Joint Committee on Financial Services and Markets First Report





1.  We are asked to advise whether the proposed disciplinary framework contained in the draft Financial Services and Markets Bill ("the Bill") is likely to infringe any of the Articles of the European Convention on Human Rights (and in particular, Article 6) in the form in which the Convention will be incorporated into United Kingdom law under the Human Rights Act 1998. We base our advice upon the draft Bill as published in July 1998, and upon the draft Guidances and Codes published under the Bill.

2.  In our view, for the reasons set out below:

(a)  Even before the incorporation of the Convention by the Human Rights Act, Convention rights will be relevant in construing the Bill, in that the courts will have regard to the Convention and to Convention law in interpreting ambiguous provisions, or in themselves exercising discretionary powers.

(b)  Once the Human Rights Act comes into force, the courts will have to construe the Bill so as to be compatible with Convention rights if at all possible, even if this involves a strained rather than a natural interpretation of its provisions. Furthermore, in our view, the FSA, as a public administrative body, will in principle be liable in damages if it acts in breach of a Convention right, notwithstanding the statutory immunity from damages claims (except in cases of bad faith) conferred by paragraph 17 of Schedule 1 of the Bill.

(c)  Turning to the disciplinary provisions of the Bill, Article 6 of the Convention provides far more stringent protections if those provisions are considered to be "criminal offences" for the purposes of the Article. In our view, it is strongly arguable that all of the disciplinary offences, and in particular the Market Abuse offences, are indeed "criminal" in that sense. This is because the nature of the offences, and the nature and severity of the penalties to which the person concerned is exposed, are such that, having regard to the Convention case law, it is unlikely that the courts will accept that the characterisation in the Bill of the offences as "civil" is determinative of their true nature. Accordingly, the safeguards for the determination of criminal charges are likely to apply to disciplinary proceedings under the Bill.

(d)  Applying the protections conferred by Article 6 to the disciplinary provisions of the Bill:

(i)  the right to an independent and impartial court, and the right to a fair trial, is satisfied by the right of appeal to the Tribunal, but only to the extent that (a) the appeal is (as it appears to be), de novo, full, and with the burden of proof remaining on the FSA; and (b) the individual or commercial entity affected is not prejudiced by the "first instance" determination against him or it by the FSA;

(ii)  the principle of equality of arms and the right to legal assistance under Article 6(3)(c) may require, in complex cases, that an individual without means is provided with financial assistance to secure representation before the Tribunal;

(iii)  the presumption of innocence may be infringed if the standard of proof before the Tribunal is interpreted to be proof on the balance of probabilities (as the FSA appear to contemplate, at least in relation to Market Abuse offences), rather than proof to a criminal standard or to a "high" civil standard;

(iv)  the presumption of innocence and the privilege against self-incrimination will be violated in breach of Article 6 if, as is presently proposed, information obtained by the FSA by compulsion is admitted in evidence in proceedings before the Tribunal relating to disciplinary or market abuse offences;

(v)  the Market Abuse offences as defined in the Bill are framed at such a high level of generality that they do not satisfy Article 7(1) of the Convention, which requires, in accordance with the principle of legal certainty, that an offence must be clearly defined in law so that a person may foresee the legal consequences of his or its actions. This violation is not wholly cured by the more detailed Code to be issued under the Bill, because it is currently proposed that the Code will have no more than evidential effect, so that conduct not prohibited by the Code might still be found to be in breach of the statutory offence;

(vi)  once the United Kingdom has ratified Article 4 of Protocol No.7 of the Convention, as the Government proposes to do in the near future, the Bill will be in violation of that Article to the extent that it allows "dual prosecution" of a person for breach of the criminal law (for insider dealing or breach of s.47 of the FSA 1986) and for breach of the Market Abuse rules.

The Structure and Proposed Disciplinary Framework of the Bill

3.  We will not set out in any detail the proposed structure of financial regulation contained in the Bill, nor the proposed disciplinary framework (within which we include the market abuse provisions of Part VI of the Bill), which is summarised in our Instructions. In essence, the Government proposes to replace the existing system of financial regulation with a single regulator called the Financial Services Authority ("FSA"). Although a private company limited by guarantee and funded by a levy on those it regulates, the FSA will be a public authority exercising statutory and delegated powers and subject to judicial review. The FSA will have disciplinary powers over authorised entities and approved persons (who, typically, will be employees or officers of authorised entities), as well as, in some instances, any person committing certain prescribed offences. The proposed disciplinary offences with which we are here concerned will all be created by the Bill at a fairly high level of generality, and will be supplemented by Codes and Guidance made under the legislation.

4.  The disciplinary framework under consideration is contained in a number of different parts of the Bill.

a)  Part V of the Bill ("Employment in regulated activities") contains, at clauses 50-54, disciplinary powers in respect of approved persons. An approved person who, as it appears to the FSA, is guilty of a failure to comply with a Statement of Principle under Clause 48 or is knowingly concerned in a contravention by a connected authorised person of a statutory requirement may be disciplined by the imposition of a "fine" (clause 50(3)(a)) or public censure (clause 50(3)(b)). Clause 52(4) provides for the recovery by the FSA of the amount of the unpaid fine as a civil debt due to it.

b)  Part XII of the Bill ("Disciplinary measures") creates (at clauses 135-141) a similar disciplinary framework in respect of authorised persons. Where the FSA considers that an authorised person has contravened a requirement of or under the Bill, it may impose a "financial penalty" (clause 136) or a public censure (clause 135). The financial penalty is again recoverable by the FSA as a civil debt (clause 139(4)).

c)  Quite separately, Part VI of the Bill confers powers upon the FSA to impose what are described as "civil fines" for "Market Abuse". By virtue of Clause 58, if the FSA is satisfied that a person has engaged, or has induced another person to engage, in Market Abuse (as defined in general terms in clause 56 ("the Statutory Precepts") and to be supplemented by a Code published under clause 57), it may impose upon that person a fine of such amount as it considers appropriate. Clause 62(4) again provides for recovery of an unpaid fine by the FSA as a civil debt.

We are not asked to advise upon those provisions of the Bill dealing with fitness and propriety, and the withdrawal of authorisation or approved status.

The Impact of the Human Rights Act 1998

5.  It is important to summarise the relevance of Convention rights both now and after the coming into force of the Human Rights Act 1998. Once that measure is in force, the courts will have much more power and responsibility for tackling the range of problems raised by our Instructions, to the extent that those problems have not been adequately addressed by Government and Parliament in shaping the Bill.

