The High Court has declared that HMRC acted unlawfully in granting preferential tariff treatment to products from Morocco which originated in Western Sahara. HMRC – acting pursuant to advice given by the European Commission – had treated such products as being entitled to preferential tariff treatment. But, following a preliminary reference to the Court of Justice of the EU, the High Court declared that this position was not tenable and that there was no such entitlement under the EU Morocco Association Agreement. Similarly, the Secretary of State for the Environment, Food and Rural Affairs was not entitled to grant fisheries quotas for fishing in the territorial waters of Western Sahara under the EU Morocco Fisheries Partnership Agreement.

The declaratory relief granted by the High Court represents the successful culmination of 4 years of litigation, of wider significance for the interpretation and validity under EU Law of treaties with third states regulating trade relationships.

Conor McCarthy, instructed by Leigh Day, acted for Western Saharan Campaign UK (led by Kieron Beal QC)

In a judgment released today, Lewis J has rejected an application by Orion Corporation, a pharmaceutical company, to refer to the ECJ questions relating to the starting point of its period of data exclusivity under the Medicines Directive.

The Directive gives pharma companies that obtain a marketing authorisation a period of data exclusivity, during which the data from pre-clinical tests and clinical trials that they provide to the regulator when obtaining the authorisation cannot be used by any other company to obtain an authorisation for a similar drug. That period runs from the point at which the first marketing authorisation for the product is obtained in the EU. In the present case, the main issue was that a marketing authorisation was obtained in the Czech Republic in 2002 before its accession to the EU – the authorisation was maintained until several years after the Czech Republic joined the EU in 2004. A generic company had obtained a marketing authorisation from the UK and other EU Member States on the basis that the data exclusivity period ran from 2004 and had expired. Orion challenged the decision of the UK regulator, the MHRA, on the basis that the Czech authorisation did not “start the clock” because the Czech authorities had granted it before accession and, said Orion, had not complied with a number of important conditions surrounding the grant of an authorisation. The MHRA, the UK regulator, argued that the court was not entitled to look behind the Czech authorisation, which had to be treated as valid in 2004 when the Czech Republic joined the EU and therefore started the clock.

The Judge agreed with the MHRA and held that the position was clear: the data exclusivity period began to run in 2004 and had expired. There was no basis for a reference to the ECJ.

George Peretz and Ewan West acted for the MHRA.

SAE Education Ltd v HMRC

In a unanimous judgment handed down today, the Supreme Court overturned the judgment of the Court of Appeal and the decision of the Upper Tribunal and ruled that SAE Ltd, part of a global group of higher education providers, was entitled to claim exemption from VAT as a college of Middlesex University. The judgment reiterates that the policy objective of the exemption is to ensure that the VAT cost does not hinder student access to higher education, and concludes that denying exemption to providers on the basis that they are independent commercial entities would defeat that objective. The judgment will therefore be welcomed by thousands of university students in the UK.

The Supreme Court has provided much-needed clarity for those commercial higher education providers who must collaborate with UK universities because they do not have degree awarding powers. Its judgment effectively prevents HMRC from discriminating against profit-making providers on the basis that they do not have constitutional arrangements which are similar to those of Oxford and Cambridge colleges. There is no such “hard-edged” test, as previously found by the Court of Appeal. On the contrary, each case must be decided on its own particular facts and circumstances, having regard to the student-focused policy objective of the exemption.

A number of the infamous 15 “SFM Factors” have been jettisoned by the Supreme Court. Click here for a case note by Elizabeth Kelsey, junior counsel in the case, to see which of those Factors have survived.

Click here for the judgment.

Melanie Hall QC represented SAE Ltd and is currently advising commercial providers in a similar position.

Eurotunnel v Secretary of State for Transport

Eurotunnel and the Secretary of State for Transport have today settled Eurotunnel’s challenge to the award by the Government of contracts to DFDS, Brittany Ferries, and Seaborne Freight for the provision of additional freight capacity between the UK and continental Europe. The capacity contracts were procured under the extreme urgency provisions in regulation 32(2)(c) of the Public Contracts Regulations 2015 to deal with the consequences of a ‘no-deal Brexit’. Eurotunnel challenged this procurement as being unlawful under the Regulations. The Secretary of State denied that Eurotunnel had standing to make such a challenge and denied all the claims.The procurement claim was due to be heard by Mr Justice Stuart-Smith in the Technology & Construction Court between 1 and 6 March 2019.

Daniel Beard QC, Valentina Sloane, Ligia Osepciu and Jack Williams of Monckton Chambers acted for Eurotunnel.

Philip Moser QC, Ewan West and Azeem Suterwalla of Monckton Chambers acted for the Secretary of State.

