testing the limits of marketplace liability

Tue, 11 Aug 2026 00:00:00 +0100

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Shein v Temu: Testing the limits of marketplace liability

The ongoing commercial rivalry between fast-fashion giants Shein and Temu has evolved into one of the most significant intellectual property disputes in the e-commerce sector

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Decision: Roadget Business v Whaleco
Court: High Court (Intellectual Property List)
Judge: Mrs Justice Bacon
Citation: [2026] EWHC 2165 (Ch)
Decision: Here
Key issues: Marketplace liability

Published: 26 August 2026
Authors: Nichola Jenkins

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Introduction

The ongoing commercial rivalry between fast-fashion giants Shein and Temu has evolved into one of the most significant intellectual property disputes in the e-commerce sector. While both businesses having built enormous global success through low-cost, digitally driven retail models, their recent litigation raises broader questions about copyright ownership, platform liability and the legal responsibilities of online marketplaces.

In August 2026, the English High Court handed Temu a notable victory in proceedings brought by Shein concerning the alleged unauthorised use of thousands of product photographs that appeared on Temu's platform. Shein argued that Temu had infringed its copyright "on an industrial scale" by allowing third-party merchants to use Shein's product images to market competing products. The court rejected Shein's claims and held that, even if copyright infringement had occurred, Temu would not have been liable in the circumstances. A parallel competition (counter-) claim, in which Temu has alleged that Shein forced suppliers into anti-competitive agreements, is also extant, with trial listed for March 2027.

At first glance, the dispute may appear to be a conventional copyright case. However, the judgment highlights several issues that are increasingly relevant to businesses operating digital marketplaces and platform-based business models.

Background

The claim dates back to 2023, with Shein sending a letter of claim alleging infringement of 8,036 Temu product listings. It subsequently applied for interim injunctions, which were granted in September 2023 and September 2024, both supported with cross-undertakings in damages from Shein. In response to the interim injunctions, Temu removed the notified product listings. The claim went to trial in May 2026, with judgment being handed down in August 2026.

Copyright ownership still matters

One of the noteworthy features of the case was the court's scrutiny of copyright ownership. Shein faced difficulties establishing that it owned all of the rights it sought to enforce at the relevant time. In relation to certain photographs, ownership and licensing arrangements within the Shein corporate group became a key issue. As a result, by trial, Shein had abandoned its claims in respect of all agency works and the majority of supplier works, leaving five trial sample works: four employee works and one supplier work.

The lesson for businesses is straightforward but often overlooked. Effective IP enforcement begins with clear documentary evidence of ownership. Companies that commission content from photographers, agencies, contractors or affiliated group companies should ensure that copyright assignments and licences are properly documented and regularly reviewed. In large, international organisations, gaps in ownership records can undermine even the strongest infringement claims.

Allegations

Of the remaining images, Shein alleged infringement under sections 17 (direct copying), 20 (communication of a copy to the public) and 23 (possessing and distributing a copy which the defendant knows to be an infringement) of the Copyright, Designs & Patents Act 1988.

Jurisdiction in a borderless digital economy

The allegations exposed the continuing tension between territorial intellectual property rights and global digital infrastructure.

Under section 17, Shein originally argued that Temu reproduced its photographs, but that aspect of the claim was not pursued because the relevant servers were located outside the UK. Shein therefore pivoted, arguing that there was infringement because Temu authorised users of Temu’s UK website to reproduce the photographs on the user’s web-browser. To this, the Court held that Temu had not authorised the reproduction and had a defence under section 28A. The latter explains that copyright is not infringed by the making of a temporary copy which is transient or incidental, which is an integral and essential part of a technological process and the sole purpose of which is to enable a transmission of the work in a network between third parties by an intermediary and which had no independent economic significance.

As to section 20, this failed because providing the means for users to upload and access content was insufficient to amount to communication. Rather, a deliberate intervention with full knowledge of the consequences was required, which the court held that Temu lacked. Section 23 also failed because Temu removed the listings before acquiring the requisite knowledge.

The issue of jurisdiction is increasingly important for businesses whose content is distributed globally. Copyright remains fundamentally territorial, yet online platforms frequently host, process and deliver content through infrastructure spanning multiple countries. The outcome demonstrates how the location of servers, data processing activities and platform architecture can materially affect enforcement strategies.

The growing importance of marketplace defences

Perhaps the most significant aspect of the judgment is its treatment of intermediary liability.

The court found that Temu acted principally as a marketplace hosting content uploaded by independent merchants. Mrs Justice Bacon concluded that Temu prohibited infringing uploads, did not authorise infringement and lacked the necessary knowledge of the alleged infringements. As a result, Temu could potentially rely on the so-called "hosting defence" available to intermediaries.

This finding is likely to be welcomed by operators of online marketplaces, app stores and other digital platforms that rely upon third-party content. It reinforces the principle that platforms will not automatically become liable for infringing material merely because it appears on their services, provided they maintain appropriate compliance measures and respond to infringement notifications effectively.

For rights holders, however, the decision illustrates the practical difficulty of pursuing platforms rather than individual sellers. As e-commerce ecosystems become increasingly dispersed across multiple jurisdictions, enforcing copyright may become more procedurally complex and potentially more costly.

Undertakings

Shein having been unsuccessful, it fell to be considered whether, as a result of its cross-undertakings, it was liable for Temu’s damages given the interim injunctions (incorrectly) granted.

Shein argued that the injunctions only applied to the use of the images and that Temu’s decision to remove the listings broke the chain of causation. In response, Temu explained that it did not permit listings without images, so by default an injunction to prevent the use of images was an injunction to remove the listings.

The Court agreed with Temu, finding its conduct reasonable. It follows that, subject to any appeal, Shein will be liable for any damages.

A sign of things to come

The dispute should not be viewed in isolation. Shein and Temu are engaged in broader global litigation and competition-related claims as they compete aggressively for market share across international markets. Temu's competition law counterclaim against Shein remains ongoing.

More broadly, the case reflects a growing shift in intellectual property disputes. Increasingly, the key legal question is not whether copying has occurred, but who should bear responsibility when infringing content is uploaded by third parties onto large-scale digital platforms.

As legislators and courts continue to grapple with the balance between protecting rights holders and enabling online commerce, platform liability will remain a critical area of legal development. Businesses that create valuable content should ensure robust ownership and enforcement frameworks, while platform operators should continue investing in notice-and-takedown procedures, seller compliance obligations and IP governance systems.

The Shein v Temu litigation therefore represents more than a dispute over product photographs. It serves as an important marker of how copyright law is adapting to the realities of global digital marketplaces and offers a glimpse into the future direction of online intermediary liability.

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In-house brand advisers can often feel like they are working behind closed doors. You may be working as the only trade mark lawyer in your organisation, or in a newly formed team, with new ideas, trying to understand new practices. Brand Interchange is designed to support and help you. It’s the first dedicated group of its kind aimed at promoting and celebrating UK brand professionals. To join Brand Interchange, please register with Shoosmiths by completing and submitting the membership form. Registering as a member of Brand Interchange is completely free, and so are all the benefits you receive as a member.

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Peppa Pig is granted an international injunction

Tue, 11 Aug 2026 00:00:00 +0100

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Peppa Pig is granted an international injunction

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Decision: Hasbro Consumer Products v Công ty TNHH & Ors
Court: High Court (Intellectual Property List)
Judge: Mr Justice Richard Smith
Citation: [2026] EWHC 1957 (Ch)
Decision: Here
Key issues: Injunctions

Published: 11 August 2026
Authors: Eloise Ryan

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Introduction

In Hasbro Consumer Products v Công ty TNHH & Ors, the English High Court has granted an (unusual) worldwide injunction in relation to aspects of Wolfoo, a popular preschool YouTube series.

Wolfoo was launched in 2018 and now has over 20 million subscriptions across its three major channels. It follows a young wolf, who lives with his family and friends, with episodes exploring everyday situations, adventures and games with Wolfoo.

In 2022 the makers of Peppa Pig brought infringement proceedings in the English courts, alleging, among other things:

in the UK, copyright infringement, trade mark infringement and passing off
in the EU, copyright infringement and trade mark infringement
in jurisdictions subject to various international copyright conventions and treaties (such as the Rome Convention, TRIPS and WPPT), copyright infringement

The sound recording copyright claim

In June this year, the court granted summary judgment on a discrete aspect of the wider proceedings.

Here, the Claimants alleged that audio clips from Peppa Pig had been copied in Wolfoo, resulting in infringement of copyright in the sound recordings. To support their case, the Claimants relied on detailed technical evidence, using spectrogram analysis in respect of Peppa Pig videos and a representative sample of Wolfoo videos, showing identity.

In turn, the Defendants sought to raise doubts such as the identity, authorship and ownership of the copyright works, but failed to substantively challenge the evidence advanced by the Claimants.

The issue fell before Mr Justice Richard Smith, who concluded that the Defendants had no realistic prospect of successfully defending this aspect of the claim, giving summary judgment.

International copyright claims and the presumption of similarity

The question arose as to whether the finding of copyright infringement under English law may apply to other jurisdictions and, if so, whether an injunction should be granted.

The Defendants argued that copyright is territorial in nature and that the Claimants could not simply rely upon English copyright law when alleging infringement across numerous jurisdictions.

Having examined the "default rule" and the "presumption of similarity" in private international law, the Court explained that, where foreign law is pleaded and properly engaged, English law may nevertheless play a role if it is reasonable to assume that the foreign law is materially similar to English law such that it is unlikely to lead to a different substantive outcome.

The Claimants argued that this test was satisfied in relation to EU jurisdictions because UK copyright law historically developed in line with the Information Society Directive. In relation to other countries, they relied on the harmonising effect of international copyright instruments including the Rome Convention, TRIPS and the WIPO Performances and Phonograms Treaty (WPPT).

The Court accepted those arguments and found that the Defendants had failed to identify any material differences between English law and the laws of the relevant foreign jurisdictions. In particularly forceful terms, the judge stated that it was not enough for the Defendants merely to assert a "bald belief" that material differences might exist and that further investigation would reveal them.

Representative sampling and large-scale online infringement

Another question arose as to whether the Defendants should obtain relief only in relation to the representative sample of Wolfoo video on which it relied, or all of them (which exceed some 30,000 videos).

The Court accepted evidence that the sampled videos were genuinely representative of the wider corpus, and that analysing every Wolfoo video would have been wholly disproportionate. As a result, the Court was prepared to infer that further infringements would likely be identified if wider analysis were undertaken.

Injunction

The practical consequence of this was a remarkably broad injunction. The Court ordered the removal of all Wolfoo videos falling within the scope of the findings in all jurisdictions that are parties to the relevant international copyright conventions and treaties (rather than limiting relief to specific videos or specific jurisdictions).

