On 4 October 2017, Mrs Justice Rose dismissed claims by Emerald Supplies Limited and other claimants seeking damages alleged to have been caused in relation to alleged overcharges for flights between the EU and third countries prior to 1 May 2004, and alleged overcharges for flights between the EEA and third countries prior to 19 May 2005. For the Judgment see here. The principal issues concerned whether Article 101 of the Treaty on the Functioning of the European Union applied in the international air transport sector before those dates and/or whether Regulation 1/2003 changed the position as to the powers of a national court retrospectively in relation to those periods. At a hearing on 1 December 2017 Mrs Justice Rose granted Emerald Supplies and other Claimants permission to appeal to the Court of Appeal.

The following Monckton barristers are instructed in the case:

Philip Moser QC, Ben Rayment, Anneliese Blackwood and Conor McCarthy are instructed by the Claimants.

Jon Turner QC, Michael Armitage and Stefan Kuppen for British Airways PLC

Daniel Beard QC and Thomas Sebastian for airlines facing Part 20 Contribution Claims.

United Biscuits (Pension Trustees) Ltd and another v HMRC [2017] EWHC 2895 (Ch)

The High Court (Warren J) has dismissed a claim by United Biscuits (Pension Trustees) Ltd (“UB”) against HMRC for refunds of (allegedly) overpaid VAT.

UB is the trustee of a defined benefits pension fund.  It claimed restitution of sums paid by way of VAT on supplies of pension fund management services provided by undertakings that were not authorised insurance companies (“Non-Insurers”).  Supplies of such services by Non-Insurers have always been treated as standard rated under UK law.  The two main issues were (1) whether the supplies by Non-Insurers were to be treated as exempt supplies of “insurance”, because (allegedly similar) supplies of pension fund management services by authorised insurance companies (“Insurers”) had were treated as exempt; and (2) if Non-Insurers’ supplies should have been exempt, whether EU law required UB to be given a direct claim against HMRC to recover sums they had overpaid by way of VAT to the Non-Insurers (notwithstanding the Supreme Court’s recent decision in Investment Trust Companies (In Liquidation) v  RCC [2017] UKSC 29; [2017] 2 WLR 1200; [2017] STC 985, “ITC SC”).

Warren J decided both issues in favour of HMRC and dismissed UB’s claim.  On Issue (1), Warren J held that the services were not “insurance transactions” within the meaning of Article 13B(a) of the Sixth Directive (388/77/EEC) or Article 135(1)(a) of the Principal VAT Directive (2006/112/EC) and were thus properly standard rated.  Further, the principle of fiscal neutrality did not require them to be treated as if they were “insurance transactions” (and thus exempt) or to be given the same (incorrect) VAT treatment as supplies of pension fund management services by Insurers.  On Issue (2), Warren J held that EU law did not require UB to be given direct claim against HMRC (a process which would require the Court to create a common law cause of action in unjust enrichment and to disapply the statutory bar on such causes of action in section 80(7) of the Value Added Tax Act 1994, notwithstanding ITC SC): it was not “impossible or excessively difficult” for UB to vindicate any EU law rights it may have via the route dictated by UK statute, namely a claim against the Non-Insurer.

If he were wrong on Issues 1 and 2, Warren J considered that any direct claim against HMRC would be a claim in unjust enrichment; and that the bar in section 80(7) would have to be disapplied only to the extent necessary to allow UB a claim for the 4-year period prior to the issue of the claim form, having regard to the 4 year “cap” on claims by Non-Insurers against HMRC under section 80(4) VATA 1994.

Andrew Macnab appeared for HMRC.

To read the judgment please click here.

The transfer of personal data from EU Member States to third countries such as the United States is prohibited under the Data Protection Directive (95/46/EC) unless the level of protection afforded by the third country is adequate to provide essentially the same level of protection for personal data that EU citizens enjoy under EU law and the Charter of Fundamental Rights of the EU. Following the Edward Snowden revelations in 2013 concerning the extent to which the US security services engaged in extensive surveillance programmes of internet and telecommunication systems operated by companies such as Microsoft, Apple, Facebook and others, the European Commission adopted a “Safe Harbour” decision providing for procedures under which such data could be transferred to the US. On foot of a reference made in proceedings brought in Ireland by Max Schrems, the CJEU, in a decision of the 6th of October 2015, declared the Safe Harbour decision of the Commission to be invalid.

