Hello and welcome to The Pinsent Masons Podcast, a fortnightly dose of easy-to-digest business law news and analysis designed to help you keep up with developments all around the world every second Tuesday. I’m Matthew Magee and I’m a journalist here at Pinsent Masons, and this week we ask if the UK’s planning reforms go far enough to achieve their goal of boosting the country’s productivity? And we examine how likely the trend of forever chemicals class action law suits is to cross from the US to the UK.
But first, here is some business law news from around the world:
Trump bans ‘digital dollar’ work to free the way for private cryptoassets
Australian High Court confirms head contractors fully liable for building defects in NSW and
EU considers action against China’s public procurement discrimination
US president Donald Trump has banned US authorities from creating a ‘digital dollar’ in a move experts believe could enable other countries to lead on the development of central bank digital currencies. Trump said that CBDCs “threaten the stability of the financial system, individual privacy, and the sovereignty of the United States”. He said the establishment, issuance, circulation, and use of a CBDC within the US would be prohibited. Shanghai-based Leo Xin of Pinsent Masons said Trump’s move could leave the door open for China to become the global leader in relation to central bank digital currencies. He said, “China has been aggressively pursuing its ‘digital yuan’ project and is already in advanced stages of testing. If the US steps back, China could solidify its position as a leader in digital currency innovation.”
In a landmark case for the New South Wales construction industry, the Australian High Court has ruled that developers and head contractors cannot rely on the proportionate liability defence under the Civil Liability Act 2002 (NSW) with respect to their statutory ‘non-delegable’ duty of care owed to building owners under the Design and Building Practitioners Act 2020 NSW (DBP Act). This means they will be fully liable for economic loss suffered by owners due to defects in construction work caused by a subcontractor’s failure to take reasonable care. The ruling confirmed that if a developer or head contractor is engaged in construction work over the whole of the building, they will be vicariously liable for the actions of all work occurring downstream, and they cannot discharge their duty by merely responsibly engaging others to do the construction work. Construction disputes expert Chris McGrath said that following this judgment a claim under the DBP Act may now be more appealing to owners corporations seeking damages for defective building work, as they no longer have the onus of joining other wrongdoers identified by the developer or builder. The European Commission is considering taking action under the EU's International Procurement Instrument (IPI), having found continued discrimination against EU medical devices in China's public procurement market. After a nine month investigation, the European Commission is considering taking action to restore a level playing field. Action might include restricting or excluding Chinese bidders from government contracts in the EU. Its report found “clear evidence” of China limiting the access of EU medical devices producers to its government contracts in an unfair and discriminatory way. Trade law specialist Totis Kotsonis said that the conclusions of the IPI investigation, coming “hot on the heels of a number of European Commission investigations against Chinese interests under the Foreign Subsidies Regulation, is likely to increase even further trade tensions with China”.
The UK government has announced sweeping reforms of that country's planning system as part of its proposals for boosting economic growth. Some of the plans focus specifically on big infrastructure projects - the kind of energy, water and transport projects that are part of a transition from fossil fuels to renewables, and that the government hopes will have an impact on the UK's historically, stubbornly low rates of economic productivity. But are the plans enough to achieve the government's aims? London based planning expert Robbie Owen thinks not, but he first outlined what the actual problem is that the UK government is trying to solve.
Robbie Owen: In relation to infrastructure UK infrastructure projects, you know what some refer to as economic infrastructure, so roads, railways, power generation, airports, ports, that sort of stuff, I think the problem is twofold. First of all, the current consenting system that is the one that is used to decide if projects can be built or not, has certainly slowed in terms of how long it takes for projects to go through the system since it started in 2010 and since about 2017 or 18, I would say its performance has gradually deteriorated. So, they are looking at rectifying that. But secondly, they're wanting to even do better than rectifying because there is a enormous queue of projects to be authorised and built in relation to transport, in relation to energy and in relation to water resources, and that has come for a number of reasons, perhaps the easiest one to refer to is the need for you know to achieve a transition in how we generate and transmit our electricity given the need to decarbonise. So, it's really two factors.
Matthew Magee: So what exactly does the UK government plan to do? It wants to meet six aims – to be more strategic in planning; be better at keeping policy up to date; handle applications quicker; be greener in planning; to be fairer to communities, and to have more resilient systems. So how does it plan on meeting those aims?
Robbie: There is a focus now in the context of the forthcoming planning and infrastructure bill to do a number of things, and I think probably they can be best summarised in sort of three heads. First of all, better, clearer and stronger national policy statements to create a more certain system. These are policy documents that underpin decisions then taken on individual projects. Secondly, government is planning to legislate to achieve faster decision making under the system, and thirdly, there are a series of related improvements to a couple of consenting regimes that focus on transport infrastructure. The focus is on improving the Planning Act of 2008 because that provides the framework for consents for most of our energy, water and transport infrastructure certainly in England.
