Olympic stadium contract must be disclosed in full

The First Tier Tribunal (Information Rights) ruled today that the concession agreement under which West Ham United Football Club will become the new anchor tenant at the Olympic stadium, at the Queen Elizabeth Olympic Park in Stratford, London, must be disclosed in full.

The Tribunal agreed with the Information Commissioner that disclosing the contract in full would not be likely to prejudice the commercial interests of either the London Legacy Development Corporation, or of West Ham United Football Club, and that the relevant exemption from disclosure (section 43 FOIA) was not engaged.

A copy of the Information Commissioner’s decision can be viewed here, and the Tribunal’s judgment here.

Further commentary on the judgment can be found here: BBC, The Guardian, Mirror, Daily Mail.

Laura Elizabeth John acted for the Information Commissioner.


Tribunal cuts down estate agents’ Money Laundering Regs fine

The First-tier Tribunal has reduced the fine imposed on a Leicestershire estate agency for breaches of the ‘know your client’ requirements of the Money Laundering Regulations 2007.  The original penalty of £169,652 was the largest ever imposed on an estate agency business under the Regulations.  Following an appeal hearing lasting 3 days, the Tribunal has reduced the penalty to £5,000.

The original penalty was imposed on the estate agency (Jackson Grundy Limited) by the Office of Fair Trading (OFT) in March 2014 as one of its last decisions prior to the transfer of all its functions to other regulators.  The OFT calculated the penalty amount under its ‘Interim Penalty Policy’ which set out a scheme for calculating penalty amounts, starting with a percentage of ‘relevant turnover’ at ‘Stage 1’, and subsequent stages at which other factors were taken into account.

A few days after the OFT took its decision, the OFT’s responsibilities for regulating estate agency businesses under the Money Laundering Regulations transferred to HM Revenue & Customs (HMRC).  The estate agency exercised its right to obtain a review of the decision by HMRC.  HMRC upheld the original penalty.  The estate agency then appealed to the Tribunal.

At the hearing before the Tribunal, both parties agreed that the Tribunal had jurisdiction to consider all the facts as it found them to be, and to decide whether the penalty amount that had been imposed was appropriate as constituting an “effective, proportionate and dissuasive” penalty, and to decide for itself what would constitute an appropriate penalty to meet the facts of the case.

A copy of the decision is available here.  (The Tribunal provides a summary of its reasons at paragraphs 3 and 4.)

Monckton barristers represented both parties: the Appellant was represented by Alan Bates, and the Respondent by Peter Mantle.

Judicial Review Proceedings Issued against Government over Arms Exports to Saudi Arabia

Judicial review proceedings have been issued in the High Court challenging the government’s decision to export arms to Saudi Arabia for possible use in the conflict in Yemen.

Conor McCarthy has been instructed by Leigh Day in the claim brought by the Campaign Against the Arms Trade.

The challenge follows increasing evidence that Saudi Arabian forces are violating international humanitarian law in Yemen. This evidence includes recent findings by the UN Panel of Experts on Yemen (appointed by the UN Security Council) that airstrikes by coalition forces in Yemen were violating the rules of distinction, proportionality and the prohibition on indiscriminate targeting as well as other rules of international law regarding the conduct of hostilities.

The United Kingdom has presently licensed the export of around £4.6 billion of arms and military equipment to Saudi Arabia.

If permission for the judicial review is granted,  then the High Court will be asked to consider whether the continued arms exports contravene the UK government’s commitments under UK and EU rules regulating the export of military equipment.

Conor McCarthy is acting for the claimant, and instructed by Leigh Day, led by Martin Chamberlain QC.

Paul Lasok QC and Anneliese Blackwood act for HMRC in landmark win in the Supreme Court against £100m UBS and DB ‘bankers’ bonus’ tax scheme appeal

Paul Lasok QC and Anneliese Blackwood in Supreme Court Win

The Supreme Court has allowed HMRC’s appeals against UBS AG (“UBS”) and DB Group Services (UK) Ltd (“DB”) in relation to detailed schemes designed to avoid the payment of tax on bankers’ bonuses. The determinations and decisions which UBS and DB appealed against required the payment to HMRC of nearly £100 million. In each case, the scheme used by UBS and DB respectively was intended to take advantage of Chapter 2 of Part 7 of the Income Tax (Earnings and Pensions) Act 2003 (“ITEPA”), as amended by Schedule 22 to the Finance Act 2003. The judgement of the Supreme Court was given by Lord Reed, with whom Lord Neuberger, Lord Mance, Lord Carnwath and Lord Hodge agreed.

