Blackstone's Tom Hickman on the rise of human rights challenges in commercial disputes

There can be no doubt that the most pronounced impact of the Human Rights Act on domestic law has been on administrative law. Human rights arguments are now commonplace in the Administrative Court. For UK lawyers, there is nothing remarkable or unexpected in this. But a wider perspective demonstrates that this is significant.

In Canada, for example, the Charter of Rights and Freedoms 1982 had almost no impact on administrative law. It was used primarily as a method of challenging the constitutionality of primary legislation, including in commercial contexts, and in cases about criminal procedure and evidence.

It was only after the case of Multani v Commission scolaire Marguerite-Bourgeoys [2006] 1 SCR 256 – in which the Supreme Court found that an administrative decision taken by a Quebec school authority prohibited a Sikh child from wearing a kirpan – that the Court held the Charter requires rights to be enforced through administrative law.

The New Zealand Bill of Rights 1990 also had no impact on administrative law until relatively recently. In Zaoui v A-G [2006] 1 NZLR 289 (SC), the New Zealand Supreme Court finally held that the discretionary statutory power to deport persons was impliedly limited by the right to life and the right to be free from torture.

In the US, the position is much the same. Although the Fifth and 14th Amendments apply to executive decisions, one textbook notes that: "It is entirely possible for an administrative law practitioner to spend 30 or 40 years in practice without ever encountering a constitutional due process issue."

The reasons for the predominance of human rights challenges in administrative law cases has been partly due to institutional factors, such as the presence of thriving public law profession already working with human rights principles and the availability of legal aid. 

Change in direction
However, the inertia may be changing. And yet, the direction of change may be unexpected. In April, Sweet & Maxwell published the results of a survey which showed a 36% increase in the deployment of human rights arguments in commercial cases.

The so-called 'horizontal effect' of the Human Rights Act is something that has been long recognised. But the full impact of human rights arguments in private law disputes is only beginning to be explored.

Take, for example, complex international fraud cases – not the most obvious arena for human rights arguments. And yet, human rights points were deployed in the context of a freezing injunction in JSC BTA Bank v Ablyazov [2009] EWCA Civ 1125 in an attempt by the defendant, the former chairman of a Kazakhstan bank, to resist disclosure of assets. The defendant invoked a further raft of human rights arguments in a subsequent defence to an application for a receivership order ([2010] EWHC 177 (Comm)).

Attorney General of Zambia v Meer Care & Desai [2006] EWCA Civ 390 demonstrates the potential for human rights points to arise in stay applications. In that case, it was argued that it would be unfair to continue fraudulent conspiracy claims in the UK while the defendants were in Zambia defending criminal charges. 
Another commercial context in which human rights arguments have arisen is in relation to enforcement of foreign judgments.

In Merchant International Co Ltd v Naftogaz [2012] EWCA Civ 196, the court refused to set aside default judgment obtained against an energy company based on a Ukrainian judgment, despite the fact that the Ukrainian judgment had been set aside by the Ukrainian courts.

The court (upheld by the Court of Appeal) refused to recognise the second Ukrainian judgment on the basis that it had been obtained in violation of the right to a fair trial under Article 6 of the European Convention on Human Rights.

The jurisprudential basis for such arguments is that the court is a 'public authority' under the Human Rights Act and must exercise its powers consistently with Convention rights.

Another notable recent case is Stiedl v Enyo Law LLP and Addleshaw Goddard LLP [2011] EWHC Civ 2649 (Com), arising out of a fraud claim by 555 participants in 'Innovator Schemes', which promised tax savings that did not emerge. In the course of the litigation the claimant's solicitors, through no fault of their own, received privileged documents from the liquidator of the company that had provided the schemes.

An application was made for an injunction preventing the claimants' solicitors from continuing to act. The application was substantially based on Article 6 and Article 8 of the Convention.

Beatson J accepted that issues concerning disclosure and privilege may raise questions under both Article 6 and Article 8. It is clear, he held, that fair trial rights may require communications with lawyers to be protected, and that confidential communications between lawyers and clients fall within the protection of private life, home and correspondence accorded by Article 8 (see S v Switzerland (1992) 14 EHRR 670).

Nonetheless, accepting the balancing of interest approach required by those articles, Beatson J dismissed the application.

The most interesting feature of that case, and the reason for noting it here, relates to the indirect influence of human rights principles. In order to enable the issue to be properly determined without disclosing the documents to the defendants, the Court appointed counsel to act in the interests of the defendants, but subject to restrictions on communicating with them.

The Commercial Court consciously modelled this arrangement on the 'Special Advocate' system which was developed following the Strasbourg case of Chahal v United Kingdom (1997) 23 EHRR 413 to ensure compliance with the Convention in cases where information cannot be disclosed to one side of the case.

Therefore, we are witnessing both the direct and indirect impact of human rights law outside its natural habitat of administrative law and deep into the territory of the Commercial Court. What these cases vividly illustrate is that human rights principles can provide important ammunition even in commercial cases.

Tom Hickman is a barrister at Blackstone Chambers