6.  The Convention is not yet part of English law. However, this does not mean that Convention rights are at present irrelevant when construing statutes or declaring the common law. When interpreting legislation that has an impact upon the rights guaranteed by the Convention, the courts apply a presumption that, in the absence of clear words, Parliament does not intend to exercise its legislative powers in breach of the Convention. Accordingly, the courts have regard to the Convention and its case law when interpreting ambiguous legislation: R v Secretary for the Home Department, ex parte Brind [1991] 1 AC 696 (HL). They also have regard to the Convention law when the common law is uncertain or incomplete: Derbyshire County Council v Times Newspapers Ltd [1992] 1 QB 770 (CA), affirmed on other grounds [1993] AC 534 (HL). Where the courts themselves exercise discretionary powers (for example, when granting injunctive relief or exercising appellate functions in relation to excessive awards of damages for libel), they seek to ensure that those powers are exercised in accordance with the Convention: see e.g., Attorney-General v Guardian Newspapers Ltd (No. 2) [1990] AC 109 (HL); Rantzen v Mirror Newspapers (1986) Ltd [1994] QB 670 (CA). What the courts cannot do at present is to require the FSA (as distinct, for example, from the Appeal Tribunal in exercising its judicial powers) to exercise its administrative powers in accordance with Convention rights: ex parte Brind, above. However, in the absence of a statutory or executive indication to the contrary, the courts will treat ratification of the Convention as giving rise to a legitimate expectation that the decision-maker will act in conformity with Convention rights at least when exercising prerogative powers: R v Secretary of State for the Home Department, ex parte Ahmed and Patel, judgment of the Court of Appeal of 30 July 1998, as yet unreported, per Lord Woolf MR.

7.  We should add that, quite apart from the Convention, it is well established under general principles of English public law that, to ensure fairness, the courts will imply words into a statute where the words are ambiguous or incomplete: see e.g., Wiseman v Borneman [1971] AC 297 (HL). It is a principle of legal policy that the law should be just. When construing the Bill, the courts will therefore presume that Parliament intended to observe this principle, and therefore strive to avoid a construction that leads to injustice: see e.g., Bennion, Statutory Interpretation, (3rd ed., 1997) pp. 614-16. Where necessary the courts will have regard to Article 6 of the Convention and its case law for this purpose: see Raymond v Honey [1983] 1 AC 1 (HL) and its progeny.

8.  However, when the Human Rights Bill is enacted and brought into force, the courts will have to go much further. Where possible they will have to construe legislation so as to be compatible with Convention rights, for example, by reading into the Act sufficient procedural safeguards to comply with Article 6. This may involve a strained rather than a literal or natural construction of the statutory language. The courts will not be empowered to strike down or set aside primary legislation which cannot be construed compatibly with Convention rights. However, it is the Government's repeatedly declared intention that the courts should strive where possible to avoid having to declare a statutory provision to be incompatible with Convention rights. It is to be expected that the courts will devise new principles of interpretation to make statutes compatible with the Convention. They are unlikely to adopt the doctrine of implied repeal in respect of primary legislation enacted after the coming into force of the Human Rights Act, but will probably require nothing less than an express intention to repeal or amend a provision of that Act or a Convention right.

9.  Another important consequence of the Human Rights Act will be that it will make it unlawful for a public authority, such as the FSA or the Appeal Tribunal, to act in a way which is incompatible with a Convention right. Every public power (for example, of the FSA or the Appeal Tribunal) that interferes with Convention rights (such as the right to a good reputation, or to property, or to personal privacy, or to a fair hearing by an independent court or tribunal) will have to be invoked only where necessary and applied in accordance with the principles of proportionality and legal certainty.

10.  In the case of an administrative body, such as the FSA, if it acts in breach of a Convention right, it will in principle be liable in damages under the Human Rights Act where an award of damages is necessary to afford just satisfaction to the victim of the breach. However, paragraph 17(1) of Schedule 1 to the Bill provides that neither the FSA nor any person acting on its behalf shall be "liable in damages for anything done or omitted in the discharge, or purported discharge, of the [FSA's] functions." Paragraph 17(3) disapplies paragraph 17(1) if "the act or omission is shown to have been in bad faith".

11.  The effect of this provision, which is effectively the equivalent of the existing section 187 of the FSA 1986, is somewhat obscure. We doubt whether it would be construed by the courts as immunising the FSA against a claim brought under the Human Rights Act for a breach by the FSA of a Convention right, since this would prevent victims of such breaches from enjoying effective domestic remedies for such breaches and effective access to justice: cf., the European Court's judgment of 10 July 1998 in Tinnelly and McElduff v United Kingdom. We consider it to be more likely that the courts will treat the immunity conferred by paragraph 17(1) of Schedule 1 as confined to liability for anything done or omitted to be done under the Bill read in isolation from the Human Rights Act. However, we suggest that this is a matter which needs to be clarified with the Government.

12.  The Human Rights Bill is likely to receive the Royal Assent by the end of 1998, but it is unlikely to be brought fully into force until the year 2000. During the hiatus, the courts will be unable to give direct effect to Convention rights.

13.  Although the Human Rights Act will empower and require the courts where possible to make the Bill compatible with Convention rights, and to provide effective remedies where, for example, the FSA discharges its functions in a manner which breaches Convention rights, it is the responsibility of Government and Parliament to enact the Bill in a form that does not authorise or require breaches of Convention rights. We therefore hope that the Government will be persuaded by the process of consultation on the Bill to modify its terms so as to minimise the risks of breaches of Convention rights. It is plainly in the public interest for the executive and legislative branches of government to do their best to create a user-friendly statutory scheme that reduces the need for legal proceedings under the Human Rights Act.

Article 6 of the Convention and its relevance

14.  Article 6 of the Convention provides as follows:

"(1) In the determination of his civil rights or obligations or of any criminal charge against him, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law....

(2) Everyone charged with an offence shall be presumed innocent until proved guilty according to law.

(3) Everyone charged with a criminal offence has the following minimum rights:

(a) to be informed promptly ... and in detail of the nature and cause of the accusation against him;

(b) to have adequate time and facilities for the preparation of his defence;

(c) to defend himself in person or through the legal assistance of his own choosing or, if he has not sufficient means to pay for legal assistance, to be given it free when the interests of justice so require;

(d) to examine or have examined witnesses against him and to obtain the attendance and examination of witnesses on his behalf on the same conditions as witnesses against him....".

