Norris (Appellant) v Judgments - Government of the United States of America and others (Respondent) (Criminal Appeal from Her Majesty’s High Court of Justice)

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49.  It is convenient at this point to mention an argument not advanced on behalf of Mr Norris but advanced by counsel for one of the appellants in R v GG PLC and others ([2008] UKHL 17) heard by the House immediately following the present appeal. This argument was that the effect of section 35(2) was to render any activity, however dishonest and however otherwise criminal, free from the threat of prosecution provided that the activity could be said to fall within the ambit of a “restriction” as identified or defined in the 1976 Act. In the light of both the statutory language and common sense, this cannot be correct. All that section 35(2) did was to ensure that “the odour of criminality” was excluded from applying to activities just because they fell within section 35(1)(b). Thus, if, pursuant to a price-fixing agreement, the parties enforced a provision which was a “restriction” within the 1976 Act, that could not, simply because it is unlawful under section 35(1)(b), have constituted a crime. However, if, in enforcing such a restriction, the parties did something which, independently of section 35(1)(b) would have been unlawful, for instance because it amounted to a dishonest representation, then that could have been a crime. In such a case, it is the deceit, not the price-fixing, which would constitute the criminal conduct. The price-fixing, and indeed the enforcement of the restriction, would thus be merely the occasion of the dishonesty and criminality.

50.  It is also convenient at this point to mention another argument not relied on by Mr Norris but relied on by counsel for some of the appellants in GG. This is the contention that the court would have no jurisdiction to try a common law cartel offence, in the light of Council Regulation (EC) No 1/2003 of 16 December 2002, which is concerned with “the implementation of the rules on competition laid down in articles 81 and 82 …". The argument is that, by virtue of article 35.1, a member state must “designate the competition authority or authorities responsible for the application of articles 81 and 82", that, at any rate until the 2002 Act, only the OFT and certain other regulatory bodies (such as OFCOM), but crucially not the courts, have been so designated in this jurisdiction (see section 54(1) of the 1998 Act), and, as only such authorities may impose “fines…penalty payments or any other penalty” by virtue of article 5, the courts cannot impose any sanction for agreeing or operating a cartel.

51.  There may well be force in the argument that this Regulation would prevent the courts from enforcing, even through the criminal law, a claim based on an allegation of price fixing. It is not necessary to decide the point, as there is, for the reasons discussed, no such common law offence. However, if the formation or operation of the price-fixing agreement involves additional dishonesty (e.g. lying to potential purchasers about the existence of the agreement), then nothing in the Regulation would prevent the dishonesty founding the basis for a criminal charge. Recital (9) states that the Regulation does not apply where “the national legislation pursues predominantly an objective different from that of protecting competition on the market". As already explained, in a case involving dishonest misstatement in connection with price-fixing, it would be the punishment of the dishonesty not price-fixing which would be the “objective” of the criminal law.

(3) Legal certainty

52.  The above analysis of the case law, the legislation, and ministerial and other official observations appears to establish, without more, that there has never been a common law offence of price-fixing. In addition, the material also serves to demonstrate that it would be wrong in principle for any court now to hold that there is or was, at the time of the events complained of in count 1, such a common law offence.

53.  In R v Rimmington [2006] 1 AC 459, para 33 Lord Bingham of Cornhill said that there were two “guiding principles” relevant in that case, namely:

“no one should be punished under a law unless it is sufficiently clear and certain to enable him to know what conduct is forbidden before he does it; and no one should be punished for any act which was not clearly and ascertainably punishable when the act was done".

As he went on to say in the next paragraph, those principles are “entirely consistent with article 7(1) of the European Convention". At para 35, he discussed a number of decisions of the Strasbourg Court on the topic, which established that, while “absolute certainty is unattainable, and might entail excessive rigidity", and “some degree of vagueness is inevitable” particularly in common law systems, “the law-making function of the courts must remain within reasonable limits".

