High Court dismisses attempt by National Crime Agency to strike out KGB defector’s claim

Karpichkov v National Crime Agency [2023] EWHC 2653 (KB)

The King’s Bench Division today dismissed an application by the National Crime Agency to strike out the claim brought by a former KGB double agent for breach of his data protection rights and misuse of his private information.

The Claimant – who the Court has directed may only be identified by his former name Boris Karpichkov – formerly worked for the KGB and, following the end of the Cold War, for the KGB and Latvian security services as a double agent. Fearing for his life, he fled Latvia with his family in 1998 and claimed asylum in the UK. He was granted British citizenship in 2010 under a new, undisclosed identity.

In 2019, Mr Karpichkov was arrested by Kent Police pursuant to a European Arrest Warrant issued by the Latvian authorities. In 2020, the Westminster Magistrates’ Court dismissed refused his extradition on the basis that it would breach his Convention rights, noting, among other things, that Mr Karpichkov had “an abundance of dangerous enemies in both Latvia and Russia“. In the course of processing the extradition request, however, the National Crime Agency disclosed Mr Karpichkov’s current name and address to the Latvian authorities.

In 2022, Mr Karpichkov brought a claim against the National Crime Agency, arguing that its disclosure of his current name and address to the Latvian authorities was not only unnecessary under the Schengen Information System then in force but also in breach of his Convention rights, his right to protection of his personal data and a misuse of his private information. Earlier this year, the Agency applied to strike-out Mr Karpichkov’s claims and obtain summary judgment against him, arguing that it was bound by the terms of EU law to disclose details of his current identity and address.

In today’s judgment, High Court Master McCloud dismissed the Agency’s applications, ruling that it was at least arguable that the Agency should have first considered whether its disclosures were truly “required”, taking into account Mr Karpichkov’s rights under the EU data protection legislation, the ECHR and EU Charter of Fundamental Rights.

Eric Metcalfe is instructed by Deighton Pierce Glynn for the Claimant, Mr Karpichkov.

Julianne Kerr Morrison was instructed on behalf of Mr Karpichkov at an earlier stage of the proceedings.

The judgment is available here and has been reported by Reuters and Yahoo news.

CAT approves consolidation of collective actions

On 17 October 2023, the Competition Appeal Tribunal approved the consolidation of two applications for a collective proceedings order against Google, thereby avoiding a carriage dispute. The two proceedings concerned Google’s conduct in the ad tech sector and sought substantial damages on behalf of publishers. The proposed class representatives, Mr Arthur and Mr Pollack, agreed to consolidate their applications following negotiations between themselves and their teams, including their funders and insurers, and this step has now been approved by the CAT, subject to certification of the claims which the CAT will decide next year. The consolidated application will be pursued by Ad Tech Collective Action LLP, of which both the individual representatives are members, along with Kate Wellington. This is the first time in the UK that a carriage dispute has been resolved through a negotiated settlement, though the practice is common in other countries such as Canada that have class action regimes.

Gerry Facenna KC, Julian Gregory, Alison Berridge and Nik Grubeck represent Ad Tech Collective Action LLP, instructed by Hausfeld & Co. LLP, Humphries Kerstetter LLP and Geradin Partners Limited. The consolidated claim is being funded by Fortress. Meredith Pickford KC represents Google, instructed by Herbert Smith Freehills LLP.

Monckton team instructed in opt-out claim against major video game distributor

Robert Palmer KC, Julian Gregory and Will Perry are working to prepare opt-out collective proceedings against Valve Corporation. Valve operates Steam, one of the world’s largest digital video game distribution platforms. The claim, which will be issued in the Competition Appeal Tribunal in the coming weeks, will allege that Valve used its market power in a way which has led to consumers being overcharged for games and in-game content distributed via Steam.

