Law Journal articles, Legal blogs, information on my books, letters to the Times and a few other things
Friday, 17 August 2012
A non-vintage case
Published in the current edition of the New Law Journal (vol 162, 17 August 2012, p 1094)
In 1976, the famous “Paris Tasting” took place in the French capital. Organised by an Englishman, Steven Spurrier, a selection of judges drawn from the haute société of French wine undertook a blind tasting and found, to their amazement, that they preferred unknown Californian wine to some classic French offerings. The event amounted to a watershed in the history of non-French wine: more than thee decades on, the shelves of wine merchants now heave with offerings from across the globe. As well as the New World, the event also benefited older regions, with the realisation that perhaps France did not have a monopoly on the best terroir after all.
One such older region was Hungary, whose tradition of wine making dates back to Roman times. In fact, Magyar has the distinction of being the only language apart from Greek which has a name for wine that is not derived from Latin. Hungary is best known for a dessert wine, Tokaji, and the arrestingly named red wine Egri Bikavér, or “Bull’s Blood of Eger.”
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Thursday, 26 July 2012
Understanding legislation
For Halsbury's Law Exchange
Thomas Pascoe in the Telegraph gives a familiar layperson’s lament about the amount and complexity of legislation in the United Kingdom. He complains that since the Second World War
Legislation has become more ambiguous and full of clauses, warrants and exemption as time has gone by. This is largely because politicians have incorporated the evasive language of their television appearances into their legislating.
Not only this, but perfectly serviceable 19th to mid-20th century legislation has been repealed and replaced with new laws which recreate the same offences but in a more confusing, less comprehensive manner.
Mr Pascoe is right to say that the substantially increased amount of legislation of the past few decades was at least partially a reaction to the Second World War. Indeed, it might be argued that nothing less than the whole raison d’être of the state itself – and the legal system with it – was fundamentally and irrevocably altered by both
of the world wars, together with the intervening Great Depression.
In 1910 some 25% of state expenditure was on the navy. The welfare state was in its infancy, much of the country lived in abject poverty, industry was wholly privately owned and employment rights protection was minimal to say the least. It was because the state felt no option other than to commit itself to “total war” – where all economic activity was to be directed to the war effort – that it intervened in so many aspects of life that had previously been thought none of its business. The modern regulatory state which is responsible for the enormous amount of legislation and regulation of the present day was thereby born.
The regulatory state was extended by the need to reprise total war in the Second World War, and extended further still by the need to rebuild the country afterwards. Two world wars had left the electorate demanding fundamental changes to society, reflected in the victory of Attlee’s government with its programme of social reforms requiring unprecedented levels of state intervention.
Mr Pascoe is on shakier ground, however, with his proposals as to how the complexity of modern legislation might be remedied. He argues:
It is absolutely crucial that in future laws are drafted in such a way that they make clear to anyone reading what is contained. (...)
Unfortunately, such a measure would require an impartial body to vet the language in which legislation is phrased.
Rather than create even more work for lawyers, I would suggest that we look to the jury system.
If a panel of 12 literate people drawn at random from the population are able to understand a law then it is clearly drafted. If they find it full of ambiguity and evasion then they must send it back for redrafting.
The idea that legislation might be drafted in an unambiguous way readable by any reasonably well educated lay person is not new, but neither is it remotely achievable.
Currently a popular topic is the absurd complexity of the tax system, which gives rise to the loopholes that have been attracting a lot of headlines. Certainly there is a fundamental problem with the tax system, namely the fact that it is used for reasons other than collecting revenue, as I discussed in an earlier blog. But that does not mean Mr Pascoe’s wish for understandable legislation can be achieved.
A few years ago the-then Constitutional Affairs Minister Harriet Harman said that a new bill was “for the first time” being offered in “plain English” as well as the normal legalese. She led the public to believe that the two versions would appear side by side and at long last the public could actually grasp what an Act of Parliament meant without any professional advice.
In fact no such “plain English” version existed. All that happened was that the usual explanatory notes were more extensive than normal. This was no great surprise – imagine the potential for confusion and argument if there were to be two versions of the same Act.
Of course there is always room for improvement in drafting and anyone could come up with historic examples of hopelessly badly drafted sections, or even whole acts. But there are also limits, and it is here that Mr Pascoe’s thesis falls down. Shortly after Ms Harman’s announcement I had the following letter published in the Times (June 17, 2006):
The Constitutional Affairs Minister Harriet Harman seems to have forgotten that legislation is complex because human activity, which it seeks to regulate, is also complex, and as a result law is a specialist subject, just as with architecture or medicine. The only way that a paper on new heart transplant techniques could be rendered intelligible would be if the reader had studied the subject — and was hence no longer a member of “the public” — or if the paper were simplified to the point where it was more or less completely unhelpful to a surgeon.
The example you give of an apparently plain English provision bears this out. You report that the Offences Against the Persons Act 1861 states: “It is an offence to cause a riot.”
