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China’s New Countermeasures Regulation: Identification, Blocking and the Malicious Entity List

Wed, 15 Apr 2026 16:40:23 +00:00

On 13 April 2026, the State Council of the People’s Republic of China (the State Council) promulgated the Regulations of the People’s Republic of China on Countering Improper Extraterritorial Jurisdiction by Foreign States (中华人民共和国反外国不当域外管辖条例, the Regulations), signed by Premier Li Qiang and effective on publication.¹ The instrument consists of 20 articles and draws its legal authority from the National Security Law of 2015, the Foreign Relations Law of 2023 and the Anti-foreign Sanctions Law of 2021. Official commentary frames the Regulations as defensive in purpose, presenting foreign extraterritorial measures as a form of interference in China’s internal affairs to which a law-based response is warranted.² Their practical effect is to consolidate into a single State Council instrument the identification, blocking and counter-sanctioning tools that Beijing has accumulated since 2020, and to add new ones.

The Instrument

The Regulations are a State Council administrative regulation, a category of normative instrument subordinate to statutes enacted by the National People’s Congress and its Standing Committee, but superior to departmental rules. The earlier Chinese blocking instrument, the Rules on Counteracting Unjustified Extraterritorial Application of Foreign Legislation and Other Measures of 2021 (阻断外国法律与措施不当域外适用办法, the 2021 Blocking Rules), was a departmental rule issued by the Ministry of Commerce of the People’s Republic of China (MOFCOM).³ The Regulations elevate that material into a higher rank and reassign lead identification authority to the State Council rule-of-law department, that is, the Ministry of Justice of the People’s Republic of China (the MOJ).⁴ MOFCOM retains its existing portfolios, notably the Unreliable Entity List (不可靠实体清单) regime and export- control implementation, which now sit alongside rather than under the new MOJ-led identification pipeline. Although trade ministries remain central to designations and to enforcement, the shift signals that Beijing conceives of the countermeasures architecture as foreign-related rule-of-law infrastructure rather than as trade policy, and it is likely to produce a more legalistic identification process with greater documentary output.

The Political and Geopolitical Backdrop

The Regulations arrive at the end of a 12-month cycle in which Beijing constructed, deployed and selectively paused a reciprocal counter-toolbox against US and EU extraterritorial measures. The most consequential US step in that cycle was the Affiliates Rule (Expansion of End-User Controls to Cover Affiliates of Certain Listed Entities, the BIS Affiliates Rule) issued by the Bureau of Industry and Security of the US Department of Commerce on 29 September 2025, which extended Entity List and Military End-User List licensing requirements to any entity owned 50% or more, directly or indirectly, by a listed party.⁵ China responded in October 2025 with an expansion of its own export-control regime, notably a rare-earth licensing framework that for the first time reached re-exports and foreign-made items containing controlled Chinese-origin content, or manufactured using controlled Chinese technologies. Both sides then paused: President Donald Trump and President Xi Jinping agreed at a meeting in Busan, South Korea, on 30 October 2025 to extend the bilateral truce for one year, and the BIS Affiliates Rule was suspended for a phase running to 9 November 2026.⁶ Against that backdrop, the Regulations are best understood as legal infrastructure built during a negotiated pause. Official commentary presents them as defensive, and the triggering standard under Article 6 retains substantial discretion for the interagency mechanism, which allows Beijing to hold identifications and designations in reserve without breaking the current diplomatic posture. That combination of institution-building alongside deliberate restraint is consistent with the strategic direction reaffirmed at the Fourth Plenum of the 20th Central Committee of the Communist Party of China, held in Beijing from 20 to 23 October 2025, which adopted the recommendations for the 15th Five-Year Plan and placed particular emphasis on scientific and technological self-reliance, as well as on national and economic security.⁷

The EU backdrop is secondary, but increasingly salient. The EU Blocking Statute of 1996, amended in 2018 in response to the reimposition of US secondary sanctions on Iran, and the Anti-coercion Instrument that entered into force on 27 December 2023, form part of what Beijing increasingly frames as a single Western pressure environment rather than two distinct regulatory poles.⁸ Although the primary target of the Regulations remains US extraterritorial measures, Article 3 is facially neutral across foreign states, which leaves EU sanctions packages, foreign-subsidies controls and member state disclosure orders within the foreseeable scope of Article 6 identification. European operators that already reconcile EU and US compliance obligations may now face a third jurisdictional vector that pulls in the opposite direction.

Identification, Prohibition Orders and the Malicious Entity List

Identification of a foreign measure is the precondition for every other instrument under the Regulations. Under Article 6, the MOJ, working through an interagency mechanism, assesses whether a foreign measure constitutes improper extraterritorial jurisdiction by reference to its conformity with international law, the adequacy of the connection between the foreign state and the regulated conduct, as well as the harm to Chinese interests or rights. The test is open-textured, and a residual reference to “other factors” preserves substantial administrative discretion for the MOJ and the interagency mechanism.

Once an identified measure has been publicly announced, three principal enforcement instruments become available. Article 7 authorises state-level countermeasures across policy fields that include diplomatic and consular measures, trade and investment restrictions and entry-and-exit controls. Article 13 authorises the MOJ to issue a prohibition order (禁执令, a Prohibition Order) directing a specified organisation or individual not to comply with the foreign measure, breach of which carries the Article 17 penalties, which extend across public procurement and bidding, trade in goods and technology and international services trade. Article 8 authorises relevant State Council departments to place on the Malicious Entity List foreign organisations and individuals that promote or participate in the implementation of an identified measure, with consequences ranging across visa and entry measures, asset freezes and transaction and investment bans. Article 8 separately permits the extension of those measures to organisations that are controlled by, or whose formation or operation involves, persons already on the list.⁹

The Regulations also set out procedural safety valves on each side of a designation. Article 9 permits a designee to apply to the designating State Council department for suspension, modification or cancellation of countermeasures on the basis of corrective action, and Article 11 permits a counterparty facing commercial necessity to apply for case-by-case authorisation to engage in otherwise prohibited dealings with a listed person.

Article 16 assigns industry associations and chambers of commerce a coordinating role in rights protection and dispute resolution, which may become a practical channel for industry-level representations to the interagency mechanism.

Pursuant to Article 14, Chinese citizens and organisations whose rights have been infringed by a party’s compliance with an improper foreign measure may sue in Chinese courts for cessation of infringement and for damages. Article 14 reaches the act of compliance, not the location of the complying party, with the consequence that a foreign entity with no operations in China may still face suit where its compliance with a foreign sanctions designation has injured a Chinese counterparty. The private right of action is likely to prove the most commercially consequential feature of the Regulations for foreign counterparties operating in China or doing business with China.¹⁰

The Jurisdictional Claim

Article 4 of the Regulations asserts a Chinese right to exercise extraterritorial jurisdiction over conduct with an “appropriate connection” to China, whether derived from treaty, from domestic law or from the principle of reciprocity. Although earlier Chinese instruments gestured toward this posture, the articulation in a State Council regulation is the clearest statement to date that Beijing intends to construct a symmetric long-arm capacity, not merely a defensive shield against foreign assertions.

The second structurally significant feature is the elevation of data-flow restrictions from the data-protection corpus into the sanctions toolkit. Article 8(4) permits a designated person to be cut off from the provision of data or personal information by any Chinese organisation, and Article 17 permits restrictions on cross-border data flows as a penalty for non-compliance with countermeasures or with a Prohibition Order. The data-layer consequences supplement, and in some cases duplicate, the existing Personal Information Protection Law and Data Security Law pathways and they are likely to have a more direct operational bite on technology, cloud and industrial operators than traditional visa or asset measures.¹¹

Implications for Operators

The immediate consequence for operators is a sharper conflict-of-laws exposure. Where a foreign measure has been identified under Article 6, conduct that gives effect to it becomes potentially actionable through Article 17’s administrative penalties, through an Article 14 damages claim or through a Malicious Entity List designation against a foreign parent or affiliate. The calibration pressure this creates is most acute for financial institutions, maritime and logistics operators and technology and data handlers, whose existing compliance programs treat US and EU measures as the controlling reference point.

Operators with China-nexus counterparties should review sanctions, termination and force majeure provisions to reduce the risk that a contractual exit invoked on foreign-sanctions grounds will not be later characterised as assistance to an identified measure. Dispute-resolution choices merit parallel review, because Chinese courts hearing an Article 14 claim will apply Chinese public-policy doctrine, which is likely to be shaped by the Regulations.

A precautionary or over-broad reading of a foreign sanctions designation is the precise conduct that an Article 14 plaintiff may characterise as participation in implementation, and the legal analysis supporting any refusal to perform should be tightly reasoned and contemporaneously documented. Where the foreign regime offers an exemption pathway, including a specific license from the Office of Foreign Assets Control of the United States Department of the Treasury (OFAC) for an otherwise prohibited payment, an application is worth making even where rejection is the more probable outcome; the application is itself evidence of an attempt to perform and may be deployed defensively in a subsequent Chinese proceeding.

The Regulations empower restrictions on the entry, stay and cross-border movement of natural persons, which brings compliance officers and senior commercial executives who sign off on terminations within the foreseeable range of the instrument, particularly where a Malicious Entity List designation is being contemplated.

Outlook

The most informative near-term indicator will be the first Article 6 public identification, which will fix the concrete perimeter of the regime and reveal the discretion the interagency mechanism intends to retain. A second indicator is the fate of the BIS Affiliates Rule, the suspension of which runs through 9 November 2026; its reinstatement would supply an obvious candidate for identification.¹² A third indicator is the relationship of the Regulations to the State Council Provisions on the Security of Industrial and Supply Chains (供应链产业链安全管理条例, the Supply Chain Provisions), which entered into force on 31 March 2026, and cover overlapping factual ground.

How We Can Help

Our international trade and sanctions team helps multinationals, banks and logistics firms navigate the messy overlap of Chinese countermeasures, US/EU sanctions and export controls. We do not just spot where your global obligations might clash; we are in the trenches with you, drafting force majeure clauses for China contracts, auditing compliance programs and building strategies for exemptions. Whether you are preparing for “Malicious Entity List” issues or need to know what a new enforcement action means for your business, we are here to help.

^{1 “受权发布｜中华人民共和国反外国不当域外管辖条例,” Xinhua News Agency (via China News Service), 13 April 2026, arts. 1, 20; vid. “}^{China issues rules on countermeasures against foreign states’ unlawful extraterritorial jurisdiction}^{,” State Council of the People’s Republic of China, 13 April 2026.}

^{2 “China issues rules on countermeasures against foreign states’ unlawful extraterritorial jurisdiction,” supra n. 1.}

^{3 “}^{Measures to Block the Improper Extraterritorial Application of Foreign Laws and Measures}^{,” Ministry of Commerce of the People’s Republic of China, Order No. 1 of 2021, 9 January 2021, arts. 4–7.}

^{4 Regulations on Countering Improper Extraterritorial Jurisdiction, supra n. 1, arts. 5–6; nb. art. 6 designates the “State Council rule-of-law department” as the lead identification authority, which in current interagency practice is the Ministry of Justice of the People’s Republic of China.}

^{5 “}^{Department of Commerce Expands Entity List to Cover Affliates of Listed Entities}^{,” Bureau of Industry and Security, U.S. Department of Commerce, 29 September 2025.}

^{6 “}^{Full text: MOFCOM on China’s recent export controls, other trade policies}^{,” CGTN (via Xinhua News Agency), 12 October 2025; vid. “T}^{rump-Xi meeting in Busan: Key takeaways from the summit}^{,” Al Jazeera, 30 October 2025.}

^{7 “}^{CPC plenum concludes, adopting recommendations for China’s 15th Five-Year Plan}^{,” State Council of the People’s Republic of China (via Xinhua News Agency), 23 October 2025.}

^{8 “}^{Regulation (EU) 2023/2675 of the European Parliament and of the Council of 22 November 2023 on the protection of the Union and its Member States from economic coercion by third countries}^{,” Offcial Journal of the European Union, L series, 7 December 2023; cf. Council Regulation (EC) No 2271/96 of 22 November 1996 protecting against the effects of the extra-territorial application of legislation adopted by a third country, and actions based thereon or resulting therefrom, as amended by Commission Delegated Regulation (EU) 2018/1100 of 6 June 2018.}

^{9 Regulations on Countering Improper Extraterritorial Jurisdiction, supra n. 1, arts. 6, 7, 8, 13, 17.}

^{10 Ibid., arts. 9, 11, 14, 16.}

^{11 Ibid., arts. 4, 8(4), 17.}

^{12 BIS Affliates Rule, supra n. 4.}

China’s New Supply Chain Security Regime — State Council Order No. 834 and Its Implications

Wed, 15 Apr 2026 11:34:19 +00:00

On 31 March 2026, the Premier of China, Li Qiang, signed State Council Order No. 834, promulgating the Provisions of the State Council on the Security of Industrial Chains and Supply Chains (供应链产业链安全管理条例, the Provisions).

Adopted on 13 March 2026 and effective upon publication, the Provisions constitute the first dedicated administrative regulation in China on industrial and supply chain security. ¹ In only eighteen articles, the instrument establishes new investigation procedures, vests broad countermeasure authority over foreign states and private actors alike, restricts supply chain-related information gathering in China, and imposes compliance obligations on every organisation and individual within Chinese territory. For operators from the US, the EU, the UK, Japan, South Korea and elsewhere, the Provisions introduce a new and consequential layer of legal risk.

The Provisions were publicly announced on 7 April 2026 in a question-and-answer session conducted by the Ministry of Justice (MOJ). A senior MOJ offcial explained that no single earlier instrument had offered a unified framework for risk prevention, emergency response and countermeasures; the Provisions fill that gap, consolidating authorities drawn, inter alia, from the National Security Law, the Foreign Relations Law and the Foreign Trade Law.^2-

Geopolitical Context and Timing

The Provisions arrive at a moment of acute supply chain stress: US-China tariff escalation, semiconductor and advanced-manufacturing export controls coordinated among the US, Japan, the Netherlands and South Korea, and Chinese retaliatory measures on critical minerals and rare earths. The Provisions are best understood not as a reactive measure but as the culmination of a legislative trajectory pursued systematically since at least 2020, accelerating after entity-list designations, semiconductor controls and the secondary sanctions experience of the Russia-Ukraine conflict.³

The October 2025 sequence merits particular attention. The Ministry of Transport opened an investigation into the impact of US Section 301 maritime measures on China’s shipping, shipbuilding and related supply chain security, and imposed special port fees on US-linked vessels on a staged schedule running through 2028.

Structure and Core Provisions

The Provisions combine preparatory and coercive functions. Institutional responsibility is distributed across roughly fifteen central government departments (e.g. industrial, security, cyberspace, customs and financial-regulatory), with provincial governments participating under national coordination. State Council departments must develop a dynamically adjusted “key sectors” list, establish information-sharing and risk monitoring systems, organise strategic reserves, and prepare emergency-response plans authorising requisition, mandated production and directed transportation in the event of supply chain disruption. Article 13 separately restricts supply chain related information gathering within Chinese territory; Article 9 authorises enterprises, industry associations and chambers of commerce to report situations affecting supply chain security, creating a bottom-up enforcement channel alongside top-down state monitoring.⁴

Articles 14 and 15 set out the countermeasures architecture. Article 14 reaches foreign states, regions and international organisations that adopt “discriminatory prohibitions, restrictions, or similar measures” against China in the supply chain domain; available measures include, inter alia, import and export prohibitions on goods, technology and international services trade, together with special levies. Article 15 extends the same logic to foreign organisations and individuals that violate “normal market-transaction principles” or adopt discriminatory measures causing or threatening “substantial harm” to China’s supply-chain security. Available remedies include prohibitions on the target’s imports, exports, investment in China and transactions with Chinese entities; bars on entry of personnel and vehicles; and the revocation of work or residence permits, with the measures extending to entities effectively controlled by, or established with, the target.

Article 16 then completes the framework: all organisations and individuals within China “shall execute” those countermeasures, with noncompliance attracting exclusion from government procurement, restrictions on import, export and international services trade, and restrictions on the cross-border transfer of data and personal information.

Implications for Operators

European operators face particular exposure, even though the Provisions are jurisdiction-neutral on their face. The European Commission’s (EC) alignment with US semiconductor export controls (e.g. the Dutch and Japanese restrictions on advanced lithography and chipmaking equipment) has been characterised by Chinese official media as participation in supply-chain coercion, even as the EU itself builds derisking instruments such as the Anti-Coercion Instrument, in force since December 2023. Any EU-origin company that restricts, downgrades or terminates supply relationships with Chinese counterparts in compliance with EU or multilateral export controls could face investigation and the full range of countermeasures under Article 15.⁵

The result is a structural compliance conflict. A European manufacturer in China may simultaneously face an EU obligation to restrict certain exports and a Chinese obligation, under Article 16, to execute the countermeasures adopted in response, with full compliance with one jurisdiction’s rules potentially constituting a violation of the other. Article 15’s reach extends beyond overt sanctions compliance to ordinary commercial decisions (i.e. terminating supply, withdrawing from China-linked supply chains, or altering sourcing under home-jurisdiction pressure), each of which may be characterised as discriminatory or as causing substantial harm to China’s supply-chain security. Article 13’s information gathering restrictions, moreover, create legal risk for routine compliance; environmental, social and governance (ESG); and human-rights due diligence conducted within China.

For foreign groups with operations in China, Article 16 may be the single most consequential provision: its penalties reach not only the enterprise (e.g. exclusion from procurement, trade restrictions and cross-border data controls) but also individuals, through restrictions on entry, exit, stay and residence. Expatriate managers and local personnel may face personal consequences where a China-based subsidiary has failed to execute a countermeasure that its home-jurisdiction law forbids. Banks, insurers, trade-finance providers and payment intermediaries face indirect exposure on the same axes: any matter involving designated parties, blocked transactions, restricted services trade or cross-border data restrictions may place a financial institution in conflict-of-laws territory.

Litigation Risk

Administrative penalties under the Provisions are not the only avenue of exposure. Article 12 of the Anti-Foreign Sanctions Law (AFSL), enacted in 2021, expressly prohibits any organisation or individual from implementing, or assisting in the implementation of, discriminatory restrictive measures imposed by foreign countries against Chinese citizens or entities. A party that violates this prohibition, and thereby infringes the lawful rights and interests of Chinese parties, may face civil liability, including orders to cease the infringing conduct and to compensate for any resulting losses. Accordingly, if a specific sanction falls within the scope of “discriminatory restrictive measures” under the AFSL, a court may refuse to enforce a termination clause based on the imposition of sanctions, on the ground that its enforcement would itself contravene Article 12.⁶

Litigation under Article 12 has already taken place before a Chinese maritime court. In a case published by the Nanjing Maritime Court in 2025, a Chinese marine engineering company and a Swiss company entered into a subcontract for the construction of a seawater treatment and injection module for a floating production, storage and offloading (FPSO) project. After the Chinese company completed and delivered the module, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) placed it on the Specially Designated Nationals and Blocked Persons List (SDN List). The Swiss company subsequently suspended payment of the final instalment, claiming that it had to comply with the OFAC directive. During the proceedings, the court expressly informed the Swiss company of the legal consequences under Chinese law of assisting in the implementation of foreign unilateral sanctions. The Swiss company then sought a payment licence from OFAC, and, with the court’s facilitation, the parties reached a settlement, enabling the Chinese company to recover the outstanding payment. The published case does not disclose whether the contract between the parties contained a sanctions-related termination clause.⁷

How We Can Help

Navigating the friction between global sanctions and Chinese regulatory shifts requires more than legal advice. It requires a clear map of your exposure. Our international trade and sanctions compliance team helps multinationals, financial institutions and energy leaders manage these conflicting obligations across borders.

We do not just identify the risks. We build the frameworks to manage them. Our team designs the supply chain due diligence programmes. We draft the force majeure clauses for Chinese contracts. We assess how the new provisions impact your current deals. Our focus remains on protecting you from regulatory heat and litigation.

^{1 State Council of the People’s Republic of China, “}^{Provisions of the State Council on the Security of Industrial Chains and Supply Chains}^{”, Order No. 834, adopted 13 March 2026, promulgated 31 March 2026.}

^{2 Ministry of Justice of the People’s Republic of China, “}^{Offcial Q&A on the Provisions of the State Council on the Security of Industrial Chains and Supply Chains}^{”, 7 April 2026; vid. People’s Daily, “}^{Rollout Coverage of the Provisions on the Security of Industrial Chains and Supply Chains}^{,” 8 April 2026.}

^{3 Key precursors in the Chinese economic-security framework include Standing Committee of the National People’s Congress, “}^{Export Control Law of the People’s Republic of China}^{”, 17 October 2020; “Data Security Law of the People’s Republic of China”, 10 June 2021; and “}^{Foreign Relations Law of the People’s Republic of China}^{”, 28 June 2023.}

^{4 Order No. 834, supra No. 1, arts. 3 (institutional responsibilities), 7 (key sectors list), 8-10 (information sharing, monitoring and risk prevention), 9 (reporting by enterprises, industry associations and chambers of commerce), 11 (emergency management), 12 (research, development and technology security), 13 (information-gathering restrictions), 14-15 (countermeasures against foreign states and private actors) and 16 (compliance obligation and penalties).}

^{5 European Parliament and Council of the European Union, “}^{Regulation (EU) 2023/2675 on the Protection of the Union and Its Member States from Economic Coercion by Third Countries}^{”, Official Journal of the European Union L, 7 December 2023; cf. Council of the European Union, “}^{Council Regulation (EC) No 2271/96 Protecting Against the Effects of the Extra-territorial Application of Legislation Adopted by a Third Country,}^{” Official Journal of the European Communities L 309, 29 November 1996.}

^{6 Standing Committee of the National People’s Congress, “}^{Anti-Foreign Sanctions Law of the People’s Republic of China,}^{” 10 June 2021, Art. 12.}

^{7 Nanjing Maritime Court, “}^{Nanjing Maritime Court Trial Report on Foreign and Hong Kong, Macao, Taiwan-related Cases (2020–2025)}^{,” 29 September 2025 (N.B. identifying the case as the “national first civil tort case concerning the Anti-Foreign Sanctions Law”); vid. Supreme People’s Court of the People’s Republic of China, “}^{Key Takeaways from SPC 2024 Work Report}^{”, 27 March 2025; cf. South China Morning Post, “}^{Is This Maritime Court Case a Model of China’s Anti- Sanctions Law in Action?}^{” 27 February 2026.}

Pensions Weekly Update – 15 April 2026

Wed, 15 Apr 2026 09:00:00 +00:00

Here is our weekly summary of key legal and regulatory developments relevant to occupational pension schemes that you might have missed, with links for further information.

The Pensions Regulator (TPR) has issued some strong messages for trustees of small defined contribution (DC) schemes. In a recent blog, Kim Goodall-Brown, Director of DC and Master Trust Supervision, says that trustees of smaller DC schemes face difficult decisions ahead of new duties (on value for money, small pot consolidation and guided retirement) under the Pension Schemes Bill. She says that trustees “cannot wait” until the new duties are in force and “must take a clear-eyed look at whether they can continue to meet rising expectations, or whether members would be better served through consolidation or wind up”. TPR has published new consolidation guidance to help trustees considering transferring members to a master trust and it has also refreshed its DC winding up guidance. Separately, a press release issued with TPR’s climate adaption report 2025 states that “there are too many small DC schemes where trustees' knowledge of the scale of financial risks posed by climate change is limited. As a result, TPR is calling on those trustees to upskill or consider consolidating in savers’ interests”. The climate adaption report is TPR’s contribution to the national assessment of the resilience of the UK to climate change.
On 15 April 2026, the House of Lords’ amendments to the Pension Schemes Bill will be debated in the House of Commons. The latest House of Commons research briefing contains further information. Pat McFadden, Secretary of State for Work and Pensions, has set out motions, which include the introduction of caps on the government’s power to mandate the way in which trustees invest DC funds. The caps reflect the voluntary agreement reached under the Mansion House Accord. Look out for our newsletters when the Pension Schemes Bill receives royal assent.
The government has responded to the report of the House of Lords Economic Affairs Committee on “Inheritance tax measures: unused pension funds and agricultural and business property reliefs”. Included in the response is a statement that the government will consult this Spring on the framework to allow personal representatives and pension scheme administrators to exchange all the necessary information for inheritance tax purposes promptly.
Starting from this month, the state pension age is gradually increasing from age 66 up to age 67. People born between 6 April 1960 and 5 March 1961 will reach their State Pension age at 66 years and a specified number of months.
The Pensions Dashboards Programme is hosting a webinar on Tuesday 21 April at 4 p.m. to discuss the findings of phase 1 of the MoneyHelper dashboard user testing.
Our Labour & Employment colleagues have issued a handy publication summarising key employment law changes coming into effect this month.

If you would like specific advice on any of these issues or anything else, please contact a member of our Pensions team.

frESH Law Horizons: Key Developments in UK and EU Environment Safety and Health Law Procedure and Policy

Tue, 14 Apr 2026 18:00:00 +00:00

Our Environmental, Safety & Health team is pleased to share with you the latest edition of our newsletter, frESH Law Horizons: Key Developments in UK & EU Environment, Safety and Health Law and Procedure; providing bite-size updates on EU and UK law, procedure, and policy. Take a moment to reflect on the key developments from January to March 2026.

The updates covered in this edition include (among others):

Latest Updates Regarding Extended Producer Responsibility for Packaging
UK Carbon Border Adjustment Mechanism (UK CBAM) Update
Latest News on Flood Regulation and Judicial Developments
Latest News on Chemicals in the UK
Competition and Markets Authority (CMA) Guidance on Green Claims
Consultation on proposals for The Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 2013 (RIDDOR)
Silica Dust Bill
Environmental, Safety and Health (ESH) Prosecutions
Court of Appeal Decision in Significant Environmental Claim Against Water Companies
Per- and Polyfluoroalkyl Substance (PFAS) in the UK and PFAS Litigation in Europe
Packaging and Packaging Waste Regulation (PPWR): Key Developments (January-March 2026)
Bisphenol A (BPA) in Food Contact Materials: Two Key EU Developments in Early 2026

Hungary after Orbán Sanctions, Trade and Energy Implications

Tue, 14 Apr 2026 15:55:00 +00:00

On 12 April 2026, the voters in Hungary showed their support for the Tisza Party, led by Péter Magyar, handing it approximately 138 of the 199 seats in the National Assembly on a turnout of some 77.8%, ending the sixteen-year tenure of Prime Minister Viktor Orbán.¹ Orbán telephoned Magyar to concede the election shortly after the polls closed. The Tisza Party’s new supermajority will enable it to amend needed legislation and reorient the country’s stance within the EU.