Key takeaways

The key takeaways from the decision are that:

in certain circumstances, the English courts are open for business to grant pan-jurisdictional injunctions in copyright disputes, which may serve as a cost-effective way of resolving international disputes
the presumption of similarity remains a powerful procedural tool where Defendants fail to identify concrete differences between English law and applicable foreign laws
courts may be willing to accept representative sampling as evidence of infringement across large bodies of online content where full analysis would be disproportionate
international copyright treaties and harmonised copyright frameworks can provide strong support for cross-border enforcement strategies

Caveat

While the judgment is a buoy to copyright holders looking to enforce their rights globally and cost effectively, a note of caution:

the success masks a prolonged (some four years to date) and ongoing dispute, with the court already having wrestled with pleading disputes and jurisdictional challenges
sound recordings carry no originality threshold and the infringement was clear, meaning it was harder for the Defendants to point to any material difference between English law and other jurisdictions. This may not apply to other copyright claims
the Defendants did not always attend the hearings and were not always legally represented
this is a first instance decision

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Court of Appeal considers case management of ‘omnibus’ claims

Tue, 11 Aug 2026 00:00:00 +0100

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Court of Appeal considers case management of ‘omnibus’ claims

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Judgment holds that c5,000 motor finance claims against various defendants meet the 'convenience' test in CPR r.7.3.

Published: 11 August 2026
Authors: Mahesh Vara & Claire Kershaw

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The Court of Appeal has dismissed an appeal by various lender Defendants against a High Court decision permitting c5,000 motor finance claims to proceed by way of multi-party ‘omnibus’ claim forms. While this is a case management decision specific to its facts, it will nonetheless be of interest to parties engaged in similar disputes.

Background

The Claimants all purchased motor vehicles with the assistance of finance provided by the Defendants. The Claimants claim repayment of monies paid by them under relevant credit agreements on the basis they gave rise to an unfair relationship within the meaning of s.140A of the Consumer Credit Act 1974 (the Act) due to alleged undisclosed commissions paid by the Defendants to the relevant car dealers.

The claims were issued in the County Court in 2022 by way of 8 Claim Forms, grouping the claims against each of the Defendants. Generic Particulars of Claim were served pleading the overarching allegation that the Defendants’ failure to disclose commission agreements between them and the car dealers was a breach of the Financial Conduct Authority’s Consumer Credit Sourcebook and meant that every relationship between the Claimants and Defendants was unfair.

The Defendants sought to disaggregate the claims, arguing that determination of an unfair relationship was entirely fact specific.

At first instance the County Court agreed, finding that the convenience test under CPR r.7.3 had not been met. Following the Divisional Court’s judgment in Abbott¹, the circuit judge concluded he was not satisfied that “there were common issues of sufficient significance that their determination would constitute real progress towards the final determination of each claim in a set of claims”.

The Claimants appealed. However, before the appeal hearing had taken place, the Court of Appeal handed down judgment in Morris² an unrelated professional negligence case in which the use of an omnibus claim form was also being challenged. In Morris, the Court of Appeal concluded the test set out in Abbott was too restrictive. While the factors identified in Abbott may be relevant to the question of convenience under r.7.3, they should not operate as exclusionary rules. What is ‘convenient’ is a matter for the Court’s discretion according to the facts of the case.

Morris was plainly going to influence the High Court’s approach in these the present proceedings, and so it did. The High Court judge essentially concluded that, since Abbott had been overturned by Morris, the approach taken by the circuit judge could not stand, and that he was entitled to re-exercise his discretion on the question of convenience. He identified³ 9 separate factors to consider, and on analysis found that the vast majority supported the convenience test having been met. He therefore allowed the appeal and gave directions for the Defendants to serve generic Defences, and to provide certain disclosure.

The Defendants sought permission to appeal on 4 grounds. Permission was granted on the fourth only, namely (in short) that the Judge had failed to re-exercise the discretion properly.

Court of Appeal decision

The Court of Appeal (unanimously) dismissed the appeal.

The judgment addresses 5 different aspects of the Judge’s exercise of discretion. The key points can be summarised as follows:

Unfairness

there was some criticism of the Judge’s approach insofar as he identified, as part of the common issues exercise, cases where (in his view) there was “a very clear case of unfairness”. This went against numerous authorities, including Johnson⁴, establishing that unfairness is an entirely fact-specific inquiry. This point did not, however, go to the heart of the Judge’s judgment.

Common issues

the Court reaffirmed that “[c]ommonality of issue is different to whether the result of an issue will be binding on everyone”. Claims which are very similar in nature are likely to give rise to common issues of law and fact, even if they require separate evaluation “in the final act”.
while the Court was sceptical as to the utility of the two “broad common issues” identified by the Judge, it could not say that he was wrong, in the exercise of his discretion, to conclude that there were some common issues and that that was relevant to the question of convenience.

Lead cases

the Court rejected the submission that it wasn’t enough for results in lead cases to be persuasive - as opposed to binding - to point towards convenience. The Court considered that even where claims are fact-sensitive, it would be surprisingly uncommercial and contrary to common sense not to extrapolate the results as part of considering remaining claims.
the Court agreed with the Judge that trial of lead cases would plainly be a sensible step and a “clear pointer” towards convenience. Disclosure of the brokerage agreements, as ordered by the Judge, would assist in identifying lead cases through the usual method.

Remedy

the Court rejected the criticism that the Judge had failed to consider remedy in his reasoning, observing that questions of remedy always turn on the individual facts of each case, but this was “manifestly not a reason to find that the convenience test under r.7.3 had not been made out”.

The case management directions

while the Court was doubtful that the provision of generic Defences would particularly progress matters, it could not say that the Judge was wrong to require them; it was consistent with the view he had formed about common issues and it would be more cost effective than pleading +5,000 Defences individually
as for the disclosure required from the Defendants, the Court recognised the burden this placed on them, but noted it was an inevitable part of responding to these claims (however formulated), rather than a function of the Judge’s order. The documents were necessary for the inquiry into unfairness which the Defendants urged be undertaken

Key takeaways

Due to the limited scope of the appeal (on one ground only, against a case management decision), “the result cannot easily be extrapolated into setting out any new or wider principles to be followed” in other cases on the question of convenience.

It can nonetheless be added to the growing list of authorities (going in various directions) from which parties on all sides may seek to draw analogies and/or distinctions as against their facts. It clearly illustrates the generous ambit of the courts’ discretion in relation to case management and confirms, subject to any contrary finding by the Supreme Court, that even cases involving highly fact-sensitive matters such as the assessment of unfairness under the 1974 Act are not inherently unsuitable for omnibus proceedings.

The Court did however note that the effect on court resources is relevant to the question of convenience and suggested data including lost fee revenue be compiled by HMCTS. It also gave a clear nod to the Civil Procedure Rules Committee to revisit its post-Morris decision⁵ that no amendment of either r.7.3 or r.19.1 was needed. This may potentially form part of a wider review of Part 19 which the CPRC has previously indicated would be added to its future work programme. It is also worth noting the Law Commission’s consideration of a potential new consumer class actions regime.

One thing is for certain: potential parties to large group claims should expect plenty of further developments as to how such claims should be managed.

¹ Abbott v Ministry of Defence [2022] EWHC 1807 (KB)
² Morris & Others v Williams & Co Solicitors [2024] EWCA Civ 376
³ At paragraph 89
⁴ Hopcraft and another v Close Brothers Ltd; Johnson v FirstRand Bank Ltd (London Branch) (t/a MotoNovo Finance); Wrench v FirstRand Bank Ltd; (London Branch) (t/a MotoNovo Finance) (Rev1) [2025] UKSC 33 (01 August 2025)
⁵ Recorded in the minutes of its meeting on 5 July 2024

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Duty of fair presentation in action: Insurer avoids policy after non-disclosure

Thu, 6 Aug 2026 00:00:00 +0100

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Duty of fair presentation in action

Insurer avoids policy after non-disclosure

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The Commercial Court has held that an insurer was entitled to avoid a charterer's liability policy after the insured failed to disclose a number of fires involving its cargo.

Published: 6 August 2026
Authors: Susie Wakefield

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The recent Commercial Court decision in Cometsambre SA v Lloyd's Insurance Company SA HIG 5321 provides a compelling illustration of the courts’ approach to assessing whether an insured has complied with its duty of fair presentation under s.3 of the Insurance Act 2015 (the Act), and the consequences of failing to do so.

Background

The dispute relates to a Charterer’s Liability (C/L) insurance policy underwritten by AMICA, as coverholder for the Defendant (Lloyd’s), in favour of the insured Claimant (Cometsambre), a scrap metal dealer.

Lloyd's Insurance Company SA writes European risks for Lloyd’s syndicates; the policies are then 100% reinsured by Lloyd’s syndicates, in this case Hartford's Syndicate 1221.

Cometsambre first approached AMICA through a broker in 2008 seeking C/L insurance in respect of the planned shipping of scrap from its base in Ghent, Belgium. Through various exchanges, AMICA was informed that the scrap would be non-oily, non-radioactive, non-dangerous shredded steel scrap, excluding motor blocks, borings and turnings, to HMS 1 / HMS 1+2 or ISRI specifications.

Between 2010 and 2022 cover was renewed every year on almost identical terms with little correspondence. One small claim was made in 2012 in respect of stevedore damage, and in April 2021 Cometsambre gave notice of a potential claim against it in respect of a grounding at Alexandria.

In June 2022 a cargo of Cometsambre’s scrap metal was involved in a fire on board the chartered vessel LOWLANDS MIMOSA, resulting in a claim against Cometsambre under the charterparty. AMICA were subsequently informed of various other fires involving Cometsambre’s scrap; 10 in total between 2014 and 2022, either quayside or once loaded onto vessels, with 5 of these taking place between May 2020 and October 2021.

Lloyd’s declined to cover Cometsambre in respect of the LOWLANDS MIMOSA charterparty claim on the basis that Cometsambre had breached its duty of fair presentation both in terms of (i) the nature of the scrap being shipped and (ii) the failure to disclose the 5 fires between May 2020 and October 2021.

Cometsambre issued proceedings in December 2024 seeking a declaration that Lloyd’s was obliged to indemnify it in respect of its costs of dealing with the charterparty claim and, to the extent necessary, for any substantive liability incurred in that respect.

Commercial Court judgment

The Court (Mr Justice Butcher) dismissed the claim, finding that Lloyd’s was entitled to avoid the 2022 policy.

On the key issues the Court found as follows:

Materiality

Cometsambre sought to argue that the fire record was not ‘material’ for the purposes of s.3(4) of the Act since:

none of the fires had given rise to a claim against Cometsambre (in particular, none of the vessel fires had led to a claim by the owners and were therefore not material to a C/L underwriter)
the quayside fires were not material to a C/L underwriter because any resulting claim would be on Cometsambre’s property insurance policy.

