Lexploria

EUROPEAN COMMISSION OF HUMAN RIGHTS

Application No. 17101/90

Mohamed Al Fayed, Ali Fayed

and Salah Fayed

against

the United Kingdom

REPORT OF THE COMMISSION

(adopted on 7 April 1993)

TABLE OF CONTENTS

Page

I. INTRODUCTION

(paras. 1-15) . . . . . . . . . . . . . . . . . . . . . . . 1-3

A. The Application

(paras. 2-4) . . . . . . . . . . . . . . . . . . . . . . 1

B. The Proceedings

(paras. 5-10). . . . . . . . . . . . . . . . . . . . . 1-2

C. The Present Report

(paras. 11-15) . . . . . . . . . . . . . . . . . . . . 2-3

II. ESTABLISHMENT OF THE FACTS

(paras. 16-58). . . . . . . . . . . . . . . . . . . . . . .4-17

A. The particular circumstances of the case

(paras. 16-42) . . . . . . . . . . . . . . . . . . . .4-13

B. The relevant domestic law and practice

(paras. 43-58) . . . . . . . . . . . . . . . . . . . 13-17

III. OPINION OF THE COMMISSION

(paras. 59-89). . . . . . . . . . . . . . . . . . . . . . 18-25

A. Complaints declared admissible

(para. 59) . . . . . . . . . . . . . . . . . . . . . . .18

B. Points at issue

(para. 60) . . . . . . . . . . . . . . . . . . . . . . .18

C. As regards Article 6 para. 1 of the Convention

(paras. 61-81) . . . . . . . . . . . . . . . . . . . 18-24

a) Proceedings before the Inspectors

(paras. 62-64) . . . . . . . . . . . . . . . . . .19

CONCLUSION

(para. 65) . . . . . . . . . . . . . . . . . . . .19

b) Proceedings against the Inspectors

and the Secretary of State

(paras. 66-76) . . . . . . . . . . . . . . . . 20-23

CONCLUSION

(para. 77) . . . . . . . . . . . . . . . . . . . .23

c) Proceedings against others

(paras. 78-80) . . . . . . . . . . . . . . . . 23-24

CONCLUSION

(para. 81) . . . . . . . . . . . . . . . . . . . .24

D. As regards Article 13 of the Convention

(paras. 82-84) . . . . . . . . . . . . . . . . . . . . .24

CONCLUSION

(para. 85) . . . . . . . . . . . . . . . . . . . . . . .24

E. RECAPITULATION

(para. 86-89). . . . . . . . . . . . . . . . . . . . . .25

PARTIALLY DISSENTING OPINION OF MR. C.L. ROZAKIS. . . . . . . . 26-27

JOINED BY MR. S. TRECHSEL

CONCURRING OPINION OF MRS. J. LIDDY . . . . . . . . . . . . . . . .28

DISSENTING OPINION OF MR. B. MARXER . . . . . . . . . . . . . . 29-30

APPENDIX I : HISTORY OF PROCEEDINGS . . . . . . . . . . . 31-32

APPENDIX II : DECISION ON ADMISSIBILITY

OF THE APPLICATION . . . . . . . . . . . . . 33-54

I. INTRODUCTION

1. The following is an outline of the case, as submitted to the

European Commission of Human Rights, and of the procedure before the

Commission.

A. The Application

2. The applicants are Egyptian citizens, born in 1933, 1943 and 1939

respectively. They are brothers and businessmen. They were

represented before the Commission by Messrs. Herbert Smith, Solicitors,

London.

3. The application is directed against the United Kingdom. The

respondent Government were represented by their Agent, Mrs. A. Glover,

of the Foreign and Commonwealth Office.

4. The case concerns the making and publication of a report in

March 1990 by Inspectors, appointed by the Secretary of State for Trade

and Industry, about the applicants' takeover, through their company the

House of Fraser Holdings PLC, of the House of Fraser PLC (which

includes Harrods store) in March 1985. The report made certain

criticisms of the applicants. They complained that the report

determined their civil right to honour and reputation and denied them

effective access to court in the determination of this civil right,

contrary to Article 6 para. 1 of the Convention. They also complained

of a denial of effective domestic remedies to challenge the findings

of the Inspectors, contrary to both Article 6 para. 1 and Article 13

of the Convention. (Other complaints originally made by the applicants

and their company, the House of Fraser Holdings PLC, were declared

inadmissible by the Commission on 15 May 1992 ; see Appendix II to this

Report.)

B. The Proceedings

5. The application was introduced on 30 August 1990 and registered

on the same day.

6. After a preliminary examination of the case by the Rapporteur,

the Commission considered the admissibility of the application on

7 December 1990. It decided, pursuant to Rule 48 para. 2 (b) of the

Rules of Procedure, to give notice of the application to the respondent

Government and to invite the parties to submit written observations on

its admissibility and merits. The Government's observations were

submitted on 10 June 1991 after three extensions of the time-limit

fixed for this purpose. The applicants replied on 15 November 1991

after two extensions of the time-limit.

7. On 20 February 1992 the Commission decided to hold a hearing of

the parties on the question whether Article 6 para. 1 (civil) of the

Convention had been violated. The hearing was held on 15 May 1992.

The applicants were represented by Mr. A. Lester, QC, Counsel,

Mr. P. Goulding, Counsel, Ms. L. Hutchinson, Solicitor, Messrs. Herbert

Smith, and Mr. D. Marvin, Attorney, Washington DC. The Government were

represented by their Agent, Mrs. A. Glover, Mr. M. Baker, QC, Counsel,

Mr. J. Eadie, Counsel, Mrs. T. Dunstan, Mr. M. Osborne and

Mr. J. Moore, all three of whom were from the Department of Trade and

Industry.

8. Following deliberations on the same day, the Commission declared

admissible the applicants' complaint under Article 6 para. 1 (civil)

of the Convention, both on its own and in relation to Article 13 of the

Convention. It declared inadmissible the remainder of the application

(para. 4 above).

9. The text of the Commission's decision on admissibility was sent

to the parties on 26 May 1992 and they were invited to submit such

further information or observations on the merits as they wished.

After an extension of the time-limit, the Government submitted

observations on 30 July 1992, to which the applicants replied on

4 September 1992. On their own initiative the Government submitted

more observations on the merits on 7 December 1992, to which the

applicants replied on 4 February 1993.

10. After declaring the case admissible, the Commission, acting in

accordance with Article 28 para. 1 (b) of the Convention, also placed

itself at the disposal of the parties with a view to securing a

friendly settlement. In the light of the parties' reaction, the

Commission now finds that there is no basis on which such a settlement

can be effected.

C. The Present Report

11. The present Report has been drawn up by the Commission in

pursuance of Article 31 para. 1 of the Convention and after

deliberations and votes in plenary session, the following members being

present:

MM. C.A. NØRGAARD, Président

S. TRECHSEL

E. BUSUTTIL

J.C. SOYER

H.G. SCHERMERS

H. DANELIUS

Mrs. G.H. THUNE

Sir Basil HALL

Mr. C.L. ROZAKIS

Mrs. J. LIDDY

MM. J.C. GEUS

M.P. PELLONPÄÄ

B. MARXER

12. The text of this Report was adopted on 7 April 1993 and is now

transmitted to the Committee of Ministers of the Council of Europe, in

accordance with Article 31 para. 2 of the Convention.

13. The purpose of the Report, pursuant to Article 31 of the

Convention, is:

i) to establish the facts, and

ii) to state an opinion as to whether the facts found disclose

a breach by the State concerned of its obligations under

the Convention.

14. A schedule setting out the history of the proceedings before the

Commission is attached hereto as Appendix I and the Commission's

decision on the admissibility of the application as Appendix II.

15. The full text of the parties' submissions, together with the

documents lodged as exhibits, are held in the archives of the

Commission.

II. ESTABLISHMENT OF THE FACTS

A. The particular circumstances of the case

16. The application arises out of an investigation into the affairs

of the applicants' company, the House of Fraser Holdings PLC (HOFH),

by Inspectors appointed by the Secretary of State for Trade and

Industry, pursuant to section 432 (2) of the Companies Act 1985, and

the publication of the Inspectors' report in its entirety by the

respondent Government.

17. In March 1985, the applicants acquired ownership of the House of

Fraser PLC (HOF). HOF was then and is now one of the largest groups

of department stores in Europe and includes one particularly well-known

London store, Harrods. The applicants acquired ownership of HOF

through HOFH, which at all material times was owned by the brothers.

HOFH had previously been known as the Al Fayed Investment Trust (UK)

Limited and assumed its present name in December 1985.

