Commercial agent’s ‘Shearman v Hunter Boot clause’ severed by Mercantile Court

Brand Studio Limited v St John’s Knits [2015] EWHC 3143 (QB), Teare J

This case concerned a commercial agency between a UK agent and a Californian principal. The agency contract contained a clause that elected Regulation 17 indemnity upon termination, with a proviso that the agent would get Regulation 17 compensation if that proved to be cheaper for the principal. It was common ground that the effect of that proviso was unlawful per the finding in relation to an essentially identical clause in Shearman v Hunter Boot Ltd [2014] EWHC 47 (QB). The principal in Brand submitted that the proviso could however be severed, leaving the lawful choice of an indemnity in the first part of the clause; a point left open in Shearman.

The Court (Teare J) held that the Regulation 17(2) question, whether the contract “otherwise provides”, fell to be considered after, not before, severance, particularly in this case where the agreement itself expressly contemplated severance in the event that any provision of the agreement was held to be invalid. Further, that following Beckett Investment Management Group v Hall [2007] 1 ICR 1539 (CA) the threefold test for severance formulated in Sadler v Imperial Life Assurance [1988] IRLR 388 should be adopted. The issue was whether the removal of the unenforceable provision so changed the character of the contract that it became “not the sort of contract that the parties entered into at all”. The judge found that, after severance, it was an agency contract in which the agent has agreed to accept an indemnity whether or not compensation would be a lesser sum, so that it remained “the sort of contract that the parties had entered into”. Consequently the agency contract “otherwise provides” for indemnity under Regulation 17.

Philip Moser QC and Azeem Suterwalla (instructed by Harbottle & Lewis LLP) acting for the Defendant principal.

To read the full judgment please click here Brand Studio Limited v. St John Knits


The Supreme Court rejects Subway application for permission to appeal

The Supreme Court has confirmed that HMRC are entitled to charge VAT on hot takeaway foods as that in so doing they do not breach any principles of European law.

Sub One’s permission to appeal to the Supreme Court regarding the taxation of its toasted sandwiches was refused on 17th December. Permission was refused on the basis that Sub One’s application did not raise an arguable point of law.

Click to view the Supreme Court reasoning and the summary order for Sub One Limited v HMRC.

Melanie Hall QC, representing HMRC, led Ewan West of Monckton Chambers


The Court of Appeal give permission to challenge the lawfulness of the UK’s implementation of the education exemption

The Court of Appeal has given permission to Finance and Business Training Limited, represented by Melanie Hall QC,  to challenge the manner in which the UK has implemented Article 132 of the Principal VAT Directive. One of the key issues for consideration will be whether the treatment of the education exemption in the VAT Act 1994  breaches European Law.     



Frank Mitchell of Monckton Chambers examines the issues in Skandia for an article in Bloomberg BNA’s Viewpoint publication.

Please click to read the full Skandia article.

Jeremy McBride advises Council of Europe

At its session on 11-12 October, the European Commission for Democracy through Law (the Venice Commission) adopted its Joint Opinion with the Council of Europe’s Directorate for Human Rights on the draft Law of Ukraine on the Public Prosecutor’s Office.

This draft Law will abolish the function of general supervision that currently allows the Public Prosecutor’s Office an extensive ability both to intrude into the functioning of the executive and to interfere with the interests and activities of private individuals and organisations. This capacity is compounded by the entitlement of the Prosecutor General and other public prosecutors to participate in the proceedings of the Ukrainian Parliament, boards of ministries, central executive agencies, local councils and other administrative bodies.[1] These powers and rights individually and cumulatively run counter to the appropriate separation of powers in a democracy, as well as posing a threat to rights and freedoms that are supposedly safeguarded by the Constitution.

Although welcoming this reform, the Joint Opinion identified five major areas of concern regarding the provisions relating to the powers of representation of the interests of the citizen and the state in non-criminal matters, the protection of the independence of public prosecutors, the appointment and dismissal of the Prosecutor General, the potential of certain provisions to restrict unjustifiably investigation and reporting by the media and the disciplinary procedures for public prosecutors. In addition to these main shortcomings, the Joint Opinion noted many important points of detail concerning individual provisions for which amendments and/or clarifications are required.

The enactment of a Law that satisfactorily addresses the points made in the Joint Opinion is one of the conditions for the conclusion of the EU-Ukraine Association Agreement at the EU’s Eastern Partnership summit in Vilnius in November.

The Joint Opinion was adopted on the basis of comments prepared by Jeremy McBride, acting as an expert for the Council of Europe, together with members of the Venice Commission and other Council of Europe experts.