54.  In R v Jones (Margaret) [2007] 1 AC 136, Lord Bingham took the matter a little further when he identified, at para 29

“what has become an important democratic principle in this country: that it is for those representing the people of the country in Parliament, not the executive and not the judges, to decide what conduct should be treated as lying so far outside the bounds of what is acceptable in our society as to attract criminal penalties. One would need very compelling reasons for departing from that principle.”

Lord Hoffmann said much the same at para 60.

55.  Even if it had otherwise been open to the Divisional Court to decide that price-fixing could now amount to a common law offence, these principles would have required a contrary conclusion. Considering the matter as at the 1990s, the period covered by count 1, the consistent message which had been conveyed both by Parliament, through legislation enacted between 1948 and 1976, and by the judiciary, through cases decided from 1875 through to 1984, was that price-fixing was not of itself capable of constituting a crime. This message was reinforced by ministerial statements, even into this century, and in textbooks. There was no reported case, indeed, it would appear, no unreported case, no textbook, no article which suggested otherwise. Further, the legislation indicated that cartel operating was a matter for regulation, and the cases indicated that it did not even constitute a civil wrong.

56.  In these circumstances, it would appear to involve a contravention of the principles articulated in Rimmington to hold that entering into or operating a price fixing agreement constituted, and had during the whole, or at any rate most, of the 20th century, constituted a common law offence. The Divisional Court thought otherwise, on the basis that the essence of the common law offence of price-fixing was conspiracy to defraud, a well-established (if not universally approved) offence. That involved the same error as that identified in paras 17 to 21 above, namely the acceptance of the proposition that making or operating a secret price-fixing agreement could, without more, amount to dishonesty and hence to a criminal offence.

57.  The alternative argument against Mr Norris is that, even accepting that operating a price-fixing cartel did not constitute an offence for much of the 20th century, public perceptions had changed by the end of the 1980s so as to justify taking a contrary position. That argument is also unsustainable. It is impossible to find any contemporaneous observations to support the argument, at least in the material made available in this case. There is nothing in any paper or report published at any time during the 20th century to indicate such a change of perception, except the majority view expressed in the report of the Cairns Committee, which was promptly and clearly rejected by the Government. However, even if there had been a discernible shift of perception by, say, 1985, it would have been for the legislature, and not for the courts, to decide whether, and if so to what extent, to criminalise price-fixing. The general statement of principle in R v Jones would be enough to justify that conclusion. However in the case of cartels, both the legislative history since 1948 and the observations referred to in para 17(3) above make it clear that this is an area in which the law should be developed by Parliament, not by judges. In any event, criminalising price-fixing because of a change in public perception would be hard to reconcile with the Strasbourg Court’s rejection of the notion that the courts could characterise an action as criminal simply because it was “wrong rather than right in the judgment of the majority of contemporary fellow citizens” - see Hashman and Harrup v United Kingdom (1999) 30 EHRR 241, para 38.

58.  Reliance was placed on the reasoning of the Strasbourg Court in SW v United Kingdom (1995) 21 EHRR 363. In that case, it was held that, notwithstanding article 7 of the Convention, it was open to the courts in this country to extend the offence of rape to a case of a husband forcing his cohabiting wife to have sex with him, even though historically the relationship had been held to carry with it the wife’s implicit consent. That decision does not assist the case against Mr Norris. There were two reasons why the court held that this change in the law in SW did not violate article 7, and neither applies here. The first was that a gradual change in the law on the topic of marital rape could have been perceived in the case law over the years preceding the commission of the alleged offence in SW, so that it was known that “a husband who forcibly had sexual intercourse with his wife could, in various circumstances, be found guilty of rape". Hence the change in the law in question “had become reasonably … foreseeable” (para 43/41). Secondly, by the time of the alleged offence, the notion of a husband “being immune against prosecution for rape of his wife” had become “unacceptable” in the light of “a civilised concept of marriage … and … the fundamental objectives of the Convention” (para 46/44).

