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Provisional Job Stability of Disabled Employees due to Pandemic

At the end of 2019 and beginning of 2020, the world observed the disastrous trajectory of the Sars-Cov-2 Coronavirus, which infected thousands of people in the city of Wuhan, China, and spread to several provinces in that country, and then around the world.

In Brazil, the Ministry of Health published, on February 3, 2020, Ordinance (Portaria) no. 188/2020, which declared a Public Health Emergency of National Importance (ESPIN), due to Human Infection by the new Coronavirus (2019-nCoV).

On February 6, 2020, Law no. 13.979/2020 was published, containing measures for countering the ESPIN, due to the outbreak of the virus. The Law has suffered subsequent changes.

On March 11, 2020, the Director-General of the World Health Organisation, Tedros Adhanom Ghebreyesus, declared the existence of a pandemic, resulting from COVID-19, motivating the Brazilian National Congress to establish a state of calamity, until December 31, 2020, through Legislative Decree no. 6/2020. A series of Provisional Measures (MPs) were issued in order to counter the pandemic.

One of the MPs was no. 936, converted, on July 6, 2020, into Law no. 14.020/2020, which created the so-called Emergency Program for the Maintenance of Employment and Income, and provided, in article 1, for complementary measures to combat the public health emergency caused by the coronavirus.

When MP no. 936 was converted into Law 14.020, article 17 was introduced, which prohibits the unjustified dismissal of disabled persons while the state of calamity persists. This category of employees was not singled out in the texts of the MP or of Law 13.979/2020 and its subsequent amendments.

It is an undoubted fact that persons with disabilities deserve differential treatment, in order to provide them with protection and ensure their inclusion in society and in the job market, as in Law no. 8.213/91, which provides for the mandatory hiring of these persons, pursuant to a pre-established quota.

Portaria no. 188 of February 3, 2020, of Ministry of Health, accessed on February 10, 2021. (Click here to read.)

Note that the social security legislation imposed, on a permanent basis, an obligation on the employer to hire a certain number of persons with disabilities, unlike article 17 of Law no. 10.020/2020, which guarantees protection to this group of employees only for the duration of the state of calamity due to the COVID-19 pandemic.

However, the state of calamity, which is the subject of Legislative Decree no. 06/2020, was not extended by the National Congress and, furthermore, Justice Ricardo Lewandowski of the Federal Supreme Court (STF), when hearing Direct Unconstitutionality Action (ADI) no. 6.625 MC/DF, maintained the validity of a number of articles of Law no. 13.979/20, but made no reference to the provision dealing with persons with disabilities. From this standpoint, there would be no question of stability of employment for this category of employees.

On the other hand, termination, on December 31, 2020, of the validity of Legislative Decree no. 6/2020, to which Law no. 13.979/20 is linked, unfortunately did not put an end to the state of calamity and the hardship imposed by the Sars-Cov-2 Coronavirus, reported on a daily basis by all the media. On the contrary, Brazil still faces great difficulties in combating COVID-19, which takes the lives of hundreds of people every day, and incapacitates many others.

This fact was stressed by Supreme Court Justice Ricardo Lewandowski, in the decision rendered in ADI no. 6.625 MC/DF. He considered that it was prudent and advisable that the exceptional measures contained in Law no. 13.979/2020 be maintained to combat the pandemic. The STF also ruled that the States may, through their Legislative Assemblies, decree the maintenance of the state of public calamity, as done by Minas Gerais (Decree no. 48.102/2020), Paraná (Decree no. 6.543/2020) and Tocantins (Decree no. 6.202/2020), besides several Brazilian municipalities.

Another question comes up. In view of the state and/or municipal decrees, which extend the state of public calamity, is it possible to maintain the employment of persons with disabilities, as provided for in item V, article 17, of Law no. 10.020/2020.

The exclusive competence of the Federal Government to legislate on Labour Law, provided for in art. 22, I, of the Constitution of 1988, prevents state or municipal governments from doing so. However, in this specific case, the federal law exists and may be applied, in theory, since the state of calamity remains.

