Compare the English common Law approach to jurisdiction with the provisions of the EU Council Regulation 44/2001
“…with the increasing facility of communication and transportation, the opportunities for committing crimes whose constituent elements take place in more than one State have grown apace”
The end of the twentieth century has been radically changed by the World Wide Web , with the Internet and email both effecting and affecting the future of technological development accorded to the upsurge of globalisation in today’s fiscal marketplace and potential opportunities filtering through to the legal profession worldwide . Freely available in the West are all manner of legal documents available for downloading from the Web . Data have become freely accessible in both paper and electronic formats world-wide .
Prior to the Treaty of Rome, it took a perceived breach of Community law for the rights of the individual to be recognised by a Judicial Review of Community Acts, through the invocation of Articles 230 to 233 . The Treaty of Nice, finally ratified on 1st February 2003, was intended to make the process of challenging EC laws, decisions and regulations by non-privileged applicants less onerous, with the Court of First Instance referring any evaluation of principle to the ECJ for a review of its judgement “where a serious risk of unity or consistency of Community law” might otherwise ensue .
The decision of the ECJ ensured that a breach in law was no longer necessary in order to challenge EU legislation , confirming the right of the individual had the support, within EC law, of the ECHR . Following this ruling the restrictive interpretation of the meaning of individual concern has been criticised as being at odds with the requirement for effective judicial protection for Community law rights, a principle established and upheld by the Community courts.
DISCUSSION
Modern British Company Law evolved from the unincorporated joint stock company , an association akin to partnership, rather than from the corporation . It is therefore based more on partnership principles than corporate personality and the deed of settlement under which companies were traditionally formed was not unlike a modern-day deed of partnership . As a result it had become necessary for cooperation to be established between the legal administrations of all the Member States as a direct response to the freedom of movement between jurisdictions, as recognised by the Tampere European Council in October 1999 which stated that “in a genuine European Area of Justice individuals and businesses should not be prevented or discouraged from exercising their rights by the incompatibility or complexity of legal or administrative systems in the Member States”.
This was reinforced following the Treaty of Amsterdam when Articles 61 (c) and 65 revealed the necessity for cross-border measures involving judicial cooperation to ensure the smooth-running of the EU Community. As a result the Council Regulation [EC] No 44/2001 was agreed on 22nd December 2000 and ratified on 1st March 2002. Ministers of Justice met in Stockholm in February 2001 to confirm the European Enforcement Order, a pilot project enabling businesses throughout the Member States to recover outstanding uncontested debts with minimal legislation. This was developed further when the Council Committee on Civil Law Matters confirmed the format of the derogation that needed to be drafted, thereby recognising ‘judgements in civil and commercial matters’ and ‘streamlining the procedure for obtaining a declaration of enforceability’. It has, however, attracted criticism in respect of continued constraint on the movement of judgements between Member States and has been described as being ‘too restrictive’.
Balanced against this criticism, however, is the need to adhere strictly within the realms of Article 6 of the European Convention for the Protection of Human Rights and Fundamental Freedoms, together with Article 47 of the Charter of Fundamental Rights of the European Union. As a result specific criteria need to be observed. As a result, the enforceability of Regulation 44/2001 has been established in Article 23 of Regulation 44/2001, clarifying that the parties need to have agreed to recognise jurisdiction within a court of the Member State and that ‘such jurisdiction shall be exclusive unless the parties have agreed otherwise’. Furthermore, this acknowledgment needs to be in writing as a “durable record of the agreement” .
Where this Law relates to Contemporary Society
To attempt to apply justice within company identities it needs to be possible to find out who is at fault. In English common law the only outcome could be obtaining justice but in equity , each individual case is looked at separately and the courts try to find a suitable answer to each question because, to prove fraud within common law, either conscious dishonesty or reckless indifference needs to be proved . Certain dealings may be suitable to be investigated under the laws of Equity. However, these usually involve fraud where advantage is taken of a person in a weaker or less effective position in a transaction. Fraud within equity has wider associations to that associated with common law, often involving innocent people who were misled. It is also more easily proved. It has been suggested that the common law exceptions to the idea of separate company identity are simply a symptom of the courts’ attempt to ensure that all people involved are not disadvantaged by the actions of company management and shareholders who are protected by the status of limited responsibility .
