English Judges: Little Mice in the Big Business of Corruption?

Marique, Yseult

doi:10.1007/978-3-319-19054-9_6

Yseult Marique⁵

Part of the book series: Ius Comparatum - Global Studies in Comparative Law ((GSCL,volume 11))

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Abstract

The civil consequences of corruption in international commercial contracts are poorly mapped under English private law, despite the economic importance of English law in governing international contracts. England seeks to balance protecting the main economic transaction (eg the main infrastructure project, the main provision of goods) benefitting the principal (eg a foreign public authority) with harsh treatment of the corrupting transaction itself, ie the transaction between the bribe-giver and the bribe-taker. The starting point in English law for addressing corruption is the relationship between the principal and its agent. Even though the Bribery Act 2010 moved away from this principal/agent relationship to address corruption from a criminal law perspective, the UK Supreme Court relied on this principal/agent relationship in FHR European Ventures LLP v Cedar Capital Partners LLC, where it held that the agent held the product of corruption in trust for his principal. The question remains whether such financial adjustments developed by the judges are a sufficient punishment or deterrence against corruption. They may offer a clear and simple answer signalling clearly that English judges disapprove of corruption as a serious evil. However, as a matter of public policy, a range of other techniques may need to be developed to discourage corruption in a more systematic way among all the parties involved, the bribe-giver included.

I am grateful to Professor John Bell, Dr Paul Hughes and Dr Matt Stone for their comments. All errors remain my own. Any comments on this contribution are welcome.

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Notes

1.
P Watts and F Reynolds, Bowstead and Reynolds on Agency, 19th edn (London, Sweet and Maxwell, 2010) para 33-023.
2.
Deposit of instrument of ratification on 14 December 1998; entry into force of the Convention on 15 February 1999; entry into force of implementing legislation on 14 February 2002 (http://www.oecd.org/daf/anti-bribery/unitedkingdom-oecdanti-briberyconvention.htm).
3.
Signature on 27 January 1999; ratification on 9 December 2003 and entry into force on 1 April 2004.
4.
Signature on 9 December 2003 and ratification on 9 February 2006.
5.
R (on the application of Corner House Research) v Director of the Serious Fraud Office [2008] UKHL 60.
6.
C Rose, ‘The UK Bribery Act 2010 and Accompanying Guidance: Belated Implementation of the OECD Anti-Bribery Convention’ (2012) International & Comparative Law Quarterly 485.
7.
The provision reads as follow:
“1 Offences of bribing another person
1. (1)
  A person (“P”) is guilty of an offence if either of the following cases applies.
2. (2)
  Case 1 is where—
  
  (a)
  P offers, promises or gives a financial or other advantage to another person, and
  
  (b)
  P intends the advantage—
  
  (i)
  to induce a person to perform improperly a relevant function or activity, or
  
  (ii)
  to reward a person for the improper performance of such a function or activity.
3. (3)
  Case 2 is where—
  
  (a)
  P offers, promises or gives a financial or other advantage to another person, and
  
  (b)
  P knows or believes that the acceptance of the advantage would itself constitute the improper performance of a relevant function or activity.
4. (4)
  In case 1 it does not matter whether the person to whom the advantage is offered, promised or given is the same person as the person who is to perform, or has performed, the function or activity concerned.
5. (5)
  In cases 1 and 2 it does not matter whether the advantage is offered, promised or given by P directly or through a third party.”
8.
The provision reads as follow:
“2 Offences relating to being bribed
1. (1)
  A person (“R”) is guilty of an offence if any of the following cases applies.
2. (2)
  Case 3 is where R requests, agrees to receive or accepts a financial or other advantage intending that, in consequence, a relevant function or activity should be performed improperly (whether by R or another person).
3. (3)
  Case 4 is where—
  
  (a)
  R requests, agrees to receive or accepts a financial or other advantage,
  
  and
  
  (b)
  the request, agreement or acceptance itself constitutes the improper performance by R of a relevant function or activity.
4. (4)
  Case 5 is where R requests, agrees to receive or accepts a financial or other advantage as a reward for the improper performance (whether by R or another person) of a relevant function or activity.
5. (5)
  Case 6 is where, in anticipation of or in consequence of R requesting, agreeing to receive or accepting a financial or other advantage, a relevant function or activity is performed improperly—
  
  (a)
  by R, or
  
  (b)
  by another person at R’s request or with R’s assent or acquiescence.
6. (6)
  In cases 3 to 6 it does not matter—
  