The Court rejected these arguments, preferring Lloyd’s underwriting expert’s evidence that fires were “a paradigm example of an incident capable of giving rise to a claim” which must be disclosed, even if a claim did not materialise. In particular, the fact that five fires occurred in the 18 months between May 2020 and October 2021 was significant as it indicated a change in the risk profile.

Insurers on notice

Cometsambre argued that since AMICA was aware of the nature of the cargo it should have been aware of the general risks of the business, and had not asked for an updated questionnaire on renewal each year, AMICA was on notice, for the purposes of s.3(4)(b) of the Act, that it needed to make further enquiries.

The Court regarded this as an improper attempt to reverse the burden of ensuring fair presentation of risk; that obligation lies primarily with the insured. Nothing AMICA was told could be said to have put AMICA on notice of the change in the incidence of fires over the relevant period, in particular the five fires in c. 18 months prior to the 2022 renewal. Even if (which the Court did not consider necessary in any event) AMICA failed to insist on loading surveys being performed as a matter of course, this would not excuse Cometsambre from disclosing the fires it had actual knowledge of.

Insurers’ presumed knowledge

It was also argued that underwriters could be presumed to know, for the purposes of s.3(5)(d) of the Act, that fires of this nature would probably have occurred.

Again, the Court was not persuaded, finding that Cometsambre failed to establish presumed knowledge of the relevant fires, still less that they had occurred in such quick succession after a long period of none at all, which suggested “a change in the risk profile”.

Disclosure waived

Cometsambre further submitted that the fact it was not asked to fill in an updated questionnaire or to provide further information about risk management, losses, incidents, claims and so on over the years meant a reasonable insured would understand AMICA was “only concerned with Cometsambre’s claim history and were indifferent about fires not giving rise to a claim”.

The Court disagreed. AMICA’s enquiries at the outset of the relationship were designed to ensure that fire-risky cargo was not being covered. The fact the initial questionnaire – prepared by the broker rather than by AMICA – only requested information about Cometsambre’s ‘claims record’ could not reasonably be understood as indicating that underwriters were not interested in any fires which had not given rise to a claim. Neither the absence of renewal questionnaires in subsequent years, nor the dealings between the parties in the round, reasonably be understood to amount to a waiver of disclosure of material circumstances.

Inducement

The Court stressed the need to be circumspect about evidence provided by underwriters on whether they would have declined the risk. The Court’s have recognised that there is an inherent risk that, whilst truthful, such evidence may be incorrect as it may be influenced by the fact that the loss has arisen and the witness is asked to consider what they would have done with the benefit of that knowledge.

Despite that the Court accepted the underwriter’s evidence that disclosure of the fires would have caused him to decline to renew. Key factors included the low premium, the expense of sending an expert to investigate each incident, the risk any single fire claim could result in substantial exposure, and the change in risk profile evidenced by the increase in fires.

Accordingly, and having already tendered a return of the premium, Lloyd’s was entitled to avoid the policy under paragraph 4 of Schedule 1 to the Act.

Comment

There are still relatively few judgments addressing insurers’ rights to avoid a policy for a failure to give a fair presentation of the risk under the Act.

Whilst the judgment largely turns on the facts of the case, it is a helpful guide to see how the Court will approach the detail of the analysis required under Act, and the various elements that must be established by insurers. On the facts before the Court, the judgment:

adopts a holistic approach to materiality, not limited to actual or potential claims against the specific policy, and extending to anything affecting the “overall picture of the risk”
reinforces that while the Act makes provision for insurers to be on notice or to have presumed knowledge in certain circumstances, this does negate an insured’s primary obligation to disclose material circumstances of which it has the requisite knowledge
rejects the idea that a ‘failure’ by insurers to specifically to seek out detailed information upon renewal could reasonably be understood as meaning the insurer is indifferent about being informed of material circumstances.

Notwithstanding the outcome in this case, the judgment and its underlying facts also serve as a reminder to insurers and insureds alike of the importance of ongoing meaningful risk assessment and clear forthright communication in reducing the risk of claims and coverage disputes arising in the first instance.

An application for permission to appeal this decision was lodged with the Court of Appeal on or around 13 August 2026. We are monitoring the progress of the application with interest and will report on the outcome in due course.

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When is occupation not occupation? Rates mitigation under the spotlight

Thu, 6 Aug 2026 00:00:00 +0100

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article | 6 min read

When is occupation not occupation?

Rates mitigation under the spotlight

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A “box shifting” rates mitigation scheme did not amount to occupation for non-domestic rating purposes where the sole purpose of placing items in the premises was to secure a rates saving.

Published: 6 August 2026
Authors: Sophie Tracey

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The Court of Appeal has allowed the appeal in The Mayor and Commonalty and Citizens of the City of London (CoL) v 48th Street Holdings Limited and Principled Offsite Logistics Limited (POLL), holding that a “box shifting” rates mitigation scheme did not amount to occupation for non-domestic rating purposes where the sole purpose of placing items in the premises was to secure a rates saving. The decision reverses the High Court ruling discussed in our earlier article, Strategic occupation or rates loophole?, which had found the scheme effective.

Legal position

Liability for non-domestic rates arises through occupation under section 43 of the Local Government Finance Act 1988, or ownership of unoccupied property under section 45. Empty property relief is available to the owner for the first three months after premises become unoccupied. At the time the facts in this case arose, a period of occupation of at least six weeks (the “reset period”, now 13 weeks) was required before that relief could be claimed again.

The leading test for rateable occupation, from John Laing & Son Ltd v Assessment Committee for Kingswood Assessment Area, requires: actual occupation; exclusive occupation for the occupier’s purpose; occupation of some value or benefit to the occupier; and occupation that is not too transient. The appeal focused on whether POLL’s occupation provided any real value or benefit.

What happened?

The case concerned empty office units at 2 America Square, EC3. After the initial empty rates relief period expired, POLL took a short lease at a peppercorn rent and simultaneously served a break notice ending the lease after six weeks. During that period it placed boxes in the premises, accepted liability for rates and claimed to be the occupier. Once the lease ended, the boxes were removed and the owner claimed a fresh period of empty property relief. POLL received a share of the resulting rates saving.

It was common ground that the boxes served no business or commercial purpose and were present solely to create occupation for rating purposes. The lease was not a sham; the dispute was whether the arrangement amounted to occupation to constitute a reset period.

What did the court decide?

At first instance, the High Court followed R (Principled Offsite Logistics Ltd) v Trafford Council and held that POLL’s scheme was effective. It accepted that the benefit of the occupation was the rates mitigation achieved by the arrangement.

The Court of Appeal disagreed and held that the Trafford Council case was wrongly decided. Relying on the Supreme Court’s reasoning in Rossendale BC v Hurstwood Properties, it emphasised that the empty rates regime is intended to discourage properties being left vacant and encourage productive use.

Applying a purposive interpretation, the Court held that Parliament cannot have intended temporary placement of items in an otherwise empty property to constitute occupation where there is no commercial or business purpose beyond rates mitigation. The Court described the arrangement as “pure rate mitigation occupation”.

The Court rejected the argument that the rates saving itself supplied the necessary benefit. That reasoning was circular. While storage can amount to occupation where the stored items have utility to the occupier, occupation must have some independent use, value or benefit. Activity undertaken solely to obtain a rates saving cannot satisfy that requirement.

The Court stressed this was not a motive test. Occupation may still qualify even where reducing rates is one objective, provided the occupation has genuine utility beyond the tax advantage. The difficulty for POLL was that the alleged benefit was the rates saving itself.

What next?

The judgment is a significant setback for intermittent occupation schemes that rely on minimal activity with no independent purpose. Owners, occupiers and advisers should review existing arrangements and consider whether the occupation has genuine commercial or practical utility. Rates mitigation remains possible, but only where occupation has a real use, value or benefit beyond securing a rate saving.

Sophie Tracey, Real Estate Litigation Principal Associate and a rating expert at Shoosmiths, comments: “This decision is likely to signal the end of many rates mitigation schemes based on token occupation. While the Court confirmed that occupation need not be wholly commercial in nature, it must provide a genuine use, value or benefit beyond the rates saving itself. Property owners and occupiers should therefore review existing arrangements carefully, as the courts are increasingly willing to assess such schemes against the underlying purpose of the rating regime.”

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Law Commission consultation: Reforming interim rent on lease renewals

Tue, 4 Aug 2026 00:00:00 +0100

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article | 6 min read

Law Commission consultation: Reforming interim rent on lease renewals

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Our next article considering the Law Commission's consultation on the future of the Landlord and Tenant Act 1954 (the Act) tackles one of the more complex and frequently misunderstood aspects of the lease renewal process: interim rent.

Published: 4 August 2026
Authors: Elinor Sandbach

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The Act currently contains detailed provisions dealing with interim rent. However, the Law Commission has concluded that the existing regime is difficult to understand, can produce uncertainty and tactical behaviour, and may lead to unfair outcomes both for landlords and tenants.

The consultation therefore considers whether the current approach should be replaced with a simpler system or retained in a more streamlined form.

Interim rent

When the contractual term of a lease protected by the Act expires, the tenant will often remain in occupation under a statutory continuation tenancy while the parties negotiate the terms of a renewal lease.

As a starting point, the terms of the existing lease continue during that continuation period. This means the tenant generally continues to pay rent at the level specified in the existing lease, even if market rental values have changed significantly since the lease was originally granted or the level of rent last reviewed.

Either party may, however, apply to the court for an interim rent determination.

The interim rent period starts from the earliest date that could have been specified in the relevant section 25 or section 26 notice, and continues until either:

1. the renewal tenancy is completed

2. the continuation tenancy comes to an end (for example, because the landlord successfully opposes renewal or the tenant decides not to proceed).

The current statutory regime is complicated because different valuation assumptions can apply depending on the circumstances. Where a renewal lease is ultimately granted, interim rent is often agreed to be the same as the rent payable under that new lease. However, the legislation contains a number of exceptions, particularly where:

1. rental values have changed substantially during the continuation period

2. the terms of the renewal lease differ from the existing tenancy

3. no renewal tenancy is ultimately granted.

Further complexity arises because the rent under the renewal tenancy is currently linked to the court's determination process. Legally, the valuation date is the commencement date of the renewal tenancy i.e. three months and three weeks after the court decides the provisions of the tenancy. Since future market conditions cannot be known, in practice the valuation date is generally treated as the date of the final hearing, even though that date may be itself uncertain (with final hearings sometimes listed for in excess of 12 months from the date of a Court application). This can create difficulties for valuers and encourage tactical delays in both rising and falling markets.

The Law Commission also highlights a practical cashflow issue. Until interim rent and renewal rent are agreed or determined, tenants continue to pay rent at the existing level. Once the final figures are established, a substantial balancing payment may become due from either landlord or tenant, potentially many months after the relevant period has ended.

