Author Archives: James

The British Banking Sector : From PPI to Frankfurt

The British banking sector has long trumpeted the values and virtues of being part of the EU.

Setting aside the banking, bureaucracy, and regulatory red tape set out endlessly by Brussels, one very significant point was that the big banks could have their regional of global headquarters in the City of London, and from there have their subsidiaries throughout Europe. As such, setting up a regional, international headquarters in the City has for a very long a time been very attractive to large, multinational banks. This in turn meant that the large scale financial activity in the City of London brought great benefits to the UK banking sector, and the UK economy overall. This is part of the banking concept of “passporting.” Essentially, a financial institution or bank can set up in the UK, and be able to serve clients across the European Union, and not need to get further banking licences.

Now that Prime Minister Theresa May has stated her intention to trigger Article 50 just before April – that lucrative situation for the City of London is under threat.

It was always a concern that banks might consider relocating to other countries in Europe following Brexit, taking millions (billions, maybe?) of pounds of financial revenue with them. With such a relocation, the valuable passporting rights would be preserved throughout the rest of the EU – and would erode at London’s status as a global financial hub.

Fuelling such uncertainty and potential economic damage, in October 2016 head of the Deutsch Bundesbank (German Central Bank) Jens Weidman stated that that would indeed be the case in the event of a “hard Brexit.” In an interview with the Guardian, Herr Weidmann stated that those passporting rights were “tied to the single market and would automatically cease to apply if Great Britain is no longer at least part of the European Economic Area.” He hinted that banks would probably seek to relocate to other financial hubs in the EU, stating that as “a significant financial centre and the seat of important regulatory and supervisory bodies, Frankfurt is attractive and will welcome newcomers. But I don’t expect a mass exodus from London to Frankfurt.”

Frankfurt: The New Square Mile?

Frankfurt: The New Square Mile?

With the Brexit negotiations now starting, passporting is one of a very long list of subjects sensitive to both sides that will be under detailed discussion. For the UK banking sector, it is but the latest in a long series of issues over the last decade or so.

The turn of the millennium saw a new and aggressive era in banking. This ultimately ended with the crash of 2007/8. The impact of that era is still being felt today, and has seen already seen the demise of one financial regulator, the Financial Standards Authority. Its successor since 2013 has been the Financial Conduct Authority (FCA). The FCA has been kept very busy with historic cases of excesses, and has imposed record and very public fines and sanctions (such as against the Swinton insurance group) as a very visible deterrent to other financial institutions. However, in setting new rules, and in being an effective regulator for current issues, many consider that the FCA lacks teeth. Indeed, few bankers have actually been imprisoned for effectively breaking the law, and committing financial crimes.

There is no doubt that past misdemeanours have been exposed, with financial institutions being called to account (the Libor or rate swap scandal being a good example). Indeed, one of the greatest scandals was the PPI scandal. Millions were mis sold PPI insurance throughout the 1990’s and early millennium. Banks have been fined, and ordered to make repayments and compensation payments to those affected. In 2017, PPI repayments are still being made, claims and cases are still ongoing, with the major banks setting aside even more money to settle the scandal. The total bill for mis sold PPI is set to be well in excess of £20 billion – probably nearer £30 billion.

Mis sold PPI and Libor are very much scandals of the past, though. Those past excesses are being settled and resolved now. The current issue for the UK banking sector is not one of its own making – passporting and Brexit.

It is no secret that many big UK based banks and international financial companies are considering relocating from the UK. Names ranging from HSBC to Deutsche Bank have all previously made noises that they could relocate depending on the result of Brexit negotiations. Although this will not cost them anywhere near as much as the Libor and PPI fines, the price for relocating will be hefty – as will the losses to the UK economy.

Times change – but the banking sector seemingly does not. Ten years ago, the banking sector was manipulating customers to ultimately charge them more money. Today, the banks will still (potentially) cost the British public money; the only difference is that this time this will be due to lost revenue at overall detriment to the economy, and not due to the excesses of bankers.