The discussion on the subject is still far from over, and, little by little, lawsuits are reaching the Courts seeking the reinstatement of persons with disabilities dismissed after the enactment of Law no. 10.020/2020.

We suggest caution, therefore, when dealing with this issue, taking care to verify possible collective rules issued during this period and that may have regulated the matter in a similar or even wider manner than the law under comment.

Renata Gallo Tabacchi Gava de Oliveira and Patrícia Salviano Teixeira
Associate lawyers in Labour Law Area – São Paulo
[email protected] and [email protected]

Recovery of Foreign Judgment Debts in Nigeria

Enforcement of foreign judgments has significant relevance in this era of increased international trade and foreign investments. Businesses are more comfortable doing business with foreign partners knowing that if they obtain judgment from a superior court in their home country; it can be enforced against the judgment debtor across borders. Fortunately, Nigerian courts recognise judgments from superior courts of commonwealth countries and countries with reciprocal treatment with Nigeria.

This has increased the confidence of foreigners and foreign companies to do business with Nigerians and Nigerian companies. Nevertheless, the procedure for registration of foreign judgment in Nigeria is not without challenges. Apart from the uncertainty in the statute and rules regulating the enforcement of foreign judgment, the procedure for registration of foreign judgments does not take into cognisance the evolving trends in global economy and international commerce.

The statute regulating the enforcing of foreign judgments in Nigeria is imprecise. Ordinarily the recent Foreign Judgment (Reciprocal Enforcement) Act, CAP 152, Laws of the Federation of Nigeria, 1990 (“the 1990 Act”) would have been the legislation regulating enforcement of foreign judgment but the Supreme Court in the case of Macaulay v R.Z.B of Austria (2003) 18 NWLR (Pt. 852) 282 held that the Minister of Justice has not made an order extending the Act to judgments of the United Kingdom and other countries with reciprocal treatment with Nigeria pursuant to Sections 3 (1) and 9 (1) of the Act as such the first part of Act is inapplicable.

Again, in the case of Grosvenor Casinos Ltd v Ghassan Halaoui (2009) 10 NWLR (Pt. 1149) 309, the Supreme Court postulated that both the Act and the Reciprocal Enforcement of Judgments Ordinance, CAP 175, Laws of the Federation of Nigeria, 1958 (“the Ordinance”) (“applicable legislations”) are relevant statutes in the enforcement of foreign judgments in Nigeria.

Judgment creditors now rely on the colonial Reciprocal Enforcement of Judgment Ordinance, 1958 (“the 1958 Ordinance”) which provides for a 12 months period to register and recover a foreign judgment debt in Nigeria. This is why in Suit No. FHC/ABJ/CS/203/2017; Emmanuel Ekpenyong Esq v. Attorney General and Minister of Justice of the Federation, I sought an order of mandamus at the Federal High Court, Abuja Division to compel the Attorney General and Minister of Justice of the Federation to promulgate an Order to bring the 1990 Act into operation.

The Federal High Court in its judgment opined that the Minister has discretionary powers to promulgate the Order. The trial court held that the Minister had unlimited powers to determine when to promulgate the Order. An appeal against the trial court’s judgment is pending before the Court of Appeal, Abuja division. The backlog of appeals at the appellate court has made it difficult to obtain a hearing date for the appeal.

The imprecision on the particular statute regulating foreign judgment enforcement has a devastating effect on the whole process of registering foreign judgment in Nigeria. For instance, the time within which to register a judgment under the 1990 Act is 6 years while the time to register a judgment under the Ordinance is 12 months. Since there is no Foreign Judgment Enforcement Rules for the 1990 Act, the Reciprocal Enforcement of Judgments Rules of the Ordinance (“Rules of the Ordinance”) which was enacted in 1922 regulates the legal conditions for registration of foreign judgment in Nigeria today.