The practical questions for operators, however, are narrower. They concern the Hungarian vote on EU sanctions against the Russia, the fate of the €90 billion EU loan to Ukraine, the continuation of Russian crude imports through the Druzhba pipeline, the course of the Paks II nuclear project, and the expiry, in November 2026, of the waiver by which the US administration of President Donald Trump has spared Hungary from US secondary sanctions on Russian oil.

The Transition of Power and Its Procedural Limits

Preliminary results from Nemzeti Választási Iroda (the National Election Office) give Tisza approximately 53.6% of the vote and Fidesz-KDNP approximately 37.8%, on the highest turnout recorded since the restoration of free elections in 1990. With such a mandate, the incoming administration could theoretically amend Magyarország Alaptörvénye (the Fundamental Law of Hungary) and related statutes governing the judiciary, the Prosecution Service, the National Bank, the State Audit Office and the Budget Council. Although the Fundamental Law allows for inauguration of a new prime minister to be dragged out until 12 May 2026, Magyar has publicly stated that he hopes to be installed in his new post by 5 May. Under the Fundamental Law, the president of the republic must convene Országgyűlés (the National Assembly) within thirty days of the poll and, at that sitting, propose a candidate for prime minister. While these formalities are moving along, the outgoing government retains the prerogatives of office, which includes wielding Hungary’s veto power within the Council of the European Union (the Council). Mr. Orbán will accordingly represent Hungary at the informal meeting of heads of state and government at Nicosia on 23 and 24 April, at which the 20th EU sanctions package and the €90 billion loan to Ukraine are expected to be discussed.²

Sanctions Policy and EU Financial Support to Ukraine

Even though the outgoing government is often described as a categorical opponent of EU sanctions on Russia, its record is in fact more selective. Hungary blocked the 20th package not on ideological grounds but because Hungarian diplomacy had tied it to the January 2026 interruption of oil flows through the Druzhba southern branch.³ The 20th package could be approved by the council shortly after the new government is sworn in, and subsequent packages are expected to proceed on standard timelines.

The incoming prime minister’s position on the EU’s €90 billion loan to Ukraine shows both the character and the limits of this change. At his first press conference, on 13 April, Magyar said that Hungary would not block the loan but would preserve the opt-out negotiated under Orban in December 2025, by which Hungary, the Czech Republic and the Slovak Republic would be exempt from any financial contribution therein.⁴

Energy Supply and Structural Dependency

Energy policy is the area in which the gap between symbolic change and structural continuity is expected to be most stark. The southern branch of the Druzhba pipeline has carried no Russian crude to the MOL refinery at Százhalombatta since 27 January 2026, following damage to the pipeline in western Ukraine variously attributed to Ukrainian drone operations or to Russian strikes. Independent analysis concludes that the Adria pipeline, operated by Croatia’s JANAF, can cover the combined requirements of Hungary and the Slovak Republic, though Budapest has disputed this. Magyar has said that any government led by him would continue to buy crude from Russia and would not hesitate to use any EU accession negotiations to pressure Ukraine into restoring transit of these imports through its pipelines. While it is true that the new prime minister elect has committed Hungary to a Russian energy-free Hungary, his timetable for achieving this goal is much longer than that proposed by the EU – a full eight years longer than the European Commission’s (EC) REPowerEU objective and two years after the EU’s binding 2028 prohibition on the import of Russian gas. The 2028 prohibition, adopted despite Hungary’s and the Slovak Republic’s opposition, is a constraint that the new government cannot reverse.⁵

Trade Policy and European Parliament Voting Record

The voting record of the Tisza delegation in the European Parliament is a reliable guide to the stance that a Tisza government might adopt moving forward. In the past, their delegation has cooperated with its European partners on sanctions-related matters but has also forcefully defended Hungarian sovereignty on matters of trade and on attempts to widen the EU’s competencies. It repeatedly voted against the EU-Mercosur agreement, so much so that the European People’s Party suspended the speaking right of Tisza’s members for six months after they defied the whip for a third time.⁶ Magyar has framed this as a defence of Hungarian agriculture, a position that aligns the delegation with the Central European protectionist bloc with respect to the Common Agricultural Policy, on the revenue side of the 2028 to 2034 multiannual financial framework, and, in all likelihood, on the sectoral scope of the Carbon Border Adjustment Mechanism.

Although the new government will probably cease to serve as China’s veto on the Council on questions of EU trade defence, the industrial commitments at Szeged and at Debrecen, now entering commercial production, will constrain any retroactive unwinding of these contracts.

US Secondary Sanctions

In November 2025, President Trump granted Hungary an exemption from the secondary effects of US sanctions against Rosneft and Lukoil. That exemption will expire in or about November 2026, within the first six months of the new government.⁷ The case for extension does not rest on the Orbán relationship. A Tisza government stands closer to the stated Ukraine-pressure objectives of the administration than its predecessor did, since it will no longer obstruct EU assistance to Kyiv. Extension is therefore the more probable outcome, though not one on which firm planning should rest. Should the waiver lapse, the consequences for MOL, for its downstream customers, and for the banks that finance flows of Russian-origin refined product across the region, will be abrupt and severe.

Expectations

Several dates will prove indicative about how Hungary’s new government will behave moving forward: the swearing in of the new government, which Magyar hopes to bring forward to 5 May; his first visit to Brussels and the lodging of an application to join the European Public Prosecutor’s Office (EPPO); the filing of a revised national gas diversification plan consistent with the 2028 ban; and the extension, or lapse, in November 2026, of the US secondary-sanctions waiver.

How Can We Help

As a global firm with a deep-rooted international trade and sanctions practice, we are actively advising clients on the regulatory shifts following the recent change of government in Hungary. Our team assesses counterparty exposure under both the EU and the US sanctions regimes, with a particular focus on the flow of Russian crude and refined products, while managing complex applications for licences and derogations. On the trade front, we monitor the Hungarian position within the European institutions regarding the Mercosur ratification, the Common Agricultural Policy and the trade defence measures against China, translating these developments into strategic advice for supply chains and tariffs.

In the energy sector, we can guide developers and financiers through the 2028 gas prohibition, the transition of the crude supply from the Druzhba to the Adria pipeline, and the complexities of the Paks II supply chain. We can also provide counsel on governance matters, including the recovery of the previously frozen EU funds and the institutional reforms currently underway. Our experts across the primary political and financial capitals of the world are available to discuss the implications of these developments on your operations.

¹ Al Jazeera Staff, AFP and Reuters, “Peter Magyar Wins Hungary Election, Unseating Viktor Orban After 16 Years”, Al Jazeera, 12 April 2026.

²“EU Wants to Unblock €90bn for Ukraine as Quickly as Possible After Orbán’s Defeat”, Ukrainska Pravda, 13 April 2026.

³ “Hungary to Veto New EU Russia Sanctions Over Druzhba Oil Transit”, Organized Crime and Corruption Reporting Project, 23 February 2026.

⁴Zoltan Simon, “Hungary Won’t Block €90 Billion EU Loan to Kyiv, Magyar Says”, Bloomberg, 13 April 2026.

⁵Olivia Yasukawa and Chris Stern, “Trump Grants Hungary One-year Exemption From Russian Energy Sanctions”, CNN, 7 November 2025 (reporting that union member states agreed to ban all imports of Russian gas from 2028, over the opposition of Hungary and the Slovak Republic).

⁶Sandor Zsiros, “Between Budapest and Brussels: Péter Magyar’s Political Tightrope”, Euronews, 7 April 2026.

⁷Yasukawa and Stern, “Trump Grants Hungary One-year Exemption From Russian Energy Sanctions,” CNN, 7 November 2025.

Latest Developments — Renters’ Rights Act 2025

Tue, 14 Apr 2026 14:14:39 +00:00

The government has now released The Renters’ Rights Act Information Sheet 2026 (the “Information Sheet”), which summarises the changes that tenants in the private rented sector can expect to see coming into effect on 1 May 2026. This is the latest in a string of publications preparing the private rented sector for substantial changes. A copy of the Information Sheet can be found here: The Renters’ Rights Act Information Sheet 2026.

Landlords and their letting agents must provide the Information Sheet to their tenants by 31 May 2026, in hard copy or attached as a PDF to an email. This applies if the tenancy is:

• An assured or assured shorthold tenancy

• Was created before 1 May 2026

• Has a wholly or partly written record of terms (including a written tenancy agreement)

Exceptions

The Information Sheet shouldn’t be sent where an existing agreement is entirely verbal; or to any lodgers, but a copy must be given to every tenant named on the tenancy agreement. An important point to note here is that emailing or texting a link to the PDF will not be valid. The exact PDF copy must be downloaded and sent accordingly. Failing to provide the Information Sheet where it ought to be provided could result in being fined up to £7,000.

Key Details From the Information Sheet

Serving Notice for Possession Before 1 May 2026

Landlords can still serve a notice seeking possession (either under section 8 or section 21 of the Housing Act 1988) before 1 May 2026, in which case the new rules and changes outlined below will not apply.

Changes to Fixed Terms

After 1 May 2026, it will no longer be possible for assured tenancy agreements to have a fixed term or set end date. All tenancies will automatically become rolling tenancies, traditionally known as “periodic tenancies”. If any such tenancy already has an end date, it will no longer apply. As such, all tenancies previously known as assured shorthold tenancies will be called assured periodic tenancies going forward from 1 May 2026.

All such tenancies will continue on a rolling basis until:

Mutual agreement between the parties to end the tenancy

• The tenant serves notice to end the tenancy

• The landlord serves notice to end the tenancy providing a valid legal reason

Rent Review

Any existing rent review clauses included in existing tenancies will no longer apply after 1 May 2026. Landlords must now follow the process outlined in section 13 of the Housing Act 1988 in order to increase the rent.

This will mean the rent can only be increased once per year, and at least two months’ notice will need to be given (using Form 4A) in order for the proposed rent increase to take effect.

It is also important to note that any rent increase cannot be higher than the open market rate, otherwise this can be challenged by the tenant at the First-tier Tribunal.

Ending the Tenancy as the Landlord

Landlords will no longer be able to serve a section 21 notice to terminate a tenancy on or after 1 May 2026, even if the existing tenancy allows for this. Landlords will need to serve a section 8 notice with a valid legal reason for eviction, which are referred to as grounds for possession. Relevant examples

include:

Failing to pay rent on time

• Committing antisocial behaviour in or near the property (either the tenant themselves or others living with them)

• Not taking adequate care of the property (either the tenant themselves or others living with them)

• Conditional tenancies designed for a certain purpose such as temporary or supported accommodation

• Where a landlord intends to sell the property or wants to move into the property (either themselves or their family, but under this ground, a tenant cannot be required to leave the property during the first 12 months of their tenancy.

If the tenant does not leave by the end of the notice period specified within the section 8 notice, the landlord will need to apply to the court for a possession order.

It is important to note that a tenant will still be able to end their tenancy by providing the landlord with two months’ written notice, with any shorter period for notice needing to be agreed in writing.

Keeping a Pet

Tenants will also have a right to request to keep a pet and landlords cannot unreasonably refuse any such request. Any refusal of such request must be made in writing, providing the relevant reasoning.

Landlords will need to consider each request on a case-bycase basis, but it is important to note that the tenant has the ability to challenge the refusal in court.

Assured Tenancy Forms

The government have also released new forms of notice to be used on and after 1 May 2026. For the time being, these forms cannot be used and so are watermarked accordingly, but they will be available for use from 1 May 2026. Copies of these forms can be found here:

Forms of Notice.

The template forms include:

• Form 3A – A form of section 8 notice as discussed above, along with guidance for landlords completing that notice and for tenants receiving that notice.

• Form 4A – A form of notice for landlords to propose a new rent.

Next Steps

Given the widespread changes being introduced through phase one of the act, and the increased rights available to tenants, it is important that landlords are fully aware of how this will impact them going forward.

Practical steps which landlords should be taking at this stage include:

• Consider serving section 21 notices now to bring tenancies to an end before 30 April 2026

• Serving The Renters’ Rights Act Information Sheet 2026 upon all relevant existing tenants before 31 May 2026

• Reviewing template tenancy agreements and if necessary, updating provisions to align with the new rules coming in on 1 May 2026

• Preparing to register properties on the new private sector database and to register with the “Landlord Ombudsman” scheme (when available in late 2026)

• Ensuring all properties meet the relevant safety standards and putting together essential compliance documents in advance of implementation of “Decent Homes Standard” (timelines not yet confirmed)

Unfair Trading Practices in the Agri-food Supply Chain — A Shifting Balance of Power

Mon, 13 Apr 2026 15:00:43 +00:00

Companies are normally free to structure their relationships as they see fit. This freedom is primarily constrained by competition law, which intervenes only in specific circumstances, such as cases of abuse of dominance. Outside of these well-defined boundaries, the law has traditionally taken a hands-off approach to business-to-business (B2B) dealings.

However, the EU has taken a markedly different stance in the case of farmers and farmer cooperatives. Recognising structural imbalances and persistent inequalities in bargaining power, in 2019 the EU adopted Directive (EU) 2019/633 on unfair trading practices (the “UTP Directive”), with the explicit objective of ensuring a fair standard of living for the agricultural community.

The UTP Directive is being revised, with the Commission currently procuring an impact assessment to support this, and a legislative proposal is expected in Q4 2026.

A Targeted Intervention: Scope and Mechanism

The UTP Directive introduces a regulatory framework that departs from traditional competition law by directly addressing contractual imbalances. It establishes a list of unfair trading practices (UTPs), divided into so-called “black” practices (outright prohibited) and “grey” practices (permitted only if clearly agreed in advance).

The Directive applies where there is a perceived imbalance between supplier and buyer, based on predefined turnover bands. ¹ In essence farmers and their cooperatives are given protection where their buyers have a larger turnover than them.

Beyond Farmers: Indirect Protection and the “Cascade Effect”

While the UTP Directive is primarily aimed at protecting farmers and their cooperatives, its effects extend further down the supply chain. Notably, it also offers protection to downstream suppliers with an annual turnover under €350 million².

This reflects an important economic reality – for example, UTPs³ imposed by buyers or buyer alliances on food manufacturers are unlikely to be absorbed entirely at that level. Instead, such costs can be passed upstream and can ultimately negatively impact farmers. By addressing UTPs at multiple points in the supply chain, the Directive seeks to mitigate these “cascading effects”, and preserve the economic viability of the agricultural community.

Early Assessment: Encouraging Signs but Persistent Challenges

In December 2025, the European Commission published its report on the evaluation of the UTP Directive. While the Directive has only been fully implemented for a relatively short period, the Commission identified encouraging signs for its ability to prevent and combat UTPs.

At the same time, the evaluation highlighted several shortcomings and areas for improvement. Against this backdrop, the Commission subsequently launched a call for evidence to support an impact assessment for the revision of the Directive.

The call identifies two main areas where revision may be warranted: (i) strengthening enforcement and reducing suppliers’ “fear factor” and (ii) addressing uneven performance and strengthening the economic viability of the agricultural community.

A New Layer of Enforcement: Cross-border Cooperation

Separately, a significant recent development is the adoption of Regulation (EU) 2026/697, published on 20 March 2026, which establishes a framework for cooperation among national enforcement authorities responsible for applying the UTP Directive.

The Regulation aims to ensure more effective enforcement by facilitating coordination and information-sharing across Member States. It reflects a broader recognition that unfair trading practices in integrated supply chains often have cross-border dimensions that require coordinated regulatory responses.

The Broader Debate: What Comes Next?

These developments raise important questions for the future of UTP laws in the EU.

Should protection remain limited to suppliers with turnover below €350 million,⁴ particularly in light of increasing consolidation and the growing influence of large retail alliances? Is the agri-food sector unique in warranting such intervention, or could similar imbalances justify extending UTP rules to other industries where retail alliances and online marketplaces exercise significant bargaining power?

As the balance of power between suppliers and buyers continues to evolve, so too will the regulatory landscape. The interactions between these actors, set against the backdrop of protecting the agricultural community, will be one to closely watch in 2026 and beyond.

^{1 It uses annual turnover as a proxy for bargaining power.}

^{2 The €350 million cap reflects a policy assumption that UTP effects are most pronounced for suppliers below that threshold.}

^{3 See for example recent Case C-311/24, Bundeswettbewerbsbehörde, where a retailer in Austria requested 17 of its suppliers to make a contribution to its purchasing transformation process that was unrelated to the sales of agri-food products from those suppliers to the retailer.}

^{4 Some Member States have already lifted this €350 million cap.}

Delay of Silica Rule Amendments, Pending Judicial Review

Thu, 09 Apr 2026 18:42:59 +00:00

MSHA’s recent silica rulemaking publication seeks to clarify compliance obligations. The overview below summarizes the current status of the 2024 Silica Rule and its practical impact on the mining industry.

The Mine Safety and Health Administration (MSHA) has delayed its standard on respirable crystalline silica pending judicial review.

On April 18, 2024, MSHA published its final rule, Lowering Miners’ Exposure to Respirable Crystalline Silica and Improving Respiratory Protection, 89 Fed. Reg. 28218 (2024 Silica Rule).

The 2024 Silica Rule established a standard for lowering the permissible exposure limit for respirable crystalline silica at mining operations. The rule also amended existing safety and health regulations for metal and nonmetal mines to align with the new exposure limit. MSHA originally scheduled the amendments for metal and nonmetal mine operations to take effect on April 6, 2026 (and for coal mines, April 2025).

Following publication, industry groups challenged the 2024 Silica Rule. The court ordered MSHA to stay the compliance deadlines in the 2024 Silica Rule pending judicial review.

On April 6, 2026, MSHA published a notification delaying the compliance deadlines provided by the amendments to the existing standards for metal and nonmetal mines in 30 C.F.R. §§ 56–57. While MSHA describes the compliance deadline delay as “indefinite,” the notice later states that the existing standards remain in effect only “[u]ntil the court’s stay is terminated.”

Essentially, MSHA used the notice as a mere formality to (1) acknowledge that the court paused certain compliance requirements in the 2024 Silica Rule until resolution of the rulemaking challenge, and (2) remind the mining industry that mine operators must remain in compliance with preexisting standards.

The impacted conforming amendments regarding exposure limits and control for airborne contaminants include 30 C.F.R. §§ 56.5001T, 56.5005T, 57.5001T and 57.5005T.

The existing standards set forth in 30 C.F.R. §§ 56.5001, 56.5005, 57.5001 and 57.5005 remain in effect until the court terminates the current stay.

Following publication of the notice, MSHA also issued a program information bulletin reiterating the contents above. The bulletin is available for review here.

Iran War: Implications for Business

Thu, 09 Apr 2026 15:47:06 +00:00

The US-Iran ceasefire agreement should be viewed positively but with caution. The ceasefire has halted the destruction of energy infrastructure in the Gulf, which was increasingly impacting medium-term global supply of oil, gas, critical byproducts and the global economy.

However, a full reopening of the Strait of Hormuz is unlikely in the near term, which will continue to constrain supply chains and the Gulf’s contributions to the global economy. The status of the ceasefire remains in doubt at the time of writing because of a difference between Iran and the US/Israel over whether the ceasefire covers Lebanon. Iran’s position on Lebanon appears to be supported by Pakistan, which mediated the ceasefire, but Israel is adamant that its actions in Lebanon are unaffected by the US-Iran agreement. If this difference is resolved, the ceasefire may be extended beyond two weeks as the Iranians, in particular, seek to prolong negotiations, which is their usual strategy. But a resumption of the war is also a possibility, given how far apart the sides are on fundamental issues. Each side will likely remain on a war-footing until a durable settlement takes hold. Unless there is rapid agreement over the implications of the ceasefire for Israel’s action in Lebanon, we may see two weeks of brinkmanship with the risk of miscalculation leading to a resumption of hostilities.

Status of the Strait – The operating system for the Strait of Hormuz is of prime importance, given the impact its closure had on shipping, insurance and many industries that depend on Gulf energy and byproducts. Short-term arrangements will likely increase the flow of shipping, including through ad hoc payments and arrangements by some countries, but full reopening is likely to be elusive. Major shipping companies will likely take the opportunity to retrieve tankers and cargo ships trapped inside the Persian Gulf, if they can arrange it without sanctions or insurance risk and with clarity regarding whether there are mines in the strait, providing a short-term boost to global supplies of energy and byproducts. But they may not risk sending ships back until a comprehensive peace agreement is reached. Iran will try to make permanent its current control over strait shipping, perhaps shared with Oman, demanding steep concessions on other issues to allow the strait to return to status quo ante. In sum, Gulf shipping is likely to be constrained and costly until confidence in a new system grows.

Global Economic Impacts – If shipping through the Strait of Hormuz remains sharply constrained for months to come, or if fighting and destruction of energy production resumes, global economic impacts could become serious – possibly reaching some level of “demand destruction”, a sustained drop in consumer demand due to high prices or limited supply. If, on the other hand, strait shipping resumes to near pre-war levels in the near-term, the impact on the global economy will be significant but manageable, even as some supply chain disruptions ripple through for months to come.

Beyond Shipping – Air freight through Gulf airports will resume more quickly and robustly than maritime. Expats who evacuated are unlikely to return until there is more clarity on a longer-term settlement, inhibiting the resumption of many business activities. Gulf states will focus on quick rebuilding of damaged buildings and infrastructure, more pipelines to diversify export routes and defenses against drones and missiles. There may be longer-term implications for the geopolitical alignment of some Gulf states as they seek to hedge their bets in an increasingly uncertain world.

Diplomacy – As the conflict shifts from the military to the diplomatic arena, it will be important to assess how the negotiations are organized, including who will negotiate for each side, where, and in what formats. Pakistan, which has strong relationships with China and the US, and has maintained a relationship with its neighbor Iran, has emerged as the key enabling country in finding a way forward. Current reporting indicates Vice President J.D. Vance will lead the US delegation in Pakistan beginning on 11 April, lending unusual stature to negotiations with a pariah regime. Iran is expected to be represented by Parliament Speaker Mohammad Bagher Ghalibaf, who has strong links to the Islamic Revolutionary Guard Corps (IRGC).

Influencing Negotiations – World leaders will seek to influence the negotiations to protect their countries’ economic, commercial and security interests, including visiting Washington DC to meet President Donald Trump. They can be expected to carry messages on behalf of major industries and companies, as will US elected representatives and prominent business representatives.

Bottom Line – Our bottom-line prediction from last week’s report held up well: “While fighting could subside in the coming weeks, a clear resolution that fully reopens the Strait of Hormuz to energy exports, food imports and that encourages an early return of expat executives and workers to the Gulf is unlikely.” While the ceasefire is important relief, the likely roller-coaster of negotiations will prolong uncertainty in the weeks to come.

Sector Analysis

Supply chain pressures have intensified in recent weeks, with the Logistics Managers Index (LMI) rising to 65.7 in March, its tightest constriction since May 2022, after Russia’s full-scale invasion of Ukraine. This is well above the neutral 50 threshold and signals strain across US logistics networks.

Shipping and Logistics

Adjustments in the logistics sector are likely to continue for some time, despite the ceasefire. Global inventories are lean, leaving firms with fewer goods to absorb potential supply shocks, while transportation capacity is tight. These constraints mean that even minor disruptions could still potentially trigger stockouts and market pullbacks in the industry, despite the ease that the ceasefire offers.

For shipping, the economic impact has been magnified by the extended period of the disruptions in the Strait of Hormuz. Over 34,000 ships were diverted during the first four weeks of the conflict, effectively shuttering most shipping activity from the Persian Gulf. Now that the activity might be resumed, stakeholders are reluctant to move without clarity. The Japanese Shipowners’ Association, for example, has announced that it will first examine the specifics of the ceasefire agreement before communicating guidance to its members about how to proceed in the region.

Even if the ceasefire quickly reopens the strait to cargo shipping traffic, the insurance market behind these vessels will be much slower to act. Restoring large-scale shipping through the Strait of Hormuz depends on tanker owners regaining confidence and reestablishing insurance, even as the specific conditions and “technical limitations” imposed by Iran remain unclear. The instability of the region, even under a ceasefire, will continue to be a disruptive factor. So, it is unlikely that traffic through the Strait will return to preconflict levels until a more formalized negotiation and end of hostilities takes place.

Plastics and Synthetics

Pre-conflict, roughly US$20-25 billion in petrochemical products passed through the Strait of Hormuz annually; the war’s disruptions have pushed prices significantly higher across industries that rely on petrochemicals and plasticderived components, such as electronics, synthetic textiles and toys. Critical industrial gases have been affected as well, like helium, which is commonly used in semiconductor manufacturing. Furthermore, repairs to critical infrastructural assets, like Qatar’s Ras Laffan LNG facility, which resulted in a shorting of 4% of global liquified natural gas (LNG), will likely require several years to restore to full operations.

Agriculture

The agricultural sector is also facing severe disruption due to the rising costs of fertilizers like nitrogen, urea and ammonia, which is already impacting American farmers’ planting decisions. Farmers are shifting to more soybeans over corn primarily due to lower production costs, especially for fertilizer, and higher export demand for biofuel. While the short-term ceasefire may allow shipments of these petrochemicals to reach fertilizer producers, the significant supply chain disruption and risk of future conflict will prevent rapid production of these much-needed agricultural products.

Mining and Heavy Industry

Mining and other heavy industry operating diesel generators and equipment has and will continue to see disruption due to supply shortages and price increases of fuel. This impact is especially pronounced in regions like Sub-Saharan Africa, where mining operations often lack access to local power grids and must rely on diesel generators. Many mining operations typically maintain only a four-week fuel supply onsite. Since the conflict has neared the six-week mark, these fuel reserves are being depleted.

What Next?

Despite the ceasefire, regional instability and tensions will persist; political disagreements may delay full normalization of shipping and production in the region. Ensuring ongoing stability will be a necessary first step ahead of the reopening operations. Buyers and insurers will likely remain cautious until long-term stability is established. Beyond security in the region, the “domino effect” of logistics planning will take time to fully reset. Obtaining contracts and investments and providing an environment for insurers and shippers to re-engage will all take time and strong signals of stability. Afterwards, producers will need to draw down their current stores of crude oil, to make room for new stores. Critical production infrastructure, like wells, will have to be assessed and repaired as needed. Then refining operations could begin renewed production, and the loading and exporting of refined products could potentially begin. However, even after onthe- ground operations resume, markets may remain volatile for some time. New regulatory measures and supply chain restructuring may need to be coordinated, all of which will contribute to a slower recovery to global markets.

2026 Update: LNG and Gas Developments in Europe in the Wake of Conflict: Is 2026 the New 2022?

Wed, 08 Apr 2026 09:00:00 +00:00

The role of liquified natural gas (LNG) in Europe has evolved significantly in the last five years, with every indication that the ship-transported fuel – and the disputes that go with it – will continue to be a mainstay in the European energy mix.