A basic principle for Company Directors is to meet the terms of their Articles of Association and individual service contracts, as well as agreeing with the rules within the ‘City Code on Takeovers and Mergers’ and, for Directors of listed companies, the rules within both the Stock Exchange’s ‘Listing Rules’ and the ‘Combined Code’. The resulting difficulty and obscurity have been recognised by Butcher (2000: 15) who comments: “Offshore, banking, tax havens, trusts, joint ventures, subsidiaries, corporate groups, satellites and the like have become de rigueur [i.e. essential] in today’s commercial and corporate world” .
History of Borrowings
Roscoe Pound suggests that many legal systems are intermingled, realised in a history of borrowings of legal materials. Nörr concurred, suggesting that knowledge and experience, together with opinions and ideas are transmitted across countries and continents, clarifying, however, that a ‘mixed jurisdiction’ can be revealed in a legal system at the intersection of civil law and common law – a situation which has existed in Scotland for many years and which now applies to law in England and Wales, especially relevant since the ‘Constitution for Europe’ was agreed in October 2004. In some of these dualist systems the common law has become submerged beneath the codification of civil law, although not in the case of Scotland which maintains its uncodified locus.
The procedural basis of Civil Law was based on the romano-canonical procedure which was prevalent throughout Europe from the Middle Ages and which, by contemporary times was deeply entrenched. The basis of this legal system was the learned nature of its innumerable codes, as evidenced by the innumerable Articles, Protocols and Derogations associated with the now burgeoning EU legislation. A perfect example relate to the free movement of workers within EU Member States for example, Directive 68/360/EEC and Directive 64/221/EEC , together with a number of other regulations: Article 12 prohibits discrimination on the grounds of nationality, whilst Articles 39 and 43 both relate to other provisions involving rights of access within EC countries.
There are 36 Protocols altogether, two further ones of which relate to the Treaties of Accession. Associated with the Constitution are 50 accompanying Declarations which clarify the Charter of Fundamental Rights and which establish the European External Action Service, and the Final Act confirming the signatures appended by the Heads of the 25 Member States all agree with the Treaty, Protocols and Declarations which make up the Constitution (Addendum 1, Rev 1 CIG 87/04). Conversely, however, this proliferation could also be interpreted as excessive, recognised by Advocate General Jacobs who proposed a new test to elucidate ‘individual concern’, establishing that substantial adverse effects might arise due to an individual’s specific circumstances.
In his opinion, ‘the principal of effective judicial protection is part of Community law with the principle grounded “in the constitutional traditions common to the Member States and in Arts 6 and 13 of the ECHR.”. He reiterated the relevance of Paragraph 4 of Article 230 in establishing individual concern . A further test was suggested, within the auspices of Article 230, directly as a result of Jégo-Quéré – “a way out of this self-imposed straitjacket” with the effect of specifying a restriction on rights, or imposition of obligations, clarified under Paragraph 51 of Article 230. This interpretation precludes all meaning in respect of individual concern as set out in the fourth paragraph of Article 230 EC, perhaps a natural assumption resulting in the Court of the First Instance failing to correctly interpret this law?
The Tacit Mandate of an unwritten Constitution
“It is a feature of the peculiarly British conception of the separation of powers that Parliament, the Executive and the Courts have each their distinct and largely exclusive domain. Parliament has a largely unchallengeable right to make whatever laws it thinks right. The Executive carries on the administration of the country in accordance with the powers conferred on it by law. The Court interpret the laws and see that they are obeyed” .
