The Upper Tribunal (Tax and Chancery Chamber) hears references from decisions and supervisory notices issued by the Financial Conduct Authority (“FCA”) and other specified regulators. In this case three references were made by two former employees of Deutsche Bank (Messrs Bittar and Vogt) and a former Barclays Bank employee (Mr Moryoussef).

The references related to their third party rights under section 393 of the Financial Services and Markets Act 2000 (“FSMA”).  In essence, section 393 of FSMA provides that if an FCA notice identifies someone other than the person to whom the notice is given and is prejudicial to that person, a copy of the notice must be given to that person.  The references were made because the individuals in question had not been provided with copies of the FCA decision notices against their employers regarding LIBOR/EURIBOR manipulation.

There was some dispute about whether the individuals were identifiable in the notices. In November 2015 the Upper Tribunal had found that Mr Bittar was identifiable in the decision notice against Deutsche Bank.   In March 2016 it found that Mr Vogt was not identifiable. Mr Vogt is seeking permission to appeal this decision: his application has been stayed pending the Supreme Court’s judgment in Macris v. Financial Conduct Authority [2015] EWCA Civ 490.

Mr Bittar, Mr Moryoussef and others have also been charged by the Serious Fraud Office with conspiracy to defraud in relation to EURIBOR manipulation.  The facts of the criminal proceedings overlap with the references to the Upper Tribunal.

FCA’s Applications

The FCA applied to stay Mr Bittar’s reference until the Macris judgment is released (the Supreme Court hearing is expected in October 2016) and the criminal proceedings have been concluded. The FCA also applied for Mr Bittar’s and Mr Moryoussef’s references to be consolidated, arguing that this would further the overriding objective.

Mr Moryoussef, Deutsche Bank and the SFO all supported the FCA’s application to stay the References.  Mr Moryoussef argued that he wanted to use his limited resources to defend himself in the criminal proceedings in priority to pursuing his reference and await the Supreme Court decision in Macris. He also shared the SFO’s concerns about whether the criminal trials would be fair if the regulatory proceedings had already been decided.

The SFO’s concerns regarding fairness were:

• the risk of prejudice through publicity which might flow from any finding on dishonesty ahead of the criminal trial;

• inconsistency between the Upper Tribunal and the criminal court; and

• the risk of parties seeking to identify inconsistencies between the evidence during the regulatory proceedings and the approach of the prosecution in the criminal proceedings.

Mr Bittar opposed a stay, arguing that regulatory proceedings have an important public function and it was not appropriate to stay them simply because there are parallel criminal proceedings.

Decision

Timothy Herrington (the Upper Tribunal Judge) said “there is a strong presumption against a stay and it is a power which has to be exercised with great care and only where there is a real risk of serious prejudice which may lead to injustice“.  In his view, the only concern raised by the SFO could meet this test was the risk of publicity from a dishonesty finding ahead of the criminal trial.   This would be less of an issue if there was a significant time gap between the end of civil proceedings and the start of a criminal trial.

The risk of inconsistent decisions had previously been discounted by the Courts in R v Panel on Takeovers and Mergers, ex parte Fayed and others [1992] BCC 524.  In addition, the Upper Tribunal could put safeguards in place by restricting the use of material from its proceedings and/or not publicising its decision until after the criminal trial – Mr Herrington referred to Bankas Snoras v Antonov and another [2013] EWCA 131.

To further the overriding objective, the Upper Tribunal had to avoid delay, whilst balancing the competing interests of the parties.  It was unusual for the subject of criminal proceedings not to wish to stay parallel civil proceedings.  But in Mr Bittar’s case the risk of injustice could be addressed through case management.   The timing needed to be kept under review to ensure that the civil proceedings are not heard shortly before the criminal trial, leaving publicity fresh in the minds of the jury and/or witnesses.

Mr Moryoussef satisfied the Upper Tribunal that it was appropriate for his reference to remain stayed until the Supreme Court’s judgment in Macris, and to allow him to focus his resources on the criminal proceedings.  So it was decided that the question of consolidating the references would be revisited if the court decided to lift the stay on Mr Moryoussef’s reference.

The decision was published on 6 June 2016.