15.  There are thus special procedural safeguards for proceedings involving the determination of criminal charges, in Article 6(2) and (3), notably as regards the presumption of innocence, including protection against self-incrimination. That is why it is important to know whether the disciplinary proceedings under the Bill are to be regarded as criminal or civil in nature for the purposes of Article 6. However, even if the proceedings are to be regarded as civil rather than criminal, we emphasise that the requirements of Article 6(1) apply, for example, as regards a fair hearing by an independent and impartial tribunal, and the principle of equality of arms.

16.  The procedural rights protected by Article 6, like other Convention rights, apply equally where a commercial entity is the "victim" of the conduct complained of, as where an individual is involved; see e.g. Air Canada v. United Kingdom (1995) 20 EHRR 150 (complaint of breach of (inter alia) Article 6(1) by company). Thus our analysis applies whether disciplinary proceedings are brought against an individual (whether as an approved person or otherwise) or against a legal person such as an authorised entity.

17.  We agree with our Instructing Solicitors that, in spite of the statutory description of the fines as "civil", it is strongly arguable that, for the purposes of the procedural guarantees contained in Article 6 of the European Convention on Human Rights, they are to be treated as criminal in nature. The case law of the European Court of Human Rights in this area is complex and sometimes inconsistent and unclear. We shall endeavour to summarise the relevant principles thus far developed by the Court for the purpose of deciding whether there is a "criminal charge" in terms of Article 6. However, we should observe that, although our courts will have to have regard to the case law of the European Commission and Court of Human Rights, they will not be bound by the Strasbourg decisions. There are likely to be cases where the European Commission or Court has allowed the public authorities of the Contracting States a wide margin of appreciation or discretion, and where our courts will feel able to adopt a more robust interpretation of Convention rights, as domestic rather than international courts. This is especially the case where traditional common law concepts of due process, natural justice and fairness are woven together with Article 6 of the Convention in cases where a person's livelihood, reputation, or property is at stake.

Ascertaining whether there is a "criminal offence" within the meaning of Article 6 of the Convention

18.  In general, the European Court of Human Rights has repeatedly emphasised that a restrictive interpretation of Article 6 of the Convention would frustrate the aim and purpose of that provision, bearing in mind the prominent place which the right to a fair trial holds in a democratic society: see e.g., paragraph 30 of the Court's judgment of 26th October 1984 in De Cubber v Belgium, Series A no. 86, (1985) 7 EHRR 236.

19.  The concept of "charge" in Article 6 consists of "the official notification given to an individual by the competent authority of an allegation that he has committed a criminal offence": Deweer v Belgium, Series A no. 35, (1980) 2 EHRR 439; Eckle v Germany, Series A no. 51, (1982) 5 EHRR 1. However, the existence of a criminal charge is not always dependent on there being an official act. It may in some instances take the form of other measures which carry the implication of such an allegation and which substantially affect the situation of the suspect: Foti v Italy, Series A no.56, 5 EHRR 313, judgment of 10th December 1982; Brozicek v Italy, Series A no. 167, 12 EHRR 371.

20.  To determine whether an offence qualifies as "criminal", as distinct from disciplinary or administrative, for the purposes of the safeguards contained in Article 6 of the Convention, a realistic and substantive approach is required. The first matter to be ascertained is whether or not the text defining the offence belongs, in the domestic legal system, to the criminal law; secondly, the nature of the offence, and, thirdly, the nature and degree of severity of the penalty that the person concerned risked incurring must be examined, having regard to the object and purpose of Article 6, to the ordinary meaning of the terms of that Article, and to the laws of the Contracting States: paragraph 32 of the judgment of the European Court of Human Rights of 24th September 1997 in Garyfallou AFBE v Greece, Reports 1997-V; affirmed in paragraph 56 of the European Court's judgment of 2nd September 1998, in Lauko v Slovakia (as yet unreported).

21.  In answering the question whether the classification under domestic law belongs to criminal law or to disciplinary or administrative law, the descriptions given by the relevant domestic law have only a relative value: paragraph 52 of the European Court's judgment of 21st February 1984, in Özturk v Germany, Series A no. 73. If the applicable domestic law classifies the offence as criminal, this will be decisive. But, because of the dangers of evasion of the guarantees of Article 6, where the domestic law classifies the proceedings as "civil" or "disciplinary", the domestic classification is no more than a starting point: paragraph 82 of the Court's judgment of 8th June 1976 in Engel v Netherlands (1976) 1 EHRR 647, Series A no. 22. The assessment must therefore be made on the basis of objective principles. That is why the Court has developed the second and third criteria. For example, in Campbell and Fell v United Kingdom, Series A no. 80, (1985) 7 EHRR 165, the fact that the prison offences with which the applicants were charged belonged to disciplinary law and were not a "criminal cause or matter" under domestic law was not decisive.

22.  For Article 6 to apply it suffices that the offence in question is "criminal" in nature in terms of the Convention, or that it has made the person concerned liable to a sanction which, in its nature and degree of severity, belongs in general to the "criminal" sphere: paragraph 55 of the Court's judgment of 25th August 1987, in Lutz v Germany, Series A no. 123, (1988) 10 EHRR 182. The second and third criteria are alternative and not cumulative criteria: paragraph 57 of the European Court's judgment in Lauko, above. However, a cumulative approach may be adopted where the separate analysis of each of the three criteria does not make it possible to reach a clear conclusion as to the existence of a "criminal charge": Lauko, above, citing paragraph 33 of the Garyfallou AEBE judgment; and paragraph 47 of the Court's judgment of 24th February 1994 in Bendenoun v France, Series A no. 284, (1994) 18 EHRR 54 (where proceedings for tax evasion leading to large financial penalties were held to be criminal proceedings for the purpose of Article 6, even though they were described as "tax penalties" rather than "criminal penalties", and the surcharges were imposed by the Revenue under the supervision of the administrative courts, and not by a criminal court, and they were calculated in direct proportion to the tax originally evaded, and they were not an alternative to a custodial penalty).

23.  Under the second criterion, it is necessary first to consider whether the norm in question is addressed exclusively to a specific group in one or more specific capacities or whether it is of a generally binding character. A provision of disciplinary law, for example, may be addressed only to those who belong to the disciplinary system (such as members of the armed forces, prisoners, or members of a profession (see e.g. Wickramsinghe v. United Kingdom (Appln 31503/96, admissibility decision). However, even where this is the case, the disciplinary offence may still be criminal in nature for the purposes of Article 6: see e.g., Campbell and Fell above. The case law on whether or not a norm is of a generally binding character is somewhat uncertain: see e.g., the Court's judgment of 23rd March 1994 in Ravnsbörg v Sweden, Series A 283-B, paragraphs 31-33.