Rules 1 (1) and 5 of the Rules of the Ordinance which provides that the application for enforcement of foreign judgment be made by a motion ex-parte is inconsistent with the modern concept of fair hearing and the current civil procedure rules of Courts that an adverse party must be put on notice. It is without doubt that the Rules of the Ordinance is out of touch with modern realities and the different conditions in the applicable legislations have led to calamity and more uncertainty.

In a Ruling of a Lagos High Court, per Candide-Johnson J, the Court rejected the registration of a Judgment of Justice Michael Burton of the High Court of Justice, Queen’s Bench Division, Commercial London on the ground that since the Lagos Court did not have jurisdiction to hear the subject matter before the original Court, it could not register and execute the Judgment of the original court against the judgment debtor. But registration of foreign judgment under the provisions of the applicable legislations appears to be a subject matter on its own. Little wonder the process of registration of foreign judgment is regulated by its separate and distinct legislations and rules which spell out its conditions and legal requirements.

The applicable legislations provide that Nigerian courts shall accord reciprocal treatment to judgment of ‘superior courts’ from commonwealth countries and other countries with reciprocal treatment with Nigeria. They also provide that a judgment creditor from a foreign country with reciprocal treatment with Nigeria may apply to a ‘superior court’ in Nigeria within the specified time for registration of the judgment. From the ordinary meaning of the wordings of the provisions of the applicable legislations on conditions for registration of foreign judgments, it did not contemplate that the jurisdiction of the Nigerian court to register a foreign judgment will be subject to its jurisdiction to hear and determine the original subject matter of the case.

Since the judgment creditor is not asking the Nigerian court to hear the case based on its subject matter, but to grant leave for registration of the foreign judgment under the applicable legislations only, Nigerian courts have no business making its jurisdiction to hear the subject matter of the case, a condition precedent for registration of the judgment. Unless the appellate courts pronounce on this grey area, it will continue to impede the registration of foreign judgments in Nigeria.

An interesting requirement of the applicable legislations is that the Defendant against whom the foreign judgment is to be enforced must have been a Defendant at the original court. This requirement creates a profound difficulty for Judgment creditors. With the recent economic meltdown, businesses are trying to stay afloat by merging or acquiring other companies. To maintain a local presence, a multinational company may take over the business and goodwill of viable Nigerian Company. Upon such takeover the acquired company is wound up.

What then happens to a judgment creditor who obtained a foreign judgment against the acquired company? Does it mean that the judgment creditor cannot maintain a cause of action against the acquiring company just because the acquiring company was not a Defendant at the original court? Since the acquiring company acquired both the assets and liabilities of the acquired company and the acquired company is no more, the justice of the case demands that the foreign judgment obtained against the acquired company should be enforced against the acquiring company.

Another curious requirement in both the Act and the Ordinance is that foreign judgments in respect of fine, taxes and penalties cannot be enforced in Nigeria. This is against the whole concept of reciprocal treatment of judgment because it may give a safe haven to impenitent tax evaders. With the increase in tax evasion by foreign businesses and multinational companies, inability of states and government bodies to recover judgment debts in respect of fines, taxes and penalties across borders would led to a great loss of revenue. The role of fines, taxes and penalties is invaluable in the economic development of states in the 21st Century. Unlike the 19th Century where most states closed their borders against foreign goods and investment, the 21st century world is a global village.

Though Section 1 (2) of the Foreign Judgments (Reciprocal Enforcement) Act 1933 (“the United Kingdom’s Act”) provides that taxes or other charges of a like nature or in respect of a fine or other penalty cannot be registered and enforced in United Kingdom, the United Kingdom Prime Minister David Cameron in a letter to Leaders of the British Overseas Territories (BOTs) and Crown Dependencies (CDs) dated 20 May 2013 said “… I very much welcome the commitments you have made to automatic tax information exchange, both on a bilateral and multilateral basis, which will help us to reach our goal of setting a global standard in tax transparency… We also need to ensure information exchange works effectively for all… That is why we strongly support the Multilateral Convention on Mutual Assistance in Tax Matters”.

