Incident at the Bahrain Embassy in London

The following is a comment I provided to a journalist at Channel 4 News who called to enquire about examples of the Police entering diplomatic and consular premises to save life in the aftermath of an incident which took place at the Bahrain Embassy in London. The incident was unprecedented on UK soil. Unlike the Libyan embassy incident which resulted in the death of PC Yvonne Fletcher, (see, http://newsite.diplomaticlawguide.com/ [articles page]) the Police were able to enter and intervene before murder was committed. Staff in the embassy were apparently and allegedly about to throw a protestor off the roof when the police forced entry into the embassy. The entry was made without the prior consent of the head of the mission.

See: https://www.channel4.com/news/police-break-down-door-of-bahrain-embassy-in-uk-after-roof-protester-threatened

(Link to the story provided 09.08.2019 by ITV News)

Further to your enquiry, Article 22 of the Vienna Conventions states, 

‘1.    The premises of the mission shall be inviolable. The agents of the receiving State may not enter them, except with the consent of the head of the mission.

2.     The receiving State is under a special duty to take all appropriate steps to protect the premises of the mission against any intrusion or damage and to prevent any disturbance of the peace of the mission or impairment of its dignity.

3.     The premises of the mission, their furnishings and other property thereon and the means of transport of the mission shall be immune from search, requisition, attachment or execution.’ 

An embassy is therefore prima facie immune from entry by the Police under any circumstances, unless the Head of the Mission has granted his consent, or the status of the premises has been removed, see paragraph 8.11 of Satow’s Diplomatic Practice (6th ed) by Sir Ivor Roberts (attached). 

However, under paragraph 2 of Article 22 of the Vienna Convention, the receiving state is under a duty to ‘take all appropriate steps to protect the premises of the mission against any … impairment of its dignity.’ Therefore, in my opinion, if the Police judge that by throwing a protester off the roof (and possibly to his death), the dignity of the Bahrain embassy will be impaired, they may enter in order to prevent that act by removing the protester from the premises (i.e. to save life as violence by embassy staff would otherwise impair the dignity of the premises). The same principle presumptively applies to the death of Jamal Khashoggi in the consulate of Saudi Arabia in Ankarra, i.e. had the authorities been able to prevent the murder of this journalist.

BREXIT Citation in Whitaker’s Almanack

‘But hanging over the future of the art market – as with the rest of the UK – is the cloud of Brexit. Analysts are (still) clamouring to figure out what the impact of the UK leaving the EU will be on the art world. Barrister Carl Islam, among many others, was keen to point out that Brexit will lead to an increased regulatory burden and transaction costs on all sales of art. Pontus Silfverstolpe of search service Barnebys highlighted that leaving the customs union would drastically impact the way that we currently, and freely, sell and move art around the EU – in a wholly negative way.’

Whitaker’s Almanack – Art page by Eddy Frankel

See, www.whitakersalmanack.com/?id=-119362

Mr Frankel concluded,

‘The impact of Brexit is not some faraway thing, either: it is already being felt. A general decline in the global art market in 2016 may have masked the impact of the referendum, but there was nothing of the sort to hide behind this year. While UK art exports dropped 2.2 per cent to £4.8bn in 2017, imports slumped 21 per cent to £1.8bn. A weak pound played a large role in that, but general reluctance in Europe (the UK’s most regular art trading partner) to send art and antiques over the channel accounts for the rest. Either way, the potential future impact of Brexit has again left the UK art market fearful for another year.The big headline to take from all of this is that even if the auction world looks to be doing well, it is so reliant on the top end of the market that its future is shrouded in worrying uncertainty – combine that with the all-encompassing fear of a Brexit future and you have a recipe for serious uneasiness.’

Leading Brexit politicians argue that by freeing the UK art market from the shackles of ARR through post-BREXIT reform, the overall volume of art transactions in the UK will increase swelling the coffers of the treasury to fund public services. In other words, that BREXIT is an opportunity. Based upon the facts and law set out below, I conclude that the opposite will happen. In other words, that the volume of transactions executed in London will go down and not up.

My new book. the ‘Contentious Trusts Handbook’ also contains a practice note contributed by the Art Historian Pandora Mather-Lees about Trustees’ Duties in relation to art assets.

The impact of BREXIT on the UK art market

By Carl Islam

·       Introduction

·       Economic analysis

·       Artist’s Resale Right (‘ARR’)

Introduction

It is an economic fallacy to suppose that by freeing the UK art market from the shackles of ARR through post-BREXIT reform, that the overall volume of art transactions in the UK will increase swelling the coffers of the treasury to fund public services.

Based upon the expert sectoral market analysis and economic evidence referred to below, it is obvious that the opposite is likely to result, because BREXIT will result in an increased regulatory burden and higher EU cross-border transaction costs. In any event transformation cannot occur during a transition period, and politically ARR is unlikely to be high on the political agenda of whichever party or coalition is in power when BREXIT is implemented.

Liberalisation of Britain’s international Trade market in art and antiquities also overlooks the policy rationale underlying the Artist’s Resale Right Regulations 2006 (the ‘Regulations’) (outlined toward the end of the post), which is to give artists an on-going royalty stream from their work – in the same way as authors, musicians and film directors receive royalties from their work – and to enable artists to benefit from the resale of their artworks in the secondary market.

Economic analysis

‘In order for the UK to maintain its status in the global art market it must attract the highest priced art available for sale worldwide by providing the most favourable and most competitive conditions. Fine art (paintings, drawings, prints and sculpture) dominates the art market, accounting for 64% of all sales by value in the UK in 2016. The analysis of fine art sales at auction … demonstrates the significance of high value art sales to the British art market … In the UK, although 89% of the volume of all transactions in the market was accounted for by works priced at less than $50,000, they made up just 10% of the value of all sales. 90% of the overall value of the market was accounted for by individual sales of over $50,000. Works priced at over $1 million represented a 57% share, despite accounting for just under 1% of the number of individual transactions. In the market for works priced below $50,000, the US, UK and China accounted for a 67% share by value and 51% of all individual transactions. However in the market priced over $1 million, their combined share rose to 94% (by value) and 92% (by volume).For individual sales over $1 million, the UK accounted for a 22% share by value and 21% by volume of the world market. Within the EU as a whole, 81% of the number of transactions at this level in 2016 were in the UK and an 87% share by value. For individual works sold for over $10 million, the UK accounted for a 24% share by value and volume in 2016. Only 2% of the total value of auction sales over $10 million took place outside the top three markets, and just 3% of all individual transactions. Within the EU as whole, the UK accounted for 91% by value and 89% of all individual transactions above $10 million. Although HMRC’s official figures suggest that the bulk of the trade both in and out of the UK by value is with countries outside the EU, with just 16% of imports into the UK coming from within the EU, and just under 3% of exports destined to countries within the Single Market, this picture is incomplete. HMRC statistics understate the extent of intra-EU trade, because many EU sales under the VAT margin scheme are not necessarily recorded. Additional research carried out in the auction sector in 2016 showed that while the US was the most important trading partner by value, for some of the major auction houses, consignments from EU member states accounted for up to 25% of their UK sales on average, while up to 20% of their exports were destined to EU buyers. In the dealer sector also, the main dealer associations reported that on average between 10% and 22% of dealers’ purchases for subsequent sale were made in the EU, and EU purchasers accounted for 15% – 20% of all their sales. The art market contributes to the UK economy through taxes and levies paid to the Exchequer on sales, trade, incomes and profits. These amounted to an estimated £1.46 billion in 2016. It is worth noting that the fiscal contribution of the art trade has grown at more than double the rate of underlying sales since 2013: sales in the art market increased in value by 15% between 2013 and 2016, whereas the contribution made through taxation increased by 22%.

Sales in the art market are divided into those related to Fine art, which includes paintings, sculptures and works on paper (including watercolours, prints, drawings and photographs); and Decorative art, which includes furniture and decorations (in glass, wood, stone, ceramic, metal or other material), couture, jewellery, ephemera and textiles. The fine art sector dominates in terms of values and accounted for close to 64% of all sales by value in the UK in 2016. Given the significance of the fine art sector, the analysis in this section looks at the sectors that comprise the fine art market. While both dealer and auction data is used to research trends within the market and estimate total sales, precise analyses of prices and individual sales within sectors of the art market relies primarily on auction data, which provides the only large scale, global and publicly available information on individual transactions. The sectoral analysis that follows is based only on auction results In the UK fine art auction sector, Modern and Post War & Contemporary art accounted for a 75% share of sales by value in 2016, a percentage which reflects the global market as a whole. Considering both dealers and auctions, these two sectors represented just over half of the value of the UK art market in 2016. While Post War & Contemporary art remained the largest sector of the fine art market in the UK (with a share of 45%), after two years of growth from 2013 to 2015, sales declined significantly in 2016 (by 32%) to $976 million. Worldwide, sales in this sector also fell in 2016 by 18%. Sales in this sector in the UK are now 37% lower than their peak in 2008 of $1.6 billion. The UK’s share of global sales in the Post War & Contemporary sector fell 3% in 2016 to 14%, and has declined ten percentage points since its high point in 2008 of 24%. However, the UK is by far the largest Post War and Contemporary market in the EU, accounting for 65% of the value of sales and 24% of all transactions in 2016. Within the Post War & Contemporary art sector, sales of work of living artists at auction accounted for 20% of total sales in UK fine art auctions in 2016 (or 44% of the Post War and Contemporary sector by value). Sales in this sub-sector reached $434 million in 2016, a decline of 41% year-on-year (against a global decline of just 7%). The UK accounted for 19% global share of the value of living artists sales at auction in 2016, down from 30% in 2015. Within the EU, the UK accounted for the largest share of sales, with 72% by value and 30% by volume in 2016. European Old Masters dominate the Old Master sector in the UK, accounting for 94% of the value of Old Master sales in 2016, with only 6% of sales accounted for by non-European artists. The UK was the largest sales centre for European Old Master works at auction in 2016 with a share of 43% (up 4% year-on-year). Sales of European Old Masters increased in the UK by 16% in value in 2016, by far the best performing of the fine art sectors. The UK also has the highest share of sales in Europe in the sector, accounting for 71% of the value of EU sales of European Old Master works and 40% of number of lots sold.’

The British Art Market 2017 – An Economic Survey prepared for The British Art Market Federation by Arts Economics.

What impact will BREXIT have on art transactions in London?

In ‘Brexit: opportunity or threat for the Art industry?’ Macfarlanes LLP conclude: https://www.lexology.com/library/detail.aspx?g=8aec652d-d856-4708-abc1-ec73a6e9882b

‘It is likely that Brexit will make the movement of art between the UK and EU more burdensome and costly, but there are also certain opportunities for the UK art market to benefit from Brexit. However, such changes are unlikely to take effect for some time, particularly as the government has announced its proposal for a transitional / implementation period of “around two years” (which may ultimately be considerably longer than that). If that position can be agreed with the EU, the UK would, during such transitional period, continue to be bound by the existing structure of EU rules and regulations, which would include continued membership of the Customs Union and the Single Market.

This transitional / implementation period would be welcome in providing more much needed time to agree and implement a new trade agreement between the UK and the EU as well as to consider necessary amendments to domestic UK law and the UK’s future relations with other countries. We have in this note considered just a few potential impacts Brexit will have on the art market, but there are many others, including restitution claims for cultural property illegally removed between EU member states and the anti-money laundering regime, which will need to be considered once the position is clearer.’

A key opportunity is that Brexit gives the UK Government the opportunity to revisit the Artist’s Resale Right Regulations 2006, either through reform or abolition. The results of a survey of the PAIAM members on ARR are set out before the Appendix to the PAIAM note ‘What impact might Brexit have on the Artist’s Resale Right?’

The artists’ resale right (ARR) gives creators of original works of art (including paintings, engravings, sculpture and ceramics) a right to receive a royalty each time one of their artworks is sold on the secondary market in the UK by an art market professional (e.g. an auction house, gallery or dealer) for more than €1,000. There is an exception: no ARR is due if the seller acting in the course of business acquired the artwork directly from the artist less than 3 years before the sale and the sale price does not exceed €10,000.

ARR affects two major areas of the UK art market – Modern art and Post War & Contemporary.

While, as stated above, the UK is by the largest Post War and Contemporary market in the EU, accounting for 65% of the value of sales and 24% of all transactions in 2016, the UK’s share of global sales in the Post War & Contemporary sector fell 3% in 2016 to 14. The comparative advantage of abolishing ARR in order to compete with other markets outside the EU therefore needs to be weighed in the balance against the comparative costs and regulatory burden imposed by BREXIT on other art transactions.