Lord Reed noted that there were two key factors identified in Barclays Mercantile [2004] UKHL 51, at para 34. First, “tax is generally imposed by reference to economic activities or transactions which exist, as Lord Wilberforce said, ‘in the real world’”. Secondly, tax avoidance schemes commonly include “elements which have been inserted without any business or commercial purpose but are intended to have the effect of removing the transaction from the scope of the charge”. He went on to note that Carnwath LJ said in the Court of Appeal in Barclays Mercantile, [2002] EWCA Civ 1853, at para 66, that taxing statutes generally “draw their life-blood from real world transactions with real world economic effects”. Lord Reed stated that where an enactment is of that character, and a transaction, or an element of a composite transaction, has no purpose other than tax avoidance, it can usually be said, in the words of Carnwath LJ, that “to allow tax treatment to be governed by transactions which have no real world purpose of any kind is inconsistent with that fundamental characteristic.” He concluded that, as Ribeiro PJ said in Collector of Stamp Revenue v Arrowtown Assets Ltd [2003] HKCFA 46, at para 35, where schemes involve intermediate transactions inserted for the sole purpose of tax avoidance, it is quite likely that a purposive interpretation will result in such steps being disregarded for fiscal purposes although not always. Some enactments, properly construed, confer relief from taxation even where the transaction in question forms part of a wider arrangement undertaken solely for the purpose of obtaining the relief.  He concluded that the position was ultimately summarised by Ribeiro PJ in Arrowtown Assets, at para 35: “The ultimate question is whether the relevant statutory provisions, construed purposively, were intended to apply to the transaction, viewed realistically”.

Lord Reed considered that section 423 of ITEPA, when construed purposively, was not intended to apply to the schemes in question. He found that the reference in section 423(1) to “any contract, agreement, arrangement or condition which makes provision to which any of subsections (2) to (4) applies” was to be construed as being limited to provision having a business or commercial purpose, and not to commercially irrelevant conditions whose only purpose is the obtaining of the exemption. On the facts he found that the restrictions on the shares in the UBS and DB schemes respectively were commercially irrelevant conditions whose only purpose was the obtaining of the exemption. As a consequence he concluded that the schemes involved the provision of unrestricted shares and as such fell outside the tax exemption provided for in Chapter 2 of Part 7 of ITEPA.

Paul Lasok QC and Anneliese Blackwood appeared on behalf of HMRC.

To view the full judgment, please click here.


Levy Control Framework trumps “certainty” of Renewables Obligation closure date

The Court of Appeal this week upheld the Secretary of State’s decision to close the Renewables Obligation to new large-scale solar photovoltaic (PV) projects two years early, despite previous statements by the Government (made in the interests of providing “certainty” to investors) that the RO would remain open until 31 March 2017, in a decision which is likely to have significant implications for the future of similar renewable energy subsidies.

Dismissing Solar Century Holdings Ltd’s appeal from the judgment of Green J, the Court held that the existence of Government’s Levy Control Framework, which caps the cost of levy-funded spending for energy and  climate change goals, prevented any legitimate expectation arising to the effect that the RO would not be closed before that date if deployment of solar PV exceeded forecasts.

Floyd LJ held that the Government was entitled to formulate and re-formulate policy when rational grounds existed for doing so, unless to do so would amount to an abuse of power. Statements in the Levy Control Framework that the Government was committed to “maintaining support levels” for “existing investments” did not include investments which were in the pipeline but which had not yet been accredited under the RO scheme.

Further, the adoption of a “grace period” of an extra year for certain pipeline projects to accredit did not offend against any principle against retrospectivity and was not unfair in the public law sense, despite the fact that the relevant date by which projects would have to meet the criteria to qualify for the grace period had already passed when the closure order was made. The Secretary of State had set the date of the publication of his consultation proposals, to prevent a “gold rush” of projects seeking to qualify for accreditation in time. It it was lawful to close the scheme in its entirety to new entrants with effect from 1 April 2015, it was difficult to see how it could be unlawful to soften that blow by extending the scheme for a further year to those who had reached a particular stage of investment.