Perfectly plain, until someone is charged under the section and it has to be determined what “caused” and “riot” mean in context.
My view has not changed since. There are countless legal terms that contain special meanings, and indeed whole legal concepts that are fictions (constructive trustee, for example) that it would be idle to pretend a layperson could understand – any more than they could fully understand the blueprint for a new office tower or, as I said in the letter, a paper on heart surgery.
Incidentally, much modern regulation is handed down to us by Europe, leaving Parliament little choice in its wording, but Mr Pascoe’s colleagues at the Telegraph usually have a ready answer to that point ...
Thomas Pascoe in the Telegraph gives a familiar layperson’s lament about the amount and complexity of legislation in the United Kingdom. He complains that since the Second World War
Legislation has become more ambiguous and full of clauses, warrants and exemption as time has gone by. This is largely because politicians have incorporated the evasive language of their television appearances into their legislating.
Not only this, but perfectly serviceable 19th to mid-20th century legislation has been repealed and replaced with new laws which recreate the same offences but in a more confusing, less comprehensive manner.
Mr Pascoe is right to say that the substantially increased amount of legislation of the past few decades was at least partially a reaction to the Second World War. Indeed, it might be argued that nothing less than the whole raison d’être of the state itself – and the legal system with it – was fundamentally and irrevocably altered by both
of the world wars, together with the intervening Great Depression.
In 1910 some 25% of state expenditure was on the navy. The welfare state was in its infancy, much of the country lived in abject poverty, industry was wholly privately owned and employment rights protection was minimal to say the least. It was because the state felt no option other than to commit itself to “total war” – where all economic activity was to be directed to the war effort – that it intervened in so many aspects of life that had previously been thought none of its business. The modern regulatory state which is responsible for the enormous amount of legislation and regulation of the present day was thereby born.
The regulatory state was extended by the need to reprise total war in the Second World War, and extended further still by the need to rebuild the country afterwards. Two world wars had left the electorate demanding fundamental changes to society, reflected in the victory of Attlee’s government with its programme of social reforms requiring unprecedented levels of state intervention.
Mr Pascoe is on shakier ground, however, with his proposals as to how the complexity of modern legislation might be remedied. He argues:
It is absolutely crucial that in future laws are drafted in such a way that they make clear to anyone reading what is contained. (...)
Unfortunately, such a measure would require an impartial body to vet the language in which legislation is phrased.
Rather than create even more work for lawyers, I would suggest that we look to the jury system.
If a panel of 12 literate people drawn at random from the population are able to understand a law then it is clearly drafted. If they find it full of ambiguity and evasion then they must send it back for redrafting.
The idea that legislation might be drafted in an unambiguous way readable by any reasonably well educated lay person is not new, but neither is it remotely achievable.
Currently a popular topic is the absurd complexity of the tax system, which gives rise to the loopholes that have been attracting a lot of headlines. Certainly there is a fundamental problem with the tax system, namely the fact that it is used for reasons other than collecting revenue, as I discussed in an earlier blog. But that does not mean Mr Pascoe’s wish for understandable legislation can be achieved.
A few years ago the-then Constitutional Affairs Minister Harriet Harman said that a new bill was “for the first time” being offered in “plain English” as well as the normal legalese. She led the public to believe that the two versions would appear side by side and at long last the public could actually grasp what an Act of Parliament meant without any professional advice.
In fact no such “plain English” version existed. All that happened was that the usual explanatory notes were more extensive than normal. This was no great surprise – imagine the potential for confusion and argument if there were to be two versions of the same Act.
Of course there is always room for improvement in drafting and anyone could come up with historic examples of hopelessly badly drafted sections, or even whole acts. But there are also limits, and it is here that Mr Pascoe’s thesis falls down. Shortly after Ms Harman’s announcement I had the following letter published in the Times (June 17, 2006):
The Constitutional Affairs Minister Harriet Harman seems to have forgotten that legislation is complex because human activity, which it seeks to regulate, is also complex, and as a result law is a specialist subject, just as with architecture or medicine. The only way that a paper on new heart transplant techniques could be rendered intelligible would be if the reader had studied the subject — and was hence no longer a member of “the public” — or if the paper were simplified to the point where it was more or less completely unhelpful to a surgeon.
The example you give of an apparently plain English provision bears this out. You report that the Offences Against the Persons Act 1861 states: “It is an offence to cause a riot.”
Perfectly plain, until someone is charged under the section and it has to be determined what “caused” and “riot” mean in context.
My view has not changed since. There are countless legal terms that contain special meanings, and indeed whole legal concepts that are fictions (constructive trustee, for example) that it would be idle to pretend a layperson could understand – any more than they could fully understand the blueprint for a new office tower or, as I said in the letter, a paper on heart surgery.
Incidentally, much modern regulation is handed down to us by Europe, leaving Parliament little choice in its wording, but Mr Pascoe’s colleagues at the Telegraph usually have a ready answer to that point ...