18. Prior to the HOF takeover, in or about early November 1984, on

professional advice, the applicants appointed Broad Street Associates

to act as their public relations advisers and, with their assistance,

the brothers and their advisers led the press to receive and present

a positive picture of their origins, wealth, business interests and

resources. Upon the basis of this picture, which they had a part in

painting, they enjoyed, for a time, an esteem or reputation which was

highly valuable to them. Between 2 and 10 November 1984 the first

applicant gave separate interviews to The Observer, The Sunday

Telegraph and The Daily Mail. The applicants' public relations

consultants played a part in making the arrangements. A further

interview involving the brothers, arranged by the consultants, took

place on 10 March 1985. In these interviews the brothers described a

wealthy, distinguished and established family background. They gave

a similar picture to Mr. MacArthur of their merchant bankers

Kleinwort Benson. Mr. MacArthur accepted it and, acting on their

behalf, conveyed that picture by a press release in November 1984 and

in a television interview in early March 1985. There were other press

interviews about the family background for which the applicants were

responsible. They thus took active steps to promote their own

reputations in the public domain. The acceptance of the brothers by

the City of London and by the Government was later considered to be

crucial to an understanding of the events surrounding their takeover

of HOF.

19. The takeover was vigorously but unsuccessfully opposed by

Lonrho PLC (Lonrho) and, in particular, its Chief Executive,

Mr. Rowland, a former business associate, turned rival, of the

applicants. In 1984 Lonrho had sold its near 30 % share in HOF to the

applicants, but when those directors representing Lonrho's interests

were obliged to resign from HOF's Board and the applicants bid to take

over HOF completely, relations between Lonrho and the applicants

deteriorated. Lonrho proceeded to launch an acrimonious campaign

against the applicants. In opposing the applicants' bid for HOF,

Lonrho had made submissions to Ministers concerning unfair competition

and the undesirability of HOF falling into foreign hands. It was

alleged that the applicants were fraudulently claiming that the funds

for the acquisition were theirs personally. Lonrho alleged that the

brothers were lying about their money and themselves and that they

should not be permitted to acquire HOF without a thorough inquiry.

However, the applicants' bid was cleared and accepted, but Lonrho

campaigned on through the media and other publications, and in

particular through its newspaper, The Observer. The applicants

instituted three libel actions against The Observer in 1985 and 1986

for articles written about them. In March 1987 Lonrho commenced legal

proceedings against the applicants and their bankers alleging wrongful

interference with Lonrho's business, and conspiracy and negligence in

connection with HOFH's acquisition of HOF. In particular, it was

alleged that the applicants, by false statements about their financial

capacity to acquire the share capital and develop HOF's business, had

persuaded HOF's Board of Directors to accept their bid and had

convinced the Secretary of State not to refer their bid to the

Monopolies and Mergers Commission (MMC). Thereby it was claimed that

the applicants had tortiously interfered with Lonrho's right to bid for

the shares or, alternatively, they had conspired against Lonrho. These

proceedings are still pending. Lonrho was refused leave to apply for

judicial review of the Secretary of State's refusal to refer the

applicants' acquisition of HOF to the MMC.

20. After two years of powerful and unrelenting pressure by Lonrho

upon the United Kingdom Government, on 9 April 1987, the Secretary of

State for Trade and Industry appointed two Inspectors to investigate

the affairs of HOFH and, in particular, the circumstances surrounding

the acquisition of shares in HOF in 1984 and 1985. The appointment of

the Inspectors was made by the Secretary of State under section 432 (2)

of the Companies Act 1985 (the 1985 Act).

21. The Inspectors stated that their investigation was an unusual one

and that in order to establish what had occurred during the takeover

they had been obliged to make findings on contested issues of fact.

22. The principal questions which they addressed when investigating

the affairs of HOFH were as follows:

"(i) Were the Fayeds who they said they were, and if not

who were they?

(ii) Did they acquire HOF with their own unencumbered

funds?

(iii) Did they deliberately mislead, whether directly

or indirectly, those who represented them to the

authorities and the public?

(iv) If so, did they seek to frustrate those who tried

to establish the true facts, and if so how?

(v) What steps did the Board of HOF and its advisers

and the Fayeds' financial and legal advisers take

before they gave the comfort that they appeared

to give to those who relied on their words or

actions?

(vi) Were the authorities - the officials of the OFT

(Office of Fair Trading) and the DTI (Department

of Trade and Industry) and, eventually, Ministers -

or the public misled about the Fayeds? If so,

how and why?"

(The Inspectors' report, para. 1.11).

23. The Inspectors also stated that, throughout their investigation,

they were not concerned solely with simple questions relating to the

direct control of the purchase money which was used to buy HOF. They

were concerned about the statements which the applicants made, or which

they allowed others to make on their behalf, which had the effect of

influencing people to act favourably towards them.

24. During the course of the investigation, the Inspectors identified

matters upon which they wished to receive evidence. If any uncertainty

or issue arose in relation to the provision of such evidence, these

were discussed in the course of meetings or through correspondence

between the Inspectors' staff and the applicants' solicitors.

Thereafter, information was provided to the Inspectors by way of

memoranda, together with copy documentation. In addition, the

Inspectors received oral evidence by interviewing witnesses. They

interviewed Mohamed and Ali Fayed on 14 October 1987 and again on

8 and 9 March 1988. All proceedings were conducted in private. There

was no opportunity for the applicants to confront or to cross-examine

witnesses, it being well-established as a matter of English law that

the Inspectors were not obliged to afford such an opportunity to

anyone.

25. It was agreed between the Inspectors and the applicants that,

having assimilated the factual information supplied, the Inspectors

would notify the applicants of the provisional conclusions they had

reached and the material upon which they had relied in reaching such

conclusions. The Inspectors would then consider such submissions as

the applicants might make in respect of these conclusions.

26. Respect for personal privacy was a matter of particular concern

to the applicants. It was not in dispute that they had occupied a

position as trusted and confidential advisers to Heads of State. This

fact made respect for the privacy of their affairs especially

important. They claimed that loss of confidence in their ability to

maintain privacy would put in jeopardy their relationships, as

businessmen and confidential advisers, with Heads of State and other

important and influential individuals.

27. The Inspectors' approach to matters of privacy and

confidentiality is summed up at paragraphs 26.44 - 26.45 of their

subsequent report as follows:

"We were aware of the Fayeds' concerns about privacy.

However, if private people incorporate a company, in

which they become directors, and which makes public

representations about their affairs, Inspectors who

are appointed to investigate the truth of those

representations must balance their concern to preserve

the directors' privacy as far as practicable (in

Chapter 12 for instance we have deliberately refrained

from making detailed findings in respect of many of

the Fayeds' private companies whose accounts we have

seen) against their duty to do the job which they

were appointed to perform.

If the Fayeds had chosen to say nothing this might

have created evidential difficulties for us. But

because they wished us to make findings in their

favour they brought witnesses to see us ...

and gave us evidence about their private affairs

which it was then our duty to test."

28. At the start of the investigation the applicants expressly

accepted that the Inspectors were entitled to inquire into the accuracy

of statements which had been made by them or on their behalf. These

were the statements at the heart of the inquiry. Only at the very end

of the inquiry did they alter that stance and challenge the Inspectors'

entitlement to inquire into certain aspects of their private life. The

Inspectors rejected the challenge and gave their reasons for so doing.

The Inspectors were entitled to seek confidential information from

third parties, but before doing so they gave the applicants an

opportunity to satisfy them as to the accuracy of the statements "in

whatever manner was least obtrusive to their privacy" (report

paras. 16.2.5 and 16.6.2). The law did not permit them to compel the

applicants to produce personal bank statements (which would have gone

far to confirm or refute the accuracy of the statements) nor, save to

a very limited extent, did the applicants consent to such production.

The Inspectors considered that the applicants were in breach of their

duty to give all the assistance which they were reasonably required to

give. The Government stated that the Inspectors were entitled to

certify to a court that the applicants were refusing to answer

questions, produce documents or to give such assistance as they

required (section 436 of the 1985 Act). The court could then have

taken steps to sanction the applicants if, after hearing evidence, it

was satisfied that they were in breach of their duty. The Inspectors,

however, were of the opinion that they could complete their task

without the need to resort to such a serious measure and chose to

pursue the matter without making such a certificate.

29. In October 1987 and thereafter Lonrho publicly criticised the

conduct of the investigation by the Inspectors and sought an additional

two month period in which to assemble and submit evidence to them.