Constitution in the United Kingdom, however, has a tacit mandate, realised through the Statutes , The Common Law and established Conventions through which the various organs of State are co-ordinated, an inherent part of the charter without being incorporated into the actual law. Through habitual utilisation revealing the expectations associated with these Conventions, a compliance affecting political and legal activities limits any prerogative powers, although not enforceable in law. The doctrine that maintains a separation of powers reinforces the concept of the constitution, thereby “…avoiding the risk of too much power being accumulated in one person or institution…” . Montesquieu propounds the total separation of powers, with no single person fulfilling more than one prominent position. This simplistic solution, however, does not adequately address the organisation of the Parliamentary offices that exist today.
At any one time there are a range of Ministers involved with all major issues of law, with Ministers from various government departments playing roles in legal matters through their responsibility for law reform in their particular area . Where other countries have a single Ministerial office responsible for co-ordinating criminal offences, Britain’s legal system is administered through this traditional hierarchy of offices each responsible for their own particular area of concern and often covering branches of work directly in contravention of each other , e.g. the Lord Chancellor’s Department is at present responsible for the Head of the Judiciary and Speaker of the House of Lords whilst also fulfilling a role as Member of the Cabinet. However, it was announced by the Government in 2003 that the position of Lord Chancellor was to be abolished.
The Sovereignty of Parliament, in association with acknowledged Conventions, contributes to the sanctity of the Constitution, with Statute reinforcing this safeguard. Until EU legislation was ratified Parliamentary precedence prevailed through Statute, encoded within legislation and sustained by the English legal system. This espousal of English law, and ultimately Parliament, precluded the judiciary from assuming supremacy unless the Government were culpable of illicit conduct . Occasionally the Courts have concession to decide the application of legislative power as in a case involving the extent of the Inland Revenue’s authority . Successive Governments are enfranchised through Parliamentary sovereignty to repeal Acts retrospectively from which the doctrine of implied repeal once enabled Courts to apply the latest legislation if confronted with a resultant incompatibility although this has now be superseded by Section 2 (4) ECA 1972, where compliance to all Community legislation is required.
This concept of a later Parliaments not being bound by its predecessor also failed to gain Lord Denning’s support, referring, as he does, to a ‘political reality’, limitations of which also impact upon social and economic factors – especially relevant since the inception and ratification of EU legislation and its impact up the English domestic Courts’ system.
New sources of law , such as the devolved administrations realised in The Scotland Act 1998 and the Government of Wales Act 1998, and especially evident since the ECHR was ratified in October 2000, also complicate matters, although devolved legislation and all UK Ministers remain ultimately accountable to UK Parliament . Section 2(1) of the European Communities Act 1972 limits Parliament’s sovereign rights, with EU legislation being a contract between Member States under which mutual duties are accepted. Many of the Articles of the Convention are limited by various derogations which can also be applied , although EU law retains the ultimate supremacy as evidenced in Factortame and, although loss of sovereignty is limited, the House of Lords acknowledged the discrepancy. The sovereignty of Parliament was curtailed with the Courts requirement “…to override any national law found to be in conflict with any directly enforceable community law…” creating a potential for impasse with the Constitution, and rescinding Parliament’s remit to unilaterally legislate with impunity. Section 2(4) of the Convention is especially relevant in binding any implied repeal by Parliament, although there is always potential for derogations to be applied as necessary .
Jurisdiction over Foreign Defendants
Following the Brussels Convention in 1968 and the later Lugano Convention in 1988, both of which related to the Jurisdiction and the Enforcement of Judgements in Civil and Commercial Matters, the Member States invoked Article 293 and concluded that it was necessary for rules governing the free movement of ‘judgments in civil and commercial matters’ to be put into place and for this Directive to be formally recognised amongst all Member States . Accordingly, EU Council Regulation 44/2001 [20] states that:
“The United Kingdom and Ireland, in accordance with Article 3 or the Protocol on the position of the United Kingdom and Ireland annexed to the Treaty on European Union and to the Treaty establishing the European Community, have given notice of their wish to take part in the adoption and application of this Regulation” .