Tuesday, 24 July 2012
Combating corruption in a global business environment - Halsbury's Law Exchange Panel Discussion - Video
The video of last Tuesday's panel discussion has been uploaded to Youtube here.
Monday, 16 July 2012
Combating corruption in a global business environment – HLE panel discussion
Last night Halsbury’s Law Exchange, in partnership with international law firm Eversheds, held its second panel discussion for 2012. The subject was combating bribery and corruption in a global business environment. The panel was chaired by Khawar Qureshi QC. Other panellists were Peter Binning of Corker Binning, Neill Blundell of Eversheds, Susannah Cogman of Herbert Smith LLP, Felicity Gerry of 36 Bedford Row, Ben Rose of Hickman and Rose, and Satnam Tumani of the Serious Fraud Office (SFO).
The event was introduced by the Solicitor General, Edward Garnier QC, who spoke of the current consultation for Deferred Prosecution Agreements (DPAs).
As expected, there was robust and lively debate about the entire process of prosecuting fraud, including whether the SFO had adequate resources, whether it should be targeting more than simply the high end of the corruption scale, whether DPAs were a suitable means of achieving justice, whether the sentencing regime was adequate, and what lessons could be learned from the way in which the United States deals with corporate corruption.
The Solicitor General was keen to emphasise that DPAs were an additional weapon, not a substitute for any existing method of combating crime. He also reiterated the government’s commitment to the SFO.
The event will be uploaded to Youtube in due course, and will be of interest to all who work in this area and indeed anyone engaged in international business.
The event was introduced by the Solicitor General, Edward Garnier QC, who spoke of the current consultation for Deferred Prosecution Agreements (DPAs).
As expected, there was robust and lively debate about the entire process of prosecuting fraud, including whether the SFO had adequate resources, whether it should be targeting more than simply the high end of the corruption scale, whether DPAs were a suitable means of achieving justice, whether the sentencing regime was adequate, and what lessons could be learned from the way in which the United States deals with corporate corruption.
The Solicitor General was keen to emphasise that DPAs were an additional weapon, not a substitute for any existing method of combating crime. He also reiterated the government’s commitment to the SFO.
The event will be uploaded to Youtube in due course, and will be of interest to all who work in this area and indeed anyone engaged in international business.
Tuesday, 26 June 2012
Jimmy Carr and tax avoidance
Published on Halsbury's Law Exchange here.
Jimmy Carr and his K2 tax-minimising cohorts have attracted their share of detractors for using a tax-avoidance scheme which reduced the amount payable on their income to about 2%. It is a familiar debate: where is the line drawn between tax avoidance (legal) and tax evasion (illegal)? Is tax even moral to begin with? (Those of a libertarian disposition think that it is far too high at present, morally entitling or even obliging people to avoid as much as possible, whilst those of the old left think it too low.)
Recently, Mr Carr has had a slightly unlikely apologist in the form of the Rev Dr Peter Mullen, a priest of the Church of England and former Rector of St Michael, Cornhill and St Sepulchre-without-Newgate in the City of London.
Dr Mullen, writing in the Telegraph, argues that
“… reasonably and legitimately, within the confines of the law, to avoid paying more tax than one needs to pay is no more dishonest than, say, the effort of a working man to sell his labour to the highest bidder.”
Of course the simple answer is for tax loopholes to be closed. And of course that is very much easier said than done. Thus we are left with the endless game whereby HMRC closes one loophole and another is discovered. With a tax system as complex as Britain’s, it seems that the battle will never be over. Nor is it anything new: Alan Coren’s feuilleton Tax Brittanica was probably not far off the mark, with his fictional Roman accountant, Dubious Abacus, running rings around the hapless tax inspector Miscellaneous Onus in 408 AD.
However, Dr Mullen goes on to a rather wider issue. He writes:
“There is a very deep issue here. For if something that is allowed as quite legal and above board is at the same time, as some in these same high places have declared, unacceptable and immoral, then that sets up a fatal disjunction between law and morality.
Is it seriously being maintained that the law – the way according to which we all agree to rule our lives – is immoral? Argue that, and you are doing much worse than shooting yourself in the foot. You are undermining the principles of any rational social ethic. And consequently rubbishing reason itself.”
Here Dr Mullen is entering some murky waters. One would hope that each of our laws has a moral justification, allowing for the fact that even within an ethical framework such as the modern conception of Judeo-Christianity that forms the basis of English law there will always be room for disagreement on particular issues. But it is a philosophical truism that not everything legal is moral, still less than that everything immoral should be illegal. That is one reason why the prosecuting authorities, under the aegis of the Attorney-General, have the discretion not to prosecute any individual act of criminality.
Suppose, for example, I break a bylaw by driving my car in a municipal park, in order to rescue someone who has had a heart attack. Technically I have broken the law, but no-one would suggest I have acted immorally, and (I would hope) the prosecuting authorities would take note.