24.  In a number of recent admissibility decisions, the Commission has held or assumed that regulatory proceedings which relate only to those engaged in the particular market or profession are civil for the purposes of Article 6(1): see APB v. IMRO (Appln 30552/96, 15 January 1998) (IMRO proceedings relating to intervention order and fitness and properness of member were assumed to be civil in nature); X v. United Kingdom (Appln 28530/95, 18 January 1998) (regulatory proceedings relating to the Secretary of State's objection to the Applicant's appointment as Chief Executive of an insurance company on the basis that the Applicant was not fit and proper as required by Insurance Companies Act 1982 assumed to be civil); Wickramsinghe v. United Kingdom (Appln 31503/96, 8 December 1997) (GMC and Privy Council's decision as to the Applicant's fitness to practice medicine was expressly held not to be a criminal matter but civil for the purposes of Article 6). However, in each case it is clear that the Commission's view turned not on the fact that the norm was not of general application to the public at large, but rather on the fact that the power at issue was open to exercise not for punitive reasons but for protection of the public, by the exclusion of an unfit person from the industry or profession, whether temporarily or permanently.

25.  If the norm is sufficiently general, it then becomes relevant to ascertain the purpose of the penalty. Where a fine has a deterrent and punitive purpose, this is sufficient to show that the offence is criminal in nature in terms of Article 6 of the Convention: Lauko, above. The fact that the commission of the offence is not punishable by imprisonment and does not give rise to a criminal record are not decisive of the classification of the offence for the purpose of the applicability of Article 6: Lauko, citing paragraph 53 of the Özturk judgment. Furthermore, the relative lack of seriousness of the penalty at stake cannot deprive an offence of its inherently criminal character: Lauko, citing paragraph 54 of the Özturk judgment.

26.  In Lautko, the applicant was found guilty of what was described under domestic law as a minor offence (namely, without justification accusing a family of causing a nuisance). He was fined and ordered to pay costs. The Constitutional Court dismissed his constitutional complaint that there had been no fair and public hearing in his case and that the administrative authorities dealing with it had no been impartial. The complaint was dismissed on the ground that it involved only a minor offence and therefore not subject to examination by a court. However, the European Court held that, even though the offence was not defined as criminal by domestic law, it was criminal in nature for the purposes of Article 6 because of the general character of the legal rule infringed by the applicant and the punitive purpose of the fine imposed upon him.

27.  The third, and in many cases decisive, criterion is that of the nature (as distinct from the purpose) and the severity of the penalty with which the violator of the norm is threatened. Even if the purpose of the sanction does not make the second criterion applicable, because the scope of the violated norm is not of a general character, the nature and severity of the penalty may still make Article 6 applicable: see e.g., the Court's judgment of 27th August 1991 in Demicoli v Malta, Series A no. 210, (1992) 14 EHRR 47.

28.  Outside the sphere of disciplinary proceedings, where "fiscal penalties" are imposed, if they are of a punitive nature, such as fines and disqualification, they give the proceedings a criminal character for the purposes of Article 6: see e.g., Lutz v Germany, Series A no.123, (1988) 10 EHRR 182 ("regulatory" petty road traffic offences punishable by fines and disqualification from holding a driving licence for a period of one to three months and that had been decriminalised were treated as criminal in nature, because they were deterrent and punitive).

Application of the Convention principles to the "civil fines" under the draft Bill

29.  The fact that the Bill describes the fines as "civil" is, for the reasons we have explained above, no more than a starting point in the analysis. In our view, a consideration of each of the second and third criteria referred to above point strongly to the conclusion that at least some if not all of the disciplinary offences under the Bill are criminal in character.

30.  Considering first the nature of the offences, it is clear that both the civil fines for disciplinary offences and for market abuse are of a generally binding character; indeed, they are in this respect markedly different from the disciplinary rulebooks of the SROs, which generally took effect only by virtue of the contractual relationship between the members and the SRO. This is therefore the first clear point of distinction as regards the Commission's admissibility decision in APB Limited v. IMRO (above), where express reference was made to the self-regulating nature of IMRO's system of maintaining internal discipline (at p.13 of the transcript). The disciplinary framework of the Bill is imposed by or under statute, and it is imposed (in the case of Market Abuse offences) upon any person or body contravening their terms, whether authorised or not. In this respect, there is a slightly stronger case for believing that the Market Abuse offences are "criminal" than the more general disciplinary offences upholding the Principles and other standards set out in or under the Bill (Parts V and XII), which only apply to authorised or approved persons.

31.  The criminal nature of the offences created by the Bill appears most clearly from the nature of the Market Abuse offences. The "Statutory Precepts" set out in clause 56 of the Bill create "offences" of "information misuse" and "market manipulation". "Information misuse" (Clause 56(1)(b)(i) of the Bill) is, in effect, a civil equivalent of the insider trading regime. The draft Code of Conduct published in June 1998 provides that a person may not deal (etc) where he possesses "privileged knowledge" (i.e. information which other market users could not legitimately get, for example because confidential) of "disclosable information" (i.e. information which will at some time be disseminated on the relevant market) which is "relevant information" (ie information which a market user would reasonably regard as significant in deciding whether to deal).

32.  In our view, it would be very surprising if the Article 6 protections which plainly apply to the criminal offence of insider trading were not to apply to the very similar offence of misuse of privileged information. Indeed, the Bill will for the first time confer upon the FSA the power to prosecute for the existing criminal offences of insider dealing and misleading statements and practices under section 47 of the Financial Services Act 1986, so that the FSA will be in the position of having to chose, when faced with "insider dealing-type" conduct, whether to exercise its criminal powers under the Criminal Justice Act 1993 or whether to exercise its Market Abuse powers (or both). In our view, the courts (including the Appeal Tribunal) are likely to treat both as criminal in nature for Convention purposes.

33.  Similar considerations apply to the Market Abuse offence of market manipulation (clauses 56(1)(b)(ii) to (iii)). This offence is further subdivided into "dissemination of misleading information", "artificial transactions" and "price manipulations", at least some of which would fall under section 47 of the Financial Services Act 1986—in respect of which the FSA is also for the first time given a prosecutorial role.