Robert, Julian and Will are acting for Proposed Class Representative, Vicki Shotbolt, a prominent campaigner for children’s digital rights. They are instructed by Milberg London LLP (see their press release here) and are working with funders Bench Walk Advisors, and economists from the Berkeley Research Group.

Alfred Artley obtains urgent interim injunction to restrain trespass and harassment in commercial dispute

In an unusual claim in the context of a commercial dispute, the Chancery Division made an order for an interim injunction in action for trespass and harassment against a well-known firm of debt collectors.

The claimant, an IT services provider, was in dispute with one of its suppliers over a number of invoices. Despite having no judgment in its favour or writ of execution, the supplier instructed a debt collection agency to enforce the alleged debt. The debt collection agency had previously featured in the Channel 5 series ‘Can’t Pay? We’ll Take It Away’.

Although warned not to do so, the debt collection agency sent bailiffs to both the IT company’s London office and the home of its managing director. The company therefore issued proceedings for trespass and harassment against the debt collection agency, and an interim injunction was granted preventing the bailiffs from coming with 10 metres of the company’s business address and its director’s home, communicating with the company other than through solicitors, or otherwise harassing it.

Alfred Artley acted for the successful claimant, instructed by Sajjid Kurmani of Freeths LLP.

Judgment: High Court clarifies jurisdiction of Payment Systems Regulator

R (NoteMachine UK Ltd) v the Payment Systems Regulator [2023] EWHC 2522 (Admin)

The High Court has today handed down its long-awaited judgment in a judicial review challenge which clarifies the law governing the jurisdiction of the Payment Systems Regulator (PSR), and specifically how it deals with complaints from participants in payment systems.

NoteMachine, an ATM operator, challenged a family of decisions taken by the PSR within its overall decision not to pursue an investigation in response to an application made by NoteMachine. NoteMachine had complained to the PSR about LINK decreasing the Interchange Rate which NoteMachine receives from cash withdrawals.

NoteMachine issued a claim with five grounds of challenge, of which four were given permission. The grounds given permission alleged that the PSR had made three narrow errors of law, and one error of fact and law. The grounds were:

  1. The PSR failed to apply s.108 of the Financial Services (Banking Reform) Act (FSBRA) correctly in concluding that it was required to deal with NoteMachine’s application under Regulation 103 of the Payment Services Regulations 2017 (PSRs 2017) instead of under s.57 FSBRA.
  2. When considering Regulation 103 PSRs 2017, the PSR failed to define and apply the concept of “discrimination” correctly as required by Regulation 103(3)(b) PSRs 2017.
  3. When deciding not to take further action in relation to the issues which the Claimant raised concerning the Competition Act 1998 (CA98), the PSR erred in its approach to s.62 FSBRA.
  4. In a letter of 12 March 2021, when deciding not to take further action in relation to the issues which the Claimant raised concerning CA98, the PSR erred in fact and in law by failing to appreciate that CA98 applies equally to Multilateral Interchange Fees which are set too low.

Sweeting J found that all four grounds failed following the substantive hearing, which took place on 16-17 March 2022. In addition, he held that s.31(2A) of the Senior Courts Act 1981 applied to preclude relief in relation to grounds 1, 4 and 5.

Michael Bowsher KC acted for NoteMachine, instructed by Hill Dickinson LLP.

Kassie Smith KC and Imogen Proud acted for the Payment Systems Regulator, instructed by Kingsley Napley.

The full judgment can be read here.

Self-Invested Pension Plans (“SIPPs”) are not exempt “insurance transactions” for the purposes of VAT

Intelligent Money Ltd V Hm Revenue & Customs [2023] UKUT 00236 (TCC), 26 September 2023.

The Upper Tribunal (Tax and Chancery Chamber), Mr Justice Rajah and Judge Ashley Greenbank, has dismissed Intelligent Money’s (“IML”) claim that fees it received in connection with the provision, operation and administration of self-invested personal pension schemes (SIPPs) were consideration for exempt supplies of “insurance transactions” within the meaning of Group 2 of Schedule 9 to the Value Added Tax Act 1994 (“the Insurance Exemption”). The Upper Tribunal upheld the decision of the First-tier Tribunal, [2022] UKFTT 0338 (TC), albeit for reasons that differed in some respects.