Through its lawyers, Lonrho submitted that the rules of natural justice

required the Inspectors to allow Lonrho access to the information the

Inspectors had received from the applicants because Lonrho's commercial

reputation would suffer if the Inspectors dismissed the complaints

which it had made so publicly. The Inspectors dismissed Lonrho's

application for access to the applicants' evidence, but permitted

Lonrho to have a longer period in which to adduce evidence to them,

relating primarily to the personal background of the applicants and

their family. The applicants' solicitors protested to the Inspectors

vigorously about this decision. The Inspectors accepted that Lonrho

and its directors had pursued their ends in a remarkably single-minded

manner.

30. The Inspectors' provisional conclusions were made available to

the applicants on 12 April 1988 and, after much correspondence, it was

agreed that the applicants could make final submissions to the

Inspectors by 15 July 1988. On 23 July 1988, the Inspectors delivered

their report to the Secretary of State. The Inspectors concluded that

the applicants had dishonestly misrepresented their origins, their

wealth, their business interests and their resources to the Secretary

of State, the OFT, the Press, the HOF Board and HOF shareholders and

their own advisers; that during the course of their investigations, the

Inspectors had received evidence from the applicants, under solemn

affirmation and in written memoranda, which was false and which the

applicants knew to be false; in addition, that the applicants had

produced a set of documents they knew to be false; that this evidence

related mainly, but not exclusively, to their background, their past

business activities and the way in which they came to be in control of

enormous funds in the Autumn of 1984 and the Spring of 1985. The

Inspectors were satisfied that the main thrust of Lonrho's attack on

the applicants was well founded on a sound basis of substantiated fact

(report para. 1.20). However, the Inspectors did not reject the

entirety of the applicants' evidence and praised part of their work.

Thus the report included, for example, findings that "... the departure

of the Lonrho directors and their replacement by the Fayeds brought

harmony to a board where previously discord had existed" (report

para. 6.6.9); and that "the Fayeds' considerable ability to identify

assets with a potential for capital appreciation has undoubtedly been

an important element in their business success" (report para. 12.6.10).

In relation to the valuation of the applicants' banking interests, the

Inspectors rejected the evidence of an Observer journalist and accepted

the figure which they advanced. In the final chapter of the report the

Inspectors made complimentary findings of fact and expressed favourable

opinions about HOFH. In the concluding paragraph the Inspectors made

it clear that their concerns "have been principally centred on the

specific matters we were appointed to investigate, and not on anything

which has occurred since March 1985". They regarded the management of

HOF since its acquisition as, subject to certain reservations, "law-

abiding, proper and regular".

31. The Secretary of State passed the report to the Director of

Public Prosecutions (the DPP) and the Director of the Serious Fraud

Office (the SFO). On 29 September 1988, the Department of Trade and

Industry (DTI) issued a press release stating that publication of the

report would be delayed until the SFO had completed its investigations.

After consideration of the report and the accompanying evidence, the

Director of the SFO and the DPP jointly referred the matter to the

Metropolitan Police on 24 November 1988 and asked for necessary

inquiries to be carried out. In the summer of 1988, the Secretary of

State also sent copies of the report to the Bank of England, the

Takeover Panel, the Inland Revenue, the OFT and the MMC.

32. In early November 1988, Lonrho sought judicial review of the

Director General of Fair Trading's failure to advise the Secretary of

State with regard to a possible referral to the MMC. This application

was withdrawn when the Director General subsequently tendered his

advice to the Secretary of State. On 9 November 1988, the Secretary

of State announced that, consistent with the advice of the Director

General of Fair Trading, he had decided against the referral of HOFH's

acquisition of HOF to the MMC, even though the report did disclose new

material facts. Also in November 1988, Lonrho made an unsuccessful

application for judicial review of the Secretary of State's decisions

(i) not to publish the report immediately and (ii) not to refer the

acquisition to the MMC in the light of the report. On 30 March 1989,

the day of Lonrho's Annual General Meeting, The Observer newspaper

published a 16 page special midweek edition devoted solely to extracts

from and comments on a leaked copy of the report. On the same day,

Lonrho posted between 2,000 and 3,000 copies of the special edition to

persons named on a mailing list to whom Lonrho had been regularly

sending propaganda literature hostile to the applicants. The High

Court immediately granted injunctions, on the applications of the

Secretary of State and HOFH, restraining any further disclosure of the

report or its contents. On 10 April 1989, before Lonrho's appeal in

its unsuccessful judicial review application was before the House of

Lords, Lord Keith of Kinkel raised the question whether the publication

of the special edition and its posting to, inter alia, four members of

the House of Lords who were due to hear Lonrho's appeal was a contempt

of court by Lonrho, Mr. Rowland or the editor of The Observer.

Subsequently, the House of Lords held (<1989> 3 WLR 535) that the

publication of the special edition did not in the circumstances create

any risk that the course of justice in the appellate proceedings

challenging the lawfulness of the Secretary of State's decision to

defer the publication of the report would be impeded or prejudiced, and

they dismissed the contempt proceedings.

33. During the course of an interview broadcast on BBC Radio 4's news

programme, Today, on 4 April 1989, the Secretary of State stated, prior

to its publication, that the Inspectors' report "clearly disclosed

wrongdoing". This gave rise to substantial press reports.

34. On 1 March 1990, the Director of the SFO and the DPP announced

that their inquiries into the matter were complete and that they would

not be taking further action. They had carefully considered the report

and the accompanying evidence. In a joint statement issued on that

date they said:

"The directors are now satisfied that all lines of inquiry

have been pursued and that the evidence available is

insufficient to afford a realistic prospect of conviction

for any criminal offence relating to any matter of

substance raised in the report."

35. The Attorney General expressed himself satisfied that the

conclusion reached by the two directors was the correct one on the

basis of the admissible and available evidence. On 12 March 1990, he

stated to the House of Commons, in reply to a question (Hansard, House

of Commons, 12 March 1990, column 14):

"Whereas it was open to the Inspectors to take account

of hearsay evidence if they thought that it was reliable

- and of course it was open to them to reach the

conclusion that they did - it would not have been open

to a jury in a criminal case to convict upon evidence

of the same character. The Inspectors are entitled to take

account of evidence covering a wider scope than that

available in criminal proceedings in an English court ...

... Inquiries were pursued in every part of the world

indicated by the Inspectors' report, but the

of the SFO and the DPP> had to conclude, as they said

in their joint statement issued on 1 March, that there

was insufficient evidence available for use in an English

court in English criminal proceedings on any matter of

substance raised in the Inspectors' report to warrant

the bringing of criminal proceedings."

36. On 1 March 1990, the Secretary of State had announced his

intention to publish the report on 7 March 1990. It is general policy

to publish reports on public companies. (HOFH is a public company.)

In this particular case the Government considered that there were

specific grounds of general public interest justifying publication.

They described these grounds as follows:

"There had been a complex and lengthy investigation, and the

public were entitled to learn the result of that investigation

unless there were compelling reasons why they should not. There

were important lessons to be learnt by those involved in

takeovers from studying the report. These were categorised under

six headings as: (1) the demarcation of responsibility between

the merchant bank and the solicitor, (2) knowledge of one's

client, (3) appropriate procedures for advisers in relation to

taking on clients, taking up references, accepting and verifying

material from other advisers, and accepting instructions from

clients, (4) relationships with the media, (5) relationships

with the regulatory authorities, and (6) loopholes in the City

Code on Takeovers and Mergers. The report contained a

recommendation that certain features of part XIV of the 1985

Act (which deals with the investigation of companies and their

affairs) deserved to be reconsidered in the light of difficulties

encountered by the Inspectors (report para. 1.25). (Changes were

later incorporated in the Companies Act 1989.) It was

appropriate to acknowledge that the Secretary of State, the OFT,

the DTI, certain journalists and sections of the press, the Board

of HOF, the regulatory authorities, and the applicants'

professional advisers had been misled by the applicants. Lonrho

considered that its interests and reputation had been seriously

and adversely affected by the preparedness of the Secretary of

State to allow the HOFH bid to go forward in March 1985 without

a reference to the MMC. Lonrho would have had a legitimate

grievance if the explanation for this was suppressed without

compelling reasons. There was a need to dispel continuing

speculation as to the events which had given rise to the

investigation. Rumours and speculation were rife. Publication

of the report would provide employees and creditors with

information concerning the way in which HOF and Harrods had been

run and might be expected to be run in future. (The Inspectors

were largely prepared to accept the sincerity of the brothers'

assurances for the future.) The brothers had been prepared

before the Inspectors to attempt to discredit Lonrho,

Mr. Rowland, The Observer, its editor and others. It was deemed

to be in the public interest to publicise both the fact that

these attempts had been made and the conclusion of the Inspectors

that they were ill-founded."