34.  It is, in our view, not a sufficient distinction that the existing criminal offences under the CJA 1993 and FSA 1986 are backed by the sanction of imprisonment, whilst the Market Abuse sanctions are purely financial (or denunciatory). As we have already noted, the sanction of imprisonment is clearly not a necessary condition for the offence to be regarded as criminal. Furthermore, it is significant that the purpose for which fines are to be levied under clause 58 of the Bill has been described by the FSA (which under clause 59 of the Bill is obliged to prepare and publish a statement of its policy as to the imposition and amount of fines) in its Consultation Paper No. 10 (Market Abuse, Part 1, June 1998) as including not merely restitution to any identifiable victims, and the disgorgement of any profits made, but also "a fine aimed at deterring [the] misconduct" (para. 6, page 4; see also paras 132-136, p.31). In our view, a sanction which has as its aim a deterrent effect upon society generally (since Market Abuse offences apply to all; not merely to authorised persons) is a hallmark of a criminal offence.

35.  The nature and severity of the penalty (the third criterion referred to above) also points to the criminal nature of the Market Abuse offences. The fines which may be levied are unlimited, except for the need for the FSA to seek to ensure that they are proportionate to the gravity of the offence. In serious cases, the fines are likely to be very substantial; as our instructing solicitors note, SRO fines have recently increased very substantially, with IMRO fining the Morgan Grenfell companies £2 million (by consent) in connection with the Peter Young Unit Trusts affair, and SFA fining SBC Warburg (as it then was) in the region of £4-500,000 (by consent) in the Regional Electricity derivatives case (which case, incidentally, concerned conduct which appears to be a central preoccupation of the "information misuse" provisions of the Bill). There is every likelihood that the FSA will seek to continue, if not to increase, the recent level of fines.

36.  It is true that the sanction for non-payment is enforcement as a civil debt rather than committal to prison, but on balance, in our view, the importance of this is outweighed by the other factors, and the courts are likely to decide that these fines have a criminal connotation.

37.  The position is less clear-cut in relation to the disciplinary regimes under Parts V and XII of the Bill. Since these regimes will only apply to approved and authorised persons respectively, it might be argued that such offences are closer to a scheme of internal regulation rather than punitive sanction, and thus, by extension from the Commission's admissibility decision in APB v. IMRO (above) may be considered as civil in nature. However, in our view the nature of the disciplinary schemes is inconsistent with this analysis. Not only are they imposed by statute, and can lead to unlimited fines or "financial penalties", but it is notable that they operate quite separately from the powers relating to fitness and propriety, under which authorisation or approval can be withdrawn or not granted (the subject matter of APB v. IMRO). In our view, it is more probable that these powers too will be found to be criminal in nature.

Application of Article 6 safeguards to the Disciplinary Framework

38.  It follows that the safeguards for the trial and determination of criminal charges contained in Article 6 should, in our view, apply to the determination of guilt and the imposition of fines under the draft Bill. The main Article 6 safeguards are the right to a fair trial by an independent and impartial court or tribunal, the principle of equality of arms, and the presumption of innocence, including the privilege against self-incrimination. We shall consider each of these concepts and its relevance. In considering the extent to which the Bill's disciplinary framework meets these standards, it is necessary to consider the framework as a whole, including the available rights of appeal: see e.g., Bryan v United Kingdom, Series A no. 335-A, (1996) 21 EHRR 342. But where a person faces serious criminal charges, he is entitled to a first instance tribunal which fully meets the requirements of Article 6(1): Finlay v United Kingdom (1997) 24 EHRR 221 at paragraph 79.

Right to a Court

39.  The FSA as an administrative authority with enforcement powers is not an independent and impartial court or tribunal within the meaning of Article 6, whatever internal procedures are devised to ensure natural justice before it reaches its decisions. Not only does it have conferred upon it the roles of investigator and prosecutor of disciplinary offences, but it will also apparently retain for its own use the proceeds of fines, as well as costs orders made in its favour. Accordingly, even if the FSA constructs relatively elaborate internal procedures to be followed before it arrives at decisions to impose disciplinary penalties (for example, by affording those affected a full internal hearing), these are not likely to fulfil the requirements of Article 6(1).

40.  If, as we consider to be the true position, enforcement proceedings under the Bill are properly to be regarded as involving serious charges to be classified as criminal in nature, then, as we have indicated, the person affected is entitled to a first instance tribunal which fully meets the requirements of Article 6(1): see e.g., Finlay v United Kingdom (1997) 24 EHRR 221. In our view, the Bill satisfies this requirement. It provides for a right of "appeal" by way of a de novo hearing before the Financial Services and Markets Appeal Tribunal ("the Tribunal"), and thereafter an appeal on point of law to the High Court. The Tribunal will satisfy the Article 6 requirement that it be "independent and impartial"; its members are to be taken from a panel of lawyers and a lay panel selected by the Lord Chancellor. It will form part of the Court service. Since the Tribunal will have the power (and the obligation) to consider appeals from decisions of the FSA de novo and on the merits, in practice the Article 6 requirements will be satisfied if the Tribunal meets those requirements, irrespective of the procedure adopted internally by the FSA (unless the FSA's decision itself causes such prejudice as to preclude a fair trial; see paragraph [46] below).

41.  It should be emphasised, however, that the above conclusion rests on the assumption that although the Tribunal is described as an "Appeal Tribunal", in practice it can and will provide a full and unfettered hearing of the case. Limitations upon the Tribunal's ability to do so will automatically risk a violation of Article 6. Thus, we note that clause 68(3)(c) provides that the Tribunal may hear any arguments by the appellant not raised at the time that the FSA made its decision "save in specified circumstances". If circumstances are specified which prevent an appellant from raising arguments which he reasonably did not make to the FSA (because, for example, he was not aware of the case against him, or was not given a full and adequate opportunity to make representations), then we believe that there would be a violation of Article 6 (see similarly, the assumption as to the Tribunal's power to receive fresh evidence at paragraph 54 below).

Equality of Arms

42.  The principle of equality of arms applies to civil as well as to criminal proceedings as an essential ingredient in a fair trial: see e.g., Dombo Beheer v Netherlands (1993) 18 EHRR 213; and Ruis-Mateos v Spain (1993) 16 EHRR 505. The principle requires that everyone who is a party to proceedings must have a reasonable opportunity of presenting his case to the court under conditions which do not place him at a substantial disadvantage vis-à-vis his opponent. There must be a fair balance between the parties: see e.g., De Haes and Gijsels v Belgium (1997) 25 EHRR 1.

