Recent insights from our practice and legal world for legal practitioners

The Online Trade Sanctions Interface (“OTSI”) is officially live, offering a streamlined application process for trade services sanctions licences. Moving forwards, OTSI will handle the processing of all new applications for licences to provide sanctioned trade services.

OTSI’s introduction marks a significant development in the distribution of responsibilities between the three licensing bodies within the Department for Business and Trade (“DBT”).

Application Requirements

Applicants must provide a clear definition of the services intended for licensing, demonstrating how these correspond with one or more categories of prohibited services under relevant sanctions regulations. Applications should reference these regulations carefully.

Applicants must also explain how the provision of these services would remain in line with the purposes of the sanctions. Specific activities, referred to as licensing ‘considerations’ or ‘grounds’, likely qualify for licences. If an application is made under these pre-defined grounds, it is important to show how the services fall within these considerations. Applications may also be made for services that do not fit within these grounds, provided they are consistent with the broader purpose of the sanctions.

Licensing Grounds

A comprehensive list of pre-defined licensing grounds is available in the statutory guidance for each sanctions regime. For professional and business services supplied under the UK Russia Regulations, grounds include:

• Services essential for delivering humanitarian assistance

• Services related to the production or distribution of food for civilian benefit

• Medical and pharmaceutical services for civilian use

• Civil society activities promoting democracy, human rights or the rule of law in Russia

• Services necessary for non-Russian entities to divest from or wind down business operations in Russia

• Services to a person connected with Russia by a UK parent company or UK subsidiary

• Services necessary for the urgent prevention or mitigation of serious risks to human health, safety or infrastructure

• Services ensuring critical energy supply

Legal advisory services may qualify for a licence if the relevant activity meets the licensing ground applicable under UK sanctions.

When a Licence Is Not Required

UK sanctions regulations apply to all individuals and businesses in the UK, as well as UK nationals and businesses operating abroad, under what is termed a “UK nexus”. A licence is not required to provide services that are either not prohibited by sanctions regulations or covered by an exception.

Who Is Covered by a Licence

A licence may provide authorisation for:

• A business with a UK nexus, covering employees, members, partners, consultants, contractors, officers and directors

• Named individuals with a UK nexus working for a business without a UK nexus

• An individual, such as a sole trader

Third parties, such as legal advisers, may apply on behalf of businesses or individuals by uploading a letter of instruction.

Licence Renewal

A new licence application is required if renewal is needed or if there are changes to the details of the licence, such as the scope of services or parties involved.

Stay Updated

The updated gov.uk pages reflecting OTSI’s new licensing responsibilities can be accessed for various sanctions regimes, including:

• Complying with professional and business services sanctions related to Russia

• Providing professional and business services to a person connected with Russia

• Russia sanctions: guidance

• The UK Sanctions List

• Trading under sanctions with Russia

• UK sanctions relating to Venezuela

• Venezuela sanctions: guidance

For more details, visit the OTSI online licence application service.

On Monday 28 October 2024, General Licence INT/2024/4671884 expired. A new General Licence (INT/2024/5334756) specifically covering legal services came into effect at 00:01 on Tuesday 29 October 2024.

The new General Licence, along with its reporting forms, is accessible on the Legal Services General Licence page on GOV.UK. Individuals intending to rely on this licence should review it thoroughly to understand the definitions, permissions and requirements for its usage. A publication notice highlights key changes to guide users of this licence.

The General Licence can be accessed through this link.

Jurisdiction: Sweden

The SCC Arbitration Institute (“SCC”) has published non-binding guidance on the use of AI in cases administered under the SCC rules. The guide acknowledges that AI is a transformative field and given its substantial benefits, the guide proposes how to maintain adaptability and versatility when using AI while still contributing to the development of global best practices. The SCC encourages that, when using AI, Arbitral Tribunals should consider factors such as confidentiality, quality, integrity and non-delegation of decision-making.

Jake Lowther, Specialist Counsel at SCC, stated:

“AI is the future! Its current application offers substantial benefits for arbitration users, particularly in terms of cost and time efficiency. We anticipate a dramatic increase in AI usage.”

Harnessing AI’s Potential

The guide adopts a light-touch approach, emphasising the importance of flexibility while fostering the development of best practices. The SCC advises arbitral tribunals and relevant participants in arbitration to keep the following key factors in mind:

• Confidentiality: Certain AI applications may inadvertently compromise arbitration confidentiality. It is essential for participants, especially arbitral tribunals, to understand how any data input is processed when employing AI tools.

