The European Court of Human Rights has given judgment on the merits of the largest commercial dispute ever litigated.

Yukos Oil Company, formerly the largest and most successful Russian oil company, challenged the imposition and enforcement of additional tax liabilities for four years (2000-3) together with fines and penalty interest amounting to €19.6Bn. The Russian authorities took draconian enforcement measures, which involved freezing all the company’s assets as soon as the first assessment was made, sweeping its bank accounts, forbidding the company to use its assets to meet the tax liabilities and imposing fines for the resulting non-payment. As a result, Yukos was paralysed and its crown jewel asset, YNG which produced as much oil as Libya, was sold at an auction at which only one participant bid, at a price fixed not by reference to YNG’s value, but merely to a part of the Yukos tax liabilities which were outstanding. Yukos was declared bankrupt, its assets were sold, largely to the State controlled oil company Rosneft, and Yukos was dissolved in October 2007, without any dividend to its 50000 shareholders.

The European Court held that the Russian tax proceedings were unfair in breach of Article 6 and the retrospective reinterpretation of Russian law to ‘justify’ the imposition of fines and penalty interest was unlawful, contrary to the Convention standard.

Although the interpretation of the tax liabilities which were applied to Yukos was foreseeable, the Court held that the crux of the case was the rapid and inflexible enforcement of those liabilities. Yukos had been effectively paralysed because all its assets were frozen from the first assessment. In the Court’s view, two factors in particular contributed to Yukos’ demise and showed that the Russian authorities had failed to strike a fair balance and violated Article 1 of Protocol No 1:

1. the bailiff’s choice of Yukos’ principal subsidiary as the first target for auction, without considering the implications for the company’s future: this dealt Yukos a ‘fatal blow’;

2. the Russian authorities were unyielding and inflexible in response to requests for time to pay and the bailiffs imposed additional fines amounting to €1.15 Bn, which had to be paid before the taxes, but the payment of which was prohibited under the freezing orders.

The issue of just satisfaction under Article 41 ECHR was reserved to further pleading.

Yukos was represented throughout the proceedings by Piers Gardner.

 

The 2011 Chambers Bar Awards shortlist has been announced.  Monckton Chambers has once again been nominated for ‘Set of the Year’ for Competition/EU after winning the award last year.

Additionally, we are pleased to announce Daniel Beard QC has been nominated for ‘Silk of the Year’ along with Josh Holmes for ‘Junior of the Year’, both for Competition/EU.

The results will be announced at The London Hilton on Park Lane on Thursday, 27 October.

In Fulham Football Club (1987) Limited v Sir David Richards, The Football Association Premier League Limited  [2011] EWCA Civ 855, the Court of Appeal held that unfair prejudice petitions under section 994 of the Companies Act 2006 may be referred to arbitration and that, accordingly, Mr Justice Vos had been correct to order a stay pursuant to section 9 of the Arbitration Act 1996 (“the 1996 Act”) of  Fulham FC’s petition. This is the first judgment at appellate level in this jurisdiction to examine the concept of “arbitrability”.

The underlying dispute between Fulham FC, on the one hand, and Sir David Richards and the Football Association Premier League Ltd (“the FAPL”), on the other, relates to the involvement of Sir David in the transfer of Peter Crouch from Portsmouth FC to Tottenham Hotspur FC in July 2009. Fulham FC alleges: first, that Sir David’s involvement in that transfer was in breach of his company law duties, the Football Association Rules, the Agents Regulations (under the FA Rules) and the FAPL’s Articles of Association;  and, secondly, that the FAPL has conducted itself to the prejudice of some part of its members, including Fulham FC,  in carrying out and accepting the conclusions of an inadequate investigation and in failing to provide any assurance that Sir David’s conduct would not be repeated.

In December 2010, Vos J held: that previous High Court authority to the effect that unfair prejudice petitions were non-arbitrable (Exeter City AFC Ltd v Football Conference Ltd [2004] 1 WLR 2910) had been wrongly decided; that Sir David and the FAPL were entitled to a stay under section 9 of the 1996 Act, there being two separate arbitration agreements covering the subject matter of the dispute underlying the petition; and that the stay applications raised an important point of law such that his judgment ought to be made publicly available ([2011] Ch. 208). The judge also granted Fulham FC permission to appeal.