This article reflects on the changed role of LNG in Europe over the last several years and addresses certain of its ongoing challenges, including those arising in light of the 2022 Russian cuts to pipeline gas and the latest developments in the Middle East. For those European buyers entering the LNG market or expanding their portfolio within it, a close consideration of contractual terms and the context in which they may be exercised will be an issue of top priority.

Read full insight to learn more.

Implementation of the EU Pay Transparency Directive – The Latest Position

Tue, 07 Apr 2026 09:51:25 +00:00

With less than three months to go until the Pay Transparency Directive comes into force, we are starting to see more EU member states take steps to prepare for its implementation. Progress is, however, still slow. This is not a reason for employers not to take action! We would continue to urge affected companies to be taking steps now to comply with the requirements of the Directive. It seems that, as was the case with the Whistleblowing Directive, many member states will be issuing draft legislation late in the day. This makes things very difficult for employers, but as the minimum requirements of the Directive are clear, employers should be using these as the framework for their preparations.

In the latest version of our “snapshot” guide, we have collaborated with our Global Edge contributors to set out the current state of play in 19 key EU member states, including an indication of the likely scale of change in different jurisdictions and the potential need for union/works council consultation along the way.

As the UK is no longer a member of the EU, it will not be required to implement the Directive. To the extent UK companies have operations in continental Europe, however, it will, of course, still be relevant. Greater transparency in pay practices and procedures in EU member states is also likely to raise the profile of this issue in the UK and potentially trigger demands from UK staff or similar information.

We also track pay transparency developments on our award-winning subscription-based platform, Global Edge. Existing subscribers can access the Pay Transparency At a Glance Guide here. For more information about subscribing to Global Edge or to organise a demo or trial access to the platform, please email us.

BSA: Building Liability Orders – A Just and Equitable Perspective

Thu, 02 Apr 2026 16:25:59 +00:00

Constable J in Crest Nicholson Regeneration Ltd & Ors v Ardmore Construction Ltd (In Administration) & Ors [2026] EWHC 789 (TCC) has delivered a highly anticipated judgment concerning, among other things, when it will be “just and equitable” to grant a Building Liability Order (BLO) pursuant to Section 130 of the Building Safety Act 2022 (BSA).

This is only the second case to consider the just and equitable test in the context of a BLO, following Jefford J’s judgment in 381 Southwark Park Road RTM Company Ltd & Ors v Click St Andrews Ltd & Anr [2024] EWHC 3179 (TCC).

We understand that the Ardmore group intends to appeal the judgment, and we expect industry stakeholders will be following the appeal closely.

Facts

Between 2007 and 2009, Ardmore Construction Ltd (ACL) was engaged by Crest Nicholson Regeneration Ltd (CNR) as the main contractor to design and build Admiralty Quarter in Portsmouth, which is a complex of 19 residential apartment buildings.

Following the tragedy at Grenfell Tower on 14 June 2017, investigations into the external walls of Admiralty Quarter were carried out. Following which, a series of fire safety risks were discovered.

Ultimately, adjudication proceedings were issued against ACL on 29 August 2025 relating to alleged breaches of contract and duties under the Defective Premises Act 1972 (DPA). The adjudicator ordered ACL to pay circa £14,928,320.40 (the Award).

Following the adjudication, the current BLO proceedings were commenced against ACL’s associated entities and sought:

An “anticipatory” BLO in advance of ACL being found in breach of its obligations under section 1 of the Defective Premises Act 1972 by a court.
An “Adjudication BLO”, which would make ACL’s associated entities jointly and severally liable for the Award

Key Takeaways

While the judgment touches on many important features of the BSA and should be read in full, if possible, we highlight the following key matters:

A BLO can be brought even when the primary liable party (the “original body” as defined in section 130(2) of the BSA) has entered insolvency.
An adjudicator may determine a relevant liability, particularly in the context of DPA liabilities, for the purposes of a BLO. This is important because it is not necessary for a party to become embroiled in lengthy litigation to establish the liability of the original body.
A BLO can be obtained before, or in “anticipation”, of the underlying relevant liability being established. In the judgment, a BLO was likened to an a “indemnity”. A party can therefore bring a BLO application separate from (and in advance of) the underlying proceeding concerned with establishing the original body’s liability. The claimant can then seek to rely on the BLO when the liability proceedings are determined.
The court considered the scope of the BSA and stated the following: “in the context of Section 130, the emphasis placed on domestic property holders and a nexus with facilitating the actual carrying out of works is misplaced”. We consider this indicates a broader application of a BLO, as compared with a Remediation Order and Remediation Contribution Order (RCO). Please check out the next edition of Building Safety F(ACT)s for further commentary on this point.
An in-depth analysis was provided on when it may be just and equitable to grant a BLO. While useful, the court emphasised, like with an RCO, much will turn on the facts of each individual case and the court’s discretion when deciding whether to grant a BLO is deliberately broad.
It was confirmed (again) that claims under the Defective Premises Act 1972 may be pursued in adjudication. This is important as it is not necessary for a party to become embroiled in lengthy litigation to establish a relevant liability on which a BLO may attach.

Practical Considerations

The following practical considerations are important in light of the judgment:

Appreciate potential exposure – Any party who is or may become involved in BSA claims and disputes must ensure they identify and manage potential exposure and liabilities. Such considerations will necessarily extend to future restructuring or acquisitions.
Speed – We anticipate that this judgment may result in a faster resolution of BSA claims (even if on a temporary basis). It is crucial that stakeholders appreciate the options available to them at the outset to ensure they navigate this complex and evolving area of law.
Strategy – Disputes can be expensive and time consuming. It is therefore crucial that stakeholders are proactive in positioning themselves from the outset, to allow them to maximise their potential recovery or defence as against expenditure in both time and cost.

We have an expert team of BSA lawyers who are available to assist with any queries so please do not hesitate to contact us.

Iran War: Implications for Business

Thu, 02 Apr 2026 13:53:27 +00:00

In his April 1 address, President Donald Trump shed little new light on the Iran war and did not comment on its impact on international business, other than gas prices and the stock market. While repeating the war would end soon, at one point suggesting two to three weeks, he pledged to hit Iran extremely hard over that period, especially if it does not agree to a deal. He did not include reopening the Strait of Hormuz among US war aims, suggesting that the “strait will open naturally,” and reiterating his view that countries that depend on oil from the Gulf should take on that task militarily.

The unexpected escalation and duration of the war, and its likely messy aftermath, continues to expand risk and certain opportunities for a wide range of global industries. Piling on top of geopolitical disruptions unprecedented since World War II – COVID-19, Russia’s invasion of Ukraine, regime change in Venezuela, US tariffs and broader trends of Chinese overcapacity and European deindustrialization – businesses and governments must now constantly reassess supply chains and investment decisions.

Iran fired more missiles and drones at Israel and Gulf states after President Trump’s speech. Iran’s strikes on Gulf energy infrastructure are now impacting longer-term global energy supply, not just availability, due to the effective closure of the Strait of Hormuz. Refined and associated products such as jet fuel, urea, ammonia and helium are also impacted, not only from the Gulf, but from countries such as China and South Korea that have restricted exports to protect domestic consumers, with implications for global fertilizer supply and semiconductor manufacture. Attacks and threats from both sides have broadened to include universities and businesses of all types. A potential US ground incursion, which President Trump did not mention in his April 1 address, would trigger intensified Iranian retaliation in the near term. US attacks on Iran’s domestic power or desalination infrastructure, which President Trump threatened, would trigger Iranian attacks on equivalent infrastructure in the Gulf countries, with serious implications for sustainability of certain population centers.

The implications for Gulf countries are already serious, affecting the successful low-tax business and tourist economies that those countries have built in recent decades. There have been some reports of expat employees moving their families out, and of ultra-high net worth individuals moving, temporarily or permanently, elsewhere. But a lot of expat employees seem to be staying put: there have been some reports of Gulf-based employers insisting on presence in the office to try to stem any flow, but many employers are allowing a high degree of remote working and schools are operating remote learning. Distribution of Dubai’s US$270 million “business support package” began on 1 April.

Rapid deescalation, and a visible change in the Iranian regime could make these short-term effects from which the Gulf countries recover quite quickly. But the persistence of threat from a non-reformed Iranian regime would have lasting effects even if the immediate intensity of hostilities reduces.

Despite President Trump’s expectation that the war will end in two to three weeks, it will not end cleanly and possibly not that soon, carrying growing implications for international business. Both sides believe they are winning and neither has clear strategic goals. The US and Israel are dominating the military war, but Iran is winning the economic war. There is an imbalance in what might constitute victory; for the US and Israel, there are a range of objectives including destroying Iran’s nuclear program, destroying Iran’s ballistic missile program, ending Iran’s support for terrorist proxies or regime change. For Iran, survival of the regime is success. The most important question: who will win the political war; in other words, which side’s motivation to keep fighting ends first, or does the war continue to escalate? Here are several scenarios:

President Trump declares victory and the world pressures Iran to stop its attacks. Iran may pause, but will threaten to resume strikes unless the US accepts difficult conditions (such as sanctions relief or reduced US military presence in the Gulf). The Strait of Hormuz could reopen partially, perhaps with naval escorts, allowing only a portion of the 100-150 ships crossing per day pre-conflict. This is the most likely deescalation scenario in the coming weeks, but it would not cleanly end the conflict, nor fully reopen the strait. For the longer term, Iran would likely resume its nuclear and ballistic missile programs, leading to the need to address these issues again in a few years.
The US and Iran both declare victory and virtually all attacks cease, including by Israel. The Strait of Hormuz reopens, and energy prices fall. This scenario is very unlikely absent a convincing threat to the regime’s survival. The regime’s pain threshold is very high, and its goal is to reestablish deterrence to prevent future attacks. The regime believes a longer, larger war strengthens its hand on settlement terms and reduces the risk of a future military campaign of this kind by the US and Israel.
Iran’s regime changes to become willing to deal with the US and Israel. This outcome, along Venezuela lines, is President Trump’s preference, but is very unlikely. There are no signs of cracks within the regime nor, so far, of an uprising to overthrow it. The hardline Islamic Revolutionary Guard Corps (IRGC) is ideologically committed and deeply embedded across the country and its institutions. The Iranian regime has made a practice over many years of quasi-engagement to buy time and obfuscate, and the currently highly fragmented leadership model makes identifying valid interlocutors very hard. The Israeli-led program of assassination of regime leaders has removed some of those who could have facilitated an outcome along the lines of Venezuela. Anyone purporting to speak authoritatively for the regime in reaching an agreement with the US in current circumstances would be at high risk of denunciation and removal by IRGC hardline elements.
Iran fragments, disintegrates or descends into civil war. This may be Israel’s preferred outcome to weaken Iran long-term, but the US is more interested in a stable Iran with business opportunities. Control of the Strait of Hormuz would be uncertain, as would Iran’s nuclear program. And terrorist groups could take advantage of uncontested space in a disintegrating Iran. This would be a very dangerous outcome for long-term global stability.
More escalation – Further US/Israeli attacks on Iran’s power and desalination plants, as President Trump threatened, or a US ground incursion to seize Iran’s Kharg island to control its oil exports or the Qeshm, Larak and Hormuz islands to control the strait could trigger further Iranian attacks in the Gulf, including on high tech US investments and Gulf production and refining facilities, removing more oil and gas supply. In extremis, Iran could seek to render life in certain Gulf states increasingly difficult, through increased attacks on energy infrastructure and water desalination plants. The Houthis have threatened to reopen a second front by resuming attacks on shipping in the Red Sea.

The Bottom Line

While fighting could subside in the coming weeks, a clear resolution that fully reopens the Strait of Hormuz to energy exports, food imports and that encourages an early return of expat executives and workers to the Gulf is unlikely. Iran retains drone and ballistic missiles, albeit in reduced quantities, plus cyber and terrorist attack capabilities to prolong the war. Escalation with further long-term implications is also a real possibility.

Takeaways from the war so far:

Gulf reputations and risk premiums as stable locations for exports, investments and connectivity have been damaged, even as country leaders actively seek to preserve their business-friendly environments.
The US and other governments will double down on establishing resilient, multiple supply chains and domestic production for a growing number of strategic industries after witnessing the outsized impacts of Iran’s chokehold on the Strait of Hormuz. These efforts will take years, and significant government and private sector investment.
The range of industries impacted by the war includes chemicals, semiconductors, aerospace, automotive, shipping (including air freight), ports, insurance, fertilizer, remittances and of course defense and energy. The Gulf is more central to the interconnected world economy than many realized.
The US reaction to European governments’ unwillingness to participate in military operations to keep the Straits of Hormuz open during this active phase of the war risks greater transatlantic divergence, undermining the US commitment to NATO and accelerating European aspirations to strategic autonomy, with implications for transatlantic trade in critical materials, technology and defense.

This war is a stark reminder that geography and geopolitics – where a company buys, sells, invests and hires – matters now more than ever. In a world of conflict, commercial activity has become central to countries’ national security. A growing number of industries are now considered strategic due to their dependencies on other countries’ supply chains or connectivity. In the US, commercial regulations or disputes that were previously the purview of independent government agencies, based on technical or commercial factors, are now eventually decided by a small group of national security officials.

At Squire Patton Boggs, we see this dynamic every day as we help companies navigate risk and find opportunities in a new world where politics, policy, law and regulations impact company and investor decision-making more intensively than ever.

Key UK Legal Topics: What Do Hotels/Higher Risk Buildings Need To Be Aware Of?

Thu, 02 Apr 2026 09:47:12 +00:00

The Building Safety Act 2022 (BSA)

Does the BSA Apply to Hotels?

The BSA introduced a rigorous regime focusing closely on “higher-risk buildings” (HRBs), defined as:

Being at least 18 metres in height or having at least seven storeys
Containing at least two residential units

Hotels are currently excluded from the definition of an HRB. However, this exclusion only applies where the building is being used solely and entirely as a hotel. This means that, if you own a hotel, the BSA could apply to your building if:

The accommodation provided is serviced apartments.
The building provides short term lets.
The hotel forms part of a mixed-use development/is located within a building that includes residential units.

Who Is Responsible for Compliance With the BSA?

The person or entity that is responsible for the repair and maintenance of the relevant parts of the structure and exterior of the building will be referred to as the “accountable person”. This will usually be:

A person who holds a legal estate in possession in any part of the common parts – where the property has been let, the person responsible for the repair works under the relevant lease(s) will be the person responsible for compliance with the BSA.
A person who does not hold a legal estate in any part of the building but who is responsible for the repair/maintenance of any part of the common parts (for example, a managing company).

Key Responsibilities of the Accountable Person Under the BSA

Regularly assess the potential risks that could arise from the building as a result of structural failure or the spread of fire to part of the building
Take reasonable steps to prevent a building safety risk from materialising, or to reduce the severity of any incident that could occur
Prepare, update and maintain a safety case report for the building and provide a copy of the report to the building safety regulator if required to do so
Establish a system for reporting any significant incidents or risks to the building (known as a “mandatory occurrence”)
Provide information to residents, as required, and implement a strategy for promoting participation of any residents/property owners in building safety decisions
Keep and maintain the information required under the BSA and associated regulations

Breach of Duties Under the BSA

Failure to comply with the BSA can result in:

The regulator issuing a compliance notice (a notice that requires the accountable person to do something)
An unlimited fine
Criminal prosecution

Construction Considerations

During the construction and development phase, the BSA imposes key obligations and responsibilities on those who are appointed as “duty holders” who will be held responsible and accountable for the safety of the building during the construction phase. This can include:

The developer(s)
The person/entity commissioning the work
The contractor(s)
The designer(s)

The general responsibilities for each duty holder include ensuring:

The building work complies with the BSA
Information related to the works is shared and held securely
Where necessary, the relevant applications have been made to the building safety regulator and the relevant approvals obtained
All parties appointed to the project are competent and have the necessary skills, knowledge, experience and behaviours to carry the work they are instructed to do

Combustible Materials Ban

Hotels in England are now banned from using combustible materials in external walls of buildings that are more than 18 metres in height.

Electronic Communications Code 2017 (Code)

Who Are Operators?

Certain companies that have been authorised by Ofcom to exercise rights under the Code. A list of authorised operators can be accessed on the Ofcom website.

Operator Rights

Operators have numerous rights under the Code, but these are the rights we see exercised and disputed most often in relation to HRBs:

Granting of temporary or permanent rights for occupation or access over land
Having utilities installed over land
Granting of a lease, licence and ancillary rights to:
- Install apparatus on, under or over land and buildings (usually on rooftops of HRBs and hotels)
- Inspect, maintain, adjust, alter, repair, upgrade or operate apparatus
- Carry out works on land or buildings for or in connection with the installation, maintenance, adjustment, alteration, repair, upgrading or operation of the apparatus on land or buildings

Who Are Occupiers?

Landowners (freeholders)
Tenants under a lease (leaseholders)
Occupiers under a licence or other agreement (e.g. a farm business tenancy)

Note that some nonoccupiers may still be bound by an operator’s code rights.

Occupier Rights

Occupiers can serve statutory notices to:

Remove an operator situated on their land or building(s) only in limited circumstances, the most common of which are:
- An occupier intends to redevelop its land or building(s)
- An operator has persistently failed to make payments under a Code agreement
- An operator has committed other breaches of a Code agreement
Force an operator to remove its equipment where its permission to access/remain on land or buildings has come to an end
Seek compensation under the Code where an agreement is imposed or where agreements under the Code provide for the same

Impact of Operator’s Rights on Hotels and HRBs

The presence of telecommunications equipment on a building can present many issues for occupiers, such as:

Operational constraints, such as restricting any commercial development that the business may wish to carry out and adding complexity to necessary repairs and maintenance, particularly as to rooftop works.
Health and safety issues. While operators have responsibility for the health and safety of their sites and equipment, occupiers will retain responsibility under the BSA for buildings as a whole and are responsible for holding “the golden thread of information”, which may necessitate procuring information from any operators present on a building.
Competing interests for rooftop space and/or works thereon where space is required for air conditioning and other equipment servicing buildings, particularly where multiple operators are present on one building.
Given how consideration is determined through Paragraph 24 of the Code, the level of rent that can be obtained from operators for placing equipment on land or buildings is limited.

Overview

BSA 2022

It is crucial that hotel owners, operators and developers are aware of who holds the responsibility for the various requirements set out within the BSA. These include legal duties, reviewing compliance processes, taking reasonable measures to ensure the competence of all duty holders, ensuring the relevant gateway certificates are obtained and that all important safety information is secured in line with “golden thread”.
Hotels should therefore seek professional legal advice on the implications of the BSA, in order to act decisively with regard to all legal requirements and to demonstrate to investors, guests, employees and customers that building safety is a key priority for the business.

Electronic Communications Code

Given the implications of the Code and the extensive rights that are granted to operators, it is crucial that hotels are able to seek legal advice in relation to their rights and when negotiating agreements to provide them with sufficient protections in relation to their building safety and business operations.

Gulf War, Fast Justice – The Case for Expedited Arbitration in LNG Disputes

Thu, 02 Apr 2026 09:24:55 +00:00

As the war in the gulf enters its fifth week, the Strait of Hormuz remains effectively blocked. This data shows that daily traffc through one of the world’s most important shipping lanes is down 95% since the beginning of the war.1 In parallel, Iran’s missile and drone strikes on the Ras Laffan facility, reportedly impacting two liquified natural gas (LNG) trains, have prompted a chain reaction of force majeure declarations from the gulf into wider energy markets.

Tremors of the macroeconomic impact of this disruption are already being felt around the world, with some fearing an oil price-induced global inflation shock. Meanwhile, market participants are facing immediate legal, commercial and operational risks, which in some cases may evolve into disputes. In the context of the LNG industry, those disputes may concern disagreements on contract interpretation and claims advanced under contractual provisions for force majeure, annual programming, restoration, make-up entitlement, failures to deliver, hardship and price reviews.

This article, which supplements several other recent insights from our global team on issues arising from the gulf conflict, explores the use of expedited arbitration as a means of resolving such disputes in an effcient and expeditious manner.

UK Employment Law – What’s Coming Into Force in April?

Wed, 01 Apr 2026 16:39:21 +00:00

April is a busy month on the legislative front, as a number of the changes contained in the Employment Rights Act 2025 will come into force, as well as the usual annual uplifts, etc.

Below is a quick reminder of the key employment law changes coming into effect this month.

1 April 2026 – National Minimum Wage/ National Living Wage

The National Living Wage (NLW) for workers aged 21 and over will increase to £12.71 per hour.

The revised hourly National Minimum Wage (NMW) rates that also take effect on 1 April 2026 are:

Workers aged 18-20 – £10.85
Workers aged 16-17 – £8
Apprentices – £8

4 April 2026 – Gender pay gap reporting

Private sector employers in Great Britain with 250 or more employees must publish their gender pay gap reports for the 2025/26 reporting year on or before 4 April.

Remember, affected employers will have the option on the gender pay gap reporting service to publish a voluntary action plan alongside their gender pay gap data for the next reporting year (2026/27). These action plans will become mandatory for the 2027/28 reporting year.

5 April 2026 – Increased Statutory Maternity Pay (SMP) rate for 2026/27

From 5 April, SMP will increase from £187.18 to £194.32 per week.

6 April 2026 – Increased benefit rates for 2026/27

From 6 April, Statutory Paternity Pay (SPP), Statutory Adoption Pay (SAP), Statutory Shared Parental Pay (SSPP), Statutory Parental Bereavement Pay (SPBP) and Statutory Neonatal Care Pay (SNCP) will increase from £187.18 to £194.32 per week.

The rate of Statutory Sick Pay (SSP) will also increase from £118.75 to £123.25 per week.

Remember, the changes to SSP entitlement (namely, no three-day waiting period and no Lower Earnings Limit) will also come into force from 6 April , subject to transitional provisions. HMRC has issued guidance for employers on how to deal with sickness absences that start before and end on or after 6 April 2026.

The amount of SSP payable will be the lower of the statutory rate set out above and 80% of the employee’s normal weekly earnings. See our previous checklist for details of the changes that will be required to your sickness absence policies.

From 6 April, statutory paternity leave and parental leave will also both become “day one” rights, and the prohibition on taking paternity leave after a period of shared parental leave will also be removed. See our previous checklist for details of the changes that will be required to your policies.

6 April 2026 – Bereaved partner’s paternity leave

As per our recent alert, a new statutory right to bereaved partner’s paternity leave will come into force from 6 April.

6 April 2026 – Tribunal compensation limits

New limits on certain Employment Tribunal awards will come into force on 6 April. The two key changes are:

The limit on the compensatory award for “ordinary” unfair dismissal will increase from £118,223 to £123,543
The maximum amount of a week’s pay for calculating statutory redundancy payments and the unfair dismissal basic award increases from £719 to £751

These new limits will apply to dismissals that take effect on or after 6 April.

Note that the cap on the compensatory award for “ordinary” unfair dismissal is currently the lower of the statutory limit set out above and 52 weeks’ pay of the individual concerned. As previously highlighted, this statutory cap will be removed with effect from 1 January 2027.

6 April 2026 – Protected disclosures – sexual harassment

The whistleblowing provisions in the Employment Rights Act 1996 will be amended to provide that a report that sexual harassment has occurred, is occurring or is likely to occur will amount to a protected disclosure for whistleblowing purposes. See our previous checklist for details of the changes that will be required to your whistleblowing policy.

6 April 2026 – Collective redundancies – increase in protective award

The current maximum penalty that can be awarded by an Employment Tribunal for a breach of the collective redundancy consultation obligations is 90 days’ actual pay per affected employee. In relation to dismissals taking effect on or after 6 April, this will be doubled, i.e. 180 days’ actual pay per affected employee.

6 April 2026 – Duty to keep annual leave records

The Working Time Regulations (WTR) 1998 will be amended from 6 April to place a new obligation on employers to keep “adequate” records to show they have complied with their obligations to provide statutory holiday and holiday pay to their workers. The Employment Rights Act 2025 states that such records “may be created, maintained and kept in such manner and format as the employer reasonably thinks fit”, thus on the face of it giving employers a degree of flexibility concerning the records they keep. Such records must be kept for six years from the date on which they are made. It will be an offence, punishable by a fine, to fail to comply with this duty, as is the case for certain other breaches of the WTR. The government only announced recently that this change was coming into force from 6 April, so employers need to review their current recordkeeping obligations promptly to ensure they are compliant.

6 April 2026 – Trade union recognition

The changes to statutory trade union recognition set out in the Employment Rights Act 2025 will come into force, including the removal of the 40% support threshold for recognition ballots so that trade unions only require a simple majority of the workers voting to win.

7 April 2026 – Fair Work Agency

The Fair Work Agency will be established.

The above update covers England and Wales.

Oil Reserves in a Volatile Geopolitical Environment – A Focus on EU Stockholding Obligations of Economic Operators

Wed, 01 Apr 2026 15:00:00 +00:00

Context: Renewed Focus on Oil Reserves in a Volatile Geopolitical Environment

Recent geopolitical developments, including disruptions affecting key global shipping routes in the Middle East and increased instability in energy supply chains, have brought renewed attention to the resilience of oil supply systems in Europe. Although no immediate supply shortage has materialized so far, the current environment has heightened concerns regarding the reliability, accessibility and availability of petroleum products across the EU.

In this context, strategic oil reserves, long regarded as a largely technical compliance requirement, are re-emerging as a central component of energy security policy. EU institutions and Member States are expected to place greater emphasis on ensuring that existing stockholding mechanisms are robust, enforceable and capable of responding effectively to potential supply disruptions.

This may occur in the context of EU Oil Stocks Directive (Directive 2009/119/EC of 14 September 2009, available here), which imposes an obligation on Member States to maintain minimum stocks of crude oil and/or petroleum products.

As a result, companies operating in the oil and refined products markets should anticipate increased regulatory scrutiny, particularly in relation to compliance with stockholding obligations and the effectiveness of their underlying arrangements.

Legal Framework: EU Obligations on Oil Stockholding

The relevant core obligation is established under Article 3(1) of the Oil Stocks Directive. Member States must maintain minimum stocks equivalent to at least 90 days of average daily net imports, or 61 days of average daily inland consumption, whichever is greater.

This obligation is formally imposed on Member States. In practice, however, it is typically implemented through national legislation that places corresponding obligations on economic operators, including refiners, importers and traders.

The directive allows significant flexibility in implementation. As a result, differences exist between jurisdictions in the identification of concerned entities, the methodologies used to calculate stockholding requirements, the products covered and the applicable reference periods. Divergences also arise in the use of central stockholding entities, the availability of compliance mechanisms such as ticketing arrangements as opposed to physical storage and the rules governing cross-border storage and the recognition of stocks held in other Member States.

