Yukos Bankruptcy Liquidator’s Acts Invalidated in the Netherlands

On 31 October 2007 the District Court of Amsterdam gave a landmark judgment on the non-recognition of foreign insolvency proceedings.  The court refused to recognise the authority of a Russian bankruptcy liquidator appointed in respect of Yukos Oil Co to vote the shares of the Yukos’ Dutch subsidiary, Yukos Finance BV.  The court held that huge and unexpected Russian tax assessments were the primary cause of Yukos Oil Co’s bankruptcy in Russia.  The fact that the huge tax assessments were raised unexpectedly, that freezing orders imposed by the Russian courts prevented Yukos from paying them and the unfairness and inadequacy of the procedures for challenging them were unfair contrary to ECHR and general standards of due process.  As a result, the appointment and actions of the Russian bankruptcy liquidator could not be recognised by the Dutch courts on public policy grounds.  The bankruptcy liquidator’s purported dismissal of the previous management of Yukos BV and all other acts undertaken in respect of that Dutch company on his purported authority, were invalid and should be reversed.

Piers Gardner of Monckton Chambers was part of the team, led by NautaDutilh, Amsterdam, instructed by the successful previous management of Yukos Finance BV and by the company.

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Piers Gardner

Court of Appeal Defines Limits of Resident Rights of EU Citizens

In its Judgment of 25th October 2007 the Court of Appeal held that parents with third country national status cannot rely on EC law to claim a right of residence in the UK on the basis that they have a child who is a national of a Member State and a citizen with EU and who can only exercise his right to reside within the EU if he is supported by a parent.

A previous ECJ decision, C-200/02 Chen, held that the UK had to grant a residence to Mrs Chen, a Chinese mother who gave birth to a baby girl in Northern Ireland, on the grounds that the child had acquired Irish nationality and could only exercise her right under Article 18 of the EC Treaty to reside in another Member State if she was with her self sufficient mother.  The Court distinguished the case of Chen on the basis that the Appellants in Mouloungui, Liu, Wang & Ahmed v SSHD could only become self-sufficient if they had access to the UK labour market whereas Mrs Chen was able to fulfil the self-sufficiency requirement without access to the UK employment market.

Christopher Vajda was instructed by the Treasury Solicitor on behalf of the Secretary of State for the Home Department.

The Council of Europe Strengthens the Legal Framework for Civil Society in Europe

 

In October 2007 the Committee of Ministers of the Council of Europe adopted a Recommendation to member states on the legal status of non-governmental organisations in Europe (CM/Rec(2007)14).

This is the first international legal instrument that targets the legislator, the national authorities and the NGOs themselves.  It aims to recommend standards to shape legislation and practice vis-a-vis NGOs, as well as the conduct and activities of the NGOs themselves in a democratic society based on the rule of law.

The recommendation was adopted to recognise the importance of NGOs in modern society and to elaborate minimum standards for their operation.  Although these standards are observed in many countries, the position of NGOs has been under threat in others and the recommendation gives a better basis for monitoring adverse measures taken in the future.

It is particularly concerned with the legal and fiscal framework required to ensure that NGOs can continue to make their various contributions to public and social life.  Furthermore, it outlines the limitations on objectives and activities that NGOs must observe, particularly those that are anti-democratic or are concerned with the making and distribution of profits.  In addition, it highlights responsibilities that can arise from receiving public support for their activities as well as underlining their responsibility to be transparent and to observe the generally applicable law.

The broadly framed guarantees of freedom of association, other human rights and fundamental freedoms that have been provided in rulings of the European Court of Human Rights and the views of the UN human rights treaty bodies have been built upon in this recommendation.

Implementation of this Recommendation will require member states to take full account of the standards that it sets out in all their legislation, policies and practices that have any bearing on the formation, operation and termination of NGOs.  It will only be fully successful through the widest possible dissemination of the standards set out in it and by training all officials concerned with the activities of NGOs.

So what does this mean? All 47 Council of Europe member states adopted the Recommendation but, unlike an EU Recommendation, there is no specific legal obligation to implement it.  It will, however, be used in arguments before the European Court of Human Rights as to the requirements of the right to freedom of association under the European Convention on Human Rights and will also be used by political bodies such as the Committee of Ministers and the Parliamentary Assembly of the Council of Europe as a basis for assessing state practice and exerting political pressure.

Jeremy McBride was the scientific expert for its preparation.

To view the recommendations, please click here.

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Jeremy McBride

 

 

Two Prestigious Awards for our Members

Sir Jeremy Lever KMCG QC received the special award for ‘Lifetime Achievement’ at the Chambers Bar Awards where the spotlight was put on his half century of practice at the Bar: “…Fittingly for a lawyer called in 1957, the Year the Treaty of Rome was signed, he has made his name in the field of Competition and European Law, earning the highest regard from his peers. In 2002, he was knighted for his services to competition law and the EC, one of only three barristers who have been recognised in this way whilst still in practice.  After a successful career acting in many of the major cases of the day, Sir Jeremy retired in 2006.  However, such as the popularity of this enthusiastic, committed, amiable and above all modest advocate, that he was persuaded to return by colleagues, two years later.  Since then, he has continued to add gloss to his reputation by appearing in such matters as Courage v Crehan and Mastercardv OFT. An expert on state aid and a Fellow and Senior Dean of All Souls as well, he continues to display the energy of a man many years his junior and to represent all that is best about the Bar.”