Furthermore as the PAIAM Note states, 

‘Despite fears that the introduction of ARR would negatively impact the UK art market and divert sales to non-ARR markets, there has been no evidence to date to support this. In 2006 when ARR came into play in the UK, The European Fine Art Federation (TEFAF) published a report that valued the UK art market at over £8.5 billion.61 Although the global art market felt the impact of the recession – contracting 41% in 2009 from its peak in 2007, by 2010 the global art market was in recovery and rose by 51% to €43 billion.

In 2011, the European Commission’s report on ARR concluded that “no clear patterns can be established to link the loss of the EU’s share in the global market for Modern and Contemporary art with the harmonisation of provisions relating to the application of the resale right in the EU on 1 January 2006.”

Looking at the recent figures in TEFAF’s latest report, the global art market in 2014 has reached its highest ever-recorded level – a total value of €51 billion worldwide and a 7% year-on-year increase from the 2007 pre-recession level.

This growth trend was also evident in the UK which grew 17% in 2014, increased its own market share by 2% and was valued at €11.4 billion (approximately £9 billion and higher than its value in 2006 when ARR was introduced). In context, the ARR royalties distributed by DACS represent just 0.1% of the total market value in 2014. Auction sales are also on the rise. According to the report, public auction sales accounted for 48% of the overall market in 2014 with total sales exceeding the peak in the market in 2007 and have recovered value by 88% since their low point in 2009.

Post War and Contemporary art sales at auctions, which make up 48% of all global fine art sales followed by modern art at 28%, have grown to record levels as well. In 2014 Post War and Contemporary sales saw an all-time high of €5.9 billion globally, which has sharply risen since its post-crash low of €1.42 billion in 2009. 65 These two sectors are predominately responsible for ARR royalties with modern art covering artists born between 1875 and 1910 and Post War and Contemporary for artists born after 1910. In the UK Post War and Contemporary art sales represent €1.1 billion and modern art sales €753 million – both increasing on the previous year’s figures. 66

Compared to ARR royalties DACS collected in 2014, this represents just 0.64% of the Post War and Contemporary and Modern art sales in the UK. The royalties collected and distributed for ARR are only a minor fraction of a strong Contemporary and Modern art market. Furthermore, a survey of art dealers at the London Art Fair revealed that their biggest concerns are business rates and rents; nonetheless, 85% of those surveyed believed that the British Modern and Contemporary art market in 2016 would remain strong or fare better.67

Lastly, visual arts as part of the wider UK creative industries is immensely valuable to the UK economy. For every £1 of Gross Value Added (GVA) by the arts and culture industry, an additional £1.43 of GVA is generated in the wider UK economy.68 Overall, visual arts contribute US $3 billion GVA to the UK economy each year and employs more than 37,000 people.’

Artist’s Resale Right (‘ARR’)

In the UK, the Regulations created an intellectual property right (“resale right”) which was previously unknown to United Kingdom law.

The Regulations implemented Directive 2001/84/EC of the European Parliament and of the Council on the resale right for the benefit of the author of an original work of art (‘the Directive’).

The Directive entered into force on 13 October 2001 and required transposition into national law by 1 January 2006.

The Directive was an internal market measure adopted under Article 95 of the EC Treaty which required Member States to introduce a harmonized right for authors of an original work of art, and their successors in title, to benefit from a share of the proceeds when the artists’ works are resold on the art market.

The Regulations introduce a new right which has not previously existed in the UK, although it has existed in several other EU Member States. The Directive has also been extended to the European Economic Area.’

Article 3 of the Regulations states,

‘3.

(1) The author of a work in which copyright subsists shall, in accordance with these Regulations, have a right (“resale right”) to a royalty on any sale of the work which is a resale subsequent to the first transfer of ownership by the author (“resale royalty”).

(2) Resale right in a work shall continue to subsist so long as copyright subsists in the work.

(3) The royalty shall be an amount based on the sale price which is calculated in accordance with Schedule 1.

(4) The sale price is the price obtained for the sale, net of the tax payable on the sale, and converted into euro at the European Central Bank reference rate prevailing at the contract date.

(5) For the purposes of paragraph (1), “transfer of ownership by the author” includes in particular—

(a)      transmission of the work from the author by testamentary disposition, or in accordance with the rules of intestate succession;

(b)      disposal of the work by the author’s personal representatives for the purposes of the administration of his estate; and

(c)      disposal of the work by an official receiver (or, in Northern Ireland, the Official Receiver for Northern Ireland) or a trustee in bankruptcy, for the purposes of the realisation of the author’s estate.

Regulation 9(1) further provides ‘Subject to regulation 10(2), resale right in respect of a work is transmissible as personal or moveable property by testamentary disposition or in accordance with the rules of intestate succession; and it may be further so transmitted by any person into whose hands it passes.’

Resale right may be transmitted to:

1.     a natural person (and where it is transmitted to more than one person, it shall belong to them as owners in common); or

2.     a qualifying body.

Regulation 11 further provides that nothing in Regulation 9 prevents a resale right from being held, and exercised in respect of a sale, by any person acting as trustee for the person who would otherwise be entitled to exercise the right (“the beneficiary”), or from being transferred to such a trustee, or from the trustee to the beneficiary.

ARR entitles visual artists or their heirs to receive a royalty payment each time their work is sold on the secondary market in the UK through an auction house, gallery or dealer. The royalty is calculated as a percentage of the sale price, on a sliding scale ranging from 0.25 per cent to 4 per cent, subject to exemptions and a cap of €12,500 – see Schedule 1 of the Regulations.

The right lasts for as long as the copyright in the work subsists, which is normally for 70 years after the death of the artist. It may accordingly be inherited by the artist’s successors. Two points arise from the fact that resale right was previously unknown to United Kingdom law. The first is that, where an artist dies before the Regulations come into force, there will at that time have been no resale right to pass to a successor. In regulation 16, the Regulations accordingly make provision for which of the artist’s successors is to be regarded as holding resale right in such circumstances. The second point is that the Article 8(2) of the Directive provides a special derogation which is limited to those Member States which did not previously have resale right in their national law. Such a State may prevent the successors of a deceased artist from exercising their resale right until 1st January 2010. Regulation 17 takes advantage of that derogation.

Resale right is declared by the Directive to be inalienable, and accordingly may neither be assigned nor waived. This principle is implemented in regulations 7 and 8. The limited exceptions provided by regulation 7(3) (transfer between charities) and regulation 11 (transfers of legal title to trustees) are not in reality a derogation from that principle, as the beneficial ownership of resale right is not thereby affected.

The Regulations also impose certain nationality requirements on the enjoyment of resale right (see regulation 10) . Only an EEA national, or a national of a country specified in Schedule 2, may benefit from resale right. This reflects the fact that (leaving aside EEA nationals, who must be treated equally with United Kingdom nationals) resale right is a right enjoyed on the basis of reciprocity. Thus only the nationals of countries which make resale right available to EEA nationals may benefit from the rights given under the Directive. That principle is also applied to charitable bodies, which may benefit from resale right only where they are based in such a country.

Breach of Fiduciary Duty Claims

Hard copies of the March 2019 edition of Trusts & Trustees (published by Oxford University Press) containing my new article ‘Breach of Fiduciary Duty Claims and the Quiet Fiduciary Thesis’ are now being sent out to subscribers worldwide.

To read the article please click on the link to the article on the ‘Publications’ page at: https://newsite.carlislam.co.uk/publications

On the same page you will also find a link to my article published in 2018 about equitable compensation.

As a practising Barrister, I am currently acting in several cases involving breach of fiduciary duty, and am developing my practice to include minority shareholder disputes, and civil fraud.

My forthcoming book, the ‘Contentious Trusts Handbook’, which I have been commissioned to write by the Law Society for publication in October, will also include detailed chapters about: (i) breach of duty; (ii) equitable remedies; and (iii) equitable defences.

As a registered Public Access Barrister, I can be instructed directly by members of the public (including executors and trustees) without the involvement of a solicitor.

I exercise rights of audience before every court in England and Wales in relation to all proceedings and principally appear inwill, trust, and inheritance disputes in the Business and Property Courts and Central London County Court. I also appear as an advocate in the Court of Protection (see my article the ‘Advocate and the Expert in the Court of Protection’ co-authored with Dr Hugh Series of Oxford University which is also available on the Publications page of my website).

I formerly practised as a solicitor, and am authorised by the Bar Standards Board to conduct litigation. In an appropriate case, this permits me to carry out day to day case management activities (including the issue of a Claim Form in any court in England and Wales) which are reserved to Solicitors. This enables me to offer a one stop shop litigation and advocacy service to members of the public, from evaluation of the merits, evidence, and remedies, through to trial or settlement of the claim.

To enquire about instructing me please contact my Clerk at 1 Essex Court: 

Tel: 020 7936 3030 or 020 7832 1010.

Tel out of hours: 07721 866 858.

Email: clerks@1ec.co.uk

www.ihtbar.com 

‘Trusts & Trustees is the leading international journal on trust law and practice. The most significant source of information in its field, the journal is essential for all trusts practitioners and lawyers … The journal is ideal for international trust lawyers working in both private practice and in-house in trust companies; trusts practitioners; and those working in trust companies. It will also be an essential source of reference for academics specializing in trusts; members of the judiciary; members of regulatory bodies; and institutional libraries.’ Oxford University Press.

‘Breach of Fiduciary Duty Claims’ article published

My article, ‘Breach of Fiduciary Duty Claims and the Quiet Fiduciary Thesis’ has been published in Trusts & Trustees by Oxford University Press, and a link to the article has been posted on the Publications page at www.ihtbar.com.
My new book about Contentious Trusts (due to be published by the Law Society in October) will also contain an extensive chapter on breach of trust and breach of fiduciary duty claims.
The abstract of the article is as follows:
‘In arriving at the conclusion that a claim for fraudulent calumny can be brought on the grounds of breach of fiduciary duty where a fiduciary has been silent (the ‘Quiet fiduciary thesis’), the author examines:
· the approach of the court to breach of fiduciary duty claims—i.e. the framework of applicable legal principles;
· the hallmarks of a fiduciary—i.e. who is a fiduciary;
· the scope and content of fiduciary duties—i.e. the nature of the duties which define a fiduciary; and
· the equitable remedies available to the claimant which result—i.e. the remedial consequences of breach of fiduciary duty, which include: (i) the availability of the section 21(1) Limitation Act 1980 carve-out; (ii) equitable proprietary remedies, including tracing in equity, which is not defeated by the irretrievable mixing of property, Agip (Africa) Ltd v Jackson [1991] Ch 417; and (iii) the non-application of common law principles of remoteness in claims for equitable compensation based upon breach of fiduciary duty. (the ‘fiduciary principle’).
After applying the Fiduciary Principle to demonstrate the validity of the Quiet Fiduciary Thesis, the author discusses the operation of the fiduciary principle in the wider commercial and contractual context. Because rescission is a self-help remedy at common law, in equity the question that arises is, ‘can a contract be rescinded on the grounds of breach of fiduciary duty, by reason of silence/non-disclosure e.g. by a company director or co-venturer?’ The author concludes that it can. The principles applicable to breach of fiduciary duty claims in the context of a commercial joint-venture were recently examined in: Glenn v Watson & Ors [2018] EWHC 2016 (Ch) (31 July 2018) and Sheikh Al Nehayan v Kent [2018] EWHC 333 (Comm).’
I am currently acting in 3 breach of fiduciary duty cases, one of which is currently in the High Court in Cardiff where I appeared in January.
To enquire about instructing me in relation to a will, trust, or breach of fiduciary duty dispute please contact Ian Hogg at 1 Essex Court on 0207 936 3030.
www.ihtbar.com
‘Trusts & Trustees is the leading international journal on trust law and practice. The most significant source of information in its field, the journal is essential for all trusts practitioners and lawyers … The journal is ideal for international trust lawyers working in both private practice and in-house in trust companies; trusts practitioners; and those working in trust companies. It will also be an essential source of reference for academics specializing in trusts; members of the judiciary; members of regulatory bodies; and institutional libraries.’ Oxford University Press.

No BREXIT if no deal?

What follows is blue-sky thinking.

How do you honour the referendum result whilst avoiding no deal without agreeing to remain in the customs union and single market (i.e. a soft Brexit)?

The answer is simple.

You stop and wind back the clock.