RD & Ors, R (on the application of) v Worcestershire County Council [2019] EWHC 449 (Admin)

In a judgment handed down today, the Administrative Court has ruled that Worcestershire County Council acted unlawfully in failing to carry out proper transitional planning in relation to families affected by its decision to cut a much-valued home-visiting service known as ‘Portage’ for children with special educational needs and disabilities. The Claimants raised a variety of statutory and common law challenges to the decision-making process. Mr Justice Nicklin ultimately decided the case on the basis that the Defendant had frustrated the affected families’ legitimate expectations, which had arisen from assurances made by the Defendant at the time the decision to cut the Portage service was taken to the effect that proper transitional planning would take place in order to ensure that the impact of the cessation of the service would be properly mitigated.

Michael Armitage acted for the Claimants, instructed by Bindmans LLP. Having acted unled at the permission stage, Michael was led by Jenni Richards QC of 39 Essex Chambers at the substantive hearing.

Steve Broach also advised the Claimants at an earlier stage in the proceedings.

The judgment is the latest in a series of cases in which Monckton members have successfully represented claimants challenging local authority cuts (see News 14 August 2018, 6 August 2018 and 22 July 2016)

On 21 February 2019, the FCA issued a decision which finds that 3 asset management firms breached competition law. This is the FCA’s first formal decision under its competition enforcement powers.

The infringements found by the FCA consisted of the sharing of strategic information, on a bilateral basis, between competing asset management firms during one initial public offering and one placing, shortly before the share prices were set. The firms disclosed and/or accepted otherwise confidential bidding intentions, in the form of the price they were willing to pay and sometimes the volume they wished to acquire. This allowed one firm to know another’s plans during the IPO or placing process when they should have been competing for shares.

Asset managers bid for the shares they want in IPOs and placings against competing asset managers in prevailing market practice. The FCA found that if asset managers share detailed and otherwise confidential information about their bids with each other, they undermine the process by which prices are set. This can reduce pressure to make bids that reflect what they really think the company is worth. This could reduce the share price achieved by the IPO or placing and so raise the cost of equity capital for the issuing company. According to the FCA, firms rely on such capital as a way of financing investments, so unlawful information sharing could increase the cost of related investments or even make them unviable.

The FCA has fined Hargreave Hale Ltd £306,300 and River and Mercantile Asset Management LLP (RAMAM) £108,600. The FCA also found that Newton Investment Management Limited was involved in the anti-competitive conduct, but it was not fined because it was given immunity under the competition leniency programme.The companies now have two months to appeal the FCA’s decision.

Kassie Smith QC, Alison Berridge and Jack Williams are acting for the FCA.

Daniel Beard QC is acting for Hargreave Hale.

A Complex dispute concerning the Aggregates Levy has now been concluded after over 14 years of litigation in the European and domestic courts. Three separate but linked appeals to the General Court have been withdrawn after hearings in Luxemburg  but before Judgments were handed down.

The Aggregates Levy was introduced by the UK Government in the Finance Act 2001 as an environmental tax on the commercial exploitation of aggregate in the UK.  Its overall aim was to encourage the commercial exploitation of aggregate to be conducted in a more environmentally friendly manner.

The Levy included a series of complex exemptions and reliefs for certain types and uses of aggregate in the UK.  Due to particular circumstances affecting Northern Ireland, a specific relief was adopted in order to give the industry in Northern Ireland sufficient time to adapt to the Levy.  The European Commission decided that, with certain exceptions, these exemptions and reliefs from the Levy did not constitute state aid. Its decisions to that effect were challenged by the British Aggregates Association and, in relation to Northern Ireland, certain quarries located in the Republic of Ireland on the basis that the exemptions and reliefs did comprise state aid, which was said to have distorted competition in a way that was not compatible with the single market.

It is the appeals against those decisions in cases T-101/14, T-610/15 and T-741/15 that have now been withdrawn.  These appeals were the second round of challenges conducted in the European Courts against the Commission’s approval of certain other aspects of the Levy. In general terms it was said that the exemptions from the levy amounted to incompatible state aid.

The Government has now made a written statement in Parliament indicating that it will be reviewing the operation and effectiveness of the levy over the next year.  The Written Statement can be found here.

Melanie Hall QC and Ben Rayment represented the United Kingdom on each of the appeals.