It is only financially sensible for the big banks to seek a financial and competitive advantage by relocating to take advantage of passporting rights. That is also the responsible thing to do in line with their fiduciary and shareholder responsibilities. However, such big banks should also consider the impact of any relocation upon the UK financial sector and economy overall.

Many, however, remain optimistic that such a relocation is unlikely. As the Brexit negotiations start, it is to be hoped that that is indeed the case.

UK Lawyers: “Don’t put Spotlight on Dubai”

DubaiUK lawyers have warned against putting the spotlight on Dubai as an international centre of arbitration. The comments come ahead of a seminar due to take place next month with the intention of promoting Dubai as a place to settle legal disputes.

The seminar is being developed with the involvement of the British Irish Commercial Bar Association (BICBA), cooperating with the Dubai International Arbitration Centre (DIAC) and the University of Dubai. David Casement QC, the chair of the BICBA, is also among the event’s speakers. The goal of the event is to promote Dubai and the United Arab Emirates (UAE) as a whole as a “world centre in arbitration,” as well as to host discussions and generate proposals on how this position can be strengthened and how the Dubai legal system could develop in the future.

However, a number of legal professionals in the UK, including both solicitors and barristers, have criticised the aim of promoting Dubai as an international centre of justice. They say that there are serious problems with the legal system of the UAE, and that this kind of spotlight should not be shone on the region until they are resolved.

Critics of the seminar and its message point out that the High Court in England and Wales has ruled against allowing individuals to be extradited from the UK to Dubai. The grounding for this decision and for their criticisms, they say, is that the Dubai justice system has a history of problems such as corruption, violations of human rights, and denying access to justice.

Much of the criticism has come from Detained in Dubai, which is based in the UK but specialises in the civil and criminal justice systems of the UAE. The organisation described the seminar as “fuelling propaganda that Dubai has an equivelently competent justice system.” A partner at the organisation, non-practising solicitor David Haigh, said “I have practised law in both the UK and the UAE but unfortunately, I myself have first-hand experience of the legal system in Dubai. I was wrongfully imprisoned, arbitrarily detained.”

Haigh continued: “At present, until the UAE judicial system undergoes significant reform, the DIAC can by no means, be considered a just, independent, safe or modern dispute resolution centre.”

Doughty Street Chambers barrister Ben Cooper was also critical, saying that he “would not recommend” the BICBA help to portray Dubai as a centre of dispute resolution. He went on to say that “The UAE needs to address and remedy judicial failings before it should be considered as a possible legal jurisdiction of choice.”

Employee Rights and Workplace Accidents

Accidents have the potential to happen in just about any workplace, and in some they are a definite and ever-present risk. Under the law, employees have some very strict rights relating to accidents, both in terms of protection from injury and in terms of what they can do and expect if an accident should occur.

Accident Books and Reporting

All but the smallest of employers are required to record all accidents, even minor ones, in an accident book. The relation of this to employee rights is twofold. Firstly, it ensures that there is a record of the accident for reference if it later results in the employee having to exercise their rights, for example by taking time off or claiming compensation. Secondly, this is arguably an employee right in itself; a right to have any accident recorded as possible future evidence.

For similar reasons, employers are also under an obligation to report all accidents. Every accident in the workplace must be reported by the employer to the relevant local authority’s department of Health and Safety. This duty is enshrined in regulation, specifically the Reporting of Injuries, Diseases and Dangerous Occurences Regulations or RIDDOR. It is the employer’s responsibility to make this report, though many workers prefer to make sure that their accidents have been reported properly.

Financial Rights

If you have to take time off because of an accident at work that has left you injured or sick, in most cases you will only have an automatic right to receive Statutory Sick Pay. Individual employers may have policies in place to provide additional pay to people who have to take time off because of accidents that have happened in the course of their work. You may also be able to negotiate an individual arrangement with your employer to receive additional pay since the injury was acquired through your work.