This fragmentation creates a complex compliance landscape for companies operating across multiple jurisdictions.

Impact on Affected Companies

So far, no changes have been made to the regulatory framework, despite the geopolitical situation. Nevertheless, the current outlook increases both regulatory and operational exposure for companies subject to stockholding obligations.

Companies should reassess their compliance frameworks, considering the possibility of heightened scrutiny. This includes verifying the accuracy of stock calculations under applicable national rules, confirming the correct classification of eligible products and ensuring that reporting processes and audit trails are robust and defensible.

Companies should prepare to monitor and respond to potential national measures. These may include compulsory stock release obligations, export restrictions or measures prioritizing domestic supply. Each of these scenarios may have significant legal and contractual implications, particularly for companies relying on cross-border arrangements or third-party storage.

National authorities are expected to intensify oversight activities. Increased audit activity and stricter enforcement of compliance requirements are likely to be in the near term.

How We Can Support

In this environment, companies benefit from targeted legal and regulatory support designed to ensure compliance under conditions of heightened scrutiny. This includes comprehensive assessments of stockholding obligations across relevant jurisdictions and detailed analysis of compliance methodologies under national law.

Support may also include regulatory stress testing to assess exposure under potential emergency measures, as well as assistance in audits, investigations and enforcement proceedings. Strategic advice on the structuring of stockholding arrangements can help companies balance compliance obligations with cost considerations and operational flexibility.

We have experience advising companies on obligations arising from the implementation of Directive 2009/119/EC at the national level across several jurisdictions, including in cross-border contexts. This allows us to deliver practical and commercially focused advice tailored to the regulatory frameworks applicable to each client.

In the current climate of geopolitical uncertainty, the ability to combine legal expertise with strategic insight is critical. Squire Patton Boggs’ Public Policy Practice, with offices in key jurisdictions, enables us to monitor regulatory developments closely, anticipate policy shifts and provide forward-looking guidance.

We are well-positioned to assist companies in navigating increased regulatory scrutiny, mitigating compliance risks and adapting their stockholding strategies to an evolving and uncertain energy landscape.

The Impact of Major Supply Chain Shocks on Contracts for the Manufacture, Distribution and Sale of Goods

Wed, 01 Apr 2026 12:40:37 +00:00

Yet another shock to the supply chain has emerged from the US/Israel/Iran war, which has quickly expanded to include Iranian attacks on Bahrain, Cyprus, Jordan, Kuwait, Oman, Qatar, Saudi Arabia and the UAE.

Linked to all of this is the impact on the ability of all affected countries to export oil via the Strait of Hormuz (currently closed). There are also expected impacts on all maritime trade that flows through the Red Sea and the Suez Canal, as well as all air cargo that flies across the Middle East and via hub airports in the Middle East.

As with many other supply chain shocks of recent years, the speed and scale of the escalating situation across the Middle East have taken many businesses by surprise, although tensions had been rising. This is not dissimilar to other major events, whether they be natural disasters affecting major industrialised countries, Brexit, COVID-19, the Russia/Ukraine conflict or the global cost of energy crisis, which have all had and, in some instances, continue to have major adverse impacts on the ability of companies to source, manufacture and sell raw materials, commodities, components, finished goods and services.

The occurrence of these events has placed businesses under extreme pressure for a considerable period of time as the events continue for months or years, rather than being a one-off occurrence. These events are often compounded by other issues relating to tariffs, energy prices and changes in tax, employment and other policies of national governments.

The impact of all “unexpected” events is that they must be managed simultaneously by businesses and, as such, the effects of these events may be difficult to separate from other supply chain shocks. For example, the impact of digitisation, artificial intelligence and “as-a-service” business models is also having a dramatic effect on the nature of what many companies produce, as well as how companies bring the goods that they produce to market.

As a result, existing supply chain contracts may require renegotiation if businesses are to remain viable, while greater care will be needed to ensure that new contracts provide appropriate protection when dealing with fast-changing conditions.

This note considers some of the key contractual issues that businesses (particularly those involved in the manufacture, distribution and sale of products) need to consider as they assess their critical needs, vulnerabilities and protections alongside their ability to mitigate risks, both under existing contracts and as they develop new contractual arrangements.

In addition, many of the practical tips apply equally well to businesses that may need to look to renegotiate failing contracts, particularly where one party finds itself under financial pressure, either generally or as a result of an existing contract that is either onerous, or that does not provide adequate protection as regards supply chain issues.

To read the full insight, click here or download the PDF using the button above.

Family Office Insights: FinCEN’s New Residential Real Estate Reporting Rule

Wed, 01 Apr 2026 12:20:00 +00:00

Real estate is a critically important asset class to many family offices. Our global Real Estate Practice monitors market and regulatory developments in the real estate sector around the world to provide our clients with real-time information and expertise.

Last month, the US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) implemented its Residential Real Estate Reporting Rule (RRE Rule), a new antimoney- laundering (AML) reporting obligation that applies to certain residential real estate transactions in the US, and we have summarized the RRE Rule and its requirements below.

Current Pause on Reporting Requirements

On March 19, 2026, the US District Court for the Eastern District of Texas issued a decision in Flowers Title Companies, LLC v. Bessent, No. 6:25-CV-127-JDK, 2026 WL 782283 (E.D. Tex. Mar. 19, 2026), vacating the RRE Rule. Specifically, the court held that FinCEN lacked the statutory authority under the Bank Secrecy Act to impose the RRE Rule, and ordered it vacated. In response to this decision, on March 20, 2026, FinCEN issued the following statement: “In light of a federal court decision, reporting persons are not currently required to file real estate reports with FinCEN and are not subject to liability if they fail to do so while the order remains in force.” Accordingly, parties otherwise subject to the RRE Rule are not currently obligated to submit a Real Estate Report or otherwise comply with the requirements of the RRE Rule. Our global Real Estate team will be monitoring the rulemaking in this space, and interesting parties should standby for further developments.

Introduction to the RRE Rule

Effective March 1, 2026, FinCEN implemented the RRE Rule, a new AML reporting obligation that applies to certain residential real estate transactions across the US. The RRE Rule will require specified categories of professionals involved in real estate closings and settlements to submit reports (Real Estate Reports) to FinCEN regarding certain non-financed transfers of residential real property to legal entities or trusts. Specifically, a Real Estate Report must be filed when the following four conditions are met: (i) the transaction involves residential real property; (ii) the transfer is non-financed; (iii) the property is transferred to a legal entity or trust and (iv) no exemptions apply.

What is Residential Real Property Under the RRE Rule?

For the purposes of the RRE Rule, “residential real property” is defined as real property containing a structure designed principally for occupancy by one to four families.

This definition includes an individual unit within a larger residential structure designed principally for occupancy by one to four families. Critically for real estate developers and investors, the RRE Rule also applies to raw land where the transferee intends to build one or more structures designed principally for occupancy by one to four families.

However, this definition does not encompass transactions where an entity purchases developed lots, if the developer only intends to hold the lots as a “landbank,” or otherwise subdivide and sell the lots to third-party builders (who would then construct homes after acquiring title), as such transferee would not “intend to build” a residential structure during its period of ownership.

In addition to the acquisitions of real property described above, the transfer of residential real property under the RRE Rule includes sales of shares in a cooperative housing cooperation if the underlying property is located in the US.

What Constitutes a “Non-financed Transfer”?

A transfer of residential real property is considered “nonfinanced” if either (1) no financing was used at all, or (2) any financing received by the transferee is neither secured by the transferred property, nor extended by a financial institution subject to FinCEN’s AML program requirements and suspicious activity reports (SAR) obligations. Thus, transfers that are financed by financial institutions that have an obligation to maintain an AML program, and are required to file SARs are not subject to additional reporting under the RRE Rule. However, transactions involving cash purchases or financing from private parties (such as debt funds and other sources of private credit) will require reporting under the RRE Rule.

Reporting Requirements and Timeline Under the RRE Rule

The individual required to file the Real Estate Report with FinCEN under the RRE Rule is known as the “Reporting Person”. On the Real Estate Report, the Reporting Person must submit information to identify the Reporting Person, the real property being transferred, the transferee entity or trust (including, if the transferee is a trust, the identity of any entity trustee), the beneficial owners of the transferee, certain individuals representing the transferee and the transferor. The Reporting Person must also report the total consideration paid for the property, along with other specified information about the payment made by transferee.

While the parties of the subject transaction may enter a written “designation agreement” electing an individual to serve as the Reporting Person, if no such designation agreement is entered, there is a “reporting cascade,” which prioritizes the individuals who must serve as the Reporting Person. The reporting cascade ranks those individuals in the following order: (i) the person listed as the closing or settlement agent on the closing or settlement statement; (ii) the person that prepares the closing or settlement statement for the transfer; (iii) the person that files with the recordation office the deed or other instrument that transfers ownership of the residential real property; (iv) the person that underwrites an owner’s title insurance policy for the transferee with respect to the transferred residential real property, such as a title insurance company; (v) the person that disburses in any form, including from an escrow account, trust account or lawyers’ trust account, the greatest amount of funds in connection with the residential real property transfer; (vi) the person that provides an evaluation of the status of the title and finally (vii) the person that prepares the deed or, if no deed is involved, any other legal instrument that transfers ownership of the residential real property, including, with respect to shares in a cooperative housing corporation, the person who prepares the stock certificate.

A Real Estate Report must be filed by the last day of the month following the month closing occurred, or 30 calendar days after the date of closing, whichever is later. The applicable Reporting Person will therefore generally have about 30 to 60 days to file the report.

Exceptions to the RRE Rule

The RRE Rule expressly exempts certain transfers from its purview. Those transfers include (i) a transfer of an easement, (ii) a transfer due to the death of an individual through their will, trust, by operation of law or by contract; (iii) transfer due to divorce or dissolution of marriage or civil union; transfer to bankruptcy estate; (iv) transfer supervised by a court in the US; (v) gift transfer or transfer for zero consideration between spouses, or to a trust created for the benefit of the transferor; (vi) transfer to a qualified intermediary for 1031 tax deferred exchange; (vii) a transfer where there is no reporting person.

The RRE Rule continues the regulatory trend towards greater transparency and disclosure in private transactions. Family offices engaged in financing, acquiring or developing portfolios of residential real estate need to consider the potential application of the RRE Rule to their activities. Our global Real Estate team will be monitoring the rulemaking in this space for further developments.

Restructuring Roundup (UK)

Wed, 01 Apr 2026 11:55:25 +00:00

Here is our summary of key developments relevant to restructuring professionals that you might have missed, with links for further information.

The case of Mannarest is the first reported example of a liquidator converting a liquidation to an administration. Although the circumstances are not “typical”, it is helpful to know that in the right circumstances the court will support such an application.
In case you have missed this announcement, it is worth noting that Companies House are asking all companies to check that their filing records are correct. As practitioners we often rely on the register to obtain and verify information, so this is certainly something to be mindful of in the immediate term.
Did you see our newest Litigation Quick Guide? Options for Enforcement and Recovery of Insolvency Claims.
The government has just published this consultation on corporate civil enforcement reforms. It includes interesting proposals regarding the director’s disqualification regime, but of wider interest are proposals regarding preference and transaction at an undervalue (TUV) claims to include presumptions where a transaction is with a connected party.
It looks like the successful restructuring of US-quartered Fossil Group, using an English restructuring plan is catching on, with New Fortress Energy announcing its intention to restructure part of its business using an English plan. Our quick guide gives insight into Restructuring Foreign Companies In England Using a Restructuring Plan, explaining the benefits of doing so, but this is not just something for US companies!
Perhaps not something to read, but at least something to note, is the consultation on collective redundancy obligations. The Employment Rights Act 2025 introduces (or will introduce) various changes to employment law, including expanding the requirement for employers to consult where redundancies are made across an entire organisation. This will capture those companies that have multi-sites, of smaller employee numbers. The consultation invites responses on how thresholds should be set alongside the introduction of the organisation wide threshold.
What is fair when it comes to a CVA? Does this recent Scottish decision pave the way for a different approach to unfair prejudice challenges to a CVA? HMRC were unsuccessful in its challenge, but the judge cautioned against applying rigid rules when testing whether a CVA is fair to creditors. The last time we saw high profile challenges to a CVA were back when the CVAs proposed by Regis and New Look were challenged by its landlords – for a reminder of the key takeaways on fairness from those cases read our previous alert Treatment of Creditors in a Company Voluntary Arrangement – Fairness and Voting.
The latest Legal NewsBITE: Food and Drink Quarterly is a bumper packed edition, highlighting many changes that are or could impact those businesses operating in the food and drink sector – worth keeping an eye on for those practitioners that work with businesses in that sector.
Over the past 18 months or so, we have seen several cases grapple with questions concerning intellectual properties (IPs) remuneration – increases, challenges and information requirements, etc. Look out for our special newsletter (coming shortly), which will bring all those cases together in one place as a snap shot of what “to do” (or not) when considering approvals and challenges.

If you would like specific advice on any of these issues or anything else, please contact a member of our UK Restructuring & Insolvency team.

Trump Administration Announces Jones Act Waiver

Tue, 31 Mar 2026 15:58:33 +00:00

The ongoing Iran conflict has triggered widespread global disruption, including immediate energy price spikes and potential food security threats due to fertilizer shortages.

The global transportation sector is witnessing the most significant impacts on global maritime transportation with attempts at blocking or disrupting the Strait of Hormuz, and potentially the Red Sea, endangering some of the most critical global trade routes. However, few observers would have anticipated the Iran conflict having an immediate impact on US domestic shipping and service to US ports some 7,000 to 8,000+ miles (11,000–13,000+ km) away, and yet it has.

Pensions Weekly Update – 31 March 2026

Tue, 31 Mar 2026 15:27:20 +00:00

Here is our weekly summary of key legal and regulatory developments relevant to occupational pension schemes that you might have missed, with links for further information.

The Pension Schemes Bill has had its third reading in the House of Lords. A few drafting amendments were made to the bill during its third reading, but otherwise the significant amendments are those that we noted in part one of last week's update. Possibly the most significant amendment made by the House of Lords has been the removal of the government’s power to mandate the way in which pension trustees invest defined contribution (DC) pension funds. It has been widely reported in the press that the government proposes countering opposition to mandation by introducing caps that would reflect the voluntary agreement reached under the Mansion House Accord (being a minimum 10% allocation to private markets across all main default funds in DC schemes by 2030, with at least 5% of the total going to UK private markets). The amendments made to the bill by the House of Lords will be considered by the House of Commons on 15 April.
In anticipation of the Pension Schemes Bill becoming law, The Pensions Regulator (TPR) has published guidance in relation to the Virgin Media remedy contained in the bill. TPR notes that trustees of schemes considering whether to take advantage of the Virgin Media remedy will normally first need to seek advice and information from their legal adviser, and that they may need advice and information from their actuary, as well as information from their administrator. Trustees may also need to discuss remediation with the sponsoring employer. TPR notes that trustees may give a formal instruction to start work to their actuary in advance of the bill becoming law. However, unless there is a pressing need to act more quickly (such as an imminent buyout project), where trustees have been taking an active watching brief on the issue, we think it would be reasonable for them to continue to do so for the time being and be ready to seek legal advice as soon as royal assent occurs.
The House of Lords has considered the reasons put forward by the House of Commons for rejecting amendments made to the National Insurance Contributions (Employer Pensions Contributions) Bill by the House of Lords (see part one of last week's update for those amendments). The House of Lords did not insist on their amendments, meaning that the bill has now been agreed. The bill imposes a cap of £2,000 on the amount of pension contributions that can be made (without being subject to national insurance contributions) as part of a salary sacrifice arrangement. This will come into force on 6 April 2029.
HM Revenue and Custom’s (HMRC’s) pension schemes newsletter 179 contains a reminder that from 6 April 2026, all scheme administrators must be a UK resident. As noted in our weekly update on 12 November 2025, this does not refer to your usual third-party provider of administration services. The “scheme administrator” in this context is the person who is registered on HMRC’s online platforms as the scheme administrator. This is usually one or more of the pension scheme’s trustees. If a scheme currently has an oversees person acting as the “scheme administrator”, they must remove themselves as scheme administrator (ensuring that one or more persons remain). If the overseas person is the only scheme administrator, they must first associate someone else who is a UK resident, before removing themselves. Trustees should check that they do not have a non-UK resident fulfilling the scheme administrator function for their scheme.
Following part one of its response to consultation on scheme improvements (access and protections) to the Local Government Pension Scheme (LGPS), the government has published regulations granting elected mayors and councillors in England access to the LGPS. The regulations come into force on 11 May 2026.
The Pensions Administration Standards Association (PASA) has published the final instalment of its trustee-administrator lifecycle guidance. The concluding section explores how relationships can be established, maintained and strengthened through open dialogue, proportionate governance and a focus on long-term outcomes. PASA plans to continue engaging with trustees, administrators and other industry stakeholders over the coming months to test, refine and build consensus around the guidance.
As reported in a previous update, the Pensions Dashboards Programme (PDP) is consulting on updated reporting standards. It has recently extended the deadline for responses to 30 April 2026.
The Financial Conduct Authority (FCA) is consulting on alterations to its rules to make it easier for firms to provide simplified forms of personalised advice to customers with straightforward needs. This should make the advice more accessible and affordable. The consultation also considers existing rules relating to financial advisers’ ongoing services. Comments are invited by 22 May 2026.
Pensions partner, Wendy Hunter, was delighted to be a guest speaker to discuss guided retirement as part of WTW’s Pensions Perspectives series of podcasts.

If you would like specific advice on any of these issues or anything else, please contact a member of our Pensions team.

Mandatory Ethnicity and Disability Pay Gap Reporting for Large Employers Gets the Green Light

Tue, 31 Mar 2026 11:10:00 +00:00

Following a consultation that closed in June 2025, (for our thoughts on the proposals at the time, please see here) the government has confirmed that it is going ahead with mandatory ethnicity and disability pay gap reporting for large employers (those with over 250 employees) to increase transparency and help tackle barriers in the workplace.

The government has also published the outcome to the consultation, which it confirms shows widespread support for the proposals (seemingly 87% of respondents supported the proposals), but keep in mind that “respondent” here is a reference to any person contributing to the consultation outcome and not to employers only. It would be materially misleading to suggest that employers favour these measures to the same extent.

This is not a wholly new idea. As per our blog, the previous government issued official guidance for voluntary ethnicity pay reporting in April 2023, but that left a great deal more to the discretion of the employer than is now proposed and did not include any reference to disability.

Key points to note are:

The government will develop legislation to introduce mandatory ethnicity and disability pay gap reporting for large employers. This will include a mix of primary legislation and supporting regulations, which will set out the detailed reporting requirements. The consultation outcome includes draft legislation in Annex A, which the government has confirmed is indicative of the model any such legislation will follow, but will be subject to further refinement. The government’s intention is that it will seek to build on the current gender pay gap reporting to simplify the process and make it easy for employers to record their data.
The government has also promised guidance and practical tools to support employers with the proposed new reporting requirements, including:
- Guidance on how employers can improve employee declaration rates on ethnicity and disability
- Detailed step-by-step guidance on how to make the calculations
- Advice on actions to address ethnicity and disability pay gaps

Given the government’s track record on practical guidance and its usefulness in the real world, are we allowed to say that we will believe it when we see it?

The reporting framework will be broadly the same as for gender pay gap reporting, which is clearly good news because affected employers are familiar with this and have set up their systems accordingly. Only employers in Great Britain with 250 or more employees will be caught, and they will be obliged to report on the same set of six pay gap measures as for gender pay (mean and median differences in average hourly pay, pay quartiles, mean and median differences in bonus pay and the percentage of employees receiving bonus pay for the relevant protected characteristic). Furthermore, the key dates and deadlines will be the same as for gender pay gap reporting, namely (for private sector employers) a “snapshot date” of 5 April, and a reporting date of 4 April the following year. All data will have to be reported online.
Employers with fewer than 250 employees will not be required to report, but will be encouraged to report voluntarily.
It will also be mandatory for affected employers to report on the overall breakdown of their workforce by ethnicity and disability, and to provide the percentage of employees who did not disclose their ethnicity and disability. The government believes this additional data will give context to employers’ ethnicity and disability pay gap figures. It also seeks to mitigate against what would be a fairly dire unintended consequence of the legislation, if employers then sought to recruit fewer ethnic minority or disabled people to avoid higher pay gap figures. The requirement to publish declaration rates is intended to allow employers to explain if their data may have been affected by low rates. Indeed, low self-reporting/declaration is likely to be a key issue for many employers. Not all employers currently collect this data and even those that do will inevitably not have complete data. Concerted efforts will need to be made by employers to obtain such information (which will not simply be a case of asking for it, but will also involve creating a culture in which employees feel willing, able and safe to disclose such personal data) to enable any reliable analysis to take place.
Large employers will be required to publish action plans to tackle any ethnicity and disability pay gaps as part of their reporting. The government intends to harmonise approaches so that employers can produce a single equality action plan on the same service covering sex, race (including ethnicity) and disability, when all the reporting requirements are in force – recognising that some actions may be beneficial for multiple groups (for example, flexible working).
There will, however, understandably be some important differences from gender pay gap reporting, especially when it comes to data collection and analysis:
- Ethnicity data – The government has confirmed that employers will be expected to ask employees to report their own ethnicity using the classifications in the Government Statistical Service ethnicity harmonised standard, as used in the 2021 census. Employers should follow the Office for National Statistics (ONS) guidance on how to aggregate different ethnic groups. In practice, this means that individual ethnic groups would be aggregated into one of five broader ethnic groups (White; Asian or Asian British; Black, Black British, Caribbean or African; mixed or multiple ethnic groups and other ethnic groups). The guidance for employers will include further advice about how to aggregate different ethnic groups.
- All in-scope employers will be obliged to report a binary comparison as a minimum. The only exception to this will be if an employer does not have the minimum threshold number of employees to make that comparison without compromising confidentiality (see below).
- The consultation included various options about how this binary comparison could be made. Taking into account the consultation responses and stakeholder feedback, the government’s preferred approach is to require a binary comparison of White (including White Other) with all other ethnic groups combined (to avoid high earners in the White Other group skewing the pay gap figures for all other ethnic groups combined, which could mask potential disparities within organisations).
- To add further transparency, the intention is that employers will also be required to report comparisons between the five broad ethnic groups if they meet the minimum employee threshold (level of the threshold is yet to be decided). For example, if the threshold is 10, an employer would need to have at least 10 employees in each of the five broad ethnic groups. The White ethnic group would be the main “comparator,” against which the other four groups would be compared, for example, White and Asian or Asian British (the government intends to build in exceptions to this as it develops the detailed reporting requirements, that is, if there are insufficient numbers of employees in any of the five broad ethnic groups).
- Employers will not be required to provide more granular comparisons than using the five broad ethnic groups, as the government’s view is that it is unlikely, even for very large employers, that comparisons between up to 19 ethnic groups (which is the full number of ONS ethnicity classifications) would be feasible when considering minimum thresholds and the need to protect confidentiality. It would also represent a significant burden on employers to undertake such a large number of comparisons.
- Disability data – For disability pay gap reporting, the government is also proposing to take a binary approach and require employers to compare the pay of disabled employees with non-disabled employees, and to use the definition of disability in the Equality Act 2010 as the basis for identifying disabled employees. The issue of disability will also be determined on a self-declaration basis (leaving it up to employers to make that judgment would be disastrous), but as we stated at the time of the consultation, it is possible to wonder if that has been fully thought through as an idea. After all, if you invite employees to say they are disabled then those at the margins, or with unresolved or latent grievances may be tempted to tick that box. That puts the employer on notice of that status, though not of the impairment alleged and so triggers immediately a full set of duties to explore reasonable adjustments for issues of which it had no prior awareness, as well as to consider in every case of misconduct or poor performance whether it arose from a condition of which it was aware, but simultaneously knew nothing. Any subsequent redundancy or disciplinary process, or other detriment of any description thereafter could be alleged to be a product of that disclosure. It is also possible to query whether the reporting would tell the reader anything useful given that in contrast to issues of race or sex, less favourable treatment (including as to pay) on grounds of disability is entirely lawful if it can be justified. That is a question to be decided per individual and so not something which could properly be dealt with in an employer’s report.
A minimum threshold (level yet to be decided) will apply across all the pay gap calculations to build in safeguards and avoid sensitive data being disclosed.

The government had proposed to introduce additional mandatory reporting obligations for large employers in the public sector (namely: ethnicity and disability pay differences by grade or salary bands; plus, data relating to recruitment, retention and progression by ethnicity and disability), but will not be going ahead with these proposals.

Although we do not yet have an indication of when these provisions will be introduced, affected employers should add “preparation for mandatory ethnicity and disability pay gap reporting” to their ever-growing “to do” list, as collecting and analysing this data is likely to be very time-consuming.

As with the gender pay reporting, the existence of gaps around ethnicity and/or disabilities does not necessarily signify any unlawful discrimination. There may be good reasons for those gaps. However, the government’s expectation is that employers will nonetheless see such gaps as a bad thing and take steps to address them. This won’t necessarily be through pay levels, but instead through closer consideration of under-representation at certain levels within the business – at what stage does it arise, at the point of recruitment or a later stage and what could be done to bring retention and advancement rates into closer alignment with white or non-disabled colleagues? Is this a case for positive discrimination (in the limited circumstances where that is permitted), or should you be looking at which impact might be had upon your disability pay gap by a review of potentially helpful adjustments?

If you would like to discuss these latest proposals and what changes are likely to be necessary in your business, please speak to one of the following or your usual contact in the Labour & Employment team.

UniCredit v Celestial - Implications for Trade Finance Under UK Sanctions

Mon, 30 Mar 2026 15:40:00 +00:00

On 25 March 2026, the UK’s Supreme Court delivered a unanimous judgment in UniCredit Bank GmbH v Celestial Aviation Services Ltd, holding that UK sanctions against the Russian Federation (Russia) prohibited a confirming bank from making payments under standby letters of credit issued as security for civilian aircraft leases to Russian airlines, notwithstanding that both the leases and the letters of credit predated the sanctions, and the leases had been terminated before payment fell due.¹

The ruling, which upheld the Court of Appeal and reversed the High Court, resolves a question of acute commercial significance for trade finance, aviation leasing and the broader financial services industry. By affirming that the phrase “in connection with”, an arrangement requires only a factual nexus, not a causal link, to prohibited activity, the Court has confirmed that UK sanctions legislation is to be construed broadly, with the licensing regime serving as the principal mechanism for mitigating unintended consequences. The ruling affects any institution holding payment obligations under financial instruments connected, however indirectly, to arrangements involving restricted goods, technology and persons connected with Russia.