37. On 2 March 1990, the applicants were provided with

pre-publication copies of the report in confidence, in order to enable

them to consider their position. Throughout the period from

26 July 1988 to 7 March 1990 the possibility of applying for judicial

review to prevent publication was kept under review by the applicants

and their advisers, but the unanimous view at all stages was that such

proceedings were almost inevitably bound to fail and, accordingly, they

were not commenced.

38. On 7 March 1990, the Secretary of State for Trade and Industry

stated to the House of Commons (Hansard, House of Commons,

7 March 1990, column 873):

"I should explain to the House that in this matter I have

three main responsibilities as Secretary of State: first,

to decide whether to publish the report. This I have now done

as soon as possible after I was informed by the prosecution

authorities that they had withdrawn their objection to

publication. Second, I had to consider whether to apply to

the court to disqualify any director under section 8 of the

Company Directors Disqualification Act 1986. I have concluded

that it would not be in the public interest to do so.

Anyone who reads the report can decide for themselves

what they think of the conduct of those involved.

Third, I also have responsibility for decisions on

whether to refer mergers to the Monopolies and Mergers

Commission. That responsibility was fully discharged

by my predecessor. He had six months from July 1988 in

which to consider the findings of the Inspectors' report

and to decide whether to refer the matter. He concluded

in November 1988 that a reference to the MMC would not

be appropriate ...

No other matters require action from me. I have passed

the report to all those authorities concerned with

enforcement and regulation so that they may consider

whether to take action under their various powers."

39. The Secretary of State considered that the publication of the

report and the ensuing publicity would enable people who might have

dealings with the applicants in their capacity as directors to judge

whether their interests were likely to be at risk from the type of

conduct described in the report. The Secretary of State also publicly

expressed his own view that the Inspectors' findings were correct. He

stated (Select Committee Report, Annex 6, page 183, paras. 938, 939,

940A):

"... the allegations in the report have not been substantiated

in a court of law. We can all take our view about them and

I think that the balance of probability is extremely strong

that they are accurate, but there is no proof of this.

...

I am not required to say that every fact and opinion in the

report is true. These were outside Inspectors who were

appointed to look into these matters, and they published

their report. I have no means of checking it word for

word. I myself and I think most people are inclined to

believe that the events revealed are correct, but we have

no proof - that is all I am saying.

...

It appears that even told

a succession of lies to the Inspectors themselves, who

were then investigating the lies they had already told.

Is that right?

It so appears."

40. On the day of the publication the applicants issued a press

communiqué through HOFH commenting on, inter alia, the contents of the

report and the conduct of the Inspectors. Part of this press release

read as follows:

"The Inspectors misled us.

They misled our lawyers. Indeed they were not even honest with

them.

They demonstrated prejudice towards us and they did not treat us

even-handedly.

They reneged on their agreements with us.

They have employed language which has no place in such a

document.

They had reached conclusions which they do not support with

facts.

They have dishonoured themselves and the whole procedure of

Department of Trade inquiries.

These Inspectors went far beyond their legal powers, enquiring

into matters that were no legitimate concern of them.

They completely disregarded the principles of natural justice.

In simple terms they did not give us a fair hearing."

41. On 28 March 1990, in the course of a debate in the House of

Lords, the Minister of State for Trade and Industry stated (Hansard,

House of Lords, 28 March 1990, columns 946-7):

"Although the Inspectors concluded that the Fayeds lied

to the competition authorities at the time of the merger

- I have no reason to believe that they were wrong, but

it is for individuals to make up their own minds once

they have read the report - the Inspectors did not

criticise the Fayeds for the way they were running the

House of Fraser which they already owned and which

cannot be taken away from them. In these circumstances,

considered that publication

of the report, which would allow people to judge for

themselves whether they wished to do business with

the Fayeds, would be a severe blow to their reputation,

as indeed I think it has proved."

42. The report and its findings were widely reported on television,

radio and in the national press. The applicants claimed that it very

seriously damaged their personal and commercial reputations as the

Minister had predicted. They also felt compelled to abandon their

libel actions against The Observer newspaper and paid the latter's

£500,000 legal costs. One month after the publication of the report

the Bank of England served notice of restrictions on Harrods Bank Ltd

in relation to the applicants' positions within that company. A

Parliamentary Select Committee considered that the Secretary of State

had not taken sufficient action against the applicants. Lonrho

persisted with its attacks. In May 1990 it applied for judicial review

of the Secretary of State's refusal to apply to the High Court for an

order disqualifying the first three applicants as directors. This

application was dismissed on 21 October 1991.

B. The relevant domestic law and practice

The scope of a section 432 (2) investigation

43. The investigation of HOFH was conducted under section 432 (2) of

the Companies Act 1985 in relation to the circumstances surrounding the

acquisition of shares in HOF in 1984 and 1985. Section 432 (2)

empowers the Secretary of State to appoint Inspectors to investigate

the affairs of a company and to report on them in such manner as he

directs if it appears to him that there are circumstances suggesting

wrongdoing, within the categories of wrongdoing defined in

sub-sections 432 (2) (a) to (d). Section 432 (2) defines those

categories of wrongdoing as follows:

"(a) that the company's affairs are being or have been

conducted with intent to defraud its creditors or

the creditors of any other person, or otherwise

for a fraudulent or unlawful purpose, or in a

manner which is unfairly prejudicial to some part

of its members, or

(b) that any actual or proposed act or omission of the

company (including an act or omission on its

behalf) is or would be so prejudicial, or that the

company was formed for any fraudulent or unlawful

purpose, or

(c) that persons concerned with the company's formation

or the management of its affairs have in connection

therewith been guilty of fraud, misfeasance or other

misconduct towards it or towards its members, or

(d) that the company's members have not been given all

the information with respect to its affairs which

they might reasonably expect."

44. The Secretary of State does not generally disclose to the company

concerned the reasons for the appointment of Inspectors to investigate

its affairs. The Secretary of State is under no statutory obligation

to do so (Norwest Holst Limited v. Secretary of State <1978> 3 WLR 73

(CA)). In this case, when requested by the House of Lords to do so in

the course of Lonrho's judicial review applications, the Government's

counsel stated that the Secretary of State had acted under

section 432 (2) (a) in appointing the Inspectors.

The basis for a section 432 (2) investigation

45. Before appointing Inspectors under section 432 (2) it must appear

to the Secretary of State that there are circumstances suggesting one

or more of the types of wrongdoing described in section 432 (2) (a) to

(d). The Secretary of State is not required to limit the powers of

investigation of the Inspectors to the matters set forth in

section 432 (2), and Inspectors are not obliged, before they report,

to consider whether every matter on which they report can properly be

described as falling within section 432 (2), and to exclude it if it

cannot (the Inspectors' report in this case, para. 26.18).

The Inspectors' powers to obtain information

46. Section 434 confers wide powers upon the Inspectors to obtain

information, if necessary by compulsion, from officers and agents of

the company whose affairs are being investigated. An answer given by

a person to a question put to him in exercise of powers conferred by

section 434 may be used in evidence against him (section 434 (5)). By

virtue of section 436, obstruction of the Inspectors is treated as a

contempt of court, and is therefore punishable by imprisonment or fine.

The Inspectors' duty to act fairly

47. The Inspectors have a duty to act fairly and to give anyone whom

they propose to criticise in their report a fair opportunity to answer

what is alleged against them (In re Pergamon Press Ltd <1971> 1 Ch. 388

(CA)). However, the Inspectors are not a court of law; they are

masters of their own procedure and are under no duty to act judicially

(ibid., pp. 399-400 per Lord Denning M.R.; pp. 406-07 per Buckley

L.J.). Except for the duty to act fairly, Inspectors are not subject

to any set rules or procedures and are free to act at their own

discretion. There is no right for a person who is at risk of being

criticised by the Inspectors to cross-examine witnesses (ibid., p. 400B

per Lord Denning M.R.). It is not necessary for the Inspectors to put

their tentative conclusions to the witnesses in order to give them a

chance to refute them. It is sufficient in law for the Inspectors to

put to the witnesses what has been said against them by other persons

or in documents to enable them to deal with those criticisms in the

course of the investigation (Maxwell v. Department of Trade and

Industry <1974> 1 Q.B. 523 (CA)).

Publication of the report of the investigation

48. The Secretary of State is empowered by section 437 (3) (c) to

decide whether or not to print and publish the Inspectors' report.

Although he has a very wide discretion in deciding whether or not to

publish the whole report, he is precluded by section 437 (3) (c) from

deciding to publish only parts or a synopsis of it. Publication may,

however, be deferred if there is a possibility that criminal

proceedings may be taken, in order to avoid the possibility of

prejudice to such proceedings.