In addition Peter Roth QC shrugged off tough competition and won as ‘Best Silk’ in the Competition/EU award.  They mentioned: “Peter Roth QC has an enviable competition, EU, sports and telecommunications practice conducting an impressive range of cases on behalf of a substantial number of private clients, the OFT and other regulators.  Due to his successful track record, he is a first choice for difficult competition cases such as Attheraces, Floe and adidas.”

Monckton Chambers was also nominated as ‘Set of the Year’ in the Competition/EU section.

European Commission Fines Visa £10.2 million

On 3rd October 2007 the European Commission fined Visa for infringing Art 81 of the EC Treaty and Art 53 of the EEA Agreement.

In 2000 Morgan Stanley complained to the Commission about Visa’s refusal to admit Morgan Stanley Bank (“MSB”) in the UK as a member of Visa.  Visa followed an internal rule of not admitting an applicant which is deemed to be a competitor.

The Commission’s investigation considered this to be a restriction in competition as MSB’s card operations in the EU were confined to issuing MasterCard cards in the UK and its entry into the UK acquiring market (i.e. provision of card acceptance capabilities to retailers) could be expected to have contributed to more efficient competition.  The investigation concluded that it was not a competitor of Visa as it had no payment card network in the EU and that it would be highly unlikely that Discover, Morgan Stanley’s US card network, would expand in the EU given the high entry barriers.

Furthermore, the Commission argued that this rule was also discriminatory as Visa admitted Citigroup and several shareholders of JCB Co Ltd.

A settlement was agreed in 2006 following which MSB withdrew its complaint and was admitted as a Visa member.  Despite this, the Commission decided to impose a fine as Morgan Stanley was excluded for the UK acquiring market for over 6 years.

Visa Europe has indicated that it intends to appeal the decision.

Rupert Anderson QC was part of the legal team for Morgan Stanley and Anneli Howard was junior counsel to Visa.

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Anneli Howard

 

 

Two New Tenants

Monckton Chambers is delighted to welcome two new tenants after the successful completion of their pupillage on 2nd October 2007.  Both Fiona Banks and Ewan West have gained valuable experience outside the Bar which supports our beliefs of being a progressive and forward thinking set which understands the commercial pressure its clients are under.

Before coming to the Bar, Ewan West worked for twelve years at what is now the Department for Transport.  From 2000 he was a member of the Senior Civil Service.  He developed a particular expertise working at the interface of the public and private sectors and was involved with a number of high-profile projects, including railway privatisation, the London Underground PPP and, in his last post, the early stages of the Crossrail project.  He also worked on aviation policy in the European Union and on certain aspects of the regulation of the Channel Tunnel. He also gained considerable experience of dealing with a wide variety of regulatory and other public sector bodies, and with senior figures of the private and public sector, including Government Ministers.  Ewan holds an MBA from Cranfield University and has a solid grounding in the principles of corporate finance, accounting and financial analysis, including investment appraisal.

Between 2004 and 2006 Fiona Banks was Trainee Solicitor with Freshfields Bruckhaus Deringer and qualified as a Solicitor in 2006.  Fiona is currently representing clients in disputes in the High Court, the Competition Appeal Tribunal and at arbitration.  Her recent work includes acting for DEFRA in relation to litigation in the Technology and Construction Court, acting for an applicant in an appeal to the CAT in relation to a determination of Ofcom and acting for a defendant Premier League football club at arbitration.  She recently appeared in the VAT & Duties Tribunal for HMRC in a case concerning Insurance Premium Tax (DSG v HMRC). Fiona is currently seconded on a part-time basis to the Competition department of Visa Europe.

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Ewan West
Fiona Banks

Book News ~ “UK Competition Procedure – The Modernised Regime”

This book, published by Oxford University Press in March 2007, provides readers with a comprehensive reference to the procedures for the enforcement of competition law in the UK following the implementation of the EC modernisation regulation which came into effect on 1 May 2004.  It deals with topics such as leniency, enforcement, information gathering and disclosure and it contains information on all competition authorities relevant to UK businesses, with particular emphasis on the Office of Fair Trading as the primary enforcer in the UK

The book has been written by an experienced team of former OFT officials with excellent knowledge of UK and European procedural changes and co-edited by one of our members Anneli Howard, who specialises in competition law. We doubt that a more hands on, practical and insiders’ view is currently available.

Barrister Aidan Robertson, who specialises in Competition law, reviewed the book for the October 2007 issue of the European Competition Law Review.

“UK Competition Procedure – The Modernised Regime” is available in all good legal bookshops.  For more information on the book and how to order it directly, please click here.