The Commission subsequently adopted certain decisions known as the Standard Contractual Clauses (SCC) decisions under which a data exporter in the EU (such as Facebook which transfers its EU customers’ data from Ireland to the US) could lawfully transfer data to countries such as the US if the data exporter and importer put in place an agreement which complied with the relevant SCC. Mr. Schrems reformulated his complaint to the Irish Data Protection Commissioner to the effect that the SCCs, even if complied with, did not in fact afford EU citizens the level of protection required under the Directive in order to comply with Articles 7 (respect for private and family life), 8 (protection of personal data) and 47 (right to an effective remedy and to a fair trial) under the Charter. Having considered his complaint, the Data Protection Commissioner, Helen Dixon, considered that his complaint was well-founded and she brought proceedings before the Irish High Court for the purpose of making a reference to the CJEU to adjudicate on the validity of the SCC Commission decisions. As Mr. Schrems’ complaint related to the transfer of his data by Facebook Ireland Limited to Facebook in the US, she joined Facebook Ireland Limited and Mr. Schrems as defendants. A large number of persons applied to be joined as amici curiae and the High Court joined four parties as amici curiae to the proceedings including the United States of America.

After a five week oral hearing which included evidence from five experts on US law concerning the nature and extent of the level of protection for personal data and remedies for infringements in the US, the High Court (Costello J.) formed the view that there appeared to be well-founded concerns that there is an absence of an effective remedy in US law compatible with the requirements of Article 47 of the Charter for an EU citizen whose data are transferred to the US where the data may be at risk of being accessed and processed by US State agencies for national security purposes in a manner incompatible with Articles 7 and 8 of the Charter. She formed the view that the safeguards purportedly constituted by the SCCs do not appear to address the well-founded objection that there is an absence of a remedy in the US compatible with Article 47 of the Charter, particularly having regard to the standing requirements under US constitutional law.

Costello J. accepted the arguments of the Data Protection Commissioner that she had jurisdiction to make a preliminary ruling on the validity of the SCC decisions; that the court was not obliged to reject the application by reason of the adoption by the Commission of another mechanism for data transfer known as the EU – US Privacy Shield decision; that the Data Protection Commissioner’s well-founded concerns as to the absence of an effective remedy in US law compatible with the requirements of EU law and the Charter were not eliminated by the introduction of the Privacy Shield decision; that an issue also arose as to whether the exceptional discretionary power conferred on the Data Protection Commissioner by Article 28 of the Directive to suspend or ban the transfer of data to a data importer in a third country on the basis of the legal regime in that third country is sufficient to secure the validity of the SCC decisions.

In her judgment she pointed out that “[t]he case raises issues of very major, indeed fundamental, concern to millions of people within the European Union and beyond. First, it is relevant to the data protection rights of millions of residents of the European Union. Secondly, it has implications for billions of euro worth of trade between the EU and the US and, potentially, the EU and other non-EU countries.  It also has potentially extremely significant implications for the safety and security of residents within the European Union.”

Following the delivery of the High Court’s decision on the 3rd of October 2017, the Court is shortly due to hear submissions on the form of questions to be referred to the CJEU.

Michael M. Collins SC acted for the Data Protection Commissioner.

Scotch Whisky Association v The Lord Advocate and The Advocate General for Scotland [2017] UKSC 76

The Supreme Court has decided that Scottish legislation which will introduce a minimum price per unit of alcohol does not breach EU free movement of goods law. Any retail seller of alcohol in Scotland will be required to ensure that an alcohol product must not be sold at a price below a statutorily determined minimum price per unit of alcohol. The current proposal is that it should be 50 pence per unit of alcohol.

The proceedings were brought by The Scotch Whisky Association and two Belgian organisations representing spirits and wine exporters. The Scottish and UK Governments were the respondents: the Lord Advocate representing the Scottish Ministers and the Advocate General for Scotland representing the United Kingdom government. The appeal turned on whether the restriction on inter-state trade created by the proposed legislation was justified on public health grounds.

The case discusses an important issue concerning the EU proportionality principle, namely whether a reviewing court should apply a separate “third stage” of balancing of interests (or “proportionality stricto sensu”) in addition to the first two limbs of “suitability” and “necessity”. The Supreme Court held that the Court of Justice had deliberately rejected the idea of a separate third stage, contrary to the view of Advocate General Bot.

