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UK Publishes Guidance on Failure to Prevent Fraud: Companies Without “Reasonable Prevention Procedures” Could Be Held Criminally Liable

On 6 November 2024, the UK government published guidance in respect of the failure to prevent fraud offence, which was introduced in the Economic Crime and Corporate Transparency Act 2023 (ECCTA).Under this offence, companies may be held criminally liable if they did not have ‘reasonable prevention procedures’ in place when a fraudulent act was committed by persons associated with them. The guidance helpfully outlines which factors businesses should consider when developing such procedures. Below, we have summarised key aspects of the guidance.

UK Supreme Court Upholds Anti-Suit Injunction in Support of French Arbitration

In UniCredit Bank GmbH v. RusChemAlliance LLC,[1] the UK Supreme Court confirmed the general common law rule that a choice of governing law for a contract as a whole will apply to an arbitration agreement within the contract, even when a different country has been chosen for the seat of the arbitration. This was important in the circumstances of the case because it meant that English – as opposed to French – law applied, which in turn gave the English courts jurisdiction to grant an injunction to restrain RusChemAlliance from litigating the dispute in Russian courts in breach of the parties’ agreement to arbitrate.  

D’Aloia v. Persons Unknown & Others: Victim of Crypto-Fraud Fails in Claim Against Crypto Exchange

In D’Aloia v. Persons Unknown & Others,[1] the High Court of England and Wales dismissed a claim brought by the victim of a crypto-scam against Bitkub, one of the exchanges with whom the fraudsters were alleged to have held their accounts.

This is the first judgment following a full contested trial on some fundamental points regarding the status and treatment of cryptocurrency and the potential liability of exchanges to victims of crypto-frauds. The lengthy judgment traverses a number of complex issues, confirming the rights attaching to tether (USDT) as a cryptoasset, as well as the application of trust and tracing principles in crypto-disputes.

Hammon v. UCL: Group Litigation Order Denied in Favour of English Court’s Case Management Powers

In David Hammon and Others v. University College London[1], the High Court of Justice found that the threshold requirements for making a group litigation order (GLO) had been met but decided that the court’s general case management powers would be more appropriate to manage the claims, rather than a GLO.

The case emphasises important questions about the future of GLOs as a mechanism for group litigation in a landscape where class actions are on the rise.

Court of Appeal Provides Comfort to Lenders on Default Interest Clauses

In Houssein & Others v. London Credit Ltd & Another[1], the Court of Appeal considered the proper application of the common law rules on penalties to a default interest clause in a loan agreement. Contrary to the conclusion of the High Court, the Court of Appeal found that in light of relevant case law, the lender ‘inevitably’ had a legitimate interest in the enforcement of the obligation to repay the loan, which would justify a default interest clause.