Category: Global

Locking Tik Tok? White House Requires Removal of TikTok App from Federal IT

On February 28, the White House issued a memorandum giving federal employees 30 days to remove the TikTok application from any government devices. This memo is the result of an act passed by Congress that requires the removal of TikTok from any federal information technology. The act responded to concerns that the Chinese government may use data from TikTok for intelligence gathering on Americans.

I’m Not a Federal Employee — Why Does It Matter?

The White House Memo clearly covers all employees of federal agencies. However, it also covers any information technology used by a contractor who is using federal information technology.  As such, if you are a federal contractor using some sort of computer software or technology that is required by the U.S. government, you must remove TikTok in the next 30 days.

The limited exceptions to the removal mandate require federal government approval. The memo mentions national security interests and activities, law enforcement work, and security research as possible exceptions. However, there is a process to apply for an exception – it is not automatic.

Takeaways

Even if you are not a federal employee or a government contractor, this memo would be a good starting place to look back at your company’s social media policies and cell phone use procedures. Do you want TikTok (or any other social media app) on your devices? Many companies have found themselves in PR trouble due to lapses in enforcement of these types of rules. In addition, excessive use of social media in the workplace has been shown to be a drag on productivity.

Article By J. William Manuel and Anne R. Yuengert of Bradley Arant Boult Cummings LLP

For more communications, media, and internet legal news, click here to visit the National Law Review.

© 2023 Bradley Arant Boult Cummings LLP

G7 Sanctions Enforcement Coordination Mechanism and Centralized EU Sanctions Watchdog Proposed

On Feb. 20, 2023, Dutch Minister of Foreign Affairs Wopke Hoekstra gave a speech titled “Building a secure European future” at the College of Europe in Bruges, Belgium where he made a plea to “(…) sail to the next horizon where sanctions are concerned.” The Dutch Foreign Minister said European Union (EU) “(…) sanctions are hurting the Russians like hell (…)” but at the same time the measures “(…) are being evaded on a massive scale.” Hoekstra believes this is in part because the EU has too little capacity to analyze, coordinate, and promote the sanctions. However, arguably, there is also a lack of capacity at the EU Member-State level to enforce sanctions.

Against this background the Dutch Foreign Minister proposed to set up a sanctions headquarters in Brussels, Belgium, i.e., a novel watchdog or body to tackle the circumvention of EU sanctions. Such a body might represent the nearest EU equivalent to the U.S. Office of Foreign Assets Control (OFAC). OFAC both implements and enforces U.S. economic sanctions (issuing regulations, licenses, and directives, as well as enforcing through issuing administrative subpoenas, civil and administrative monetary penalties, and making criminal referrals to the U.S. Department of Justice). In Hoekstra’s words:

“A place where [EU] Member States can pool information and resources on effectiveness and evasion. Where we do much more to fight circumvention by third countries. This new HQ would establish a watch list of sectors and trade flows with a high circumvention risk. Companies will be obliged to include end-use clauses in their contracts, so that their products don’t end up in the Russian war machine. And the EU should bring down the full force of its collective economic strength and criminal justice systems on those who assist in sanctions evasion. By naming, shaming, sanctioning, and prosecuting them.”

The Dutch Foreign Minister’s proposal – which is also set out in a separate non-paper – apparently is backed and supported by some 10 or so EU Member States, including Germany, France, Italy, and Spain.

Additionally, on Feb. 23, 2023, the press reported the international Group of Seven (G7) is set to create a new tool to coordinate their enforcement of existing sanctions against the Russian Federation (Russia). The aim of the tool, tentatively called the Enforcement Coordination Mechanism, would be to bolster information-sharing and other enforcement actions.

Background

Like other Members of the G7, the EU has adopted throughout 2022 many economic and other sanctions to target Russia’s economy and thwart its ability to continue with its aggression against Ukraine. Nevertheless, currently EU Member States have different definitions of what constitutes a breach of EU sanctions, and what penalties must be applied in case of a breach. This could lead to different degrees of enforcement and risk circumvention of EU sanctions.

As we have reported previously, on Nov. 28, 2022, the Council of the EU adopted a decision to add the violation of restrictive measures to the list of so-called “EU crimes” set out in the Treaty on the Functioning of the EU, which would uniformly criminalize sanctions violations across EU Member States. This proposal still needs the backing of EU Member States, which have traditionally been cautious about reforms that require amendments to their national criminal laws.

Next steps

The decision on when and how to enforce EU sanctions currently lies with individual EU Member States, who also decide on the introduction of the EU’s restrictive measures by unanimity. As such, the Dutch Foreign Minister’s proposal requires the backing and support of more EU Member States. If adopted, the new proposed body could send cases directly to the European Public Prosecutor’s Office (EPPO), assuming the separate “EU crimes” legislative piece was also adopted.

Notably, the Dutch Foreign Minister’s proposal appears to suggest a stronger targeting of third countries, which are not aligned with the EU’s sanctions against Russia or help in their circumvention (e.g., Turkey, China, etc.).