Policy concerning the publication of Inspectors' reports

generally

49. The question of whether an Inspector's report should be published

is considered in each case on its merits. The DTI's general policy is

to publish reports on public companies wherever possible, as being

matters of public interest. HOFH is a public company.

50. Members of a limited company are in a privileged legal position

because their liability is limited. In view of this privilege, where

the Secretary of State has decided that the affairs of a large public

company should be investigated under the provisions of section 432 of

the 1985 Act, because he is satisfied that the conditions of that

section have been met and that the circumstances are of sufficient

concern to warrant the substantial cost of an inspection, it is

important that the Inspectors' report explaining the underlying facts

and the conclusions that they draw from them should be made public

unless there are overriding reasons to the contrary.

Inspectors' report as evidence

51. Section 441 of the 1985 Act provides that the Inspectors' report

"is admissible in any legal proceedings as evidence of the opinion of

the Inspectors in relation to any matter contained in the report ..".

Privilege from defamation proceedings

52. The defence of privilege or immunity in defamation cases rests

upon the idea that conduct, which would otherwise be actionable,

escapes liability because the defendant is acting in furtherance of

some interest of social importance which is entitled to protection,

even at the expense of uncompensated harm to the plaintiff's

reputation. If the interest is one of paramount importance,

considerations of policy may require that the defendant's immunity for

false statements be absolute, without regard to his purpose or motive

or the reasonableness of his conduct. Such is the nature of the

absolute protection afforded to judicial and parliamentary proceedings.

Also on grounds of public policy, a defence of qualified privilege may

lie when the publication is made by a person in good faith and in the

discharge of some public or private duty. The condition attached to

qualified privilege is that it must be exercised in a reasonable manner

and for a proper purpose. A publisher with malicious intent would lose

the defence of qualified privilege.

53. In re Pergamon Press Ltd (<1971> Ch. 388 (CA)), at page 400G,

Lord Denning M.R. stated that Inspectors

"should make their report with courage and frankness,

keeping nothing back. The public interest demands it.

They need have no fear because their report, so far as

I can judge, is protected by an absolute privilege: see

Home v. Bentinck (1820) 2 Brod. & Bing. 130, 162, per

Lord Ellenborough, and Chatterton v. Secretary of State

for India in Council <1895> 2 Q.B. 189, 191, per Lord

Esher M.R."

54. Even if, contrary to Lord Denning's observation, the Inspectors'

report is subject to a qualified rather than an absolute privilege,

neither the Inspectors nor the Secretary of State could be successfully

sued for defamation in publishing the report, except upon proof of

express malice (i.e., the desire to injure as the dominant motive for

the defamatory publication: see Horrocks v. Lowe <1975> A.C. 135 (HL),

at page 149 per Lord Diplock).

Judicial review

55. The grounds on which administrative action (such as the Secretary

of State's decision to publish the report) is subject to judicial

control are the three traditional grounds of judicial review described

by Lord Diplock in Council of Civil Service Unions v. Minister for the

Civil Service (<1985> AC 375 (HL)), at pages 410-11. These grounds are

illegality, irrationality, and procedural impropriety. "Illegality"

means that the decision-maker must understand correctly the law that

regulates his decision-making power and must give effect to it.

"Irrationality" applies to a decision which is so outrageous in its

defiance of logic or of accepted moral standards that no sensible

person who had applied his mind to the question to be arrived at could

have arrived at it. "Procedural impropriety" covers failure to act

with procedural fairness towards the person who will be affected by the

decision.

56. The Secretary of State had a duty to exercise his discretion

whether to publish the Inspectors' report by reference to relevant and

not irrelevant considerations, and in a manner which was not

unreasonable in the sense of the Wednesbury principles (Associated

Provincial Picture Houses Ltd v. Wednesbury Corporation (1948) 1 KB 223

(CA)). "Irrationality" or "Wednesbury unreasonableness" is a narrowly

restricted ground of judicial review of an administrative decision.

"Where the existence or non-existence of a fact is left to the judgment

and discretion of a public body and that fact involves a broad spectrum

ranging from the obvious to the debatable to the just conceivable, it

is the duty of the court to leave the decision of fact to the public

body to whom Parliament has entrusted the decision-making power save

in a case where it is obvious that the public body, consciously or

unconsciously, are acting perversely" (per Lord Brightman, in

R v. Hillingdon L.B.C., ex parte Puhlhofer <1986> A.C. 484 (HL), at

page 528).

No duty on the Secretary of State to give reasons for his

decision to publish

57. There is no general duty on a public body to give reasons as a

matter of administrative fairness (R v. Civil Service Appeal Board,

ex parte Cunningham, Times Law Report, 13 June 1990). Thus, there was

no duty on the Secretary of State to give reasons for his refusal to

make a reference to the MMC of HOFH's bid for HOF (R v. Secretary of

State for Trade and Industry, ex parte Lonrho, <1989> 1 WLR 525, per

Lord Keith of Kinkel at page 539H). Similarly, there is no duty on the

Secretary of State to give reasons for his decision to publish the

report. The absence of any duty to give reasons for the decisions of

public authorities limits the scope of judicial review.

The powers of the Bank of England, and safeguards for persons

affected by their exercise

58. The regulatory duties and functions of the Bank of England and

the controls placed upon them are contained in the Banking Act 1987.

The powers of the Bank of England include the power to grant or refuse

to institutions authorisation to carry on a deposit-taking business

(section 9). The minimum criteria for authorisation of an institution

include a requirement that every director, manager and executive

shareholder and indirect controller of the institution is a fit and

proper person to hold his position (schedule 3 para. 1(1)). In

determining whether a person is fit and proper, regard must be had,

inter alia, to his probity (ibid. para. 1(2)) and regard may be had to

any evidence that he has, inter alia, engaged in any business practices

appearing to the Bank to be deceitful, oppressive or otherwise improper

(whether unlawful or not) or which otherwise reflect discredit on his

method of conducting business (ibid. para. 1(3)(c)). The Bank may

revoke (section 11) or restrict (section 12) the authorisation of an

institution if, inter alia, the minimum criteria for authorisation are

not met by the institution. A party aggrieved (including, in the case

of a revocation or restriction, the individual concerned) by any

decision of the Bank may appeal to a tribunal consisting of an

experienced lawyer and two persons with experience in accountancy and

banking respectively (section 28). The tribunal has power to confirm

or reverse the decision complained of (section 29(2)) and has to

determine whether the Bank's finding of lack of probity was not

justified by the evidence on which it was based. There are further

rights of appeal on a point of law to the High Court, and, with leave,

to the Court of Appeal and the House of Lords (section 31).

III. OPINION OF THE COMMISSION

A. Complaints declared admissible

59. The Commission has declared admissible the applicants' complaint

that the making and publication of the Inspectors' report on their

company, HOFH, determined their civil right to honour and reputation

and denied them effective access to court in the determination of this

civil right, contrary to Article 6 para. 1 (Art. 6-1) of the

Convention. The Commission also declared admissible the applicants'

complaint that they had no effective domestic remedies for their

Convention complaints, contrary to Article 13 (Art. 13) of the

Convention.

B. Points at issue

60. The following are the points at issue in the present

application:

- whether the making and publication of the Inspectors' report

constituted a determination of the applicants' civil rights within the

meaning of Article 6 para. 1 (Art. 6-1) of the Convention;

- whether the publication of the report denied the applicants'

subsequent access to court in the determination of their civil rights,

within the meaning of Article 6 para. 1 (Art. 6-1) of the Convention,

for proceeding against the Inspectors or the Secretary of State;

- whether the publication of the report denied the applicants'

subsequent access to court in the determination of their civil rights,

within the meaning of Article 6 para. 1 (Art. 6-1) of the Convention,

for proceeding against others;

- whether the applicants otherwise had effective domestic remedies

at their disposal, pursuant to Article 13 (Art. 13) of the Convention,

under English law to protect their right to honour and reputation

against the adverse findings of the Inspectors' report.

C. As regards Article 6 para. 1 (Art. 6-1) of the Convention

61. Article 6 para. 1 (Art. 6-1) of the Convention provides as

follows:

"In the determination of his civil rights and obligations or of

any criminal charge against him, everyone is entitled to a fair

and public hearing within a reasonable time by an independent and

impartial tribunal established by law. Judgment shall be

pronounced publicly but the press and public may be excluded from

all or part of the trial in the interest of morals, public order

or national security in a democratic society, where the interests

of juveniles or the protection of the private life of the parties

so require, or to the extent strictly necessary in the opinion

of the court in special circumstances where publicity would

prejudice the interests of justice."

a) Proceedings before the Inspectors

62. The applicants alleged that the making and publication of the

Inspectors' report on their takeover of HOF had a severely damaging

effect on their good reputation. They claimed that the Inspectors

effectively determined their civil right to honour and reputation

without any of the procedural guarantees of Article 6 para. 1

(Art. 6-1) of the Convention being respected.

