Russia invaded Ukraine at the end of February this year. The invasion has had rippling economic and humanitarian repercussions globally, with the energy market being the most strongly hit, particularly in Europe. Now, oil and gas companies working synchronously with the government have a shared imperative: mitigate Russia’s potential disruption of gas and oil supplies.
What is agreed by all sides is that the energy industry imperatively needs to become more resilient and relevant in such a rapidly changing energy world.
It is important to note that there is a significant difference between ‘pre-war’ and ‘pre-crisis’. Even before the Ukraine war, the world witnessed a crisis in the energy sector as global demand was beginning to outstrip supply. After the demand had recovered, post the COVID-19 pandemic, this imbalance between demand and supply was estimated to grow, in 2022, to 2%.
However, the war has drastically drifted the reality apart from such expectations as the shortfall in supply that the world is witnessing today is historic.
What about the legal field? How is it dealing with such an oil and gas crisis?
To sum it up, the repercussions on the legal field do not appear to be that gloomy, if gloomy at all. In an unexpected turn of events, and despite the unavoidable slowdown that resulted from the Russian invasion of Ukraine, deal activity has witnessed a rebound this summer – especially in August. In particular, ‘legal giants’ such as Latham, Kirkland and magic circle firms have registered some astronomic deals in tech, private equity and energy.
For example, EIG was advised by Latham with regards to its $4.8bn acquisition of a 25% share in Repsol Upstream. The latter is an exploration and production company which was newly formed and operates globally. Noteworthily, this company comprises the entirety of the global upstream gas and oil business of Repsol, a Spanish energy company. London partners and associates in the firm and Madrid associates led Latham’s team. Regarding A&O, its team comprising three Madrid partners and one London partner was instructed by Repsol.
Tysoe, one of Latham’s London partners, commented to Legal Business that it is a win-win situation for both Repsol and EIG.
On the one hand, this is the ideal opportunity for Repsol to monetize its upstream assets and enable the company to develop non-oil and gas energy in its portfolio. On the other hand, EIG has, so far, a stellar track record of enhancing portfolios’ performance, bringing ESG-focused, innovative techniques to them. This leads to a situation where great talents meet and points to the fact that great opportunities are still available for oil and gas private investment on a large scale, hence adding a ‘bright touch’ to otherwise dark times.
In conclusion, the Russian invasion’s impact on Europe and its consumers will depend on different factors: the duration of the war, how severe Russian supply shocks will be and Europe’s level of gas and oil shortfalls.
At present, these factors cannot be predicted, let alone quantified. Time will tell. However, regarding the legal field, Latham and A&O’s deal sparks hope amid a gloomy season, not simply for Ukraine but the entire world.
New York Times bestselling author Malcolm Gladwell has criticised JPMorgan Chase chief executive Jamie Dimon over the bank’s treatment of Gwen Campbell, one of its financial advisers. He compared Dimon’s actions to “a game an 11-year-old would play”, claiming that his financial adviser “has been exiled like Napoleon on Elba”.
The internal conflict between JPMorgan’s two distinct but overlapping businesses, the private bank and JPMorgan Advisors, began after Campbell accused the private bank of trying to poach the high-profile private wealth clients, including retired baseball star Alex Rodriguez, whom she brought with her when she joined JPMorgan Advisors from Bank of America’s Merrill Lynch division in 2020.
She claims that despite having an agreement with JPMorgan that arrangements concerning shared clients would “maintain the current nature of their relationship with the private bank”, the private bank approached several of her clients, which resulted in it winning more of Rodriguez’s business. Rodriguez was deemed a shared client due to him keeping a “low seven-figure amount” with the private bank and because JPMorgan’s investment bankers had previously advised him and his then-fiancé, Jennifer Lopez, on an attempt to buy baseball team, the New York Mets in 2020, before Campbell joining JPMorgan.
Campbell has brought several actions against JPMorgan in relation to these allegations. In December 2021, a judge denied her request for a temporary restraining order against the bank, but she subsequently filed for arbitration proceedings in hopes of being awarded financial damages for breach of contract. Furthermore, in April 2022, she filed a complaint of gender discrimination with the US Equal Employment Opportunity Commission. The result of these proceedings remains to be seen.