The analogy is to pressing the re-set button on an athlete’s stop watch.

Parliament therefore needs to vote on a motion that results in the revocation of Article 50.

Why does that work?

Answer:

1. it restores the status quo ante to the time before Article 50 was triggered in the aftermath of the referendum result; and
2. Brexit is not prevented because the clock can be switched back on at the touch of a button, e.g. following a second referendum in 10 years’ time.

Consequently:

1. there is no need for a second referendum now;
2. there is no need for a general election;
3. there is no need for a deal;
4. there is no need for a backstop;
5. there is no need for a bespoke Norway/Canada plus style arrangement;
6. the UK retains access to the EU market and through its membership to the FTA’s negotiated by the EU with other states (as can those Commonwealth countries who rely upon access through the UK’s membership);
7. the UK would not need to regularise its WTO scheduled commitments, and can benefit from the EU’s recently updated and revised schedules;
8. the UK and the EU would not need to negotiate a distribution of the EU’s TRQ’s, which could be problematic to third countries who find that the redistribution of the EU’s TRQ’s is unfair because it reduces their access to the EU market as a result of the UK’s exit;
9. the UK can pool its: (a) evolving international trade & WTO dispute resolution expert resources and; (b) diplomatic soft-power, with the EU to collaborate in negotiating FTA’s with other states e.g. China; and
10. Scottish independence is avoided.

Why is this a rational political choice?

The answer lies in the premise that when the referendum was held the public were not told that the earliest an FTA is likely to be concluded with a non-EU country is after 2030.

In other words, because the deal = no FTA’s for at least another 10 years, Brexit is already dead for an entire generation.

That is because when you cumulate the transition period (which may have to be extended) with the time necessary to negotiate, approve and ratify an FTA (see the Brexit page at www.diplomaticlawguide.com) that = 10 years.

The practical reality is that Brexit cannot be delivered until after 2030 under the terms of the deal, because ‘with the exception of any state whose executive decisions are made by a dictator, in the real world no state will constrain its options by doing a deal with the UK until it has received comprehensive legal advice about the extent to which the UK remains integrated and aligned with the EU. In other words, countries with whom the EU does not have a FTA like the US, New Zealand and China will simply not want to negotiate an FTA with the UK until they know what Britain’s relationship with the EU actually is. Which bits of the single market, if any, is the UK in? Which parts of EU competition law apply to the UK? Once Britain has left the EU’s customs union, what rules of origin will Brussels apply, so that other countries cannot use the UK as a way of circumventing the EU restrictions on their exports? Does regulatory harmonisation between the EU and the UK make convergence between the UK and their country impractical or a legal impossibility?’ see, Brexit page of Diplomatic Law Guide www.diplomaticlawguide.com under ‘Brexit Agreements’: http://newsite.diplomaticlawguide.com/brexit-2#agreements

If the back-stop kicks in then it will be as long as it takes to find a solution to the Irish border, and the technology and surrounding legal infrastructure for its implementation does not exist and is likely to take more than 5 years to develop, test, and agree.

Since voting demographics will change whilst the clock is switched off and an entire generation of British youth will be left to wander in the economic wilderness until they arrive at the foothills of the promised land in say 10 years’ time if the deal (on the terms agreed ) is approved and ratified, then it is common sense to have a second referendum in 2030, and meanwhile to remain a member of the EU.

During the next 10 years the UK can then re-negotiate its long-term relationship with the EU. If e.g. immigration is resolved and there is no need to leave there is no point in Brexit. If not, then the public can vote again in 10 years’ time.

The government’s lawyers appear to have conceded that Parliament has the power to direct the government to withdraw Article 50, which can be confirmed in a question before the vote.

A state may seek to adjust the way in which treaty will apply to it by means of interpretative declarations or reservations.

‘… Article 21 of the Vienna Convention indicates that a reservation “modifies … the provisions of the treaty” … Since the effect to be brought about by a reservation is expressed in words, and results in a different set of words apt to describe the rights and obligations of those affected by the reservation, thinking of the result in textual terms may not be such a bad approach … [a reservation is] akin to a modifier of what the treaty is, in contrast to the interpretive declaration which affects how the treaty is to be understood. Put in a nutshell, a reservation affects what is to be interpreted; an interpretive declaration seeks to affect how something is to be interpreted, that is what meaning is to be attributed to it.’ Treaty Interpretation, 2nd Ed (2015) by Richard Gardiner (OUP), para 3.3.1.

Can an amendment be proposed which results in a reservation about the backstop that has the effect of deeming Article 50 to be revoked, i.e. by directing the government to notify the EU in e.g. the event that the backstop provisions are not withdrawn from the treaty by the EU within a specified time-period? In which case, the notification would have to be made prior to 29 March, unless Article 50 is extended. Therefore, the EU must confirm its refusal to withdraw the backstop provisions from the treaty within the time available, which could extend beyond 29 March if Article 50 is extended. If not, then the deadline must be before 29 March.

Some food for thought!

The art of cross-examination at Christmas

It’s beginning to look a lot like Christmas, lawyers in every store, and to celebrate my anniversary of 4 years at 1 Essex Court, here is an early present just for you…

So let your heart be light and have yourself a merry little Christmas now.

Now, listen to what I say …

When planning the cross-examination of a witness, the starting point is to ask yourself what your cross-examination is directed at eliciting and proving, which in this case is the existence of Santa Claus. So, you better be good!

Even though it’s lovely weather for a sleigh ride with the witness, your aim should be to:
(i) destroy the material parts of his evidence – i.e. that NASA have found no evidence of the existence of dwellings at the North Pole sufficient to accommodate a colony of Elves that is large enough to manufacture at least one toy for every child in the world – ‘Of course not as my expert witness (Mr Kris Kringle of 34th Street New York, New York) has clearly stated in his report, ‘they only exist in the dream world’ – really I thought everyone knew that!’;
(ii) weaken the evidence where it cannot be destroyed – i.e. that reindeer cannot fly – ‘The case I shall advance on behalf of my Client is that Reindeer only fly at midnight on Christmas Eve’;
(iii) elicit helpful evidence, i.e. the Christmas albums of Bing Crosby, Frank Sinatra, the great Nat King Cole, Andy Williams, Perry Como, Johnny Mathis; Deano, Rod Stewart, Michael Bublé and Cliff – well why not it’s Christmas …;
(iv) to undermine the witness (or shake his credit) by showing that he cannot be trusted to speak the truth, or that he is deposing (however honestly) to matters of which he has no real knowledge, ‘I will demonstrate that Frosty the snowman has no peripheral vision whatsoever. I shall also prove that at all material times he was wearing woolen ear muffs.’

The ideal to be aimed at is to lead the witness to admit that his evidence was untruthful or mistaken. ‘How do you know that you saw Mummy kissing Santa Claus underneath the mistletoe?’

Cast doubt.

Bring in Schrodinger’s cat: https://whatis.techtarget.com/definition/Schrodingers-cat

Then distract and use as an opportunity to get the witness to prove another fact, e.g. that reindeer can fly.

‘My next question, as you no doubt correctly anticipated [flatter witness to disarm], is that outside, the snow is falling, and friends are calling, “yoo-hoo!” – Yes?’
Then get the witness to gradually agree.
‘There’s a birthday party at the home of Farmer Gray – Yes?
It’ll be the perfect ending of a perfect day?
We’ll be singing the songs we love to sing without a single stop?
At the fireplace while we watch the chestnuts pop, pop, pop, pop?
There’s a happy feeling nothing in the world can buy?
When they pass around the coffee and the pumpkin pie?
It’ll nearly be like a picture print by Currier and Ives?
These wonderful things are the things we remember all through our lives?
Do you hear those sleigh bells jingling, ring-ting-tingling, too?’
‘Sleigh bells ring – are you listening – Yes?’
‘Please turn to Bundle J, Tab 14 at page 300 Do you see exhibit …
‘It is a picture print by Currier and Ives isn’t it – yes?’
‘What is the reindeer doing?
‘It’s flying isn’t it!’

After the witness has said, ‘yes – I suppose so’ nod vigorously, flick a large wad of pages over in your file (any will do), and declare ‘so you have seen a reindeer fly!’ – then move on quickly to your next question.
In most cases, the objective is not so much to destroy the evidence outright, as to weaken it, i.e. to reduce the weight of the evidence and qualify the inferences which might be drawn from it. This objective is particularly important where the evidence is circumstantial, so that its damaging effect depends not so much on what is actually said as on what may be deduced from it. The witness may be induced to admit that other explanations are possible. Relentlessly probing into the details, as in cases where identification is in issue may show that there is a possibility of a mistake. The eliciting of fresh evidence may lead to a new topic altogether. More often, however, the new evidence simply consists of facts which put a new colour on the evidence in chief. If this is done successfully, the result is not only to help in the building up of one’s case, but also, at the same time, to weaken the other side. Undermining, if successful, destroys the assumptions on which the reliability of the evidence depends. ‘How can you be sure that reindeer don’t like heights? After all, don’t they bear an uncanny resemblance to mountain goats? – only with big red noses and antlers. Is it a coincidence that they both like carrots? What other possible explanation can there be – reindeer are an elevated species of mountain goat. QED, I believe.’
After enjoying the sight of the witness’ jaw dropping to the ground savour the silence as if you had just stepped into the winter wonderland (i.e. Harrods – pronounced ‘arrods’) and taken in a deep breath of refreshingly pure winter air. Smile – but for not more than 5 seconds.

It does not follow that because an individual’s evidence is unreliable in some respects it is must also be unreliable in others.’ i.e. just because Gloria Estefan said that ‘all she wanted for Christmas was me’ [NB what she actually said was ‘you’ but that’s not how I heard it], it is not axiomatic that she did not also want a copy of my latest book on Contentious Probate – which incidentally is very reasonably priced at £79.95 and ordering links appear on the Publications page at www.carlislam.co.uk. Spread the love at Christmas.

Cross-examination requires the greatest ingenuity:
· a habit of logical thought;
· clearness of perception in general;
· infinite patience and self-control;
· power to read men’s minds intuitively, to judge their characters by their faces, to appreciate their motives;
· ability to act with force and precision; a masterful knowledge of the subject-matter itself; an extreme caution; and
· above all, the instinct to discover the weak point in the witness under examination.
By our manner toward a witness we may have in a measure disarmed him, or at least thrown him off his guard, whilst his memory and conscience are being ransacked by subtle and searching questions, the scope of which will hardly be apparent to himself, it it is however, only with the matter of our cross-examination, that we can hope to destroy him.

‘Dasher, Dancer, Prancer, Vixen, Comet, Cupid, Donner, and Blitzen – are all professional dancers on ‘Strictly Come Dancing’ [which incidentally was very good this year, and I am voting for Stacey] – yes?
So, you stay in on Saturday nights?
You also stay in on Sunday nights to watch the results show – don’t you!
And yet here you stand today telling us that your field of expertise is ‘jingle bells’.
Not very likely is it?
In fact, you have never been conveyed in a one-horse open sleigh, have you?
Ever!’

There are three principal techniques for undermining credibility. An advocate may suggest that a witness is:
(i) being dishonest;
(ii) inaccurate or inconsistent; or
(iii) biased.

Alternatively, the advocate may seek to suggest some combination of (i) to (iii).
In cross-examination an advocate may either:
(i) confront the witness with evidence that is inconsistent with their account;
(ii) insinuate another version of events; or
(iii) probe the witness’s evidence for flaws.
‘Your childhood hero was Ebenezer Scrooge – was he not?
you worshiped his work ethic – didn’t you.
So, you espouse thrift as a core value?
Your friends – if you had any, might call you ‘thrifty’ – is that not so?
Scroogle knew about Tiny Tim – didn’t he! [note I have got the fact at which my question is directed down to only 5 words].
Charity does not feature in your vocabulary – does it?
In the hierarchy of moral values – Scrooge comes first doesn’t he?
Neither of you shed a tear for poor Tiny Tim before the midnight chimes ran out through your empty house – which until then had been as quiet as a mouse. [NB not a moose!].
So why should we believe you when you say that you were visited by Muppets at midnight on Christmas Eve?
Your evidence is nothing more than fantasy is it!’