59.  The first time it was apparently suggested in any publication that price-fixing might be a common law offence was in an article written in 2005 by Sir Jeremy Lever QC and Mr John Pike, “Cartel Agreements, Criminal Conspiracy and the Statutory ‘Cartel Offence’” [2005] ECLR 90. At p 95, the authors made the point, which has already been touched on, that if, in addition to the price-fixing, something positively misleading is said, such as a dishonest “representation … that offers are being made competitively", the criminal law will be engaged. More controversially, the authors then went on to suggest that making and operating secret price-fixing agreements could, of itself, operate dishonestly so as to constitute a crime, at least in circumstances where purchasers are acting in the belief, known to the price-fixers, that there is no price-fixing.

60.  This article was not only published after the 2002 Act, but a number of years after the activities complained of in count 1 had ended. So it is not as if even an astute reader of legal articles in this area of law could have informed himself at the relevant time of the possibility of his price-fixing activities attracting criminal sanctions. In any event, although the Divisional Court was impressed with the article, there are problems with the notion that mere secrecy can of itself render the price-fixing agreement criminal. It is not as if secrecy is always necessary for a price-fixing agreement to be effective, or that it is the secrecy which causes a purchaser loss. As already mentioned, in order to establish a criminal offence along the lines suggested by Lever and Pike, it would be necessary to show that it was the secrecy which caused the purchaser’s loss, since it must be the alleged dishonesty which causes the loss.

61.  Quite apart from this, it would be dangerous and impractical, particularly for the judges, to introduce a general principle that there is some sort of implied representation that the price at which goods are offered has been arrived at on a certain basis. Finally, the very fact that it was not until 2005 that it was first suggested that secret price-fixing could of itself constitute a common law offence underlines the difficulty faced by the argument that it would have been a common law offence in the 1990s, especially when one considers the material which was available on the topic from Parliament and the courts.

62.  For all the reasons given in sections (1), (2) and (3) above the committee concludes that mere price-fixing (that is, the making and implementation of a price-fixing agreement without aggravating features) was not, at any time relevant to count 1, a criminal offence in the United Kingdom. Mr Norris’ appeal in relation to this count must accordingly be allowed and the judge’s order quashed.

(4)  The double criminality issue

63.  As stated, Mr Norris’s appeal with regard to count one falls to be allowed on the elementary basis that the conduct of which he is accused—mere undeclared participation in a cartel—was not at the material time, in the absence of aggravating features, a criminal offence in this country either at common law or under statute. It was therefore wrong to have characterised his conduct as being party to a conspiracy to defraud although it would have been otherwise had the allegation been, for example, that he and his co-conspirators, having entered into a price-fixing agreement, agreed in addition to deceive their customers by making false representations to the contrary. That certainly would have been an aggravating feature. But no such conduct is alleged here. It is true that Ms McClain has deposed that the conspirators “[i]n effect . . . defrauded their customers by requiring that they pay higher prices than they might otherwise have paid had there been no conspiracy.” But that is no more than to assert an intrinsic unlawfulness and dishonesty merely in taking part in a secret cartel and under English law, until the enactment of section 188 of the Enterprise Act 2002, that was simply not so.

64.  The issue raised for the House’s decision under section 137 of the Extradition Act 2003 strictly, therefore, does not arise. It was discussed by the Divisional Court [2007] 1 WLR 1730, para 99, under the heading “the double criminality issue” and posed thus: “whether, if price fixing is capable of constituting the English offence of conspiracy to defraud, of which dishonesty is an essential ingredient, the absence of such ingredient in the United States offence of price fixing prevents the alleged conduct of Mr Norris from being an extradition offence within section 137.” But it only arose because the Divisional Court found that the conduct alleged against Mr Norris did indeed constitute an offence under English law before the Enterprise Act. Given, however, the obvious general importance of the issue and that it was fully argued before the House, we think it right to decide it.

