Joint Committee on Human Rights Appendices to the Minutes of Evidence


APPENDIX 6

Memorandum by the Secretary of State for Trade and Industry

INTRODUCTION

  Preparations within the Department for the implementation of the Human Rights Act began well over two years ago. We recognised when the Human Rights Bill was still proceeding through Parliament that it would be important to make a sustained effort to raise awareness throughout the Department of the implications of this new legislation. In July 1998 we were pleased to host a two-day conference organised by the Civil Service College and open to all Departments. This conference marked the beginning of a programme of training within the Department to deepen understanding of human rights issues across the broad spectrum of our activities and to strengthen a culture in which awareness of such issues is an integral part of Departmental policy formulation and practice.

THE DEPARTMENT'S PREPARATIONS FOR THE HUMAN RIGHTS ACT

  The early training of the Department's legal advisers was a high priority so that they in turn would be well placed to offer specific guidance to administrators. A series of short courses was arranged for administrators. These courses were designed to give a general understanding of the Human Rights Act and specific implications for the Department. In parallel extensive guidance material on human rights was made available to all staff. Certain parts of the Department, for example those involved in prosecutions work, the Insolvency Service and the Patent Office, supplemented these materials by more specialised training for their staff. For example, within the Patent Office, depending on individual and job needs, this supplementary training ranged from tailored half-day workshops for tribunal Hearing Officers, who deal with a range of ex parte and inter partes disputes, mainly on trade marks and patents, to short briefings for all staff in the Agency. The final phase was a "Human Rights Week" in mid-September involving posters, briefing packs and lunchtime briefing seminars, which were well attended.

  Shortly after the Bill received Royal Assent we instigated a rolling programme across the Department to assess our legislation and procedures against the requirements of the European Convention on Human Rights. The Department has always paid close attention to the principles of natural justice in policy development and the delivery of its services and has taken seriously its obligation to act in accordance with the Convention. However we felt that a more structured approach to human rights issues was called for in view of the enactment of the Human Rights Act. A review was therefore carried out by the Department's Directorates, given their expert knowledge of their areas of responsibility, but the process was monitored by a central team, which reported periodically to the Department's Management Board.

  Although it was not possible to identify with complete certainty all areas which could be vulnerable to successful challenge under the Human Rights Act our assessment is that on balance our legislation and procedures were human rights compliant and that the Department was well prepared when the Act was implemented in October 2000. However in a limited number of areas changes were identified which could not be made without primary legislation.

  As part of this review we made sure that the public authorities and similar bodies which are associated with the Department, such as the Post Office, were aware of their responsibilities under the Human Rights Act. In September last year the Department made a presentation to the Human Rights Task Force, a body set up to advise the Home Office on implementation of the Act, on our preparations for commencement of the Act.

CASES BEFORE THE COURTS

  In our prosecutions work we have seen an increase in the number of challenges citing delay in bringing the case before the courts and therefore infringement of the right to a fair trial set out in Article 6 of the European Convention. We have successfully resisted the majority of such challenges either in the Magistrates Court or the Crown Court. There are no appeals pending on these grounds.

  However a small number of cases are currently before the courts as the judiciary begins the process of clarifying the meaning of the Human Rights Act in detail. Most of these concern the application of Article 6 of the European Convention.

DEVELOPMENT OF A HUMAN RIGHTS CULTURE

  The human rights perspective is an important consideration in the development of new policy and procedures and is increasingly being embedded in the Departmental culture. The Company Law Review offers a useful example of the way in which the Department is building human rights issues into its policy-making process.

  At a very early stage in the Review the Department's legal advisers produced a paper for the independent Steering Group formed to manage the exercise which set out the key components of the Human Rights Act, explained how the provisions of the Act might affect the Review's approach to some topics and created a checklist of human rights criteria with which the Review's conclusions and recommendations would need to comply. This led directly to human rights issues being flagged up as an important issue for the Review in its first consultation document, The Strategic Framework (URN 99/654). As the work of the Steering Group has progressed there have been several examples of how this approach has been adopted in practice. For example:

    —  in consulting on its approach to a revised company law enforcement and sanctions regime the Group has drawn attention to the requirements of the European Convention, including "reverse burden of proof" provisions, the status of civil penalties, and more generally the need to strike a "fair balance ... between the demands of the general interest of the community and requirements of the protection of the individual's fundamental rights", and the need to ensure that any sanction is proportionate to the objective;

    —  in putting forward proposals to facilitate company restructuring, the Steering Group has specifically noted the human rights implications of procedures for buying out minority shareholders;

    —  in developing proposals for a specialist tribunal to hear certain cases relating to company accounts the Steering Group recognised that if the arrangements were to satisfy human rights considerations, then the tribunal would not only need to be independent and impartial but also to be seen to be so, and would need to be established by or under statute;

    —  in considering the establishment of an arbitration scheme for disputes involving shareholders of private companies the Steering Group recognised that to the extent that an arbitration scheme was compulsory it would need to comply with the Article 6 of the European Convention.