Proposals for reform

Rather than abolishing interim rent altogether, the Law Commission has developed two alternative reform models.

Option A: fixed valuation and commencement dates

Under Option A, both the valuation date and commencement date for the renewal tenancy would be fixed by reference to the section 25 or section 26 notice.

The intention is to create a clearer and more predictable system in which the parties know from the outset the dates that will be used for valuation purposes.

If adopted, this approach would largely remove the need for separate interim rent provisions because the rent under the renewal tenancy would effectively apply from a date linked to the notice itself.

The principal advantages are greater certainty, simpler valuation evidence and reduced scope for tactical delay.

However, the proposal could create difficulties where the renewal tenancy differs materially from the existing tenancy. For example, if the renewal lease relates to only part of the premises, it may be unfair for the tenant to continue occupying the whole property during the continuation period while paying rent calculated by reference to the smaller demise.

The Law Commission therefore proposes that, in certain cases, adjustments could be made to reflect significant differences between the continuation tenancy and the renewal tenancy.

The consultation also seeks views on whether the notice-linked date should be:

the earliest date that could have been specified in the notice (which, following the amendments introduced by the Regulatory Reform (Business Tenancies) (England and Wales) Order 2003, is the date from which interim rent is currently payable); or
the actual termination date specified in the notice.

This distinction could have significant strategic implications. The 2003 Order deliberately severed the link between interim rent and the date actually specified in the notice, instead tying interim rent to the earliest date that could have been specified. The intention was to prevent parties from obtaining a tactical advantage by choosing a longer notice period. Reverting to the actual termination date would risk reintroducing those tactical considerations, as parties may seek to influence both the valuation date and the commencement of any revised rent by controlling the timing of their notices.

Option B: retain interim rent but simplify it

Option B would preserve the current structure of the Act, keeping the commencement date and valuation date broadly unchanged, and with interim rent continuing to exist as a separate concept.

However, the basis on which interim rent is assessed would be substantially simplified.

Rather than the current array of different valuation exercises and exceptions, interim rent would be assessed by reference to the open market rent of a hypothetical tenancy on the same terms as the continuation tenancy.

This approach is simpler than the current statutory scheme, and avoids both bringing forward the lease renewal cycle and the need to account for differences between the continuation tenancy and the renewal tenancy.

However, it would not eliminate uncertainty around valuation dates and would continue to allow scope for tactical delay because the renewal rent would still be linked to the timing of the court process.

Application of interim rent in more complex scenarios

The consultation also examines how either option should work where circumstances do not fit the traditional lease renewal model.

For example, issues can arise where the rental model changes on renewal, such as a transition from a conventional rack rent to a turnover rent arrangement. The ability of the court to order a turnover rent is discussed in Chapter 7 of the Consultation and in our article here: Commercial leases: On what terms and rent can a lease be renewed?

The Law Commission recognises the practical difficulties of retrospectively calculating turnover-based rents for periods when tenants may have had no obligation to keep or provide the relevant trading data. Under Option A, the court could be given power to make an appropriate adjustment. Under Option B, interim rent would instead remain based on the rental model used in the original tenancy.

The consultation proposes a similar approach where no renewal tenancy is granted, suggesting that the rent should continue to be assessed using the same rental structure as the original lease.

The Law Commission also seeks views on whether parties should be able to apply for interim adjustments to rent during the continuation period and how balancing payments should be enforced once the final rents have been determined.

Comment

From a corporate occupier perspective, Elinor Sandbach, partner in the real estate litigation team, comments:

“From an occupier perspective, the strongest argument for reform is greater certainty. The current regime can leave occupiers carrying a significant contingent liability for many months while lease renewal proceedings progress, only for a substantial balancing payment to arise long after the relevant period has passed. That uncertainty can make budgeting and financial planning particularly challenging for businesses with large property portfolios.

Option A has obvious attractions because it creates a clear valuation framework from the outset and reduces the scope for tactical delay. However, fixing the valuation date at the notice stage also means that the parties are effectively pricing a lease before the terms have been finalised and, in some cases, before market conditions have fully evolved. In volatile occupational markets, a significant period may elapse between the service of a notice and completion of the renewal lease, creating a risk that the rent ultimately paid is detached from conditions prevailing at the point the new tenancy is actually granted.

Many occupiers may therefore see merit in the simplicity offered by Option B, which preserves the existing renewal timetable whilst streamlining the valuation exercise.”

Laurence Matthews, a Senior Associate in the real estate litigation team who acts for investors and developers, agrees:

“Option A gives both parties greater certainty from the outset, but the trade-off is that it could accelerate the lease renewal cycle. Fixing the valuation and commencement date at an earlier stage means that a lease that takes a year to negotiate may have already lost a substantial part of its term by completion, bringing the next renewal process into view much sooner. While parties may respond by agreeing longer lease terms, that will of itself affect value and, potentially, the new level of rent under the renewal lease."

This article forms part of our series examining the Law Commission's consultation on reform of the Landlord and Tenant Act 1954. Our separate article on Chapter 7 Part 1 considers the Law Commission's proposals regarding the assessment of rent under renewal tenancies.

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Orwell's legacy meets trade mark reality: Why Animal Farm and 1984 could not be protected by trade mark law

Mon, 3 Aug 2026 00:00:00 +0100

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Brand interchange | 3 min read

Orwell's legacy meets trade mark reality

Why Animal Farm and 1984 could not be protected by trade mark law

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Decision: ANIMAL FARM and 1984
Court: EUIPO Grand Board of Appeal
Citation: R1719/2019-G and R1922/2019-G
Decision: Here and here
Key issues: Descriptiveness, distinctiveness

Published: 3 August 2026
Authors: Eloise Di Pasqua

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Introduction

While Animal Farm and 1984 remain two of the most influential literary works ever written, a recent EUIPO Grand Board of Appeal decision demonstrates that fame alone does not guarantee trade mark protection. The ruling provides an important reminder that trade mark law protects indicators of commercial origin, not cultural significance.

Background

The Estate of the late Sonia Brownell Orwell sought to register the titles Animal Farm and 1984 as EU trade marks for a range of goods and services, including books, films, digital content, educational materials, games and entertainment services.

At first glance, the applications may have appeared straightforward. Both titles enjoy worldwide recognition and are intrinsically associated with George Orwell's works. However, the EUIPO examiner partially refused the applications on the basis that the marks were descriptive and lacked distinctive character for many of the goods and services applied for.

The matter ultimately reached the EUIPO Grand Board of Appeal, which was asked to address an important question: can the title of a famous literary work function as a trade mark, or will consumers simply view it as describing the content of the goods and services concerned?

Decision

The Grand Board upheld the refusal to register both marks for a significant number of content-related goods and services.

The Board's key findings included:

Animal Farm and 1984 are widely recognised by the relevant public as the titles of Orwell's novels
where the mark describes its subject matter of the goods and services then it may be liable for refusal under Article 7(1)(c) EUTMR
where goods or services convey creative, educational or entertainment content, literary titles may directly describe that content
copyright ownership, editorial control and licensing arrangements do not determine whether a sign functions as a trade mark; consumer perception remains the decisive test

Importantly, the Board emphasised that there is no blanket prohibition on registering book titles as trade marks. However, exceptionally famous titles may face difficulties where the public primarily associates them with the underlying work rather than with a commercial undertaking.

Commentary

This decision highlights the distinction between copyright and trade mark protection. The Grand Board found that consumers are likely to perceive Animal Farm and 1984 as the titles of famous literary works and as descriptions of their content, rather than as indicators of commercial origin.

The ruling also demonstrates that fame can sometimes hinder, rather than help, trade mark registration. While brand owners often seek widespread recognition, highly famous titles may become so embedded in popular culture that they are no longer perceived as trade marks.

For rights holders, the decision is a reminder that trade mark protection cannot be relied upon simply because a work enjoys significant cultural prominence. The key question remains whether the sign functions as a badge of origin for the relevant goods and services.

Key takeaways

fame alone will not secure trade mark registration and, in some cases, may make registration more difficult where consumers associate the sign with a well-known work rather than a commercial source
the decisive question is how consumers perceive the sign in relation to the relevant goods and services
titles of creative works may be refused registration where they are perceived as describing the content or subject matter of the goods or services
applicants should carefully assess specifications and consider whether the sign will be viewed as a badge of origin, particularly in the publishing, entertainment and educational sectors
evidence of acquired distinctiveness may be important where a title has become culturally ubiquitous.

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AI-generated workplace disputes: Burden or opportunity?

Mon, 27 Jul 2026 00:00:00 +0100

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article | 4 min read

AI-generated workplace disputes: Burden or opportunity?

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AI is changing how employment disputes are raised and pursued. We look at the practical steps employers can take to cut through the noise and deal with AI-generated disputes proportionately.

Published: 27 July 2026
Authors: Darlia Williams

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Employees can now use free online tools to generate detailed grievances, tribunal pleadings, correspondence and broad data subject access requests in minutes. While that can help employees articulate their concerns clearly, it can also add complexity to the issues and bring in arguments that may not be legally correct. As a result, it means employers are receiving lengthy, legalistic documents from employees whose expectations for resolution may be shaped by AI, rather than qualified legal advisers. Given AI’s propensity to agree with the prompter, an employee’s expectations can be inflated without having an actual legal basis, making resolution of the issue more difficult.

For employers, this creates both burden and opportunity: more material to manage and more time and cost involved in dealing with disputes, but also more scope to narrow the issues, test the evidence and focus on the facts.

Practical steps for employers

Speak to the employee, not the document

One of the weaknesses of AI produced content is that it is only as good as the prompt and information provided to it. Where an employee gives an incomplete or one-sided account, the AI output is likely to amplify their perspective and present it in a more persuasive and often lengthy form.

For employers, a meeting, whether in person or online, will often be the quickest way to understand what the employee is really saying. It allows the employer to ask the employee to explain their concerns in their own words, identify the facts they rely on and clarify what outcome they want. In practice, employers should ask: what happened, who was involved, when did it occur, what evidence is available and what outcome is the employee seeking? The discussion should be documented carefully and used to define the scope of any investigation.

Follow the process

The ACAS Code of Practice on disciplinary and grievance procedures remains the minimum standard employers should follow when handling workplace issues. In AI-assisted disputes, that discipline matters even more. It gives employers a structure for dealing with lengthy correspondence: follow internal policies, keep clear records, investigate reasonably and communicate outcomes proportionately.