63. The Government conceded that the applicants' reputation was

adversely affected by the publication of the Inspectors' report, but

not to the extent claimed by the applicants. Moreover, they considered

that the effects of the publicity were ephemeral. However, they

submitted that neither the proceedings before the Inspectors nor the

publication of their report "determined", within the meaning of

Article 6 para. 1 (Art. 6-1) of the Convention, either the right of the

applicants to enjoy a good reputation, or indeed "determined" any right

at all.

64. The Commission notes that the function of the Inspectors was to

inquire and report to the Secretary of State for Trade and Industry on

the takeover of HOF by HOFH. As owners of HOFH, the applicants were

required to provide evidence to the Inspectors about the takeover. The

Commission considers that it is a matter of general public interest and

necessary in a democratic society that governments exercise supervisory

controls over large commercial activities in order to ensure good

management practices and the transparency of honest dealings. Such

transparency is enhanced by the publication of Inspectors' reports.

Publication enables the public, particularly small investors and

shareholders, to acquire fuller information about major business

interests. Publication will also call the attention of business

enterprises to standards which they should observe. Furthermore,

administrative inquiries by Inspectors may lead to legislative reforms

or policy changes, as happened in the present case with account being

taken of the Inspectors' recommendations in the HOFH inquiry for

certain reforms incorporated in the Companies Act 1989 (see para. 36

above). Such inquiries may also lead to civil or criminal proceedings

against the company or individuals concerned before the normal courts,

but the Inspectors' report does not determine civil or criminal

liability. This investigative rather than determinative role of the

Inspectors is further reflected in the fact that, if it should be

considered, in the light of the Inspectors' report, that civil or

criminal proceedings should be initiated against a particular company

or individual, the report is only admissible as evidence of the

Inspectors' opinion (see para. 51 above). It would be for the courts

to determine the actual facts and legal consequences for the parties.

The Commission is of the opinion, therefore, that Article 6 para. 1

(Art. 6-1) of the Convention was not applicable to the proceedings

before the Inspectors in the present case because they did not

determine the applicants' civil rights or obligations within the

meaning of that provision.

CONCLUSION

65. The Commission concludes, by 12 votes to 1, that there has been

no violation of Article 6 para. 1 (Art. 6-1) of the Convention as

regards the actual making and publication of the Inspectors' report.

b) Proceedings against the Inspectors and the Secretary of

State

66. It is not disputed that the publication of the Inspectors' report

had an adverse effect on the applicants' reputation and that any civil

suit in defamation which the applicants could have brought against the

Inspectors and/or the Secretary of State would have been effectively

met with the defence of absolute or qualified privilege.

67. The applicants contended, inter alia, that they have a civil

right to enjoy a good reputation, and a right of access to court,

ensured by Article 6 para. 1 (Art. 6-1) of the Convention, to have the

justification of any attack upon such reputation determined by a court.

They claimed that English law denied them any effective access to court

either by way of defamation proceedings or by way of judicial review

against the Secretary of State or the Inspectors. They stressed,

however, that they were not arguing that they should be entitled to

hold the Inspectors or the Secretary of State personally liable for

damages under a claim for libel. They were not challenging the law on

privilege in defamatory actions.

68. The Government submitted, inter alia, that the civil right to

honour and reputation is delimited by the doctrine of privilege and to

this extent the applicants had no civil right under English law

attracting the application of Article 6 para. 1 (Art. 6-1) of the

Convention. Alternatively, if the doctrine of privilege is a

procedural rather than a substantive limitation on the civil right to

honour and reputation, procedural in the sense that the applicants'

access to court was thereby effectively restricted, the limitation

pursued the legitimate aim of permitting the Inspectors to report

frankly and courageously in the public interest. Moreover, it was

proportionate to that aim, given the safeguards afforded, for example,

by the rules of natural justice and judicial review.

69. The Commission considers that this aspect of the applicants'

claim falls within the scope of Article 6 para. 1 (Art. 6-1) of the

Convention. It has constantly held that "the right to enjoy a good

reputation and the right to have determined before a tribunal the

justification of attacks upon such reputation must be considered to be

civil rights within the meaning of Article 6 para. 1 (Art. 6-1) of the

Convention" (No. 9248/81, Leander v. Sweden, Dec. 10.10.83, D.R. 34

p. 78, at p. 83). However, any civil claim in defamation which the

applicants could make against the Inspectors or the Secretary of State

would be met with a defence of qualified, if not absolute, privilege.

70. The Commission considers that this defence amounts to a

limitation on the right to bring defamation proceedings. It therefore

acts as a restriction on effective access to court.

71. In this context the Commission refers to the general

considerations of the European Court of Human Rights in its Ashingdane

judgment on a provision limiting liability under mental health

legislation:

"55. In its Golder judgment of 21 February 1975, the Court held

that 'Article 6 para. 1 (Art. 6-1) secures to everyone the right

to have any claim relating to his civil rights and obligations

brought before a court or tribunal' (Series A no. 18, p. 18,

para. 36). This 'right to a court', of which the right of access

is an aspect, may be relied on by anyone who considers on

arguable grounds that an interference with the exercise of his

(civil) rights is unlawful and complains that he has not had the

possibility of submitting that claim to a tribunal meeting the

requirements of Article 6 para. 1 (Art. 6-1) (see the Le Compte,

Van Leuven and De Meyere judgment of 23 June 1981, Series A

no. 43, p. 20, para. 44 in fine, and the Sporrong and Lönnroth

judgment of 23 September 1982, Series A no. 52, p. 30, para. 81).

Furthermore, in the 'contestations' (disputes) contemplated by

Article 6 para. 1 (Art. 6-1) it may be the actual existence of

a 'civil right' which is at stake (see the first-mentioned

judgment, p. 22, para. 49 in fine).

56. The applicant did have access to the High Court and then to

the Court of Appeal, only to be told that his actions were barred

by operation of law (see paragraphs 17 and 18 above). To this

extent, he thus had access to the remedies that existed within

the domestic system.

57. This of itself does not necessarily exhaust the

requirements of Article 6 para. 1 (Art. 6-1). It must still be

established that the degree of access afforded under the national

legislation was sufficient to secure the individual's 'right to

a court', having regard to the rule of law in a democratic

society (see the above-mentioned Golder judgment, Series A

no. 18, pp. 16-18, paras. 34-35, and paragraph 92 of the report

of the Commission in the present case).

Certainly, the right of access to the courts is not absolute but

may be subject to limitations; these are permitted by implication

since the right of access 'by its very nature calls for

regulation by the State, regulation which may vary in time and

in place according to the needs and resources of the community

and of individuals' (see the above-mentioned Golder judgment,

p. 19, para. 38, quoting the 'Belgian Linguistic' judgment of

23 July 1968, Series A no. 6, p. 32, para. 5). In laying down

such regulation, the Contracting States enjoy a certain margin

of appreciation. Whilst the final decision as to observance of

the Convention's requirements rests with the Court, it is no

part of the Court's function to substitute for the assessment of

the national authorities any other assessment of what might be

the best policy in this field (see, mutatis mutandis, the Klass

and Others judgment of 6 September 1978, Series A no. 28, p. 23,

para. 49).

Nonetheless, the limitations applied must not restrict or reduce

the access left to the individual in such a way or to such an

extent that the very essence of the right is impaired (see the

above-mentioned Golder and 'Belgian Linguistic' judgments, ibid.,

and also the above-mentioned Winterwerp judgment, Series A

no. 33, pp. 24 and 29, paras. 60 and 75). Furthermore, a

limitation will not be compatible with Article 6 para. 1

(Art. 6-1) if it does not pursue a legitimate aim and if there

is not a reasonable relationship of proportionality between the

means employed and the aim sought to be achieved."

(Eur. Court H.R., Ashingdane judgment of 28 May 1985, Series A

no. 93, pp. 24-25, paras. 55-57)

72. The Commission must therefore examine whether the limitation on

access created by the defence of privilege in the present case pursued

a legitimate aim and bore a reasonable relationship of proportionality

to that aim in the circumstances.

73. The Commission notes that the Inspectors' report would enjoy the

benefit of the privilege doctrine, should any of its conclusions prove

false, because English law demands that Inspectors "report with courage

and frankness, keeping nothing back" (Lord Denning in re Pergamon Press

Ltd., see para. 53 above). Their freedom to report in this manner must

be seen in the context of the general public interest in such

inquiries, which, as the Commission has already remarked at para. 64

above, aim at ensuring honesty and transparency in the dealings of

large commercial enterprises like HOFH. The Commission is of the

opinion that such objectives are legitimate.