Alternatively, suppose by some bureaucratic foul-up the government has built a new road but the road technically has not had a speed limit applied to it. It might be legal for me to drive at excessive speeds on the road, but it would certainly not be moral.
Back to Jimmy Carr and his fellow tax-minimisers. Assuming tax to be moral to begin with, is it immoral for the very wealthy, who can afford the advice, to use whatever loopholes available to avoid paying the rate that they would normally incur? The majority of wage earners do not have that option, because they are taxed at source and could not afford the advice anyway. The intention of the law is that those earning over a certain amount pay at a certain rate. If that law is morally just, then arguably it is not moral for Mr Carr and co to exploit the fact that the law is badly drafted.
On the other hand, it is not as if there is a moral imperative to pay more tax than is due, and on countless occasions individuals and corporations make decisions on company structures, trusts and individual transactions based on what would minimise tax. So far as they do not break the law, they are not being immoral so much as sensible. This argument is encapsulated in the famous quote from Tomlin LJ in Inland Revenue Commissioners v Duke of Westminster [1935] All ER Rep 259:
“Every man is entitled, if he can, to order his affairs so that the tax attaching under the appropriate Acts is less than it otherwise would be. If he succeeds in ordering them so as to secure this result, then however unappreciative the Commissioners of Inland Revenue or his fellow taxpayers may be of his ingenuity, he cannot be compelled to pay an increased tax. This so-called doctrine of ‘the substance’ seems to me to be nothing more than an attempt to make a man pay notwithstanding that be has so ordered his affairs that the amount of tax sought from him is not legally claimable”.
The Chancellor of the Exchequer would have done well to have recalled that quotation earlier this year when speaking of “aggressive tax avoidance”, which is not a concept known to the law.
Certainly it would not be justifiable to impose some sort of windfall tax, even in the case of an abysmal loophole which cost the treasury billions: the rule of law requires the law to be fixed in advance, so far as possible, and does not permit retrospective penal or revenue laws.
Nevertheless, there are still some difficult questions of law and morality involved, not of the open-and-shut variety Dr Mullen seems to assume. In Mr Carr's case, it would pay to recall that the Revenue looks to the substance of any transaction, and there seems on the face of it no purpose to Mr Carr's scheme and its constituent transactions other than to get around income tax.
Mr Carr might not have acted illegally or immorally, depending on how all the questions above are answered. But, having lampooned tax avoiders in the past as part of his well-remunerated stand-up comedy routine, he is certainly guilty of one charge – hypocrisy – and for that reason he has brought the unsympathetic press on himself.
Jimmy Carr and his K2 tax-minimising cohorts have attracted their share of detractors for using a tax-avoidance scheme which reduced the amount payable on their income to about 2%. It is a familiar debate: where is the line drawn between tax avoidance (legal) and tax evasion (illegal)? Is tax even moral to begin with? (Those of a libertarian disposition think that it is far too high at present, morally entitling or even obliging people to avoid as much as possible, whilst those of the old left think it too low.)
Recently, Mr Carr has had a slightly unlikely apologist in the form of the Rev Dr Peter Mullen, a priest of the Church of England and former Rector of St Michael, Cornhill and St Sepulchre-without-Newgate in the City of London.
Dr Mullen, writing in the Telegraph, argues that
“… reasonably and legitimately, within the confines of the law, to avoid paying more tax than one needs to pay is no more dishonest than, say, the effort of a working man to sell his labour to the highest bidder.”
Of course the simple answer is for tax loopholes to be closed. And of course that is very much easier said than done. Thus we are left with the endless game whereby HMRC closes one loophole and another is discovered. With a tax system as complex as Britain’s, it seems that the battle will never be over. Nor is it anything new: Alan Coren’s feuilleton Tax Brittanica was probably not far off the mark, with his fictional Roman accountant, Dubious Abacus, running rings around the hapless tax inspector Miscellaneous Onus in 408 AD.
However, Dr Mullen goes on to a rather wider issue. He writes:
“There is a very deep issue here. For if something that is allowed as quite legal and above board is at the same time, as some in these same high places have declared, unacceptable and immoral, then that sets up a fatal disjunction between law and morality.
Is it seriously being maintained that the law – the way according to which we all agree to rule our lives – is immoral? Argue that, and you are doing much worse than shooting yourself in the foot. You are undermining the principles of any rational social ethic. And consequently rubbishing reason itself.”
Here Dr Mullen is entering some murky waters. One would hope that each of our laws has a moral justification, allowing for the fact that even within an ethical framework such as the modern conception of Judeo-Christianity that forms the basis of English law there will always be room for disagreement on particular issues. But it is a philosophical truism that not everything legal is moral, still less than that everything immoral should be illegal. That is one reason why the prosecuting authorities, under the aegis of the Attorney-General, have the discretion not to prosecute any individual act of criminality.
Suppose, for example, I break a bylaw by driving my car in a municipal park, in order to rescue someone who has had a heart attack. Technically I have broken the law, but no-one would suggest I have acted immorally, and (I would hope) the prosecuting authorities would take note.
