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A Little Taste of ‘Long Arm’ Powers
London & Bermuda Newsletter
An interesting procedural issue made its way to the Judicial Committee of the House of Lords (now replaced by the Supreme Court). In Masri v. Consolidated Contractors International Co. SAL & Ors. [2009] UKHL 43, there were complicated questions concerning the enforcement of an English judgment against an entity which was in administration outside the jurisdiction. The sole point to which we would like to draw attention here concerns the power to make rules of court procedure which apply extra-territorially.
Lord Mance said: “Parliament must be taken to have understood and endorsed the manner in which the power has been understood and exercised over the years; and it permits the extension of the jurisdiction of the English courts over persons abroad to cover new causes of action and situations”. While the lords eventually concluded that the Rule of Court in question did not in fact apply for the purposes for which the judgment creditor wished to use it, they held that the statutory rule-making power was wide enough in principle to permit the making of rules relating to the examination of an officer abroad of a company against which judgment has been given within the jurisdiction. Perhaps this finding foreshadows in a small way a longer reach on the part of the UK judicial system, somewhat alike to what we have become used to seeing with the US courts.
Blowing One’s Own Whistle
For some years the US Department of Justice has encouraged companies which have transgressed in some way the stiff anti-corruption laws of the US to “fess up” and make their peace with the authorities before the authorities take official steps against them. Some observers might consider the United Kingdom to have lagged rather behind the US in this process, but there are currently signs that it might be catching up.
In January 2009, the Financial Services Authority (FSA) fined Aon Limited £5.25 million for failings in its anti-bribery and corruption systems and controls. In early July 2009 the English bridge-building company Mabey & Johnson Plc pleaded guilty to charges of overseas corruption and breaches of United Nations sanctions, in what was seen as a clear plea-bargaining process with the Serious Fraud Office (SFO). These criminal proceedings had followed a civil process in which the SFO used its new civil recovery powers against the construction company Balfour Beatty in a case which is understood to have rested on issues of overseas corruption. There has been much recent publicity concerning the SFO’s investigation of BAE Systems for similar reasons. On 21 July 2009 the SFO published guidance on its approach to overseas corruption, which it said could be used as the basis for an approach to it (that is, for settlement purposes).
The thrust of the joint actions of the FSA and the SFO is the same, namely to try to persuade companies which may have been involved in obtaining or facilitating overseas contracts by bribery or corruption to “self-report” themselves, in order to secure lesser penalties (preferably of a civil nature) than might be imposed in official proceedings. The issues to be examined by companies themselves, when determining what action to take in relevant situations, are highly complex and far outside the scope of this article. However, the whole concept of “self-reporting” could certainly raise difficult questions for commercial insurers should instances of this become more common.
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