Whether or not an EU sanctions oversight body is established, the Dutch proposal signals the current appetite for enhanced multilateral coordination on economic sanctions implementation and tougher, more consistent enforcement of economic sanctions violations. The G7’s proposed Enforcement Coordination Mechanism points in the same direction.

©2023 Greenberg Traurig, LLP. All rights reserved.

Australia: ASIC Reveals 2023 Enforcement Priorities

The Australian Securities and Investments Commission (ASIC) has revealed its key enforcement priorities for 2023. This year, ASIC has signalled an expanded focus on enforcement activity targeting:

  • sustainable finance practices and disclosure of climate risks;
  • financial scams;
  • cyber and operational resilience; and
  • investor harms involving crypto-assets.

In its release, ASIC has emphasised that the regulator’s prioritisation of monitoring in these areas intends to “address misconduct, market integrity threats and consumer harms in sectors including financial services, retail and crypto-assets.”

The warning coincides with this month’s release of ASIC’s enforcement and regulatory report that highlights the major uptick in enforcement and regulatory actions taken by ASIC during the last half of 2022, including:

  • 173 criminal charges being laid and $76.3 million in civil penalties imposed;
  • heightened action against money laundering risks;
  • the issuance of 22 design and distribution obligations (DDO) stop orders to prevent consumers and investors being targeted by products inappropriate to their objectives, financial situation and needs; and
  • the regulator’s first action for greenwashing and consequential issuance of infringement notices for misleading sustainability-related statements.

Another priority of ASIC for the coming year is to increase its transparency to industry and streamline its interactions with the entities it regulates. For the first time, ASIC has released a regulatory developments timetable setting out projected timeframes for ASIC regulatory work, such as the publication of draft or final guidance, and the anticipated making of a legislative instrument. ASIC’s release of these key enforcement priorities and regulatory developments timetable gives us a clear indication of ASIC’s intention to continue its heightened level of surveillance and enforcement action into 2023.

Article By Matthew J. Watts and Rebecca Mangos of K&L Gates

For more securities legal news, click here to visit the National Law Review.

Copyright 2023 K & L Gates

EU PFAS Ban Should Raise U.S. Corporate Concerns

On February 7, 2023, the European Chemical Agency (ECHA) unveiled a 200 page proposal that would ban the use of any PFAS in the EU. While the proposal was anticipated by many, the scope of the ban nonetheless drew reactions from a myriad of sectors – from environmentalists to scientists to corporations. U.S. based companies that have any industrial or business interests in the EU must absolutely pay close attention to the EU PFAS ban and consider the impact on business interests.

EU PFAS Ban Proposal

The EU PFAS ban currently proposed would take effect 18 months from the date of enactment; however, the ECHA is contemplating phased-in restrictions of up to 12 years for uses that the group considers challenging to replace in certain applications. The proposal is only the inception of the ECHA regulatory process, which next turns to a public comment period that opens on March 22, 2023 and will run for at least six months. ECHA’s scientific committees to review the proposal and provide feedback. Given the magnitude of comments expected and the likely hurdles that the ECHA will face in finalizing the proposal, it is not expected that the proposal would be finalized prior to 2025.

The EU PFAS ban seeks to prohibit the use of over 10,000 PFAS types, excluding only a sub-class of PFAS that have been deemed “fully degradable.” The proposal indicates: “…the restriction proposal is tailored to address the manufacture, placing on the market, as well as the use of PFASs as such and as constituents in other substances, in mixtures and in articles above a certain concentration. All uses of PFASs are covered by this restriction proposal, regardless of whether they have been specifically assessed by the Dossier Submitters and/or are mentioned in this report or not, unless a specific derogation has been formulated.” (emphasis added) Several specific types of uses and consumer product applicability would be included in the first phase of the proposed ban, including cosmetics, food packaging, clothing and cookware. This first phase of the ban implementation would include uses where alternatives are known, but not yet widely available, which is the reason why the first phase would take effect within 5 years. The second phase of the ban anticipates a 12 year period of time for ban implementation and encompasses uses where alternatives to PFAS are not currently known. Significantly for U.S. business, the proposed ban includes imported goods.

Impact On U.S. Companies

In 2022, U.S. companies exported just shy of $350 billion in goods to the EU. In many instances, companies do not deliberately, intentionally, or knowingly add or utilize PFAS in finished products that are sent to the EU. However, PFAS may be used in manufacturing processes that inadvertently contaminate goods with PFAS. In addition, many U.S. companies rely on overseas companies for supply chain sourcing. Quite commonly, supply chain sources outside of the U.S. do not voluntarily provide chemical composition information for components or goods that they supply. Inquiring of those companies for such information, or certifications that the good contain no PFAS, can be extremely difficult. Getting overseas companies to provide such information often proves impossible and even when certifications are made, the devil may be in the details in terms of what is actually being certified. For example, certifying that goods contain “no hazardous substances” or “no hazardous PFAS” sound reassuring, but by what measure of “hazardous” is the statement being made? Under what country’s regulations? Using which scientific definition? The result of all of these complexities may be that many U.S. based companies need to test their products themselves, which not only increases time to market issues and financial costs associated with production, but also risks to the companies doing business in the U.S. that they may open themselves up to environmental pollution or personal injury lawsuits by conducting such testing. In addition, alternatives may not be as cost effective as PFAS, which impacts businesses and has the potential trickle-down impact of passing some of the costs on to consumers.