As well as the legal implications for JPMorgan, the bank has also received criticism from a number of Campbell’s clients, including Gladwell. Michael Willemin, Campbell’s lawyer, has stated that “what JPMorgan is doing is not only hurting Gwen but having a direct adverse impact on her clients which are JPMorgan’s clients”. This statement suggests that the bank could have reputational implications amongst high net worth individuals.
With the UK’s official withdrawal from the EU on January 31st, 2020, it was assumed that the tensions between Brexiteers and Remainers would finally be appeased. Yet, with the presentation of the controversial Retained EU Law (Revocation and Reform) Bill (REUL Bill) by the Conservative parliamentary majority on September 22nd, 2022, it feels like a Brexit battle is being fought all over again.
If enacted in its current form, the REUL Bill will allow either the restating, revoking, replacing or updating of retained EU law by the “sunset date” of December 31st, 2023 (which could potentially be pushed back to 2026). In that sense, around 2400 laws will undergo automatic repeal where ministers or devolved authorities do not actively decide to preserve them before the deadline.
Moreover, courts will enjoy increased discretionary powers to depart from EU case law, and any retained EU law that is preserved will become known as “assimilated law”, which UK law will take priority over if a conflict is found between the two.
On the one hand, former leader of the House of Commons and Minister of State for Brexit Opportunities, Rees-Mogg, emphasized that the aim of the REUL Bill largely consisted of restoring parliamentary sovereignty and abolishing the remnants of EU law supremacy, as well as cutting down regulations allegedly putting businesses under pressure. The latter suggested that “perhaps a dozen” retained EU laws should be assimilated into UK law, demonstrating the substantial extent to which this Bill may transform the legal landscape.
On the other hand, the opposition has a different take on the implications of the REUL Bill, which was described by legal experts as conferring “undemocratic” powers upon ministers and by MP Jonathan Reynolds as putting “a gun to Parliament’s head”. The former expressed deep concerns about the dangers of legal uncertainty and administrative chaos that the passing of this Bill might entail for employees, employers, and businesses.
With legislation likely to be affected, such as the Working Time Regulations 1998, the Agency Workers Regulations 2010, the Part-Time Workers (Prevention of Less Favourable Treatment) Regulations 2000, the Fixed-Term Employees (Prevention of Less Favourable Treatment) Regulations 2002, or the Maternity & Parental Leave Regulations 1999, employees and workers’ unions fear a severe deregulation and undermining of workers’ rights. Legislation covering working hours limits, rest breaks, paid annual leaves, parental rights, and more are expected to be disrupted for the worse.
Moreover, despite a wide range of crucial legislation in the field of employment law that is likely to be affected, the sunset clause does not allow for much time to prepare for these changes. This restriction imposes a regulatory burden on employers, who must be especially attentive to the rapidly changing landscape of employment law and adapt their practices accordingly, allowing them to minimize legal risk and ensure the smooth continuation of their activities.
The Retained EU Law Bill is extremely broad in scope and is very likely to affect most, if not all, businesses in one way or another. However, it remains in its early stage, and it is thus impossible to predict how the law will be affected precisely and to what extent.
On the one hand, some businesses may see this context of deregulation as an opportunity to push reforms that are favourable to their growth. On the other hand, many fear these impulsive legislative changes, which create an uncertain legal climate. Uncertainty prevents businesses from properly anticipating and adapting to changes in the law, possibly putting them at risk of being liable for non-compliance with legal standards or of no longer being able to run a profitable business because of supply chain disruptions.
Lucy Monks, head of international affairs at the Federation of Small Businesses, points out that the very restricted timeframe imposed by the sunset clause does not represent nearly enough time for small businesses to adapt to a wholly renewed regulatory environment and would most likely have disastrous consequences, especially in the context of “widespread economic instability and rampant inflation”.
For all businesses, the next steps will be to monitor these pieces of retained EU law which are essential to the functioning of their activities, while keeping in mind the possibility of their being revoked or amended. As of now, there remains much uncertainty regarding how the legislative landscape will be affected, and it is in the best interests of businesses to engage with government departments to make their concerns and interests known.