Don’t match volume with volume

Employers should not assume that a document is stronger because it is longer, or more persuasive because it cites legislation or case law. AI generated content may look daunting at first glance, but it can also reveal weaknesses in the employee’s case: missing dates, vague allegations, unsupported assumptions or legal points that do not match the facts or which are, in fact, incorrect. Employers should avoid validating inaccurate AI generated content and do not necessarily need to respond line by line to every aspect. A better approach is to identify the core allegations, investigate them properly and explain the outcome clearly.

Employers should also resist being pulled into legal arguments with employees. An employer’s role is not to debate the law or provide legal commentary; it is to understand the factual complaint, reach a sensible conclusion and decide what, if any, action should be taken. Where a grievance cites case law or legal principles, the employer can say that it has considered the points raised but has focused its investigation on the underlying factual concerns.

Put clear guardrails around AI use

Employers should consider introducing or updating an AI policy. This should explain:

when employees may use AI tools
whether tools should be limited to company approved ones only rather than publicly available tools
what information must not be entered into public AI platforms in any circumstances
the need for employees to check accuracy before relying on AI generated content and
potential confidentiality, data protection and privilege risks.

A clear policy will not prevent every issue, but it should give employers a framework for managing AI use consistently and help identify where a breach of confidentiality or data protection has occurred for which disciplinary action against an employee may then be taken.

AI in the employment tribunal

AI is also making employment tribunal claims harder to manage and settle. Employees who rely on AI for an assessment of their claim may receive a confident, claimant-friendly output as well as suggested legal arguments, strategy and an overinflated estimation of the claim value. This can reinforce the claimant’s view of their case and entrench their position, particularly where the output has not been checked by a legal adviser.

For employers, this means receipt of more claims, more complexity, more ambitious applications and difficult settlement discussions. However, AI generated content often contains factual errors, incorrect case law, misconceived claims and disproportionately lengthy correspondence. This is where employers may have an opportunity. The Employment Tribunal may strike out misconceived claims and, whilst cost awards remain relatively rare, may award costs where an employee pursues meritless claims or otherwise acts vexatiously or unreasonably during proceedings by generating excessive correspondence.

AI use may also create targeted disclosure opportunities. Where employees use AI to generate content related to their dispute, the AI prompts used and their output may not be legally privileged and therefore may be disclosable in Employment Tribunal litigation. Employer requests for disclosure about AI use should however be targeted, proportionate and linked to the issues in dispute. They should not be used as a fishing expedition or as a substitute for engaging with the merits of the claim. The same point cuts both ways: if an employer has used AI in preparing correspondence, pleadings or evidence, it should be ready to explain and justify that use if challenged and ensure that all aspects are checked and accurate.

Key takeaway

AI is not going away. Employers should expect more lengthy grievances, more legalistic correspondence and more AI assisted tribunal claims. The answer is not to match volume with volume, or to treat every AI generated point as equally important. Instead, employers should keep the process disciplined: speak to employees directly, focus on the facts, comply with the ACAS Code and their internal policies, keep clear records and respond in a way that is proportionate, accurate and commercially sensible.

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easyGroup v Easyfeetstore: How far does a “family of marks” really extend?

Fri, 17 Jul 2026 00:00:00 +0100

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Brand interchange | 4 min read

easyGroup v Easyfeetstore

How far does a “family of marks” really extend?

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Decision: easyGroup v Easyfeetstore [2026] EWHC 767 (IPEC)
Court: Intellectual Property Enterprise Court (IPEC)
Judge: HHJ Hacon
Decision: Here
Key issues: Family of marks

Published: 17 July 2026
Authors: Ellen Hughes-Jones

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Introduction

The Intellectual Property Enterprise Court has handed down an important decision on the limits of the “family of marks” doctrine in easyGroup v Easyfeetstore. The judgment will be of particular interest to brand owners that manage portfolios of marks sharing a common prefix or naming convention, and to businesses facing claims based on alleged brand ‘families’.

At the heart of the dispute was a question that has surfaced repeatedly in easyGroup litigation over the years: does the widespread use of the EASY prefix across a portfolio of brands mean that consumers will assume any EASY+suffix sign originates or is associated with easyGroup?

HHJ Hacon’s answer was clear: not without evidence.

Background

easyGroup, the owner and licensor of the well-known EASY brand portfolio, brought proceedings against Easyfeetstore, its director and an associated US company. The defendants sold orthopaedic and orthotic insoles online using the signs EASYFEET and EASYFEETSTORE.

easyGroup relied on a number of registered trade marks, including marks such as EASYJET, EASYGROUP, EASYFOOD, EASYFOODSTORE and EASYTRAVELSEAT. It alleged infringement under sections 10(2) and 10(3) of the Trade Marks Act 1994, passing off, and sought invalidation of the defendants’ UK EASYFEET registration.

Although a number of issues arose, the case was ultimately driven by easyGroup’s contention that it had established a recognised ‘family of marks’ built around the word EASY.

The key issue: did easyGroup have a protectable family of marks?

The concept of a family of marks is well established in trade mark law. In principle, where consumers recognise a series of marks sharing a common characteristic as originating from the same undertaking, the use of a new mark displaying that characteristic may give rise to indirect confusion.

easyGroup argued that consumers had come to recognise EASY marks as denoting businesses connected with easyGroup. According to that argument, a consumer encountering EASYFEET would assume it was another member of the easyGroup stable of brands.

The difficulty for easyGroup was that the only feature common to all of the marks relied upon was the word EASY. That placed substantial weight on the proposition that the word EASY alone had become a source identifier for easyGroup across a broad spectrum of goods and services.

Why the argument failed

HHJ Hacon concluded that the evidence fell well short of establishing the existence of the claimed family.

A particularly striking aspect of the judgment is the court’s observation that easyGroup has brought numerous similar actions over the years (approx. 76 since 2015), yet had not produced evidence demonstrating that the public recognises EASY+suffix marks as identifying businesses associated with easyGroup.

The judge also relied on earlier authorities, including easyGroup v Beauty Perfectionists [2024] EWHC 1441 (Ch), where similar arguments had been rejected.

The court characterised easyGroup’s position as effectively requiring consumers to assume that any mark consisting of EASY coupled with a descriptive suffix belonged to easyGroup. HHJ Hacon regarded that as an extreme proposition which had not been established on the evidence before him.

This finding proved decisive throughout the remainder of the infringement analysis.

No likelihood of confusion

Once the family of marks argument fell away, easyGroup faced a more conventional comparison between its marks and the defendants’ signs.

The court held that the only common element was the word EASY, which the judge regarded as descriptive and lacking inherent distinctiveness. The suffixes (such as JET, FOOD, TRAVELSEAT, FEET and FEETSTORE) were quite different.

In those circumstances, the court found no relevant visual, aural or conceptual similarity capable of generating either direct or indirect confusion. Importantly, there was also no evidence of actual confusion notwithstanding the parties’ concurrent trading.

The section 10(2) claim therefore failed.

No link, unfair advantage, detriment to distinctive character or detriment to reputation

easyGroup also advanced claims under section 10(3) of the Trade Marks Act.

The court accepted that EASYJET enjoyed a substantial reputation and that EASYFOOD had acquired a reputation within its own field. However, even where reputation existed, easyGroup still had to show that consumers would form the requisite ‘link’ between the defendants’ signs and the relevant trade mark.

The court found that no such link had been established. Nor was there evidence of unfair advantage, detriment to distinctive character or detriment to reputation.

As a result, the section 10(3) claims also failed.

Passing off and invalidity

The remaining claims met a similar fate.

The passing off claim failed because the underlying allegation of consumer confusion was not made out. Likewise, the challenge to the defendants’ EASYFEET registration stood or fell with the infringement case and was dismissed.

Commentary

This decision provides one of the clearest recent judicial statements on the evidential burden involved in establishing a family of marks.

The judgment does not undermine the doctrine itself. Rather, it demonstrates that a claimant must prove that consumers genuinely recognise the common element of the alleged family as an indicator of trade origin. Mere ownership of multiple registrations using the same descriptive component will not suffice.

The case is also a useful reminder that descriptive or laudatory terms remain inherently weak foundations on which to build broad exclusivity claims. The larger and more commercially successful a brand portfolio becomes, the more tempting it may be to argue that a naming convention has acquired independent significance. However, courts will still expect robust evidence that consumers perceive it in that way.

For brand owners, the practical lesson is straightforward: if a family of marks argument is going to form a central part of an enforcement strategy, evidence of consumer recognition should be gathered before litigation begins. For defendants, the judgment provides useful support where the alleged similarity rests primarily on a common descriptive element.

In short, easyGroup v Easyfeetstore confirms that a family of marks can be a powerful doctrine, but only where the family is recognised by consumers rather than assumed by its owner.

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No free ride for privilege: White v Uber, litigation privilege and funding communications

Wed, 15 Jul 2026 00:00:00 +0100

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No free ride for privilege

White v Uber, litigation privilege & funding communications

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The High Court has held that litigation privilege does not extend to documents created for the purposes of assessing the the commercial viability of funding litigation.

Published: 15 July 2026
Authors: Emma Carr

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The High Court’s decision in Uber London Ltd & Ors v White & Ors (Re Disclosure) [2026] EWHC 1610 (Comm) serves as a useful reminder for prospective parties to litigation, their legal teams and potential funders that privilege cannot safely be assumed simply because a document discusses the merits of a claim or was created against the backdrop of contemplated proceedings.

The judgment does not itself establish any new law. Rather, it reinforces a principle that has become increasingly clear since the Court of Appeal’s decision in WH Holding Ltd & Anor v E20 Stadium LLP [2018] EWCA Civ 2652, a case with which the author was involved, namely that litigation privilege protects communications created for the dominant purpose of conducting litigation, not every commercial decision made because litigation is contemplated.

Background

The judgment arose out of a disclosure application in claims for unlawful means conspiracy brought against three entities in the Uber group. The Claimants include around 13,000 black cab drivers and the assignee of claims formerly held by two private hire businesses. The claims are proceeding to a preliminary issue trial on limitation, specifically whether the Claimants discovered, or could with reasonable diligence have discovered, Uber’s alleged wrongdoing only after late June 2018.

Against that background, Uber sought disclosure of pre-October 2018 communications between Mishcon de Reya (the Claimants’ solicitors), Harbour¹ (the litigation funder) and the Licensed Taxi Drivers’ Association (of which some individual Claimants are members). Uber contended that those documents could be relevant to what was known by, or reasonably discoverable to, the Claimants before the key limitation dates. The Claimants resisted disclosure on the basis of relevance, privilege, control and proportionality.

Why litigation privilege mattered

Litigation privilege is one of the most important protections available to parties preparing for disputes. It enables parties to investigate claims, obtain evidence and seek advice without fear that those communications will later have to be disclosed.

The difficult question is not usually the existence of the principle, but where its boundaries lie.

White v Uber asks a similar question in the funding context.