If you have suffered an accident at work and your employer was at fault, you will also have the legal right to claim compensation. Your employer was at fault if they were negligent in any way, such as not observing proper health and safety procedure or failing to take proper steps to mitigate specific dangers, and this was the cause of your accident. Financial compensation is designed to both make up for any financial loss incurred, for example by having to take time off work, as well as to compensate you for pain and distress caused by the injury.

Brexit Opponents Consider Legal Routes

BrexitOpponents of “Brexit” are considering legal steps they can take to try and prevent the UK’s exit from the EU. Lawyers and campaigners have been studying the situation to identify areas of the law through which the decision may be challenged.

The referendum has proved a decisive issue for the UK, and a vote in favour of leaving the EU by a majority of just 51.9% has left many opponents of Brexit unsatisfied. Many not only continue to believe that leaving the EU would be a mistake, but feel that, with the public still essentially split down the middle, the vote was too close to form the basis of such a major and long-term decision for the country’s future. Matters have not been helped by polls suggesting that over 1.1 million people may regret voting leave, either in light of things that have happened and information that has come to light since voting closed or because they used it as a protest vote.

Millions of people, an unprecedented number, have signed a petition for the government to repeat the referendum in hopes that the British public will be able to come to a more decisive conclusion one way or another. Others fear that this could just lead to a “neverendum” where vote after vote must be held before a vote that will be accepted can emerge.

Those who oppose either the entire concept of leaving the EU or the acceptance of such a narrow majority have begun looking at possible legal bases for either blocking the UK’s exit from the EU or delaying it for further consideration. Many of these possibilities are rooted in the fact that the referendum itself is not legally binding. A public vote is not part of the process for leaving the EU and under law is essentially an opinion poll, though the government added weight to it by pledging before polls opened to follow the result.

The actual legal mechanism for the UK to enact Brexit is by triggering Article 50 of the Lisbon Treaty, which gives a two-year timeframe for the country to negotiate its exit. Article 50 states that an EU member state may leave the Union “in accordance with its own constitutional requirements.” This has led some legal experts to raise questions about just what requirements are lawful in the UK constitution, with some claiming that the Prime Minister alone does not have the authority to invoke Article 50 as this would overturn the 1972 European Communities Act. Under this interpretation, the Prime Minister requires consent in the form of an act of parliament to leave the EU.

A number of legal experts have subscribed to this view. One of these is Lord Pannick QC, who says that the question of whether such consent should be given is a matter for parliament to decide.

New Software Solution Aims to Aid Legal Research

One of the harsh realities of legal work is the need to spend long, long hours researching past cases that may be relevant to current ones. Indeed, this requirement is one of the key reasons behind the long working hours and poor work/life balance that have come to almost define the role of a solicitor, especially in the City.

However, a new software solution is in development aimed specifically at helping the legal industry tackle this problem. The new tool aims to make the process of researching case law considerably faster and easier by making key information from relevant cases readily available through the intelligent handling of typed queries.

The tool is being developed by tech start-up Ross Intelligence. It is an artificial intelligence (AI) solution which aims to provide highly relevant results to user queries. This may sound like a specialist legal data base with a search function, but the developers of the software hope that using the most up-to-date developments in AI will make it something much more. Search queries can be entered in natural language, phrased in much the same way they would be addressed to a human colleague. Queries will, it is hoped, be analysed intelligently to provide information that is directly relevant, and it is intended that the system will be able to adequately deal with questions that are quite specific. It is based on the IBM Watson platform, an advanced system that uses natural language and machine learning principles to accurately identify relevant information in large and unstructured quantities of data.

According to Andrew Arruda, Ross Intelligence chief executive and co-founder, “Lawyers may know the law and where it stands on a particular issue today but many cases come out and it can change that so they’re always looking into the past to build the future.”

Arruda continued: “The issue with that is there’s just millions of cases. What our system is able to do is keep up to track with all these changes in the law so at a glance a lawyer can help their clients really, really efficiently.”

Arruda claims that lawyers using the system stand to cut their working time by up to 30%. This claim, he insists, is based on an accurate assessment of the amount of time that they currently spend researching through traditional databases, and how this compares to the amount of time it would take to perform equivalent research with his company’s system.

