Commercial Awareness Update – W/C 7th August 2023

UK BILL COULD REMOVE SAFEGUARDS WHICH PROTECT GIG ECONOMY WORKERS FROM ‘ROBO-FIRINGS’

If successfully pushed through Parliament, the Data Protection and Digital Information (No. 2) Bill will significantly weaken protections for workers in the gig economy against ‘robo-firing’.

Overview

The gig economy is a labour market that predominantly relies on independent contractors and freelancers occupying temporary and part-time roles instead of traditional full-time permanent employees.

This is often facilitated through digital platforms which connect gig workers with employers or clients, helping them to find short-term employment opportunities. The main attraction of this type of work is flexibility, as workers can control when and how often they work. However, the gig economy is also characterised by a lack of protection and job security, as workers do not have fixed employment contracts.

This lack of protection means companies can carry out ‘robo-firings’ of gig economy workers. ‘Robo-firing’ refers to using automated decision-making (ADM) to terminate employment without human review. Under current laws, workers can see when companies automate decision-making using the data they hold and can force them to explain the automated decision.

The Amsterdam Court of Appeal confirmed this right in April this year when it found in favour of the UK-based drivers who brought a case against Uber and Ola Cabs for ‘robo-firing’ them. The Court stated that under Article 22 of the General Data Protection Regulation (‘GDPR’), the drivers had the right not to be subject to automated decision-making for significant decisions. It also states that under Articles 13-15, the drivers were entitled to an explanation.

However, a UK Bill has been proposed to significantly weaken workers’ rights to force companies to explain automated decisions. The Data Protection and Digital Information (No. 2) Bill, currently at the Report Stage in the House of Commons, makes it easier for companies to charge money for access to the data used to make automated decisions. It also empowers companies to reject requests entirely if they consider them vexatious. This removes current safeguards regarding ADM, which aim to ensure worker transparency.

Implications

This Bill would reduce protections against ‘robo-firing’ for workers, contributing to the already high levels of job insecurity within the gig economy. As a result, more workers may lose their jobs without any explanation or adequate recourse. This will further disadvantage workers already vulnerable in an increasingly precarious economic climate, as they are not entitled to receive national minimum wage, sick pay, or paid holiday.

How might a law firm be involved?

If the Bill limits workers’ ability to seek explanations for algorithmic decisions, it may increase legal challenges and litigation. Gig economy workers who believe they were subject to unfair decisions may pursue legal avenues to seek redress and uphold their rights.

Furthermore, reduced transparency in automated decisions may complicate identifying potential biases or discriminatory practices within algorithms. This could result in legal challenges related to discrimination claims, significantly if certain groups of workers are disproportionately affected.

Article written by Olivia Mathieson

THE OIL TYCOON CHOSEN TO LEAD THE FIGHT AGAINST CLIMATE CHANGE

After an underwhelming COP27 and another year of geopolitical tensions, record-breaking temperatures, and damning climate reports, much pressure is being placed on the UN’s upcoming Conference of the Parties to catalyse concrete action in the fight against climate change.

Yet, the heavily criticised appointment of Sultan Al Jaber as president-designate of the conference has left many doubtful of COP28’s prospects of success, with the somewhat subdued build-up to the conference doing little to appease critics.

As commercial actors attempt to navigate the rapidly evolving global energy sector, the conference’s potential outcomes will significantly impact business strategy and costs.

The controversies of COP28

Although initially expected to be the ‘implementation COP’, focusing on enforcing states’ commitments to addressing global climate issues, COP27 under-delivered on several key issues, notably reducing emissions to meet the 1.5°C target.

This shortcoming was primarily attributed to the pushback from petrostates like Saudi Arabia. With the UAE taking on the leadership role this year, the dynamics between the oil industry and climate politics will inevitably shift.

Though this is not the first time COP has been hosted by a leading oil-producing state, the UAE presidency of COP28 has been the subject of unprecedented controversy. The conflicts of interest and improper behaviour of Sultan Al Jaber are glaring.

Alongside his role as president, Al Jaber is the CEO of the Abu Dhabi National Oil Company (Adnoc), the world’s 12th largest oil company by production. Maintaining the pretence of a clear separation between his roles, Al Jaber has justified his appointment with his strong business ties, which he believes will prove essential in calling the private sector to action.

In the wake of numerous scandals, such as the revelation that Adnoc had access to emails to and from the COP28 climate summit office and the alleged ‘greenwashing’ of Al Jaber’s image through heavy modification of his Wikipedia page, many politicians have called for his removal as COP president.

So far, The UAE has only responded with seemingly empty promises to alleviate concerns. The country pledged to achieve carbon neutrality by 2050, a surprising target for a state so heavily reliant on oil and gas production but yet has omitted all details on the actual implementation of this plan. Adnoc has announced its aims to reach net-zero emissions from its operations by 2045, yet it still needs to address Scope 3 Emissions, with these being the most significant from fossil fuel consumption.

