UK: Fairness of Disciplinary Proceedings - the Distinction Between Civil and Criminal for the ECHR

Article 6 of the European Convention on Human Rights ("the ECHR") sets out requirements for a fair hearing. Article 6(1) applies where civil rights or a criminal charge are being determined. Articles 6(2) and 6(3) apply specifically in criminal cases. Article 6(2) is the presumption of innocence until guilt is proven. Article 6(3) provides various rights including the right to free legal advice if the defendant cannot afford it. In R(on the application of Fleurose) v. Securities and Futures Authority Ltd [2001]. All ER (D) 361 (Dec) the Court of Appeal considered whether SFA disciplinary proceedings engaged Articles 6(2) and 6(3).

The appellant had been found guilty on two charges of misconduct by the SFA disciplinary tribunal. His registration was suspended for two years and he was ordered to pay £175,000 towards the costs of the SFA. The SFA's disciplinary appeals tribunal dismissed his appeal and the Administrative Court declined to grant his application for judicial review of that decision.

The Court of Appeal approved of the test for whether offences are "criminal" or "civil" as affirmed recently in Han & Yau v. Customs and Excise Commissioners [2001] EWCA Civ 1048, namely that:

• The first question is how the allegation is classified in domestic law. If the offence is not classified as criminal however this is not decisive and therefore the court must also have regard to;
• the nature of the offence; and
• the severity of the penalty.

Where the offence is restricted in its application to a specific group rather than to the public at large, which is generally the case in relation to disciplinary offences, the court will not usually classify the offence as criminal unless it involves or may lead to loss of liberty.

The court was not persuaded that the regulatory code of the SFA was more akin to a criminal code of general application than a code applying to a specific group. The fact that the appellant had a basic right to carry on his trade and that the only reason he submitted to the SFA's code was because that was the only way he could carry on his chosen trade was insufficient for the court to find that the SFA code did not apply just to a specific group. Accordingly even the prospect of unlimited fines was insufficient to convince the court that the SFA proceedings against the appellant involved a criminal charge or offence.

However, the court cited Official Receiver v. Stern [2001] 1 WLR 2230 (following the judgment of the European Court of Human Rights in Albert and Le Compte v. Belgium (1983) 5 EHRR 533) where the court had stated that even if a trial is categorised as civil, the principles enshrined in Articles 6(2) and (3) are also contained in the notion of a fair trial as embodied in Article 6(1), and therefore the court will take those principles into account in the context of a civil trial.

The court confirmed the general rule that what fairness requires varies from case to case, and will depend on the gravity and complexity of the charges and defence.

It was not unfair therefore for the appellant to be unrepresented before the appeal tribunal (he was represented during the disciplinary tribunal hearing and before the Administrative Court). The court did not agree that the appellant was disadvantaged by not being able to put forward an argument that he was relatively junior and did not have much time to consider how he should react to the improper orders of his superior. The court noted that this was not a defence put during the disciplinary hearing and that it was extremely difficult to introduce new evidence during the appeal. Moreover the court did not view this argument as being so subtle that it required a "trained legal mind to advance it".

Likewise the court did not agree that the charges were too vague in this case since it was apparent that the appellant knew of what he was accused.

The Court of Appeal held that statements made by the appellant to the London Stock Exchange during the course of their investigations of his employer were admissible in evidence against him. The court based this view on a variety of reasons including the fact that the proceedings were not criminal, neither the appellant nor his counsel had raised any objection during the disciplinary tribunal hearing or the appeal tribunal hearing and although he was under practical pressure, he was under no legal compulsion to answer the questions put by the LSE. The court also felt that it was conceivable that the disciplinary tribunal would have still come to the same conclusion even if the statements had not been admitted.

Although the court does not give any indication as to whether they would have decided this point differently if the appellant had objected during the disciplinary or appeal tribunal hearings, they note that "in civil proceedings the question of admissibility is one of discretion in the Tribunal of first instance".

This case highlights how difficult it is for a professional to argue that disciplinary action against him constitutes a criminal charge for the purposes of Articles 6(2) and (3) of the ECHR. This is despite the willingness of the courts to look behind the description of the proceedings and consider the nature of the offence and the severity of the penalty.

Nevertheless the judgment also makes it clear that a classification of the tribunal hearing as "civil" does not preclude consideration of the rights set out in Articles 6(2) and (3) since these rights are already contained in the notion of a fair trial, although of course what is necessary for a fair trial will vary from case to case.

With regard to statements obtained by other regulatory bodies, their admissibility will depend in part upon whether the case is classified as criminal or civil. In civil cases it is very difficult to argue that statements should be ruled inadmissible when the statements were not given under legal compulsion and when no objection was raised during the tribunal hearing. In any case the tribunal has a discretion as to whether to admit the evidence.

© Herbert Smith 2002

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