The funding context

Before proceedings were issued, Harbour had engaged Mishcon de Reya to investigate potential claims against Uber. At that stage, Mishcon de Reya had not yet been retained by the individual Claimant drivers. The documents in issue were generated while Mishcon de Reya was retained by Harbour and before it later acted for the Claimants.

The Court accepted that some material was relevant, particularly documents that might shed light on what individual drivers knew or understood about possible claims against Uber before June 2018. It also accepted that material showing what Mishcon de Reya and Harbour had discovered might, in principle, be relevant to what the Claimants could with reasonable diligence have discovered, although that category was more indirect.

The privilege decision

Mr Justice Birt held that the relevant Harbour communications did not attract litigation privilege on the evidence before the Court. Their dominant purpose was to enable Harbour to decide whether to fund the litigation. That was a commercial funding decision, not the conduct of litigation itself.

The judgment is not authority for the proposition that communications with funders can never be privileged. Nor does it remove the protection of legal advice privilege where a funder is receiving legal advice and the relevant test is satisfied – as the Court acknowledged would likely be the case here. Its significance is narrower, but important: litigation privilege will not arise merely because the documents concern contemplated litigation, analyse merits or quantum, or are created in the course of a proposed funding exercise. Instead the key question the court will ask is why the documents were created.

That focus on purpose is consistent with the approach in WH Holding. The fact that a communication may be commercially important to litigation, or may affect whether litigation can practically be pursued, does not necessarily mean that it was created for the dominant purpose of conducting the litigation.

Control and informed consent

The judgment also contains an important control point. Where a law firm first acts for a funder in assessing a potential claim and later acts for the claimants, relevant material from the earlier engagement with the funder may be within the claimants’ control for disclosure purposes. That will be difficult to avoid unless (i) the claimants have given properly informed consent to the firm withholding that information² and (ii) that information is in fact withheld.

Practical takeaways for in-house teams (acting as claimant or defendant) and funders

where material is created primarily to enable a prospective funder to decide whether to invest, litigation privilege should not be assumed simply because legal analysis and the contemplation of litigation appears within it. Funding workstreams should be structured with privilege in mind from the outset.
second, there is a practical tension. Funders will need enough information to assess merits, quantum and risk, but claimants and their advisers should consider carefully whether material prepared or shared for that purpose is privileged, and on what basis.
funders and funded parties should distinguish between documents created for a funding decision and documents created, if applicable, for the conduct of litigation. The former may not attract litigation privilege, even where the proposed claim is analysed in detail. The latter may still be protected if the dominant purpose test is satisfied and/or if legal advice privilege applies.
defendants facing a funded action should scrutinise claims of litigation privilege where funding-related communications are withheld on a blanket basis. Privilege claims need to be properly made and explained. It is not enough simply to describe a class of documents as “privileged” without identifying the type of privilege claimed and the basis for it.
in-house legal teams should focus on purpose from the outset. The label attached to a document, or even the presence of detailed legal analysis, is unlikely to be determinative if the communication was created to facilitate a commercial decision rather than the conduct of litigation. As ever, careful consideration should be given to who within the organisation can properly be regarded as the “client” for privilege purposes.

Read alongside WH Holding, White v Uber illustrates a consistent judicial approach rather than a change of direction. The Courts are maintaining a distinction between communications created for the conduct of litigation and communications created to support commercial decisions associated with litigation, such as commercial decisions surrounding settlement and funding.

That distinction is likely to become increasingly important as third party funding and ATE insurance continue to play a greater role in commercial disputes.

¹ There are various Harbour entities and for reasons explained at para 80 of the judgment none were party to the application however it appears the relevant entity was Harbour Fund IV LP.
² For the purposes of paragraph 6.4(b) of the SRA’s Code of Conduct

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Supreme Court confirms narrow scope of issue estoppel

Fri, 10 Jul 2026 00:00:00 +0100

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Supreme Court confirms narrow scope of issue estoppel

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The Supreme Court has unanimously confirmed that issue estoppel remains a doctrine of narrow application and should not be expanded beyond its established limited scope.

Published: 10 July 2026
Authors: Emma Carr

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In its recent judgment in Skatteforvaltningen (The Danish Customs and Tax Administration) v MCML Ltd (previously known as ED&F Man Capital Markets Ltd) the Supreme Court held that SKAT’s present claim should not be struck out on the basis of issue estoppel, despite earlier proceedings between the parties concerning many of the same tax vouchers.

The judgment provides helpful clarification of when issue estoppel will arise and reinforces the distinctions between issue estoppel, abuse of process and precedent.

Background summary

The 2018 claim

In 2018, SKAT commenced proceedings in the Commercial Court against EDFM (and others) in respect of 420 tax vouchers issued by EDFM (a financial brokerage business) to its clients, which those clients had then used in support of applications to SKAT for refunds of withholding tax. The claim against EDFM was pleaded in negligent misrepresentation and EDFM was designated as a “Non-Fraud Defendant” in contrast to other “Alleged Fraud Defendants”.

The Commercial Court held that SKAT’s claims were inadmissible under the ‘Revenue Rule’ (a common law rule which says that English courts have no jurisdiction to entertain an action for the direct or indirect enforcement of a penal, revenue, or other public law of a foreign state). SKAT successfully appealed this decision as against the other Defendants, but chose not to pursue that ground as against EDFM, with the result that the Commercial Court’s finding that the Revenue Rule barred SKAT’s claim against EDFM was final in the 2018 proceedings.

The 2022 claim

In 2022, SKAT issued the present second set of proceedings against EDFM in respect of some of the same tax vouchers and five additional ones. This time SKAT alleged certain statements in the tax vouchers were fraudulent, as opposed to negligent, misrepresentations. EDFM applied for strike out and argued that the earlier proceedings gave rise to an issue estoppel and an abuse of process preventing the second claim from proceeding.

At first instance the Commercial Court dismissed that argument as the claims involved different causes of action and different factual allegations, and an examination of the circumstances in which SKAT raised the allegation of fraud revealed no Henderson¹ abuse.

EDFM appealed and the Court of Appeal partially upheld the appeal. It agreed with the Commercial Court that the 2022 claim was not an abuse of process, but found that the 2022 claim was barred by an issue estoppel (albeit with some differences in reasoning) and should therefore be struck out.

SKAT appealed to the Supreme Court.

Supreme Court judgment

The Supreme Court unanimously allowed SKAT’s appeal, such that the 2022 claim should not be struck out. Giving the leading judgment, Lord Sales and Lord Doherty held that the Court of Appeal had adopted an overly broad approach to identifying the issue said to have been determined in the earlier proceedings.

The Court reaffirmed that issue estoppel is a doctrine of substantive law which operates only in limited circumstances, and highlighted a number of well-established legal principles:

the issue said to give rise to the estoppel must have been necessary and fundamental to the earlier decision.
whether the issue arose in the parties’ pleading is an important consideration when assessing whether its determination was necessary and fundamental to the earlier decision.
only an issue which formed the immediate foundation of the earlier judgment can give rise to an issue estoppel. Wider reasoning of observations made in reaching that decision cannot.
issue estoppel should remain narrowly confined – the Court emphasised that issue estoppel operates inflexibly and involves a serious interference with the ordinary entitlement of litigants to present their claims and to defend themselves. For that reason, the doctrine has consistently been applied narrowly. Expanding the doctrine beyond its established limited would risk preventing parties from litigating issues that had never truly been determined between them.
issue estoppel is distinct from abuse of process – the Court rejected any suggestion that issue estoppel should be expanded to achieve similar outcomes to abuse of process. Unlike issue estoppel, abuse of process provides a flexible framework for regulation of a situation similar to that in the present case, balancing the interests of the parties and seeking to achieve overall justice between them. Giving issue estoppel an expansive interpretation would cut across and significantly displace the rules on abuse of process.
similarly, the judgment also draws a clear distinction between issue estoppel and the doctrine of precedent. Issue estoppel is concerned with identifying the factual and legal issues that were necessary to the earlier judgment. By contrast precedent concerns identifying legal principles established by a previous decision for application in future cases. Conflating the two doctrines would risk extending issue estoppel beyond its proper limits.

With all this in mind, the Supreme Court concluded that the issues determined in the earlier 2018 proceedings were not the same as those raised in the 2022 claim. Although the 2022 proceedings concerned many of the same tax vouchers, the claims rested on different factual allegations and different causes of action. The earlier 2018 decision did not therefore create an issue estoppel.

Why does this matter?

The decision does not change the law of issue estoppel. Rather it emphasises its narrow scope, helpfully distils the key principles from the authorities, and clarifies the delineation between the three doctrines which may or may not come into play in a similar situation.

For businesses involved in complex commercial disputes, claims frequently evolve as new evidence emerges or different causes of action become available. The judgment confirms that a subsequent claim will not necessarily be barred simply because it arises from the same underlying events. The critical question is whether the specific issue said to found the estoppel was actually determined, was necessary and fundamental to the earlier judgment, and formed the immediate foundation of it.

The judgment also provides useful guidance on the relationship between issues estoppel, abuse of processes and precedent. Parties considering whether earlier proceedings preclude subsequent claims should analyse each doctrine separately rather than assuming the existence of one will determine the application of another.

Key takeaway

This is a relatively concise judgment but one with practical significance for commercial litigants. While it does not change the underlying law, it provides authoritative guidance on identifying issues capable of giving rise to an issue estoppel and confirms that the doctrine remains a narrow one, to be applied within carefully defined limits

Businesses involved in complex litigation should carefully assess whether an earlier judgment truly determined the issue said to found an estoppel before concluding that subsequent proceedings are barred.

¹ Henderson v Henderson (1843) 3 Hare 100)

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Are you sure? HMRC’s consultation on the uncertain tax treatment regime

Fri, 10 Jul 2026 00:00:00 +0100

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Are you sure? HMRC’s consultation on uncertain tax treatment regime

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When HMRC introduced the Uncertain Tax Treatment (UTT) regime in 2022, they did so only after abandoning some of their most controversial ideas. Four years later, those ideas are back.

Published: 10 July 2026
Authors: Kate Garcia

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HMRC’s latest consultation, which closed on 4 June 2026, proposes a significant expansion of the regime beyond large businesses: bringing individuals, trusts and additional taxes within scope, tightening the existing exemption and, most importantly, introducing a notification trigger based on competing legal interpretations.

The proposal has attracted significant criticism because it effectively returns to territory that HMRC retreated from during the original UTT consultations.

This article explains the current regime, what HMRC now want to change and why the proposals have attracted such a strong response from professional bodies and advisers.

The Current UTT regime

The current UTT regime applies to large companies and partnerships with UK turnover exceeding £200 million or a UK balance sheet total exceeding £2 billion. Notification is required where the tax advantage exceeds £5 million and the taxpayer either:

adopts a position that is contrary to HMRC’s known position, as apparent from materials published in the public domain or dealings with HMRC; or
makes a provision in its accounts for potential challenge.