Ross Intelligence is based in the US, and is currently developing its AI system to answer queries relating to US case history. If the tool proves successful in delivering on its promises and is taken up by the legal industry in the USA, however, it seems likely that variants of the system or similar solutions will be created to help lawyers research case history in other countries.

Google’s Controversial UK Tax Arrangements Ruled Legal

Google LogoHM Revenue and Customs (HMRC) has reportedly ruled that the highly controversial and very complex tax arrangements are within the boundaries of UK law. The ruling will see the multinational firm only required to pay a fraction of the tax that would otherwise have been due.

The ruling, which followed an investigation over the course of six years and has not previously been published, means that the American search giant is not required to pay tax on proceeds from the sale of advertising in the UK. This decision clears up some of the confusion around the fact that Google is only paying an additional £130 million in tax for the past ten years, which represents a very small percentage of its actual UK-generated earnings.

While it has been decided that the company’s tax practices are legal, many critics still label them tax avoidance and the agreement reached between Google and HMRC has been heavily criticised. The arrangement means that Google pays an effective tax rate of only 3% on the millions of pounds of income it generates in the UK.

The main tactic used to minimise Google’s tax bill involves taking steps to register the bulk of its UK profits in Ireland. A separate company based in Ireland carries out all of Google UK’s operations. The company works exclusively for Google, but is legally a separate business. They carry out work on behalf of Google UK in return for a fee. As a result, from a legal viewpoint only this fee qualifies as profit generated in the UK, and is therefore kept as low as possible. All other profits, which amount to millions, are counted as profits generated in Ireland where the business is based.

A number of other multinational businesses use similar arrangements to register their UK profits as occurring overseas in jurisdictions with lower rates of tax. The ruling that Google is operating within the boundaries of the law could therefore have important implications when it comes to assessing the legality of other major companies engaging in alleged tax avoidance. Technology giant Apple and major online retailer Amazon are among the more prominent examples of companies employing similar tactics.

The decision that this practice is currently legal has also led to increased pressure on the government to take steps to close loopholes and prevent profits from multinational businesses being diverted abroad in order to avoid paying tax in the UK on income that has been generated here.

Legal Funding For Personal Injury Still Available – Despite Legal Reform

“The removal of legal aid will start to undermine the rule of law. People will feel like the government isn’t giving them access to justice and that will either lead to frustration and lack of confidence in the system, or it will lead to people taking the law into their own hands.”

 

Such was the opinion of Lord Neuberger, the President of the Supreme Court, prior to the 2013 enactment of the much maligned and criticised “Jackson Reforms,” enshrined mostly in the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO).

In the post- LASPO world, civil litigation has become increasingly of concern for the legal sector, and civil rights campaigners. A key part of LASPO was to reduce legal aid funding. Consequently, a great majority of people are now, quite simply, unable to take their cases to court. The cost of going to court, of obtaining legal representation, in most cases now has to be met by the parties concerned. With no recourse to legal aid, more and more are simply unable to obtain justice.

The secondary impact of that has been to radically reform the legal sector in other ways. Small law firms have had great struggles in a post LASPO world, as fewer civil litigants are coming to them. Many law firms have either gone under, merged, or diversified. For both litigants and lawyers alike, the post LASPO legal landscape has been greatly damaging. Indeed, a 2014 Ministry of Justice select committee investigation was damning in the scale of the damage done to the provisions of civil justice.

However, LASPO has not been a total disaster across the board; some sectors have remained relatively unscathed, or have suffered little, due to the Jackson Reforms. Immigration is one such area. Although only specific immigration cases can now be handled under a legal aid certificate, many immigration matters (predominantly asylum) are still eligible for public funding. Another such area of civil law is personal injury, and certain areas of employment law.

However, personal injury (PI) has for a long time funded itself in many cases outside the provisions of legal aid. Since 1998, until 2013, the majority of PI cases were funded under a Conditional Fee Agreement (CFA). With a CFA, the lawyers and court costs are only paid after the case is settled, and on the understanding that the litigant will win their case. If the litigant does not win, then they themselves do not pay their legal costs. The same year that LASPO was enacted saw the CFA structure alter, but although changed, the essential details remained the same. Consequently, PI is one area of civil law that is still very much accessible for the average person regardless of financial means, due to CFA’s.