Legal Development

The case arose from 12 standby letters of credit issued between 2017 and 2020 by Sberbank, a Russian state-owned bank, and confirmed by the London branch of UniCredit Bank GmbH, a German institution. The letters of credit secured lease obligations owed by Russian carriers, including AirBridge Cargo and Aurora Airlines, to three Irish-incorporated aircraft lessors: Celestial Aviation Services Ltd (a subsidiary of AerCap Holdings NV, the world’s largest aircraft leasing company) and two entities within the Aircastle group, including Constitution Aircraft Leasing (Ireland) 3 Ltd. (Constitution). The leases themselves had been entered into between 2005 and 2014. The principal sums at issue were approximately US$45.8 million for Celestial, and US$23.5 million for Constitution. Following Russia’s invasion of Ukraine, the UK government amended Regulation 28(3)(c) of the Russia (Sanctions) (EU Exit) Regulations 2019 (the Regulations), with effect from 1 March 2022, extending the prohibition on providing financial services or funds from military goods to “restricted goods”, a category that encompasses critical-industry goods, including civilian aircraft.² The lessors demanded payment under the letters of credit in March 2022. UniCredit declined, asserting that the amended sanctions prohibited payment absent a license. It applied promptly to HM Treasury’s Office of Financial Sanctions Implementation (OFSI) and the Export Control Joint Unit, obtaining the requisite licenses in October 2022, after which the principal sums were paid. The residual dispute concerned interest and costs for the intervening period.

The Court’s Reasoning

The Supreme Court addressed two issues. The first was whether regulation 28(3)(c) prohibited UniCredit from paying under the letters of credit. The appellants contended that the prohibition required a causal connection between the provision of funds and the prohibited supply of aircraft, and that no such connection existed: the aircraft remained in Russia solely because of the Russian airlines’ breach of the terminated leases, not because of any act of the bank. Lord Stephens, giving the sole judgment, rejected that interpretation. The statutory language, he held, requires only a factual connection between the provision of financial services or funds, and an “arrangement” whose object or effect is making restricted goods available to persons connected with Russia. The phrase “in connection with” is deliberately broader than “in pursuance of”; read together, the two phrases capture anything that factually connects the provision of funds to the relevant arrangement.³ The Court endorsed what it described as a deliberately broad prohibitory structure, in which the sanctions regime casts a wide net and the licensing system operates as a safety valve, administered by public authorities who are the proper arbiters of the competing interests involved.⁴

The Court also rejected three subsidiary arguments advanced by the appellants: that the leases were not “arrangements” within the regulation because they predated the sanctions; that termination of the leases extinguished their status as relevant arrangements and that there must be temporal coincidence between the provision of funds and the existence of the arrangement. On each point, Lord Stephens held that the object of the leases, namely making aircraft available to Russian airlines, was determined when the leases were made and was not altered by subsequent termination.⁵

The second issue analysed was section 44 of the Sanctions and Anti-Money Laundering Act 2018 (SAMLA), which provides that a person is not liable to civil proceedings in respect of an act or omission done in the reasonable belief that it is in compliance with sanctions.⁶ Although not necessary to the outcome, the Court addressed the point because of its wider significance. Departing from the Court of Appeal’s obiter view, Lord Stephens held that section 44 provides a defence, not a procedural bar, and that it extends to claims for debt, interest and costs where the bank’s omission to pay was based on a reasonable belief that payment was indeed prohibited.⁷

Commercial and Compliance Implications

The practical consequences of this judgment are substantial and extend well beyond the aviation leasing sector. First, the ruling confirms that UK sanctions legislation will be construed expansively, and that the phrase “in connection with” an arrangement will be read to capture any factual link between a financial payment and a prohibited arrangement, regardless of causation. Financial institutions cannot rely on a narrow, purposive interpretation to avoid the sanctions’ reach, nor can they argue that a payment that does not itself cause or contribute to the prohibited supply falls outside the prohibition. The implications for banks, insurers and other financial intermediaries handling transactions with any nexus to restricted goods or sanctioned jurisdictions are considerable. Although the Supreme Court’s judgment was directed specifically at regulation 28(3)(c), the phrase “in connection with” appears in numerous other provisions of the Regulations. It must be assumed that the Court’s broad, factual-nexus interpretation applies with equal force to every such instance, significantly widening the practical scope of the ruling beyond the particular prohibition at issue in this case.

More broadly, the Regulations contain several other imprecise formulations (e.g. “making available” and “related to”), which the Supreme Court did not directly address. Nevertheless, the interpretive approach adopted by the Court, favouring breadth over specificity, treating the sanctions regime as a deliberately wide net and relying on the licensing system as the mechanism for relieving unintended hardship, strongly suggests that the courts would apply a similarly expansive reading to those phrases. Prudent compliance practice would therefore treat such terms as carrying a broad, factual meaning rather than a narrow or technical one, and would factor that assumption into risk assessments, transaction structuring and internal screening procedures.

Secondly, the retroactive reach of sanctions upon pre-existing commercial arrangements is now settled at the highest appellate level. Letters of credit, guarantees and other financial instruments that were entirely lawful when issued may be caught by subsequent amendments to sanctions regulations if the underlying arrangement involves goods or services that become restricted. Parties cannot assume that the passage of time, the termination of an underlying contract or the absence of any wrongful intent on their part will insulate connected financial flows from prohibition.

This has direct consequences for the structuring of trade finance facilities, aircraft leases, energy supply contracts and any transaction involving goods at risk of future sanctions designation.

The ruling fundamentally alters the risk allocation in letter of credit transactions. Standby letters of credit are traditionally procured precisely to mitigate credit default risk; the Supreme Court has now confirmed that sanctions-related default risk, the very contingency the instrument was designed to address, may render the instrument itself unenforceable pending a license. The credit default risk caused by sanctions will remain extant notwithstanding the existence of the letter of credit. Lessors and other beneficiaries of such instruments must therefore reckon with the possibility that a confirming bank will be prohibited from paying, and that they will have limited legal recourse during the period of non-payment.⁸

The Court’s interpretation of SAMLA’s section 44 provides banks with an additional layer of protection. Where a bank withholds payment in the reasonable belief that sanctions prohibit it, the bank is shielded from claims for debt, interest and costs incurred during the period of non-payment. This is so even if the bank’s reading of the sanctions is ultimately found to have been mistaken, provided that the belief was reasonably held. The incentive structure is plain: it encourages cautious compliance and prompt licensing applications, but it places the cost of any delay squarely on the beneficiary rather than the bank.

Finally, the judgment underscores the importance of pursuing licensing across all relevant jurisdictions with equal diligence. The Court of Appeal had found that UniCredit could not rely on US sanctions for a six-week period during which it had failed to make reasonable efforts to obtain a license from the Office of Foreign Assets Control; UniCredit did not appeal that finding.⁹ Institutions subject to overlapping sanctions regimes must therefore maintain parallel compliance processes and cannot assume that a license from one jurisdiction will cover obligations arising under another.

How We Can Help

As a global law firm with a dedicated international trade and sanctions compliance practice area, we are ideally situated to advise clients on the consequences of this ruling. We regularly assist financial institutions, lessors, insurers and trading companies with the assessment of exposure under the UK, EU and US sanctions regimes; the review of letters of credit, guarantees and other trade finance instruments for sanctions risk; the preparation and submission of license applications to OFSI, the Export Control Joint Unit and equivalent bodies; the revision of internal compliance policies and counterparty screening procedures and the management of disputes arising from sanctions-related payment suspensions, including claims under SAMLA section 44. We would welcome the opportunity to discuss how these developments affect your operations and transaction structures.

¹ UniCredit Bank GmbH, London Branch (Respondent) v Constitution Aircraft Leasing (Ireland) 3 Ltd and another (Appellants); UniCredit Bank GmbH, London Branch (Respondent) v Celestial Aviation Services Ltd (Appellant) [2026] UKSC 10, judgment of 25 March 2026.

²Russia (Sanctions) (EU Exit) Regulations 2019, SI 2019/855, reg. 28(3)(c), as amended by the Russia (Sanctions) (EU Exit) (Amendment) (No. 3) Regulations 2022, SI 2022/195, with effect from 1 March 2022.

³[2026] UKSC 10 at [80].

⁴[2026] UKSC 10 at [76]-77; [2024] EWCA Civ 628 at [66].

⁵[2026] UKSC 10 at [86]-88.

⁶Sanctions and Anti-Money Laundering Act 2018, s. 44(1)-(3).

⁷[2026] UKSC 10 at [91]-93.

⁸Rob Harkavy, Sanctions trump letters of credit in Supreme Court setback for lessors, ICLG, 25 March 2026.

⁹[2024] EWCA Civ 628 at [130].

“Strike Two” For TCPA Prior Express Written Consent Requirement

Mon, 30 Mar 2026 09:45:00 +00:00

Is this a signal of more such things to come? Perhaps, as a second court – the Federal District Court in Maryland in Deborah Bradley v. DentalPlans.com et al – has ruled that “Congress has required only prior express consent“ to receive automated and prerecorded telemarketing calls under the Telephone Consumer Protection Act (TCPA). No prior express written consent was required.

Background Facts

Deborah Bradley signed up for a Cigna dental plan through a telephone call with DentalPlans.com. During the call she orally agreed to receive automated and prerecorded calls, ostensibly to “keep her updated with any plan information.” Later after indicating that she did not want the plan to auto-renew, she received prerecorded calls telling her that her membership would expire soon and she could renew her plan; she ignored those calls and her plan expired. However, she continued to receive “win back” prerecorded calls encouraging her to repurchase. There were 10 such post-expiration calls before they stopped. She brought a class action alleging that DentalPlans and Cigna violated the TCPA by “placing unauthorized telemarketing calls to her and the proposed class.”

The court initially determined that the “win-back” calls were telemarketing, denied DentalPlans summary judgment motion and certified a class. But DentalPlans asked the court to reconsider and decertify the class, arguing that the original determination was no longer permissible after the Supreme Court decisions in Loper Bright Enters. v Raimondo and McLaughlin Chiropractic Associates, Inc. v McKesson Corp.. DentalPlans motion claimed that in light of those decisions, the court could not apply the Federal Communications Commission (FCC) interpretive regulations imposing a prior express written consent for telemarketing calls.

The Court’s Analysis and Rulings

The Loper Bright and McLaughlin decisions both addressed the role of the courts in assessing whether an agency has acted within its statutory authority. As ultimately held in the latter, now “District Courts are not bound by the agency’s interpretation” of the statute, but must “independently determine for itself, whether that interpretation is correct.”

Armed with that framework, the court addressed two central issues: (1) whether the FCC could impose an additional writing requirement to the TCPA’s “prior express consent” and (2) in the end did Ms. Bradley provide prior express consent. The court answered “no” to the first and “yes” to the second. As result the court granted Dental Plan’s motion for reconsideration and decertified the class.

FCC could not impose – The court considered two appellate court decisions by the 11th Circuit (Insurance Marketing Coalition Ltd v. FCC) and 5th Circuit (Bradford v. Sovereign Pest Control of TX, Inc.). The former found that the Congress’ delegation of authority to the FCC did not include the ability to “interpret” the TCPA’s prior express standard as the agency had done – “Rather than respecting the line that Congress drew, the FCC stepped right over it.” The latter concluded that “contrary to the FCC’s regulation, Congress permits either written or oral consent for any auto-dialed or prerecorded call,” subject to having prior express consent. Considering these precedents and the facts at hand, the Court held that “[b] ecause Congress has required only prior express consent, not prior express written consent, that is all that is required to overcome an alleged TCPA violation” in this case.

Requisite consent was given – The court noted that Congress had not, for consent purpose, made a distinction between telemarketing and informational calls. It was the FCC that did so, in the context of deciding which standard governs the calls at issue, prior express consent or prior express written consent. The court, however, looking at the “plain language of the statute” could not discern any distinction warranting applying the FCC interpretation. Since Ms. Bradford had agreed initially to receive automated or prerecorded calls in the context of signing up for the plan, she had provided the requisite consent and “DentalPlans did not violate the TCPA as a matter of law.”

Implications Going Forward?

What are the implications of this decision going forward?

There are now two specific precedents in different federal circuits on this issue. Certainly other courts in other jurisdictions can pick up on this analysis when it is presented to them. Defendants in TCPA class action cases have a tool to employ in cases involving similar fact settings.

These decisions may instigate other challenges to FCC generated “interpretations” under the TCPA. Further following on the guidance to district courts in Loper and McLaughlin, other FCC-generated interpretations and regulations can be attacked. The Bradley court specifically noted “[t]here may be cause to reevaluate the availability of vicarious liability under the TCPA.”

These decisions could impact the FCC’s own formulation of its regulations in interpreting and applying the components of the TCPA going forward. They might give the FCC pause when it is presented with the option of engrafting a requirement that is not clearly expressed in the statutory language.

Finally, the Bradley Court also clearly implied if there was to be a prior express written consent requirement, it was for Congress not the FCC to impose such a rule – “It is for Congress to respond to the issues presented in this case and to address whether the TCPA, as written, adequately addresses the contemporary realities of American life.” In the immediate future that seems unlikely, but it certainly bears watching.

We expect there will be additional progeny of Loper and McLaughlin for the application of the TCPA, not only with respect to consent issues. We will be monitoring closely.

Anti-suit Injunctions and Arbitrations: Preparing for the Wave of Conflict-driven Disputes

Mon, 30 Mar 2026 09:20:56 +00:00

As the Middle East conflict continues, Iran has attacked key infrastructure, including the Ras Laffan liquified natural gas (LNG) complex, the Habshan Gas Processing Complex, the Bab Oil Field and the SAMREF Refinery. Simultaneously, Iran has effectively closed the Strait of Hormuz, upending the energy supply chain. In response, the US president threatened to “obliterate” Iran’s power plants if the Strait was not reopened, leading to negotiations that are now taking place. The consequences of these actions are severe.

Our authors are monitoring the situation closely and have spoken to legal counsel situated in or operating across the region, discussing crisis management, force majeure clauses and war risk clauses, as well as advising on immediate actions and responses to contractual counterparts. Our global team has also issued numerous insights during this conflict covering some of the key questions facing companies in the region, on issues of force majeure and frustration.

Sometimes, however, procedure is as important, if not more so, than the substantive dispute. This insight examines anti-suit injunctions; a procedural weapon used to protect contractual dispute-resolution rights, and one which has played a prominent role following the Ukraine war.

Anti-suit Injunctions

Anti-suit injunctions (ASIs) are equitable orders seeking to prevent a party from starting or continuing legal proceedings in a foreign court.

ASIs bind the targeted party, not the foreign court. While foreign proceedings may therefore technically continue, an English court order can include:

A negative injunction – Ordering a party to take no further steps in the foreign proceedings.
A mandatory injunction – Ordering a party to take positive steps to alleviate the breach, such as discontinuing the foreign proceedings.
A penal notice – By incorporating a penal notice, the enjoined party, and any third parties that might assist them, face severe penalties for failing to comply. This includes:
- Imprisonment of up to two years
- A fine (the court has broad discretion to set the financial penalty based on severity)
- Seizure of assets

Strategic Utility of ASIs

The most common reason to seek an ASI is to prevent a party from commencing or pursuing proceedings in a “friendly” jurisdiction that provides some substantive or procedural advantage they would otherwise not have.

Other key strategic reasons include:

Preventing parallel proceedings that risk inconsistent outcomes
Preserving nonsubstantive advantages of litigating in certain jurisdictions (e.g. preferable procedural, evidential or case-management rules
Addressing enforcement concerns, particularly if accepting the offending proceedings would impact the chances of successful or cost-effective enforcement.

The English Law Test

As a matter of English law, there are two distinct tests, depending on the foundation of the ASI application.

1. Contractual (Breach of a Jurisdiction or Arbitration Clause)

This test applies where a party commences foreign proceedings in breach of an exclusive jurisdiction or arbitration clause. An injunction will ordinarily be granted to enforce the contractual right, unless the respondent can show a “strong reason” to the contrary. The test asks:

Is there a valid jurisdiction or arbitration clause governing relations between the parties?
If so, do the foreign proceedings amount to a breach of that clause?
If so, has the party in breach established a “strong reason” why discretion to issue an injunction should not be exercised? (For example, where it would expose parties, including nonparties involved in litigation abroad, to the risk of inconsistent findings).

Notably, a court may also grant an injunction enforcing a clause against a nonparty. This can arise where a nonparty seeks to enforce contract terms through a statutory right of direct action (as in The Prestige), or where a clause applies to disputes with a contracting party’s affiliates and proceedings are commenced against an affiliate in breach (as in Dell Emerging Markets (EMEA) Ltd v IB Maroc SA).

2. Noncontractual (Alternative Forum Cases)

Where no contractual clause exists, the English courts may still grant an ASI, but the test is more stringent. It requires showing that:

The English court has a sufficient interest in the matter as to justify the grant of anti-suit relief (e.g. where the injunction is sought to restrain an attempt to indirectly circumvent an English jurisdiction or arbitration clause, and, therefore, to protect the jurisdiction of the English court or tribunal).
The pursuit of foreign proceedings is unconscionable, vexatious or oppressive, or that the ends of justice require the injunction.

The Evidentiary Burden and the Need to Act Fast

The evidentiary burden shifts depending on whether the ASI is sought on an interim or final basis, and whether it relies on contractual or alternative forum grounds. Contractual cases will be more straightforward; noncontractual cases less so.

For example, proving vexation or oppression depends on all the facts taken together. Simply demonstrating the existence of parallel proceedings is not typically sufficient. Other evidentiary proofs are necessary, which could include showing that:

The foreign claim is doomed to fail.
The foreign proceedings were initiated to attack or evade justice (e.g. to circumvent an English claim).
The foreign claim would expose the applicant to the risk of irreconcilable judgments, or duplicate cross-examination.

The Need To Act Urgently

ASIs are ordinarily made on notice, but must be brought promptly and before proceedings are too far advanced. There are circumstances where extreme urgency justifies an application without notice (ex parte). This is typically only granted where the court views it as genuinely justified due to insufficient time to give notice.

Practical Steps

As matters develop quickly, there are several practical steps companies can take:

Monitor dockets in jurisdictions where counterparties have a footprint to detect preemptive foreign filings.
Act promptly once threatened, notified of or served with foreign proceedings.
Apply for the ASI before the foreign court has the chance to decide on an application to stay or dismiss the foreign proceedings.
Consider also applying for damages in addition to the ASI in accordance with S50 of the Senior Courts Act 1981.
Avoid taking steps that would be deemed voluntary submission in the foreign proceedings, such as seeking to litigate the merits locally.
Leverage the protection available under S32 and S33 of the Civil Jurisdiction and Judgements Act to work with local counsel to carefully (a) challenge the foreign court’s jurisdiction, (b) ask the court to dismiss or stay proceedings in favour of arbitration or the English courts, or (c) protect property threatened with seizure, without being seen to voluntarily submit to the jurisdiction.
Commence proceedings seeking an indemnity, and/ or damages for breach of the jurisdiction or arbitration agreement, counteracting the harm caused by the foreign proceedings.
Collate evidence of all costs and damage sustained as a result of the foreign proceedings, as well as the impact of any orders that court may issue.
Review additional weaponry available, including interim orders such as asset disclosure orders or worldwide freezing injunctions.

Trump Administration Releases America’s Maritime Action Plan

Mon, 30 Mar 2026 09:00:00 +00:00

The Trump administration (Administration) recently released “America’s Maritime Action Plan” (MAP), which is the next step towards achieving the policy goals stated in the Administration’s April 9, 2025 Executive Order 14269 entitled “Restoring American Maritime Dominance.”

The MAP focuses on rebuilding the US domestic shipbuilding capacity, modernizing maritime regulations, increasing the size of the US merchant fleet and increasing support for maritime workforce education and training.

The MAP reinforces the Administration’s focus on America’s maritime sector. Similar to the US Trade Representative’s (USTR) Section 301 investigation into Chinese shipbuilding and maritime practices, the MAP is premised on the notion that commercial shipbuilding and a vibrant merchant marine are directly tied to, and indeed essential to national and economic security. The MAP is yet another example of the continued intersection between economic, trade and national security concerns that is central to President Donald Trump’s “America First” agenda. MAP is premised on the following precepts:

Commercial shipbuilding is integral to national and economic security
US-built and US-flagged vessels are viewed as strategic priorities
Multi-year procurement and financing reforms aim to stabilize industrial demand
Autonomous maritime systems are integrated into long-term industrial planning
Arctic access and maritime infrastructure are treated as economic and security assets
Workforce, trade, tax and regulatory reforms are used to lock in long-term maritime industrial capacity

The Pillars of the MAP

The MAP is an overarching master plan that cuts across multiple areas of the maritime sector. To increase the size of the US flagged merchant fleet and grow domestic shipbuilding capabilities and enhance national maritime security, the MAP is broken into the following “Pillars:”

Pillar I – Rebuilding US Shipping

Increasing domestic shipbuilding capacity
Incentivizing investment in US shipyards
Establishing maritime prosperity zones to incentivize and align new domestic and allied investment in US maritime industries and waterfront communities
Addressing supply and demand issues
Reducing dependence on unreliable suppliers through heightened cooperation with allies and partners

Pillar II: Marine Workforce Education/Training

Expanding mariner training and education to address workforce challenges in the maritime sector through maritime educational institutions and workforce transitions
Providing financial and regulatory incentives for the training of shipbuilders and US credentialed mariners
Modernizing the US Merchant Marine Academy
Enhancing maritime training capabilities to meet industry needs

Pillar III: Growing the Marine Industrial Base (MIB)

Strengthening requirements for shipping government-impelled and commercial cargoes on US-flagged vessels
Imposing a land port maintenance tax to balance payments from importations across land ports versus maritime ports
Streamlining and improving acquisition processes for US government vessels, while reducing change orders
Considering actions, as appropriate, based on the USTR’s investigation of China’s targeting of the maritime, logistics and shipbuilding sectors for dominance

Pillar IV: National and Economic Security

The goals that are part of Pillar IV are designed to strengthen the resilience of the maritime industry as follows:

Strengthening the resilience of the MIB through improved component supply chains
Increasing the fleet of commercial vessels trading internationally under the US flag
Establishing a Maritime Security Trust Fund (MSTF)
Fostering the development of the autonomous maritime technology industry
Developing a strategy to secure Arctic waterways and enable American prosperity in the face of evolving Arctic security challenges and associated risks
Prioritizing the recapitalization of government owned sealift vessels

Significant MAP Recommendations

Among the recommendations set forth in the MAP are:

Overhauling Ship Financing

Investors, the finance industry and other shipping industry professionals should take note that the MAP calls for the long-term funding and the modernization of the federal ship financing program (Title XI), as well as the US Maritime Administration (MARAD) Capital Construction Fund.

Establishing Maritime Security Trust Fund (MSTF)

The MSTF would provide funding for long-term investment in America’s shipbuilding capacity, fleet expansion and maritime workforce

Vessel and Land Entry Fees

A universal fee on foreign built vessels from any nation entering US ports would be imposed. Revenue collected from the universal vessel entry fee would be paid to fund either infrastructure improvements, or the MSTF. The fee would be assessed on the weight of the imported tonnage arriving on the vessel.
- It is not clear whether proposed fees would be in addition, or in lieu of the fees proposed by the USTR’s Section 301 China maritime investigation.
To prevent the circumvention of the vessel entry fees, a land port maintenance tax is proposed based on 0.125 percent of the value of the merchandise that enters the US.

International Bridge Agreements

Reaching agreements with allied shipyard to build vessels in their home yards, while having foreign shipbuilders invest in US shipyards.

What’s Next

Potential Congressional and Agency Action The MAP is a blueprint for the government, shipbuilders and the maritime industry to meet the goals articulated in Executive Order 14269 – “Restoring American Maritime Dominance,” and highlights a pressing need to invest in the maritime sector. The MAP sets out to expand domestic shipbuilding from less than 1% of global commercial ship construction to a level that can support both military logistics and international trade. The US currently operates only eight active shipyards capable of building vessels greater than 400 feet in length. The repair base includes 22 shipyards with drydocking capability, and 25 additional shipyards with topside repair capability.

As the MAP proposes hundreds of billions of dollars in new investments to achieve its goals, an important question is how success will be measured. Given the breadth and cost of the MAP, its credibility and political viability during the time required for its completion will depend in part on whether the government sets clear priorities and concrete benchmarks for progress, so that resources are tied to measurable gains in, for example, shipyard capacity, fleet growth, workforce development and maritime readiness.

To implement the MAP, government-wide action across several agencies and future legislation will be required. A key related question is whether the government can coordinate the MAP’s many legislative, regulatory, financing and trade-related pieces in a clear and effective way. Without that coordination, even sound ideas may create delay and confusion rather than the sustained maritime growth the MAP is intended to promote.

The anticipated legislative initiatives should be viewed as complementing the pending Shipbuilding and Harbor Infrastructure for Prosperity and Security Act of 2025 (SHIPS Act) and the Building Ships in America Act of 2025. Federal agencies will have to engage in rulemaking to either revise existing regulation or implement new rules to give effect to MAPS objectives. From a public policy perspective, however, workable implementing rules alone will not be enough to ensure that the MAP is seen as a practical industrial strategy rather than merely a statement of aspirational policy goals. That will depend in significant part on whether Congress supports the effort through stable appropriations and financing tools that create clear, reliable incentives sufficient to give private and allied investors the confidence to commit long-term capital.

Increased Opportunities in the Maritime Sector

There are several areas and issues that have been discussed over the last year, but remain largely undefined, for example:

The Administration is relying on billions in foreign investment, primarily from Japanese and Korean shipbuilders, to jumpstart a US shipbuilding renaissance, but little new investment has materialized
The Administration was counting on universal fees on foreign built vessels entering US ports, or at least very high fees on Chinese-built and -owned vessels pursuant to the section 301 investigation, but that initiative was put on hold
There was talk of expanded cargo preferences for US flag vessels (which may be foreign-built) and port-of-entry fees imposed on foreign merchandise delivered by land as tools to reshape American fleet composition and investment incentives
Expanded workforce training, credentialing reform and investment in maritime education were framed as essential to sustaining increased shipbuilding output, but little is materializing at this time.

While the surge of federal interest is intended to increase commercial activity in the maritime industry, creating opportunities in the US and abroad, a key question is whether the measures described above will expand US maritime capacity, or simply increase costs across the supply chain. If they are not designed and implemented carefully, vessel fees, cargo preferences and similar measures may impose new burdens without generating the shipyard investment and fleet growth the MAP is intended to promote. Because the MAP will require sustained legislative and administrative action, maritime stakeholders will, however, have a meaningful opportunity to engage with lawmakers and regulators to help ensure that practical commercial concerns are addressed as implementation moves forward.

