28. RIGHT OF ESTABLISHMENT OF LAWYERS (14TH REPORT, SESSION
Letter from Gary Streeter MP, Parliamentary Secretary,
Lord Chancellor's Department to Lord Hoffman, Chairman of Sub-Committee
AMENDED PROPOSAL FOR A DIRECTIVE OF THE RIGHT OF ESTABLISHMENT
You wrote to me on 27 November after the Sub-Committee
had considered my Explanatory Memorandum and asked me to keep
the Sub-Committee informed of developments particularly as regards
our consultation exercise.
As you will see from the enclosed Supplementary Explanatory
Memorandum that exercise has been completed, although it took
longer than I had hoped. The legal professions are in favour of
our accepting the amended Directive, and, subject to points of
detail, that is the approach I propose to take.
I am very grateful to you and to the Sub-Committee for the
care with which you have examined this text. I hope it will be
possible to achieve a satisfactory common position at the Internal
Market Council meeting on 20 May.
11 March 1997
PROPOSAL FOR A EUROPEAN PARLIAMENT AND COUNCIL DIRECTIVE
TO FACILITATE PRACTICE OF THE PROFESSION OF LAWYER ON A PERMANENT
BASIS IN A MEMBER STATE OTHER THAN THAT IN WHICH THE QUALIFICATION
Supplementary Explanatory Memorandum on European Community
Submitted by the Lord Chancellor's Department
1. Reference is made to the Explanatory Memorandum submitted
by the Lord Chancellor's Department on 24 October 1996 (10221/96).
2. The Lord Chancellor's Department has now completed the
consultation process referred to in that Memorandum. The question
under consideration was whether Article 10 of the proposed Directive,
which deals with integration of migrant lawyers into the host
State profession, represented an acceptable compromise, having
regard to the undoubted advantages gained in respect of Article
2, which allows lawyers to establish themselves permanently under
their home State titles in other Member States.
3. Explanatory Memorandum 10221/96, of 24 October 1996, was
considered by the House of Lords Select Committee on the European
Communities on 20 November 1996. The Committee retained the proposal
under scrutiny until the results of the Department's consultation
exercise were available, and asked to be kept informed of developments
on the proposal.
4. The House of Commons European Legislation Committee considered
the Explanatory Memorandum on 13 November 1996 and decided that
the proposal raised questions of legal and political importance,
but made no recommendation for its further consideration at this
stage. They maintained the document under scrutiny until the
compromise had been discussed with interested parties in this
country and asked to be informed of the results of the consultation.
5. The earlier scrutiny history is as set out in the Explanatory
Memorandum of 24 October.
6. The Department has maintained regular contact with the
United Kingdom delegation to the Council of the Bars and Law
Societies of the European Communities (CCBE). The Lord Chancellor's
Advisory Committee on Legal Education and Conduct (ACLEC) and
some large firms of solicitors based in the City of London were
7. The UK delegation to the CCBE strongly favoured accepting
the present text. ACLEC considered it broadly acceptable.
8. The City firms who responded generally favoured accepting
the present text. Such reservations as were expressed in relation
to Article 10 were qualified by recognition that it formed part
of a compromise package which included Article 2.
POLICY IMPLICATIONS OF ARTICLE 10
9. As was said in the Explanatory Memorandum of 24 October,
the Government considers that the amended version of Article
10 represents a significant, if partial, improvement over the
original proposal. Those remarks should be seen in the context
of the unqualified welcome given by the Government to the amended
text of Article 2.
10. The permanent right to establish under home State title
would provide a very considerable benefit to UK lawyers, and
the new text represents a delicate compromise negotiated within
the European Parliament following lobbying from various legal
interests within the EU including the CCBE, in which the UK professions
played a prominent role.
11. This route to integration would undoubtedly contrast
markedly with the system under the Mutual Recognition of Qualifications
Directive of 1989 (89/48/EEC) "the Diplomas Directive").
Under that Directive the general rule is that applicants seeking
to have their qualifications recognised may choose between sitting
an aptitude test and undergoing an adaptation period. In the
case of professions which require a precise knowledge of national
law and in respect of which the giving of advice or assistance
in national law is an essential feature, the choice as to whether
applicants should sit a test or undergo an adaptation period is
given to Member States. The present proposal would, arguably,
remove much of the importance of that derogation. It would, however,
remain open to applicants to use the diplomas directive route
to integration if they wish, in which case the derogation would
still apply. Moreover, the present proposal is narrow in scope,
in that it only applies to persons who are authorised to practise
under one of the titles listed in Article 1. Given that the legal
professions, whom the derogation in the Diplomas Directive was
primarily designed to protect, are content with the new proposal
the Government considers that concerns about the effect on the
derogation are outweighed by other considerations.
12. It is not likely that many migrant lawyers are likely
to set up in small practices with vulnerable clients in competition
with, for example, high street solicitors: we are generally dealing
here with large firms seeking corporate clients and whose work
is generally commercial in nature. Moreover, the CCBE Code of
Conduct, which applies to all lawyers in the EU, is designed
(among other things) to prevent lawyers from taking on work which
they are not competent to do. Breach of the Code can result in
disciplinary proceedings and sanctions including striking off
or disbarment. That should significantly mitigate fears that lawyers
unqualified in (for example) English law might mislead clients
as to the nature of their qualifications or damage their interests.
13. There are undoubtedly points of detail which need to
be clarified. In particular, although the text makes clear that
the onus of proving that for three or more years he has engaged
in "effective" and "regular" pursuit of the
professional activity, it needs to be made clear (although in
the Government's view it is necessarily implicit) that if the
applicant does not satisfy the competent authority of his eligibility
to benefit from the provisions of Article 10 admission may be
withheld. This ground for refusal would be additional to the "public
interest" reasons referred to in Article 10.4.
14. Subject to those considerations, the Government is minded
to accept Article 10 as part of a package which promises significant
overall benefits for the United Kingdom legal professions.
15. The present (Dutch) Presidency is seeking to reach a
common position on this text at the Internal Market Council meeting
on 20 May. This is an aim the Government supports.
10 March 1997
1 Published in Correspondence with Ministers, 5th Report, Session 1996-97, p. 39. Back