Jeremy McBride is continuing to advise the Council of Europe on the steps needed to adopt a Law that meets European standards. Previously he advised the Council of Europe on the preparation of a new Code of Criminal Procedure in Ukraine to replace the one adopted during the Soviet era.

To read the Joint Opinion in full, please click here

Key Strasbourg Ruling on Hearsay Evidence and “Judicial Dialogue”

Eric Metcalfe acted on behalf of the NGO intervener JUSTICE in a landmark judgment by the Grand Chamber of the European Court of Human Rights in the case of Al Khawaja and Tahery v United Kingdom.

The much-anticipated ruling came in the wake of the judgment of the UK Supreme Court in R v Horncastle in late 2009 in which the Supreme Court had strongly criticised the earlier chamber judgment of the European Court in Al Khawaja. At issue was the use of hearsay evidence under the Criminal Justice Act 2003 as the “sole or decisive” basis for a person’s conviction, and whether this was compatible with the right to cross-examine witnesses as part of the right to a fair trial under Article 6(3)(d) of the European Convention on Human Rights. The UK Supreme Court complained that the European Court of Human Rights had misunderstood the safeguards in the 2003 Act that prevented unfairness to the accused. The UK government therefore sought a referral to the Grand Chamber and a hearing was held in May 2010.

In its judgment, the Grand Chamber upheld its previous rulings that a conviction based “solely or decisively” on the testimony of absent witnesses was likely to breach the right to a fair trial under article 6 unless it could be shown that “there are sufficient counterbalancing factors in place”, including “measures that permit a fair and proper assessment of the reliability of that evidence to take place”. The Grand Chamber ruled that the safeguards available in the case of one of the applicants (Al Khawaja) had been sufficient to meet fair trial concerns, but found the UK government in breach of article 6(3)(d) in relation to the second applicant, Mr Tahery.

In addition to its implications for “sole or decisive” rule under article 6, the Grand Chamber ruling has a significant public law dimension as it relates to the process of “judicial dialogue” under section 2 of the Human Rights Act between the UK Supreme Court and the European Court in cases in which the UK Supreme Court has serious concerns about the implications of a Strasbourg ruling for UK law. In a concurring opinion, the European Court’s President Sir Nicolas Bratza described the case as “a good example of the judicial dialogue between national courts and the European Court on the application of the Convention”.

Jeremy McBride set for ECtHR with Nada v Switzerland

The case Nada v Switzerland is to be heard in the Grand Chambers of the European Court of Human Rights, tomorrow 23 March.  The case involves a challenge to the implementation of UN sanctions on persons supposedly connected in some way to Al-Qaeda. The challenge is being made because of the passage of over seven years without providing either any specific allegations or any form of hearing in which they could be challenged, with the result that the applicant was confined to a territory of 1.7 sq km for almost six years and has suffered serious interferences with his private and family life, as well as significant damage to his reputation.

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Jeremy McBride

ECHR ruling on foreign missionary expulsions

European Court of Human Rights holds that expulsion of foreign missionary on national security grounds is contrary to freedom of religion

The European Court of Human Rights (ECHR) held in a judgment issued today, 12 February 2009, that Russia’s expulsion of an American missionary of the Unification Church on national security grounds was incompatible with its obligation to secure religious freedom.

STRASBOURG, 12 February 2009: The ECHR, in a judgment issued this morning (Nolan and K. v. Russia, no. 2512/04), held that Russia’s expulsion in 2002 of Patrick Nolan, then a missionary with the Unification Church, violated several articles of the European Convention of Human Rights, including Article 9 (freedom of religion). The Russian authorities had maintained that Mr Nolan’s activities as a foreign missionary were a threat to national security.

Mr Nolan, who had lived in Russia for nearly eight years, was refused re-entry into Russia in 2002 following a short trip abroad, notwithstanding the fact that he possessed a valid entry visa and his 10-month-old child, of whom he was the sole custodial parent, remained on Russian soil. The expulsion followed amendments to Russia’s national security doctrine identifying foreign religious organisations and missionaries as a ‘negative influence’ threatening Russia’s ‘spiritual and moral heritage’.

In reaching its conclusion, the ECHR held that ‘Article 9 of the Convention does not allow restrictions on the ground of national security. Far from being an accidental omission, the non-inclusion of that particular ground for limitations in Article 9 reflects the primordial importance of religious pluralism as “one of the foundations of a ‘democratic society’ within the meaning of the Convention” … It follows that the interests of national security could not serve as a justification for the measures taken by the Russian authorities’.