43.  The principle of equality of arms requires that the parties to civil proceedings should be entitled to cross-examine witnesses: see e.g., Application no. 5362/72, X v Austria 42 CD 145 (1972) (European Commission of Human Rights). A principle underlying Article 6 as a whole is that judicial proceedings should be adversarial: see e.g., McMichael v United Kingdom (1995) 20 EHRR 205; Mantovanelli v France (1997) 24 EHRR 370. Furthermore, Article 6(3)(d) expressly confers a right upon a defendant in criminal proceedings to cross-examine adverse witnesses.

44.  It appears likely that the procedures which the Tribunal will adopt will, in general, meet these requirements. One possible area of difficulty, however, concerns the right to legal assistance, which may arise both under the principle of equality of arms (in circumstances in which the FSA will no doubt be represented by lawyers) and independently under Article 6(3)(c), which requires legal assistance to be provided "when the interests of justice so require". Under the existing regime, concerns have recently been expressed about the ability of individuals facing substantial SRO disciplinary proceedings to defend themselves (in circumstances where they may have been dismissed by their employers); for example, in the Barings and Morgan Grenfell cases. There will be situations where the interests of justice may require financial assistance for legal representation and for the retention of expert witnesses in complex disciplinary cases. In our view, there is a real risk of a breach of Article 6(3)(c) unless provision is made (whether in the Bill or elsewhere) for financial assistance in such cases. Indeed, it is at least arguable that even if the proceedings were merely to be classed as civil in nature, financial assistance might be required under Article 6(1) in a sufficiently serious and complex case; see e.g., Airey v. Ireland (1979) 2 EHRR 305.

45.  We have considered whether the principle of equality of arms (or indeed, any aspect of Article 6) may be infringed by the fact that the Bill confers upon the FSA powers not only to take action for suspected Market Abuse, but also to prosecute for criminal offences (as traditionally understood) such as insider dealing and offences under section 47 of the FSA 1986. As our instructing solicitors point out, there may well be circumstances in which the simultaneous availability of both powers is oppressive to the person under investigation, in that there may be enormous pressure to accept a market abuse fine in circumstances where there remains a risk of prosecution. Indeed, the FSA's Consultation Document on Market Abuse (Consultation Paper No. 10, Pt 1) reveals that although the FSA intends ordinarily to consider first whether to prosecute and only then (para 141, p.33) whether to exercise market abuse powers, it leaves open the possibility that "evidence may come to light in civil or regulatory proceedings [for market abuse] which require reconsideration of whether criminal prosecution is warranted" (para 143, p.34).

46.  In our view, however, the potential availability of the two sets of powers is unlikely of itself to constitute a breach of Article 6 (save in relation to double jeopardy, as to which see paragraphs 68 and 69 below). Provided that each procedure is itself fair and complies with the principle of equality of arms, there is no authority to suggest that the fact that the person under investigation may be placed in a difficult position itself constitutes a breach of Article 6. We would point out, however, that were the FSA in practice to act in an oppressive manner, this might well give rise to a domestic judicial review challenge for abuse of discretion: if, for example, the FSA either (i) went against its guidance in refusing to consider whether to prosecute (in accordance with the Code for Crown Prosecutors) before considering Market Abuse remedies; or (ii) decided to reconsider criminal proceedings in the light of a failure to force an admission or settlement of a Market Abuse charge, where there was no genuinely material new evidence warranting such reconsideration.

47.  We have also considered the point raised by our instructing solicitors as to the potentially oppressive effect of the extra-territorial reach of the market abuse provisions. Clause 56(4)(b) has the effect that the market abuse provisions catch conduct which takes place outside the United Kingdom, but which occurs "in relation to" qualifying investments traded on a relevant market in the United Kingdom. Although we agree that the provision is sweepingly drafted, we do not consider that it violates Article 6, or indeed any Convention right. Nothing in the Convention prevents conduct committed abroad with an impact within a contracting state from being made unlawful.

Fair Trial

48.  Even where the principle of equality of arms is satisfied, there may still be a breach of the requirements of a fair trial. A good recent example arose in Niderhost-Huber v Switzerland, Judgment of 18th February 1987, where the applicant brought civil proceedings against a company from which he had been dismissed as chairman and managing director, seeking arrears of salary and a severance payment. In the course of the Swiss proceedings, the Cantonal Court transmitted the appeal to the Federal Court together with the case file and one page of observations which were not communicated to the applicant. The Court found that, since the observations had not been communicated to either party, no infringement of equality of arms had been established. However, the Court observed that the concept of a fair trial also implies in principle the right of the parties to a trial to have knowledge of and comment on the evidence adduced or observations filed (citing, inter alia, the Court's judgment of 20th February 1996 in Lobo Machado v Portugal (1996) 23 EHRR 79 for the principle that the requirements derived from the right to adversarial proceedings are the same in both civil and criminal cases). The Court described the right to adversarial proceedings as a "fundamental principle" and held that the right to a fair trial had been violated even though the observations did not present any fact or argument which, in the opinion of the Swiss courts, had not already appeared in the impugned decision. The Court stated (paragraph 27) that "What is particularly at stake here is litigants' confidence in the workings of justice, which is based on, inter alia, the knowledge that they have had the opportunity to express their view on every document in the file."

49.  As we understand the position, although there may be no right to disclosure of all information gathered or considered by the FSA in making a disciplinary order, the appellant will have sight of all material which the FSA discloses to the Tribunal. Further, the Tribunal will itself have the power to make disclosure orders against the FSA. This would appear to meet the requirements of Article 6. Although the appellant may not have an unfettered right to adduce new evidence before the Tribunal (if the Lord Chancellor's rules circumscribe that right by requiring, for example, that the fresh evidence could not reasonably have been produced to the FSA at the earlier stage), we anticipate that the Tribunal's power to allow fresh evidence would nonetheless be sufficient to comply with Article 6; the Tribunal will, in appropriate cases, no doubt allow fresh evidence where it can be shown that the individual could not earlier have anticipated its relevance (because, for example, of limited disclosure by the FSA).

50.  More generally, the Appeal Tribunal would not be required by virtue of the requirements of Article 6 to adopt the same evidential standards as would be applied by a domestic criminal court—with regard, for example, to the admissibility of hearsay evidence. The European jurisprudence generally accords states a wide margin of appreciation as to what procedures may be adopted, provided that the presumption of innocence is respected (as to which, see below), and provided that the procedures overall respect the right to a fair trial. We do not consider, on the material before us, that the Tribunal procedures contemplated generally fail that test, save in the specific respects referred to below.