However, in order to reconcile English Common Law with the requirements of Regulation 44/2001 it has been necessary to make certain adaptations. Britain is one of the few countries whose legislation has evolved from common law whilst EU legislation has developed in accordance with the precepts of the majority of European countries, all of which have a civil law background. As a consequence, EU legislation, following the civil law format, is based upon a nation’s prerogative to exercise jurisdiction over its citizens. This ‘protective nexus’ was recognised in the significant case of The Lotus (Fr v Tur) which is recognised as a definitive international law referent, described as “any crime committed outside [the forum's] territory by an alien against the security, territorial integrity or political independence of the [forum]....” , reproduced in Harvard Law School .
Common Law countries, however, centre their nexus on the territorial aspect based on the association of effects which recognises that “acts done abroad which affect the security of the state…” . When compared with civil law countries, this locus is considered of subordinate significance: civil legislation encompasses all conduct that may impair that country and “which concern it more than they concern other states…”. Particularly relevant to this concept is the case of the Crown v Waddon when the Obscene Publications Act 1959 was invoked. The case related to pornographic material being relayed from a computer in the UK to a computer server in the United States after which it was downloaded and transmitted back to the UK for viewing .
Following this case the Council of Europe introduced congruent legislation at a Convention on Cybercrime in November 2001 in an attempt to assuage this problem . This particular Treaty, whilst granting courts in Member States jurisdiction over offences by “one of its nationals, if the offence is punishable under criminal law where it was committed or if the offence is committed outside the territorial jurisdiction of any State” , or “in its territory” , alternative nexuses are also entitled to be applied as per Article 24(4) of EU Council Regulation 44/2001. This does little to diminish any conflicting criteria arising from the common law approach to jurisdiction provisions.
Doctrine of Implied Consent
Another disparity existing between civil law and common law countries relates to implied consent to a court’s jurisdiction. These differences have been acknowledged through international convention sustained by the Hague Conference on Private International Law, with sufficient similarity for conciliatory efforts to achieve potential success. Implied consent acknowledges that an individual is a citizen within the court’s jurisdiction, living within that domain and ‘having general contacts with the forum or specific contacts with the forum’, the most importance of which are the first two which rely on the physical presence of the individual, with a more contemporary approach relying on the ‘virtual presence’ of that individual which covered the veil of incorporation and business assets. A discussion relating to the legalities surrounding English common law were revealed in Burnham v Superior Court of California .
Whereas Common Law countries base their procedures on a flexible correlation between statute and due process, Civil Law is based solely on a system of codes realised within EU legislation, since 2001, in the Regulation on Jurisdiction and the Recognition and Enforcement of Judgements in Civil and Commercial Matters ; The consolidated text is published in European Union, OFFICIAL JOURNAL , with Article 2 stating that EU citizens may only be “sued in the courts of that Member State”.
Acknowledging the differences between civil and common law has required legislation that achieves more than that contained within EU legislation per se. A Convention on Jurisdiction and Foreign Judgements in Civil and Commercial Matters has been designed to promote “the progressive unification of the rules of private international law” . Statute of The Hague Conference on Private International Law, 1955 was augmented by the Hague Conference on Private International Law which constitutes all the EU Member States, together with the United States and a number of other countries . The major effect, following eventual ratification, would be that, according to Article 6, an action in contract could be pursuable in the country where it was performed, but also, as per Article 10, in the country affected through either tort or delict.
A longstanding point of disagreement was contained in Article 7(3) in which the forum selection clauses are defined. Alternatives including quoting EU Regulations verbatim or, according to Article 7 , for each country to either actively agree to enforce forum selection clauses or, equally, as per Article 7 , an active refusal to enforce these clauses.