This highlights the importance of cross border tax collection. Nigeria will gain more if it offers herself and other states the opportunity to recover fine, taxes and penalties against evading offenders by either amending her Foreign Judgment statutes to accord foreign judgments on fine, taxes and penalties the same status with monetary judgments or enter into Multilateral and Bilateral treaties with other states to assist themselves on recovery of cross borders fine, taxes and penalties.

Furthermore, the requirement that once an appeal is filed at the original court, the foreign judgment cannot be registered at the registering court may be prejudicial to the judgment creditor. What happens in a situation where an unscrupulous debtor in an attempt to forever deny the judgment creditor the fruits of his judgment files an appeal at the original jurisdiction and goes to sleep? What happens to the judgment creditor where the judgment debtor dissipates the res before outcome of the appeal at the original court? Is it not justiciable to preserve the res at the registering court pending the outcome of the appeal at the original jurisdiction? This is the reasoning behind the provisions of Section 1 (3) of the United Kingdom’s Act which provides that “a judgment shall be deemed to be final and conclusive notwithstanding that an appeal may be pending against it, or that it may still be subject to appeal, in the courts of the country of the original court”.

In conclusion, there is a need for the lingering crisis on the law regulating enforcement of foreign judgment in Nigeria to be settled. The legal conditions for enforcement of foreign judgment have been interpreted too broadly to adequately protect the interest of foreign judgment creditors. Therefore, the law and rules should be amended to reflect modern realities. The Courts should be proactive in breaking new grounds and developing the jurisprudence on enforcement of foreign judgment in Nigeria in accordance with the essence of reciprocity of judgments. This will improve the prospects of Nigeria as a business destination and enhance the growth of her economy.

Challenges remain for Industrials, but calculus shifts

Disruption arising from COVID-19 has accelerated trends already apparent in the industrials market – particularly digitalisation and trade volatility – and transformation has gone from a “nice to have” to a necessity, according to the latest findings from Baker McKenzie. The law firm surveyed 700 company leaders in six industrial sub-sectors in early 2020, and again at the end of the year after the pandemic had taken hold of the global economy.

Interviews with sector leaders highlighted renewed action and energy, with companies looking to acquire technology and reimagine systems, networks and services to thrive in future. A License to be Bold: Transforming Industrials covers four areas of focus: adapting to the new market; digitalising for growth; disruption-proofing supply chains; and sustainability.

Nikolaus Reinhuber, Global Chair of Baker McKenzie’s Industrials, Manufacturing and Transportation industry group says, “Our findings show that disruption arising from COVID-19 has accelerated trends already apparent in the market –– particularly digitalisation, trade volatility and the importance of sustainability –– and transformation has gone from “nice to have” to necessity. There is a significant imperative to change, with greater stakeholder buy in and long-term viability outweighing short-term performance.

“Those organisations that meet disruption with a bold and innovative vision and execute effectively on it, will be best placed to adapt and grow over the coming decades. The industry has an imperative to change and a new license to be bold –– the stage is set for transformation.”

A License to be Bold: Transforming Industrials

Deloitte chief economist comments on inflation figures from the ONS

Commenting on the latest inflation figures, published by the ONS today, Ian Stewart, chief economist at Deloitte, said:

“Inflation hit a low last year and, while still less than half its target rate, is likely to rise gradually over the next year as activity snaps back. Rising unemployment and slack in the economy will limit inflationary pressures and keep the Bank of England’s focus on activity.”

Ian Stewart is a Partner and Chief Economist at Deloitte where he advises Boards and companies on macroeconomics. Ian devised the Deloitte Survey of Chief Financial Officers and writes a popular weekly economics blog, the Monday Briefing. His previous roles include Chief Economist for Europe at Merrill Lynch, Head of Economics in the Conservative Research Department and Special Adviser to the Secretary of State for Work and Pensions. Ian was educated at the London School of Economics.