There needs to be more to make people forget that the UAE and Adnoc had the world’s third most extensive oil and gas expansion plans. Indeed, in the run-up to the conference, Al Jaber remains reticent in discussing the phase-down of fossil fuels; he has instead placed greater emphasis on tackling fossil fuel emissions, implying the use of untested and unpredictable carbon capture technology rather than the scale-back of fossil fuels themselves. With increasing time pressure to reduce emissions, this lethargic approach may prove unacceptable to his critics.

Legal implications

Given Al Jaber’s background, we can expect significant business engagement at the conference. However, this will not dispel the severity with which the general public and lawmakers consider business’ climate strategies.

With the help of their lawyers, companies will have to find a balance between developing plans to sufficiently reduce their emissions to stay ahead of regulation while maintaining economic efficiency and production. In equal measure, they must steer clear of greenwashing, which has become a significant deterrent for stakeholders.

In these uncertain times, a competent COP presidency with clear, unbiased goals would have been instrumental to green business development. It seems, for now, we will have to settle for less.

Article written by Laura Perez-Pardon

ELITE LAW FIRMS GIVEN LICENCES TO PRACTISE IN SAUDI ARABIA

To strengthen Saudi Arabia’s legal sector, Crown Prince and Prime Minister Mohammed bin Salman and his administration now permit foreign law firms to practise in their country through a licence.

Once received, each firm must provide two partners to spend at least 180 days a year in Saudi Arabia. Before, foreign firms could only operate in the kingdom through partnerships with local law firms.

These new licenses have been sought out by some of the world’s most elite firms, such as Kirkland & Ellis, Latham & Watkins, Squire Patton Boggs, Greenberg Traurig, Clifford Chance, Dentons, and Herbert Smith Freehills.

Why are elite firms eager to work in Saudi Arabia?

Over the years, Saudi Arabia has become an attractive market to foreign companies since its government has actively sought foreign investments to bolster its economy.

The country’s Vision 2030 programme – which aims to transform the kingdom into a global investment powerhouse and decrease its economy’s dependence on oil – and the government’s focus on improving its private sector have been the main drivers for encouraging foreign investments.

The licences for foreign law firms to operate independently in Saudi Arabia are the latest stage in the government’s goal to open the country to the world. As a result of these initiatives, there has been remarkable deal-making in Saudi Arabia and the rest of the MENA region amid a decrease in global M&A and IPO activity caused by inflation and high borrowing costs in Europe and the US. In 2022, over $1bn worth of transactions occurred across various industries in the Mena region, and this activity is expected to continue in 2023.

In Saudi Arabia, M&A deals, such as the proposed merger of the USA’s PGA Tour and Europe’s DP World Tour with the kingdom’s LIV Golf League, have been funded by its $650bn Public Investment Fund. Saudi Arabia’s IPO market has equally been thriving. In 2022, there were 17 primary listings in the country, driven by the energy, technology, healthcare, food processing, and education sectors. One of these IPO deals included the $1.3bn listing of Saudi Aramco Base Oil Company.

What does this mean for elite firms?

Elite law firms can benefit from operating independently in Saudi Arabia, as the new licenses will enable them to compensate for a loss in partner profits caused by the sluggishness of the global M&A and IPO markets.

However, these firms could potentially face backlash for setting up shop in Saudi Arabia, where homosexuality is a capital crime and where dissidents have been imprisoned. In the US, certain law firms have decided or been pressured to cut ties with specific clients. Such firms have refused to represent opioid manufacturers, anti-abortion groups, and former US president Donald Trump and his associates.

Following a school shooting in Texas last year, Kirkland & Ellis was pressured to drop two attorneys representing the National Rifle Association (NRA). Thus, these law firms could be criticised for seeking opportunities in Saudi Arabia similarly.

It seems that the elite firms have already faced some questioning for their decisions, as some have begun to justify their decision for wanting to work in the region. Herbert Smith Freehills claimed that the firm takes human rights and ESG ‘seriously and responsibly’ and has policies to ensure that it is ‘taking on the right clients and mandates in Saudi’.

Richard Rosenbaum, the executive chair of Greenberg Traurig, has stated that the firm does not ‘judge the local customs, religious views, and value systems of every jurisdiction and culture [they] enter’, adding that ‘it is not [their] place to be judgmental in that manner’.

Although firms like Latham & Watkins and Clifford Chance have refused to comment on the matter, they most likely have taken similar stances.

Article written by Dior Donkor

THE UPC: CONSIDERATIONS FOR THE UNITED KINGDOM

Following an arduous process of turbulent debates, extended delays and Brexit, the Unified Patent Court (UPC) has formally been born and bred to provide a unified court system across EU member states.

Centralisation is vital; the unified system has successfully overcome gruelling issues related to its development to provide for a new era, covering patent protection through an EU-wide unitary patent and centralised patent litigation.

The UPC’s woes

While previous patents in Europe were burdened by national requirements and issued based on singular nations, the UPC Agreement ensures that a patent is granted by the European Patent Office, disregarding national requirements for validation and granting unitary effect across Europe through a single application. This era strives to harmonise procedures and consistently revise European patent case law.