CONCLUSION
There are moves to apply personam jurisdiction in civil cases in countries which follow the common law and those countries which uphold the precepts of codified legislation as revealed within the European Union, especially relevant in company law. A connection needs to be established between the transaction and the forum for this to be regarded as legal in common law countries whilst the focus is on the consumer’s home country or, for non-consumer issues, in the forum where the contract is executed in countries such as the European Union which follow the Civil Code. The Hague Convention recognises these differences and has attempted to clarify and incorporate these legislative differences into an acceptable degree of uniformity over and above that recognised by the legislation of the European Union such as Council Regulation [EC] No 44/2001.
In Britain, however, judicial review limits its constitution, incorporating the ultra vires doctrine of common law in respect of both primary and secondary legislation which, in turn, provide achieve a degree of constraint on Parliament. Conversely, however, through the doctrine of common law there is considerable flexibility which would enable the English common law approach to adequately absorb any jurisdiction provisions thrust on it by either EU Council Regulation No 44/2001 or, indeed, any other EU legislation that would bind future powers of government, such as the Constitution for Europe should it be ratified in Britain following referendum in 2006.
Whilst part of this flexibility owes its characteristics to the tacit mandate of Britain’s unwritten constitution, sufficient statute has entered the legal system for this flexibility to be retained should the need for a written constitution ever arise. The locus supporting the success of an encoded constitution relies on the legal system’s ability to constrain the powers of government and this would not necessarily be any the less limited if Britain abides by the precepts of EU codified legislation or whether it maintains its common law influence or, indeed, whether a true interface develops to support both. As a result, English common law is sufficiently robust to be able to recognise and incorporate the Human Rights Act 1998 together with all the Articles, Protocols and Derogations within the ECHR whilst maintaining its overall supremacy. As a result there would be little need to change in order for common law precepts to adapt to incorporate the very necessary alterations required for company law in Britain to be more efficient within the contemporary global marketplace.
BIBLIOGRAPHY
Books
Brownlie, Ian (1990): Principles of Public International Law [4th ed] Page 304
Butcher, B S (2000): Directors’ Duties: A New Millennium, a New Approach. Hague: Klewer Law International
Derbyshire, P (2003): Eddey & Darbyshire on the English Legal System (7th ed). Andover: Sweet & Maxwell
Elliott, C. & Quinn, F. English Legal System, (1996) 1st Ed. Harlow: Longman.
Evans-Jones, Robin (ed.) (1995), The Civil Law Tradition in Scotland
Gower, L C B (1954): The Principles of Modern Company Law. London: Stevens and Sons
Maitland-Walker, Julian and Sully, Robert (2002): ECJ Defines the Right of an Individual to Challenge EC Laws that Detrimentally Affect it. London: Goldens Publications
Mital, V & Johnson, L (1992): Advanced Information Systems for Lawyers. London: Chapman & Hall, at Page 167
Montesquieu, C. The Spirit of the Laws, Cambridge: Cambridge University Press.
Murley, Richard [introduction] (2003): A Practitioners Guide to The City Code on Takeovers and Mergers 2003 – 2004. Button, Maurice [ed]. Old Woking, Surrey: City & Financial Publishing
Nörr, Knut Wolfgang (1992): The Problem of Legal Transplants and the Reception of Continental Law in China before 1930. In Wege zum japanischen Recht: Festschrift für Zentaro Kitagawa ( 1992), 231.
Scott, 1912, vol. I, p. 45
Smith, T B (1962): Studies Critical and Comparative; Joseph Dainow (ed.). In The Role of Judicial Decisions and Doctrine in Civil Law and in Mixed Jurisdictions ( 1974).