LNG Supply Disruption: Understanding how force majeure affects your contracts

Thu, 26 Mar 2026 12:09:40 +00:00

On Saturday 28 February 2026, the US and Israel launched large-scale coordinated attacks on Iran. Iran responded with missile and drone strikes across the Gulf region, including targeting locations in Saudi Arabia, Qatar, Bahrain, Kuwait and the UAE.

The situation is rapidly evolving, with global consequences including (i) QatarEnergy’s decision to cease production of LNG and associated products at its facilities in Ras Laffan after military attack on its operating facilities; and (ii) Iran’s Islamic Revolutionary Guard Corp’s effective shutdown of the Strait of Hormuz, a critical transit route for world oil and LNG shipments.

Most gas and LNG agreements contain contractual provisions addressing events of force majeure. These clauses typically provide that a party shall be relieved from a contractual liability that might otherwise arise consequent upon a failure to perform where there is an act, event or circumstance that (i) is beyond the control of the party affected by it, and (ii) prevents that party from performing some or all of its contractual obligations (or, in other iterations of such clauses, which prevents, hinders, impedes or delays that party from performing its full contractual obligations).

The critical components of a force majeure provision therefore include (but are not limited to) (i) identifying the qualifying factors, such as any acts, events or circumstances that are intended to give rise to force majeure and excluding those that the parties have agreed do not give rise to force majeure; (ii) establishing the notice requirements that a party must comply with in order to be entitled to claim force majeure relief; (iii) prescribing any mitigation measures, including the potential resumption of normal performance; and (iv) stipulating the consequences of an event of force majeure on the performance of the contract.

Traditionally, force majeure clauses often fall into the “boilerplate” nonnegotiated category of contractual terms. This is due to the provision’s limited (or nil) impact on the more heavily negotiated contractual terms underpinning the commercial bargain – such as price, source or flexibility. This can be a perfectly fine state of affairs until, all of a sudden, it is not. When issues pertaining to force majeure arise, they are rarely straightforward, and, by definition, they are unexpected and often unplanned for. There may be numerous legal and factual complications depending on the actual circumstances in question, as well as on the potential applicability of other clauses in any particular contract and how they are meant to interact with the force majeure clause in any particular situation.

Quite often, parties are left without clear answer as to whether the force majeure clause in question will apply, and, regardless of whether it does or not, their respective obligations in relation to it. This is where disputes inevitably arise.

Crucially, the application of force majeure clauses will depend on the specific contractual language and the applicable governing law of the agreement in question. Where there is a valid declaration of force majeure, an affected party’s nonperformance may be excused, meaning that the normal penalty payment or compensation cost element for any failure to perform falls away. From a monetary perspective in the current LNG market, this can equate to millions of dollars spent or saved, as the case may be.

While there is a tendency for force majeure clauses to sometimes be treated as boilerplate provisions, there are certain important drafting considerations for parties to take into account at this challenging time:

The clause should provide that a qualifying act, event or circumstance (as specified in the clause) must have occurred that causes the inability (or delay/hindrance etc.) of one party to perform its obligations under the agreement. The crucial element here is the nexus between the qualifying act, event, or circumstance and actual performance. Typically, parties do not like to include drafting that suggests that a situation of force majeure may arise where performance has simply become more problematic or expensive. Rather, parties prefer to have clear language establishing that performance must not be possible as contracted for as a result of the act, event or circumstance in question. This point can be spelled out in the provision. For example:
- Although certain force majeure provisions discuss a “failure to perform”, parties may wish to consider developing this wording to specify an “inability” to perform. This will help to clarify and distinguish situations where a party simply fails to perform (for example, where it has elected to not perform), from one where that party physically or legally could not have performed as it contracted to do.
- The force majeure provision may expressly exclude certain acts, events or circumstances from giving rise to force majeure, such as market price increases, economic impracticability or economic hardship.
Linked to the first point, does the force majeure clause provide any flexibility to the affected party with regard to the impact of the qualifying act, event, or circumstance on its performance? For example, does the language in the relevant clause contemplate performance being delayed, hindered or impeded, or does it excuse liability only where performance is “prevented”? This is often a key battleground between parties when interpreting these provisions, in particular under English law, where the word “prevent” has been interpreted by English courts to have a narrower meaning than “hinder” or “delay”. The fundamental question for the parties is whether they are looking to excuse performance only where performance is impossible or whether they seek to do so when circumstances fundamentally change the complexion of the contractual obligation.
It is important to consider the balance between specificity and certainty. Sometimes, parties try to be as specific as possible in articulating the act, events or circumstances that they consider could amount to force majeure. The force majeure clause could reflect this by identifying a veritable laundry list of specific acts, events or circumstances, with the idea that more specificity brings greater clarity. However, the very nature of force majeure under most legal systems is that an unforeseen act, event, or circumstance has prevented a party from performing as it was supposed to do under the contract. Consequently, this may involve acts, events or circumstances that were never contemplated and therefore are not on the specific list or those that are almost (but not quite) identical to those listed in the force majeure clause. As with many things that end in arbitration, the devil is in the details.
- If the purpose behind the force majeure clause is simply to excuse performance where an unanticipated act, event or circumstance has made performance impossible, it may be better for a party to keep things as simple as that. Often, this is done by framing the list of acts, events or circumstances intended to give rise to force majeure in nonexclusive terms, to avoid any implication that a disruptive event that is not specifically mentioned is not force majeure.
- This means that, in the event of a force majeure declaration, instead of focusing on whether or not something falls precisely within the list of events itself, the proper focus will be on the more pertinent issues: was the act, event or circumstance unforeseen and did it prevent the affected party from performing its obligations under the contract?
The clause may require the affected party to actually substantiate with evidence (rather than simply assert) (i) the existence of the act, event or circumstance underpinning its declaration of force majeure; and (ii) that its failure to perform (or perform on time) was as a result of circumstances beyond its control.
In terms of the disruption, the provision may require the affected party to show (i) that there were no reasonable steps that it could have taken to mitigate or avoid the act, event or circumstance in question or its consequences; and (ii) that it has taken reasonable steps to mitigate or overcome the effects of the force majeure in order to resume normal performance as soon as possible. In an LNG context, this may be done, for example, by obliging a party to take steps to bring the force majeure to an end, including, in certain instances, instructing the affected party to try to seek alternative supplies (perhaps from a variety of sources, not just its own export facility) or other means of contractual performance.
Where a contract provides that the parties shall use reasonable endeavours to resume normal performance after the occurrence of a force majeure event, the governing law of the contract will have a bearing on what is required.
- For example, under contracts governed by English law, the English courts have suggested that, generally speaking, a “reasonable endeavours” obligation is less stringent than requiring a party to take “all reasonable endeavours” or use “best endeavours”.
- Further, in the context of force majeure, a reasonable endeavours obligation will only be linked to the performance of a specific obligation in a contract and will not require the nonaffected party to accept offers of noncontractual performance, even in circumstances where doing so would overcome the impact of the force majeure.

Ultimately, what is required (or not required) by a force majeure is a fact-dependent exercise. For this reason, it is very important that as soon as events or circumstances arise that impede a party’s performance, that party keep clear documentation of the events and its responses.

If you have any questions on the subject matter of this piece, please contact the authors. The views expressed in this piece are those of the authors and not the firm or any of its clients.

EU and Australia Conclude Negotiations on Free Trade Agreement, Sign Security and Defence Partnership

Thu, 26 Mar 2026 09:13:56 +00:00

On 24 March 2026, Australian Prime Minister Anthony Albanese and European Commission (EC) President Ursula von der Leyen announced the conclusion of negotiations for an Australia-EU free trade agreement (FTA). This initiates the procedures towards the signature and ratification of the FTA. It should unlock substantial opportunities across numerous sectors at a time when Australian and EU businesses are looking for improved market access and geographic diversification.

In addition to the FTA, Australia and the EU signed an Australia-EU Security and Defence Partnership (SDP), which is now in operation.

Taken together, the FTA and the SDP deepen both the commercial and strategic relationships between the two blocs. For exporters, investors, procurement bidders, regulated manufacturers, digital and professional service providers, and defence businesses, the significance lies in the combination of market-access commitments with wider rules on procurement, digital trade, professional mobility, critical minerals and security cooperation. Operators with exposure to the European market, or to Australian inbound investment and supply chains, should therefore treat the package as a development of immediate planning importance.

Content of the FTA

The negotiated FTA is comprehensive. It includes, inter alia, commitments in the following areas:

Trade in goods – The FTA should eliminate tariffs on all nonagricultural goods, except ferro-silicon, tropical plywood, electric passenger vehicles, and goods vehicles, where tariffs of up to 22% will be eliminated over three to five years. This includes advanced manufacturing and other industrial goods (such as textiles, auto parts and wood), environmental goods (including but not limited to wind turbines, lithium batteries and solar panel components) and energy and resource products (including critical minerals, lithium hydroxide and hydrogen). There would be tariff eliminations for some agricultural products (including but not limited to wine, seafood, honey and olive oil), as well as tariff reductions for other agricultural products (including but not limited to, beef, sheep meat, sugar and natural butter).
Investment liberalisation and capital movements – Streamlined investment in both directions, with improved legal guarantees. In particular, the FTA provides for preferential treatment in sectors such as mining, manufacturing, tourism, education, energy and resources. Subject to conditions, Australia investors should be treated the same as EU investors in the EU. Australia would raise its foreign investment screening thresholds for EU investors.
Merger control – Dedicated competition provisions to address mergers with Australian and EU implications, as well as competition enforcement in general.
Energy and raw materials – Improved access for the EU to Australian energy and raw materials through the elimination of EU tariffs on Australian energy and resource products including critical minerals, lithium hydroxide and hydrogen. For Australia, the elimination of tariffs on, for example, critical minerals, will support the growth of renewable energy and stabilise supply chains.
Subsidies and rules on state-owned enterprises and public procurement – Levelling the playing field and providing improved access to all important Australian and EU public procurement markets.
Trade in services – Opening key sectors to each other’s companies, including financial services and telecommunications.
Digital trade – Digital trade-specific provisions to facilitate online business. Again, the emphasis is on improving legal guarantees and streamlining procedures, for example by preventing the forced transfer of source code, supporting paperless trade and electronic controls and signatures, or committing to open internet access.
Intellectual property (IP) – Improved IP protection between both jurisdictions (e.g. patents, copyright, geographic indications, etc.).

Other than the above, the FTA would also include general provisions to facilitate trade between the parties, e.g. in relation to rules of origin, customs procedures, technical barriers to trade, sanitary and phytosanitary rules and other standards, trade defence, etc. Most rules would be subject to dispute settlement, ensuring their enforceability.

Road Ahead for the FTA

The conclusion of negotiations is the first step in the process towards the FTA’s entry into force.

The FTA must now be presented to the Council of the European Union (Council), i.e. the EU’s member states, which must approve its signature by qualified majority. Australia must also complete its required domestic steps before signing the FTA, including obtaining approval from the attorney-general and the Federal Executive Council. Australia and the EU will then be able to sign the FTA (likely in early to mid-2027).

Once the FTA is signed, Australia and the EU will begin their respective ratification procedures.

In Australia, the FTA and the Joint Standing Committee on Treaties’ recommendation on whether the FTA should be binding will be tabled in both houses of Parliament. After this and before the FTA can enter into force, any legislative changes needed to implement the FTA domestically must be passed by both houses of Parliament, after which the governor-general in council may approve its ratification.

In the EU, the extensive nature of the FTA means that it will likely have to be approved both by the EU as a whole (i.e. by the Council and the European Parliament) and individually by the EU’s 27 member states.

As has been observed with previous EU trade agreements, this may prove difficult. Nevertheless, the EC should be able to “provisionally” apply certain key aspects of the FTA without the individual approval of the member states. Alternatively, the EC could try to split the agreement into an easier to transpose agreement covering topics falling under the EU’s exclusive competences and a second agreement covering topics falling under shared competences.

The FTA may prove to be politically sensitive in the EU. Agricultural provisions in particular, which already caused a breakdown in negotiations in 2023, are likely to be controversial. It follows that the road towards the full ratification may prove tortuous, making “provisional” application a probable solution when the time comes.

Despite this, the need for supply chain diversification, moderate growth and increasingly uncertain circumstances in markets such as China and the US means that there is political and economic momentum in favour of the FTA on both sides. As long as it remains so, the FTA is expected to remain a priority for both Brussels and Canberra.

Content of the SDP

The SDP mainly sets out cooperation frameworks in areas such as, but not limited to, maritime security, cyber issues, defence initiatives (e.g. exploring involvement in respective defence initiatives), space security, the climate change and security nexus, external aspects of economic security, etc.

How We Can Help

Our teams in Brussels and Sydney are ideally placed to help clients leverage the FTA to the fullest.

From investment and trade opportunities to the optimisation of existing supply chains and the fulfilment of sustainability-related obligations, the FTA is an invitation to rethink Australia-EU operations. The technicality of the agreement and the complexities of its ratification mean that in-depth analysis may be warranted. Our lawyers and public policy experts routinely assist clients in relation to FTAs, and can help you prepare for the Australia-EU FTA as early as necessary, and throughout its ratification process.

Legal NewsBITE: Food and Drink Quarterly March 2026

Wed, 25 Mar 2026 16:05:46 +00:00

Welcome to Legal newsBITE: Food and Drink Quarterly, put together by our UK and EU food and drink team.

Articles this quarter include:

UK and EU Sanitary and Phytosanitary (SPS) Alignment
The New European Commission Strategy on Life Austria – Next for Legislation Restricting HFSS Advertising?
Consultation on Change to UK Nutrient Profiling Model
Artificial Intelligence (AI) meets Enforcement of EU Food Law!
Upcoming Changes to UK Price Marking Order 2004 – Scope for Prepacked Food and Drink
EU Proposal for Legal Framework on Precautionary Allergen Labelling
Impact of Ultra-processed Food (UPF) Litigation Developments in the US
UK Deposit Return Schemes (DRS) Update
EU Ban on “Meat” Names for Plant Based Foods
UK FSA National Food Crime Unit Enforcement
Strait of Hormuz Impact on Food Supply Chain
Closure of UK Allotment Due to Per- and Polyfluoroalkyl Substance (PFAS) Soil Contamination Against Context of UK PFAS Plan
Food Contact Materials – Revision of the Plastic Regulation
Targeted Consultation on a Revision of the Water Framework Directive
New Public Consultation To Tackle Territorial Supply Constraints and Protect the Single Market

If you have any comments or suggestions for Legal newsBITE or you would like to get in touch, please contact us.

Pensions Weekly Update – 25 March 2026 Part Two

Wed, 25 Mar 2026 15:25:20 +00:00

Here is part two of our weekly summary of key legal and regulatory developments relevant to occupational pension schemes that you might have missed, with links for further information.

In part one, we looked at legislative developments relating to the Pension Schemes Bill, National Insurance Contributions (Employer Pensions Contributions) Bill and the Finance Act 2026.
The Pension Protection Fund (PPF) has published its policy statement and levy rules for 2026 to 2027. The levy is set at zero for conventional schemes, with a levy still payable by alternative covenant schemes (i.e. superfunds). The PPF says that while some levy-specific data will no longer be required, the PPF will continue to need a core set of data via the annual pension scheme return to help it assess and monitor risk across the defined benefit universe, including to inform decisions on whether, and how, a levy should be charged in future. It says that it will undertake a review of future data requirements in due course.
As highlighted in our recent update, phase 2 of consumer testing of the MoneyHelper dashboard is underway. The Pensions Dashboards Programme’s (PDP) latest blog post gives further information on the rollout, explains how phase 2 will help shape future dashboard development and describes how the industry will be kept informed. PDP also cautions that schemes should expect a rise in enquiries as testing activity increases and more partial matches are generated.
The Pensions Administration Standards Association (PASA) has published the second and third instalments of its trustee-administrator lifecycle series. Part 2 outlines the key areas trustees should consider before commencing a review for the appointment of a new administrator. Part 3 focuses on the transition process itself, highlighting the need for structured planning, robust governance and open communication to aid a smooth handover.
The Pensions Regulator (TPR) has released its 2025 annual report on the UK’s occupational defined contribution (DC) market. Consolidation in the DC sector has continued, with the number of schemes falling by 15% compared with the previous year. Total DC assets increased by 22%, rising from £205 billion in 2024 to £249 billion in 2025. Master trusts now account for approximately 92% of all DC memberships, underscoring their dominant position in the market.
The chief executive of TPR, Nausicaa Delfas, gave a speech at the JP Morgan Pension and Savings Symposium, in which she urged the market to align behind a vision to generate a sustainable income in retirement. She said this would mean innovation in defined benefit (DB) endgame, innovation in terms of DC investments and default retirement plans, as well as strong governance standards, effective administration and innovation through data and artificial intelligence (AI). Ms Delfas also highlighted the importance of TPR taking a different approach to regulation. She gave the example of new guidance for DC master trust reserving, to help schemes to use the most efficient mix of assets to meet their capital requirements and enable some to safely reduce the level of cash reserves they have, unlocking investment for more productive purposes.
AI is currently a hot topic in most industries. In this blog post, our colleagues consider the UK government’s full report considering the use of copyright works in the development of AI systems.

If you would like specific advice on any of these issues or anything else, please contact a member of our Pensions team.

Pensions Weekly Update – 25 March 2026 Part One

Wed, 25 Mar 2026 15:12:18 +00:00

Here is part one of our weekly summary of key legal and regulatory developments relevant to occupational pension schemes that you might have missed, with links for further information.

The Pension Schemes Bill continued to be debated in the House of Lords on 19 March and 23 March. Further amendments were made to the value for money (VFM) provisions, along with amendments that deleted the controversial asset allocation provisions/power to mandate how defined contribution (DC) pension funds are invested. Other amendments agreed to include:
- Additional exemptions from the requirement for DC pension funds to scale up to £25 billion.
- A requirement to have regard to innovation and competition when determining asset scaling requirements/exemptions.
- An increase to the time period during which a small pot would be considered to be dormant for the purposes of automatic consolidation from 12 months to 36 months.
- Clarification that guided retirement provisions apply in respect of deferred members, as well as active and pensioner members.
- Technical amendments to the provisions relating to the Pension Protection Fund (PPF) and Financial Assistance Scheme that introduce indexation (Consumer Price Index (CPI) capped at 2.5%) prospectively to payments in respect of pre-1997 accrual where former schemes provided for those increases.
- The creation of a new unfunded public sector scheme to take a transfer of the AWE pension scheme, which is a trust-based DB pension scheme for employees and former employees of AWE plc, the Atomic Weapons Establishment. Since 2021, AWE plc has been wholly owned by the Ministry of Defence, and the pension scheme is backed by a crown guarantee. The assets held by the scheme are to be sold and the proceeds transferred to the treasury. Consequences for members are to be tax neutral.
- A requirement for the secretary of state to publish a review, within 12 months of the bill being passed, of the long-term affordability, intergenerational fairness, fiscal sustainability and accounting treatment of public service pension schemes.
- A requirement within three months of the bill being passed to make regulations to commence the provisions laid out in section 169(2)(d) of the Pensions Act 2004, which would allow the PPF to discharge liabilities in respect of compensation by way of a cash sum.
- A requirement within 12 months of the bill being passed to conduct a review of all legislation, regulation and guidance governing marketing, financial promotion and member communications in relation to occupational and personal pension schemes. The review must consider whether existing rules unduly restrict pension providers from communicating risks, warnings, comparative information, providing guidance and targeted support on decumulation options, fund choice, consolidation and value for money, or restrict providers from supporting informed member decision-making through guidance or targeted support.
- The VFM measures will now come into force on a date specified in regulations, rather than on royal assent.
Also of note, was that the House of Lords voted down the government’s amendment to insert a new section 36ZA into the Pensions Act 1995. This would have provided the primary legislation required for the government to issue statutory guidance on trustees’ investment duties, which the pensions minister had previously said would be issued for consultation soon. The new section would have required the secretary of state to issue guidance explaining aspects of the law relating to a scheme’s statement of investment principles and choosing investments. The draft wording says that this may include an explanation of the meaning of any expressions relevant to that law, and include example illustrations. Trustees and fund managers would be required to have regard to that guidance. The scope of the proposed guidance would be particularly wide, and could have the potential to change expressions and meanings already well understood by virtue of trust law. Perhaps the House of Lords are predicting that this clause will be reinstated further down the line, because they agreed to an amendment to the bill that would bring the clause into force two months after royal assent.

The next stage is that the bill will be read for a third time in the House of Lords (with opportunity for further amendments) on 26 March, and then the House of Commons will consider the amendments made to the bill by the House of Lords. A date for the latter has not yet been scheduled.

Amendments made to the National Insurance Contributions (Employer Pensions Contributions) Bill by the House of Lords were considered by the House of Commons on 23 March. This is the bill that imposes a cap on the amount of pension contributions that can be made (without being subject to national insurance contributions) as part of a salary sacrifice arrangement. One of the amendments made to the bill by the House of Lords was to increase the cap from £2,000 to £5,000. Other amendments include exemptions for basic rate taxpayers, and small and medium sized businesses and charities, along with a provision that would exempt salary sacrificed pension contributions over the limit from being included in the calculation of student loan repayments. The House of Commons rejected the House of Lords’ amendments to the bill on the grounds that they would alter financial arrangements made by the House of Commons. The next step is that the House of Lords will consider the House of Commons’ reasons on 25 March.
The Finance No.2 Bill has received royal assent and become the Finance Act 2026. This is the legislation that introduces inheritance tax (IHT) on unused pension pots and death benefits from 6 April 2027. The legislation was amended during the final stages to clarify that all death in service benefits, including in relation to those from life assurance only schemes, would be exempt from being included in the IHT calculation for the estate of a deceased individual.
In part two of our weekly update, we cover other developments from the PPF, MoneyHelper, the Pensions Administration Standards Association and The Pensions Regulator.

If you would like specific advice on any of these issues or anything else, please contact a member of our Pensions team.

EU PFAS Restriction: A Critical Window for Companies To Influence the Outcome

Wed, 25 Mar 2026 12:06:02 +00:00

The proposed EU-wide restriction on per- and polyfluoroalkyl substances (PFAS) is now entering a decisive phase for companies across multiple sectors.

Indeed, following several years of scientific assessment, the process is moving towards its final stages, which are expected to result in an amendment to Annex XVII of the Registration, Evaluation, Authorisation, and Restriction of Chemicals (REACH) Regulation and the introduction of far-reaching restrictions on the manufacture, placing on the market and use of PFAS in the EU.

On 3 March 2026, the European Chemicals Agency’s (ECHA) Committee for Risk Assessment (RAC) adopted its opinion on the proposed restriction. Shortly thereafter, on 11 March 2026, ECHA’s Committee for Socioeconomic Analysis (SEAC) agreed on its draft opinion. Both have been published on 26 March and are available on ECHA’s website.

The SEAC draft opinion is now subject to a 60-day public consultation, which will run until 25 May. Unlike the RAC opinion, which is not formally open for comments, this public consultation represents a critical and time-limited opportunity for companies to engage with the process and ensure that their specific uses, applications and sectoral constraints are properly reflected before the regulatory framework is finalised.

In practice, this consultation represents the last formal opportunity for companies to influence the substance of the proposed restriction before the file moves into the European Commission for decision-taking.

Public Consultation on SEAC Draft Opinion

The consultation is open to all interested stakeholders, and submissions must be made through ECHA’s online platform. There are no formal standing requirements. In practice, however, submissions tend to carry greater weight where they are supported by robust evidence and clearly address sector-specific uses and impacts.

The consultation will focus on SEAC’s draft opinion, which addresses, in particular:

The socioeconomic impacts of the proposed restriction
The availability and technical and economic feasibility of alternatives
The overall cost-benefit balance of the regulatory options under consideration

Importantly, the consultation does not constitute a general reopening of the restriction proposal. Rather, it is limited to comments on SEAC’s preliminary conclusions.

Within this framework, stakeholders may, for example, seek to challenge or refine SEAC’s assessment of costs and impacts, provide new technical or economic evidence (including as regards substitution constraints or timelines), or support the case for derogations, transitional periods, or differentiated regulatory treatment.

The consultation will run until 25 May. Extensions are not typically granted, and late submissions are generally not taken into account. Time will therefore be of the essence, and companies should get ready to comment within a tight timeframe.

Strategic Importance of Participation

Participation in the SEAC consultation is of critical importance. The SEAC is required to take into account relevant information submitted during the consultation before finalising its opinion.

The final SEAC opinion, together with the RAC opinion, will form the basis of the consolidated ECHA opinion transmitted to the European Commission.

At subsequent stages of the process, including the commission’s preparation of a draft measure and discussions within the REACH Committee under the comitology procedure, opportunities for stakeholders to influence the substance of the restriction are more limited and are not conducted through an open, public consultation process.

In practical terms, the SEAC consultation therefore represents the last formal stage at which stakeholders can introduce new evidence and substantively shape the regulatory outcome.

Indicative Timeline

The RAC opinion and the SEAC draft opinion were published on 26 March; a 60-day consultation on the SEAC draft opinion has now started.

Following the consultation, SEAC is expected to finalise and adopt its opinion by the end of 2026, taking into account the submissions received. The combined ECHA opinion would then be transmitted to the European Commission later in 2026.

On that basis, the commission is expected, in early 2027, to consider the preparation of a draft amendment to Annex XVII of the REACH Regulation. The draft measure would then proceed through the comitology procedure, including consultation of Member States in the REACH Committee, a World Trade Organization notification, and a scrutiny period by the European Parliament and the council, ultimately leading to the adoption and publication of the restriction.

How We Can Assist

We are uniquely positioned to assist stakeholders at this critical juncture. We are Europe’s largest chemicals law firm, and combine deep regulatory and advocacy experience across sectors impacted by PFAS regulation.

We support clients in understanding and anticipating the implications of the proposed restriction. We can assist in the preparation and submission of robust, evidence-based contributions to the SEAC consultation, including the development of arguments in support of derogations, appropriate transitional periods and proportionate regulatory treatment.

Beyond the consultation phase, we work with clients to develop forward-looking strategies, including preparing for potential restrictions, assessing alternative compliance pathways, and supporting engagement at EU level during the commission and comitology stages where relevant.

Given the limited window for meaningful input, early preparation and careful strategic positioning will be essential. We remain available to assist clients as needed.