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Anneli Howard

Firebuy Resists Heat Brought On By Procurement Injunction Challenge

Firebuy, a non-departmental public body sponsored by the Department for Communities and Local Government, has successfully resisted an application for an interim injunction in a procurement claim by Lion Apparel.  The injunction, if granted, would have prevented Firebuy from entering into a contract for the supply of a new national uniform for firefighters.

The challenge related to a procurement competition commenced in 2003 called the “Integrated Clothing Project” or ICP.  Under the ICP, Fire and Rescue Authorities across England are to be given the opportunity to acquire the new national uniform, which includes protective equipment, through a centralised contract.

In March 2007, Bristol Uniforms was appointed preferred bidder for the ICP.   Following that appointment, Lion Apparel, one of the unsuccessful bidders, challenged the outcome of the process and commenced proceedings in the Chancery Division, applying for an interim injunction pending trial.  The claims made by Lion were wide ranging, but included allegations that Lion’s bid had been mis-scored in relation to price and garments; an allegation that Firebuy’s scoring system was irrational and unfair; and an allegation that Firebuy had discriminated against Lion in giving feedback to Bristol in a “bid development” phase.

Lion’s application was heard over 6 days by Morgan J.  The judge reviewed Lion’s various complaints in detail, and with one exception, found that Lion’s complaints were unfounded, out of time or would not have affected the outcome of the competition.  Morgan J held that the remaining claim, the challenge to Firebuy’s scoring methodology, was weak and speculative.  That complaint was not sufficient to interrupt the process given the possible adverse consequences of doing so.  Lion, if it succeeds at a trial, is limited to a claim in damages.

The judgment, which will be published in full in the week of 1st October 2007, contains interesting findings in relation to the standard of review the court will apply to decisions of contracting authorities, and the particular need for promptness where a claimant wishes to interrupt a procurement process which would otherwise move forward to the next stage.

Michael Bowsher QC and Rob Williams appeared for Firebuy, instructed by Pinsent Masons.

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Michael Bowsher QC
Rob Williams

Ex-Works Argument Dispatched by the ECJ

Case C-409/04, The Queen, on the application of Teleos plc and others v HMCE

The applicants were UK mobile phone traders who had supplied phones to a Spanish company.  The goods’ destination was France or Spain and the traders argued that by placing the goods at the purchasers’ disposal at a UK bonded warehouse under “ex-works”, a standard Incoterm, the goods had been “dispatched” for the purposes of an intra-Community acquisition of goods, so that the intra-Community supply of goods was exempt from VAT.  The traders were assessed for VAT by HMCE retrospectively.

The High Court judge found that the traders had made all such investigations as were reasonably possible and that the right to dispose of the goods as owner had been transferred to the purchaser.

In this context the question of the meaning of “dispatch” was referred to the ECJ, which held that in order to qualify for exemption, “dispatch” within the meaning of Article 28 of the Sixth VAT Directive means not only that (a) the right to dispose of the goods as owner had to have been transferred to the purchaser, but also that (b) the supplier had to establish that those goods had physically left the UK.  However, the ECJ also held that the fact that a supplier acted in good faith and that it took every reasonable measure in its power and that its participation in fraud is excluded were important points in deciding whether such a supplier could be obliged to account for the VAT after the event.  The ECJ observed that, once the supplier has fulfilled all its obligations, where the contractual obligation to dispatch or transport the goods out of the Member State of supply had not been satisfied by the purchaser, it is the latter who should be held liable for the VAT in that Member State.  The case now returns to the High Court for a decision on the facts.

Rupert Anderson QC and Rebecca Haynes of Monckton Chambers acted for HMCE. Philip Moser of Monckton Chambers acted for Teleos and others.

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Philip Moser QC
Rebecca Haynes

 

 

Calltel Telecom Ltd and Opto Telelinks (Europe) Ltd ~ News Update

Following the ECJ’s judgment in Kittel v Belgium, the scope and application of the “means of knowledge” (“MoK”) test in cases of “Missing Trader Intra-Community” VAT fraud (“MTIC” or “carousel” fraud) has been considered twice at interim hearings in UK cases: in Dragon Futures Limited (Decision of the VAT & Duties Tribunal dated 10 October 2006) and Just Fabulous (UK) Ltd & ors [2007] EWHC 521 (Admin).

A decision in the first MoK case after a full hearing on the facts was delivered by the VAT & Duties Tribunal Calltel Telecom Limited and Opto Telelinks (Europe) Limited v HMRC on 20 July 2007.

The Tribunal approved of the application of Kittel to chains of transaction (and to so-called “contra-trading”) and found that the Appellants were not entitled to their repayment claims for VAT, despite their not having dealt directly with any defaulting trader, due to their being “connected with” MTIC fraud within the meaning of the test in Kittel.  The Tribunal found that these particular Appellants had had actual knowledge, but it found in the alternative that the same would have been the case on the basis of MoK.

The Tribunal also gave guidance on the disclosure required in cases of this type.
The Appellants have appealed to the High Court by Notice of Appeal dated 14 September 2007.

Philip Moser acted for HMRC.

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Philip Moser QC