The Supreme Court also considered the consequences of the Court of Justice’s ruling in Scotch Whisky on the “time of assessment” in a proportionality case. The Supreme Court considered that as the petitioners were allowed to rely on material not before the decision-maker, it would seem artificial, and even unfair not to allow the respondents to refine the “legitimate aims” previously advanced by reference to new material.

Ultimately, the issue in this case turned on the “necessity” limb of proportionality, and specifically the argument that taxation could achieve the same level of health protection but with less disruption to trade. The Supreme Court held that the court below had been entitled to find that taxation was unable to target the specific group of the drinking population the measure was aimed at as effectively as minimum pricing. It was reasonable to conclude on the basis of the evidence (including new evidence) available that there was no less restrictive measure which would achieve the state’s desired level of health protection equally effectively.

Ian Rogers QC advised various UK Government departments in the proceedings in the Supreme Court, Court of Justice of the European Union and Scottish courts. The Advocate General for Scotland (representing the UK Government) was one of the two respondents to the proceedings.The Supreme Court judgment can be found here.

COMPETITION AND MARKETS AUTHORITY v CONCORDIA INTERNATIONAL RX (UK) LIMITED

On 5 October 2017, the CMA was granted ex parte a warrant under section 28 Competition Act 1998 to search the premises of the pharmaceutical company, Concordia. The basis upon which the warrant was obtained was that there was a risk that documents relevant to an investigation would be destroyed or concealed (section 28(1)(b)(ii)).

The warrant was in relation to an investigation concerning inter alia the drug hydrocortisone. The CMA had been investigating Concordia in respect of an alleged anti-competitive agreement in respect of this drug since April 2016 and had previously served section 26 Notices on Concordia to obtain information. Concordia sought to have the warrant discharged on the basis that there could be no reasonable grounds for suspecting that any documents relating to the investigation would be destroyed or concealed.

The warrant was obtained in part by relying on information which the CMA said was protected by public interest immunity. The issue arose as to whether the CMA could rely on that material for the purposes of Concordia’s challenge to the warrant but not disclose it to Concordia. The CMA relied on authorities relating to criminal warrants which it said supported that approach.

Mr Justice Marcus Smith ruled that such a process would be unfair to Concordia and “would constitute the sort of “closed material” process that (according to the Supreme Court in Al Rawi) ought only to be sanctioned by Parliament.” He distinguished the approach taken to criminal warrants. Consequently, in so far as material was upheld as being subject to PII, it could not be relied on by the CMA at the inter partes hearing for the variation of the warrant. The Judge, agreeing with the CMA, also rejected a suggestion by Concordia that the CMA place the PII material into a confidential ring of external lawyers only.

The Judge made recommendations for the procedure to be adopted when the CMA applies ex parte for a warrant under section 28 and wishes to rely on PII material.

The Judge gave the CMA permission to appeal his decision to the Court of Appeal.

Mark Brealey QC acted for the Defendant, Rob Williams acted for the Claimant.

To read the judgment please click here.

Littlewoods Ltd and others v HMRC [2017] UKSC 70

The Supreme Court has handed down judgment in Littlewoods Ltd v HMRC [2017] UKSC 70. The Court has ruled that those claiming refunds of overpaid VAT from HMRC do not have a right to compound interest either under EU law or under the common law; and that interest on such refunds is limited to statutory, simple interest under section 78 of the Value Added Tax Act 1994. The Court held (upholding Vos J and the Court of Appeal, and dismissing Littlewoods’ appeal) that sections 80 and 78 of the 1994 Act exclude any common law cause of action in respect of the time or use value of overpaid VAT (whether compound interest or otherwise). The Supreme Court further held (reversing Henderson J and the Court of Appeal, and allowing HMRC’s appeal) that EU law–in particular, the principle of effectivenessdid not give Littlewoods any EU law right to compound interest; and that the UK’s regime, providing for simple interest did not deprive Littlewoods of “an adequate indemnity for the loss occasioned by undue payment” of the tax. Consequently, the High Court’s 2014 judgments in favour of Littlewoods, totalling approximately £1.25 billion, will be set aside. The Court’s judgment also puts paid to approximately 5,000 other claims, estimated at £17 billion, for compound interest on overpaid VAT. This is an important judgment, not just because of the very large sums involved and number of taxpayers affected, but also for the Supreme Court’s reasoning on the relationship between EU law rights and national law remedies and its conclusion that EU law had not harmonised and did not dictate the content of national law interest remedies.