Matthew: Robbie thinks this legislation programme will take the rest of this year to get through the UK parliament, so changes won’t be felt on the ground until at least early 2026. But it can’t be just about legislation, he said. If change is really going to happen then all sorts of parts of government machinery are going to have to have the skills to work in a new way.
Robbie: I think a key issue is really skills and resources, particularly amongst those who have to respond to proposals, respond to applications for consent, so local authorities, all of the regulators like Natural England, The Environment Agency, The Marine Management Organisation, Historic England, the whole issue of capacity and to an extent capability is one that will need constant focus and indeed ditto with capacity and capability within government departments. I think the other issue is trying to work out how these projects can get through the consenting system in a way that attracts greatest support from communities and trying to work out how the communities affected, who often don't really stand to benefit from the infrastructure, can actually be given greater benefits so that they will feel that the project is doing something for them as well as for everybody else. So I think working out across all these different infrastructure types, what a good community benefit scheme looks like, you know, whether it's reduction in electricity bills or perhaps water bills or other things we are still, I think, at quite an early stage in terms of developing good, you know sensible community benefits schemes.
Matthew: Even if the skills and resources were in place Robbie doesn’t think the plans go far enough to achieve the desired change. Many large infrastructure projects are challenged by judicial review – this is where a court looks at the decision of a public body to ensure it was taken in the correct way. The UK government has accepted recommendations of a report that it commissioned which would limit the scope of judicial reviews in relation to nationally significant infrastructure projects. Robbie thinks that the scope of these reviews should be limited even further.
Robbie: Government needs to decide have we got the balance right between national interest and local interests and to my mind, I don't think we have got the balance right and I think governments should be doing two additional things, both involving parliament. The first is that parliament at the moment approves national policy statements brought forward by government ministers, but they are still, after parliamentary approval, able to be taken through the courts by judicial review. To me, that seems inappropriate given that the national policy statements have been approved by parliament and therefore, to my mind, the normal rule should apply that things approved by parliament, like legislation, should then be beyond questioning in the courts. And if MPSs are kept up to date and approved by parliament every five years then they shouldn't then also be able to be judicially reviewed.
Matthew: Robbie also wants the UK parliament to directly back the very biggest projects with one line legislation so that it can’t be challenged in the courts, something he said was common before about the year 2000. This feels like a big change in that balance Robbie identifies between national and local interests, but he rejects the idea that it introduces any kind of deficit in public accountability in decision making.
Robbie: The project would still go through the normal consenting system, by which I mean for most purposes, the development consent order, The DCO regime involving consultation, proper impact assessment, a six month examination in which everyone can participate, all stakeholders, all communities. We have had the approach in this country for decades of parliament directly approving individual projects through what's called the hybrid bill process. That was used most recently in relation to HS2, before then the Elizabeth Line or the Crossrail project as it was then called, and before then all number of railway and highway schemes say, for example, the Channel Tunnel itself, HS1. So we have a history in this country of parliament, directly approving big infrastructure projects. Why don't we go back to the system we used to have until about 2000, where parliament would confirm decisions taken by ministers having gone through a full, legally compliant process.
A law suit in the US which claims that buyers of Apple computer products deserve compensation because the machines contain harmful chemicals has shone a further spotlight on PFAS, or forever chemicals, and the growing awareness of the liabilities manufacturers might face in the future. PFAS stands for poly- and perfluoroalkyl substances. They’re sometimes called ‘forever chemicals’, and are a collection of 10,000 materials used in the manufacture of lots of goods, from make up to computer chips. They do all sorts of things like make products water resistant or heat resistant but what causes concern is the growing evidence that they degrade very slowly and so persist in soil, water and even in our bodies for a long time. Hence the law suits – usually class action suits in the US where lots of people who’ve suffered relatively small harms get together to sue a company for what can collectively be a very large sum. Manchester based litigation expert Katie Hancock said that internationally quite a lot of litigation is already under way, and it might make its way to the UK.