Confrontation, as the name indicates, consists of confronting the witness with a great mass of damaging facts which he cannot deny, and which are inconsistent with his evidence. It is a destructive technique, but when it fails to destroy it may still succeed in weakening. Probing consists of inquiring thoroughly into the details of the story to discover flaws. It may be used either to weaken or destroy, or open up a lead to something new. Insinuation is a many-sided technique. In essence, it is the building-up of a different version of the evidence-in-chief, by bringing out new facts and possibilities, so that, while helping to establish a positive case in one’s own favour, at the same time it weakens the evidence-in-chief by drawing out its sting. Insinuation may take the form of quietly leading the witness on, little by little: alternatively, it may be necessary to drive him. Thus, there are two main forms of the technique, gentle insinuation and firm insinuation. The object of undermining is not to break down the evidence by inquiring into the facts, but to take away the foundations of the evidence by showing that either: (i) the witness does not know what he is talking about; or (ii) if he does know the truth, he cannot be trusted to tell it.

‘Santa Claus is also known by other names isn’t he?
[Santa anoraks please visit: https://www.wordhippo.com/what-is/the-meaning-of/swahili-word-106819fed9cd37eab541002dcf4e23899c833f98.html]
In Swahili Santa Claus means Santa Claus!
That is right isn’t it!
The evidence is therefore overwhelming, and without doubt points to only one conclusion – namely that there is a Santa Claus, because during the holidays he parties with the Zulus.
Surely you are not suggesting that the Zulus invented Santa Clause – and if I were you I really wouldn’t go there, because as Michael Caine will tell you (see film on boxing day), it’s not a smart move to upset the Zulus – they are very sensitive about things like that.
So you better watch out
You better not cry
You better not pout
I’m telling you why
Santa Claus is coming to town
He’s making a list,
Checking it twice,
Gonna find out who’s naughty or nice.
He sees you when you’re sleeping
He knows when you’re awake
He knows if you’ve been bad or good
So be good for goodness sake
With little tin horns, little toy drums
Rooty toot toots and rummy tum tums
Santa Claus is coming to town
And curly head dolls that toddle and coo
Elephants, boats, and kiddie cars too
Santa Claus is comin’ to town
Then kids in Girls and Boy land will have a jubilee
They’re gonna build a Toyland town
all around the Christmas tree
So! You better watch out, you better not cry
Better not pout, I’m telling you why
Santa Claus is comin’ to town – Yes?’
Then pause for silence and throw in a splattering of latin phrases, whilst looking meek – as if praying for the salvation of the soul of the witness.
‘En grege relicto
Humiles ad cunas,
Vocati pastores adproperant,
Et nos ovanti,
Gradu festinemus.
Venite, adoremus!’

An expert’s possession of special expertise or knowledge is obviously the main foundational fact for expert opinion evidence; but it is not sufficient to prove some expertise at large. The expert witness must also be shown to be an expert in the field to which the issue about which they have been called to give evidence belongs.
Move in for the kill …

‘I notice that your CV does not mention ‘walking in the winter wonder-land.’
You live in a village, don’t you?
So how do you know that Santa Clause ‘is not coming to town’?
You have never heard sleigh bells in the snow have you?
In fact, you were not even dreaming of a white Christmas when you gave your evidence were you?
Examine your conscience.
Can you tell us truthfully whether you have you been naughty or nice this year?
Finally [the five golden rings question!]
Please turn to Bundle A, Tab 4 at page 108 – do you see what I see? – an exhibit as big as a kite? – a receipt marked ‘all items we supply have been certified as complying with Elf and Safety.’
Listen to what I say …
‘on the fifth day of Christmas DHL, who bring goodness and light, delivered –
Five golden rings!
Four calling birds,
Three French hens,
Two turtle doves,
And a partridge in a pear tree?’
What did DHL bring on the 12th day of Christmas?
You don’t know! … ’

Look astounded and shake head 3 times in disbelief.
Then pull yourself up by lapels on gown, look judge straight in the eye and gently say in re-assuring voice …

‘My Lord, I bring tidings of comfort and joy.
The only question you have to ask yourself is ‘do I believe?’
I submit that there is only one conclusion which can be reached on the facts in this case – and please think of the little children when you deliver your ruling, silver bells, presents on the tree, and bonuses in the City …
and that conclusion is that Santa Clause does exist, and that he exists in the person of my expert witness Kris Kringle!’

Then whilst opposing counsel’s head slumps into his papers as he thumps the table with his right hand, spread the joy! – and don’t hold back – it’s Christmas:
‘So, deck the halls with boughs of holly, strike the harp and join the chorus …
May your days always be merry and bright!
Joyeux Noël et bonne année
Frohe Weihnachten und neues Jahr, Glückliches
Buon Natale e felice anno nuovo
Feliz Navidad, Próspero año y Felicidad’.

Result.

Then do a high five with the court usher – but only in an American court!

Disclaimer

This is a work of pure fiction. Any similarity to actual persons, living or dead, or actual events, is purely coincidental, and that includes Zulus.

May all your future cross-examinations be well-mannered and polite!
Merry Christmas and a Happy New Year to one and all wherever you may be.

Brexit deal in real world = No FTA’s

If the Government’s objective is to set the UK free to trade on terms to be agreed with the rest of the world (including those states with whom the EU has agreed free trade agreements which will no longer apply to the UK when the UK ceases to be a member of the EU), then the Brexit deal it is self-defeating, because throughout the duration of the transition period and operation of the back-stop, the UK is constrained both legally, and practically, from concluding FTA’s with non-EU states. On its face, it therefore represents a complete failure of economic diplomacy by the UK. So, economically, what is the point of Brexit?