Alternatively, suppose by some bureaucratic foul-up the government has built a new road but the road technically has not had a speed limit applied to it. It might be legal for me to drive at excessive speeds on the road, but it would certainly not be moral.
Back to Jimmy Carr and his fellow tax-minimisers. Assuming tax to be moral to begin with, is it immoral for the very wealthy, who can afford the advice, to use whatever loopholes available to avoid paying the rate that they would normally incur? The majority of wage earners do not have that option, because they are taxed at source and could not afford the advice anyway. The intention of the law is that those earning over a certain amount pay at a certain rate. If that law is morally just, then arguably it is not moral for Mr Carr and co to exploit the fact that the law is badly drafted.
On the other hand, it is not as if there is a moral imperative to pay more tax than is due, and on countless occasions individuals and corporations make decisions on company structures, trusts and individual transactions based on what would minimise tax. So far as they do not break the law, they are not being immoral so much as sensible. This argument is encapsulated in the famous quote from Tomlin LJ in Inland Revenue Commissioners v Duke of Westminster [1935] All ER Rep 259:
“Every man is entitled, if he can, to order his affairs so that the tax attaching under the appropriate Acts is less than it otherwise would be. If he succeeds in ordering them so as to secure this result, then however unappreciative the Commissioners of Inland Revenue or his fellow taxpayers may be of his ingenuity, he cannot be compelled to pay an increased tax. This so-called doctrine of ‘the substance’ seems to me to be nothing more than an attempt to make a man pay notwithstanding that be has so ordered his affairs that the amount of tax sought from him is not legally claimable”.
The Chancellor of the Exchequer would have done well to have recalled that quotation earlier this year when speaking of “aggressive tax avoidance”, which is not a concept known to the law.
Certainly it would not be justifiable to impose some sort of windfall tax, even in the case of an abysmal loophole which cost the treasury billions: the rule of law requires the law to be fixed in advance, so far as possible, and does not permit retrospective penal or revenue laws.
Nevertheless, there are still some difficult questions of law and morality involved, not of the open-and-shut variety Dr Mullen seems to assume. In Mr Carr's case, it would pay to recall that the Revenue looks to the substance of any transaction, and there seems on the face of it no purpose to Mr Carr's scheme and its constituent transactions other than to get around income tax.
Mr Carr might not have acted illegally or immorally, depending on how all the questions above are answered. But, having lampooned tax avoiders in the past as part of his well-remunerated stand-up comedy routine, he is certainly guilty of one charge – hypocrisy – and for that reason he has brought the unsympathetic press on himself.
Wednesday, 20 June 2012
Combating corruption in a global business environment – Forthcoming HLE panel discussion
For Halsbury's Law Exchange
According to the Ministry of Justice, it was hoped that the Bribery Act 2010 would “provide a more effective legal framework to combat bribery in the public or private sectors” and “help tackle the threat that bribery poses to economic progress and development around the world”.
It is fair to say that the old regime was a fractured state of affairs, and it is also fair to say that it did not achieve very much. In 2007, for example, the US brought 69 cases relating to foreign bribery, Germany 43 and the UK none at all. In fact, no successful prosecution for “foreign” bribery under the previous law was brought until 2008, the authorities preferring instead to settle cases before trial.
At first glance, therefore, the Bribery Act seems like a necessary and valuable step. Nearly a year since it came into force, however, not much progress seems to have been made in terms of convictions of substantial entities for large-scale fraud. The first successful prosecution under the Act concerned a court clerk who accepted bribes of a few hundred pounds to make driving offences disappear – hardly the sort of billion pound international fraud the Act was supposedly aimed at. Nor was it conduct for which a new criminal statute was needed: the same actions would have been better prosecuted under the long established offence of perverting the course of justice.
At second glance, it is perhaps not difficult to see why the Bribery Act has not had much impact. The obstacles to successful policing of bribery in an age of instant communications and sophisticated computer-based, cross-border transactions are formidable. To begin with, one has to define the terms. “Bribery” and “corruption” sound obvious to a lay ear. Yet one person’s corruption may be another’s standard business practice. There are parts of the world in which a “facilitation payment” would be seen as necessary, whereas in the United Kingdom it would be a straightforward bribe.
This problem raises the potential threat that the Bribery Act could render British companies uncompetitive in those jurisdictions with a different concept of corruption. This will do nothing to change the practice of corruption; it will just impoverish the United Kingdom instead.
Even if some greater form of international agreement can be reached on the definition of corruption, global enforcement poses another difficulty. Judgments from friendly and similar jurisdictions such as the United States are not always enforced in this country as a matter of course; judgments from less reputable jurisdictions known for corruption will be enforced even less often.
The additional red tape imposed in Britain by the Act may mean that overseas companies will be reluctant to invest here. An investment bank with thousands of clients undertaking hundreds of trades every day will hardly be in a position to undertake a detailed compliance exercise for every transaction – another way in which British companies may be rendered uncompetitive without any real impact on fraud, especially on a global level.