The Presumption of Innocence

51.  If the proceedings are criminal in nature, so as to give rise to the presumption of innocence guaranteed by Article 6(2), then the overall burden of establishing guilt must remain with the prosecution: see e.g., Lingens and Leitgens v Austria (1981) 4 EHRR 373. Any rule which shifts the burden of proof in a criminal case, or which applies a presumption operating against the accused, must be confined within reasonable limits: Salabiaku v France (1988) 13 EHRR 379. Even if the proceedings are civil in nature, they are, of course, subject to the requirements of fairness and a fair balance between the parties, inherent in Article 6 as a whole.

52.  In Allenet de Ribemont v France (1995) 20 EHRR 557, the French Minister of the Interior and a number of senior police officers held a press conference shortly after the applicant's arrest in which they named him as one of the instigators of a murder. The European Court of Human Rights held that the presumption of innocence could be violated not only by a judge or a court but also by other public officials. Although Article 6(2) could not prevent the authorities from informing the public about investigations in progress, it required that they did so with all discretion and circumspection necessary if the presumption of innocence was to be respected. The statements at the press conference contained a clear implication that the applicant was guilty and therefore violated Article 6(2).

53.  The position under the Bill appears to be, as we understand it, that no public censure (or other penalty) imposed by the FSA will be implemented before the hearing of any appeal by the Tribunal (because clause 68(5) provides that a decision appealed against does not have effect until the appeal, and any further appeal to the High Court, has been finally disposed of). We note, as our Instructing Solicitors point out, that clause 211, dealing with Decision Notices, provides that decisions must "specify the date upon which the decision takes effect" (clause 211(1)(b)) and that the FSA may "publish such information about the matter to which a decision notice relates, in such way as it considers appropriate" (clause 211(5)). In our view, those provisions must be taken to be subject to the effective stay on implementation of any decision contained in clause 68. On that basis, it appears that the presumption of innocence will not be infringed by action of the FSA before an appeal is heard.

54.  If we were wrong in our interpretation of the above provisions, and it is intended that action may be taken by the FSA before an appeal to the Tribunal is heard and determined, then the position would be very different. In that scenario, a person might, for example, be found guilty of a disciplinary offence by the FSA and effectively punished by publication of a public censure before any appeal to the Tribunal could be heard. Not only would it then be strongly arguable that the presumption of innocence would be infringed, but more fundamentally the incompatibility of the FSA's internal procedures with Article 6 would come into play: there would have been an effective determination and punishment without recourse to an impartial tribunal. However, as we have explained, we do not consider that this vice is in fact inherent in the statutory scheme.

55.  As to the burden and standard of proof before the Tribunal, we note that the FSA's Consultation Paper 10 on Market Abuse suggests (at paragraph 7) that the burden will be on the FSA, but only "on the balance of probabilities". If this is intended to suggest that the standard will effectively be 51 per cent (at least in relation to the Market Abuse offences), rather than the usual civil standard which may be more onerous in serious cases (on the Hornal v Neuberger principle: [1957] 1 QB 247 (CA)), then the proposal is likely to infringe the presumption of innocence. The case for an infringement would be reinforced by the argument that there was a breach of Article 14 (non-discrimination) read with Article 6, because of the unjustified distinction between the standard in criminal cases in the strict sense (for example, for insider dealing) and the standard in Market Abuse or other disciplinary cases.

56.  It is arguable that the burden of proof ought to be even more stringent than the sliding civil standard; that, assuming that the proceedings are found to be criminal in nature, the criminal standard ought to apply; see, in the domestic context, Re A Solicitor [1993] Q.B. 69 (where allegations in disciplinary proceedings are essentially criminal, then the criminal standard applies) and R v. Police Complaints Board ex p. Madden [1983] 2 All E.R. 353. However, even in the domestic context, the position is anything but settled; compare Re A Solicitor with R v. Hampshire CC ex p. Ellerton [1985] 1 All E.R. 599 (fire officers' disciplinary proceedings to be decided on flexible civil standard even where grave allegations of corrupt practice made) and R v. Maidstone Crown Court ex p. Olson (QBD, Unreported, 18 May 1992) (standard for determining whether taxi driver "fit and proper" is civil, even though the allegation constituted a criminal offence). In the closest existing parallel to the Tribunal, the present Financial Services Tribunal (which hears appeals from certain authorisation and expulsion decisions of the ex-Securities and Investments Board) has adopted a sliding civil test in its decisions, notwithstanding the serious nature of allegations made; see In the Matter of Peter James West and Paul Bingham (published decision of the FST of 18 November 1994).

57.  In any event, we have some doubts as to whether the application of the sliding civil standard would violate the presumption of innocence within Article 6. In the first place, there is no overriding Convention requirement that where an offence is criminal in nature, proof must be "beyond reasonable doubt". And in any event, recent decisions by SRO Tribunals have demonstrated that they are capable of adapting the civil standards, in cases, where very serious allegations are made, so as to be to all intents and purposes indistinguishable from the criminal standard: see e.g. SFA v. Capel Cure Myers (unpublished decision of the SFA Disciplinary Tribunal, October 1995).

58.  The FSA's Consultation Paper 10 on Market Abuse proposes that a breach of the FSA's Code on Market Abuse will itself provide "evidential weight" that the Statutory Precepts have been infringed (at paragraph 5; p.3). Whether or not this will constitute a partial shifting of the burden of proof away from the FSA (and clause 57(6) of the Bill suggests that it will not), we consider that this is not likely to infringe the presumption of innocence, given the Convention case law on the point (see Salabiaku v. France, above).

Privilege against Self-Incrimination

59.  The right to a fair trial in a criminal case includes the right of anyone charged with a criminal offence to remain silent and not to contribute to incriminating herself: Funke v France (1993) 16 EHRR 297. In Murray v United Kingdom (1996) 22 EHRR 29, the European Court of Human Rights held that, although not specifically mentioned in Article 6, the right to remain silent under police questioning and the privilege against self-incrimination are generally recognised international standards which lie at the heart of Article 6. In Saunders v United Kingdom (1996) 23 EHRR 313, the European Court held that that the right not to incriminate oneself cannot be reasonably confined to statements of admission of wrongdoing or to remarks which are directly incriminating. Information obtained under compulsion which appears on the face to be of a non-incriminating nature, such as mere information on questions of fact, may later be deployed in criminal proceedings in support of the evidence given by the person during the trial or otherwise undermine his credibility. Therefore, the right or privilge against self-incrimination protects a person not only from being forced to supply answers of a directly incriminating nature, but also answers which would provide the factual basis from which liability could subsequently be established. Accordingly, the admission in evidence at the applicant's trial of transcripts of evidence of interviews with DTI inspectors violated Article 6(1) since at the time of the interrogation he was under a duty to answer the questions which were enforceable by criminal proceedings for contempt.