On 6 February 2018 Rob Merrick, Deputy Political Editor of the Independent reported, ‘Giving evidence to the Commons Foreign Affairs Committee, [Sir Simon Fraser – Former head of the UK Diplomatic Service] warned: “Our leverage in international institutions is going to be weaker once we are outside the European Union.” Other countries believe Britain has “lost the plot” by pursuing Brexit because it will reduce the country’s “international influence”. Sir Simon Fraser also accused Theresa May of “mushy thinking” over her promise to achieve a new “Global Britain” outside the EU – branding it just a “slogan”. Calling Brexit a “strategic error”, Sir Simon ridiculed No 10’s vow that leaving the EU would see Britain “strike out in the world”, telling a Parliamentary inquiry: “I don’t know what that means.”
And he warned: “To be frank with you, a lot of countries think, for the time being, that we have slightly lost the plot in terms of where we intend to go.”
The European Commission Press Release states,
‘The EU and the UK negotiators have agreed on how to avoid a hard border between Ireland and Northern Ireland. Both will use their best endeavours to have – by 1 July 2020 – a future agreement concluded before the end of the transition period. Should this not be the case, the EU and the UK could jointly extend the transition period. Alternatively, as of January 2021, the backstop solution for Ireland and Northern Ireland would apply, subject to a joint review mechanism.
That backstop solution means that a single EU-UK customs territory will be established, which will apply from the end of the transition period until such a time as a subsequent agreement becomes applicable. Northern Ireland will therefore remain part of the same customs territory as the rest of the UK. The single customs territory covers all goods with the exception of fishery and aquaculture products.
The creation of the single customs territory includes the corresponding level playing field commitments and appropriate enforcement mechanisms to ensure fair competition between the EU27 and the UK.
The outline of the political declaration published today records the progress in reaching an overall understanding on the framework for the future EU-UK relationship. The EU and UK negotiators will continue their work based on the outline. [I.e it is an ‘outline’ road-map].
Nothing is agreed until everything is agreed. The present Withdrawal Agreement – including the transition period – must take into account the framework of the future relationship. The political declaration must therefore be further developed and agreed in its final form…
The EU and UK negotiators will continue their work on the political declaration on the framework for the future relationship based on the outline published today. It is up to the President of the European Council to decide whether and when to convene a meeting of the 27 Heads of State or Government. It will be up to the European Council (Article 50) to endorse the Withdrawal Agreement and the joint political declaration on the framework of the future relationship.
Once the Withdrawal Agreement is endorsed by the European Council (Article 50), and before it can enter into force, it needs to be ratified by the EU and the UK. For the EU, the Council of the European Union must authorise the signature of the Withdrawal Agreement, before sending it to the European Parliament for its consent. The United Kingdom must ratify the agreement according to its own constitutional arrangements.
Prime Minister Theresa May triggered Article 50 of the Treaty on European Union on 29 March 2017… Her letter to Donald Tusk, the President of the European Council, formally began the process of UK’s withdrawal from the EU. Negotiations on the terms of the UK’s withdrawal formally began on 19 June 2017, following the UK’s general election. On 8 December 2017, the EU and the UK published a Joint Report, setting out the areas of agreement between both sides on withdrawal issues. This was accompanied by a Communication by the European Commission. In March 2018, the European Commission and the United Kingdom published a draft Withdrawal Agreement. This document highlighted areas of agreement and disagreement using a green, yellow and white colour-coding. The future relationship between the EU and the UK will be outlined in a political declaration and will only be negotiated once the UK becomes a third country, i.e. outside of the EU, after 29 March 2019.’
In project management terms, the text agreed at negotiator level is therefore a level 1 ‘framework’ agreement and not a fully worked out and worked through, level 5 ‘detailed’ agreement that is capable of practical implementation because it does not fully define the extent to which the UK remains integrated within and aligned with the EU and ‘Union Law’ (as defined), which is uncertain and a moving target. Because the Brexit deal commits the UK to enter into a parallel EU universe where international trade vis-à-vis the EU is governed by Union Law, it curtails the ability of the UK to enter into more preferential trading arrangements (through the agreement of FTA’s) with non-EU states. Because ‘Nothing is agreed until everything is agreed’ business cannot actually know the extent of the UK’s legal obligations to comply with Union Law until it ceases to apply. As for the exit mechanism, see the commentary on the applicable provisions of the Vienna Convention below, and for more detail please visit www.diplomaticlawguide.com. Whoever authorised this agreement was clearly not an international lawyer and appears to have had no grasp of the default provisions which apply that are far from satisfactory.
What does the text of the agreement state?
Article 184 (Negotiations on the future relationship) states,
‘The Union and the United Kingdom shall use their best endeavours, in good faith and in full respect of their respective legal orders, to take the necessary steps to negotiate expeditiously the agreements governing their future relationship referred to in the political declaration of [DD/MM/2018] and to conduct the relevant procedures for the ratification or conclusion of those agreements, with a view to ensuring that those agreements apply, to the extent possible, as from the end of the transition period.’
Article 2 (Definitions) states,
‘For the purposes of this Agreement, the following definitions shall apply:
(a) “Union law” means:
(i) the Treaty on European Union (“TEU”), the Treaty on the Functioning of the European Union (“TFEU”) and the Treaty establishing the European Atomic Energy Community (“Euratom Treaty”), as amended or supplemented, as well as the Treaties of Accession and the Charter of Fundamental Rights of the European Union, together referred to as “the Treaties”;
(ii) the general principles of the Union’s law;
(iii) the acts adopted by the institutions, bodies, offices or agencies of the Union;
(iv) the international agreements to which the Union is party and the international agreements concluded by the Member States acting on behalf of the Union;
(v) the agreements between Member States entered into in their capacity as Member States of the Union;
(vi) acts of the Representatives of the Governments of the Member States meeting within the European Council or the Council of the European Union (“Council”);
(vii) the declarations made in the context of intergovernmental conferences which adopted the Treaties;’
Article 6 (References to Union law) states,
‘1. With the exception of Parts Four and Five, unless otherwise provided in this Agreement all references in this Agreement to Union law shall be understood as references to Union law, including as amended or replaced, as applicable on the last day of the transition period.
2. Where in this Agreement reference is made to Union acts or provisions thereof, such reference shall, where relevant, be understood to include a reference to Union law or provisions thereof that, although replaced or superseded by the act referred to, continue to apply in accordance with that act.
3. For the purposes of this Agreement, references to provisions of Union law made applicable by this Agreement shall be understood to include references to the relevant Union acts supplementing or implementing those provisions.’
Article 6 of the Protocol (Single customs territory, movement of goods) provides,
‘1. Until the future relationship becomes applicable, a single customs territory between the Union and the United Kingdom shall be established (“the single customs territory”). Accordingly, Northern Ireland is in the same customs territory as Great Britain.
The single customs territory shall comprise:
(a) the customs territory of the Union defined in Article 4 of Regulation (EU) No 952/2013; and
(b) the customs territory of the United Kingdom.
The rules set out in Annex 2 to this Protocol shall apply in respect of all trade in goods between the territories referred to in the second subparagraph, as well as, where so provided, between the single customs territory and third countries. With a view to ensuring the maintenance of the level playing field conditions required for the proper functioning of this paragraph, the provisions set out in Annex 4 to this Protocol shall apply. Where appropriate, the Joint Committee may modify Annex 4 in order to lay down higher standards for these level playing field conditions.
The Joint Committee shall adopt before 1 July 2020 the detailed rules relating to trade in goods between the two parts of the single customs territory for the implementation of this paragraph. In the absence of such a decision adopted before 1 July 2020, Annex 3 shall apply.’
Article 3 (Territorial scope) provides,
‘1. Unless otherwise provided in this Agreement or in Union law made applicable by this Agreement, any reference in this Agreement to the United Kingdom or its territory shall be understood as referring to:
(a) the United Kingdom;
(b) Gibraltar, to the extent that Union law was applicable to it before the date of entry into force of this Agreement;
(c) the Channel Islands and the Isle of Man, to the extent that Union law was applicable to them before the date of entry into force of this Agreement;
(d) the Sovereign Base Areas of Akrotiri and Dhekelia in Cyprus, to the extent necessary to ensure the implementation of the arrangements set out in the Protocol on the Sovereign Base Areas of the United Kingdom of Great Britain and Northern Ireland in Cyprus annexed to the Act concerning the conditions of accession of the Czech Republic, the Republic of Estonia, the Republic of Cyprus, the Republic of Latvia, the Republic of Lithuania, the Republic of Hungary, the Republic of Malta, the Republic of Poland, the Republic of Slovenia and the Slovak Republic to the European Union;
(e) the overseas countries and territories listed in Annex II to the TFEU [the Treaty on the Functioning of the European Union] having special relations with the United Kingdom1, where the provisions of this Agreement relate to the special arrangements for the association of the overseas countries and territories with the Union.[I.E. Anguilla, Bermuda, British Antarctic Territory, British Indian Ocean Territory, British Virgin Islands, Cayman Islands, Falkland Islands, Montserrat, Pitcairn, Saint Helena, Ascension and Tristan da Cunha, South Georgia and the South Sandwich Islands, and Turks and Caicos Islands].’
Article 1 of Annex 2 provides,
‘Scope
1. Subject to the conditions laid down in Article 6(1) of the Protocol, this Annex shall apply to all goods:
(a) produced in the customs territory of the Union or the United Kingdom customs territory, including those wholly or partially obtained or produced from products coming from third countries which are in free circulation in the customs territory of the Union or the United Kingdom customs territory; or
(b) coming from third countries and in free circulation in the customs territory of the Union or the United Kingdom customs territory;
(c) obtained or produced in the customs territory of the Union or the United Kingdom customs territory, in the manufacture of which products coming from third countries and not in free circulation either in the customs territory of the Union or the United Kingdom customs territory were used, under the condition that the import formalities have been complied with and any customs duties or charges having an equivalent effect which are payable on those goods or on the third-country products used in their manufacture have been levied in the exporting part of the single customs territory.
The term “wholly obtained” in point (a) shall have the same meaning in the United Kingdom customs territory as it does in the customs territory of the Union.
2. Goods from third countries shall be considered to be in free circulation in the customs territory of the Union or the United Kingdom customs territory if the import formalities have been complied with and any customs duties or charges having equivalent effect which are payable have been levied by the Union or by the United Kingdom in their respective part of the single customs territory, and if they have not benefitted from a total or partial reimbursement of such duties or charges.
3. As regards goods obtained or produced in the customs territory of the Union or the United Kingdom customs territory, in the manufacture of which products coming from third countries and not in free circulation either in the customs territory of the Union or the United Kingdom customs territory were used, but which are not covered by point (c) of paragraph 1, the importing part of the single customs territory shall apply the customs legislation applying to goods from third countries.’
Article 3 (Customs Tariff applicable to trade with third countries) states,
‘1. The United Kingdom shall align the tariffs and rules applicable in its customs territory with:
(a) the Union’s Common Customs Tariff, as set out in Article 56(2) of Regulation (EU) 952/2013;
(b) the Union’s rules on the origin of goods, as set out in Chapter 2 of Title II of Regulation (EU) 952/2013; and
(c) the Union’s rules on the value of goods for customs purposes, as set out in Chapter 3 of Title II of Regulation (EU) 952/2013.
2. Under no circumstances may the United Kingdom:
(a) apply to its customs territory a customs tariff which is lower than the Common Customs Tariff for any good or import from any third country; or
(b) apply or grant in its customs territory tariff preferences to any good on the basis of rules of origin that are different from those governing the granting of such preferences to the same good by the Union in its customs territory.
3. The United Kingdom may not, without prior agreement in the Joint Committee, apply or grant in its customs territory any quotas, tariff-rate quotas or duty suspensions.
4. The United Kingdom shall be informed of any decision taken by the Union to amend the Common Customs Tariff, to suspend or reintroduce duties and any decision concerning quotas, tariff-rate quotas or duty suspensions in sufficient time for it to align itself with that decision. If necessary, consultations may be held in the Joint Committee.’
Article 4 (Commercial policy) states,
‘1. The single customs territory shall comply with the relevant provisions of Article XXIV of the GATT 1994. To this end, the United Kingdom shall harmonise the commercial policy applicable to its customs territory with the common commercial policy of the Union to the extent necessary to give effect to Article 6(1) of the Protocol and Article 3 of this Annex, and by applying regulations of commerce other than duties, in particular measures falling under Article XI:1 of the GATT 1994, which are substantially the same as those of the Union.
2. The United Kingdom shall ensure that, for the products covered by Article 6(1) of the Protocol, its Schedules of Concessions referred to in Article II of the GATT 1994 are fully aligned with those of the Union, and commitments on tariff-rate quotas are compatible with those of the Union and comply with the provisions of Article 3 of this Annex. The Union and the United Kingdom agree to cooperate on WTO matters on the apportionment of WTO tariff-rate quotas and to the extent necessary for the functioning of the single customs territory.
3. The Union’s trade defence regime, as well as the Union’s Generalised Scheme of Preferences (“GSP”), shall cover both parts of the single customs territory. The Union shall consult the United Kingdom on any trade defence measures or actions under the GSP regime which it considers taking. At least 6 months before the end of the transition period, the Joint Committee shall set up the procedures for the application of this paragraph.’
Article 174 (Disputes raising questions of Union Law) states,
‘1. Where a dispute submitted to arbitration in accordance with this Title raises a question of interpretation of a concept of Union law, a question of interpretation of a provision of Union law referred to in this Agreement or a question of whether the United Kingdom has complied with its obligations under Article 89(2), the arbitration panel shall not decide on any such question. In such case, it shall request the Court of Justice of the European Union to give a ruling on the question. The Court of Justice of the European Union shall have jurisdiction to give such a ruling which shall be binding on the arbitration panel.’
Article 160 (Jurisdiction of the Court of the European Union concerning certain provisions of Part Five) states,
‘Without prejudice to Article 87 of this Agreement, Articles 258, 260, and 267 TFEU shall apply in respect of the interpretation and application of applicable Union law referred to in Article 136 and Article 138(1) or (2) of this Agreement. To this effect, any reference made in Articles 258, 260, and 267 TFEU to a Member State shall be understood as including the United Kingdom.’
In the event of no deal the UK has no FTA with any other state and loses access to those agreed by the EU on behalf of member states with non-EU countries. The UK’s WTO scheduled commitments also need to be regularised (by approval) with the membership of WTO. It only takes 1 out of 148 to block. This could take years. I am not sure that MP’s have fully grasped the time-line (see the commentary about the WTO below). The Civil Service has, and many senior official are members of my LinkedIn network, as well as representatives of various countries at the WTO, and senior trade officials in Canada, the US, Australia and New Zealand, as are many international trade law and economic diplomacy academics around the world. Nothing in this post is intended in any way to be a criticism of their skill expertise and professionalism. It is their political masters I blame.
‘In the event of a ‘no deal’, EU trade agreements will cease to apply to the UK when we leave the EU. Our intention is that the effects of new bilateral agreements will be identical to, or substantially the same as, the EU agreements they replace. However, users of current EU free trade agreements should be aware that, in contrast to the current situation and during any Implementation Period, there may be practical changes to how they make use of preferences under these new agreements. For example, UK and EU content will be considered distinct, and each new agreement will individually specify what origin designations may be used to qualify for preferences. We will aim to limit these changes as far as possible, but the final form of new agreements and any resulting changes will depend on ongoing discussions with our trading partners. The Trade Bill contains a reporting requirement stating that the government will publish a report before these new free trade agreements are ratified on any significant changes to the new trade-related provisions. Where arrangements to maintain particular preferences in a no-deal scenario are not in place by exit day, trade would take place on WTO terms. Under such terms, traders would pay the applied MFN tariff. This is the tariff applied equally to all countries in the absence of preferential arrangements. In the event of no-deal, the government will determine and publish a new UK MFN tariff schedule before we leave the EU. Information on the current tariff rates are freely available to view in the UK’s applied goods schedule and can be found on the UK Government’s Tariff Look Up tool. Further practical information on arrangements for the border and relevant contact information for guidance can be found in:
· Classifying your goods in the UK Trade Tariff if there’s no Brexit deal
· Trading with the EU if there’s no Brexit deal
The specific commitments for services trade that WTO members apply to trading partners, independently of any preferential arrangements, are set out in each Member’s schedule of commitments under the General Agreement on Trade in Services. Some countries have liberalised beyond these specific commitments.
For more information on the WTO, visit the WTO website.
This notice is meant for guidance only. You should consider whether you need separate professional advice before making specific preparations.
It is part of the government’s ongoing programme of planning for all possible outcomes. We expect to negotiate a successful deal with the EU.
Norway, Iceland and Liechtenstein are party to the Agreement on the European Economic Area and participate in other EU arrangements. As such, in many areas, these countries adopt EU rules. Where this is the case, these technical notices may also apply to them, and EEA businesses and citizens should consider whether they need to take any steps to prepare for a ‘no deal’ scenario.’ UK Government Guidance (12 October 2018): https://www.gov.uk/government/publications/existing-free-trade-agreements-if-theres-no-brexit-deal/existing-free-trade-agreements-if-theres-no-brexit-deal
I have not heard a single MP mention that on 29 March, even if there is a deal, the UK will have tied its hands in concluding an FTA with any non-EU state until possibly 2030 (see below) because:
(i) the UK does not have an FTA with any other state (except through membership of the EU); and
(iii) with the exception of any state whose executive decisions are made by a dictator, in the real world no state will constrain its options by doing a deal with the UK until it has received comprehensive legal advice about the extent to which the UK remains integrated and aligned with the EU.
In other words, countries with whom the EU does not have a FTA like the US, New Zealand and China will simply not want to negotiate an FTA with the UK until they know what Britain’s relationship with the EU actually is. Which bits of the single market, if any, is the UK in? Which parts of EU competition law apply to the UK? Once Britain has left the EU’s customs union, what ‘rules of origin’ will Brussels apply, so that other countries cannot use the UK as a way of circumventing EU restrictions on their exports? Does regulatory harmonisation between the EU and the UK make convergence between the UK and their country impractical or a legal impossibility?
The practical binary choice the Brexit deal offers is, ‘trade with us [i.e. the EU] and benefit from a level playing field, or go off on your own and trade with the rest of the world on terms to be agreed – if there is no practical solution to the Irish border issue by the end of the extended transition period, you remain aligned – possibly indefinitely (see the exit mechanism below).’
Because an FTA with the EU may take between 4-7 years to agree, the transition period may not end until 2025.
If at the end of that period the technology does not exist to avoid a hard border on the island of Ireland , then the UK will remain substantially, if not 100% aligned with the EU for international trade.
Therefore our hands are tied in negotiating more preferential terms with non-EU states.
Meanwhile the EU is currently negotiating trade agreements with over 72 other countries. Post-Brexit, the UK will therefore need to re-negotiate or start new bilateral negotiations on over 125 trade agreements, i.e. to replace the agreements that have already been negotiated by the EU that will no longer apply to the UK when Britain leaves the EU, and to keep pace with the EU on the world stage.
Until a bespoke trade agreement has been concluded between the UK and the EU, no state with whom the UK wishes to negotiate a FTA can properly formulate a position upon the scope and terms of a future bilateral agreement, because the extent of the UK’s freedom to agree the scope and terms of a FTA will be curtailed by the terms of a bespoke UK-EU trade agreement. In other words, the UK’s negotiating counter-parties cannot know the extent to which the UK’s hands will be tied by the EU when the UK is free, post Brexit, to enter into a legally binding FTA. Therefore the practical result of the Brexit deal is that until a comprehensive FTA has been agreed with the EU no state worth its salt with conclude a binding FTA with the UK.
How long will it then take to conclude an FTA with a non-EU state?
The Peterson Institute for International Economics who analysed how long it took the US to agree 20 bilateral trade deals concluded: (i) one and a half years, on average, and (ii) more than three and a half years to get to the implementation stage. https://www.weforum.org/agenda/2016/07/how-long-do-trade-deals-take-after-brexit/
= 5 years.
It is therefore not inconceivable that the first trade agreement with a non-EU state will not be concluded and implemented until 2030.
What is the status quo in relation to regularisation of the UK’s schedules of tariffs with the WTO?
‘Resistance to a joint UK-EU proposal to the World Trade Organization on trade after Brexit – which was once celebrated by the trade secretary, Liam Fox, as “real progress” – has triggered a break down in unity, with London and Brussels divided on a way forward.
Fox had described the plan on how much meat, butter and wheat the rest of the world could export to the UK and the 27 member states on low or zero tariffs as a sign of the country “forging ahead”, and boasted: “It’s a sign we can make progress when both sides choose to do so.”
Yet, in recent months the united EU and UK front has splintered in the face of a strident rejection of their proposals from the US, Australia and New Zealand, among others, the Guardian understands.
Brussels has proposed another way forward. But London has yet to agree and has left open the prospect that the UK could go its own way in talks with the world’s biggest trading powers.
To add to the tensions, the UK is also seeking to speak during the 21-month transition period after Brexit with an independent voice at the WTO, where large multilateral trade deals are negotiated, something the European commission is resisting.
Until Brexit, the EU has a schedule spelling out how much of each agricultural product from each country that can be imported into the bloc without attracting high tariffs.
After Brexit, the plan had been for the UK and EU, as independent WTO members, to divide the current quotas between the two according to historical flows of trade in each product. This plan was described as a “technical rectification”.
However, EU sources said an initial objection from the US, Argentina, Brazil and New Zealand over the joint plan, hammered home in a fiery letter last October, had not gone away, proving Brussels’ initial belief that the plan would “not fly”.
Brussels is now pushing for a new tactic under which they would go through the more arduous procedure of a full renegotiation with WTO members over key agriculture products, offering compensation where necessary, via what is called an article 28 procedure.
The UK is insisting that the EU sticks with the original plan. British negotiators working in the WTO in Geneva believe that for 95% of the schedules there is no need for negotiation.
The UK also insists it could unilaterally liberalise its tariff regime from Australia and elsewhere, in a move that could be damaging to EU trade flows, but would receive immediate agreement from those countries resisting the original joint plan.
The EU’s chief negotiator, Michel Barnier, is understood to have told MEPs during a recent private meeting that “unsurprisingly a number of [WTO] members do not agree” with the plan, adding: “They are reluctant to discuss and are reserving their position in Geneva.”
A senior EU official told the Guardian: “We think we will we have to go through a more difficult procedure. The UK wants to go for the simplest way we are saying we are not against it but politically it will not fly at all and we will have to do it the other way and even then it will be contested.
“I think some have a case. With New Zealand and their lamb, they might say that we send our meat via Rotterdam or elsewhere to Britain, and you are making our trade arrangements more rigid.
“For the first plan to work, the changes have to be perceived as technical adjustments for which there are no political issues. The other is a real correction, a real adjustment when you go through an approval process. And they take their time.”
Alan Matthews, a professor of agricultural policy at Trinity College Dublin, said: “Rectification was always a crazy idea which would never be accepted as clearly what the UK and EU propose goes way behind what is covered by rectification.”
The Department for International Trade, which Fox heads, said: “As we leave the EU we need to create a new UK goods schedule at the WTO, covering tariffs on our imports from other WTO members. We have engaged all 164 WTO members, and they understand our intention to establish our goods schedule by rectification.
“As a part of the process, we also agreed an approach with the EU to apportion tariff rate quotas covering certain imported goods, based on historic trade flows, and wrote to WTO members on this last year. We are continuing to speak to them about next steps to secure an outcome with is fair and avoids disruption to existing trade.”’ Resistance to joint proposal to WTO leaves UK and EU divided
Show of unity breaks down after US, Australia and others reject post-Brexit trade plans by Daniel Boffey, the Guardian, 25 April 2018.
It only tales 1 member out of 164 in the WTO to block any attempt by Britain to regularise its schedules.
The economic diplomacy underlying this dance will make Brexit look like a children’s parlour game, and has not even begun.
How do we get out of this political mess?
What is the treaty exit mechanism?
Part V of the Vienna Convention on the Law of Treaties (the ‘Convention’) sets out the various circumstances in which a treaty can be denounced, terminated or its operation suspended, other than on grounds of invalidity.
‘Denunciation and withdrawal are used interchangeably to refer to a unilateral act by which a nation that is currently a party to a treaty ends its membership in that treaty. In the case of multilateral agreements, denunciation or withdrawal generally does not affect the treaty’s continuation in force for the remaining parties. For bilateral agreements, in contrast, denunciation or withdrawal by either party results in termination of the treaty for both parties. The termination of a multilateral agreement occurs when the treaty ceases to exist for all States parties.’ (Hollis), page 635.
‘To be effective, denunciation, termination or suspension may take place only as a result of the application of the provisions of the treaty itself or Article 42(2) [of the Convention]. These days, most treaties contain provisions on duration and termination, often in the same article. But when there are none, one must consider not only the relevant article in Part V [of the Convention], but other articles in that Part which govern the conditions for applying the article, such as Articles 65-68 concerning the procedure to be followed. Certain other articles of the Convention may also be relevant…’ (Aust), page 245.
Article 42(2) provides, ‘The termination of a treaty, its denunciation or the withdrawal of a party, may take place only as a result of the application of the provisions of the treaty or of the present Convention. The same rule applies to suspension of the operation of a treaty.’
The design and operation of treaty exit clauses is governed by the foundational principle of State consent.
Article 54 of the Convention provides,
‘The termination of a treaty or the withdrawal of a party may take place:
(a) In conformity with the provisions of the treaty; or
(b) At any time by consent of all the parties after consultation with the other contracting States’.
‘At the negotiation stage, State representatives have free rein to choose the substantive and procedural rules that will govern the future cessation of their relationship. Once those rules have been adopted as part of a final text, however, a State that ratifies or accedes to the treaty also accepts any conditions or restrictions on termination, withdrawal or denunciation that the treaty contains. Unilateral exit attempts that do not comply with these conditions or restrictions are ineffective. A state that ceases performance after such an attempt remains a party to the treaty, albeit one that may be in breach of its obligations. However, the treaty parties may waive these conditions or restrictions and permit unilateral withdrawal, or terminate the treaty, “at any time by consent of all the parties after consultation with the other contracting states.”… States are the undisputed masters of treaty exit rules… But what if a treaty omits such clauses entirely? In such a situation the VCLT provides default rules to govern the end of the parties’ relationship.’ (Hollis), page 636.
Article 56 provides,
‘1. A treaty which contains no provision regarding its termination and which does not provide for denunciation or withdrawal is not subject to denunciation or withdrawal unless:
(a) it is established that the parties intended to admit the possibility of denunciation or withdrawal; or
(b) a right of denunciation or withdrawal may be implied by the nature of the treaty.
2. A party shall give not less than twelve months’ notice of its intention to denounce or withdraw from a treaty under paragraph 1.’
Whilst the commercial character of a treaty is not determinative, in principle, a trade agreement is likely to fall within the Article 56(1)(b) exception.
Article 70 further provides,
‘1. Unless the treaty otherwise provides or the parties otherwise agree, the termination of a treaty under its provisions or in accordance with the present Convention:
(a) releases the parties from any obligation further to perform the treaty;
(b) does not affect any right, obligation or legal situation of the parties created through the execution of the treaty prior to its termination.
2. If a State denounces or withdraws from a multilateral treaty, paragraph 1 applies in the relations between that State and each of the other parties to the treaty from the date when such denunciation or withdrawal takes effect.’
‘Taken together, these provisions restrict States from using exit to avoid accountability for past violations of international law. They also discourage the precipitous and opportunistic withdrawals in which a State seeks to exit and then immediately violate a rule that it previously accepted as binding.’ (Hollis), page 641.
Article 43 also provides, ‘The invalidity, termination or denunciation of a treaty, the withdrawal of a party from it, or the suspension of its operation, as a result of the application of the present Convention or of the provisions of the treaty, shall not in any way impair the duty of any State to fulfil any obligation embodied in the treaty to which it would be subject under international law independently of the treaty.’
Treaty exit clauses operate in tandem with other flexibility devices including: reservations; amendment rules; escape clauses; and renegotiation provisions, that treaty makers use to manage risk.
Please see, the ‘Brexit’ and ‘Bilateral and Regional Trade Agreements’ pages at www.diplomaticlawguide.com