Leaving aside those preliminary objections, actually prosecuting fraud faces a different set of hurdles. First, there is the question of discovering fraud in the first place. Is there sufficient protection for whistleblowers in this country? If not, then the chances of fraud being discovered will be correspondingly reduced.
Secondly, there is the issue of resources. One of the underlying principles of criminal law is the assumption that the state has far greater resources than the defendant, hence the various forms of protection such as the onerous burden of proof. But this is not the case in substantial cross border frauds: indeed, the larger the fraud, the greater the resources may be on the part of the suspects, which might substantially outweigh those of the Serious Fraud Office.
A wealthy corporation will be able to hire legal advisers well versed in the art of filibustering inquiries. They might disclose a vast amount of irrelevant documentation which the investigators will have to spend disproportionate resources trawling through. Much of the information may be on encrypted electronic storage devices for which the owners might have conveniently forgotten the passwords, leaving the authorities to pay for expensive IT help in trying to hack the encryption.
Next there is the problem of identifying individuals responsible in a large corporation. Criminal liability requires the prosecution to prove that the “directing mind and will” of an organisation was at fault, which may be hard to establish in a large corporation where decision-making is spread thinly.
Let us assume, nevertheless, that the authorities manage to wade through all of the obstructions and mountains of evidence and find a prima facie case of criminal conduct. The well-resourced defendant will then elect trial by jury, and promptly attempt to batter the jurors into a stupor with highly technical evidence and a supporting paper mountain. For all the benefits of the jury system, the idea of twelve lay people chosen at random being able to understand complex financial concepts and transactions, or to sift through vast amounts of documentary evidence, is wishful thinking.
A converse danger is that if a high profile former executive of a failed bank finds him or herself at the end of a criminal prosecution, the jury may be tempted to make an example of him or her.
It may therefore be better to do away with juries in complex fraud trials and replace them with single judges. Alternatively a judge might sit with expert assessors or advisers, as a development of the long-established practice in wet shipping cases for elder brethren of Trinity House to sit with the judge.
If the jury system cannot be replaced, victims of large-scale fraud could instead seek to pursue justice through the Commercial Court or Chancery Division, where cases will be heard before a single judge familiar with the City and experienced in sifting through formidable amounts of evidence. This, however, relies on the victims of fraud being willing and able to bring lengthy and expensive court proceedings. It also means that blatant fraud will not result in a criminal conviction, which will leave a lingering sense that justice has not been done even if the money has been recovered.
Finally, even supposing a conviction is correctly obtained, the difficulties in tracing and recovering funds which have been misappropriated are well known.
Given all these obstacles, another tactic employed by a defendant might be to offer a settlement for substantially less than its actual liability. Settlements were used under the old regime, as noted, and this is the course of action that has occurred in some tax cases too. But while a settlement might result in a rough sort of justice, it is less of a deterrent and less likely to obtain public confidence.
No doubt with the above considerations in mind, on 17 May the Attorney General’s office announced plans for a new tool in combating crime, known as Deferred Prosecution Agreements. According to the press release:
“companies would agree to publically admit wrongdoing, and meet tough conditions such as payment of substantial penalties, undertaking internal reform and submitting to regular review and monitoring.
The whole process would be overseen by a judge and the threat of full prosecution would remain hanging over a company should they fail to comply with the agreement.”
Public submissions are open until 9 August 2012.
In the meantime, the above issues are among those to be discussed at a forthcoming panel discussion to be held by Halsbury’s Law Exchange, in partnership with Eversheds, on 17 July 2012, entitled Combating Corruption in a Global Business Environment.
The panel will be composed of leading experts in the field:
• Khawar Qureshi QC – Barrister at Searle Court
• Peter Binning - Partner at Corker Binning
• Neill Blundell - Partner and Head of Fraud Group at Eversheds
• Susannah Cogman - Partner at Herbert Smith
• John Cooper QC – Barrister at 25 Bedford Row and Consultant Editor, Criminal Law & Justice Weekly
• Felicity Gerry - Barrister at 36 Bedford Row
• Ben Rose - Partner at Hickman and Rose
• Satnam Tumani - Head of Bribery & Corruption and International Assistance at the SFO
Attendance is free but strictly limited, so please RSVP to Sarah Plaka at sarah.plaka@lexisnexis.co.uk at your earliest convenience. Further details may be found at http://www.halsburyslawexchange.co.uk/
Tuesday, 19 June 2012
King and I
Published in the Times, 19 June 2012
Dear Sir
As a cricket fan I wish I could agree with Lord Desai (letter, June 18) that the reason Sir Mervyn King followed rules scrupulously is that he is a cricketer, rather than a footballer happy to indulge in professional fouls.
If there ever truly was a cricketing "golden age" which justifying the saying that something unsporting was "not cricket" I am not sure when it was. Certainly not that of Clive Lloyd's bullying West Indians or Ian Chappell's bullying Australians, and much less still Douglas Jardine's win-at-all-costs Englishmen.