While debate continues in the U.S. as to the scientific validity of the “whole class” approach to regulating PFAS (of which there are over 12,000 types according to the EPA), the EU PFAS ban leapfrogs the U.S. debate stage and goes directly to proposing a regulation that would embrace such a “whole class” regulatory scheme. Without a doubt, chemical manufacturers, industrial and manufacturing companies, and some in the science community are expected to strenuously oppose such an approach to regulations for PFAS. The underlying arguments will follow ones advanced and debated already in the U.S. – i.e., not all chemicals act identically, nor have the vast majority of PFAS been shown to date to present health concerns. Proper scientific method does not permit sweeping attributions of testing on legacy PFAS like PFOA and PFOS to be extrapolated and applied to all PFAS. The EU’s response to this via their proposal is that the costs of remediating PFAS from the environment are significant enough that it warrants regulating PFAS as a class to avoid costly, decades-long, and potentially repetitive remediation work in the EU.

Conclusions

It is of the utmost importance for businesses to evaluate their PFAS risk. Public health and environmental groups urge legislators to regulate these compounds in the U.S. and abroad. One major point of contention among members of various industries is whether to regulate PFAS as a class or as individual compounds.  While each PFAS compound has a unique chemical makeup and impacts the environment and the human body in different ways, some groups argue PFAS should be regulated together as a class because they interact with each other in the body, thereby resulting in a collective impact. Other groups argue that the individual compounds are too diverse and that regulating them as a class would be over restrictive for some chemicals and not restrictive enough for others.

Companies should remain informed so they do not get caught off guard. States are increasingly passing PFAS product bills that differ in scope. For any manufacturers, especially those who sell goods overseas, it is important to understand how the various standards among countries will impact them, whether PFAS is regulated as individual compounds or as a class. Conducting regular self-audits for possible exposure to PFAS risk and potential regulatory violations can result in long term savings for companies and should be commonplace in their own risk assessment.

©2023 CMBG3 Law, LLC. All rights reserved.
For more Environmental Law news, click here to visit the National Law Review

Multi-Club Ownership – For the Good of the Game?

Alongside the rise of investment from sovereign wealth and private equity funds, sport has also seen an increase in multi-club/franchise ownership groups. These groups, often spanning across different sports, leagues, countries, and continents, allow investors to diversify their portfolios and spread their risks.

However, in football, the rise of the Multi-Club Ownership (MCOs) model poses a challenge for how the sport is governed and has implications on current and future financial regulation. MCOs acquire multiple football clubs, building a network of related teams in the process. This, consequentially, has a knock-on effect on player transfers, commercial opportunities, and the overall competitive balance of football across the globe.

In this article, we discuss the benefits of MCOs for both clubs and owners, the potential competitive advantages clubs can gain through MCOs, and whether the existing financial regulations are fit for purpose given the increasing number of MCOs within the sport.

Governance

One of the key benefits for clubs under an MCO structure is the ability to leverage centralized governance infrastructure and apply lessons learned from across the group. By centralizing key departments at the portfolio level, and incentivizing knowledge sharing within the group, MCOs can apply synergies and implement best practices with each new acquisition, leading to a more effective and efficient operation. Additionally, the centralized governance structure within an MCO brings with it opportunities for financial benefits in the form of cost savings and potentially increased revenues.

Sponsorships and Commercial Deals

Operating under an MCO allows clubs to benefit from sponsorships and other commercial deals negotiated at the group level, while also increasing individual brand awareness for each respective club. For example, an MCO could negotiate a group sponsorship agreement with a kit manufacturer or shirt sponsor covering a number of teams within the group, including the flagship club.

Agreements of this kind would be beneficial for all parties involved. The sponsor increases its own profile by being associated with the flagship club, while also getting instant access to a variety of markets through the other clubs in the agreement. At the group level, the homogeneity created by having clubs within the group playing in similar kits creates a stronger brand identity, whilst also boosting the brand profile for the smaller clubs by further associating them with the flagship club. Additionally, a group agreement would allow the MCO to secure a competitive rate that may have been unattainable for a solitary club.

Player Scouting, Acquisition, and Development

The other major financial benefit for clubs in an MCO structure relates to how players are scouted, acquired, and developed. A common feature of MCOs is the application of a uniform strategy, across all portfolio clubs, set at a group level by a Sporting/Technical Director. When trickled down to each club, this results in a global scouting network, acquiring local talent with the group’s playing style in mind. These players will then be brought into an academy, through which they will be developed to play in the MCO’s preferred playing style.