A SIPP is a tax-efficient means whereby individuals may save for their retirement, set up and operated in accordance with the provisions of the Finance Act 2004 and the Pensions Act 2008. A SIPP member’s investments are held on trust and administered by the SIPP trustee and operator. The member is solely responsible for all decisions relating to the purchase, retention and sale of all investments within the SIPP. The value of the SIPP may only be applied to provide benefits in accordance with the scheme rules, which include (1) payments to the member on reaching retirement age and/or (2) payments to his or her nominees on death, pursuant to a tax-efficient discretionary trust structure.

The UT held that IML’s administration services did not involve any assumption of risk to the member and did not meet the necessary conditions for an “insurance transaction”, in accordance with the consistent case law of the CJEU, starting from Card Protection Plan Ltd v. CEC (Case C-349/96) and including United Biscuits (Pension Trustees) Ltd v RCC (Case C-235/19). IML’s services lacked the essential feature of an “insurance transaction”, namely that, under the contractual relationship between the insured and the insurer, the insured obtains some protection from a relevant risk or uncertainty; someone other than the insured must bear the cost of the payment or the provision of the service that is provided on the materialization of that risk or uncertainty. Under the trust arrangements of the SIPP, the provision of “life” and “death” benefits fell exclusively on the SIPP member, through the member’s accumulated fund, in which IML had no beneficial interest. For that reason, the UT, disagreeing with the FTT, considered that the SIPP was not a contract of insurance as a matter of domestic law. The UT further held that the pre-CPP decision of a VAT & duties tribunal in Winterthur Life UK Ltd v. CEC [1997] Lexis Citation 1166 was wrongly decided.

The UT further considered (obiter) that the fees paid by the member to IML were not “premiums”; they were not paid “in advance” for a benefit that may or may not arise, but were payments made after the event or for ongoing administrative services. Members’ contributions to their funds were not consideration for anything, but were held by IML on trust. The life and death benefits provided to the members, their dependants or other beneficiaries were paid out of the members’ own funds in which IML had no beneficial interest, by IML qua trustee under the powers and duties conferred by the trust deed and scheme rules; it was wrong to equate those powers e duties as a contractual obligation to provide benefits.

Andrew Macnab acted for HMRC.

Read the Upper Tribunal’s decision here.

Read the FTT’s decision here.

CAT supports CMA in excessive pricing case Allergan PLC & Ors V The Competition and Markets Authority

On 18th September 2023, the Competition Appeal Tribunal handed down judgment in Allergan PLC & Ors V The Competition and Markets Authority concerning a CMA Decision on findings of excessive and unfair pricing of hydrocortisone tablets. The judgment is available here. The CAT upheld the finding of excessive and unfair prices by the Appellants (and largely upheld the penalties imposed on them), but quashed numerous findings and approaches taken by the CMA in its Decision (in particular, for example, its approach to market definition).

Robert Palmer KC, Laura John and Jack Williams (instructed by Linklaters LLP) appeared for the Intas Appellants.

Mark Brealey KC (instructed by Morgan, Lewis & Bockius UK LLP) appeared for the Advanz Appellants.

Josh Holmes KC, Nikolaus Grubeck, Michael Armitage and Daisy Mackersie (instructed by the legal department of the Competition and Markets Authority) appeared for the Competition and Markets Authority.

Launch of opt-out collective action claim against Severn Trent

In the context of ongoing national publicity regarding discharges of untreated sewage and wastewater into rivers, streams and coastal waters, a new collective action brought in the Competition Appeal Tribunal alleges that Severn Trent is infringing UK competition law.

The proposed class representative, Professor Carolyn Roberts, is a water resource management specialist.