It currently applies to corporation tax, income tax (including PAYE) and VAT, and businesses are exempted from making a notification to HMRC where it is reasonable for them to believe that HMRC are already aware of the uncertainty.

The notification is tied to the relevant tax return, and penalties start at £5,000 for a first failure to notify, rising to £25,000 and then £50,000 for repeat failures.

Why HMRC want change

HMRC point to a “legal interpretation” tax gap of £5.4 billion and the relatively small number of notifications made under the existing regime (30 as at 1 January 2026). HMRC appear to believe that significant uncertainties remain outside the current framework and that broader notification requirements are needed.

What HMRC are proposing

The consultation sets out six main proposed changes:

adding extra taxes: HMRC propose to include Stamp Duty Land Tax, National Insurance contributions, the Construction Industry Scheme, Capital Gains Tax and Inheritance Tax within the UTT regime.
extending the regime to apply to individuals and trusts: All individuals and trusts would be included within scope where the tax advantage exceeds a £5 million threshold, with no wealth, income or turnover test applying.
introducing a third notification trigger: Notification would be required where there is more than one credible legal interpretation and HMRC’s view is not known.
a single annual notification date: notification would no longer be tied solely to the filing of the relevant tax return.
a narrower HMRC knowledge exemption: For the exemption to apply, the taxpayer would need to hold confirmation from HMRC that the uncertainty has been brought to their attention, rather than having a belief that HMRC are reasonably aware of the uncertainty.

The proposed third trigger is the most controversial element of the consultation. HMRC want taxpayers to notify where HMRC’s view is not known and there is more than one credible interpretation of the law. The aim is to capture novel or difficult points that may currently fall outside the regime.

Why the trigger is controversial

The difficulty is that the proposal revives many of the concerns that led HMRC to abandon a similar trigger when the UTT regime was first introduced. The core problem is uncertainty about the word “credible”. It is not clear whether this means reasonably arguable, more likely than not, or something else entirely. The consultation provides no clear answer.

This matters because tax advice often involves weighing a range of possible interpretations, particularly where the amounts at stake are significant. If the threshold for “credible” is set too low, taxpayers may feel required to consider and disclose alternative interpretations even where they ultimately adopt a well-supported position.

The test also depends on whether HMRC’s view is ‘known’ or ‘not known’, which is often difficult to determine in practice. This is particularly the case where guidance is incomplete, out of date, unpublished (either because it relates to new policy or has simply never been published) or inconsistent with HMRC’s known operational approach. It is also not unheard of for HMRC to adopt a position that is different from a previously generally understood position.

Practical difficulties

The proposals may be particularly difficult for individuals and trusts. Unlike large businesses, individuals and trusts generally do not have formal tax governance procedures, Customer Compliance Managers or dedicated tax teams. Similar obligations would therefore be imposed on taxpayers who have fewer routes to obtain certainty from HMRC.

It could be argued that some taxes are poor candidates for inclusion. For example, CIS uncertainties are often factual rather than questions of legal interpretation and inheritance tax planning may take place many years before any charge arises. By the time an IHT return is submitted, will executors be able to identify whether the original advice involved more than one credible interpretation of the law?

Next steps

The consultation is presented as a transparency measure designed to reduce the tax gap. However, many stakeholders argue that the proposals place greater responsibility on taxpayers without imposing any corresponding obligation on HMRC to reduce uncertainty through clearer legislation, better guidance or more accessible clearances.

There is a clear irony. The UTT regime was originally narrowed because subjective tests were viewed as unworkable. Four years later, HMRC are proposing to reintroduce a different version of the same idea. Whether this represents sensible evolution or a genuine trip back to the future remains to be seen.

In light of this, large businesses may wish to stress-test how a “credible interpretation” trigger might apply to any current matters, and wealthy individuals, trustees and their advisers should consider the need to start keeping a clearer paper trail of how significant tax positions are reached.

If you would like to discuss what the proposals could mean for you or your business, please contact a member of the Shoosmiths tax team.

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The rising cost & risk of employment: Why LLPs are not a simple answer for executive engagement

Tue, 7 Jul 2026 00:00:00 +0100

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The rising cost & risk of employment

Why LLPs are not a simple answer for executive engagement

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Rising employment costs and widening employment law risk may make LLP structuring look attractive. But the Supreme Court’s recent decisions in the cases of BlueCrest and HFFX underline that LLP status is not a simple workaround: the structure, economics and governance must support genuine partner treatment.

Published: 7 July 2026
Authors: Laura Gould

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Being an employer is becoming more expensive - and riskier. From April 2025, employer NICs increased from 13.8% to 15%, and the secondary threshold fell from £9,100 to £5,000, increasing the payroll cost of employing staff. At the same time, employment law reform is significantly increasing the potential cost and legal risk of terminating senior employees (in particular): from 1 January 2027, ordinary unfair dismissal protection is due to apply after six months’ service, rather than two years, and the statutory cap on unfair dismissal compensatory awards will be removed, potentially bringing high-value equity incentives and pension entitlements into the value of unfair dismissal claims.

Against that background, some businesses may ask whether senior individuals could be engaged as members of an LLP rather than as employees. LLP members are generally taxed as self-employed partners, not employees. The LLP does not pay employer NICs on profit allocations to genuine self-employed members, and those members do not automatically benefit from ordinary unfair dismissal protection.

But recent case law highlights that LLP status is not a simple solution to minimise costs and risk. The recent Supreme Court decisions in BlueCrest Capital Management (UK) LLP v HMRC [2026] (“BlueCrest”) and HMRC v HFFX LLP; Atkins & Ors v HMRC [2026] UKSC 17 (“HFFX”) are timely reminders that LLP profit-sharing and member remuneration arrangements are under close scrutiny. LLP “member” status is not simply a label that can be applied to mitigate the costs and obligations of employment. The legal and commercial substance matters.

BlueCrest: significant influence must be legally grounded

BlueCrest is a UK LLP providing investment management and support services. The focus of the long-running case concerned whether certain senior members should be treated as employees under the salaried members rules.

The Supreme Court dismissed BlueCrest’s appeal and, broadly, upheld the Court of Appeal’s approach, confirming a narrow interpretation of the “significant influence” condition (one of the three conditions that must be met for the member to be treated as an employee for tax purposes). The case will return to the First-tier Tribunal for the rules to be reapplied in light of the Supreme Court’s guidance.

The Court confirmed that “significant influence” must derive from the individual’s legally enforceable rights and duties as a member of the LLP and contained in the LLP agreement (or statutory framework). The requisite qualifying influence is likely to be managerial or strategic influence in relation to the affairs of the LLP itself. Crucially, the court held that managing a core part of the business does not constitute influence over the “affairs of the LLP taken as a whole”.

For firms that rely on members having “significant influence” in order to achieve or maintain self-employed tax status, BlueCrest requires a governance review. It is no longer enough to point to an individual’s commercial importance or day-to-day autonomy. The question is what enforceable rights they actually hold, whether those rights give influence over the LLP as a whole, and whether that influence has practical and commercial substance.

HFFX: another warning on LLP profit allocation

The Supreme Court’s decision in HFFX adds a further cautionary note. HFFX concerned structured profit-sharing arrangements within an LLP, under which amounts that would otherwise have been allocated to individual members were instead allocated to a corporate member, with awards later made to individuals through a “special capital” mechanism. The Supreme Court rejected HMRC’s profit allocation argument but held that the receipts were, nevertheless, taxable as miscellaneous income.

The Court’s approach, in HFFX and BlueCrest, reflects an increasing tendency by HMRC and the courts to scrutinise amounts received by self-employed LLP members or partners where those amounts arise outside straightforward allocations of trading profits.

Why this matters now

These decisions land at a time when the economics of employment are changing. Higher employer NICs, a lower NIC threshold and forthcoming employment law reforms are increasing the cost and legal risk of employing senior personnel.

These changes may encourage some businesses to ask whether they can and should be moving senior executives or investment professionals into an LLP structure. But these cases demonstrate that simply making someone an LLP member is not enough.

Businesses operating through or considering LLP arrangements for senior executives should treat BlueCrest and HFFX as governance and documentation warnings and use them as an opportunity to review their LLP arrangements.

If you would like to discuss this further, please contact Laura Gould at Laura.Gould@shoosmiths.com or Adam Lambert at Adam.Lambert@shoosmiths.com or your usual Shoosmiths contact.

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Covid-19 business interruption: Supreme Court ruling on furlough issue

Thu, 2 Jul 2026 00:00:00 +0100

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Covid-19 business interruption: Supreme Court ruling on furlough issue

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The Supreme Court has confirmed that furlough payments received by holders of business interruption insurance policies reduce the losses otherwise claimable under those policies.

Published: 2 July 2026
Authors: Susie Wakefield

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Just over 6 years on from the UK’s first Covid-19 lockdown, the Supreme Court has recently handed down judgment in Bath Racecourse Company Ltd and others v Liberty Mutual Insurance Europe SE and others^[1]on the question of whether furlough payments made to businesses under the Coronavirus Jobs Retention Scheme (the Scheme) fall to be deducted from the amounts otherwise payable to them by their business interruption (BI) insurers.

Upholding the High Court and Court of Appeal decisions on the issue, the Supreme Court held that the payments did reduce the losses claimable under the policies, marking the end of the road for this particular line of argument in the wider BI litigation spawned by the pandemic.

In this article we briefly consider the Supreme Court’s judgment and where matters now stand in relation to post-Covid BI litigation generally.

The Supreme Court’s decision on furlough payments

Each of the relevant BI policies contained a ‘savings’ clause in either of the following terms:

the amount payable shall be “less any sum saved during the Indemnity Period in respect of such of the charges of the Business payable out of Gross Revenue as may cease or be reduced in consequence of the incident”
“if any of the charges or expenses of The Business payable cease or reduce in consequence of the Damage such savings during the Indemnity Period shall be deducted from the amount payable”.

The courts below held (following a separate High Court decision in 2022 in Stonegate^[2]) that the furlough payments paid to the policyholders under the Scheme “reduced” the charges or expenses of the business and did so “in consequence” of the “incident” or “damage” (which in turn refer to the occurrence of the “insured peril”). Accordingly the amounts received in furlough payments should be deducted from the amounts the policyholders could otherwise claim under their BI insurance policies.