  With support from the Department's lawyers the human rights implications of all the Department's legislative proposals are assessed as an integral part of policy development so that Ministers are appraised of the human rights perspective. A check is made on the human rights status of proposals for primary legislation before the Department puts forward its bids for legislative slots. All of the primary legislation which is currently in the course of preparation within the Department is expected to be compatible with the European Convention. A further analysis will be made in accordance with central procedures before clearance is given for the introduction of Bills. Section 19 statements will be prepared in due course, again in accordance with central guidance, when the Bills are ready for presentation to Parliament. Ministers will be ready to explain to Parliament the thinking on the compatibility of provisions in individual Bills. All secondary legislation is prepared with human rights issues clearly in mind.

IMPACT OF THE HUMAN RIGHTS ACT ON EVERYDAY LIFE IN THE DEPARTMENT

  It is difficult to generalise about the impact which the Act has had on the day to day activities of the Department. It has had most direct impact on those involved in new policy development, particularly the preparation of legislative proposals, where a more structured approach to assessment of human rights implications has been introduced. Clearly the effect has also been felt by those parts of the Department whose legislation and procedures are subject to scrutiny by the courts.

  Moreover the Department gives advice to enquirers who are seeking guidance on human rights issues, principally in relation to employment matters. The volume of such enquiries has increased substantially since the Act came into force. However, taken across the broad span of the Department's responsibilities our assessment is that the Act is yet to have a very material impact on day to day activities.

Annex

Cases on the Human Rights Act currently before the Courts

  A number of current cases turn on whether the requirement in Article 6 has been breached that everyone charged with a criminal offence shall be presumed innocent until proven guilty according to law. The issue in Pateman is whether the use of pre-existing business documents which were produced in compulsory proceedings under the Insolvency Act 1986 in response to the Official Receiver's inquiries into the causes of bankruptcy breached this presumption of innocence. The case has been referred by the Attorney General to the Court of Appeal and is likely to be heard in the Spring. There are a further two appeal court hearings, Mahady and Modi, which are awaiting the decision in the Pateman case.

  There are two further cases, Narine and Daniel, which concern the Insolvency Act 1986. Under s352 it is a defence for a defendant to show that he had no intention to defraud or conceal the state of his affairs. The defence's contention is that this imposes a reverse burden of proof and therefore offends against the presumption of innocence requirement. The prosecution argue that these defences are there for the benefit of the defendant because those factors are almost exclusively within the knowledge of the defendant and they are proportionate in terms of the obligations which the Act imposes for seeking protection under bankruptcy laws. Other cases in the Crown Courts are awaiting the ruling of the Court of Appeal in these cases.

  We are awaiting judgement by the Employment Appeal Tribunal in the Link case, which concerns a different aspect of Article 6, whether employment tribunals are an "independent and impartial" tribunal within the meaning of that Article, in regard to the determination of complaints against the Department, in view of the fact that lay persons are appointed and paid by the Department. The appeal is from a decision of the Hull Employment Tribunal on 30 June 1999. Consequently the appeal will decide whether the employment tribunal system prior to changes in appointments procedures introduced last year complies with Article 6. As the tribunal hearing was before the Human Rights Act came into force it was argued on the basis of an "EU gateway" (enforcement of European Community law derived rights) for the application of the Convention.

  In its judgement of 23 November last year in the case of Wilson v First County Trust, the Court of Appeal notified the Crown that it was considering making a declaration of incompatibility under s4 of the Human Rights Act in respect of s127(3) of the Consumer Credit Act 1974. The case concerns a consumer who entered into an agreement with a pawnbroker for a loan on the security of her car. Because of an error of law (as it was held to be by the Court of Appeal) on the part of the pawnbroker the requirements of the Act were not met regarding the form and content of the agreement. As a result under the terms of the Act the agreement was unenforceable. The Court held that s127(3) precluded any exercise of discretion of its part to allow enforcement. It also held that the consequence of unenforceability of the agreement was that she was entitled to a refund of the interest on the loan, the return of her car and to keep the capital sum lent. The Vice Chancellor considered that it might be arguable that s127(3), which he held prevented the court from exercising a discretion to allow enforcement of the agreement by the lender and recovery of the loan capital, infringes Article 6 of the Convention and/or Article 1 of the First Protocol. The Secretary of State for Trade and Industry has decided to be joined as a party to the proceedings.

  Finally the case of Mithum Muhamad, which is on appeal to the Court of Appeal, turns on the application of Article 7 of the European Convention, which protects against retrospective offences, to s362(1)(a) of the Insolvency Act 1986. The defence argue that this provision is incompatible with Article 7 because gambling is not an offence. The fact that the defendant by his gambling substantially increased his indebtedness which led to his bankruptcy meant that it is only his bankruptcy ex post facto that criminalises his gambling which occurred before bankruptcy. The prosecution's argument is that the legislation is in place for the protection of creditors and the defendant is aware or ought to have been aware of the consequences of his actions and in any event is able to seek advice if he is unsure as to his criminal liabilities. This is not a case whereby legislation is enacted and has retrospective effect after the offences have been committed.

March 2001


 
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