News (#10 October 2016)

Cases

UK residents brought claim against MasterCard

UK residents have brought a collective action against the MasterCard payment system with a requirement to recover from it large compensation for excessive commission paid over 15 years. This lawsuit has already become the largest in the history of the country.

The reason for the collective action became unreasonably high commissions on cross-border transactions within the European Union, which MasterCard charged for 15 years.

In 2014 the Luxembourg-based European Court of Justice upheld a decision of the European Commission that the amount of interchange fees, which was in force from 1992 to 2008, was established in breach of EU competition law. As a result, prices on all purchases with MasterCard cards became artificially inflated.

Retailers suffered serious expenses because of interchange fees charged by MasterCard, which then were passed on to consumers, by including fees in prices of goods and services. The rough damage assessment carried out by representative of the plaintiff’s interests, the company Quinn Emmanuel Urquhart & Sullivan LLP, is GBP 14 billion. The collective action against MasterCard is the second one since adoption of a new law on consumer protection in 2015, which allows the recovery of damages from a company on behalf of all consumers. If the claim is satisfied, they will automatically be eligible for a refund if they themselves do not renounce their right to it.

 

Ukraine filed lawsuit against Russia

Ukraine initiated arbitration proceedings against Russian Federation in accordance with the United Nations Convention on the Law of the Sea (1982), in order to protect its rights as the coastal state adjacent to the Crimea maritime zones of the Black Sea, Sea of Azov and the Kerch Strait.

Ukraine is asking the arbitration tribunal to confirm its rights as a coastal state and to oblige the Russian Federation to cease its internationally wrongful acts in relevant maritime areas, to provide Ukraine with appropriate assurances and guarantees of their non-repetition and to reimburse Ukraine all losses caused by the Russian Federation. By joining the Convention, Ukraine and the Russian Federation agreed to settle disputes through the arbitration procedure, whose decision is binding on the parties.

 

Japan fined Apple

The Japanese authorities fined Apple Inc. 12 billion yen (about USD 118 million) for understatement of profit indicators. The penalty was issued by Tokyo’s tax authorities. The Japanese branch of Apple transferred part of the profit received from paid services (in particular, from iTunes), to the account of the Irish division of the company, thereby avoiding payment of taxes in Japan.

A reminder that after the decision of the European Commission to collect the tax debt of the American company Apple to Ireland, Austria and Spain intend to take similar measures.

In view of Apple’s corporate structure, tax breaks in Ireland enabled the company to avoid paying taxes on almost the amount of profit generated within the EU single market. The European Commission explains the illegality of this approach by the fact that it provided Apple with a significant advantage over other companies.

 

Court finds end user responsible for copyright infringement via free Wi-Fi

In accordance with the explanation of the European Court of Justice in Luxembourg in a case on copyright infringement via the use of free Internet via Wi-Fi that the service provider shall not be held responsible but the end user.

The dispute arose when the Sony Company filed a claim against the owner of one of its stores in Germany selling lighting equipment and audio systems. Free point of access to the Internet via Wi-Fi was set at the store to attract the attention of potential customers, via which a musical composition was downloaded in 2010. The German court dealing with the case asked for clarification from the European Court of Justice. The European Court of Justice concluded that the a copyright owner cannot file claims against provider of the free Wi-Fi network if the latter complied with provisions of the EU Directive On Electronic Commerce and cannot demand compensation for copyright infringement by third parties. At the same time, the copyright owner may ensure that the provider took steps to prevent further violations of these rights by its network users.

Such a measure as protection of a free network with a password and user identification is a reasonable solution in terms of maintaining balance between need to respect copyright and the possibility of doing business taking into account the rights and freedoms of users.

 

Pavlenko Legal Group defended interests of insurance company

Pavlenko Legal Group team represented interests of JSC UASK ASKA in a dispute with a private enterprise in the Economic Court of Zaporozhye Region. The subject of the dispute was insurance payment in the amount of UAH 6 million, claimed to be recovered by a private enterprise in connection with an aircraft crash in Dnepropetrovsk Region. The project involved lawyer Hrygoriy Pavlenko under supervision of Olena Pertsova, head of the judicial practice.

 

EY former partners charged with violating auditor rules

The Securities and Exchange Commission (SEC) of the USA has fined the American audit firm EY USD 9.3 million due to the fact that two of the firm’s audit partners, Gregory Bednar and Pamela Hartford, got too close to their clients on a personal level and violated rules that ensure firms maintain objectivity and impartiality during audits. Both partners are no longer employed by EY and they are suspended from appearing and practicing before the SEC as accountants, which includes not participating in the financial reporting or audits of public companies.

 

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