The policyholders appealed to the Supreme Court on the basis that:

there was no “reduction” of charges or expenses, as the wages and other employment costs had to be paid out by the policyholder before being reimbursed under the Scheme (the Construction Issue)
as a matter of law, the furlough payments were not caused by the insured peril and were therefore not “in consequence” of it (the Causation Issue).
the Supreme Court unanimously dismissed the policyholders’ appeal.
in relation to the Construction Issue, the Supreme Court found that:
the insurers’ construction of the savings clauses (whether the payments reduced the businesses’ charges and expenses as a matter of fact) was to be preferred over the policyholders’ construction (whether the liability for a charge or expense was reduced as a matter of law).
the insurers’ construction better reflected reality of the Scheme and the purpose of the policies and savings clauses (their being concerned with overall economic outcomes/effects rather than the legal mechanics). It was also more commercial, and not dependent on artificial distinctions around the timing of payments.

In relation to the Causation Issue:

there was a straightforward causal connection between the BI losses and the savings from the furlough payments. Given the existence of the Scheme, it was a predictable and direct consequence of the insured peril that the policyholders ‘furloughed’ employees while claiming (at least most of) the costs of doing so. The Supreme Court noted that “[had] it not been for the skill of the appellants' counsel in arguing otherwise, we would have thought this conclusion indisputable”.
the Court rejected the policyholders’ argument that the insured peril was “irrelevant” to their receipt of furlough payments and the savings made as inconsistent with the approach to establishing causation for the BI losses themselves as set down in the FCA test case^[3]and the policyholders’ own position in that respect.
the Court also rejected the argument that the payments were “collateral” to the insured peril, rather than caused by it, on the basis they were voluntary, gratuitous or benevolent. The Scheme involved legally enforceable rights and obligations, and was implemented to benefit both the UK Government and the public in the circumstances at the time.

The end of an era?

It is coincidentally poignant that the Bath Racecourse proceedings reached their conclusion just over 6 years after Covid-19 was declared a notifiable disease in the UK and the nation subsequently went into lockdown – a point in time at which any BI claims which were yet to be issued (or preserved through a standstill agreement) likely became time-barred. While the outcome was perhaps relatively predictable, the Supreme Court’s decision puts to bed a long-fought issue and parties with similar disputes on hold can now finally resolve them accordingly. Recent data from Solomonic suggested that more than 54% of Covid-related BI claims were still in active dispute as at 11 March 2026^[4] and it will be interesting to see how that percentage shifts in light of the Bath Racecourse judgment. It is not impossible that further case law in the BI space may yet be generated by the cases which remain live (whether issued or in standstill), although this now seems increasingly unlikely. There has certainly been no shortage of other global events since Covid to present yet more stark challenges to insurers, policyholders and brokers alike.

[1] Gatwick Investment Limited & Ors v Liberty Mutual Insurance Europe SE [2026] UKSC 14 (22 April 2026)
[2] Stonegate Pub Company Ltd v Ms Amlin Corporate Member Ltd & Ors [2022] EWHC 2548 (Comm) (17 October 2022)
[3] The Financial Conduct Authority & Ors v Arch Insurance (UK) Ltd & Ors [2021] UKSC 1 (15 January 2021)
[4] Covid-19 Business Interruption Claims: Six Years of Litigation Trends — Solomonic

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Preventing financial crime in the insurance sector – FCA recommendations

Tue, 30 Jun 2026 00:00:00 +0100

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Preventing financial crime in the insurance sector

FCA recommendations

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Financial crime remains one of the Financial Conduct Authority’s cross-sector priorities. Insurance firms should take note of the regulator’s findings from its recent review of financial crime frameworks in the sector.

Published: 30 June 2026
Authors: Daren Allen & Claire Kershaw

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Key facts

The FCA undertook a multi-firm review of financial crime systems and controls in the insurance sector and has recently published its findings here.

Several large insurance firms were reviewed across the retail, wholesale and life insurance markets. These firms were asked to provide the FCA with documents in response to 38 questions across ten key groups of financial crime controls.

The FCA evaluated the design of firms’ controls against the Money Laundering Regulations 2017, the FCA’s Financial Crime Guide, the SYSC rules, and guidance issued by the Joint Money Laundering Steering Group and the Financial Action Task Force.

Overall, the FCA found life insurance firms generally had stronger controls than retail and wholesale firms, with six cross-sector themes emerging (see our key takeaways).

The FCA highlighted the following ‘headline’ areas for improvement:

retail – risk assessment and policies and procedures
wholesale – fraud risk management
life – transaction monitoring.

Firms should note the full findings and take appropriate action

Key takeaways

AML transaction monitoring – firms should ensure they consider the risks and benefits of their approach to this and clearly document their rationale. Any reduction or simplification in controls should be risk-based, proportionate and clearly evidenced.

Controls monitoring and testing – this must be clearly co-ordinated to avoid gaps in coverage (or duplication). Firms without internal assurance expertise should be able to evidence how they have considered financial crime risks and assessed need for specialist or outsourced reviews.

Policies and procedures – firms should consider supplementing group-level frameworks with more specific policies and procedures tailored to individual business units and jurisdictions. How these interact and are implemented in practice should be clearly documented.

Roles and responsibilities – firms should also consider using a RACI (Responsible, Accountable, Consulted, Informed) matrix to define roles and responsibilities clearly across their financial crime framework.

Obligations management – to support clear accountability and oversight firms should consider an obligations register or similar method of articulating its legal and regulatory obligations, and mapping them to specific controls, processes and responsible roles.

Third-party outsourcing – where firms outsource financial crime activities, they should categorise third-party relationships by risk and apply proportionate oversight, documenting oversight activities and decisions clearly.

For more information or advice, please contact our Financial Services Disputes and Investigations team.

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Shorts International v Google: A short lesson in distinctiveness

Tue, 30 Jun 2026 00:00:00 +0100

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Brand interchange | 4 min read

Shorts International v Google

A short lesson in distinctiveness

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Decision: Shorts International v Google [2026] EWCA Civ 668
Court: Court of Appeal (Civil Division)
Judges: Chancellor of the High Court, Stephen Phillips LJ; Falk LJ
Decision: Here
Key issues: Trade Marks; Distinctiveness

Published: 30 June 2026
Authors: Irem Alici

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Background

The Court of Appeal’s decision in Shorts International Ltd v Google LLC highlights the limits of trade mark protection for descriptive terms, particularly in the context of digital media services.

Shorts International Ltd (“SIL”) operates the “ShortsTV” channel and produces and distributes short-form audiovisual content. It owns a portfolio of UK trade mark registrations incorporating the word “SHORTS”, including both figurative marks and a word mark, covering audiovisual content, broadcasting and related services.

2021 was the year Google launched its “YouTube Shorts” feature in the UK, offering user-generated, short-form video content designed primarily for mobile viewing. Google used the term “shorts” in a number of ways in connection with this service, including as part of the name “YouTube Shorts” and in various on-platform displays.

SIL alleged that Google’s use of “shorts” infringed its registered trade marks and amounted to passing off. Google denied the claims, arguing in particular that “shorts” is descriptive of short-form video content, and counterclaimed that SIL’s marks were invalid for lack of distinctive character.

At first instance, the High Court rejected SIL’s claims. While certain stylised marks were held to be valid, the word mark “ShortsTV” was largely found invalid. The court also held that Google’s use of “shorts” was primarily descriptive and did not give rise to a likelihood of confusion. SIL appealed those findings.

Issues

The appeal raised a number of interrelated issues concerning both infringement and validity, centred primarily on how the word “shorts” would be understood by the average consumer.

SIL argued that “shorts” would be taken to refer to traditional short films, whereas Google contended that it had a broader, descriptive meaning encompassing short-form video content more generally. This distinction was critical, as it informed whether Google’s use of the term was descriptive and, in turn, whether there was any likelihood of confusion.

The Court also considered whether Google’s use of “shorts” functioned as trade mark use in all contexts, or whether, in some instances, it was merely descriptive. In parallel, the Court had to assess the distinctiveness of SIL’s marks, both inherent and acquired, and the extent to which any distinctiveness affected the scope of protection.

Finally, SIL sought to rely on the enhanced protection available under section 10(3) of the Trade Marks Act 1994, which required it to establish that its marks enjoyed a sufficient reputation in the UK.

Decision

The Court of Appeal dismissed the appeal in full.

A central finding was that the term “shorts” is not limited to traditional short films, but extends more broadly to short-form audiovisual content. As a result, the element common to SIL’s marks and Google’s signs was descriptive in the relevant context.

This significantly narrowed the scope of protection available to SIL. Although there were similarities between the parties’ signs, those similarities related to a descriptive term with low distinctive character. The Court agreed with the trial judge that this pointed away from any likelihood of confusion.

The Court also confirmed that, in certain contexts, Google’s use of “shorts” would be understood as purely descriptive rather than as indicating origin — for example, where it appeared as a label within the platform interface. Even where the term formed part of branding, the overall differences in presentation and context were sufficient to avoid confusion.

SIL’s claim under section 10(3) failed at the outset. The Court held that SIL had not established that its marks enjoyed a reputation among a significant part of the UK public, and therefore did not benefit from enhanced protection.

On validity, the Court upheld the finding that the word mark “SHORTSTV” is descriptive. It was considered to convey no more than short-form content delivered via television or similar media, and therefore lacked distinctive character. SIL’s reliance on acquired distinctiveness was not supported by the evidence, and its proposed limitation excluding “short films” was also rejected.

Commentary

This decision is a clear commercial warning for brand owners operating in crowded, fast‑moving sectors.

In practical terms, it reinforces that descriptive branding offers limited enforceability, even where it has been registered. If the core of a mark describes what the product or service is -rather than who it comes from - it will be difficult to prevent competitors from using similar language, particularly where that language is industry‑standard.

For businesses launching new platforms or features, the case also highlights the importance of naming strategy at the outset. Terms that feel intuitive and consumer‑friendly (such as “shorts”) may be attractive from a marketing perspective, but they are inherently difficult to protect. The result is that competitors can often adopt similar terminology without infringing.

The decision will be particularly relevant to companies in the content, media and tech sectors, where products are frequently categorised by format (e.g. reels, stories, clips, shorts). In these environments, courts are likely to treat such terms as descriptive, leaving limited scope to claim exclusivity.

From an enforcement perspective, the case also underlines the need for strong evidence of market recognition. Reliance on niche audiences, limited distribution, or relatively small viewing figures will not be sufficient to establish reputation or acquired distinctiveness. Businesses seeking broader protection need to be able to demonstrate real penetration into the relevant market.

Overall, the take‑away is straightforward: businesses should not assume that registration alone will secure meaningful protection. Investing in genuinely distinctive branding, or in building clear, widespread recognition, is critical if trade mark rights are to provide real commercial value.

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Buying leasehold land: How to avoid an unreasonable landlord killing your deal

Thu, 25 Jun 2026 00:00:00 +0100

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Buying leasehold land

How to avoid an unreasonable landlord killing your deal

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In a case of interest to purchasers acquiring leasehold titles, the court considered the position where the seller’s landlord unreasonably withholds or delays consent to the assignment.

Published: 25 June 2026
Authors: Tom Freeman