While this does not represent an immediate cost saving, this network of local scouting and academies at the club level can lead to a significant competitive and financial advantage as players move within the group from smaller clubs to the flagship club. By transferring or loaning players “in-house”, MCOs can ensure that a player’s development is not hampered by being played in an unfavorable position, or by being asked to perform a different role, protecting their value.

Additionally, by acquiring players from within the group, clubs save both time and money on scouting, as players are already a known quantity within the network. Furthermore, the receiving club acquires a player tailor-made to their playing style, reducing the time required to bed them in.

“In-house” Transfer Agreements

As exemplified by the transfer of Hassane Kamara between Pozzo family-owned clubs Watford and Udinese, “in-house” transfers can be leveraged to alleviate financial constraints for clubs within the group. Kamara, initially purchased by Watford in January 2022 for £4m, and who went on to be Watford’s player of the season, was subsequently sold to Udinese in August 2022 for £16m.

However, Kamara was then loaned straight back to Watford for the 2022/23 season. Although prima facie, this transfer does not benefit Udinese, it allowed Watford to recognize an £8m profit on Kamara while retaining his services, and strengthening their cash flow at a time when they were negotiating contracts with other star players. While “in-house” transfers of this kind raise questions regarding their fitness and propriety, they also have implications on competitive balance.

Parent Feeder

The most recognizable transfer strategy within MCOs is the feeder club model. This can be mutually beneficial to both clubs, with the best-performing players transferring to the “parent” clubs” and the “feeder” club receiving transfer income, as well as occasional loan transfers of youth team players to develop while remaining in the MCO structure.

Such a relationship can be seen between Red Bull owned, RB Leipzig (RBL) and FC Red Bull Salzburg (FCS). Since 2015, twelve players have transferred directly from FCS to RBL, with transfer fees totaling £119.75m. Eight of these players, bought for a total of £73.85m have subsequently been sold for a total of £117.50m, generating £43.65 profit RBL. The cumulative market value of the four players still playing for RBL has risen by £26.32m since their relevant transfers. For perspective, there have only been four transfers from RBL to FCS in the same period. [i]

Competition Integrity

Although centralized governance structures provide a wealth of benefits to clubs and owners within MCOs, there is a regulation to limit the effects of centralized governance on the integrity of competition.

UEFA’s regulations on common ownership prohibit teams from competing in the same competition where a single person or entity has a de facto control over both clubs. For clubs under common ownership to compete in the same competition, they must demonstrate that there are disparities within the clubs’ corporate matters, financing, personnel, and sponsorship arrangements.

On only one occasion since 2002 has UEFA’s rule on common ownership been considered. RBL and FCS both qualified for the 2017/18 Champions League and had to make significant structural changes in order for both teams to be admitted to that season’s edition. Therefore, as long as MCOs are willing to sacrifice centralized operations to an extent satisfactory to UEFA regulations, mutual competition is allowed. However, while many smaller clubs within more centralized MCO structures may not have short-term goals of European Football, UEFA regulations do raise questions over the investor’s long-term footballing ambitions for those clubs.

Financial Sustainability Regulations

In addition to the on-field benefits, being part of an MCO also provides opportunities for clubs to improve their financial position, and potentially exploit loopholes in existing financial regulation. UEFA’s recently introduced Financial Sustainability Rules (FSR) are built upon three pillars: solvency, stability, and cost control. The new cost control regulation, known as the squad cost ratio, states that a club’s outlays on wages, agents’ fees, and amortization costs must be less than 70% of club revenues. [ii]

In a scenario where an MCO owned club requires to decrease their squad cost ratio, it is possible that group sponsorship agreements and in-house transfers could be used to achieve this. By selling players within an MCO, and then receiving those players back on loan, clubs will recognize a profit on the sale for the purposes of FSR and bring down their squad cost ratio.

When considering group sponsorship agreements in respect of FSR, it is also possible that the accounting treatment of this contract at the club level could be engineered to assist a club in complying with the squad cost ratio. The allocation of revenue from a group-level sponsorship to each of the clubs under the agreement is not required to be split evenly, which provides MCOs with an opportunity to funnel revenues from group sponsorships to their clubs complying with FSR. With no current guidance or regulation on how group sponsorships should be treated from an accounting perspective, group sponsorships are another tool that can be utilized to improve their squad cost ratio.

Fair Value Regulations

Although MCOs bring opportunities to improve squad cost ratios, the FSR regulations also require all transactions to be made at “fair value”. This means that financial arrangements for sponsorships and player transfers must be accounted for on an “arm’s length” basis. Where there are doubts amongst the Club Financial Control Body (CFCB) board, it can request an adjustment of the proceeds resulting from the transfer of a player, or the allocation of sponsorship monies.

However, there is currently no precedent or evidence to indicate how UEFA would view the accounting treatment for a club under a group sponsorship agreement or the transfer of players within MCOs. Furthermore, while there is a clear means to value a sponsorship agreement, this is considerably more difficult with regard to transfers, specifically the valuation of a player.