The Court of Appeal dismissed Fulham FC’s appeal, holding for reasons different from those of Vos J that there ought to be stay under section 9. The Court of Appeal reasoned as follows:

i. that s. 1(b) of the 1996 Act requires that restrictions on arbitrability be strictly limited to “only…such safeguards as are necessary in the public interest” (Patten LJ dissenting and holding this provision to apply only to restrictions on the method chosen to resolve arbitrable disputes);

ii. that whether or not the dispute is arbitrable does not turn on the relief sought or on the particular facts of the case but on whether s. 994 petitions in general attract “a degree of state intervention and public interest such as to make it inappropriate for disposal by anything other than judicial process“;

iii. that neither the relevant statutory provisions nor public policy require that s. 994 petitions be held to be incapable of arbitration; and

iv. that an arbitration clause would be unenforceable “insofar as it included within the scope of the reference the question of whether the company should be wound up“, but that this did not preclude the arbitration of “the dispute between shareholders or the company which forms the grounds upon which such relief may be sought“, with the parties then able to seek relief from the Court on the basis of the arbitrator’s findings.

Paul Harris QC  represented Fulham FC.

The new Public Procurement (Miscellaneous Amendments) Regulations 2011 which come into force on 1 October will see the basic time limit for starting any proceedings not claiming ineffectiveness reduced to 30 days from the date of knowledge.

There are also other changes to the suspension regime (which now operates on the issue of a claim, as long as the CA is aware of the claim) and the mandatory bases for rejecting an economic operator (Bribery Act etc).

August has been a busy month for the legislator adding all these various technical changes, as well as expanding the procurement regime to contracts in the defence and security sectors with some adaptations to the public sector procurement regime.

Members of Monckton Chambers provide suppliers, contracting authorities and utilities with a full range of services, from non-contentious advice during the tender process to representation in highly complex litigation and, where appropriate, mediation.

Monckton Chambers has 28 practitioners specialising in procurement law, dealing with hundreds of sets of procurement instructions each year. We believe our range of procurement experience and expertise surpasses that of any other chambers.

The parties are both providers of Digital Retinal Screening Software (DRSS) to the UK’s diabetic retinopathy screening programmes.  The aim of diabetic retinopathy screening is to reduce the risk of sight loss among people with diabetes. The screening programme involves a systematic annual screening of all diabetic patients aged 12 or over, using digital photography of the retina, followed by a two or three-stage image grading process to identify the changes of sight threatening retinopathy in the retina.   The OFT has concluded that the merger is not expected to lead to a substantial lessening of competition within a DRSS market or markets in the United Kingdom and has today published its clearance decision.

Ben Rayment was directly instructed by the parties to represent them before the OFT.

As one of the leading commercial sets at the Bar to host a stellar cast of competition law practitioners, Monckton Chambers has always been a first port of call for many city solicitors seeking merger control advice and, where necessary, representation before specialist courts and tribunals.

Clients include full service law firms, city and international law firms without a dedicated merger control team in London as well as General Counsel who can instruct the Bar directly.

NEIL HERRON  and PARKING APPEALS LIMITED v THE PARKING ADJUDICATOR; (SUNDERLAND CITY COUNCIL and the SECRETARY OF STATE FOR TRANSPORT as Interested Parties)

Court of Appeal (Stanley Burnton and Aikens LJJ, Sir David Keene)

[2011] EWCA Civ 905

The Court of Appeal handed down judgment last week in a public law case concerning the application of the principles of substantial compliance to the apparently mandatory duties of local authorities to use prescribed traffic signs and road markings.

This was an appeal against a decision of Bean J to reject a judicial review of the Parking Adjudicator’s decision in a test case concerning the effect of alleged defects in traffic signs and road markings on the liability to pay the penalty charge (a parking ticket). The approach of the Parking Adjudicator was again upheld.

The judgment applies the law on substantial compliance to the issue of defective signs and lines. It considered the divergent lines of authority drawn to the Court’s attention by the Parking Adjudicator. Doubts were expressed by the Court of Appeal about a line of authority developed by the courts in cases where the offence consists of the failure to comply with an indication given on a traffic sign (speeding offences, for example). The recent decision of Ouseley J in Moss v KPMG [2010] EWHC 2923 (Admin) was held to be wrongly decided insofar as that case followed Davies v Heatley [1971] R.T.R. 145. The Court of Appeal held that it was difficult to reconcile the strict approach in Davies v Heatley with the modern approach to statutory interpretation and substantial compliance exemplified by R v Soneji [2006] 1 A.C. 340.