Mediation in the Court of Protection

I have been invited to write an article for publication in the Autumn edition of the Expert Witness Journal (ahead of the Bond Solon annual international Expert Witness Conference in London on 9 November 2018), entitled, ‘The Advocate and the Expert in the Court of Protection’. The article is being co-authored with Dr Hugh Series who is a consultant in old age psychiatry at the Oxford Health NHS Foundation Trust, a member of the Faculty of Law at the University of Oxford, and a medical member of the Mental Health Tribunal (first tier). In this post, extracting text from the draft article, I introduce, a new technique called ‘BME Mediation’ that I have pioneered for the mediation of appropriate estate and trust disputes worldwide. This technique was derived from the technique of ‘Guided Settlement’ that I pioneered and outlined in my previous book the ‘Contentious Probate Handbook’ published by the Law Society, and will be more fully outlined in my new book the ‘Contentious Trusts Handbook’, that I am currently writing. What I conclude is that in Court of Protection proceedings, BME Mediationcan result in an all-round ‘win/win’ outcome for all parties, with P‘s best interests being placed front and centre – particularly where related Care Act issues are engaged and need to be resolved to enable a plan to be put in place and implemented in P‘s best interests. As far as I am aware this is the first time such a method of ADR has been suggested, and is timely in light of the progress of the Mental Capacity (Amendment) Bill [HL] 2017-19. I would therefore welcome any comments and criticism.

An application to the COP can include a request for an order that the parties attend mediation. In furtherance on the overriding objective (Rule 1.1), the court is expected to encourage the parties to use an alternative dispute resolution procedure where appropriate, and once proceedings are issued, the court can consider whether all or any of the issues subject to application are suitable to be referred to mediation. When is mediation appropriate? ‘The issues covered in case studies mediated ranged from residence (most frequently cited, with 59% of cases involving residence) to medical treatment and statutory wills (each raised in 7.4% of cases). Almost one-third of cases involved finance and property. Other issues in the cases mediated included Power of Attorney, Deputyship, holidays, and Deprivation of Liberty … The success rate in the reported cases was high, with 78% of reported cases reaching an agreement either during or following mediation. Written agreement was reached in 52% of cases, with a further 19% achieving written agreement following the mediation. Oral rather than written agreement was reached in 7% of cases. In 22% of cases there was no agreement. In most of those where an agreement was reached (59%), the terms of agreement were incorporated into a court order. Reasons for lack of agreement being reached included entrenched positions, too many parties and too little time, and the existence of allegations of financial abuse and fraud. Examples given of approximate cost savings were between £6,000 and £30,000 – the exact savings depended on length of case and when in the proceedings the mediation took place, as well as estimates of savings of judicial and court staff time, and time of counsel and local authority professionals.’  ‘Mediating Court of Protection cases – Summary of research’ by Charlotte May: https://ukaji.org/2017/05/03/mediating-court-of-protection-cases-summary-of-research/

‘For those who have proposed mediation or responded to a suggestion by the court or another party, it is essential to consider what to expect from the mediation. Advisers will need to have a clear grasp of the strengths and weaknesses of the client’s case. Perhaps for this reason, many Court of Protection mediations take place after the receipt of experts’ reports … This is an ideal time to take stock of the evidence as it now stands, in as objective a way as possible … In anticipation of the mediation the following issues should be considered:

·         Assuming that new evidence (especially in the form of expert reports) has been received, what if any impact has this evidence had on the views and positions of the parties?

·         Advisers should explore with their clients as neutrally as possible whether there are any concessions which the client feels they could offer which might promote an agreement. These might include matters that could not be achieved through litigation alone …

·         It is important to evaluate in the light of the evidence what the client can realistically achieve in the litigation. If mediation fails what is the likely outcome of a contested hearing?