Perhaps Lord Desai has in mind the Victorian era, though I doubt it: the greatest Victorian cricketer was W.G. Grace - the amateur who made a fortune from the game, and who once nonchalantly replaced the bails after being bowled and took guard again. [In response to the umpire's umbrage he casually offered "They've come to see me bat, not you umpire".]
Words in square brackets omitted - rather a shame as they constituted the punchline.
Dear Sir
As a cricket fan I wish I could agree with Lord Desai (letter, June 18) that the reason Sir Mervyn King followed rules scrupulously is that he is a cricketer, rather than a footballer happy to indulge in professional fouls.
If there ever truly was a cricketing "golden age" which justifying the saying that something unsporting was "not cricket" I am not sure when it was. Certainly not that of Clive Lloyd's bullying West Indians or Ian Chappell's bullying Australians, and much less still Douglas Jardine's win-at-all-costs Englishmen.
Perhaps Lord Desai has in mind the Victorian era, though I doubt it: the greatest Victorian cricketer was W.G. Grace - the amateur who made a fortune from the game, and who once nonchalantly replaced the bails after being bowled and took guard again. [In response to the umpire's umbrage he casually offered "They've come to see me bat, not you umpire".]
Words in square brackets omitted - rather a shame as they constituted the punchline.
Friday, 8 June 2012
An ignoble day for the noble art
For Halsbury's Law Exchange
Recently on Halsbury’s Law Exchange Simon Hetherington wrote a thoughtful piece on boxing. He stated candidly at the outset that he was not a boxing fan. For my own part, I admit to being an inveterate fan of the sport, although I haven’t followed it closely for a few years now. Even the most avid boxing fan, however, has to admit that the activity gives rise to serious moral and legal questions. And even if one finds satisfactory answers to those questions in principle, no-one can be happy – from a legal, moral or sporting perspective – with the way in which boxing is run, as the embarrassing saga of the planned fight between David Haye and Dereck Chisora demonstrates.
The first question a lawyer might ask is why boxing is legal at all. Ordinarily, hitting someone with the intention to render them unconscious would amount to a serious criminal offence. The immediate riposte is that boxing is done by consent. But consent is usually no defence to a serious criminal offence, as the law student favourite of R v Brown [1993] 2 All ER 75 demonstrates. In that case the House of Lords found that the fact that the defendants had consented to sado-masochistic sexual activities was no defence to charges of unlawful and malicious wounding, and assault occasioning actual bodily harm (offences under ss 20 and 47 of the Offences against the Person Act 1861).
Is there a moral difference between damaging genitals for sexual gratification on the one hand, and damaging brains for sporting enjoyment, money and the entertainment of spectators on the other? If there is, it is not obvious. Of course, other activities (smoking or drinking for a start) and indeed other contact sports involve a risk to one’s health. But only in boxing (or the various forms of full contact martial arts, which incidentally are usually regulated even more badly than boxing) is damaging another person’s health the whole point of the activity rather than a risky side effect.
R v Brown was and remains a controversial decision, and one reached by a bare majority. For what it is worth, I think it was wrongly decided, and it would be interesting if someone challenged it with reference to the European Convention on Human Rights, under the right to a private life guaranteed by Art 8. But the case remains good law at least for now, and it is hard to square the underlying principle with the continuing legitimacy of boxing.
We therefore start with the fact that boxing is a moral and legal anomaly. How has it survived in an age of health and safety? I suggest there are four main reasons. First, it has the veneer of respectability conferred by the fact that it is a regulated activity. Secondly, it has been sanitised in the public eye by the Queensbury rules. Thirdly, it has a long history and accompanying tradition, which means there has been little public call for its abolition (though centuries of history and tradition did not save fox hunting). Fourthly, there is the natural resistance, particularly in England, to state paternalism - if people box voluntarily and with knowledge of the risks involved, most consider that it is not the state’s business to stop them (this being the chief reason why R v Brown remains controversial).
A side note should be made about the Queensberry rules. They were not the first attempt at boxing rules (for example, in 1743 a set of rules known as the London Prize Ring Rules were published), but they were the reason why boxing took on its modern form, with a fixed number of rounds for each bout, restricted target areas and forms of striking, and compulsory gloves. Ironically these were only partially successful. Although potential injuries must have been reduced by the restrictions on possible forms of hitting, it is generally held that the use of gloves has actually increased the risk of death or serious injury. This is because in bare knuckle fights contestants would damage their hands quite quickly, especially with head punches, which thereafter limited the effectiveness of their blows (and thus explains why fights would last for dozens of rounds). Conversely, with gloves hand injuries are rare, even over 12 round fights, meaning punches can be thrown with maximum force throughout. While gloves cushion blows they do not reduce their force; the same brain injury will occur even if superficial injuries such as cuts will be reduced. Thus the Queensberry Rules are a good example of the law of unintended consequences.