To view the full judgment, please click here.

Robert Palmer appeared for the Secretary of State.

Court of Justice hears challenge to EU’s Russian Sanctions

Case C-72/15 OJSC Rosneft Oil Company v. HM Treasury; the Secretary of State for Business, Innovation, and Skills; the Financial Conduct Authority

On 23 February 2016 the Grand Chamber of the Court of Justice of the EU heard Case C-72/15 Rosneft, concerning that company’s challenge to the sanctions imposed by the EU on the Russian Federation, and in particular on the Russian oil sector, in response to Russia’s actions in Ukraine.

The case was referred by the High Court in February 2015 ([2015] EWHC 248 (Admin)) and raises questions both as to the legality of the EU’s sanctions against Russia, and important constitutional issues concerning the jurisdiction of the EU Court of Justice to rule on the validity of decisions adopted under the EU Common Foreign and Security Policy.

The debate at the oral hearing focused on the interpretation of Article 275 TFEU, which limits the CJEU’s jurisdiction in relation to foreign and security policy matters, on the scope of Article 215(2) TFEU, which concerns restrictive measures adopted against natural or legal persons and groups or non-State entities, and on the role of the national courts in protecting fundamental rights affected by EU foreign policy decisions.

The judgment is likely to contain important findings by the CJEU as to the proportionality of sectorally-targeted sanctions, such as those targeting the Russian oil industry, and the jurisdiction of both national courts and the CJEU itself to consider challenges to the validity of EU foreign policy decisions. The Court is, in particular, considering whether EU law recognises the concept of a non-justiciable acte de gouvernement.

Gerry Facenna QC appeared on behalf of the United Kingdom. The hearing was also attended by Rosneft, the UK Financial Conduct Authority, the Czech Republic, Estonia, France, Germany, the EU Council and the Commission. The Advocate General’s Opinion is due on 31 May 2016.

In the proceedings in the High Court, Tim Ward QC and Julianne Kerr Morrison also acted for HM Treasury and the Department for Business, Innovation and Skills.

Presumption of innocence not breached by contemporaneous parliamentary inquiry and criminal proceedings

The European Court in Rywin v. Poland (read here) has found by a 4-3 majority  that the presumption of innocence under Article 6(2) of the European Convention on Human Rights was not breached by the contemporaneous  carrying out of criminal proceedings and a parliamentary commission of inquiry into a corruption scandal which concerned a well-known film producer. The work of the commission of inquiry had given rise to extensive media comment and the lower house of Parliament had approved the commission’s report in which five high-ranking State officials were alleged to have been guilty of corruption in connection with the legislative procedure for the amendment of the Broadcasting Act and the film producer was mentioned as being the “agent” of those officials. The film producer was subsequently convicted of attempted fraud. The Court considered that the presumption of innocence had not been breached by the wording of the resolution setting up the parliamentary commission of inquiry and the findings of the commission’s report. The Court also found that there had been no violation of the right to a fair trial under Article 6(1) or of the prohibition on inhuman and degrading treatment under Article 3. It considered that the reasoning of the judgments delivered by the criminal courts did not reveal anything to suggest that the judges had been influenced by the statements of the members of the commission or by the findings in its report and that the authorities had been attentive to the producer’s state of health during his imprisonment and that the general conditions of his detention could not be criticised.

Jeremy McBride acted for Mr Rywin.

Monckton team successfully defends Google against abuse of dominance claim

High Court dismisses claim against Google, holding that, where a pro-competitive innovation by a dominant company is alleged to have harmed competition on a related market, the effect on competition in that market must be serious or appreciable in order to constitute an abuse of dominance.

In a judgment handed down today, the High Court dismissed a claim for abuse of dominance brought against Google by online map provider Streetmap.

Streetmap alleged that, by displaying a clickable image of a map, taken from Google Maps, at the top of its search engine results page in response to certain search queries, Google gave Google Maps an unfair advantage over other online map providers, and thereby abused its (assumed) dominant position in the market for online search.