• Quality: Tribunals must ensure that utilising AI does not compromise the quality of their decisions. Human oversight is necessary to ensure appropriate review and verification of AI outputs prior to their incorporation in arbitration.

• Integrity: Transparency and accountability are vital for maintaining integrity. Tribunals are encouraged to disclose any use of AI in fact-finding, legal interpretation or application of law to ensure the parties' rights to be heard.

• Non-delegation of Decision-Making Authority: While AI can assist in decision-making, it must not replace the tribunal’s role. Arbitral tribunals retain sole authority over decisions and the reasoning behind them.

The Guide to the use of AI in cases administered under the SCC Rules can be accessed here.

State of Libya v. Siba Plast – Decision of 1 October 2024

Overview of the Judgment

On 1 October 2024, the Paris Court of Appeal’s International Trade Chamber overturned the enforcement of a €280 million arbitral award against the State of Libya. The Court found that Libya had not been properly notified of the arbitration proceedings, leading to a breach of the principle of adversarial proceedings under French law. The decision emphasises the importance of procedural fairness in international arbitration, especially when dealing with State parties.

Case Background

The dispute stemmed from five commercial contracts concluded in 2012 between an Italian company and the Libyan National Transitional Council, acting on behalf of the Libyan State. The Italian company’s rights under the contracts were later assigned to Siba Plast, a Tunisian company. Siba Plast alleged that Libya failed to fulfill its contractual obligations and initiated ad hoc arbitration in Tunisia, invoking the arbitration clause in the contract amendments. In Libya’s absence, the arbitral tribunal issued an award in November 2014, ordering Libya to pay €280 million.

Procedural Missteps and Legal Issues

After obtaining an enforcement order in France in March 2017, Siba Plast sought to enforce the award by seizing Libyan state-held bank accounts. Libya appealed the enforcement, claiming it was unaware of the arbitration as it was not properly notified. Libya's appeal cited Articles 1520 and 1525 of the French Code of Civil Procedure (“FCCP”), focusing on the breach of adversarial proceedings, a fundamental principle under French law.

Court’s Decision and Reasoning

The Paris Court of Appeal ruled that Siba Plast had failed to ensure Libya was duly notified of the arbitration proceedings. The court noted two critical issues: the email addresses used for notifying Libya were incorrect and did not match the designated contacts under the contract; and the notification methods stipulated in the contract were only applicable to contractual matters and not to arbitration, which is considered separable from the underlying contract.

The Tunisian Arbitration Code, which governed the arbitration, did not allow for electronic communications for procedural matters. Even if it had, the email addresses used were invalid.

Given these deficiencies, the court determined that the State of Libya had been deprived of the opportunity to defend itself, violating the principle of adversarial proceedings. Consequently, the enforcement order was overturned and Siba Plast was ordered to pay Libya’s legal costs.

Practical Implications

Adherence to principles of adversarial proceedings is vital for the enforcement of arbitral awards in French courts. The ruling underscores that missteps regarding notifications can lead to the annulment or non-enforcement of arbitral awards. Parties should exercise caution when notifying State parties, ensuring that they comply with all contractual and procedural requirements to avoid similar outcomes. The State of Libya v. Siba Plast illustrates the strict approach French courts take towards procedural fairness in arbitration.

Belgravia Law is actively monitoring developments in AI, exemplified by our Ceyda Ilgen’s participation in the Oxford Generative AI Summit held on 17-18 October 2024 at Jesus College, University of Oxford.

The event featured a series of keynotes, panels and lightning talks from distinguished experts across AI, business, government and media, providing a rich platform for knowledge exchange. Ceyda participated in discussions on the rapid evolution of AI technologies and their implications for various sectors, including legal services.

During the summit, Ceyda emphasised our firm’s keen interest in AI applications in arbitration, highlighting how we are not only exploring innovative uses of AI in dispute resolution but also monitoring compliance with emerging AI regulations. This includes preparing relevant contracts for startup companies to ensure they can navigate the legal landscape effectively while leveraging AI technologies.

Ceyda received positive feedback from attendees who appreciated the unique legal perspective Belgravia Law brings to the discussion, reinforcing our commitment to being at the forefront of AI regulation and its practical implications in the legal field.