About Deloitte

In this press release references to “Deloitte” are references to one or more of Deloitte Touche Tohmatsu Limited (“DTTL”) a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see deloitte.com/about for a detailed description of the legal structure of DTTL and its member firms.

Deloitte LLP is a subsidiary of Deloitte NSE LLP, which is a member firm of DTTL, and is among the UK’s leading professional services firms.

The information contained in this press release is correct at the time of going to press.

Private markets forecast to grow to $4.9tn globally by 2025

The report, Prime time for private markets: The new value creation playbook, examines prospects for four primarily illiquid asset classes of private equity (including venture capital), infrastructure, real estate and private credit across a range of scenarios for 2019-2025.

The report projects significant growth for the value of private markets of $5.5tn (best case), $4.9tn (base case) and $4.2tn (worst case) depending on how global economic conditions respond to the disruption caused by COVID-19.

Will Jackson-Moore, global leader for private equity, real assets and sovereign funds at PwC says: “The report highlights the continued emergence of private markets as a fast growing and highly impactful portion of global capital markets. Investors continue to look to the sector to deliver the yields that lower risk and more liquid asset classes struggle to match.

Yet this is also an opportunity for private markets to take a lead on ESG and net zero commitments and demonstrate the impact they can make in public perception beyond public markets.”

Opportunities across asset classes

Even in the worst case scenario of a prolonged recession, the projections look ahead to growth of almost 50% up to 2025.

While private equity is very much “the asset class of the moment” there is evidence that there are significant opportunities for growth and returns in areas such as real estate, infrastructure and private credit.

Will Jackson-Moore says: “While opportunities for growth are out there, it is important to emphasise that returns will be harder to find and be more aggressively fought for. Managers will need to be innovative in their approach to value creation and respond swiftly to changing investors and governmental expectations as economies recover from the effects of the crisis.”

ESG and going beyond financial return

Will Jackson-Moore says: “Our research highlights the extent to which financial return is no longer the sole driver of private markets growth. ESG and Net Zero commitments now represent a significant source of value preservation and creation.

Private market managers need to respond by looking at how to apply an ESG lens to investment strategy and product development. Whether it is in impact turnaround initiatives in which ‘dirty’ production facilities are turned green, or building strong commitment to diversity and inclusion at your organisation, these matters are no longer an overlay.”

CFOs anticipate return to growth and lasting change in 2021

Finance leaders expect a return to growth in 2021 with optimism rising to a record high, according to Deloitte’s latest CFO survey. Despite the surge in business optimism, half of CFOs do not expect demand for their own businesses to recover to pre-pandemic levels until the last quarter of 2021 or later.

The Deloitte CFO survey for Q4 2020, which gauges sentiment amongst the UK’s largest businesses, took place between 2nd December and 14th December 2020, so before new COVID restrictions announced on 19th December and the Brexit deal on 24th December.

A total of 90 CFOs participated in the latest survey, including CFOs of 12 FTSE 100 and 44 FTSE 250 companies. The combined market value of the UK-listed companies that participated is £308 billion, approximately 13% of the UK quoted equity market.

Revenues, risk appetite and economic landscape

There has been a sharp improvement in CFO expectations for UK corporates’ revenues this quarter with 71% expecting a rise over the next 12 months, up from 29% in Q3 2020, while over half (53%) of CFOs expect operating costs to rise. For the first time since 2015, a net balance of CFOs are expecting corporate operating margins to increase in the next year.

Risk appetite remains weak with only 19% believing it is a good time to take greater risk onto the balance sheet, however this is up from just 3% in Q1 2020.

Consistent with the idea of a return to growth CFOs’ expectations for inflation have risen markedly since Q3 2020. Over half of CFOs (59%) expect consumer price inflation to be at or above 1.6% in two years’ time, up from 36% three months ago.