  (a)
  whether R requests, agrees to receive or accepts (or is to request, agree to receive or accept) the advantage directly or through a third party,
  
  (b)
  whether the advantage is (or is to be) for the benefit of R or another person.
7. (7)
  In cases 4 to 6 it does not matter whether R knows or believes that the performance of the function or activity is improper.
8. (8)
  In case 6, where a person other than R is performing the function or activity, it also does not matter whether that person knows or believes that the performance of the function or activity is improper.”
9.
Section 6(1) reads as follows: “A Person (“P”) who bribes a foreign public official (“F”) is guilty of an offence if P’s intention is to influence F in F’s capacity as a foreign public official.”
10.
S 3(2).
11.
MoJ, The Bribery Act 2010 – Guidance about Procedures which Relevant Commercial Organisations Can Put into Place to Prevent Persons Associated with Them from Bribing (section 9 of the Bribery Act 2010) 2011.
12.
MoJ, Lord Falconer quoted in Joint Committee on the Draft Corruption Bill, Draft Corruption Bill (2002–03 HL Paper 157 and HC 705) para 29.
13.
Home Office, Corruption – Draft Legislation (2003 Cm 5777) para 6.
14.
See illustrations provided in M Furmston, Cheshire, Fifoot and Furmston’s Law of Contract, 16th edn (Oxford, OUP, 2012) 473–74.
15.
Lister & Co v Stubbs (1890) L.R. 45 Ch. D.1; Attorney General of Hong Kong v Reid [1994] 1 A.C. 324. For an illustration of the most recent decisions in this matter, see Sinclair Investments (UK) Ltd v Versailles Trade Finance Ltd (in administration) [2011] EWCA Civ 347.
16.
eg Omnium de Traitement et de Valorisation SA v Hilmarton Ltd [1999] 2 All E.R. (Comm); Soleimany v Soleimany [1999] QB 785 (CA).
17.
Westacre Investment Inc v Jugoimport – SPDR Ltd [2000] 1 QB 288, 316 (CA).
18.
eg World Duty Free Ltd v Republic of Kenya ICSID Case Arb/00/7, Award of the Tribunal, 6 October 2006, commented in C Nicholls, T Daniel, A Bacarese and J Hatchard, Corruption and Misuse of Public Office, 2nd edn (Oxford, OUP, 2011) para 9.138 ff.
19.
See on this question: J Karton, The Culture of International Arbitration and the Evolution of Contract Law (Oxford, OUP, 2013).
20.
M Furmston, Cheshire, Fifoot and Furmston’s Law of Contract (n 14), 459.
21.
(1775) 1 Cowp 341 at 343.
22.
J Beatson, A Burrows and J Cartwright, Anson’s Law of Contract, 29th edn (Oxford, OUP, 2010) 384.
23.
ibid 385.
24.
G Mitchell and C Bond, ‘The Effect of Foreign Illegality on English Law Contracts’ (2010) Journal of International Banking and Financial Law 531.
25.
Omnium de Traitement et de Valorisation SA v Hilmarton Ltd [1999] 2 All E.R. (Comm); Soleimany v Soleimany [1999] QB 785 (CA).
26.
S Wade, ‘Westacre v Soleimany: What Policy? Which Public?’ (1999) International Arbitration Law Review 97, 101.
27.
P Millet, ‘Case Comment: Bribes and Secret Commissions Again’ (2012) Cambridge Law Journal 583; P Millet, ‘Bribes and Secret Commissions’ (1993) Restitution Law Review 7.
28.
Beatson et al (n 22), 491–92.
29.
Beatson et al (n 22), 432.
30.
[2009] EWHC 3218 (QB).
31.
Nicholls et al (n 18), para 9.70 ff.
32.
Beatson et al (n 22), 426 (eg when one party is innocent) and 432–38.
33.
[1994] 1 A.C. 340.
34.
Saunders v Edwards [1987] 2 ALL ER 651; Howard v Shirlstar Computer Transport [1990] 1 WLR 1292; Tribe v Tribe [1996] Ch 107.
35.
Law Commission, Illegal Transactions: The Effects of Illegality on Contracts and Trusts (1999 Law Comm no 154) para 7.72.
36.
Law Commission, The Illegality Defence (2009 Law Com no 186).
37.
P Davies, ‘The illegality defence – two steps forward, one step back’ (2009) Conveyancer and Property Lawyer 182; D Sheehan, ‘Reconsidering the Defence of Illegality in Unjust Enrichment’ (2009) Lloyd’s Maritime and Commercial Law Quarterly 319–343.