While age, injury record, marketability, and contract length, are all attributable factors, a player’s worth comes down to how much the selling club desires weighted against how much the buying club is willing to pay. An MCO structure circumvents this issue and allows for “in-house” transfers at an inflated value stipulated by the shared owner/s. Given the regulations, it is unlikely any club would want to pique the interests of the CFCB by hyper-inflating the value of a transfer, but whether MCOs will be deterred from increasing the value of in house transfers by smaller, nominal values remains to be seen.

The Future of MCOs

Recent trends have shown that the existence of MCOs will be sustained over the coming years. Sport has developed alongside the increasingly commercialized world, resulting in significant growth in investor interest across multiple clubs and sports. However, how the governance and regulation of MCOs evolves will define their development in the long term. Another factor that must be considered is whether investors will prefer multi-sport ownership (MSOs), which bring with them their own regulatory considerations, particularly in relation to conflicts of interest. Nonetheless, in the immediate future we expect continued investment in Football, the question is whether they remain satisfied with just one club, or one sport.

[i] All figures have been taken from https://www.transfermarkt.co.uk/

[ii] A full copy of UEFA’s new regulations can be found here

Kurun Bhandari (Director) and James Michaels (Associate) at Ankura authored this article.

For more entertainment, art, and sports legal news, click here to visit the National Law Review.

Copyright © 2023 Ankura Consulting Group, LLC. All rights reserved.

Nigeria’s Energy Sector: Looking Back at 2022 and Looking Ahead in 2023

We review the key events of 2022 in Nigeria’s energy sector – a year that saw significant steps in the implementation of PIA, intermittent M&A activity and the continuing effects of crude theft. We also consider what we can expect in 2023, ahead of what appears to be Nigeria’ closest presidential election yet.

2022: What happened in legal matters?

The Petroleum Industry Act (PIA) entered its second year of effectiveness and continued its slow march of implementation . The most notable step was the official “relaunch” of The Nigerian National Petroleum Corporation as NNPC Limited in July in a high profile ceremony led by President Buhari. As mandated in the PIA, NNPC Limited was incorporated as a new CAMA company which is wholly owned by the Nigerian government. Key consequences of this transition include:

  • Commercial entity: NNPC Limited is a limited liability company (rather than a state-owned and state-funded corporation) and is intended to operate as a commercial entity. It is expected to publish annual reports and audited accounts and declare dividends to its shareholders – the Nigerian government, and therefore should remain a vital contributor to state revenues.

  • Independence from government and self supporting: The new NNPC Limited is independent and should not depend on government support for its operations. It is expected to raise its own funds, which may lead to wider adoption of the incorporated joint venture model (as provided for, but is not mandatory, under PIA). Whether this will help unlock NNPC’s capability to be a functioning and cash call paying partner in its joint operations remains to be seen. The extent of actual government control and direction over NNPC Limited will also only become clear through practice. PIA retains (for now) total government ownerships of NNPC Limited and control over the selection of its management team.

  • Royalty-paying entity: NNPC Limited is, like any other oil and company operating in Nigeria, required to pay its share of all fees, rents, royalties, profit oil shares and taxes to the government in relation to any participating interests it holds in petroleum leases or licences.

NNPC Limited’s first actions as a commercial entity were notable: these included exercising pre-emption rights over a 40% stake in OML 86 and OML 88 and buying OVH Energy’s downstream assets (giving NNPC access to 380 fuel stations and eight liquefied petroleum gas plants), along with other purported pre-emptions over upstream M&A transactions. NNPC Limited has partnered with Afreximbank to raise US$5 billion to support NNPC Limited’s upstream business and energy transition plans.  NNPC Limited also made senior appointments in 2022 with Senator Margery Chuba Okadigbo as chair and Mele Kyari continuing as CEO.

Another consequential step in PIA implementation was the promulgation of the Nigeria Upstream Petroleum Host Communities Development Regulations in June, setting out the requirements for the establishment and funding of host community development trusts. The new trust structure was one of the more controversial parts of PIA, with licence holders required to pay into the trust a levy of 3% of their actual annual operating expenditure of the preceding financial year in the upstream petroleum operations affecting the host communities for which the fund was established.

What happened in politics / regulatory matters?

The continuing impact of the global pandemic, the war in Ukraine, rising energy costs and the consequences of crude theft and spills made for a challenging final year in office for President Buhari.

Progress was made on some of Nigeria’s key gas projects that form part of the “Decade of Gas” programme. Construction is under way on Nigeria LNG’s Train 7 project, which promises to increase LNG production capacity by 35%. The Assa North-Ohaji South Gas project moves closer to completion and promises to accelerate Nigeria’s transition towards cleaner fuels and improve availability of natural gas for power generation.

New projects were also lined up: Nigerian Minister of State for Petroleum Resources Timipre Sylva, alongside the Ministers of Energy of Niger and Algeria signed a memorandum of understanding to build an over 4,000km trans-Saharan gas pipeline at an estimated cost of US$13 billion. The pipeline is intended to start in Nigeria and end in Algeria and be connected to existing pipelines that run to Europe.