Then there are the boxing associations which act as the sanctioning bodies and award titles in each weight division. Nowadays there is any number of competing associations, whose proliferation has led to a sometimes comical devaluation of the concept of “world champion”. Many boxing fans will have never even heard of some of the fighters and some will not have even heard of all the soi-dissant authorities. So too with weight divisions: once upon a time there were only three (“heavyweight” started at ten stone ...) which was manifestly too few; nowadays there are manifestly too many.
Of greater legal interest however are the licensing authorities. In Britain the chief authority is the British Boxing Board of Control (BBBoC). Theoretically, only fights sanctioned by a recognised authority are lawful, although there are exceptions. The authorities seem to turn a blind eye to some forms of bare knuckle fights, for example, whilst two people who put on gloves and spar in an unlicensed gym will not likely attract the authorities’ attention either.
But let us return to licensing authorities and the gaping regulatory hole which Simon Hetherington identifies. His article was prompted by the forthcoming fight between Haye and Chisora. The fight is not being sanctioned by the BBBoC. Nevertheless it is taking place in Britain, apparently legally, because it is being sanctioned by another board, that of Luxembourg. Can it be right, Mr Hetherington asks, that one country’s authority can license a fight in another country, particularly when that other country’s authority has explicitly refused to sanction it?
One thinks immediately of the tragic end to the greatest of all boxing greatest careers, that of Muhammad Ali. By 1981 he was a washed up has-been, a shadow of his former self, yet continued to rage against the dying of his sporting light, like so many boxers before and since. He wanted to fight the journeyman Trevor Berbick. No regulatory authority in America would have anything to do with it. But the shameless Bahamian boxing authorities did sanction the fight, which went ahead and was, as everyone predicted, an horrific spectacle as the once-great Ali was hammered by the young journeyman Berbick. To add to the disgrace the Bahamian organisers were so inept that no stopwatch or bell had been officially provided: a watch had to be borrowed and then someone improvised with a cowbell.
That “contest” was bad enough as an instance of greed above all else. But imagine how much worse – indeed, absurd – it would have been if the fight had been held in America under the auspices of a foreign authority, against the wishes of the duly constituted American authorities? That is the scenario that is threatening to occur with the Haye/Chisora fight.
Admittedly Haye against Chisora does not have the feel of an imminent disaster in the way that Ali v Berbick did; both fighters are presumed competent. But it has only come about because someone has managed to persuade the Luxemborg authority (which has no professional fighters under its jurisdiction) to licence the fight and a German company to promote it – on British soil. The British board does not want the fight to happen. Its reasons are not the point – if one disagrees with them, then one should appeal, or apply to review the decision by way of judicial review. One certainly should not have the option simply to rope in some other licensing authority to circumvent the inconvenience of one’s own regulator.
If boxing is to have any credibility as a sport, let alone as an activity forming a glaring exception to the criminal law, then it has to be conducted in a respectable fashion. It does no one any credit or respect to be able to dodge the appropriate British regulatory authority on British soil with a small country’s equivalent organisation. It would be embarrassing in other sports, if one could find one in which it would happen. But in boxing it should also be illegal – not simply unlawful, but as illegal as organising a criminal activity, which, after all, is precisely what unregulated boxing amounts to.
According to recent press reports, the European Boxing Union has threatened Luxembourg with expulsion for licensing the fight. Let us hope it is prepared to carry through with that threat, and that the whole tawdry affair is thereby brought to a swift and appropriate conclusion.
Sunday, 27 May 2012
Dear Diary ...
Published in the New Law Journal, vol 162, 25 May 2012, p 726
The Duke of Edinburgh is famous for his
less-than-politically-correct remarks. Wincing as they often are, he seems to
get away with it because he has otherwise been content to play a silent second
fiddle to his spouse, who in turn has almost always studiously observed the
requirement of her role to be seen as above the political fray, devoid of any
revealed political opinions.
By stark contrast, their eldest offspring, the Prince of
Wales, seems rather taken with his own opinions and has rarely been shy about
expressing them, whether on modern architecture, the environment or the Human
Rights Act. In 2005 his propensity to speak out landed him in some bother when
a disloyal subject leaked some of his private journals to the press.
The journals concerned his trip to Hong Kong in 1997, when
that particular slice of the rump of the Empire was being returned to China in
what was inevitably referred to as the Chinese Takeaway.
Continue reading here.
Thursday, 17 May 2012
Warner Bros v Nelson: a screen siren comes to court
I have been published in this week's New Law Journal (vol 176, 18 May 2012, p 690) on the civil action of Warner Bros v Mrs Ruth Nelson. To her generation Mrs Nelson was one of the greatest film stars of all time. To my generation I suppose her eyes are more famous than her films, and the picture above gives some clue as to why that might be. But to every generation she was (and is) known by her childhood nickname followed by her maiden name: Bette Davis.
The article will appear here in due course.With thanks to Guy Skelton for reading a draft of the article and providing invaluable comments.
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