38.
Law Commission, The Illegality Defence (2010 Law Com no 320; HC 412).
39.
MoJ, Report on the Implementation of Law Commission Proposals, March 2012, 14–15.
40.
Nayyar v Denton Wilde Sapte [2009] EWHC 3218 (QB).
41.
At 118.
42.
At 119.
43.
Regazzoni v KC Sethia (1944) Ltd [1957] 2 Lloyd’s Rep 289, 294.
44.
ibid at 317.
45.
G Mitchell and C Bond, ‘The Effect of Foreign Illegality on English Law Contracts’ (2010) Journal of International Banking and Financial Law 531.
46.
[1988] QB 448.
47.
At 461.
48.
Omnium de Traitement et de Valorisation SA v Hilmarton Ltd [1999] 2 All E.R. (Comm).
49.
Wade (n 26), 101.
50.
Wade (n 26), 102.
51.
Regazzoni v KC Sethia (1944) Ltd [1958] AC 301.
52.
Barros Matttos Jr v MacDaniels Ltd [2005] 1 WLR 247 at 257.
53.
Quoted in Wade (n 26), 101.
54.
[1958] A.C. 301.
55.
Turnbull v Garden (1869) 38 LJ Ch 331, 334.
56.
Marlow Commercial Inc v Kozeny [2006] EWHC 872 (Comm); Donegal International Ltd v Republic of Zambia [2007] EWHC 197 (Comm).
57.
Watts and Reynolds (n 1), para 3-009; Fiona Trust and Holding Corp v Privalov [2007] EWCA Civ 20.
58.
Watts and Reynolds (n 1), para 6-087.
59.
Lord Goff and G Jones, The Law of Restitution, 7th edn (London, Sweet and Maxwell, 2007) para 33-023.
60.
Watts and Reynolds (n 1), para 6-087. See for further details: ibid, para 8-217 ff on the remedies of the principal against the third party in case of agent’s lack of authority.
61.
Nicholls et al. (n 18), para 9.57.
62.
(1875) LR 10 Ch App 96.
63.
[1988] 1 WLR 1256.
64.
(1890) 45 Ch.D.1. Stubbs was employed to buy materials for his employers. He received commissions from suppliers. He invested some of these commissions in shares and made profit from this. The employers sought to recover the profit that Stubbs had made, notably with freezing orders against the shares.
65.
[1994] 1 AC 324. The head of the anti-corruption unit in Hong Kong accepted bribes from persons he was supposed to investigate. He invested the money in landed properties in New Zealand. Their value increased. The Hong Kong government brought proceedings against the head of anti-corruption in New Zealand, claiming that the properties were held on trust by him for the government.
66.
Millet, ‘Case Comment’ (n 27), 583; Millet, ‘Bribes and Secret Commissions’ (n 27), 7.
67.
[2011] EWCA Civ 347.
68.
Millet, ‘Case Comment’ (n 27), 583, 585 (footnotes omitted).
69.
Millet, ‘Case Comment’ (n 27), 583, 590.
70.
S Worthington, ‘Fiduciary Duties and Proprietary Remedies: Addressing the Failure of Equitable Formulae’ (2013) Cambridge Law Journal 720, 724.
71.
eg Worthington (n 70), 720, 725; R Nolan, ‘Bribes: A Reprise’ (2011) Law Quarterly Review 19, 23; T Dayton, ‘Case Comment: No Proprietary Liability for Bribes and Other Secret Profits?’ (2011) Trust Law International 3, 16.
72.
FHR European Ventures LLP v Cedar Capital Partners LLC [2014] UKSC 45, at 1.
73.
ibid at 46.
74.
ibid at 42.

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School of Law, University of Essex, Wivenhoe Park, CO4 3SQ, Colchester, UK
Yseult Marique

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UNIDROIT, Rome, Italy
Michael Joachim Bonell
Centre of European Law and Politics, University of Bremen, Bremen, Germany
Olaf Meyer

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Marique, Y. (2015). English Judges: Little Mice in the Big Business of Corruption?. In: Bonell, M., Meyer, O. (eds) The Impact of Corruption on International Commercial Contracts. Ius Comparatum - Global Studies in Comparative Law, vol 11. Springer, Cham. https://doi.org/10.1007/978-3-319-19054-9_6

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