Brexit holds part of the blame associated with UPC’s previous incessant delays. Yet, before the United Kingdom departed from the EU, they had poured extensive effort into influencing the system. Despite nations grappling over hosting one of the UPC’s several court locations, a subdivision of the Central Division of the UPC’s Court of First Instance was to be hosted in London. At the same time, judges from the UK contributed to preparing UPC judges for their upcoming roles.

Primarily however, the UPC’s Rules of Procedure which govern the operation of UPC’s courts and procedures for UPC patent litigation, are heavily derived from the rules of procedure of UK patent courts. Specific crucial rules and procedures of the UPC are absent in the patent rules and procedures of other EU member states, thus meaning that the UK provided the backbone for the UPC and its litigatory capacity.

Nevertheless, the UK’s departure from the EU cast a dark cloud over its association with the UPC. At the same time, they may have influenced the system and acted as a frontrunner in its preparation, but participation in the UPC has been terminated. This has raked in disappointment, heightened by removing a coveted court location that would have continued to instil the UK’s leadership position across Europe.

Impact on the legal sector

The presence of a UPC court in London would have made it easier for UK law firms to present their expertise to future clients, yet their ambitions to play influential roles have been reduced as they are left scrambling to prepare new strategies. However, all is not lost.

2022 brought a silver lining, whereby an additional qualification procured by UK lawyers will enable them to obtain patents through the European Patent Office and conduct UPC proceedings. The UPC is not strictly branding itself as an EU-specific privilege.

Although the UK is not participating, the UPC remains open to those patent lawyers who are also demonstrably qualified European patent lawyers. Thus, following the news in 2022, those unqualified sought to obtain the relevant European patent qualifications, thereby remaining partially attached to the UPC.

The Republic of Ireland may provide an additional avenue for UK firms and lawyers who wish to solidify their position in UPC proceedings. Ireland has signed the UPC Agreement, although ratification has yet to occur. Ratification is dependent upon a constitutional referendum that will take place in 2023 or 2024; a ‘yes’ vote will determine Ireland as a participating member of the UPC and will provide an additional avenue through which UK firms could participate.

Where ‘a lawyer…authorised to practice before a court of a Member State of the EU’ (Article 286 UPC Agreement) may practice in the UPC, it is a viable option for UK lawyers to demonstrate qualifications in Ireland. Likewise, UK lawyers with an Irish background may rely on those roots to gain an Irish licence while seeking to participate in UPC proceedings.

IP-centred UK firm Powell Gilbert chose this route; its 14 partners have admitted to practising in Ireland, thus authorising them to represent clients in the UPC. Bristows has followed suit in establishing their Irish base, eager to get involved and ensure their clients are included.

Finally, the UK’s influence in patent litigation will not suddenly cease. As aspects of UPC Rules of Procedure have been derived from the rules of procedure for UK patent courts, the UPC may continue to observe the application of UK rules in UK courts.

When a legal dispute arises regarding patent infringement or the validity of a UPC-approved patent, a parallel patent case will run in the UK. Where UK patent litigation has been influential, it is likely that the UPC will not ignore the actions and decisions of UK patent courts.

Article written by Ana-Maria Tudor

SHOULD BANKS PASS ON HIGH-INTEREST RATES TO SAVERS?

Following pressure from the government and the UK’s financial regulator, banks are increasing the interest rate they offer to savers.

UK’s central banks have increased the interest rates offered to savers shortly after being called to a meeting with the Financial Conduct Authority. A two-year fixed savings account with £10,000, which had an average interest rate of 4.79 per cent, saw an increase in its rate to 5.07 per cent. This move comes in response to growing political criticism that banks are taking advantage of the higher rates for their benefit.

This is because when the Bank of England increases interest rates to curb inflation, banks can hike the rates on the loans they offer to borrowers. As a result, consumers have seen their mortgage rates increase. Similarly, businesses must pay back more interest rates on their debt.

However, the banks have failed to pass on high-interest rates to savers. The difference in the high-interest rates it charges and the low-interest rates it passes on to savers allows the banks to generate substantial profits.

Implications for the economy

The decision to compel banks to pass on high-interest rates to savers will benefit consumers with savings accounts significantly. They can now earn more interest than they typically do on their savings. This will encourage more people to save money in the bank than spend it, which will, in turn, help to reduce inflation in the long term.

On the other hand, forcing banks to offer high-interest rates to savers may reduce their profits. This could harm the economy because a bank with a low-profit margin may alter its propensity to provide loans that many companies require for investments, such as acquisitions. As a result, there may be a reduction in M&A and private equity deals. This is because these deals tend to use much debt to fund acquisitions.

Implications for the legal industry

Lower profit margins mean banks must contend with more restrictive budgets, which means they are more selective about the deals they finance, resulting in a decline in the overall number of transactions.

This can directly impact the workload and revenue of law firms’ M&A and private equity departments, as there will be fewer deals to advise on. A reduction in M&A or private equity deals may also lead to decreased work done by practices that advise on these deals. This includes intellectual property, tax, competition, employment, and litigation.

As a result, financial regulators and government ministers should be mindful of pressuring banks to offer high-interest rates to savers. While this may benefit savers in the short run, it may adversely impact both the economy and the legal industry in the long run.

Article written by Ifeoluwa Bayo-Oluyamo