The Appellants’ submission that any departure, other than one which was trivial, from the definition of a “controlled parking zone” in regulation 4 of the Traffic Signs Regulations and General Directions 2002 invalidated the entire controlled parking zone was rejected. In any event, it accepted the Parking Adjudicator’s submission that the original adjudicator had made findings of fact that all alleged defects in signs and lines fell within the de minimis principle.

Furthermore, the test to be applied in order to decide whether an irregularity is trivial was whether it could have misled a road user as to the significance of the road sign. This was the test applied by the original adjudicator, whose decision was therefore upheld.

The decision of the Court of Appeal brings to an end a long-running case which originally disposed of a challenge to the independence of the Parking Adjudicator under Article 6 ECHR.

Ian Rogers appeared throughout the proceedings for the Parking Adjudicator, instructed by the Traffic Penalty Tribunal.

Monckton Chambers will have a strong presence on the London 2012 Pro Bono sports advocacy service, having had 3 members of chambers elected.  Paul Harris QC, Elisa Holmes and Fiona Banks were elected to offer free legal representation for accredited athletes, coaches as well as National Olympic Committees and International Federations during the 2012 Olympics.

 

Chemistree Homecare Ltd & anor v Teva Pharmaceuticals Ltd [2011] EWHC 1877 (Ch)

On 4 July 2011, Mr Justice Mann refused an application brought by Chemistree, a homecare provider/group of pharmacies for an interim mandatory injunction requiring the pharmaceutical company Teva to supply it with 1200 packs of Copaxone (a patented drug licensed for treating certain forms of multiple sclerosis) pending trial. Chemistree said it required that amount of Copaxone not only for its UK patients but also to ensure the success of its new online Europe wide prescription dispensing service. The UK price for Copaxone is significantly cheaper than that in many other EU Member States. Chemistree argued that Teva’s refusal to supply it with the full amount sought was an abusive refusal to supply contrary to Article 102 TFEU/ the Chapter II prohibition in the Competition Act 1998. Chemistree also relied on two non-competition arguments, namely that the refusal was contrary to Article 56 and/or Article 34 TFEU as it restricts Chemistree’s ability  to provide its EU dispensing service between Member States and that it put Teva in breach of the public supply obligation in Regulation 8(1)(b) of the Medicines for Human Use Regulations 2005, implementing Article 81 of the Medicines Directive 2001/83.

The Judge found that Chemistree’s case on abuse of a dominant position was arguable although on the material before him  “not obviously strong“. In reaching this conclusion he considered and applied the judgment of the European Court of Justice in Greek Glaxo [2008] ECR I-7139. He reached the same conclusion on the TFEU provisions and described the Article 81 point as “not promising”.

On 18 July Mann J ordered an expedited trial on liability which has been fixed to come on in the week commencing 13 February 2012.

Christopher Vajda QC and Ronit Kreisberger, instructed by Charles Russell, acted for Teva.

 

The European Court of Justice in Luxembourg has heard a defence of the Directive integrating international aviation into the EU emissions trading system (EU-ETS), from the European Union, six Member States including the UK, and an international coalition of environmental organisations.

The coalition of environmental organisations (which consisted of two US-based organisations, the Environmental Defense Fund and Earthjustice, as well as Europe-based WWF-UK, the European Federation for Transport & Environment, and the Aviation Environment Federation), intervened a judicial review brought by several US airlines – United, Continental and American – and their trade association, the Air Transport Association of America (ATA), in order to defend Europe’s right to tackle carbon emissions from aircraft that fly into and out of Europe.  The European Court of Justice, on a preliminary reference from the High Court, heard arguments on 5 July on whether the Directive was compatible with public international law.

The Advocate General will deliver her opinion on the case on 6 October 2011, with a final judgment of the Court to follow at a later date.

The environmental groups are represented by Jon Turner QC and Laura Elizabeth John.

Please click below for more information on:
Jon Turner QC
Laura Elizabeth John

By decision of 28 June 2011, communicated to the parties on 1 July 2011 the Supreme Court has declared inadmissible the application by Mobilx for permission to appeal out of time against the MTIC VAT fraud decision of the Court of Appeal in Mobilx Ltd & Ors v HM Revenue & Customs [2010] EWCA Civ 517. Philip Moser of Monckton Chambers acted for HMRC in its submissions to the Supreme Court.

This brings to an end the series of post-Kittel MTIC test cases which began with Calltel & Opto v HMRC [2007] UKVAT 20266 and in the course of which Melanie Hall QC, Philip Moser, Fiona Banks and the late Ian Hutton of Monckton Chambers had all acted for the successful Commissioners.

For further information, our case note can be found here.

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Philip Moser QC