The government launched its energy transition plan in 2022 as it works towards Nigeria’s commitment to reach net zero by 2060 and provide access to affordable, reliable and sustainable energy to all of its citizens by 2030. Vice President H.E Yemi Osinbajo said that Nigeria would need to spend an additional US$10 billion per annum on energy projects. Nigeria’s federal minister of power, Engr. Abubakar D. Aliyu also announced new renewable energy policies: the national renewable energy and energy efficiency policy, the national renewable energy action plan, the national energy efficiency action plan and the sustainable energy for all action agenda.

Crude theft was rampant in 2022 and remains a huge critical and unresolved issue for Nigeria, resulting in the shutdown of two of Nigeria’s major pipelines in July. Its impact is significant: the petroleum regulator estimated that Nigeria suffered a US$1 billion loss in revenue in the first quarter of 2022 as a result, and the (attempted) flight of international oil companies from the worst-affected onshore acreage has continued.

What deal activity happened?

Panoro Energy received government approval for the sale of its interest in OML 113 to PetroNor at the start of the year. The Majors divestment plans continued but encountered significant delays, with some being indefinitely postponed and others becoming mired in regulatory approval roadblocks and facing the new appetite of NNPC to assert purported pre-emptory rights.

What is expected in 2023?

  • Politics: The 2023 elections loom large, with the Presidential and National Assembly elections commencing on 25 February and Governorship and State House elections following on 11 March. The Presidential election is presently too close to call and we make no predictions. The onset of electioneering will slow regulatory decision making. International investments may pause until the election outcome is decided, key appointments made and the direction of economic and energy policies are explained.

  • Legal: Industry participants will continue to grapple with the new PIA regime, while its implementation continues over the coming year. Expected key steps include:

    • The deadline for voluntary conversion of existing OPLs and OMLs into their new forms was set for February 2023. Licence holders will need to decide whether to adopt early conversion, balancing the extent of improved PIA fiscal terms against the consequences, including termination of all outstanding arbitration and court cases related to the relevant OPL / OML, removal of any stability provisions or guarantees given by NNPC, and relinquishment of no less than 60% of the acreage. If not converted by this date, then it becomes mandatory on licence expiry / renewal.

    • The deadline for segregation of upstream, midstream and downstream operations also falls in February. Any midstream and downstream activities that were being carried out as part of upstream operations require the grant of a new midstream / downstream licence.

  • Regulatory: A new licensing round covering seven deepwater blocks has been announced for 2023, marking Nigeria’s first offshore bid round in 15 years. A pre-bid conference is taking place this month with pre-qualification applications due by the end of January.

  • Transaction activity: Upstream deals may need to wait for the dust from the 2023 election to settle, but there should be a resumption of the divestment programmes of the Majors in 2023.  Outside of M&A, Nigeria is due to go to trial in London in January 2023 as it seeks to overturn an approximately US$11 billion (including interest) arbitration award won by Process and Industrial Developments Ltd in relation to a 2010 gas project agreement. The award is now worth about a third of Nigeria’s foreign reserves.

  • Projects: Following significant delays, in part due to the COVID-19 pandemic, we understand that the Dangote refinery is expected to be officially commissioned by President Buhari in January and start up mid-2023. First gas from both the Ajaokuta-Kaduna-Kano pipeline and from Seplat’s Assa North-Ohaji South Gas project is forecast for the first half of 2023.

© 2023 Bracewell LLP

Bad Faith Games – Hasbro Rolls and Loses

For EU and UK trademarks, there is a five-year grace period following the issuance of a registration, during which the trademark owner must use the mark in connection with the goods and/or services covered by the registration before it can be challenged (and potentially ultimately revoked) for non-use with such goods and/or services. Some trademark owners have tried to take advantage of this by re-filing their previously registered trademarks for exactly the same goods and/or services just before the five-year grace period ends as a means of extending this grace period. This is commonly referred to as “evergreening.”

In Hasbro v EUIPO1, the General Court has upheld the EUIPO Board of Appeal’s decision that repeat filing of trademarks can result in bad faith applications. While it is true that evergreening doesn’t always mean bad faith, where it can be demonstrated that an applicant’s intention for filing a trademark application is to dodge showing genuine use of a mark more than five years old, then bad faith may be established.

Bad faith?

In legal terms, “bad faith” goes back in time and considers a trademark owner’s intention at the time it applied for the trademark. If the intention was to weaken the interests of third parties or obtain a trademark registration for reasons that are unrelated to the trademark itself, then this might result in bad faith. In Hasbro, the question of whether the board game conglomerate acted in bad faith hinged on whether Hasbro’s repeat filings of the MONOPOLY trademark, to avoid showing genuine use of the mark, amounted to bad faith.

Hasbro v EUIPO

When Hasbro filed its MONOPOLY trademark yet again, specifying goods and services near-identical to its earlier filing, the General Court said the application was made in bad faith, as Hasbro’s intention was to prolong the five-year grace period allowed for establishing use.

