UK
Businesses regulated by the Financial Conduct Authority:Most companies carrying on business in the banking, insurance and investment sectors in the UK are regulated by the Financial Conduct Authority (FCA). Any person who is intending to acquire control of a regulated entity will need to obtain the FCA’s approval before doing so. Failure to do so is a criminal offence. For these purposes, ‘control’ means directly or indirectly acquiring a 10% stake in an FCA-regulated entity.
Defence: There is no general rule against foreign takeovers of, or investment in, companies involved in the defence industry. However, if a company has any contracts with the UK Ministry of Defence, these will contain terms which will be relevant to consider in the context of a takeover or investment, including a provision allowing the Ministry of Defence to terminate the contract upon a change of control.
Media: There are media ownership rules for television, radio and newspapers. The rules aim to help protect plurality of viewpoints and give citizens access to a variety of sources of news, information and opinion. There is a so-called media public interest test which enables the Secretary of State to intervene in media mergers on public interest grounds.
Football: Anybody who takes over as a director of an English Premier League or Football League club, or the owner of more than 30% of a club’s shares, must pass a fit and proper person test.
6.2. What challenges if any do investors find in getting certainty around local law and regulation? The UK has an extremely stable and mature legal and regulatory system and this is one of the reasons why the UK is a favoured jurisdiction for inward FDI.
The UK is ranked by the World Bank as one of the top jurisdictions in terms of ease of doing business. Notwithstanding this, the UK government has a continuous focus on reducing and eliminating so-called red tape to ensure that the UK remains a competitive and attractive place to do business.
7. Dispute resolution
7.1. How efficient are local courts’ enforcement and dispute resolution proceedings, and are there any procedural idiosyncrasies foreign investors must be aware of? The courts in the UK are very efficient at dealing with disputes and parties are able to effectively enforce their rights through court proceedings. Proceedings are generally completed within one to two years, although more complex cases can take longer and appeals can also lengthen the process.
The UK courts employ an adversarial system, with each party’s case being extensively tested. The parties are required to disclose all documents in their possession that are relevant to the dispute (save for privileged documents). Witnesses generally provide evidence in chief by way of witness statements and are then cross examined orally at trial.
The UK has a loser pays rule in relation to the costs of court proceedings, so that an unsuccessful party generally pays the successful party’s costs. Claimants from outside the EU or European Free Trade Association (EFTA) may be required to provide security for costs.
Investors should note that England and Wales, Scotland and Northern Ireland are each separate jurisdictions within the UK, with their own court systems.
7.2. Do the courts of the FDI jurisdiction respect foreign judgments and are arbitration awards enforceable in the jurisdiction? The UK courts generally respect foreign judgments, unless the foreign judgment can be challenged on the grounds of fraud or public policy.
Save for certain exceptions, a foreign judgment cannot be enforced directly and instead will need to be enforced by way of fresh legal proceedings in the UK. However, a proceeding on a foreign judgment is often determined on a summary basis and the UK courts take a narrow view of the possible defences to such an action.
If a foreign judgment is from a court in certain Commonwealth jurisdictions, or an EU or EFTA member state, the judgment may be enforced directly in the UK once it has been registered.
Arbitration awards are enforceable in the UK by way of an application to a UK court. The UK is a party to the New York Convention of 1958 and so enforcement of an arbitration award made in a contracting state to the New York Convention may only be refused on very limited grounds.
7.3. Are judgments and arbitration awards from the FDI jurisdiction generally enforceable in other jurisdictions? The question of whether a judgment from a UK court is enforceable in another jurisdiction is one for the law of the state where enforcement is to take place.
Judgments from UK courts are enforceable by way of registration in other EU and EFTA member states. UK judgments are also enforceable in certain Commonwealth countries.
As mentioned above, the UK is a party to the New York Convention and so arbitration awards from the UK are relatively easily enforced in the courts of other contracting states to the New York Convention.
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IFLR REPORT | FOREIGN DIRECT INVESTMENT 2014
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