Employment Issues Commonly Missed in M&A Transactions – Hidden Workforce Risks That Can Erode Deal Value

Tue, 24 Mar 2026 17:55:07 +00:00

Introduction

In most mergers and acquisitions (M&A), employment issues are rarely the headline drivers of valuation. Buyers tend to focus on revenue growth, intellectual property, market share and operational synergies. Yet in many transactions, workforce-related liabilities become some of the most significant sources of post‑closing exposure.

Over more than two decades of partnering with corporate deal teams on transactions and employment diligence, I have advised on the employment issues that are unavoidably present in almost every deal. Fortunately, my corporate partners involve their employment colleagues from the inception of the deal, or at least at the start of due diligence. In fast‑moving deals, however, employment diligence is sometimes treated as routine or administrative, or not worthy of specialist attention. In reality, it can uncover issues that materially affect valuation, integration planning and long‑term competitive positioning.

When employment diligence is scoped properly and employment counsel brought in early, many of these issues can be identified and mitigated. When it is not, they often surface shortly after closing, sometimes with costly consequences.

Below are some of the bigger employment‑related risks that investors and acquirers frequently underestimate during transactions, along with lessons drawn from real deal experience.

Restrictive Covenants That Turn Out To Be Unenforceable

One issue that frequently arises in transactions involves assumptions about the enforceability of executive noncompete agreements.

Buyers often assume that key executives are bound by enforceable noncompete, confidentiality and non‑solicitation agreements. However, the enforceability of these agreements varies significantly by state, and depends heavily on how the agreements were drafted and implemented.

In one post-closing matter I worked on, a prominent New York corporate firm handled the deal documentation, but their employment counsel had clearly not been involved in reviewing the target company’s executive restrictive covenant agreements under the relevant state law.

Shortly after the transaction closed, several senior executives left the company and quickly launched a competing business. When the buyer attempted to enforce the noncompete agreements, it became clear that the agreements were unlikely to be enforceable under the governing state law due to several structural and statutory issues. In that case, the executives worked in a “red pencil” noncompete review state, where the judge can throw out the entire noncompete if it is drafted overbroadly. Furthermore, certain executives had not received adequate consideration under the applicable state law.

As a result, the buyer had limited practical ability to prevent key executives from competing directly with the business only weeks after closing, an outcome that significantly undermined the value of the acquisition. Had employment counsel advised during the due diligence phase, the buyer could have required execution of new legally compliant executive noncompetes as a deal term and closing condition.

Hidden Wage and Hour Exposure Embedded in Payroll Systems

Another issue that frequently surfaces during employment diligence involves wage and hour compliance, particularly in companies with complex payroll systems.

In one transaction I worked on, the target company appeared to have relatively routine payroll practices. However, when we conducted a deeper review of payroll data and compensation practices, we discovered a systemic issue involving the calculation of the overtime regular rate.

Specifically, the company’s payroll system was failing to properly incorporate certain incentive compensation into the regular rate used to calculate overtime.

Because the issue was embedded in the payroll system configuration itself, the error had gone unnoticed internally for several years. Once the payroll data was analyzed, it became clear that the improper calculations were affecting a significant number of employees.

Based on preliminary modeling, the potential class action exposure for unpaid overtime alone approached US$1 million in back wages, before considering potential statutory penalties or attorneys’ fees.

Importantly, this issue was not obvious from high‑level diligence materials. It required reviewing payroll records and understanding how the payroll system was actually performing its calculations. Fortunately, in that deal, our client was able to insert a special indemnification rider for that liability.

Independent Contractor Misclassification

In another acquisition involving a services‑based business, the buyer initially viewed the target’s reliance on independent contractors as an operational advantage.

However, a closer review of the contractor relationships revealed that many workers were functioning in roles that closely resembled employees under applicable state classification tests.

The workers performed core operational functions, the company controlled scheduling and work methods and many contractors had long‑term, exclusive relationships with the company.

Under several applicable state law tests (e.g., the ABC test), these factors created a meaningful risk that the workers could be deemed employees rather than independent contractors. If that occurred, the company could have faced exposure for unpaid overtime, payroll taxes, benefits eligibility claims, workers’ compensation obligations and other employee-based claims.

Because the issue was identified during diligence, the buyer was able to plan for remediation and structure the transaction accordingly. Without that review, the company could have inherited substantial classification exposure embedded in the business model.

Unresolved Employee Complaints

Not all employment risks appear in contracts or payroll records.

In another transaction involving a fast‑growing operating company, diligence revealed that several internal complaints had been raised against a senior manager that alleged inappropriate workplace conduct.

Although the company had documented receiving the complaints, it had never conducted a formal investigation or documented a clear resolution. From a diligence perspective, this created potential exposure for harassment or retaliation claims.

Because the issue was identified prior to closing, the buyer was able to evaluate the potential exposure and address the situation during integration planning. Situations like this demonstrate that employment diligence must also consider employee relations issues that may not be visible from standard policy reviews.

Worker Adjustment and Retraining Notification (WARN) Act Exposure in Asset Transactions

Another area where buyers sometimes underestimate risk involves the federal WARN Act and similar state laws.

In one transaction I worked on, the buyer structured the deal as an asset purchase and initially assumed that WARN obligations would not be triggered because it would likely hire most employees, even though it did not want to commit to any hiring of employees.

However, a closer analysis revealed that the seller was planning to terminate a large number of employees that did not receive offers from the buyer three days after closing. In the draft asset purchase agreement, the buyer had no contractual obligation to hire enough of those employees to avoid a WARN Act trigger, which meant that the WARN “sale of business” exception would not apply. Because the WARN Act deems those employees of the seller employed on the day of closing to be employees of the buyer for WARN purposes, the buyer would have unexpectedly taken on the WARN liability for that mass layoff effected by the transaction.

Because the issue was identified during the diligence and drafting phase, the parties were able to address it through transaction structuring and planning so that WARN was not triggered.

Without that review, the WARN implications could have emerged only after closing, creating huge potential liability tied to the workforce reduction.

Conclusion

For investors and acquirers, these examples illustrate a broader point: many employment‑related risks are not visible from standard diligence summaries or policy reviews.

Instead, they often require deeper analysis of payroll practices, workforce classifications, executive agreements, restrictive covenants and employee relations history.

When these issues are identified early, buyers can address them through transaction structuring, indemnities, pricing adjustments or remediation plans. When they are discovered after closing, however, they often become costly surprises that affect deal value.

For that reason, employment diligence should not be treated as a routine compliance exercise. Done properly, it is an important component of protecting the long‑term value of an acquisition.

Royal Decree-Law 7/2026 of 20 March, Approving the Comprehensive Response Plan to the Crisis in the Middle East

Tue, 24 Mar 2026 15:45:31 +00:00

The Spanish government has approved Royal Decree-Law 7/2026 of 20 March, establishing a comprehensive response plan to address the crisis in the Middle East.

Background and Purpose of the Legal Alert

The purpose of this legal alert is to provide an overview of the main measures introduced by the Royal Decree-Law 7/2026 of 20 March, which approves the Comprehensive Response Plan to the Crisis in the Middle East.

This regulation has been adopted by the Spanish government as an urgent response to the economic and geopolitical consequences arising from the recent escalation of the conflict in the region, particularly its impact on energy markets, inflationary pressures and the stability of essential sectors.

Although the bulk of the Royal Decree‑Law focuses on energy, fiscal and industrial measures, it also introduces several provisions with significant implications for labor law, and, in particular, the employment protection.

The Royal Decree‑Law entered into force on the day following its publication in the Official State Gazette (BOE), meaning 21 March 2026.

Key Employment-related Measures

Prohibition of Dismissal for Companies Receiving Public Aid

Companies benefiting from direct public aid are prohibited from dismissing employees on economic, technical, organisational or production-related (ETOP) grounds, or force majeure, arising from the situation caused by the crisis in the Middle East.

Any dismissal carried out in breach of this prohibition must be classified as null and void, and obliges the company to repay the aid received.

Rules Applicable to Fixed‑discontinuous Employees

The same dismissal‑related restrictions are extended to fixed‑discontinuous employees.

Therefore, the grounds cited in the previous section cannot be used to justify the end of the activity period, nor the failure to recall the employee until 30 June 2026.

This ensures that companies benefiting from public aid do not avoid the employment‑maintenance obligation by modifying the seasonal activity cycle of these workers.

In light of the above, before proceeding with any dismissal until 30 June 2026 based on ETOP grounds or force majeure arising from the situation that the relevant measures are intended to address, it is advisable to verify any direct public aid received and confirm that such aid does not trigger the aforementioned prohibition on dismissals (for example, direct aid for the road transport sector, which is expected to be very common).

We would be pleased to discuss the implications of this development with you and to assist with any immediate queries you may have.

Freezing Non‑party Assets in London‑seated Arbitrations: The Post‑reform Landscape

Tue, 24 Mar 2026 09:00:00 +00:00

The Arbitration Act 2025 (in force since 1 August 2025) introduced a significant expansion of the English court’s powers to support arbitration. The English courts may now grant worldwide freezing orders (WFOs) against non‑parties to a London‑seated arbitration. This change resolves long‑standing uncertainty around whether section 44 (s.44) of the Arbitration Act 1996 could be used to reach third‑party asset‑holders.

This closes a long-standing gap in asset‑protection strategies for complex international disputes, particularly where assets sit within offshore structures, or are held by individuals or entities outside the arbitration.

What Has Changed?

S.44 of the Arbitration Act 1996 has long allowed the English court to grant interim measures, including WFOs, in support of arbitration, but this ability was widely understood to apply only to the parties to an arbitration. The Arbitration Act 2025 now expressly extends these powers to cover actions taken: “…in relation to a party or any other person.”

The result is that non‑party assets can now be frozen within a single s.44 application, without the need for parallel English proceedings or creative jurisdictional workarounds.

Why This Matters

In modern cross border disputes, assets are frequently held by individuals or entities outside the arbitration. Common examples include:

Parent or subsidiary companies
Offshore holding structures
Nominees, trustees or escrow agents
Controlling individuals behind corporate respondents

Previously, freezing such assets required separate claims, often adding delays and uncertainty. The amendment removes these barriers and aligns the law with commercial reality by giving London‑seated arbitrations a new enforcement horizon.

When the Expanded Power Applies

The expanded s.44 jurisdiction applies to arbitrations commenced on, or after 1 August 2025. Applicants must still satisfy the usual WFO criteria:

A good arguable case (or serious issue to be tried, per Dos Santos v Unitel)
A real risk of dissipation
It is just and convenient to grant the requested relief

Three Immediate Use‑cases

Group‑structure Dissipation
Assets moved to a non‑party parent/subsidiary can now be frozen by the English Court within the same s.44 application.
Non‑party Trustees and Escrow Holders
Where assets sit with a non-party fiduciary pending enforcement, a WFO may now reach that party and assets directly.
Individuals Behind Offshore Entities
If a controlling individual holds assets in England, a WFO may now reach those assets even if that person is not a party to the arbitration in question.

Practical Steps for Clients and Offshore Counsel

Move quickly – Third‑party asset transfers often accelerate once disputes escalate.
Map the structure – Identify connected entities and individuals early.
Expect scrutiny – Courts will examine the link between non‑parties and the dissipation risk.
Leverage the London seat – Unlike section 25 of the Civil Jurisdiction and Judgments Act 1982 (CJJA) (foreign proceedings), s.44 does not require any additional English connection beyond the seat.
Consider coordination – English WFOs remain a key component of multijurisdictional freezing strategies.

Key Takeaways

The amendment to s.44 consolidates London’s status as a leading enforcement and asset‑protection center. Clients previously advised that only the named respondent could be targeted may now have significantly broader protection available.

Our firm’s disputes team advises regularly on WFOs, cross‑border enforcement and coordination with offshore counsel. We would be pleased to discuss whether the new s.44 regime can support your matter.

HSR Update: Fifth Circuit Action Reinstates Prior HSR Rules and Form

Fri, 20 Mar 2026 14:03:07 +00:00

On March 19, 2026, the US Court of Appeals for the Fifth Circuit denied the FTC’s motion for a stay pending appeal in Chamber of Commerce v. FTC, allowing the district court’s decision vacating the FTC’s 2024 overhaul of the HSR Notification and Report Form to take immediate effect.

The vacated rule had significantly expanded filing requirements, including new narrative disclosures and broader document production obligations. The district court held that the FTC exceeded its statutory authority in adopting key aspects of the rule. The FTC has appealed, but the prior HSR framework now governs while the appeal proceeds.

The FTC’s Premerger Notification Office has announced that it is immediately accepting filings using the pre-February 10, 2025, form and instructions and will make those materials available shortly. The agency will also continue to accept filings under the February 10, 2025, form on a voluntary basis.

Practical Implications

The prior HSR form is reinstated and governs current filings.
Parties may optionally use the 2025 form.
There is no change to filing thresholds or waiting periods.

Practical Guidance

For near-term filings, parties should generally consider using the prior form to reduce upfront burden. The new form may still be appropriate where parties wish to provide additional detail upfront to potentially streamline review. Parties should remain mindful of potential “whiplash risk” if the Fifth Circuit later reinstates the new rule.

We will continue to monitor developments and are available to discuss filing strategy for upcoming transactions.

Foreign Bribery Update (AU)

Fri, 20 Mar 2026 09:00:00 +00:00

The final quarter of 2025 and first quarter of 2026 have seen several significant developments in Australia’s anti-bribery and corruption landscape, which Australian businesses with overseas operations and foreign companies doing business in Australia should have on their radar.

With the absolute liability corporate offence for a failure to prevent foreign bribery now very much in force, this is a good time for any directors, general counsel and compliance officers to carefully examine the adequacy of their company’s anticorruption procedures and culture.

Read full insight to learn more.

FCC Proposes New Rules for Foreign Call Centers – And the Reach May Surprise You

Thu, 19 Mar 2026 16:55:00 +00:00

The Federal Communications Commission (FCC) is expected to adopt a Notice of Proposed Rulemaking (NPRM) that could affect businesses that either operate customer service call centers outside the US, or rely on third parties to do so. The stated intent of the FCC’s proposal is to facilitate the onshoring of these call centers.

As proposed, such call centers outside the US would face new obligations and restrictions on their ability to make calls. These include English proficiency requirements, caps on the percentage of calls that can be handled by offshore call centers, granting consumers the right to transfer calls to a US-based call center and prohibiting certain types of calls from being handled by foreign call centers.

Conflict in the Middle East and the Potential Impact on Derivative Transactions

Thu, 19 Mar 2026 15:06:33 +00:00

As a result of the ongoing conflict in the middle east, energy prices have surged in recent weeks, bringing with them inflation fears, a real potential for a “higher-for-longer” interest rate environment and dramatic shifts in the forward and swap curves for various underlying assets. At the centre of the energy crisis lies Iran and the Strait of Hormuz, one of the world’s most critical energy chokepoints. The article examines the impact on pricing of derivatives transactions, and identifies the key provisions to review in existing derivative arrangements in light of the current conflict.

The Role of Derivative Transactions in Hedging Risk, and the Potential Impact of Current Conflict on Pricing

Derivative instruments allow market participants to transfer, manage or redistribute risk. In the context of energy markets, the fundamental purpose of hedging is to protect against adverse price movements that could disrupt business planning, erode margins or create cashflow difficulties.

As a result of the geopolitical shocks in the Middle East, the forward curve for oil has experienced a dramatic shift and has moved into a state of steep backwardation (that is, where near-term prices are significantly higher than future prices). This has been more significant for shorter tenors, suggesting that traders are betting that the current crisis will be shorted lived. As countries around the world are planning releases from emergency reserves, this is starting to reshape the forward curve.

As of mid-March 2026, the interest rate swap curves have experienced significant, sharp upward shifts, reversing the declining trend seen earlier in the year. These upward shifts have been driven by the geopolitical shocks in the Middle East that bring with them inflation fears and a real potential for a “higher-for-longer” interest rate environment, and so the market is pricing in a potential hold, or even a scenario where anticipated rate drops do not occur.

Those contemplating new derivatives positions in the current environment should consider the relevant forward and swap curves, and how they are changing, what current pricing might mean for cash flow management, terms of any margin requirements, and choice of counterparty.

Reviewing Existing Derivatives Transactions Documentation: Key Provisions To Consider

For those with derivative portfolios, whether governed by an International Swaps and Derivatives Association (ISDA) Master Agreement or a similar framework agreement or bespoke derivatives documentation, the current climate raises several important contractual issues. For the purposes of this article, we reference provisions of the 2002 ISDA Master Agreement, and where defined terms are used herein but not defined, they are as defined in the 2002 ISDA Master Agreement. We expect there will be equivalent terms in other forms of documentation.

Credit Support and Margining Obligations

Rapid and large price movements result in significant movements in the mark-to-market of derivatives transactions, and, where there are margining obligations under those transactions, this will generate correspondingly large margin calls. Where derivatives transaction are documented under bespoke documentation, dealer counterparties may have more flexibility and discretion to call for larger amounts of margin, without an express obligation to return that margin when prices become more stable.

The ability to meet these calls depends on available liquidity, the types of eligible collateral, and the operational capacity to transfer collateral within the required timeframe. Failure to satisfy margin calls could trigger a ‘Failure to Pay or Deliver’ Event of Default under an ISDA Master Agreement or an equivalent event under other documentation. It is important to consider the specific terms of the derivatives documentation, including any credit support annex (CSA) that forms part of a 2002 ISDA Master Agreement or the equivalent, and understand the margining obligations.

Force Majeure

The 2002 ISDA Master Agreement includes a ‘Force Majeure Event’ as a Termination Event. Under this provision, a ‘Force Majeure Event’ may be triggered if a force majeure or act of state beyond the control of a party’s office, a party or its credit support provider prevents performance or compliance (or would be so prevented if such payment, delivery or compliance were required on that day) or renders performance or compliance impossible or impracticable (or it would be impossible or impracticable to perform, receive or comply if such payment, delivery or compliance were required on that day) by that office, party or credit support provider, and the office, party or credit support provider could not, after using all reasonable efforts (but without any obligation to incur a material loss), overcome the relevant event. This only applies after giving effect to any other applicable provision, disruption fallback or remedy under the relevant agreement and confirmation.

Parties should be aware of the ‘Waiting Period’ mechanism in the 2002 ISDA Master Agreement. During the Waiting Period, payments and deliveries that would otherwise be due are suspended until the earlier of (i) the expiry of the Waiting Period and (ii) the date on which the ‘Force Majeure Event’ Termination Event is cured. Only after the expiry of the Waiting Period, if the event persists, may the affected transactions be terminated.

It is also worth noting a potential area of uncertainty: where one party considers the event that has occurred to trigger an Event of Default (for example, a ‘Failure to Pay or Deliver’ Event of Default) and the other party argues that it constitutes a ‘Force Majeure Event’ Termination Event, the contractual outcome and available remedies may differ significantly. This is a particular risk in the current environment, where supply disruptions, sanctions and military activity may simultaneously affect multiple counterparties in different ways.

The 2002 ISDA Master Agreement does not define the term “force majeure”, leaving the question to the governing law of the agreement. Under English law, force majeure is not a term of art and has no general common law definition.

Any determination of a ‘Force Majeure Event’ Termination Event in respect of derivatives transactions will need to be considered on a case-by-case basis and on the relevant facts. Although it can be said the events occurring at the moment may be force majeure or acts of state outside the parties’ control, with cash settled transactions, it is likely that these events will not prevent performance or compliance, or render performance or compliance impossible or impracticable. However, this may be a different story for physically settled energy commodity derivatives transactions.

Failure To Pay or Deliver

In a period of market volatility, counterparties may face difficulties meeting their payment or delivery obligations under derivatives transactions. This may arise from liquidity constraints, operational disruptions or the inability to source or deliver physical commodities. With the current conflict causing war‑risk insurance costs to surge and potentially such insurance not to be available; freight rates to hit record levels; and other disruptions at the Strait of Hormuz, these issues for energy commodities needing to travel through the Strait of Hormuz could have a significant impact on parties’ abilities to perform their obligations under physically settled energy commodity derivatives transactions. Under the 2002 ISDA Master Agreements, a ‘Failure to Pay or Deliver’ Event of Default will arise if a party fails to make a payment or delivery when due under the agreement and such failure continues for the applicable grace period (one Local Business Day, unless amended). A ‘Failure to Pay or Deliver’ Event of Default triggers the non-defaulting party’s right to designate an Early Termination Date and close out all outstanding transactions under the agreement.

Clients with physically settled commodity derivatives transactions should be particularly vigilant. Where delivery is contingent on the availability of transport through disrupted routes, the practical impossibility of delivery may give rise to disputes as to whether the failure is a ‘Failure to Pay or Deliver’ Event of Default or a ‘Force Majeure Event’ Termination Event under the applicable terms. The distinction between a default and a force majeure event may have different consequences.

Where a party might be experiencing financial difficulty or operational disruption, we recommend early engagement with your counterparty.

Bankruptcy

Market volatility and uncertain times may result in cash flow difficulties, which may lead to (i) the need to appoint an administrator, seek reorganisation or relief under bankruptcy laws, seek voluntary bankruptcy or enter into arrangements with creditors, or (ii) an involuntary bankruptcy. The 2002 ISDA Master Agreement includes a ‘Bankruptcy’ Event of Default, which provides for various insolvency-related events and actions. It should be considered whether any insolvency-related event or action could trigger a ‘Bankruptcy’ Event of Default, giving counterparties the right to terminate early or close out all transactions, and withhold payment or delivery in accordance with Section 2(a)(iii) of the 2002 ISDA Master Agreement.

Additional Provisions To Review

Sanctions and Illegality

The evolving sanctions landscape relating to the conflict should also be monitored closely. Expanded sanctions on entities, vessels or trade routes could give rise to an ‘Illegality’ Termination Event, which applies where it becomes unlawful for a party to perform any obligation under a transaction.

Cross-default

Where counterparties have cross-default provisions in their derivatives documentation, a default under a separate financing or trading agreement (for example, a commodity supply contract affected by the crisis) could trigger an event of default under the derivatives documentation. This will depend on the type of arrangements that are caught under the cross-default terms, and the thresholds. Under the 2002 ISDA Master Agreement, the concept of ‘Specified Indebtedness’ under the ‘Cross-Default’ Event of Default is standardly limited to obligations in respect of borrowed money. However, some derivatives documentation will extend this to include wider contractual arrangements.

Practical Recommendations

In light of the foregoing, we recommend the following steps:

Review derivatives transaction documentation – Identify which version of the ISDA Master Agreement governs each counterparty relationship, whether a CSA is in place, and whether force majeure provisions have been incorporated.
Assess margin exposure – Model the impact of continued price increases on your margin obligations. Ensure adequate liquidity is available to meet potential margin calls and that eligible collateral is readily accessible.
Monitor counterparty credit risk – Evaluate the creditworthiness and operational capacity of your derivative counterparties, particularly those with exposure to the Gulf region or to commodity markets directly affected by the conflict.
Review physically settled transactions – For any derivatives involving physical delivery of energy commodities, assess whether delivery routes, timelines or sources are affected by the current disruption and whether any market disruption fallbacks could apply.
Engage with counterparties early – Where potential difficulties in meeting payment, delivery or margin obligations are identified, proactive engagement with counterparties is advisable. Early communication can help to manage disputes and preserve commercial relationships.
Take legal advice before acting – The interaction between events of default, termination events and potential disruption fallbacks is complex and fact specific. Before issuing or responding to any notice of default, force majeure or early termination, it is advisable to seek specialist legal advice.
Consider discussing pricing with a hedging adviser – If contemplating new derivatives positions in the current environment, in addition to discussions with dealers, it may be helpful to discuss the relevant forward and swap curves and pricing with a third-party hedging adviser.

The Private Credit Market: Understanding Its First Real Test

Wed, 18 Mar 2026 15:29:32 +00:00

Global Private Credit & Direct Lending

The collapse of First Brands Group, the parallel collapse of Market Financial Solutions in the UK and recent redemption calls at some of the largest players in the private credit market have placed the US$1.8 trillion private credit industry under wide public scrutiny for perhaps the first time in the asset class’s phenomenal rise since the global financial crisis of 2008 (GFC).

As of mid-March 2026, several large private credit funds faced unprecedented redemption pressure, and JPMorgan has reportedly marked down collateral on software loans in private credit financing facilities, tightening the availability of funding to private credit lenders.

However, instead of portending doom for the asset class, these events should instead be seen as a market correction that can fortify the foundations of private credit, thereby allowing not just for continued growth, but for healthier and more sustainable growth.

This Q&A alert examines the structural fault lines and legal risks that underlay the disruptions described above, and explores specific steps that private credit funds, private equity sponsors and banks should be taking now to navigate this market correction.

Read the full insight

EU Sanctions Update: The New FAQ on Payment Services

Wed, 18 Mar 2026 11:40:00 +00:00

On 13 March 2026, the European Commission (EC) published an FAQ entitled “Provision of payments services”, refining the EU sanctions targeting Russia.¹ Compared to previous guidance touching upon Article 5b(2) in Council Regulation 833/2014, this new FAQ is a significant shift because it translates the legal requirements of Article 5b(2) into the practical language used in day-to-day payment operations.²

A Broader Scope

The March FAQ provides more detailed guidance regarding account continuity than anything issued so far. It clarifies that Article 5b(2) does not, in itself, require operators to terminate existing contracts or close accounts altogether. Rather, the broader customer relationship and nonprohibited services may continue, while the specific activities prohibited by Article 5b(2) must cease for customers who fall within scope. For banks, payment institutions and electronic-money institutions, that distinction is operationally significant because it separates the continued existence of the customer relationship from the separate question of whether a prohibited service is being provided.

That clarification should not be read as any relaxation of supervisory expectations. The obligation remains to ensure that prohibited services are not provided. There is an obvious risk of false comfort where firms rely upon the fact that accounts need not be closed, yet lack both the controls and the capability to adequately demonstrate to show that prohibited services were actually being in fact being prevented.

Ownership and Residence

Further clarification concerns the basic scope of Article 5b(2). As explained in the March FAQ, the prohibition is directed at three principal categories of customers: Russian nationals, natural persons residing in Russia, and legal persons, entities or bodies established in Russia. By contrast, an entity established in a Member State or in a third country does not fall within Article 5b(2) merely because it is owned or controlled by Russian persons. Russian ownership, in itself, is therefore not enough to trigger the prohibition for payment services, although the FAQ is equally clear that Article 12 may still be engaged where such an entity is being used as a vehicle for circumvention.

The residence and nationality exceptions must be read separately from that basic rule. Even where a natural person would otherwise fall within Article 5b(2), the prohibition does not apply if that person is a national of a Member State, of a country in the European Economic Area (EEA), or of Switzerland, or if that person holds a temporary or permanent residence permit in one of those jurisdictions. The March FAQ adds that holders of long-stay Type D visas who have completed the requisite residence-registration formalities are typically to be treated as legally resident for these purposes.