74. The question remains whether the defence of privilege is

proportionate to these aims. In this respect the Commission notes that

there are doubts whether the Inspectors and the Secretary of State

would enjoy absolute or qualified privilege. Certainly they would

benefit from the latter. The Commission considers that the distinction

is not of fundamental importance. What is important are the safeguards

against abuse of privilege which can be enforced by way of judicial

review.

75. The Commission observes that both the Inspectors and the

Secretary of State were bound by rules of legality, rationality and

procedural propriety (paras. 55 and 56 above). Thus any perverse or

arbitrary decision taken by them could have been challenged by the

applicants, including the Secretary of State's decision to publish the

Inspectors' report. Given the allegations made by the applicants about

the Inspectors in their press communiqué of 7 March 1990 (para. 40

above), it is surprising that the applicants did not initiate judicial

review proceeding against them. Whilst judicial review does not

provide complete protection against possibly erroneous conclusions by

Inspectors, it does, in the Commission's view, provide sufficient

guarantees for persons affected by the report, which are proportionate

to the general public interest in inquiries of the present kind.

76. In the light of these considerations, the Commission is of the

opinion that the applicants' inability to sue the Inspectors or the

Secretary of State in defamation did not impair the essence of the

applicants' right of access to court, or transgress the principle of

proportionality, in the determination of their civil right to honour

and reputation (cf. Ashingdane judgment, op. cit., p. 26, para. 59).

CONCLUSION

77. The Commission concludes, by 10 votes to 3, that there has been

no violation of Article 6 para. 1 (Art. 6-1) of the Convention as

regards the applicants' access to court for proceeding against the

Inspectors and the Secretary of State.

c) Proceedings against others

78. The applicants alleged that the publication of the Inspectors'

report hopelessly blighted the three libel proceedings they had brought

against The Observer newspaper and which were pending. They felt

obliged to withdraw from these proceedings as a result, at great cost.

They contended, inter alia, that such proceedings could provide no

redress against the adverse effects of the Government's publication of

the report. They were therefore irrelevant to the applicants' central

complaint against the Government. The Observer litigation concerned

a narrower dispute than the Inspectors' report and, the applicants

submitted, it would have been impossible to have had a fair, unbiased

jury trial of the Observer actions.

79. The Government replied that the applicants had exaggerated the

extent of the adverse publicity, which was ephemeral. The libel cases

against The Observer could arguably have been tried before a judge

rather than a jury. Alternatively, as these proceedings were taking

a long time, the publicity would have died down by the time the matter

came to trial. Moreover, any potentially biased juror could have been

screened out by the trial judge's questioning during a pre-trial jury

selection. The Government emphasised that the Inspectors' report could

not have been used as evidence against the applicants. By abandoning

their claims against The Observer, the Government contended, inter

alia, that the applicants forsook the opportunity publicly to refute

the view of the Inspectors' and of The Observer's owners, Lonrho, that

the applicants had acquired HOF by dishonestly misrepresenting their

personal background and wealth, which view was at the core of the

adverse publicity.

80. The Commission is not convinced that a fair hearing of the

applicants' claims against The Observer would have been impossible,

given the fact that the Inspectors' conclusions could not have been

used in evidence against them and the likelihood that the effects of

the adverse media publicity would have worn off by the time such

proceedings came to trial, albeit before a jury. The Commission notes

that Lonrho has brought civil proceedings against the applicants on

comparable issues and that these proceedings are still pending

(para. 19 above). The applicants have not suggested that these

proceedings are also hopelessly blighted by the Inspectors' report.

The Commission is of the opinion, therefore, that the applicants have

not been denied effective access to court in the determination of their

civil right to honour and reputation as regards third persons like

Lonrho or The Observer.

CONCLUSION

81. The Commission concludes, by 12 votes to 1, that there has been

no violation of Article 6 para. 1 (Art. 6-1) of the Convention as

regards the applicants' access to court for proceeding against others.

D. As regards Article 13 (Art. 13) of the Convention

82. Article 13 (Art. 13) of the Convention provides as follows:

"Everyone whose rights and freedoms as set forth in this

Convention are violated shall have an effective remedy before a

national authority notwithstanding that the violation has been

committed by persons acting in an official capacity."

83. The applicants complained that no effective remedy was available

under English law for their complaint of a breach of Article 6 para. 1

(Art. 6-1) of the Convention. The Government replied, inter alia, that

no separate issue to that already raised under Article 6 (Art. 6) of

the Convention arises under Article 13 (Art. 13) in the present case.

84. The Commission notes that the present case revolves around the

question of the applicants' civil right to honour and reputation which

has been extensively examined above in the light of Article 6 para. 1

(Art. 6-1) of the Convention. It recalls the constant case-law of the

Convention organs that, where questions of civil rights and Article 6

(Art. 6) arise, it is not necessary to make a separate examination of

the case under Article 13 (Art. 13) of the Convention "because its

requirements are less strict than, and are here absorbed by, those of

Article 6 para. 1 (Art. 6-1)" (Eur. Court H.R., R. v. the United

Kingdom judgment of 8 July 1987, Series A no. 121, p. 126, para. 90).

CONCLUSION

85. The Commission concludes, by a unanimous vote, that no separate

issue arises under Article 13 (Art. 13) of the Convention.

E. RECAPITULATION

86. The Commission concludes, by 12 votes to 1, that there has been

no violation of Article 6 para. 1 (Art. 6-1) of the Convention as

regards the actual making and publication of the Inspectors' report

(para. 65 above).

87. The Commission concludes, by 10 votes to 3, that there has been

no violation of Article 6 para. 1 (Art. 6-1) of the Convention as

regards the applicants' access to court for proceeding against the

Inspectors and the Secretary of State (para. 77 above).

88. The Commission concludes, by 12 votes to 1, that there has been

no violation of Article 6 para. 1 (Art. 6-1) of the Convention as

regards the applicants' access to court for proceeding against others

(para. 81 above).

89. The Commission concludes, by a unanimous vote, that no separate

issue arises under Article 13 (Art. 13) of the Convention (para. 85

above).

Secretary to the Commission President of the Commission

(H.C. KRÜGER) (C.A. NØRGAARD)

PARTIALLY DISSENTING OPINION OF MR. C.L. ROZAKIS

joined by MR S. TRECHSEL

I regret that I am unable to share the opinion of the majority

of the Commission with respect to the violation of Article 6 para. 1

of the Convention and the proceedings against the Inspectors and the

Secretary of State.

I agree with the Commission when it considers that the

publication of the Inspectors' report had an adverse effect on the

applicants' reputation and that any civil suit - the right to a good

reputation being a civil one - in defamation brought against the

Inspectors and/or the Secretary of State would have been effectively

met with the defence of absolute or qualified privilege. But I am in

no position to follow their further arguments, that in the virtual

absence of civil proceedings, the applicants still had the possibility

to defend themselves in a court of law by way of judicial review.

First of all, I would like to contest the argument of the

Commission as to the legitimacy and proportionality of the privilege

enjoyed by the Inspectors' report. I, of course, agree that the

freedom of the Government to report must be seen in the context of the

general public interest, namely the interest of society at large to be

informed of the activities of large commercial enterprises, and the

interests of those specifically dealing with such enterprises to be

duly protected in their transactions by the honesty and transparency

of those dealings. But are these interests safeguarded by reports

which are not objectively determined by the findings of a court of law,

which are prepared by "outside Inspectors", and which are of uncertain

accuracy? How can one answer the question in the positive, when the

Secretary of State himself, in commenting on the Inspectors' report,

accepted that

"... We can all take our view about [the allegations in the

report] and I think that the balance of probability is extremely

strong that they are accurate, but there is no proof of this ...

I am not required to say that every fact and opinion in the

report is true ... I myself ... believe that the events are

correct, but we have no proof ..."?

In such circumstances one wonders whether the proper balance has

been struck by the Commission here, because the interests of the public

were not served by a thorough and objective investigation by a court

of law into the truthfulness of the report's allegations, and because

the uncontested report gravely affected the reputation of the

applicants, without at the same time ensuring the real interests of

society in being adequately and properly informed.

I come now to the means of defence by which the applicants could

protect their reputation. The Commission considers that judicial

review was the right course to be followed by the applicants. It

advances the argument that, in view of the allegations made by the

applicants about the Inspectors in their press communiqué of

7 March 1990 (para. 40 of the report), it is suprising that the

applicants did not initiate judicial review proceedings against them.

