Europe: EU / UK regulatory roundup
A round up of recent regulatory developments in the EU and UK.
In a briefing published in March 2016, we considered the impact of a judgment handed down by an Appeals Court in Brazil on those involved in secured lending transactions for offshore oil and gas assets and ships which are present, even on an occasional basis, in Brazil’s maritime economic zone.
The judgment, handed down by the Appeals Court in São Paulo on 3 February 2016, cast doubt on the validity of foreign law governed ship mortgages in Brazil. In the case commonly referred to as OSX3, the Court did not recognise the validity of a Liberian ship mortgage granted in favour of Nordic Trustee (Nordic) over the FPSO “OSX-3”, stating that it needed to do so only
Understandably, this decision led to a great deal of discussion among secured lenders to oil and gas assets and ships offshore Brazil, and as a result a number of these assets have now been reflagged to Panama, as the most obvious candidate among the existing signatories to the Bustamante Code. The decision has also led to The Bahamas electing to accede to relevant aspects of the Bustamante Code, which accession became effective at the end of February 2017.
In the time since our last briefing, and in the face of resistance from the plaintiff, BTG Pactual S/A – Cayman Branch (BTG), Nordic has filed a series of appeals for the subject matter of the case to be heard by the Superior Court of Justice (the final appeals court in this case), finally lodging an appeal (known as an “Agravo” appeal) with the Appeals Court in September 2016, applying for the Superior Court of Justice to determine whether it should decide on the issue of the validity of the mortgage in the OSX-3 case.
Also in September 2016, BTG, the original plaintiff in the OSX-3 case, assigned its claims and foreclosure action with respect to the FPSO “OSX-3” to OSX3 Cayman Limited (OSX3 Cayman), which led observers to anticipate a settlement and closure of the litigation.
Whilst this assignment resulted in the foreclosure action being suspended by the court (by reason of OSX3 Cayman’s failure to move the case forward), the Agravo appeal in relation to the validity of the Liberian mortgage has continued and, in the absence of a reply from BTG, the Appeals Court sent the appeal to the Superior Court of Justice at the end of March 2017.
The Superior Court of Justice is now considering whether to hear the appeal. Should the Superior Court of Justice decide to hear the appeal, and assuming Nordic decides to continue proceedings, it will probably take several years for the Superior Court of Justice to hand down a decision.
It is open to the Superior Court of Justice to suspend the original decision of the Appeals Court, but unless it does so or hands down a different decision, the existing Appeals Court decision continues to be relevant to secured lenders with offshore oil and gas assets operating in Brazilian waters, and will stand with persuasive effect and may be followed in similar cases brought before the Brazilian courts in the future.
On July 16, 2020, the Court of Justice of the European Union (CJEU) published its decision in the landmark case Data Protection Commissioner v Facebook Ireland Ltd, Maximilian Schrems and intervening parties, Case C-311/18 (known as the Schrems II case).
On July 7, 2020, the Commission de Surveillance du Secteur Financier (CSSF) issued an FAQ document on Circular 02/77 concerning the protection of investors in case of NAV calculation errors and the correction of the consequences resulting from non-compliance with the investment rules applicable to undertakings for collective investment (the FAQ).