The attempt to delay the start of the High Court trial over the sale of Liverpool Football Club by its former owners has been refused by the Court of Appeal.

The claimants, former owners Hicks and Gillett, attempted to delay the start of the trial and vary the security for costs order. They argued that they could not raise the funds to pay for the case should the trial begin in April and that the payment for security for costs should not be expedited, therefore delaying the case until late 2013 or early 2014.

In the judgment Lord Justice Lewison stated: “The parties’ positions fluctuated during the course of the [High Court] hearing, not least because Mr Malek dropped the bombshell that neither he nor his instructing solicitor could conduct the trial in June. But it was never suggested to the judge that the indication that he gave in his draft judgment back in August that he wished to see a trial early in 2013 was wrong in principle.”

Paul Harris QC and Owain Draper of Monckton Chambers are acting for the defendants Broughton, Purslow and Ayre.

The decision has been featured in an article in The Lawyer. To read the article in full, please click here.

 

Chambers takes great pleasure in welcoming Michael Armitage. Michael joins Chambers after recently accepting an offer of tenancy.

Michael’s pupillage officially ends on 5^th March 2013 but he is already beginning to accept instructions in Chambers core practice areas.

Michael comments:

“I was delighted to accept an offer of tenancy from Monckton Chambers. After an enjoyable and rewarding pupillage in which I gained experience in all of Chambers key specialist areas, I look forward to building my own practice across EU, public and competition law, and to being instructed both as a junior and in my own right.”

Monckton Chambers has been listed for 2 cases in The Lawyer’s Top 20 Cases of 2013. The 2 cases featured are:

• Thomas Hicks; George Gillett & Ors v Martin Broughton & Ors

featuring Paul Harris QC and Owain Draper for the defendants Broughton, Purslow and Ayre.

• IPCom v HTC and IPCom v Nokia

featuring Kassie Smith and Meredith Pickford for the claimant IPCom

and Josh Holmes and Alan Bates for the defendant HTC.

The cases, selected by over 100 leading litigators, barristers and senior clerks represent the most significant cases for 2013 in terms of developing the law.

First bilateral free trade agreement concluded by the EU with an Asean country

Singapore’s trade with the European Union (EU) received a boost yesterday as both sides successfully completed almost three years of negotiations for a free trade agreement, which will grant Singapore and EU companies greater access to each other’s markets.

The EU will be eliminating tariffs on all imports from Singapore over a period of five years, but 80 per cent of the tariff lines will already be covered once the EU-Singapore Free Trade Agreement (EUSFTA), concluded in Singapore yesterday, comes into force.

In particular, the removal of the EU’s tariffs under the EUSFTA will benefit Singapore exporters of electronics, pharmaceuticals, chemicals and processed food products while Singapore will grant immediate duty-free access for all imports from the EU.

Both Singapore and the EU have also committed to make extensive commitments guaranteeing access to each others’ services markets under the EUSFTA, which will be signed only after all domestic processes, including translations and verifications, are completed.

These commitments cover a wide range of sectors of interest to EU and Singapore companies, including environmental services, computer and related services, professional and business services, financial services and maritime transport services.

In addition, the EUSFTA will see the removal of a number of non-tariff measures between the EU and Singapore, improving access for exporters of pharmaceuticals and electronics. The agreement will also widen access to government procurement opportunities in the EU and Singapore.

It is believed that the final stages of the talks involved negotiations in financial services, legal services, intellectual property rights, rules of origin and the investment chapter.

Overall, the EUSFTA is a comprehensive and broad-based agreement covering tariff-free access for goods, improved market access for services (including specific commitments on sectoral markets for financial, professional, legal, telecommunications and postal services), intellectual property protection, competition policy, technical barriers to trade, government procurement and sustainable development.

“There are numerous opportunities and benefits that EU and Singaporean companies can look forward to, once the agreement enters into force,” said Singapore’s Minister for Trade and Industry Lim Hng Kiang.