·         Is there any reason (on an objective evaluation) to believe that any of the other parties have not agreed to mediate in good faith?

·         The potential benefits of mediation should be weighed , even if it is unlikely to deliver a full resolution: might it narrow the issues or at least improve the parties’ ability to communicate?

·         With this point in mind advisers are encouraged to manage their client’s expectations …

Court of Protection cases pose particular challenges. P’s interests need to remain central to the process. If P is a party, he or she is likely to have a litigation friend who is likely to be present (or be represented) at the mediation. The litigation friend should make every attempt to ascertain P’s wishes and feelings on the issues which are being mediated. By definition, P is unlikely to be able to take part in the process of compromise and give-and-take that may be involved in mediation. It is the mediator’s role to ensure that P remains the focus of the mediation and to reduce the time spent disproportionately on satellite issues which may be considered important by the other parties. The second difficulty is that Court of Protection cases will frequently involve an imbalance of power between the parties, as they may typically involve a dispute between a statutory body and one or more individuals. It is suggested that this requires the mediator to satisfy him or herself that even though one party may be in a much stronger position, that party remains willing genuinely to consider an element of compromise.’ Court of Protection Handbook, paragraphs 19.33 to 19.41. In for example a residence dispute governed by the Care Act 2014, that is inextricably linked with COP proceedings, the mediator could be a leading specialist QC, who could be both facilitative and evaluative.

I have developed a new technique, called ‘BME Mediation’, for the amicable resolution of trust and estate disputes (which will be fully outlined in my new book for the Law Society, the ‘Contentious Trusts Handbook’https://newsite.carlislam.co.uk/contentious-trusts).

BME’ stands for ‘beginning’‘middle’, and ‘end’. The steps in the procedure are:

1.          Beginning:

1.1    Commercial analysis – joint evaluation of:

–           estate/trust assets;

–           ownership;

–           claims;

–           value;

–           opportunities (i.e. commercial exploitation of hidden value, e.g. IPR rights in relation to a work of art);

–           risks (e.g. the IHT/CGT consequences of a DOV executed after the s.142 IHTA 1984 window has closed, or the actual impact of BREXIT on the property market, e.g. if in the surrounding locality for valuation, a business fails or moves abroad, resulting in: (i) unemployment; (ii) a surge in mortgage default; and (iii) an increase in the volume of comparable properties being sold ‘cheap’ at auction, placing downward pressure on the market);

1.2      Legal risk analysis – separate evaluation of the:

–          facts (i.e. a chronology);

–        issues;

–          law;

–          evidence;

–          remedies & procedure; and

–          costs.

2.            Middle – exploration/mapping of:

2.1     needs/preferences e.g. retention of land to run a farm as a viable going concern versus assets available for sale to generate liquidity (and their saleability / current market value based upon condition/status quo);

2.2     opportunities e.g. planning permission to release/exploit hidden or trapped value or tax e.g. the RNRB for deaths after 6 April 2017;

2.3     choices – if e.g. party ‘A’ is willing to settle for asset ‘X’ and party ‘B’ for asset ‘Y’, evaluating the difference in value arising from the asymmetry between:

–          the value of each party’s respective claims on the estate/trust assets as a whole i.e. XY); and

–          the individual market values of ‘X ‘and ‘Y’; and

–          the cost of extracting value from ‘X’ and ‘Y’, e.g. if a property requires renovation before it can be sold, which when calculated may illustrate that the difference between the value at which ‘A’ and ‘B’ will settle (the ‘Zone of Difference’) is in fact less than 5%. In other words, that a symmetrical BATNA would = settlement at the mid-point of 2.5% (if actually doable, i.e. practicable);

2.4    adjustments to be factored into the settlement equation, i.e. which can reduce the Zone of Difference (‘Z’) to zero; and

2.5    arithmetical comparison of (as a crunched number) with the potential costs of litigation (‘C’) on:

–        the standard basis if a party wins i.e. because that party would usually fail to recover around 1/3 of their actual costs (which e.g. in a trial costing around £150K each = a loss of £50K; and

–          liability for own costs and other party’s costs (on standard basis if a party loses) (e.g. £250-£300K),

and chances of success (which at the early stage of any proceedings, i.e. before disclosure has taken place and witness statements have been exchanged is difficult to forecast with any accuracy, hence a conservative estimate is unlikely to be greater than 60/70% on either side = a difference of 30:35.

2.     End – Agreeing a fair and sensible split of estate/trust assets (i.e. X + Y) that avoids the ongoing and increasingly large risk of C either: (i) exhausting the available value (including hidden value) of X and Y, or (ii) the risk of either or both and B, ending up in negative equity. This requires pragmatism because in the long term ‘less can mean more’ if litigation is avoided/discontinued.

In relation to COP proceedings:

·         Y = P;

·         the value of P = costs of implementing a ‘best interests’ decision (‘BID’);

·         based upon expert evidence about P’s capacity; assessments and reports provided by a local authority about P’s needs and the available options, and resulting costs (‘RC’), the COP can endorse a BID agreed in mediation between e.g. two warring local authorities (‘LA’s’) about how RC is to be funded (‘F’);

·         in agreeing F, the LA’s can address adjustments e.g. to take account of voluntary payments already made by one LA (‘LA1’) toward P’s residential care costs following a move by to the administrative area of the other LA (‘LA2’), which LA2 can compare to the future costs of litigation (including possibly a referral to the Secretary of State and where a convention right is engaged and the claim qualifies, proceedings in the ECHR).

The point being that in mediation:

·         LA1 and LA2 can at the beginning agree upon what is in P’s best interests based upon expert evidence;

·         in the middle they can then work collaboratively to identify the practical options available and costs involved; and

·         at the end can jointly develop a plan (including transition), to implement a BID for P that can be approved by the COP judge.

That should result in a win/win outcome all round because:

·         P’s best interests will have been met;

·         LA1 and LA2 will have spent their precious resources on developing a plan for implementation, instead of on legal fees;

·         the plan can be implemented by the COP (who do not have jurisdiction to decide public law issues and therefore cannot order a LA to pay for P’s ongoing/future care); and

·         LA1 will exit on terms that are satisfactory to LA2.

The acme of the advocate and the expert in the COP is therefore to work collaboratively inP’s best interests with the aim of the parties agreeing a BID for approval by the court that is possibly better for both P and each LA, instead of going to court. That is why from the outset of a mediation the mediation advocate should say to the other counsel,

‘Thank you for meeting with us today.

I will be corrected if I am wrong, but what I think you say about the facts and the law is …

It is not my job to persuade you that your arguments will not succeed at trial.

As you know we say that we will succeed.

I am not interested in having an argument with you about whose view is right.

I suggest that litigation is not going to be a great outcome for either you or my client. The risks are…

I am here because I believe that we can reach a principled and fair deal that is not only good for my client but also better for you.

I hope that you will work with me to achieve this today’.

Each issue in dispute can then be approached constructively:

(i)             from the point of view of needs, interests (with P’s ‘best interests’ taking priority), and options, rather than fault and blame; and

(ii)           by focussing on the best possible outcome for all of the parties.

Both sides can then work to maintain an open and reasonable atmosphere, with the mediation advocates emphasising objectivity, resulting in a potential settlement being judged against agreed criteria to test fairness.

Because the beginning requires preliminary groundwork by each party, in preparing: (i) a commercial analysis; and (ii) a legal risk analysis, to be provided privately to the mediator ahead of the mediation, i.e. as a road-map to educate him about the issues, facts, law, and dynamics underlying resolution of the claim, there is no need for a plenary session, other than to discuss ‘house-keeping’ matters. In other words, instead of exchanging partisan position papers, and wasting precious daylight engaged in posturing and positional argument about who is ‘right’ and who is ‘wrong’, resulting in tempers being inflamed, and the further entrenchment of positions, resulting in ‘road-blocks’ that prevent the making of a deal before 5pm, the parties can set the mediator free to work his magic from the outset, and get on with the business of ‘doing a deal’. They can then start to engage constructively with each other in a joint-problem solving exercise, conducted by ‘proxy’, through the mediator.

Breach of Fiduciary Duty

This year I have been involved in 3 cases involving allegations of breach of fiduciary duty (including self-dealing by executors and fraudulent calumny by a fiduciary who remained silent), and this subject features in my forthcoming book the ‘Contentious Trusts Handbook’ which I am writing for the Law Society.

 

I am also giving a talk about ‘Breach of fiduciary duties by trustees’ at Barlow Robbins Solicitors in Guildford on Tuesday 13 November 2018, and will address the recent judgment by Mr Justice Nugee in  Glenn v Watson & Ors [2018] EWHC 2016 (Ch) (31 July 2018), in which the Judge observed,

 

‘I was referred by both [Counsel] to a number of authorities on the question whether a fiduciary duty is owed by one person to another.  For the most part I did not detect any significant difference between them as to the law; the authorities referred to were rather put forward as illustrations, thought to be helpful to one side or the other, of the principles.  In those circumstances, I do not intend to discuss the authorities at length, but will try and summarise what I understand the principles to be.

Those are I think as follows:

(1)                   There are a number of settled categories of fiduciary relationship.  The paradigm example is that of trustee and beneficiary; other well-settled examples are solicitor and client, agent and principal, director and company (subject to the impact of the Companies Act 2006), and the relationship between partners: Snell’s Equity (33rd edn, 2015) at §7‑004.

(2)                   Outside these settled categories, fiduciary duties may be held to arise if the particular facts warrant it.  Identifying the circumstances that justify the imposition of fiduciary duties has been said to be difficult because the courts have consistently declined to provide a definition, or even a uniform description, of a fiduciary relationship: ibid at §7‑005.

(3)                …

(4)                …

(5)                …

(6)                   What then are the particular factual circumstances that will lead to the Court finding that fiduciary duties are owed?  This can best be elucidated by a number of citations:

(a)        In his well-known classic judgment in Bristol & West Building Society v Mothew [1998] Ch 1 (“Mothew”) at 18A, Millett LJ said:

“A fiduciary is someone who has undertaken to act for or on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence.”

(b)        In Arklow Investments Ltd v Maclean [2000] 1 WLR 594 at 598G, Henry J, giving the judgment of the Privy Council, said:

“the concept encaptures a situation where one person is in a relationship with another which gives rise to a legitimate expectation, which equity will recognise, that the fiduciary will not utilise his or her position in such a way which is adverse to the interests of the principal.”

(c)        In F&C Alternative Investments (Holdings) Ltd v Barthelemy (No 2) [2011] EWHC 1731 (Ch) at [225], Sales J said:

“Fiduciary duties are obligations imposed by law as a reaction to particular circumstances of responsibility assumed by one person in respect of the conduct of the affairs of another.”

(d)       In another case involving Ross River Ltd, Ross River Ltd v Cambridge City Football Club [2007] EWHC 2115 (Ch) (cited by Lloyd LJ in Ross River at [56]-[58]), Briggs J referred at [198] to:

“well known badges or hallmarks of a fiduciary relationship, such as … [if] the plaintiff entrusts to the defendant a job to be performed, for instance, the negotiation of a contract on his behalf or for his benefit.”

(e)        In Ross River at [51]-[52] Lloyd LJ cited with approval a passage from Bean, Fiduciary Obligations and Joint Ventures (1995) (itself referring to Finn, Fiduciary Obligations (1977)), which is too long to set out in full but the essence of which is as follows:

“[Fiduciary] office holders are entrusted with power to act for the benefit of another, but are not under the immediate control and supervision of the beneficiary…

Finn’s rationale is that the fiduciary who has freedom to determine how the interests of the beneficiary are to be served requires the supervision of equity. Indeed, it is the fiduciary’s autonomy in decision-making that requires equity’s supervision and this is required whether or not the autonomy is created under a contract between the parties or is inherent in the office.”

(7)                   Without in any way attempting to define the circumstances in which fiduciary duties arise (something the courts have avoided doing), it seems to me that what all these citations have in common is the idea that A will be held to owe fiduciary duties to B if B is reliant or dependent on A to exercise rights or powers, or otherwise act, for the benefit of B in circumstances where B can reasonably expect A to put B’s interests first.  That may be because (as in the case of solicitor and client, or principal and agent) B has himself put his affairs in the hands of A; or it may be because (as in the case of trustee and beneficiary, or receivers, administrators and the like) A has agreed, and/or been appointed, to act for B’s benefit.  In each case however the nature of the relationship is such that B can expect A in colloquial language to be on his side.  That is why the distinguishing obligation of a fiduciary is the obligation of loyalty, the principal being entitled to “the single-minded loyalty of his fiduciary” (Mothew at 18A): someone who has agreed to act in the interests of another has to put the interests of that other first.  That means he must not make use of his position to benefit himself, or anyone else, without B’s informed consent.