While still showing a net negative balance, CFOs’ expectations for hiring, capital spending and discretionary spending have increased from the record lows seen in Q1 2020, with a strong uptick in each category in the last quarter. Expectations for hiring and spending are running higher than the levels seen between 2016 and mid-2019.

COVID and beyond

More than three quarters (78%) of finance leaders expect COVID-19 restrictions on movement and activity to continue through the first half of 2021, while 57% expect these measures to be removed permanently in Q3 2021.

CFOs believe that the pandemic is set to trigger a fundamental change in the business environment. An overwhelming net balance (98%) of CFOs expect flexible and home working to increase – with a five-fold increase in home working expected by 2025.

Similarly, 98% of CFOs expect levels of corporate and individual taxation to rise, two thirds (62%) anticipate higher regulation of the corporate sector and 59% see the size and role of government in the economy increasing.

Ian Stewart, chief economist at Deloitte, commented: “Boosted by the prospect of mass vaccination and growth, business sentiment surged this quarter with CFOs taking the most positive view on profit margins for the last five years. This rebound in sentiment occurred despite a backdrop of continued Brexit negotiations and with two thirds of CFOs believing that a no-deal outcome would have a severe or significant negative effect on the economy. In the three and a half years between the EU referendum and the pandemic CFOs have ranked Brexit as the top business risk for all but two quarters. The announcement of a deal after the survey closed is likely to have offered an end-year boost to CFO sentiment. The survey shows that in the first half of December, CFOs expected restrictions on movement and activity needed to combat COVID-19 to continue for the first half of this year. The announcement of further restrictions after the survey will clearly add to such concerns.

“Business leaders believe the pandemic will permanently change the business landscape. CFOs anticipate a five-fold increase in homeworking relative to pre-pandemic levels by 2025 and believe that the state will be both larger and more active in the long term.”

The impact of Brexit

CFOs think a no-deal Brexit would have been a far greater risk to the economy and to business than the actual outcome of a trade deal. Moreover, they saw either Brexit outcome as having a greater negative impact on the economy than on their own businesses. The large companies on our panel are more confident about their own ability to deal with Brexit than the wider economy’s.

Two thirds (66%) of CFOs saw a no-deal outcome as having a severe or significant negative effect on the economy and 18% expected a similarly negative impact on their own business. Just 20% of CFOs saw a trade deal as a major negative for the economy and this dropped to 7% in relation to their own business.

A majority (61%) of CFOs expect the post-Brexit points-based immigration system to act as somewhat of a drag on long-term economic growth. Around a quarter (27%) expect little or no effect, while 6% expect the new immigration system to support growth.

A net balance of 66% of CFOs expect both goods and services trade with the EU to decrease, while 77% expect a decrease in high-skilled immigration from the EU, with only 24% expecting an increase in skilled immigration from outside the EU.

Strategy and spending

CFOs remain in defensive mode with 49% and 46% respectively rating increasing cash flow and reducing costs as strong priorities. Meanwhile expansionary strategies have risen in popularity slightly since Q3, for example, around a quarter (28%) cite introducing new products, services or expanding into new markets as a priority for the year ahead.

Richard Houston, senior partner and chief executive of Deloitte UK, said: “The pandemic has triggered fundamental and lasting changes in business, with CFOs expecting rising levels of home-working, greater diversification of supply chains and increasing investment in technology.

“CFOs are optimistic about operating in this changing world, with a return to growth expected this year. However, with pandemic restrictions expected to be in place through the first half of this year and elevated uncertainty CFOs are maintaining defensive balance sheet positioning.

“The UK-EU trade deal ends over four years of uncertainty for business and is a far better outcome than the alternative of no-deal. Nonetheless, CFOs also recognise the challenges that leaving the EU may pose in the years ahead. The UK deal has very limited provisions for services, particularly for professional and financial services. These high productivity sectors are major UK successes and make vital contributions to jobs and prosperity. UK businesses urgently need additional clarity on key issues including financial equivalence as well as more information on the specific changes to other cross-border trading services.”