The FAQ also refines the residence exception by clarifying that instruments like residence permits must remain valid throughout the full validity period of any newly issued payment instrument. That raises a practical implementation question, namely how the duration of the instrument is to be aligned with the duration of the underlying residence right. Firms may therefore need to consider shorter instrument-validity periods, permit-expiry triggers, or renewal and revalidation controls.

Defining the Payment Chain

The March FAQ clarifies that existing payment instruments do not need to be cancelled or frozen, and that online and mobile banking, direct bank transfers and cash withdrawals are not prohibited by Article 5b(2)(b). By contrast, the prohibition does apply to the issuance, renewal or replacement of additional cards, and to commercial cards personalised for in-scope persons who do not benefit from the relevant exceptions. The distinction is therefore not between all payment instrument-related (i.e. card-related) activity and no card-related activity, but between the continued use of certain existing arrangements and the provision of new or specifically prohibited payment services.

The FAQ then refines that analysis by looking beyond the instrument itself to the service through which the transaction is carried out. A card may remain formally valid, yet a particular method of using it may still involve a prohibited service. That is why the EC draws a distinction between the continued existence of the payment instrument and the separate question of whether the surrounding payment infrastructure amounts to acquiring or payment initiation. In the same vein, the FAQ states that a simple bank-link redirection to the user’s own bank is not, without third-party initiation, a prohibited payment-initiation service.

The practical consequence is that firms can no longer assess compliance at the level of the product or channel alone. They must instead identify and classify the underlying payment services embedded within each transaction flow. In many cases, a single customer interaction will involve multiple service components, some of which may fall within Article 5b(2) while others do not. This requires a degree of service mapping and process decomposition that many institutions have not historically performed in a sanctions context. A Russian national resident in Russia, for example, may continue to use an existing debit card for an ATM withdrawal, even though the issuance of a replacement card upon expiry, or the use of that card through a separate third-party payment-initiation service, may fall within the prohibition. The compliance assessment must therefore distinguish between the continued use of an existing instrument and the provision of a separate regulated service within the same customer journey.

The March FAQ also clarifies the allocation of compliance responsibility across the payments chain. Although the account-servicing payment service provider (PSP) is identified, with reference to Recital 19 of Regulation (EU) 2025/2033, as the actor best placed to assess the customer relationship and the relevant account status, that does not displace the independent obligation of other providers in the chain to ensure that they are not themselves facilitating a prohibited service. PSPs are not expected to conduct exhaustive screening of each transaction at the moment of initiation. Their obligation, like that of acquirers, is instead to ensure that they are not themselves providing a prohibited service. In practice, that division of responsibility is likely to require a clearer delineation of roles, supported by contractual arrangements, control frameworks, and, where necessary, reliance models that can be justified to supervisors.³

Implementation Challenges and Areas of Likely Scrutiny

For many firms, the most immediate difficulty will not lie in interpreting the legal rule in the abstract, but in demonstrating that the operational distinctions drawn by the FAQ are actually being observed in practice. Customer-intake processes are often not designed to capture, verify and retain evidence of nationality and residence at the degree of granularity now required, especially in cases involving dual nationals, expatriates, complex residency profiles, or non-Russian entities with a Russian nexus. Detecting indirect exposure through affiliates, intermediaries and nested payment chains is rarely achievable through simple rules alone, particularly where the firm facilitates part of a broader transaction in which value may accrue to a restricted person through layered settlements or more complex structures.

Where operators transact across payment, electronic-money or crypto business lines, the control challenge may be more acute still. In such settings, the institution may need visibility over the client’s total exposure across linked accounts, wallets, subaccounts or related arrangements, together with a defensible valuation methodology and threshold-monitoring framework capable of triggering before a breach occurs. Supervisory attention is likely to focus less on the elegance of the written policy than on whether the firm can show that prohibited services are identified, internally referred, and blocked at the appropriate point in the payment chain.

How Can We Help

For institutions navigating the March FAQ, the central challenge lies in converting a more exacting sanctions framework into operational controls that can withstand scrutiny. We assist clients in mapping products and transaction flows to the underlying regulated services, testing whether existing screening and customer-status validation measures are sufficient, identifying where prohibited services may arise in practice, and strengthening the governance, internal-referral and evidential frameworks needed to support a targeted, services-based approach under Article 5b(2).

¹European Commission, “Sanctions adopted following Russia’s military aggression against Ukraine”, Finance; European Commission, “Provision of payments services”, Finance.

²European Commission, “Frequently asked questions – sanctions against Russia”, Finance; European Commission, “Commission Consolidated FAQs”; European Commission, “Deposits”, Finance.

³European Commission, “Provision of payments services”, Finance.

Pensions Weekly Update – 18 March 2026

Wed, 18 Mar 2026 09:00:00 +00:00

Here is our weekly summary of key legal and regulatory developments relevant to occupational pension schemes that you might have missed, with links for further information.

The Pension Schemes Bill reached the first day of the report stage in the House of Lords on 16 March. The debate (split into Part one and Part two) considered clauses of the bill relating to the Local Government Pension Scheme (LGPS) (clauses 1 to 8), the release of defined benefit (DB) surplus (clauses 9 and 10), and part of the value for money (VFM) measures (clauses 11 to 21).

Various amendments to the LGPS clauses were agreed, including an amendment that would prevent regulations requiring investment in specific asset classes or asset location in an investment strategy, along with new clauses dealing with benchmarking of LGPS liabilities and interim reviews of employer contribution rates. These amendments will need to be approved by the House of Commons before they form part of the final legislation.

None of the substantive amendments proposed to the release of surplus clauses were agreed by the House of Lords, including an amendment that would have required the secretary of state to report on whether the fiduciary duties of trustees of occupational pension schemes should be amended to permit discretionary indexation of pre-1997 accrued rights, where scheme funding allowed.

There was considerable debate around VFM, started by Baroness Altmann. However, the amendments considered on 16 March were not agreed, save in relation to government amendments to correct inconsistencies in the drafting.

The next report stage is scheduled for 19 March 2026.
The National Insurance Contributions (Employer Pensions Contributions) Bill has been read for a third time in the House of Lords. This is the bill that imposes a cap on the amount of pension contributions that can be made (without being subject to national insurance contributions) as part of a salary sacrifice arrangement. The chancellor announced at autumn budget 2025 that the cap would be set at £2,000, and this was reflected in the bill that was introduced into the House of Commons. One of the amendments made to the bill by the House of Lords was to increase the cap to £5,000. Other amendments include exemptions for basic rate taxpayers, and small and medium sized businesses and charities, along with a provision that would exempt salary sacrificed pension contributions over the limit from being included in the calculation of student loan repayments. The amendments made to the bill by the Lords are scheduled to be considered by the House of Commons on 23 March.
The Pensions Regulator (TPR) has issued a press release and a new scam alert to the pensions industry, warning of an increase in impersonation fraud, with a heightened risk attaching to members of UK pension schemes now residing in Africa. Schemes are urged to review their identity checks and security measures. TPR stresses the value of industry vigilance and engagement, saying that 90% of the reports informing its latest alert came from trustees and administrators.
The Financial Conduct Authority (FCA) has issued a pensions regulatory priorities report setting out its key areas of focus for 2026. These include finalising the VFM framework and rules, preparing for the scale test requirements under the pension schemes bill, working with industry on several areas to improve customer outcomes, and consulting on the charge cap and performance fees.
Companies House has been subject to another security breach, during which some people who were not authorised to make filings or change information for a particular company were able to do so. Companies House says that unauthorised access to personal data not usually visible, such as dates of birth and residential addresses, has also been possible, but that passport information provided as part of the identity verification process has not been compromised. Pension trustee companies might find it useful to subscribe to the Companies House “follow a company” service, which will send email alerts whenever there are changes on the register for that company. You can do this by searching for a company and then clicking the green “follow this company” button.
In this insight, colleagues in our Commercial Litigation team look at the impact of geopolitical shocks on force majeure clauses and when they might frustrate a contract under English law.

If you would like specific advice on any of these issues or anything else, please contact a member of our Pensions team.

ESG Disclosures and Securities Litigation Risk: What UK Boards and Those in the Financial Sector Should Be Doing Now

Tue, 17 Mar 2026 09:56:30 +00:00

UK-listed companies and financial sector participants are likely entering a new phase of securities litigation exposure. Three developments are converging:

Environmental, social and governance (ESG) disclosures are becoming structured, evidence-based datasets rather than narrative positioning.
UK sustainability disclosure architecture is tightening through overlapping regimes: Financial Conduct Authority (FCA) anti-greenwashing and Sustainability Disclosure Requirements (SDR) (within their perimeter), listed-company disclosure reform, and UK Sustainability Reporting Standards (UK SRS S1 and S2), now published for voluntary use.
Litigation under sections 90 and 90A of the Financial Services and Markets Act 2000 (FSMA) (and since 19 January 2026 regulation 30 of the Public Offers and Admissions to Trading Regulations 2024 (POATR)) is evolving, particularly around investor reliance, case management and collective action mechanics.

Together, these trends increase the risk that ESG disclosures, especially forward-looking sustainability and transition statements, become a significant source of UK securities claims. The strategic question for boards and in-house counsel is how disclosure governance must adapt.

ACCR v Santos – Is Gas Clean Energy?

Tue, 17 Mar 2026 09:50:59 +00:00

The Federal Court has handed down its much-anticipated decision in ACCR v Santos, a case that tested the limits of how far companies can go in describing natural gas and hydrogen as “clean”. At its core, ACCR alleged that Santos downplayed the emissions associated with natural gas and overstated the potential of blue hydrogen.

The court, however, found that when the statements were assessed from the perspective of the relevant target audience, Santos’ representations were not misleading or deceptive, as they were made within the broader context of its “transition to a lower carbon future” and its shift “from natural gas to hydrogen”.

More broadly, the judgment provides rare judicial guidance on the contested language of Australia’s energy transition, underscoring that whether natural gas can be characterised as “clean” is a contextual question shaped by audience, disclosure and the surrounding decarbonisation narrative.

Industrial Accelerator Act: A General Overview

Mon, 16 Mar 2026 16:31:23 +00:00

On 4 March 2026, the European Commission (EC) published a legislative proposal for a so-called “Industrial Accelerator Act” (IAA) aimed at supporting the EU’s manufacturing sector, with a focus on selected strategic sectors. Overall, the IAA pursues an EU industrialisation objective that the EU’s manufacturing industry account for at least 20% of the EU’s gross domestic product by 2035.

As proposed, the IAA would set conditions on foreign direct investments (FDIs) in certain strategic sectors, aim to facilitate permitting for industrial manufacturing projects, lay down EU origin requirements and low-carbon requirements in the context of EU public procurement and public support, and create industrial manufacturing acceleration areas.

The EC proposes that each of these areas be addressed in separate IAA chapters.

Being a legislative proposal, the IAA will now go through the EU’s ordinary legislative procedure. It may be substantially amended by the European Parliament and the Council of the European Union (i.e. the Member States) over the coming months, before possibly entering into force.

Power Play: Italy Reshapes Energy Costs, Grid Access and Data Centres

Mon, 16 Mar 2026 14:32:03 +00:00

The Law Decree of 20 February 2026, No. 21 (the Decree), published in the Offcial Gazette on 21 February 2026, introduces “urgent measures to reduce electricity and gas costs, enhance industrial competitiveness, support decarbonisation, address virtual congestion in the national electricity grid, and integrate data centres into the electricity system”.

The Decree comprises 12 articles across two chapters, covering, inter alia, electricity costs, renewable energy, grid connections, data centres, tax and gas. It entered into force on 22 February 2026 and must be converted into law by the Italian Parliament by 21 April 2026.

The purpose of this alert is to provide a clear and concise overview of the Decree’s key provisions and their potential implications for energy costs, industrial competitiveness, the energy transition, grid connection management, renewable and bioenergy incentives, and the authorisation process for data centres.

Construction and Engineering Matters (UK) – Spring 2026

Mon, 16 Mar 2026 09:20:18 +00:00

Welcome to the spring edition of Construction and Engineering Matters, where we provide you with bite-sized updates on UK construction and engineering issues.

This spring edition includes:

Is Less Really More – Can a late Payment Notice Be a Pay Less Notice (and Other Creative Defences)? Vision Construct Ltd v Gypcraft Drylining Contractors Ltd
High Court Provides Guidance on When a Party in an Unincorporated Joint Venture Can Adjudicate
Adjudication’s Expanding Empire?
Non-party Costs Orders and Construction Litigation Funding: Lessons from Thomas Barnes & Sons PLC (in administration) v Blackburn with Darwen Borough Council
The Lesser of Two Evils: Finality on Termination Provisions – Providence Building Services Limited (Respondent) v. Hexagon Housing Association Limited (Appellant)
Expert Corner: The Dark Arts of Delay Analysis: Insights from an Industry Expert

Iran War: Legal Issues for General Counsel in the Automotive and Transportation Industry

Fri, 13 Mar 2026 13:06:11 +00:00

The Iran conflict has triggered widespread disruptions across maritime shipping, air cargo, energy markets and supply chains. These developments create significant legal exposure across contracts, compliance, risk management and operational governance. The following issues are the most critical for GCs to address.

Contractual Risk, Force Majeure and Supply Chain Disruption Claims

Contract Performance Challenges

With major carriers suspending operations through the Persian Gulf and Strait of Hormuz, and rerouting vessels around Africa, companies face weekslong shipping delays and broken just‑in‑time supply chains.

GCs must evaluate:

Force majeure applicability in supply, logistics and sales agreements
Whether disruptions (e.g., blocked straits, war‑risk zones, capacity collapse) qualify as an excusable delay
Notice requirements and timelines to preserve rights under these clauses

Upstream and Downstream Liability

Prolonged disruptions may lead to:

Supplier inability to deliver critical components (semiconductors, battery materials, polymers)
OEM failure to meet delivery obligations to dealers or fleet customers
Increased claims around late delivery penalties, contractual warranties or missed production targets

GCs need to prepare for dispute resolution, renegotiation frameworks and documentation protocols.

Insurance Coverage, War‑Risk Clauses and Premium Escalation

Cancellation of War‑risk Coverage

Insurers are withdrawing or restricting war‑risk coverage for vessels transiting the Gulf.

GCs should assess:

Applicability and adequacy of marine cargo, hull, property, business interruption and political risk insurance
The impact of carriers imposing war‑risk surcharges (e.g., US$1,500‑US$3,500 per container)
Exposure if goods transit high‑risk zones against insurer recommendations

New Government‑backed Insurance Schemes

US authorities are exploring political risk insurance for tankers and cargo transiting the region.

GCs must track eligibility, compliance obligations and coverage exclusions.

Sanctions, Export Controls and Trade Compliance

With escalations involving the US, Israel, Iran and regional states, the risk of expanded sanctions is high. Even without new regulations, existing Iran‑related sanctions are stringent.

Key legal considerations:

Ensuring no direct or indirect dealings with sanctioned Iranian entities or ports
Reviewing supply chain visibility, especially where materials originate in or transit the region
Monitoring restrictions triggered by dual‑chokepoint closures (Hormuz and Suez)
Assessing risk around technology exports, especially EV batteries, semiconductors and advanced automotive electronics
Assessing of issues related to the US temporary lifting of sanctions on Russian oil presently at sea, which potentially could put US and EU sanctions on Russian oil in conflict

Failure to comply can lead to civil and criminal penalties, as well as reputational harm.

Energy Price Volatility and Regulatory Exposure

Oil prices have spiked sharply, with potential to rise to US$100‑US$150 per barrel under prolonged disruption.

Legal implications include:

Obligations under fuel‑indexed contracts, including transportation agreements, fleet sales and logistics trucking partnerships
Reviewing hedging strategies, disclosures and compliance with financial regulatory requirements
Managing consumer law considerations if higher fuel prices trigger warranty disputes, pricing challenges or financing stress

Operational Safety, Duty of Care and Corporate Travel Restrictions

Airspace Closures and Regional Infrastructure Damage

Airspace is closed in major Gulf states (UAE, Qatar, Kuwait, Bahrain, Iraq Israel) and key hubs such as Dubai International Airport have suffered damage.

GCs must ensure:

Compliance with travel risk protocols, including evacuation and employee tracking.
Updates to health, safety, and duty‑of‑care policies for drivers, logistics crews and regional staff
Oversight of contractor safety obligations in unstable regions

Cybersecurity and Critical Infrastructure Risks

Iran and aligned actors are known to engage in cyber retaliation. As highlighted in supply chain risk guidance, companies should expect escalation in cyberthreats targeting logistics, manufacturing operations and connected vehicles.

GC responsibilities:

Ensuring compliance with cybersecurity regulatory regimes
Reviewing incident‑response plans and cyber insurance adequacy
Managing obligations related to data breach reporting, especially across multiple jurisdictions

Competition, Antitrust and Market Allocation Risks

Shifts in supply availability and transportation capacity may prompt:

Collaborative arrangements between OEMs or carriers
Joint procurement or capacity sharing agreements
Market reprioritization due to shortages

GCs must ensure compliance with competition law, particularly around:

Information sharing
Coordinated pricing or capacity allocation
Market carve outs in crisis conditions

Even in emergencies, antitrust regulators maintain strict scrutiny.

Environmental and ESG‑related Legal Duties

Higher fuel costs and disrupted supply chains may force OEMs and logistics companies to:

Adjust fleet emissions strategies
Reassess sustainability reporting assumptions
Modify sourcing due to geopolitical risk GC concerns include:
Ensuring ESG disclosures remain accurate despite volatile production and emissions profiles
Validating supply‑chain human‑rights compliance amid rerouting and new suppliers
Avoiding greenwashing where EV adoption is influenced by war‑driven economics rather than structural change

Local Market Legal Exposure in the Middle East

The conflict is depressing Gulf markets and reducing demand. GCs must manage:

Dealer network exposure, including franchise law obligations
Contractual rights in markets where sales collapse or physical facilities are at risk
Employment law considerations for staff in conflict‑affected regions

Litigation Risk, Disclosure Duties and Board Governance

Given the operational and financial materiality of the disruptions:

Public companies must review securities disclosures around supply chain exposure, risk factors and forward‑looking statements.
GCs should brief boards on fiduciary risk, scenario planning and crisis oversight.
Potential shareholder litigation could arise if companies fail to disclose or mitigate foreseeable risks.

Conclusion

General Counsel in the automotive and transportation industries face a high‑stakes legal environment shaped by geopolitical instability, supply chain fragility, sanctions exposure and rapidly evolving operational risks. Addressing the legal issues above will be essential to safeguarding corporate compliance, operational continuity and strategic resilience.

Déjà Vu – Safe Port/Berth Warranties and Lessons From the Iran-Iraq War

Fri, 13 Mar 2026 10:47:39 +00:00

The conflict that has recently broken out in the Middle East has given rise to numerous issues for the shipping and international trade sectors. We have covered several of those issues already in our articles on refusing transit through the Strait of Hormuz, force majeure and material adverse change and when conflict frustrates a contract. Another such issue is how the warranties as to the safety of ports and/or berths routinely found in charterparties may operate in this context.

While the current situation is certainly dramatic, it is not unprecedented as far as the shipping industry is concerned. There is a wealth of authority on safe port warranties. In particular, conflicts in the 1980s and early 1990s, most especially the Iran-Iraq War, gave rise to many decided cases that shed light on thecurrent situation. This article examines some of those cases.

The Basics

A full discussion of safe port/berth warranties is well beyond the scope of this article. However, it is useful to have in mind the lodestar in any discussion of the issue, which is the definition of a safe port given by Sellers LJ in The Eastern City (as approved by the UK Supreme Court in The Ocean Victory):

“A port will not be safe unless, in the relevant period of time, the particular ship can reach it, use it and return from it without, in the absence of some abnormal occurrence, being exposed to danger which cannot be avoided by good navigation and seamanship.”

While the test is easy to state, it can be complex to apply, as the cases discussed below demonstrate.

Timing Is All

Two cases with ostensibly similar facts, The Evia (No.2) and The Lucille, demonstrate the importance of timing when assessing whether or not a safe port warranty has been breached.

Both cases concerned vessels that were ordered to Basrah, Iraq. In the case of The Evia, the relevant orders were given in mid- March 1980, under a charterparty concluded in November 1979.

In the case of The Lucille, the relevant orders were given in September 1980, under a charterparty concluded in July 1980. Both vessels became trapped in the Shatt-al-Arab following the outbreak of war between Iran and Iraq.

Despite the apparent similarities of the two cases, they gave rise to different results on the question of whether or not the safe port warranties in the charterparties had been breached. The charterers in The Evia were found (ultimately by the House of Lords) not to have breached the safe port warranty in that case and thus not to be liable to the owners of the vessel. Conversely, the charterers of The Lucille were found liable to the vessel’s owners.

The difference between the two cases was one of timing. As the House of Lords made clear in The Evia (No.2), the obligation on charterers under a safe port warranty is prospective in nature; the promise made as to the safety of the port has to be fulfilled at the time the order to proceed to a particular port is given. It is not an absolute or continuing promise (although there is potentially a secondary obligation in circumstances where a port becomes unsafe after the order is given).

The order for The Evia to go to Basrah was given around six months before the outbreak of full-scale war between Iran and Iraq, on 22 September 1980. The outbreak of the war was, in that context, an abnormal occurrence and accordingly there was no breach of the safe port warranty. In The Lucille, by contrast, the order was given on 20 September 1980, just two days before the outbreak of war and the closure of the Shatt-al-Arab. In that context, the outbreak of the war was not an abnormal occurrence and so the charterers were in breach of the warranty.

It follows from the above that owners and charterers considering their position in relation to orders for a vessel to proceed to a port affected by the current hostilities in the Middle East will need to look not just at the factual situation at the port in question (or in the approaches to and from that port), but also at the timing of the relevant orders.

Port v. Berth

Time charters commonly contain warranties as to the safety of the ports to which a vessel will be ordered. In voyage charters, however, it is often the case that the warranty of safety is given in respect of the berth(s) to be used by the vessel, not the port itself. The rationale for this is that, where a voyage charter expressly names the loading or discharge ports, the owners can satisfy themselves as to the safety of those ports ahead of time.

This distinction was of critical importance in The A.J.P. Priti. The vessel in that case was chartered, on the Gencon form, to carry a cargo of bagged urea from Dammam to a selection of three named Iranian ports.

This was in 1983, during the Iran-Iraq war. In the event, the vessel was ordered to discharge at Bandar Khomeini. While sailing northward in convoy, towards Bandar Khomeini, the vessel was struck by an Iraqi missile and severely damaged.

The warranty given in the charterparty referred only to the safety of the berths the vessel was to use, and not to the safety of the ports. The Court of Appeal rejected any implication of a safe port warranty. A safe berth warranty, without more, is only a warranty that the berth(s) to which the vessel is ordered will be free from risks not affecting the port as a whole (or all the berths in it).

It follows from this that the warranty does not extend to the approach to the port.

A contrast can be struck between The A.J.P. Priti, on the one hand, and the case of The Chemical Venture, on the other. The Chemical Venture also concerned a vessel struck by a missile while approaching a port – in that case by an Iranian missile while approaching the port of Mina Al Ahmadi, in Kuwait. The charterers in that case were found liable, because the warranty they had given was a safe port warranty, not just a safe berth warranty. It followed that the warranty extended to the approach to the port, which required passing through a relatively narrow channel, in which three other vessels had been attacked in the preceding 11 days.

The relevance of these cases is clear, particularly where owners are considering whether they are obliged to comply with orders requiring them to navigate areas (most obviously the Strait of Hormuz, but potentially others) of potential danger on the way to a particular port. The distance from the danger to the vessel and the port in question is also relevant in this context. It should be said, however, that owners may find the war risks clauses of their charterparty assist them, even where the safe port/berth warranties do not. We discussed such provisions in our article on war risk clauses.

The Degree of Risk

As the definition in The Eastern City makes clear, unsafety arising from an abnormal occurrence does not constitute a breach of the warranty of safety. A case that sheds light on what may be regarded as “abnormal” in this context is The Saga Cob.

The Saga Cob was time chartered and, in that context, ordered to load a cargo in Assab for carriage to Massawa. At the time, in 1988, both those ports were in Ethiopia (although they are now in Eritrea). While at anchor off Massawa, the vessel was attacked by guerillas from the Eritrean People’s Liberation Front, wounding the master and causing significant damage to the vessel.

The owners claim against the charterers under the safe port warranty succeeded at first instance, but that decision was overturned by the Court of Appeal. The basis for the latter decision was that there had not been a suffcient history of similar attacks for the attack on the vessel to be regarded as anything other than an abnormal occurrence. There had been an attack on one other vessel, but that had been around three months earlier and around 65 miles away. The risk of such an attack could not be regarded as a normal characteristic of the port of Massawa.

Interestingly, the Court of Appeal rejected an argument that the fact that the Ethiopian government had instituted a system of convoys and escorts for vessels sailing between Assab and Massawa was itself an indicator of unsafety.

As the court said, “… the taking of precautions cannot be relied on to show that the port was unsafe.” This would be very relevant if, as has been mooted, a system of convoys and escorts were to be established for vessels transiting the Strait of Hormuz.

More generally, the decision in The Saga Cob is particularly relevant in relation to ports that might conceivably be affected by the hostilities, but which are not “in the thick of it”. An attack at the former type of port could well be regarded as an abnormal occurrence, but be regarded differently at the latter port.

Waiver and Estoppel

A final point illustrated by the cases discussed in this article is that owners can, if they are not careful, waive their rights under safe port/berth warranties or otherwise be estopped from relying on those rights. Two cases in particular come to mind.

In The Kanchenjunga, a vessel trading under a consecutive voyage charter was ordered to Kharg Island, Iran, during the Iran-Iraq War. While the vessel was at anchor, waiting to berth, the port was bombed by Iraqi forces. The master promptly departed the port and the owners called on the charterers to nominate a safe port. The charterers restated their orders for the vessel to load at Kharg. The master refused.

The House of Lords found that the owners’ decision to go to Kharg in the first place and there to tender notice of readiness constituted a waiver by election; what the owners did was inconsistent with rejecting the charterers’ orders (although they had not waived any right to claim damages).

A similar issue arose in The Chemical Venture, a case discussed above. In that case, while the charterers were found to be in breach of the safe port warranty, they escaped liability because the owners were found to have waived their right to contend that the charterers were in breach, or to be estopped from contending that. This was found to be the case based on what the owners said and did as a whole, despite the absence of any express waiver.

These cases illustrate the care parties, particularly owners, must take in both their actions and their communications in situations of this kind. Any words or actions that are not carefully thought through can have serious consequences.