(8)                   …

(9)                  …

(10)               Even if a party is held to have owed a fiduciary duty to another party, the nature of the fiduciary obligations owed is itself a fact-sensitive enquiry, to be determined by considering the particular relationship between the parties: Ross River at [64].  Thus for example in John v James the defendants were not disposed to dispute that the publisher owed a fiduciary obligation to account for royalties received, but it was disputed, and had to be decided, whether it owed a fiduciary obligation in respect of exploitation of the copyrights; in Ross River Morgan J had found that the defendants owed fiduciary duties in certain respects but not others, and the Court of Appeal found that the duties were more extensive.

  1. Mr McCaughran had a further submission on this point, which is that a distinction can be seen in the authorities between cases in which the Court has held that a fiduciary duty arises out of an existing contractual relationship as an incident of the contract between the parties, and cases in which a party is held to owe a fiduciary duty to the other party in the negotiation of the contract.  He relied on what Lord Walker had said in Cobbe v Yeoman’s Row Management Ltd [2008] UKHL 55 at [81] where he referred to:

“the general principle that the court should be very slow to introduce uncertainty into commercial transactions by over-ready use of equitable concepts such as fiduciary obligations and equitable estoppel.  That applies to commercial negotiations whether or not they are expressly stated to be subject to contract.”

That was not in fact a case about fiduciary duties but about promissory estoppel, but I do not think that detracts from the force of what Lord Walker says, or from its good sense.  Parties negotiating for a contract are normally entitled to act in their own interests and are not obliged to have regard to the interests of the other party, and it takes particular circumstances before fiduciary duties are to be imposed on them.  Mr McCaughran said that in the case of negotiations for a joint venture such cases were very rare, the only example he had found being Murad.  In Murad the claimants were two sisters who lived abroad and looked to the defendant, a Mr Al-Saraj, to make appropriate recommendations and assist them in connection with investments in England; they had no relevant experience, had no knowledge of the arrangements made by the defendant with third parties, and entrusted him with extensive discretion to act in matters affecting their interests.  They were, in the words of Etherton J “wholly dependent” on him for his advice and recommendation, the negotiations with the vendors, and the instruction of professionals on their behalf, including in relation to the structure of the transaction and documentation; see at [328], [332].

I will add one further point here.  The reference in the cases (such as John v James, Mothew and Longstaff v Birtles) to a relationship of “trust and confidence” does not mean that every relationship in which one party trusts the other is a fiduciary relationship.  Contracting parties usually do trust each other – indeed they would be unlikely to do business with each other if they did not – but this does not mean that they owe each other the duties which are peculiar to fiduciaries.  What I think is meant by a relationship of trust and confidence in this context is where one party places himself, or is placed, in the position where he trusts and confides that the other party will act exclusively in the first party’s interests.  If the concept of trust and confidence is not confined in this way, it seems to me to cease to be of any utility in determining whether a fiduciary duty is owed: cf the recent decision of Leggatt LJ (at first instance) in Sheikh Al Nehayan v Kent [2018] EWHC 333 (Comm) (“Al Nehayan”) at [164]-[165]. This judgment, which contains a valuable analysis of the whole question of fiduciary duties (see at [153ff]), was not available at the time of the hearing, but it contains nothing with which I disagree, and on this particular point seems to me plainly right, and I have not thought it necessary to ask for the parties’ further submissions on it.’

In Sheikh Al Nehayan v Kent [2018] Lord Justice Leggatt stated,

‘As Lord Browne-Wilkinson cautioned in Henderson v Merrett Syndicates Ltd [1995] 2 AC 145 at 206:

“The phrase ‘fiduciary duties’ is a dangerous one, giving rise to a mistaken assumption that all fiduciaries owe the same duties in all circumstances.  That is not the case.” … I bear in mind that it is exceptional for fiduciary duties to arise other than in certain settled categories of relationship.  The paradigm case of a fiduciary relationship is of course that between a trustee and the beneficiary of a trust.  Other settled categories of fiduciary include partners, company directors, solicitors and agents.  Those categories do not include shareholders, either in relation to the company in which they own shares or to each other.   While it is clear that fiduciary duties may exist outside such established categories, the task of determining when they do is not straightforward, as there is no generally accepted definition of a fiduciary.  Indeed, it has been said that a fiduciary “is not subject to fiduciary obligations because he is a fiduciary; it is because he is subject to them that he is a fiduciary”: see Finn, Fiduciary Obligations (1977), p2, cited with approval by Millett LJ in Bristol and West Building Society v Mothew [1998] Ch 1, 18.  If this is right, it simply begs the question of how to determine when a person is subject to fiduciary obligations if not by analysing the nature of their relationship with the person to whom the obligations are owed.

Despite saying in the Mothew case that a fiduciary is defined by the obligations to which he is subject and not the other way round, Millett LJ did give a general description of a fiduciary as “someone who has undertaken to act for or on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence”: see [1998] Ch 1, 18.  This description has often since been cited with approval, including by the Supreme Court in FHR European Ventures LLP v Cedar Capital Partners LLC [2014] UKSC 45[2015] AC 250, para 5.  To similar effect, in another much quoted statement, Mason J in the High Court of Australia in Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41, 96-97, said:

“The critical feature of these relationships is that the fiduciary undertakes or agrees to act for or on behalf of or in the interests of another person in the exercise of a power or discretion which will affect the interests of that other person in a legal or practical sense. The relationship between the parties is therefore one which gives the fiduciary a special opportunity to exercise the power or discretion to the detriment of that other person who is accordingly vulnerable to abuse by the fiduciary of his position.”

Thus, fiduciary duties typically arise where one person undertakes and is entrusted with authority to manage the property or affairs of another and to make discretionary decisions on behalf of that person.  (Such duties may also arise where the responsibility undertaken does not directly involve making decisions but involves the giving of advice in a context, for example that of solicitor and client, where the adviser has a substantial degree of power over the other party’s decision-making: see Lionel Smith, “Fiduciary relationships: ensuring the loyal exercise of judgement on behalf of another” (2014) 130 LQR 608.)  The essential idea is that a person in such a position is not permitted to use their position for their own private advantage but is required to act unselfishly in what they perceive to be the best interests of their principal.  This is the core of the obligation of loyalty which Millett LJ in the Mothew case [1998] Ch 1 at 18, described as the “distinguishing obligation of a fiduciary”.  Loyalty in this context means being guided solely by the interests of the principal and not by any consideration of the fiduciary’s own interests.  To promote such decision-making, fiduciaries are required to act openly and honestly and must not (without the informed consent of their principal) place themselves in a position where their own interests or their duty to another party may conflict with their duty to pursue the interests of their principal.  They are also liable to account for any profit obtained for themselves as a result of their position …

But the existence of trust and confidence is not sufficient by itself to give rise to fiduciary obligations.  In the first place, the question whether one party did in fact subjectively place trust in the other is not the test.  As Dawson J said in the Hospital Products case (1984) 156 CLR 41 at 71:

“A fiduciary relationship does not arise where, because one of the parties to a relationship has wrongly assessed the trustworthiness of another, he has reposed confidence in him which he would not have done had he known the true intentions of that other.  In ordinary business affairs persons who have dealings with one another frequently have confidence in each other and sometimes that confidence is misplaced.  That does not make the relationship a fiduciary one.  A fiduciary relationship exists where one party is in a position of reliance upon the other because of the nature of the relationship and not because of a wrong assessment of character or reliability.”

The inquiry, in other words, is an objective one involving the normative question whether the nature of the relationship is such that one party is entitled to repose trust and confidence in the other.

It is also necessary to identify more precisely the nature of the trust and confidence which is a feature of a fiduciary relationship.  There plainly are many situations in which a party to a commercial transaction may legitimately repose trust and confidence in another without the other party owing any fiduciary duties.  Thus, in Re Goldcorp Exchange Ltd (In Receivership) [1995] 1 AC 74, the Privy Council rejected an argument that a company was a fiduciary because it had agreed to keep gold bullion in safe custody for customers in circumstances where the customers were totally dependent on the company and trusted the company to do what it had promised without in practice there being any means of verification.  Lord Mustill said (at 98):

“Many commercial relationships involve just such a reliance by one party on the other, and to introduce the whole new dimension into such relationships which would flow from giving them a fiduciary character would (as it seems to their Lordships) have adverse consequences …. It is possible without misuse of language to say that the customers put faith in the company, and that their trust has not been repaid. But the vocabulary is misleading; high expectations do not necessarily lead to equitable remedies.”

Mutual trust and confidence between parties dealing with one another can be of different kinds.  At a basic level any contracting party is entitled to rely on the other party to perform its contractual obligations without having to monitor performance or even if (as in Re Goldcorp Exchange Ltd) it is unable to monitor performance.  The kind of trust and confidence characteristic of a fiduciary relationship is different.  As discussed above, it is founded on the acceptance by one party of a role which requires exercising judgment and making discretionary decisions on behalf of another and constitutes trust and confidence in the loyalty of the decision-maker to put aside his or her own interests and act solely in the interests of the principal.’

 

 

 

 

 

 

 

Six Minutes in November 2018?

‘The Clerk at the table turned over the sandglass to time six minutes to the division. The Bar Doorkeeper opened the Chamber’s inner doors and shouted “Division!” to alert the principal doorkeeper, who activated the bell by a lever in the arm of his chair. Bells rang throughout the Commons, and the cry of “Division!” was taken by police officers and other staff. The bells rang for fifty-five seconds. During this time each side of the argument provided Tellers for the Division. After two minutes, the speaker again put the question, and announced the names of the Tellers … Members had four minutes to get into one division Lobby or the other … It is hard to say at what point the government grasped the nature of this maelstrom. Earlier in the afternoon, Ministers had felt that the Labour decision to divide the House was a mistake and had freely predicted that no more than a dozen Conservatives would defy their Whips. David Margesson [the chief government whip] claimed that it dawned on him only in the winding-up speeches that the large government majority was likely to collapse. Out of the blue, a routine adjournment motion for the Whitsun holiday, which the government had expected comfortably to win, had been hijacked, using a procedural vote to expose the fragility of the Chamberlain administration. As the division bell sounded with the piercing shrill of a fire alarm, panic spread along the front bench … There was no indication of how the vote would go as Members began to move into the division lobbies … Active until the sixth minute when the Doorkeepers turned their keys in the locks, government Whips and Ministers were still putting pressure on the dissidents … Almost the last group to make up their minds were the Conservative dissidents … Quintin Hogg [who later became Lord Chancellor] still standing [exclaimed] ‘What should I do?” He agonized. “Vote for the Government as the majority would do? Abstain as many subsequently did? Vote against and perhaps bring my country as well as the Government down?” … On the Clerk’s table, the grey sand in the Victorian glass trickled to a halt. The Speaker rose a second time, and called out: “Lock the doors” … Mind made up, Hogg rushed past the Doorkeeper – in one version forcing him aside – and got into the No lobby “as the door closed behind.” Dingle Foot described the scene in the No lobby as unique, a fitting culmination to what had been “unquestionably the most important debate in Parliamentary history”. Clement Attlee saw – much to his “pleasure and surprise” – something that he had long hoped for, but never expected to witness: Conservative MP after Conservative MP … crowded with Labour and Liberal MP’s into the same lobby. In Ronald Blythe’s phrase: “Shifty eyes and blushes met the Labour and Liberal grins.”’ Six Minutes in May– How Churchill Unexpectedly Became Prime Minister, by Nicholas Shakespeare (2017).

If the UK remains on course for a ‘no deal Brexit’ could history repeat itself in November 2018?

If you ask an adult to make a rational choice between:

(i)            saving around £300 per year in household bills (the theoretical free-trade benefit of Brexit articulated today on the BBC Sunday Politics programme by Owen Paterson MP); and

(ii)           loss of access to an essential public service (the ‘price’ of Brexit), e.g. medical care for the treatment of cancer, which could easily exceed multiple thousands of pounds in the same period for an individual (compounded by the cost of paying for private medical care if affordable unless they have insurance),

then, unless that person is a rabid ideologue, the rational answer is obvious, in which case why not ask the people ‘now that you know what the actual cost/benefit is likely to be, are you sure that you want to jump over the Brexit cliff?’ because there is no parachute or safety-net below – only sharks and rocks.