Andrew Macnab and Peter Mantle of Monckton Chambers (led by Jonathan Swift QC of 11 King’s Bench Walk) represented HMRC.

The judgment can be found here.

The CMA announced yesterday that it has accepted commitments by the Showmen’s Guild of Great Britain, the main association for travelling showmen who earn their living at funfairs. The announcement closes, without the imposition of any penalty, an investigation by the CMA into the Guild’s rules that led to the issue of a Statement of Objections in December 2016 (which indicated that the CMA was at that stage minded to impose penalties).  The commitments offered, and the reasons why the CMA accepted them, are set out here: in essence, the CMA agreed that its concerns were sufficiently addressed by amendments to the Guild’s rules that: (a) made it easier for new members to join the Guild; (b) removed a number of restrictions on the participation of non-members at fairs; and (c) changed the Guild’s system of “established rights” held by its members to grounds at fairs so as to make transfer of such rights easier, and for landowners to make improvements to fairs on their land.  The rule changes now have to be approved by the Guild’s members.

The Guild was represented during the CMA inquiry by George Peretz QC, Michael Armitage and Imogen Proud.

The European Court of Justice has decided this morning that contract bridge is not a sport. Therefore, entry fees to bridge tournaments are not exempt from VAT. Although bridge involves intellectual effort and skill, the Court held that the term “sport” referred to an activity characterised by a “not negligible” physical element. The Court recognised that bridge required logic, memory and lateral thinking and benefitted the mental and physical health of players. But the Court disagreed with Advocate General Szpunar that the health benefits of playing bridge indicated that bridge should fall within the VAT exemption for sports.

Raymond Hill represented the United Kingdom before the European Court in successfully arguing that bridge was not a sport.

 

Brendan McGurk has successfully defended Italy and Benetton Lock, Marco Fuser, following his citing for an alleged bite on Francois Louw during the European Champions Cup clash between Bath and Benetton on 14 October 2017. Louw was also cited in the same incident for making contact with Fuser’s eye. Following a hearing before the EPCR Disciplinary Panel, the case brought against Fuser was dismissed.

The Competition Appeal Tribunal has dismissed an appeal by Balmoral Tanks against the CMA’s decision finding that Balmoral and its competitors infringed competition law by exchanging commercially sensitive information with respect to galvanised steel tanks.  The CMA found that an information exchange at a single meeting in July 2012 sufficed to establish the infringement.

The CMA had covertly video recorded the meeting as part of its criminal investigation into a seven year cartel between four suppliers of galvanised steel tanks. The CMA accepted that Balmoral was not part of that cartel but found that it had been guilty of a separate object infringement.

In its appeal, Balmoral argued that it attended the July 2012 meeting with the legitimate purpose of informing its competitors that it did not want to be involved in the cartel. It argued that it could not be criticised merely for having received inducements to join the cartel.  It also argued that a single meeting did not suffice to establish the infringement, that no sensitive information was exchanged at that meeting and that no fine should have been imposed given Balmoral’s positive impact on the market.

The Tribunal has fully upheld the CMA’s decision. In particular, it accepts the CMA’s findings that Balmoral was actively involved in an unlawful information exchange of sensitive information which reduced uncertainty on the market. The Tribunal confirms that, in the context of this market, the exchange of pricing information at a single meeting was unlawful.  The judgment carries out a detailed review of the CMA’s findings regarding the nature of the information exchanged between the parties and why that exchange constituted a “by object” restriction of competition.

The Tribunal stated that “It is because executives meeting together for a legitimate industry purpose must be firmly discouraged from giving into any temptation they may face to slip into illegitimate discussion of prices that the case law defines the concept of concerted practice in price exchanges so broadly.”

The Tribunal fully upheld the fine of £130,000 imposed on Balmoral, dismissing arguments that Balmoral should not have been fined having regard to the CMA’s approach to the cartelists, and that any fine imposed should have been lower.

The judgment can be found here.

Rob Williams and James Bourke acted for the CMA.