Smith,T B (1962): Scots Law and Roman-Dutch Law: A Shared Tradition, in: Studies Critical and Comparative
Susskind, R (1996): The Future of Law. Oxford: Oxford University Press, pp 166-174
Watson, Alan (1974): Legal Transplants: An Approach to Comparative Law
Zimmermann, Reinhard and Dieckmann, Johann A (1995): Das schottische Privatrecht im Spiegel seiner Literatur. Zeitschrift für Europäsches Privatrecht Page 898
Articles
BBC News (July 1, 1999), at http://news.bbc.co.uk/hi/english/sci/tech
Gallagher, L. & Ziegler, P. ‘Lifting the Corporate Veil in the Pursuit of Justice’ JBL (1990)
Levison, A (2000): Are Lawyers Going to be Ready for the 21st Century? In Society for Computers and Law E-zine, Issue Feb/March 2000 Vol. 10 Issue 6
Ragolle, Filip (2003): Access to Justice for Private Applicants in the Community Legal Order: Recent Evolutions. 28 EL Rev, 90
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Schmitthoff, C. M (1982): Salomon in the Shadows. In JBL 305 (1982)
Legislation
Access to Justice, 1996 per Woolf
Amsterdam Treaty: http://europe.eu.int/scadplus/leg/en/s50000.htm
Article 1 of the Hague Conference on Private International Law, at http://www.hcch.net/e/conventions/text01e.html
Article 15 provides for derogation from the rights and freedoms in cases of ‘public emergency’
Article 24(1)(a)
Article 24(1)(d)
Bill of Rights 1689
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C 027, 26/01/1998 p. 0001-0027 at http://europa.eu.int.eur-lex/en/lif/dat/1968/en.html
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[to enter site www.eurunion.org.htm please see notes at end of bibliography]
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Bligh v. Brent (2 Y & C Ex. 268), decided in 1837
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Costa v. ENEL [1964] CMLR 425, ECJ
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Entick v. Carrington (1765) 19 St Tr 1030; Council of Civil Service Unions v. Minister for the Civil Service [1985] AC 374, HL
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How to negotiate the EU Official Website: URL www.eurunion.org.htm
1. Type in: http://www.eurunion.org./whatsnew/home.htm
2. Left hand link marked ‘EU Newsweb’. Click.
3. Find ‘EU Law and Policy Overviews. Click
4. Scroll down to ‘Human Rights’. Click
5. Scroll right down to bottom of page and click on ‘Citizens’ Rights’
6. THIS PAGE ALWAYS COMES UP ‘ERROR 404’. Either try ‘renew’ button on toolbar, or click on the little sign for europa.eu.int (second bullet point) – that usually works.
7. The URL will be http://europa.eu.int/abc/rights_en.htm. You can’t get this site to come up any other way usually, although I have managed it once.
8. I have visited this site a number of times today, 14th February 2005
9. This brings you to the ‘Gateway to the European Union’ portal
10. Click on 6th one down to get into the English version
11. This brings you to ‘How the European Union Works’
12. On the left is a bright green scroll bar
13. Click onto ‘Your Rights’ under ‘Living in the EU’
14. Later you will need to click onto ‘Travelling’, ‘Studying’, ‘Working’
15. Following No 11 above, you are now on ‘Online EU and National Public Services’
16. Scroll down and click on ‘Dialogue with Citizens’ button’
17. This will bring up a number of interactive buttons: click on each of these to find the answers to each of your questions.
18. Going back to No. 13: ‘Your Rights’: - also listed on this page are ‘Where to find EU documents – An Online Library’ (i.e. 2 clicks back on the ‘Back’ button)
19. However, as with No. 12, click on green scroll bar, ‘Working’.
20. This brings up a set of pictures. Click on ‘living and working’.
21. Your URL should now be: http://europa.eu.int/eures/home.jsp?lang=en. I have never been able to get in direct. I always get an Error 404 if I try.
22. Click on the living and working picture, then click into the left-hand column on the next page. This brings you to scroll bars, with all the different countries listed, for you to find your questions.
23. If you click on Norway, for instance, the next page comes up blank, apart from left-hand column links for you to press. You need to click on these to access further information for each country.
24. This is a massive site, with considerable detail hidden behind unlikely URLs. I have used this site for years and have never seen all of it.
25. Everything you will ever need on information for EU will be somewhere on this site.
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