Severn Trent is in an effective monopoly position, and can charge monopoly prices subject to control by Ofwat and the competition rules on abuse of dominance.  Ofwat’s price control in the sewerage sector is performance-related. Professor Roberts alleges that Severn Trent has misled Ofwat and the Environment Agency as to the number of pollution incidents associated with its sewerage network, with the result that it has been able to charge higher prices to its customers for its sewerage services under Ofwat’s controls than it would have been able to charge had it reported accurate information. The claim against Severn Trent is brought on behalf of 8 million customers who could each be owed a share of c. £330 million.

The claim against Severn Trent is the first in a group of collective claims planned against sewerage companies in England.

It has received extensive media coverage, including by the BBC, the Financial Times, the Guardian, the Independent, the Mirror and the Telegraph.

Jon Turner KC, Julian Gregory, Nikolaus Grubeck and Antonia Fitzpatrick are acting on behalf of Professor Roberts, instructed by Leigh Day (see Leigh Day’s press release here).

Coulson LJ: No Standing for Subcontractors or US Firms in National Lottery Claim

IGT v Gambling Comission [2023] EWHC 1961 (TCC)

Judgment has been handed down today in a preliminary issue in IGT v Gambling Commission, International Gaming Technology’s claim against the Gambling Commission in respect of the award of the Fourth National Lottery Licence (4NL).

This is part of the long-running procurement litigation about the award by the Gambling Commission of the 4NL concession to a Czech-owned company, Allwyn. Incumbent supplier Camelot brought a procurement law challenge, as did the key subcontractor, the IGT Group, which comprises both UK and US companies. After the lifting of an automatic suspension on contract-making (see here) and permission to appeal being granted to the Court of Appeal, in an unusual move Allwyn bought the other bidder, Camelot, ending the appeal process. IGT’s claim then continued alone in the High Court as a damages-only claim.  This led to the preliminary issue to determine (i) generally, whether subcontractors have standing in procurement claims, and (ii) specifically, whether US companies have standing in UK service concession contract claims.

The judgment is of obvious wider interest to public procurement lawyers and clients, as it considers and clarifies the requirements for a claimant to have standing under the Concession Contracts Regulations 2016 (CCR), and thus also under the procurement regulations more generally. Further, it determines the standing requirements for bidders from third countries, specifically other GPA states, in service concession contract cases. This is the first time that either of these matters have been fully argued and decided in the UK courts.

Sitting as a first instance judge in the TCC, Coulson LJ determined that none of the IGT Claimants had standing to bring claims under the CCR.

In the judgment dealing with subcontractors Coulson LJ considered and determined a number of issues of EU and UK law around the meaning of the Directives and Regulations, including:

  • EU law did not impose an obligation on the UK to provide standing to anyone other than the bidders in a procurement (§52);
  • Although there is no general presumption, as a matter of policy, that the UK did not “gold-plate” EU Directives, when the CCR were made the UK Government did not intend to gold-plate the Remedies Directive in order to provide standing to other categories of interested persons, including non-bidders (§120 – 121);
  • The phrase “economic operator” when considered in the context of the CCR did not include non-bidders (§160).

The Court’s conclusion on the first issue was that subcontractors (whether “key” or otherwise) do not have standing to bring a claim under the CCR (nor, by implication, under the Public Contracts Regulations 2015 and the Utilities Contracts Regulations 2015). Earlier UK cases that may have suggested otherwise, and which apparently proceeded on the basis of standing for subcontractors, (like Sysmex) notwithstanding.

In the part of the judgment dealing with service concession contract challenges by US companies, Coulson LJ found that such bidders do not have standing, and that this would be the case even if they were bidding as the main contractor.