Personal injuries can often arise as the result of accidents at work. Despite the best safety procedures, and strict health and safety guidelines, and regular inspections, it is only too easy to have an accident at work- often with a long lasting medical impact. Employment law itself has had varied fortunes following LASPO. Discrimination cases are still eligible for public funding- with many discrimination cases often starting in the workplace. Many workplace issues and disputes now end up in arbitration or workplace mediation, or dealt with by the relevant Trade Unions, prior to an Employment Tribunal or civil court, and it is before such mediation that most settlements are actually arrived at. As such, the need to go to court regarding an employment dispute has in many instances fallen. Accidents at work, and matters of employer liability in that area, still remain one of the greatest sources of workplace related litigation. Accidents at work, though, are often still handled under CFA’s, being as they are PI cases.

As such, in some areas of civil law (such as employment law, immigration, and PI), litigants are still able to get access to justice, if only via mediation or alternative funding means. However, in a great many civil cases (notably family), the Jackson reforms have ushered in an era of limited access to justice.

That limited access to justice, criticised roundly by many in all areas of the legal sector, is set to stay for the time being. Law firms and lawyers will suffer as fewer seek legal representation due to the cots involved. However, it is the would be litigant who will suffer the most, as they are driven away from seeking their absolute right of a legal remedy to a civil dispute, in most cases.

High Court Denies Disclosure for Thai Death Penalty Case

ConfidentialityA high court judge has ruled that a UK police report should not be made available for a case in Thailand that could result in two Burmese nationals receiving the death penalty. Mr Justice Green described his “very considerable unease” in passing this judgement, but reached the decision on the basis of the UK government’s policy of not assisting overseas authorities with death penalty cases.

The two men on trial are accused of murdering two British tourists, Hannah Witheridge and David Miller, last year. They confessed their alleged involvement in the murders to Thai police, but have since claimed that they only made these confessions as a result of being subjected to torture.

The Metropolitan Police, acting on a request from the Prime Minister, examined the case and produced a report. This report was intended to be used for briefing the families of the victims rather than as an investigatory tool.

Nonetheless, the defendants requested access to the report. They requested that they be provided with information pertaining to themselves under the Data Protection Act, as well as seeking access on the grounds that the report could prove useful to their defence.

The police denied the two men access on the grounds of public interest, and the application made its way to the High Court in the case of Zaw Lin and Wai Phyo v Commissioner of Police for the Metropolis, where Mr Justice Green passed judgement upholding the police’s refusal to release the report.

One of the conditions under which Thailand cooperated with the report was a strict agreement that the report be kept confidential. Furthermore, the judgement points out that the Metropolitan Police’s involvement with the case was not an investigatory one, but rather limited to “observing and recording the investigation” which was being carried out by their Thai counterparts.

Green described how the case required careful balancing of the interests of both police and claimants, with valid and important considerations on both sides. The claimants submitted that the report could potentially have a real bearing on their defence, and the fact that the case carried a possible death penalty should override many other considerations. The police, meanwhile, claimed that going against confidentiality agreements could have “a very serious adverse effect” upon the way that police forces work together across national borders.

Ultimately the judge ruled that “there is nothing in the personal data which would be of any real value to the claimants,” and that this meant that the interests of the police outweighed those of the claimants in this situation. Nonetheless, he described his unease in reaching the judgement, especially as he was required to work out for himself how the defence might be structured and evidence tendered in order to accurately gauge how useful the document would be. “This has not been a comfortable process,” he said.

Same-Sex Marriage Legalised Across the US

US Marriage EqualityThe US Supreme Court has ruled that US citizens have a legal right to marry people of the same gender. The decision, which comes just a month after Ireland introduced same-sex marriage through a referendum, is valid across all 50 states, meaning that marriage has now been legalised for same-sex couples on a nationwide basis.