Although the case was initially rejected by the Cancellation Division of the EUIPO, the EUIPO Board of Appeal partially invalidated Hasbro’s EU Registration for the MONOPOLY mark. A key factor of the General Court’s decision supporting the EUIPO Board of Appeal’s verdict was Hasbro’s admission that its motivation for re-filing was to avoid potential costs that would be incurred to show genuine use of the MONOPOLY trademark.

Impact

The Hasbro case is setting precedent in both the European and UK courts. Although the Hasbro case came along post-Brexit, it is still considered “good law” in the English courts.

In a recent dispute between the two supermarket chains Tesco and Lidl2, Tesco argued that Lidl’s wordless version of its logo should be invalidated, as the mark had never been used and Lidl was periodically re-filing it to avoid having to prove genuine use. Tesco’s counterclaim was struck out in the High Court as Tesco had not made a clear-cut case for bad faith. However, the Court of Appeal allowed Tesco’s appeal and maintained that it was possible bad faith had occurred. This forced Lidl to explain its intentions when filing the mark, which is consistent with the Hasbro case. Tesco’s bad faith allegation will now be assessed at the substantive trial later this year. This will be watched closely by brand-owners and practitioners hoping for further guidance on evergreening and specifically where re-filings amount to bad faith.

In Sky v SkyKick3, the Court of Appeal said that a trademark applicant can have both good and bad reasons for applying to register trademarks. However, trademark filings that are submitted underhandedly, particularly where dishonesty is the main objective of filing the application in the first place, should be invalidated.

Bad faith beware!

The Hasbro v EUIPO decision has resulted in brand owners and trademark lawyers taking greater care when re-filing trademarks. It is important to highlight though, that re-filing a trademark is allowed. It is only when it can be established that an applicant’s intention at the point of re-filing the mark was to skirt use requirements, that bad faith can be found.

Brands looking to file new, or re-file existing, trademarks, should ensure they have a clear trademark strategy. Also consider retaining and recording: (1) evidence of genuine use of your marks; and (2) your reasons for re-filing any existing trademarks.

1 21/04/2021, Case T‑663/19, ECLI:EU:T:2021:211 (Hasbro, Inc. v European Union Intellectual Property Office)

2 Lidl Great Britain Limited v Tesco Stores Limited [2022] EWHC 1434 (Ch)

3 Sky Limited (formerly Sky Plc), Sky International AG, Sky UK Limited v SkyKick, UK Ltd, SkyKick, Inc [2021] EWCA Civ 1121, 2021 WL 03131604

Article By Sarah Simpson and Tegan Miller-McCormack of Katten. To read Kattison Avenue/Katten Kattwalk | Issue 2, please click here.

For more entertainment, art, and sports legal news, click here to visit the National Law Review.

©2023 Katten Muchin Rosenman LLP

Humanitarian Parole Program for Cubans, Haitians, Nicaraguans, Venezuelans with Sponsorship

As of January 6, 2023, Cubans, Haitians, Nicaraguans, and Venezuelans and their immediate family members may be eligible for safe passage into the United States for up to two years as parolees if they have a financial supporter. This program is like the Uniting for Ukraine program. Organizations, including companies, can provide the financial support and, upon admission, the parolees may apply for Employment Authorization Documents (EADs).

Proposed beneficiaries cannot apply directly. Supporters must start the process.

The first step is for the supporter to submit a Form I-134A, Online Request to be Supporter and Declaration of Financial Support, including documentation proving they are able to financially support the beneficiaries they are agreeing to support. Only after that application is reviewed and adjudicated will USCIS notify the proposed beneficiary and provide instructions about how to proceed. The beneficiary will be told how to submit biographic information online and, if approved, will eventually receive travel instructions. They will be told to arrange to fly directly to their destination in the United States. Upon arrival at a U.S. port of entry, the beneficiary will be vetted again before being paroled into the country. Beneficiaries should not attempt to enter through a land port of entry as that will likely lead to a denial.

Financial supporters must be U.S. citizens or nationals, legal permanent residents (“green card holders”), conditional permanent residents, non-immigrants in lawful status, asylees, refugees, parolees, and beneficiaries of TPS, DACA or Deferred Enforced Departure (DED). While an individual must submit the Form I-134A, they can do so in association with or on behalf of an organization, business, or other entity that will provide some or all the support. Individuals who file the form on behalf of an organization must submit a letter of commitment or other documentation from an officer or other credible representative of the organization or business describing the monetary or other types of support they will provide. Beyond monetary support, other forms of support can include housing, basic necessities, and transportation. When an individual is submitting the form on behalf of an organization that will be providing the necessary level of support, the individual need not submit their own financial information.

Applications will be considered on a case-by-case basis. The grant of parole is discretionary, based on urgent humanitarian reasons or if the applicants would provide a significant public benefit to the United States.

To be eligible, proposed beneficiaries must:

  • Have a financial supporter in the United States;
  • Undergo robust security screening;
  • Have a passport valid for international travel;
  • Meet vaccination requirements;
  • Provide their own transportation to the United States, if approved for travel;
  • Meet other general requirements; and
  • Warrant an exercise of discretion.