In this regard the judgment considers the interaction between the CCR and the WTO Agreement on Government Procurement (“GPA”). This arose as one of the IGT Claimants is a US company and so was required to establish that it was an economic operator to whom a duty was owed under regulation 51 CCR. Coulson LJ determined that the competition was not a procurement to which the GPA applied on the basis that neither lottery service contracts nor service concession contracts appear in the Annexes to the GPA. Accordingly, the US company-claimant did not have standing to challenge the procurement in any event (§196).

The Court’s conclusion on the second issue means that US companies, whilst they might bid for – and potentially win – a UK service concession, do not have recourse to the High Court review procedure under the CCR if they wish to challenge such a procurement decision.

Philip Moser KC, Ewan West and Clíodhna Kelleher of Monckton Chambers acted for IGT.

A “paradigm shift”: CAT Hands Down Landmark Ruling on Brexit’s Effect on Accrued Rights

In the Merchant Interchange Fee Umbrella Proceedings, the CAT has today handed down its judgment on the “Volvo limitation issues”: [2023] CAT 49. Those issues were, principally: (i) did the CJEU find in Case C-267/20 Volvo that, as a matter of EU law, limitation did not begin to run against a claimant with a competition law damages claim until the relevant infringing activity ceased; and (ii) if so, should the CAT follow Volvo (which was handed down after 31 December 2020 or Implementation Period Completion Day / “IPCD”)?

The CAT’s judgment is of very wide significance because it represents the first explicit analysis in UK domestic law of the effect that the EU (Withdrawal) Act 2018 (“EUWA”) has had upon rights accrued under EU law prior to IPCD, and in particular of whether post-IPCD EU judgments are binding on UK courts adjudicating on such rights.

The Tribunal unanimously concluded, as to question (i) above, that CJEU in Volvo had made no binding finding on limitation in any event. However, this point remains under consideration by the CJEU in other cases.

Of wider importance in the UK, however, are the Tribunal’s responses to question (ii) which settle, in the negative, any argument as to whether post-IPCD EU judgments have binding effect in relation to rights accrued under EU law before IPCD.

On that issue, the merchant claimants argued that claims in respect of facts occurring before 31 December 2021 represented “accrued rights”, which ought to have been unaffected by Brexit, including as to the binding effect of post-IPCD EU judgments [50]-[51].

However, in the judgment of the majority (Marcus Smith J and Ben Tidswell), Parliament, by its enactment of EUWA, effected the “translation” of all rights, claims and remedies that had existed under EU prior to 31 December 2021 into rights, claims and remedies under retained EU law (i.e. domestic law), which are now preserved by virtue of section 4(1) of EUWA.

As majority put it, the UK’s “entire legal order has undergone a paradigm shift” [69(2)], and the preservation of accrued rights in an unchanged legal form would have been “inconsistent with what Parliament intended” by Brexit [69(1)].  Importantly, section 16 of the Interpretation Act 1978 had not been triggered to preserve those rights because no enactment under which they had substantively accrued had been repealed. Rather, in the majority’s analysis, the precise effect of the repeal of the European Communities Act 1972 had been to close a “gateway” through which substantive EU law rights had previously flowed into domestic law [69(3)].

Roth J’s concurring minority judgment did not agree that section 4(1) of EUWA was the mechanism by which accrued rights were converted into rights under retained EU law, noting that “[s]omewhat surprisingly, the 2018 Act does not set out a clear answer” as to what that mechanism was [101]. Nonetheless, Roth J considered that “the statutory scheme, considered as a whole, indeed has, in effect, converted or ‘translated’ rights which had accrued under EU law into rights under retained EU law, save insofar as it otherwise expressly provides” [102].

Ronit Kreisberger KC, Philip Woolfe, and Antonia Fitzpatrick, with Oliver Jackson at 11KBW, acted on behalf of a group of merchant claimants, instructed by Stephenson Harwood LLP.

Anneliese Blackwood with Nicholas Saunders KC and Aidan O’Neill KC appeared on behalf of the Class Representative in the Merricks Proceedings instructed by Willkie Farr & Gallagher (UK) LLP.

The judgment is available here.