The majority of US states have already legalised same-sex marriage of their own accord. However, 14 states continued to disallow the marriage of gay couples. However, the Supreme Court decision means that those 14 states will no longer be able to enforce such a ban, though it has not yet been made clear how soon marriage licenses for same sex couples will start to be issued in these states.

The Supreme Court made the ruling in relation to the case of Ohio resident Jim Obergefell, who had previously not been legally recognised as his deceased husband’s widower. Speaking outside the court after the ruling, Obergefell told the press: “It’s my hope that gay marriage will soon be a thing of the past, and from this day forward it will simply be ‘marriage.’”

According to Justice Anthony Kennedy, the plaintiffs in this case were simply asking “for equal dignity in the eyes of the law,” and this is their right under the US constitution. US President Barack Obama, meanwhile, said that the Supreme Court’s ruling was a “victory for America.”

“When all Americans are treated as equal,” Obama continued, “we are all more free.”

The ruling has put an end to legal battles that have been raging in the US for a number of years on both state and national levels. One eccentric California lawyer even went so far as to propose a bill that would allow homosexuals to be “put to death by bullets to the head or by any other convenient method,” though naturally this bill did not get far.

The ruling’s announcement prompted loud cheering in the streets outside the court, where hundreds had been gathered to await the news. In Georgia, one of the states that had previously banned the same-sex marriage, couples began lining up to begin exercising their newfound rights within minutes. Social media, too, was abuzz with celebration and general discussion, with the hashtags #MarriageEquality and #LoveWins trending on Facebook and Twitter respectively.

Those who had opposed the legalisation of same sex marriage, particularly America’s conservative Christian groups, were disappointed by the court’s ruling. Presidential candidate for the Republican Party, former governor of Arkansas, and outspoken opponent of gay marriage Mike Huckabee said: “We must resist and reject judicial tyranny, not retreat.”

US Prosecutors Level Multiple Accusations at FIFA Officials

As investigations into the scandal in which international football governing body FIFA has found itself embroiled, US prosecutors have levelled a list of allegations. Several of the organisation’s officials have, the prosecutors claim, been involved with fraud and racketeering for more than two decades.

Prosecutors also claim that these officials are guilty of laundering money, with tens of millions of dollars involved over the course of 24 years. Overall, 14 individuals have been indicted, seven of which are being held in Zurich since Wednesday. One of the seven in Zurich is Vice President of FIFA Jeffrey Webb. Swiss authorities report that six of these seven individuals are currently contesting extradition for trial in the US.

Overall, the US prosecutors claim to have discovered around a dozen different schemes that represent the kind of activities they allege took place. One such scheme, they say, resulted in the decision to award South Africa the honour of hosting the 2010 World Cup.

Most prominently, the indicted officials are accused of taking bribes. Since 1991, it is claimed that they collectively accepted bribes and kickbacks with a total value of over US$150 million (£97 million). According to Attorney General Loretta Lynch, these officials “corrupted the business of worldwide soccer to serve their interests and to enrich themselves.”

Summarising the accusations against the officials, Lynch said that they had “used their positions to solicit bribes,” and they had done so “over and over, year after year, tournament after tournament.”

Sepp Blatter, the president of FIFA, is not one of those on the receiving end of the allegations. In a statement, Blatter insisted that corrupt officials would be booted out of the organisation. 11 of the 14 people involved in the recent allegations from US prosecutors, including all of those currently held in Zurich, have been given a “swift and immediate provisional ban” from any activities relating to professional football.

The organisation is due to hold its presidential election this Friday, in which Blatter is the favourite candidate. Should he be successful, it will be Blatter’s fifth term as FIFA president. UEFA, the European football body, has said that this election should be postponed, and it is considering a boycott of proceedings. Currently, however, FIFA insists that its presidential election is to go ahead on Friday as planned.

As well as accepting bribes, including bribes that influenced the decision of where major tournaments would take place, officials are accused of organised racketeering, obtaining money through fraud, and money laundering.