La Gaitana Farms SA & Ors v British Airways Plc [2019] EWCA Civ 37

In a judgment handed down today in the air cargo cartel damages litigation, the Court of Appeal (Master of the Rolls; Flaux and Bean LJJ) has held that the national court did not have jurisdiction to award damages for a contravention of what is now Article 101 TFEU in relation to collusion on surcharges on air freight services provided between the EU and third countries, during the period prior to 1 May 2004. Under the transitional regime that applied during that period, the national court could only consider such conduct if the European Commission or the designated national regulatory authorities had first made a relevant decision. Moreover, the Court of Appeal held that the advent of Regulation 1/2003 did not change the position such as to enable the national court now to apply Article 101 TFEU to pre-1 May 2004 conduct on flights between the EU and third countries, despite the fact that the transitional regime no longer applies to such conduct. The judgment contains a detailed exposition of the general principle of the non-retrospectivity of substantive legal rules and is therefore of significant wider interest.

Philip Moser QC acted for the “La Gaitana” Appellants at the hearing of the appeal.

Jon Turner QC and Michael Armitage acted for the Respondent, British Airways.

Daniel Beard QC and Tom Sebastian acted for the “Part 20” Respondents to the appeal.

This is the latest judgment in the air cargo litigation, which encompasses a large number of claims that have now settled. Monckton Chambers has been at the heart of the litigation, and (in addition to the individuals above) the following Members of Chambers have all previously been instructed in the proceedings:

• Tim Ward QC Korean Air, Asiana Airlines, Thai Airways
• Philip Moser QC, Paul Harris QC, Ben Rayment, Anneliese Blackwood, Alison Berridge, Conor McCarthy La Gaitana, Kodak, Hyundai, Emerald
• Michael Bowsher QC, Anneli Howard Japan Airlines
• Jon Turner QC, Robert Palmer, Michael Armitage, Stefan Kuppen BA
• Daniel Beard QC, Tom Sebastian Polar Air, Thai Airways, Societe Air, Singapore Airlines, Scandinavian Airlines, Qantas, LAN Cargo, Korean Airlines, Japan Airlines, Deutsche Lufthansa, Cathay Pacific, Cargolux, Asiana Airlines, Bao Xiang
• Kassie Smith QC, Laura John Cargolux
• Meredith Pickford QC Korean Air, Air Canada
• Ronit Kreisberger, Nik Grubeck Cathay Pacific
• Rob Williams Sanofi
• Philip Woolfe Thai Airways, Saudi Arabian Airways, Polar Air, Malaysian Airlines, Hong Kong Airlines, Emirates, All Nippon Airways, Air New Zealand, Korean Air

ABBVIE LIMITED -v- THE NHS COMMISSIONING BOARD (OPERATING AS NHS ENGLAND)

[2019] EWHC 61 (TCC)

Pharma giant AbbVie challenged the largest NHS drug procurement ever undertaken, for contracts to treat and eliminate Hepatitis C (“HCV”) worth about £1 billion over five years commencing April 2019.

The procurement is a “whole market” procurement, to award market shares to all three existing HCV drug suppliers. The Claimant challenged two aspects of the Procurement, claiming breach of the duty of equal treatment in Regulation 18 (1) of the Public Contracts Regulations:

i) A “dummy price mechanism” (“DPM”) used in the assessment which the Claimant said gave an unfair advantage to bidders unable to supply part of the market as compared to those that could.

ii) An Unmetered Access Model (“UAM”) involving a fixed fee for all the patients a supplier commits to treat, the Claimant claiming as unfair that failure by one bidder to treat all its patients might require others to do so without additional pay.

In an important judgment on the equal treatment principle and the margin of discretion available to the contracting authority Choudhury J dismissed the claim on all points, holding:

i) The DPM did not amount to a breach of equal treatment. That a bidder might fare better than a rival under a particular model did not necessarily mean that model was in breach of equal treatment. The choice of model falls within the wide discretion available to contracting authorities to choose award criteria for their purposes. The evidence clearly demonstrated that the Claimant could still win the largest share, depending on the prices it chose to bid. Alternatively, the DPM would be objectively justified for reasons including the increase of competition, reducing cost and maximising health benefits.

ii) In relation to the UAM, the fixed fee did not breach equal treatment. The advantage the Claimant believed it had by reason of a more popular product was not a difference in competitive position which needed to be catered for in the tender rules. An application of the same rules to all suppliers, irrespective of competitive position, does not amount to unequal treatment. Also, the Claimant’s claimed understanding of how value was to be assessed was not that of the reasonably well-informed and normally diligent tenderer. Alternatively, on the evidence any discriminatory effect would be modest and thus relatively easy to justify and was objectively justified for the reasons relied upon by the Defendant.

Philip Moser QC of Monckton Chambers acted for the successful Defendant, instructed by Blake Morgan.

Ligia Osepciu of Monckton Chambers was also instructed by the Defendant on the case.

The full (non-confidential part of the) judgment is here.