“Singapore is confident that the EUSFTA will further enhance our bilateral economic relations, and pave the way for a region-to-region trade deal between the EU and Asean,” added Mr Lim.

Singapore also stands to benefit economically as the deal is likely to attract more EU companies to set up presence here as they look to use Singapore as a springboard into the region. At present, about 8,800 EU companies have operations in Singapore, reflecting the importance of Singapore as a strategic gateway to Asia and Asean for businesses from Europe.

“Singapore is a dynamic market for EU companies and is a vital hub for doing business across South-east Asia. This agreement is key to unlocking the gateway to the region, and can be a catalyst for growth for EU exporters,” said EU Trade Commissioner Karel De Gucht.

“After our agreement with South Korea, sealing this deal with Singapore clearly puts the EU on the map in Asia. But we do not intend to stop here – I hope it will open the doors for FTAs with other countries in the Asean region,” highlighted Mr De Gucht.

Last year, the EU was Singapore’s second largest trading partner with an 11 per cent share of Singapore’s total trade, while Singapore was the EU’s 13th largest trading partner as bilateral trade hit $106 billion in 2011, up 7 per cent from 2010 despite the slowdown in the eurozone economies. The EU was Singapore’s largest supplier of goods in 2011 with a share of 12.6 per cent of Singapore’s total imports while it was also the largest export market for Singapore, representing 15.2 per cent of Singapore’s non-oil domestic exports.

Besides the goods and services chapters, negotiations on a standalone investment chapter began in March 2012 as the EU had received authorisation from the European Council to negotiate investment agreements with Canada, India and Singapore only in September 2011. Once concluded, the investment chapter would serve as a catalyst for greater two-way investment flows between Singapore and the EU, a significant development considering the high levels of capital flows between both sides.

The EU ranks first as a source of foreign direct investment (FDI) into Singapore. The EU’s FDI stock rose to $169 billion in 2010, accounting for 27 per cent of all accumulated FDI, while Singapore was also the EU’s fourth-largest investment destination overall by FDI flows. The flow of capital in the reverse direction was also significant as the EU was Singapore’s second-largest investment destination by FDI stock and Singapore was the fifth-largest external investor into the EU by FDI flows.

The conclusion of the EUSFTA negotiations, which commenced in March 2010, marks a milestone in bilateral relations between the EU and Singapore as it is also the first bilateral free trade agreement concluded by the EU with an Asean country.

However, it may be a while yet before the agreement actually comes into effect as it will have to be approved by the European Council and ratified by the European Parliament before entering into force. For example, the EU-South Korea FTA was initialled on Oct 14, 2009 and was provisionally applied on July 1, 2011 after both parliaments approved it, a process which took about two years.

The Court of Appeal today rejected Ryanair’s latest challenge to the UK merger authorities’ jurisdiction to review its minority stake in rival airline Aer Lingus.

Ryanair argued, initially before the CAT, that the CC could not investigate the minority stake while the European Commission was in the process of reviewing its public bid for the remaining shares.  The CAT rejected the challenge in August. Ryanair appealed to the Court of Appeal, arguing that the UK’s duty of sincere cooperation with the institutions of the European Union precluded the CC from carrying out a merger investigation in which some of the issues would overlap with those under consideration at EU level.

The Court of Appeal rejected Ryanair’s contention, holding that there was “no doubt that a stay of the Competition Commission’s investigation at the present time is neither necessary nor appropriate”.  The European Commission is investigating a different transaction, under a separate jurisdiction, and will in any event conclude its investigation before the CC does.  The Court also held that the earlier judgment in Ryanair v OFT could not be read across to the present case, because in that case the Court was considering the possibility of EU and UK authorities reviewing the very same share acquisition, which would be contrary to the European Commission’s exclusive jurisdiction over mergers falling within its remit.

Click to view the judgment in Ryanair v Competition Commission and Aer Lingus

Daniel Beard QC and Alison Berridge appeared for the Competition Commission.