65.  Before turning, as will be necessary, to a brief history of English extradition law prior to the Extradition Act 2003, particularly with regard to the so-called double criminality rule, it is useful to stand back from the detail and recognise the essential choice that the legislature makes in deciding just what the double criminality principle requires. It is possible to define the crimes for which extradition is to be sought and ordered (extradition crimes) in terms either of conduct or of the elements of the foreign offence. That is the fundamental choice. The court can be required to make the comparison and to look for the necessary correspondence either between the offence abroad (for which the accused’s extradition is sought) and an offence here, or between the conduct alleged against the accused abroad and an offence here. For convenience these may be called respectively the offence test and the conduct test. It need hardly be pointed out that if the offence test is adopted the requested state will invariably have to examine the legal ingredients of the foreign offence to ensure that there is no mismatch between it and the supposedly corresponding domestic offence. If, however, the conduct test is adopted, it will be necessary to decide, as a subsidiary question, where, within the documents emanating from the requesting state, the description of the relevant conduct is to be found.

66.  The modern history of extradition starts with the Extradition Act 1870 which, by section 10, provided so far as material:

“In the case of a fugitive criminal accused of an extradition crime, if the foreign warrant authorising the arrest of such criminal is duly authenticated, and such evidence is produced as . . . would, according to the law of England, justify the committal for trial of the prisoner if the crime of which he is accused had been committed in England, the police magistrate shall commit him to prison, but otherwise shall order him to be discharged.”

“Extradition crime” was defined (by section 26 of the Act) to mean “a crime which, if committed in England or within English jurisdiction, would be one of the crimes described in the First Schedule to this Act.”

67.  The magistrate’s task, in short, was simply to examine the evidence produced by the requesting state to decide whether, according to English law, it would justify the accused’s committal for trial for a listed offence. As Lord Diplock made plain in successive decisions of this House in In re Nielsen [1984] AC 606 and in Government of the United States of America v McCaffery [1984] 1 WLR 867, the conduct test was to be applied:

“[T]he magistrate is not concerned with what provision of foreign criminal law (if any) is stated in the warrant to be the offence which the person was suspected of having committed and in respect of which his arrest was ordered in the foreign state.” (In re Nielsen, 624 F-G):

“[T]he test whether a person in respect of whom a warrant for his arrest had been issued in a foreign state for an offence alleged to have been committed in that state was liable to be surrendered as a fugitive criminal, was not: whether the offence specified in the foreign warrant of arrest as that for which it had been issued was substantially similar to a crime under English law falling within the list of offences described in Schedule 1 to the Extradition Act 1870, as currently amended (i.e., the so-called ‘double criminality’ test). The right test, as stated by the Divisional Court in the Nielsen case, was: whether the conduct of the accused, if it had been committed in England would have constituted a crime falling within one or more of the descriptions included in that list.” (McCaffery p 869 F-G)

68.  Extradition to Commonwealth countries, however, was governed from 1967 by the Fugitive Offenders Act 1967 and here the so-called double criminality requirement was provided for in very different terms. To constitute a “relevant offence", the offence, however described in the law of the Commonwealth country, had first to fall within a description set out in Schedule One to the Act and to be punishable under that law for a term of 12 months or more (section 3(1)(a)) and in addition it had to be established that “the act or omission constituting the offence, or the equivalent act or omission, would constitute an offence against the law of the United Kingdom if it took place within the United Kingdom . . . “ (section 3(1)(c)).

69.  In Government of Canada v Aronson [1990] 1 AC 579, the House by a majority of three to two construed section 3(1)(c) as providing for the offence test of double criminality. Lord Lowry said this:

“The ‘act or omission constituting the offence’ cannot in my opinion mean ‘the conduct, as proved by evidence, on which the charge is grounded,’ because the evidence of such conduct could prove something more than what has been charged. In such a case the conduct proved would not be the act or omission constituting the offence of which the fugitive is accused in the Commonwealth country . . . One may paraphrase the effect of section 3(1)(c) by asking: ‘what is the essence of the Commonwealth offence? And would that be an offence against the law of the United Kingdom?’ That is quite a different thing from looking at the course of conduct revealed by the evidence and asking whether that conduct (as distinct from the conduct of which the person is accused) would constitute an offence against the law of the United Kingdom.” (p 609 C-H).