In an important judgment on the application of competition law (The prohibition on abuse of dominance is contained in Article 102 of the Treaty on the Functioning of the European Union and Chapter II of the Competition Act 1998) in rapidly developing online markets, Mr Justice Roth rejected Streetmap’s case, holding that:

  • since the introduction of a clickable map image on its search page was a pro-competitive measure on the market where Google was dominant, for its conduct to be abusive, it had to be reasonably likely to have a serious or appreciable effect on competition in the related market for online maps;
  • on all the evidence, the introduction of the clickable map image on Google’s search page had not taken custom away from Streetmap.  Therefore, it was not reasonably likely to gives rise to anti-competitive foreclosure;
  • in any event, Google’s conduct was objectively justified.  Since the alternative technical solutions proposed by Streetmap would have entailed significant practical problems, or imposed a substantial additional burden on Google, it had not been required to implement them by any obligation of proportionality.

Google was represented by Jon Turner QC, Josh Holmes and Ben Lask.

To view the full judgment, please click here.

A full case note will be issued shortly.

Court of Appeal dismisses challenge to VAT education exemption

The Court of Appeal has today dismissed Finance and Business Training (FBT)’s appeal against HMRC’S refusal to recognise its university standard courses as being entitled to the education exemption from VAT.

Article 132 of the Principal VAT Directive requires Member States to exempt a number of specified types of education, including university education. However, the education has to be provided either by bodies governed by public law “or by other organisations recognised by the Member State concerned as having similar objects”. The UK has exempted education provided by universities and “any college, institution, school or hall of such a university”.

FBT was a profit-making enterprise which largely provided non-university level financial and business training. However, it also provided a number of Masters Courses under a validation agreement with the University of Wales. FBT argued before the First-tier Tribunal that it acted as a college of the University when providing the Masters courses and that they were therefore exempt from VAT. The FTT and the Upper Tribunal rejected that argument.

Before the Court of Appeal, FBT argued that the EU Law principle of fiscal neutrality required the UK to exempt its university-level courses on the basis that FBT was entitled to be recognised as an eligible body when supplying those courses, even though it did not have that status when supplying non-university courses. It argued that fiscal neutrality was breached because other eligible bodies benefitted from such treatment. It also argued that it was being discriminated against because it was a commercial provider, contrary to Case C-319/12 MDDP, that Parliament had failed to implement the Sixth Directive and that the domestic implementation breached the principle of legal certainty. FBT asserted a directly effective right to exemption, the precise scope of which it was claimed could only be determined by the CJEU.

However, the Court of Appeal agreed with HMRC that, in this context, fiscal neutrality did not simply require that the services provided (university education) be the same, but also that the suppliers have similar objects. Article 132 PVD gave Member States power to determine whether a body had similar objects to a body governed by public law and the UK had exercised that power in an EU law compliant manner by requiring colleges and halls of universities to be integrated into the universities’ activities – and therefore to be imbued with their objects – in order to be regarded as having “similar objects”.

FBT could not bring itself within that group as it could not show that it was an integrated part of the University of Wales. It only had a short-term relationship with the University, its relationship was one of partnership and not integration and FBT also had other activities which did not involve the University. The relationship was not close enough.

The Court of Appeal declined FBT’s request for a reference to the Court of Justice and refused permission to appeal to the Supreme Court.

Both parties were represented by counsel from Monckton Chambers. Melanie Hall QC and Elizabeth Kelsey represented FBT and Raymond Hill represented HMRC.

Supreme Court upholds ban on providing information to the ECtHR

The Chinese dissident Wang Yam was jailed for life for the murder of the reclusive author Allan Chappelow. In the criminal trial, for unspecified national security and witness protection reasons, the trial judge ordered that the defence case should be heard in secret.

Mr Yam subsequently applied to the European Court of Human Rights in Strasbourg (“ECtHR”), arguing that the secret trial constituted a breach of his right to a fair trial under Article 6 ECHR. By an order of the English court, however, Mr Yam was prevented from disclosing any information regarding the secret aspects of his trial, or the reasons for the secrecy, to the ECtHR.

On appeal, the Supreme Court upheld the order, concluding that it was within the power of the lower court to prevent an applicant from placing material before the ECtHR. It held that it was for the ECtHR to decide whether such disclosure was really required and that, in any event, there was a common law power pursuant to which an order for non-disclosure to the ECtHR could be made. The case in the ECtHR remains ongoing.

A copy of the judgment can be found here.

Nikolaus Grubeck, led by Lord Pannick QC and Kirsty Brimelow QC, acted for the Appellant.

Press coverage includes: BBC, The Guardian, London Review of Books.