Katie Hancock: Well, there's already PFAS litigation in a number of different European countries, but there hasn't been any PFAS litigation in the UK so far. That does look like it's going to change now. Late last year, a law firm confirmed publicly that it had been instructed to investigate a manufacturer of firefighting foam based in the town of Bentham in North Yorkshire and then a second law firm, said that it had been instructed on behalf of a community group to bring a claim against that same manufacturer. And what these claimants say is that the manufacturer has manufactured firefighting foam which contains PFAS and the PFAS has contaminated soil and water in the local area and that that's caused them harm. It doesn't necessarily mean that there is a viable claim. There are thousands and thousands of different types of PFAS, and only a fraction of them have ever been studied in any great detail. So the media tend to approach PFAS as one big homogeneous group, and they take quite a broad brush approach to describing them and the risks that they perceive in relation to PFAS. But actually they all have really different attributes and it wouldn't be right to try and attribute research findings in relation to one type of PFAS to a different class of PFAS. It's difficult at the moment to know how big PFAS claims are going to be but certainly there are a lot of them in the US and as case law starts to develop in the EU and in the UK in the coming months and coming years, it will become clearer.
Matthew: Katie said that in the US litigation has fallen into several distinct types.
Katie: The first type and the most common type is claims in relation to alleged PFAS contamination caused in the vicinity of PFAS manufacturing sites or sites which use PFAS in production in some way, and local residents near those sites say that the PFAS have contaminated the ground or the water and that that's caused them harm. There have also been several claims brought by the water industry against chemicals manufacturers and those water companies say that they've been tasked with cleaning PFAS out of the water supply and that the chemicals manufacturers who they say put the PFAS into the water supply should pay to do that. There have been claims under competition laws, so in those cases the claimants allege that manufacturers have misled consumers about the PFAS content of their products and the claimants say that that has given them an unfair competitive advantage. And there's also a relatively new category of claims and that's related to something called biosolids. Biosolids are the product of wastewater treatment facilities after the water has been cleaned and removed, and they contain a lot of nutrients and so they are spread in the US in large quantities on farmland, and that happens in other countries as well, including the UK and there are some states which have started testing biosolids and found that they contain PFAS and so particularly in the state of Maine, there are some farms which have been told they're not allowed to grow food anymore as a result of the PFAS content in their soil and that has resulted in claims against biosolids sellers.
Matthew: There was a time when class actions were a purely US phenomenon, but mass litigation is becoming increasingly common in Europe, and the UK is in many ways very well set up for this kind of law suit, so companies need to be aware of the litigation environment. The growing popularity of mass actions could have a big impact in relation to PFAS.
Katie: The UK has one of the largest mass claims market in Europe and we have a growing number of claimant focused law firms and often those law firms would be willing to carry out their work on a conditional or contingency fee basis, which means they don't get paid some or all of their fees if the claim is not successful and that can be quite attractive to claimants for obvious reasons, because litigation is expensive. Our jurisdiction also permits litigation funding and that is a growing market and what I mean when I say that is that there are specialist providers who are willing to fund some types of litigation and to receive a return only if the claim is successful and usually that relates to mass actions. But also we have a procedure which is quite well suited to the bringing of mass claims. So for example there is a relatively new collective proceedings regime for competition law claims in the competition appeals tribunal and that works on an opt out basis, meaning that claimants don't need to proactively sign up for the litigation which can lead to larger claimant cohorts and in turn that can be more attractive to claimant lawyers and to litigation funders.
Matthew: So what should manufacturers and any other companies with a PFAS liability be doing to prepare for the PFAS mass litigation maybe crossing the Atlantic?
Katie: Legislation is changing rapidly, so it's not just litigation risk that companies need to consider, but they also need to consider PFAS legislation because they need to make sure they act in accordance with that. It really varies between different countries and so manufacturers should be thinking about their supply chains, what they're using and what they're supplying, and they should use a horizon scanning service which allows them to plan ahead for compliance and also to avoid disruption to those supply chains in the event of a change in regulation. Litigation risk is also a developing picture, so manufacturers should conduct risk assessments in relation to the PFAS used in their supply chains and also consider checking insurance policies to see whether there is any coverage for them in relation to emerging risk, that's current insurance policies, but also historic policies as well.
Thank you for listening. It's greatly appreciated. There's lots out there clamming for your attention and anytime you spend with us, well, it's very welcome. Remember, you don't have to wait every fortnight to know what's happening in the world of business law news and analysis. There's a constant stream of material produced by our team of journalists working exclusively for Pinsent Masons publishing all of our expert thoughts and insights at pinsentmasons.com. And you can get your own personalised digest, tailored to only the things you want to know about, by signing up at pinsentmasons.com/newsletter. Thanks again for listening if you enjoy it, subscribe, share, like, maybe even leave a little review. It all helps us to reach people who might also be interested. Thanks for listening. Until next time. Goodbye.
Pinsent Masons podcast was produced and presented by Matthew Magee for International professional services firm Pinsent Masons.