Article By Forrest G. Read IV of Jackson Lewis P.C.

For more immigration legal news, click here to visit the National Law Review.

Jackson Lewis P.C. © 2023

Venezuela Program Expanded to Cuba, Haiti, and Nicaragua – 30,000 Per Month for All Countries

The Biden administration has announced the expansion of its Venezuela Parole program to three additional countries – Cuba, Haiti, and Nicaragua. On Jan. 5, 2023, the Department of Homeland Security announced an expansion of its new migration process for Venezuelan nationals. The expansion allows those nationals from Cuba, Haiti, and Nicaragua and their immediate family members to request advance authorization for travel and temporary parole for up to two years in the United States, including work authorization. There will be a 30,000 per month cap on the number of parolees from all four countries.

Parolees must have a supporter in the United States who will provide financial and other support, among other requirements. In order to be eligible for advance travel to the United States to request parole at the border, a person must:

  • Be a national of one of the four countries or be an immediate family member (spouse, common-law partner, or unmarried child under the age of 21) of an eligible applicant and traveling with them;
  • Possess a passport valid for international travel;
  • Be outside the United States;
  • Have a U.S.-based supporter who filed a Form I-134 on their behalf that USCIS has vetted and confirmed;
  • Provide for their own commercial travel to a U.S. airport and final U.S. destination;
  • Undergo and clear required screening and vetting;
  • Not be a permanent resident or dual national of any country other than one of these four countries, and not currently hold refugee status in any country;
    • This requirement does not apply to immediate family members (spouse, common-law partner, or unmarried child under the age of 21) of an eligible national of Venezuela with whom are traveling.
  • Not be an unaccompanied child;
    • Children under the age of 18 must be traveling to the United States in the care and custody of their parent or legal guardian.
  • Not have been ordered removed from the United States within the past five years or be subject to a bar based on a prior removal order;
  • Not have crossed irregularly into the United States, between ports of entry, after Oct. 19, 2022;
  • Not have crossed irregularly into the United States, between ports of entry, after Oct. 19, 2022;
  • Not have unlawfully crossed the Mexican or Panamanian borders after Oct. 19, 2022; and
  • Comply with all additional requirements, including vaccination requirements and other public health guidelines.

When the national arrives at the United States port of entry, there will be additional screening and vetting. If granted parole, it will typically be for two years. Once granted parole, nationals may apply for employment authorization and request a social security number.

©2023 Greenberg Traurig, LLP. All rights reserved.
For more Immigration Law news, click here to visit the National Law Review.

A COVID Surge in China Results in Renewed Restrictions for Travel to the United States

Effective January 5 (at 12:01am, Eastern Standard Time), all passengers inbound from China, Hong Kong and Macau, or who were in the country in the 10 days prior to their departure to the United States, must show a negative PCR or monitored antigen test in order to board flights to the United States. In addition, the same requirement will apply for those passengers who were physically present in China within the 10 days prior to flying through South Korea’s Incheon International Airport, Toronto Pearson International, and Vancouver International.

Background:

Amid concerns over lack of transparency around COVID case data and loosening of COVID-related restrictions, China is facing their largest coronavirus outbreak since the start of the pandemic. The large surge of cases could potentially infect upwards of 800 million people over the next few months. Such a spike in infections over a very short period increases the chances of a new variant emerging, and with the risk of new mutations come the risks of heightened transmission and death rates.

In response, several countries including the United States, Japan, Italy, India, South Korea and Taiwan are implementing measures for travelers to both limit the spread of infection and to improve early detection of new variants. As of January 5, 2023, in order to enter the United States either directly or indirectly from China, Hong Kong and Macau, all passengers over the age of 2, regardless of nationality or vaccination status, must show evidence of a negative PCR or antigen test taken within two days at the departure gate. The only exception will be for those who have recently tested positive. Those who have had COVID-19 in the 90 days prior to their travel to the United States may present documentation of recovery from COVID-19 in lieu of a negative test result.

In addition to the steps taken to specifically protect against those who test positive while traveling from China to the United States, the CDC is also expanding its Traveler Genomic Surveillance program (TGS) to additional airports. TGS, run by the Travelers’ Health Branch at the Center for Disease Control, tests international travelers to detect new variants entering the country and to fill in gaps in global surveillance. During the early days of the Omicron surge, TGS detected two Omicron subvariants weeks before they were reported elsewhere. As part of the program, arriving international travelers volunteer to participate and anonymously provide nasal swabs that are then sent for testing to allow for detection of multiple variants as well as viral characterization to help provide information on a variant’s transmissibility, virulence, and response to current treatments or vaccines.

As the case counts and variants evolve and increase, so, too, must the guidelines around international travel and efforts to control the spread. Before making any international travel plans, make sure to double-check the guidelines in place for each intended destination, prepare for delays and disruption, and continually monitor reliable news sources for updates.

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Copyright © 2023, Hunton Andrews Kurth LLP.
For more Coronavirus Legal News, click here to visit the National Law Review.