On 12 December 2012, the Supreme Court handed down judgment in the case of X v Mid Sussex Citizens Advice Bureau.  The case concerned an Appellant who worked as a volunteer adviser at the Citizens’ Advice Bureau (“CAB”). She was not contractually bound to work and received no remuneration for doing so. Although volunteers often did go on to become employed by the CAB as paid advisers, this was not automatic. There was an open, external recruitment process for paid posts and volunteering arrangements were not for the purpose of determining to whom employment should be offered. The Appellant alleged that, after she informed the CAB that she was HIV positive, she was told that she could not return to work. She claimed disability discrimination. As a preliminary issue, the Employment Tribunal determined that the Appellant was not within the scope of the Disability Discrimination Act’s definition of “employment”, because it did not cover voluntary work. The Appellant’s appeals to the Employment Appeal Tribunal and the Court of Appeal, where argument focused more on the terms of the EC Framework Directive, were unsuccessful.

The Supreme Court also dismissed the appeal and held that the EU Discrimination Framework Directive (Directive 2000/78/EC) does not apply to unpaid volunteers in the position of the Appellant.  It held that it was not necessary to make a reference to the European Court in that regard. Given its conclusion on that substantive issue, the Supreme Court held that it was unnecessary to determine whether the Directive could have direct effect in domestic law between private parties.

Kassie Smith acted for the Secretary of State in the Supreme Court.

To view the judgment and the Supreme Court’s press release, please click here. 

The final report of the Laidlaw Inquiry into the failure of the InterCity West Coast Competition was published on 6 December 2012.  The purpose of the report is to look ahead to avoid similar problems being repeated in future

The Report highlights a series of significant organisational and individual failings in the conduct by the Department for Transport (DfT) of the InterCity West Coast rail franchise competition, which were in a number of cases interlinked.  From these failings the Report identifies a series of  ‘lessons learned’.

What are the implications of these ‘lessons learned’?   In particular, is their significance confined to the West Coast Competition or do practitioners need to be alive to their possible wider relevance and transferability to the conduct of complex procurements more generally?

At the heart of the problems were difficulties that arose in connection with the mechanism to be used to assess the financial risk of the bids.  Key was the methodology to be used in order to determine the size of any Subordinated Loan Facility (SLF) needed to confirm the financial capability compliance of bidders.

The key ‘lessons learned’ in the Report’s recommendations respond to the following categories of problems identified in dealing with the SLF issue:

(1) Inadequate planning and preparation;

(2) Deficiencies in organisational structure and resourcing;

(3) Lack of efficacy in governance framework.

As to (1):

The Report records an almost universally acknowledged truth that complex procurement processes are particularly vulnerable to challenge by the losing bidders.  External advice should therefore be obtained throughout the whole of the franchising process.

The Report says consideration should be given to the extent to which a contracting authority needs flexibility to exercise commercial judgment during the procurement phase and whether that flexibility is best achieved b y way of formally including a period of engagement with the market following publication of the ITT.

The Report also identifies as key points having a contingency plan and a timescale that respects the complexity of the process.

However, market engagement after the ITT can raise potentially tricky areas of procurement law (as the Report appears to acknowledge).  Further, the flexibility to depart from particular deadlines may also not be straightforward where this involves extending the tenure of the incumbent during the period of any extension.

As to (2):

Many of the lessons learned in terms of recommendations for project leadership and obtaining access to appropriately skilled individuals to manage the process are important points of general application.

Of particular note here are the concerns about the failure to escalate and address legal concerns, which in this case had been expressed about the very issue upon which the process foundered.  Also of concern is the possibility that cultural issues may have led to an inadequate response to potential difficulties when identified.

As to (3):

Many of the lessons learned refer to sensible proposals for the management of franchise competitions designed to ensure that ‘blinkers’ are avoided and that committees and decision making processes are conducted in a joined-up way with issues addressed in the context of their proper significance for the integrity of the overall process.