70.  Lord Bridge of Harwich, agreeing with Lord Lowry, considered the consequences of the contrary approach (the conduct test):

“The issue arises when the Commonwealth offence may be established by particularising and proving ingredients A, B and C, but the nearest corresponding United Kingdom offence requires that the prosecution prove ingredients A, B, C and D. It is submitted for the Government of Canada . . . that if, in a particular case, the evidence relied on to prove the Commonwealth offence would be sufficient, if accepted, to establish ingredient D in addition to ingredients A, B and C, this is sufficient to satisfy the requirements of section 3(1)(c). Whether the extra ingredient necessary to prove the United Kingdom offence, over and above the ingredients which constitute the Commonwealth offence, is a physical or mental element, the wide construction leads to startling results. Two men are accused of the identical Commonwealth offence particularised against them in identical terms. The committing magistrate must decide whether the offence with which each is charged is a ‘relevant offence': section 7(5). If the evidence establishes ingredients A, B and C against both men but ingredient D against the first man only, the magistrate must commit the first man, but not the second, to custody to await his return to the designated Commonwealth country. Yet so much of the evidence that is relied on to establish ingredient D . . . will be irrelevant to his trial for the Commonwealth offence after his return.” (p 589 E-H).

71.  Lord Bridge’s illustration neatly raises the situation postulated in this very case. Ingredient D (here dishonesty) is required to prove the English offence but is not an ingredient of the United States offence. Applying the conduct test (as would have applied under the 1870 Act) he, but not a notional co-accused against whom dishonesty was not alleged, would have fallen to be extradited. Is that, however, really so “startling"? He, after all, would have committed an offence under English law whereas his co-accused would not.

72.  The next major legislation was the Extradition Act 1989 which consolidated the extradition regimes previously contained in the 1870 Act and the 1967 Act, both of which were repealed. The test for double criminality was set out in section 2(1)(a) which provided that “extradition crime” meant “conduct in the territory of a foreign state, a designated Commonwealth country or a colony which, if it occurred in the United Kingdom, would constitute an offence punishable with imprisonment for a term of 12 months, or any greater punishment, and which, however described in the law of the foreign state, Commonwealth country or colony, is so punishable under that law.”

73.  The Divisional Court (Rose LJ and Hooper J) in R v Secretary of State for the Home Department, Ex p Hill [1999] QB 886 held that the section imposed the conduct test as set out in Nielsen, not the narrower approach adopted in Aronson. Under the 1989 Act the Court was concerned with the conduct of which the person to be extradited is accused, not the conduct constituting the offence of which he is accused. That plainly was correct.

74.  There is one other authority worthy of brief mention in this connection before turning to the Extradition Act 2003 itself: R v Governor of Belmarsh Prison, Ex p Gilligan [2001] 1 AC 84. The House there was concerned with section 2(2) of the Backing of Warrants (Republic of Ireland) Act 1965 which provided that the accused person should not be delivered up to the Garda “if it appears to the court that the offence specified in the warrant does not correspond with any offence under the law of the part of the United Kingdom in which the court acts which is an indictable offence or is punishable on summary conviction with imprisonment for six months.” The House rejected the contention that the juristic elements of the offences had to be the same. Certainly these were relevant but so too was the accused’s conduct. A broad approach was required, the court looking only for some similarity or analogy in the comparison and ensuring that the criminal conduct was of the required degree of seriousness (Lord Steyn at 94A-95G and Lord Clyde at 99F-100B).

75.  Part 1 of the Extradition Act 2003 is concerned with extradition to category 1 territories (presently just EU Member States), Part 2 with extradition to category 2 territories which include the USA. For the purposes of Part 2 of the Act the term “extradition offence” is defined by section 137, which so far as material provides:

“(1) This section applies in relation to conduct of a person if—

(a) he is accused in a category 2 territory of the commission of an offence constituted by the conduct . . .

(2) the conduct constitutes an extradition offence in relation to the category 2 territory if these conditions are satisfied—

(a) the conduct occurs in the category 2 territory;

(b) the conduct would constitute an offence under the law of the relevant part of the United Kingdom punishable with imprisonment or another form of detention for a term of 12 months or a greater punishment if it occurred in that part of the United Kingdom;

(c) the conduct is so punishable under the law of the category 2 territory (however it is described in that law).”

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