Furthermore, the Court held that Russia was in breach of Article 38 of the Convention (obligation to furnish necessary facilities for the examination of the case) as a result of its refusal to disclose a report prepared by the Federal Security Service that had served as the basis for Mr. Nolan’s expulsion.

The Court also held that the Russia was in breach of Article 8 (right to respect for family life) due to the resulting 10-month separation of Mr Nolan from his infant son, Article 5 (right to liberty) due to the overnight detention of Mr Nolan in the airport without lawful grounds after his attempted re-entry to Russia and Article 1 of Protocol No. 7 (procedural safeguards relating to expulsion of aliens) due to the fact that Mr Nolan had been expelled before he had the opportunity to seek a review of his case.

Drew Holiner, a member of the Russian Bar, represented the applicants.

For the ECHR judgement, please click here.

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Drew Holiner

European Court of Human Rights orders Russia to release AIDS prisoner

The European Court of Human Rights (ECHR) held in a judgment issued today, 22nd December 2008, that the continued detention of Vasily Aleksanyan by the Russian authorities is ‘unacceptable’.

STRASBOURG, 22nd December 2008: The ECHR, in a judgment issued this morning, ordered the release of Mr Vasily Aleksanyan, a 37 year old lawyer who has been held in detention by the Russian authorities since April 6th 2006 (991 days). Mr Aleksanyan suffers from AIDS and a number of concomitant diseases, including AIDS – related lymphatic cancer, and is nearly blind.

Following Mr Aleksanyan’s detention and the diagnosis of HIV in 2006, his health declined rapidly. On 26 November 2007, Mr Aleksanyan lodged a request for urgent intervention by the ECHR on the basis that he was not receiving treatment appropriate to his condition and necessary to preserve his life. In response, on several occasions in November and December 2007 the ECHR issued interim measures, (injunctions) requiring the Russian authorities to transfer Mr Aleksanyan to a hospital specialized in the treatment of AIDS and concomitant diseases. The Russian authorities refused to transfer Mr Aleksanyan for treatment for over two months.

Today the ECHR, finding violations of several articles of the European Convention on Human Rights, held that the Russian authorities’ failure to provide timely treatment to Mr. Aleksanyan ‘undermined [his] dignity and entailed particularly acute hardship… which amounted to inhuman and degrading treatment’. The ECHR also noted that ‘[it] is clear… that for over two months the Government continuously refused to implement the interim measure, thus putting the applicant’s health and even life in danger’.

Finally, the ECHR found that ‘in view of the gravity of the applicant’s illnesses, [his] continued detention is unacceptable’ and ‘has lost any meaningful purpose… further maintaining of [detention] is incompatible with Article 5 of the Convention’ (right to liberty and security of person).

Drew Holiner, who is also a member of the Russian Bar, represented the applicant.

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Drew Holiner

Lord Chief Justice Applies Article 8 ECHR Rights to Business Transactions

5 March 2008 – Lord Chief Justice rules that Article 8 ECHR rights to private life and correspondence must be respected in mutual assistance proceedings concerning business transactions

On 4 & 5 March 2008, the Divisional Court (Lord Phillips of Worth Matravers LCJ presiding) heard the judicial review in Hafner and anor v. City of Westminster Magistrates’ Court. The case concerned a Swiss lawyer’s challenge to the magistrates’ court’s decision to obtain evidence under compulsion in London for forwarding to the Australian Securities and Investment Commission. The claimants asserted that the evidence concerning business matters referred to them, but the magistrates’ court refused to allow them to review the material to ensure that privileged or commercially sensitive material would not be unnecessarily disclosed, and concluded that the claimants’ privacy rights under Article 8 European Convention on Human Rights (ECHR) were not engaged.

Giving judgment the Lord Chief Justice held that the courts, when considering requests to obtain evidence in mutual assistance proceedings, must consider the privacy rights of third parties under Article 8 ECHR. In particular, where a request for mutual assistance sought the production of evidence of business matters potentially covered by privilege, obtained in confidence or otherwise subject to privacy concerns, the courts should consider whether to give notice of the proceedings to third parties affected by the evidence. The courts should also consider allowing such parties to have prior access to the evidence, if necessary upon giving an undertaking of non-disclosure and under the supervision of the court, for the purpose of making written and/or oral submissions in respect of their confidentiality interests.

The Lord Chief Justice quashed the magistrates’ court’s decision and issued detailed guidance on the procedure to be used to ensure respect for Article 8 rights in mutual assistance proceedings.

Piers Gardner and Ian Rodgers appeared on behalf of the claimants, instructed by Kingsley Napley.

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Ian Rogers
Piers Gardner