Two issues in particular stand out from a legal perspective.  First is trying to ensure that decision makers are not unnecessarily prevented through “excessive recusal”  from dealing with  important issues that are escalated during the process.  Second, is the suggestion that where a risk of bidder challenge is identified, these are escalated appropriately and considered at the ExCo level with appropriate independent legal and commercial input where necessary.

Whilst these points make good sense in the particular context of this case exactly how one approaches these issues (particularly the first) may vary quite a lot from case to case.  As to the risk of legal challenge, this, as the Report acknowledges, is a fact of life in complex procurements.  Whilst it appears that risks were not properly evaluated in the instant case the fact remains that an unduly defensive view (based on overly cautious advice) can also be extremely damaging to an effective procurement strategy.  A high profile disaster such as the present could easily lead to a disproportionate counter-reaction leading to the undue dotting of ‘i’s and crossing of ‘t’s that has been the subject of disapproving comments from the highest levels of government.

Difficult judgments will continue to have to be made under considerable pressure in the context of such complex procurements.  It is to be hoped that the ‘lessons learned’ from the Laidlaw Report will help to ensure that future franchise competitions are successful but also that they are only applied elsewhere when it is appropriate to do so.  As the Report notes “… whilst there is no absolute certainty that the flaws in this process are isolated and wholly specific to that process, it would equally be wrong to assume that they are commonplace in the DfT or across other Government departments.“

Melanie Hall QC of Monckton Chambers has had an article published in the latest edition of the Tax Journal.

The article is a focus on the AG Opinion in EC v Ireland and the impact that this will have on VAT groups.

To view the full article, please click here.

To view Melanie Hall QC’s online profile for the Tax Journal, please click here.

The hearing of a number of judicial review challenges to the Government’s decision to proceed with a high speed rail link from London to Birmingham, Leeds and Manchester started in the High Court today (Monday 3 December).  Mr Justice Ouseley will be hearing challenges brought, amongst others, by 15 local authorities located along the route of HS2.  The local authorities contend that the Government’s decision to proceed in Parliament by way of the hybrid bill procedure breaches EU environmental law (the EIA Directive), that the consultation leading to the decision was faulty, that the Government failed to comply with its public sector equalities duty and that, in a number of respects, the decision was irrational.

The challenges have been featured in the following press articles:

The Times

Financial Times

The Telegraph

Yahoo News

Kassie Smith is acting for the local authorities.

The Tax Chamber of the Upper Tribunal has released its decision on penalties for late VAT returns and payments and the principle of proportionality. HMRC, represented by Peter Mantle, won the appeal in Total Technology (Engineering) Limited. The decision is an important precedent because the integrity of the VAT surcharge provisions was in issue and grounds on which a penalty can be held disproportionate are considered.

The Upper Tribunal held that there is nothing in the VAT default surcharge which leads to the conclusion that its architecture is fatally flawed. It reversed the First-tier Tribunal’s decision that the penalty was disproportionate and had to be set aside; none of the reasons that the First-tier Tribunal had relied on lead to the conclusion that the VAT default surcharge regime infringes the principle of proportionality, or to the conclusion that the actual penalty imposed on Total did so.

After detailed analysis of ECJ and humans right case-law on proportionality, the Upper Tribunal concluded that it is open to tax tribunals to consider individual default surcharges without having first concluded that the default surcharge regime as a whole is disproportionate. The Upper Tribunal considered six features of the regime which might be said to result in unfairness. It concluded that there must be some upper limit on the penalty for a default which was proportionate, although it was not sensible for the Upper Tribunal, in this case, to suggest where that might be. The other features examined did not result in the regime failing to comply with the principle of proportionality at the level of the scheme as a whole. The absence of any power to mitigate the penalty was not such a flaw. On the facts of a particular case, a tribunal might be able to conclude that the penalty is disproportionate. But in assessing whether the penalty in any particular case is disproportionate, the tax tribunal must be astute not to substitute its own view of what is fair for the penalty which Parliament has imposed. The tribunal should show the greatest deference to the will of Parliament when considering the application of the VAT default surcharge scheme.

To view the decision, please click here.