60.  As our Instructing Solicitors note, the investigatory powers given to the FSA by the Bill include the power to compel attendance of any person to answer questions on oath (clause 99) and to produce documents, or to seize documents without a warrant (clause 101). The use of such material in subsequent disciplinary proceedings (including Market Abuse proceedings) is expressly authorised by the Bill. By virtue of clause 104(4), a statement made by a person in compliance with a requirement imposed under clauses 97 to 99 is admissible in any proceedings. Clause 104(5) creates an exception for evidence in "criminal proceedings", no doubt in an attempt to meet the requirements of Article 6. However, the exception in clause 104(5) is not intended to cover Market Abuse or disciplinary offences.

61.  In our view, provided that the criminal provisions of Article 6 are found to be applicable to such offences, the use of such material is a clear contravention of Article 6, in the light of the decisions in Murray and Saunders. This is an area of the most serious potential mismatch between the statutory scheme and Article 6 of the Convention, and it is essential that the mismatch should be removed in the legislation itself, rather than leaving it to the courts to attempt to imply appropriate Article 6 safeguards into the legislation.


62.  Article 7(1) of the Convention, which prohibits the retrospective imposition of criminal offences and penalties, includes the principle that the criminal law must not be extensively construed to the detriment of an accused; an offence must be clearly defined in law so that an individual may foresee the legal consequences of his actions: Kokkinakis v. Greece A 260-A (1993), 17 EHRR 397 (EctHR para 52). The principle has clear limits; the European Court has permitted (and it is likely that domestic courts will similarly permit) the clarification and development of existing statutory and common law offences, providing that such development is "reasonably foreseeable" by the accused (for example, the extension of the offence of rape to cover spousal rape: SW v. United Kingdom, Judgment of 22 November 1995, A-335-B, p.42; X and Y v. United Kingdom, Appln 8710/79, D&R 28 (1982), p.77). Nevertheless, the particular form of culpability required for the commission of the offence must be reasonably foreseeable, and must not be altered retrospectively.

63.  In our view, it is strongly arguable that the very high level of generality of the Market Abuse offences, as contained in the Statutory Precepts in Clause 56 of the Bill, offend against Article 7(1). Clause 56 purports to cover behaviour described as "market abuse" which takes place "in relation to" qualifying investments traded on a relevant market, which satisfy on or more of the conditions laid down in clauses 56(1)(b), and which is "likely to ... damage the confidence of ... informed participants that the market, so far as it relates to investments of that kind, is a true and fair market" (see further, paragraphs 31 and 33 above). Not only are the offences far less clearly defined than their "criminal" counterparts contained in the Criminal Justice Act and Financial Services Act, but, most strikingly, the FSA's own Consultation Document on the proposed Code on Market Abuse illustrates the range of open questions as to whether particular conduct not only will be but should be treated as falling within the Market Abuse offences (see, to take one example, the FSA's discussion of the offence of misuse of privileged information, at paragraphs 71 to 125 of Consultation Paper 10). The point is not merely that the Statutory Precepts are capable of more than one interpretation; it is rather that they are framed at such a high level of generality that they leave entirely undetermined whether particular conduct falls within the offence.

64.  The Bill, and the FSA, seek to meet the obvious uncertainty created by the Statutory Precepts by means of the Code, to be issued by FSA under Clause 57 of the Bill "for the purpose of helping to determine whether or not behaviour amounts to market abuse". The Draft Code and accompanying consultation document are obviously framed at a much greater level of specificity; although the Code inevitably still leaves considerable grey areas, we accept that were the Code to have the force of law, it is likely that any objection based upon Article 7(1) would fail. However, the Code does not have the force of law, or anything like it. Its status, under Clause 57, is merely (by subclause (6)) that it "may be relied on so far as it tends to establish whether or not ... behaviour amounts to market abuse". As noted at paragraph 58 above, the Consultation Paper interprets that provision as meaning that the Code will provide "evidential weight" of the infringement of or compliance with the Statutory Precepts.

65.  In our view, there is a real risk that the Code will not meet the objections to the uncertainty of the Statutory Precepts. It would, in our view, be a breach of Article 7 for a person to be convicted of a market abuse offence where this conduct did not fall within conduct indicated by the Code to constitute an offence—let alone where the conduct was actually permitted by the Code.

66.  In these circumstances, we suggest that the point could be met by amending clause 57(6) so that, whilst evidence of a breach of the Code could continue to be evidence to support an allegation of market abuse, evidence that the behaviour in question did not fall within the terms of the Code would be a defence to a market abuse charge.

67.  We have also considered whether the charge of vagueness might also apply to the disciplinary offences under Parts V and XII of the Bill. It is right that these offences also incorporate by reference codes or standards drawn up under the Bill (for example, by clause 50(1)(c), a person may be guilty of misconduct by failing to comply with a statement of principle issued under clause 48, or otherwise by knowingly being concerned in a contravention of a requirement imposed "under" the Act). However, unlike the market abuse offences, the standards referred to in Parts V and XII are not merely "evidential"; they constitute the offence. The same charge of imprecision, therefore, does not apply, and we would expect that these parts of the Bill would meet the Article 7 requirement, provided that the statements of principle and other "requirements under the Act" are not themselves hopelessly vague.

Double Jeopardy

68.  Article 4 of Protocol No. 7 of the Convention provides that "No one shall be liable to be tried or punished again in criminal proceedings under the jurisdiction of the same State for an offence for which he has already been finally acquitted or convicted in accordance with the law and penal procedure of that State." Provided that our conclusion that the Market Abuse offences are, in substance, criminal in nature is correct, there would appear to be a clear breach of Article 4 of Protocol 7 in permitting dual proceedings to arise.

69.  At present, the United Kingdom has not ratified Protocol No. 7 of the Convention, and it therefore offers no protection in respect of alleged violations. However, the Government announced before the recess its intention to ratify Protocol No.7 in the near future, when Parliament enacts further legislation to bring domestic law into full harmony with Protocol No. 7. When this takes place, it will in our view have the effect of creating a violation of the Convention to the extent that dual proceedings are in fact permitted.


Blackstone Chambers

Blackstone House




27th October 1998

Printed by kind permission of the British Bankers Association, the London Investment Banking Association, the Futures and Options Association, Clifford Chance, Freshfields and Linklaters & Paines

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