Yet judicial review applies only on very limited grounds: the grounds

of illegality (the decision-maker must understand correctly the law

that regulates his power and must give effect to it), irrationality (a

decision which is so outrageous in its defiance of logic or of accepted

moral standards that no sensible person who had applied his mind to the

question to be arrived at could have arrived at it), or procedural

impropriety (a failure to act with procedural fairness towards the

person who will be affected by the decision). It is characteristic

that in English common law, the application of the term "irrationality"

- which seems the most relevant ground for judicial review in the

circumstances of this case - has been further restricted by the

"Wednesbury Principles", which require that the court of review should,

in principle, leave the assessment of the facts to the public body to

whom Parliament has entrusted the decision-making power, and to

intervene only in circumstances "where it is obvious that the public

body, consciously or unconsciously are acting perversely" (see

paras. 55-56 above).

I wonder how then, under such a restrictive interpretation of the

grounds justifying judicial review, the complaints of the applicants

could have had any prospect of success. I am not referring, of course,

to those complaints which were put forward in the press communiqué, and

which were presented in an exaggerated manner in order widely to

influence public opinion. I am referring to those complaints which may

have reasonably been submitted to a court of law for an assessment and

interpretation of those facts which the Inspectors had before them.

For the above reasons, I find that the applicants did not have

effective access to court for proceedings against the Inspectors and

the Secretary of State, and that, therefore, in my opinion,

Article 6 para. 1 of the Convention has been breached.

CONCURRING OPINION OF MRS. J. LIDDY

One of the points at issue in the present case is whether the

publication of the report denied the applicants' subsquent access to

a court for proceedings against the Inspectors and the Secretary of

State, because any defamation proceedings would have been effectively

met with a defence of privilege.

In this connection, the Commission considered that the defence

of privilege acted as a restriction on effective access to Court, and

proceeded to examine the issue in the light of the Ashingdane judgment

(Eur. Court H.R., judgment of 28 May 1985, Series A no. 93).

However the Ashingdane case was concerned with a procedural

limitation on access to Court. It was concerned with a statutory

provision stating that no civil proceedings shall be brought in respect

of certain acts without the leave of the High Court, and that the High

Court shall not give leave unless satisfied that there is substantial

ground for the contention that there had been bad faith or lack of

reasonable care.

Here there is no procedural limitation on access to Court for

defamation proceedings. Instead, the very content of the right to

protect one's reputation is limited by the defence of privilege. As

stated by the Court on several occasions (e.g. Eur. Court H.R., James

and Others judgment of 21 February 1986, Series A no. 98, para. 81)

Article 6 does not in itself guarantee any particular content for civil

rights and obligations in the substantive law of the Contracting

States.

It is my opinion that to reach a finding of violation of

Article 6 in this case would be tantamount to stating that Article 6

does guarantee a particular content for the civil right to a good

reputation, and that that content extends to a degree greater than

afforded by the English law of defamation.

This, however, seems to me to be less a question of access to

Court than of substantive protection of private life, guaranteed by

Article 8 of the Convention. The admissible issues with which the

present report is concerned do not include an issue under Article 8.

The fact is that there was no barrier in domestic law to taking

defamation proceedings. Although those proceedings would have almost

inevitably have been unsuccessful because of the defence of privilege,

the absence of prospects of success is not the same as the absence of

access to Court. Accordingly I have voted against a finding of

violation of Article 6.

DISSENTING OPINION OF MR. B. MARXER

I agree with the Commission, that the right which is at stake -

the right to enjoy a good reputation and the right to have determined

before a tribunal the justification of attacks upon reputation - is a

civil one.

However, I conclude that there has been a violation of

Article 6 para. 1 of the Convention as regards

a) the actual making and publication of the Inspectors' report

on the takeover of the House of Fraser Holdings Plc;

b) the applicants' access to a court for proceeding against the

Inspectors and the Secretary of State;

c) the applicants' access to a court for proceeding against

others.

A. The making and publication of the report

As regards the applicability of Article 6 para. 1, the European

Court of Human Rights indicated that "in a democratic society within

the meaning of the Convention, the right to a fair administration of

justice holds such a prominent place that a restrictive interpretation

of Article 6 para. 1 would not correspond to the aim and the purpose

of that provision" (Eur. Court H.R., Delcourt judgment of

17 January 1970, Series A no. 11, p. 15, para. 29).

Whether there is a "contestation" as to a civil right, the Court

held in its Le Compte, Van Leuven and De Meyere judgment (judgment of

23 June 1981, Series A no. 43, p. 20, para 45) that "conformity with

the spirit of the Convention requires that this word should not be

construed too technically and that it should be given a substantive

rather than a formal meaning".

For Article 6 para. 1 to be applicable, a "determination" of a

right or obligation is required. This provision "covers all

proceedings, the result of which is decisive for private rights and

obligations ... The character of the legislation which governs how the

matter is to be determined (civil, commercial, administrative, etc.)

and that of the authority which is invested with jurisdiction in the

matter (ordinary court, administrative body, etc.) are therefore of

little consequence" (Eur. Court H.R., Ringeisen judgment of

16 July 1971, Series A no. 13, p. 39, para. 94).

The existence and the serious nature of a difference of opinion

between the parties concerned demonstrates that an issue under

Article 6 para. 1 arises (Eur. Court H.R., Sporrong and Lönnroth

judgment of 23 September 1982, Series A no. 52, p. 30, para. 81).

The "contestation" may concern both "questions of fact" and

"questions of law" (Le Compte, Van Leuven and De Meyere judgment, ibid,

p. 23, para 51).

Thus, proceedings are determinative, within the meaning of

Article 6 para. 1, if the outcome is of direct interest for the civil

right concerned. The actual civil right to be determined may not

necessarily form the main subject matter of the proceedings in

question. For example, the Benthem case at first sight concerned an

administrative refusal to grant a licence. However, the Court held

that such a licence had a proprietary character and closely involved

Mr. Benthem's civil rights linked to his commercial activities, with

direct repercussions on the value of his business and its goodwill, as

well as on his contractual relations (Eur. Court H.R., Benthem judgment

of 23 October 1985, Series A no. 97, p.15, paras. 34-36 ; see also

Ringeisen judgment, ibid, p. 39, para. 94 ; Eur. Court H.R., Sramek

judgment of 22 October 1984, Series A no. 84, p. 17, para. 35).

In the light of these considerations and taking into account the

background to the present case (see paras. 16-19 of the Commission's

Report above), the purpose of the Inspectors' inquiries, as well as the

questions the Inspectors addressed in their report (see para. 22

above), I cannot but conclude that the actual making of the report and

its publication not only had adverse effects on the applicants'

reputation, but also directly affected the civil right in question.

Hence, a determination of their right to a good reputation occurred.

B. The applicants' access to court in relation to the Inspectors and

the Secretary of State

Having had the benefit of reading Mr. Rozakis' partly dissenting

opinion I would like to join and support his view.

C. The applicants' access to court in relation to others

Having regard to the applicants' damaged reputation after the

publication of the Inspectors' report, I am, unlike the majority of the

Commission, convinced that a fair hearing in the libel proceedings

which the applicants brought against The Observer newspaper would

simply have been impossible. Given the realities of life, there was

an irreparable interference with the applicants' right of effective

access to court.

APPENDIX I

HISTORY OF PROCEEDINGS

Date Item

_________________________________________________________________

30.08.90 Introduction and registration of

application

Examination of Admissibility

07.12.90 Commission's decision to give

notice of application to the

respondent Government and to

invite parties to submit

written observations on

admissibility and merits

10.06.91 Government's observations

15.11.91 Applicants' observations

20.02.92 Commission's decision to hold a

hearing

15.05.92 Hearing on admissibility and merits,

the parties being represented as

follows:

Government:

Mrs. A. Glover, Agent

Mr. M. Baker, QC, Counsel

Mr. J. Eadie, Counsel

Mrs. T. Dunstan ) Department

Mr. M. Osborne ) of Trade

Mr. J. Moore ) and Industry

Applicants:

Mr. A. Lester, QC, Counsel

Mr. P. Goulding, Counsel

Ms. L. Hutchinson, Solicitor

Mr. D. Marvin, Attorney

15.05.92 Commission's deliberations and

decision to declare application

partially admissible

Examination of the Merits

26.05.92 Parties invited to submit further

observations on the merits

30.07.92 Government's observations

04.09.92 Applicants' observations

07.12.92 Government's further observations

04.02.93 Applicants' further observations

30.03.93 Commission's deliberations on merits

and on text of its Article 31 Report.

Final votes taken.

07.04.93 Adoption of Report

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M.A. FAYED, A. FAYED AND S. FAYED v. the UNITED KINGDOM

M.A. FAYED, A. FAYED AND S. FAYED v. the UNITED KINGDOM