Director representing a company in legal proceedings – Right to a fair trial

The Secretary of State brought a petition in the Court of Session to wind up UK Bankruptcy Limited (“UKBL”) under section 142A of the Insolvency Act 1986 on the ground of expediency in the public interest. A director of UKBL sought to represent it in opposing the petition on the basis that, among other things, a company had a right under Article 6 of ECHR to be represented in court by a director.

Lord Hodge held that, even though a company has a right to a fair trial under Article 6, that right in relation to representation does not mean that a company should be treated in precisely the same way as a party litigant. The requirement for legal representation in court is one of the disadvantages of corporate personality and as such is not in general incompatible with a company’s right to a fair trial under Article 6. In exceptional circumstances, however, the court will have to take steps to allow a company to be represented in court by someone who is not a lawyer with rights of audience in order to ensure a fair hearing. Lord Hodge reported the issue of such exceptional circumstances to the Inner House for an opinion.

Full judgement here.

This concerned a challenge to the rule that a legal (non-natural person) should be represented, even in a (sheriff court) commercial action, by a legally qualified representative with rights of audience before the court, holding the rule to be both proportionate and legitimate and justified under Article 6 since considerations of accountability and answerability to the court of those appearing before it continued to apply, notwithstanding that the pursuer in the present case was a partnership which consisted only of two natural persons.

The case is available to read here

 The Inner House held that in the light of the overriding obligation imposed on the court by Article 6 the courts in Scotland had the inherent power, without express Parliamentary authority, to put an end to a pending action, albeit competently raised within the prescriptive period, on grounds comparable to those on which the English courts were prepared to strike out a pending action for want of prosecution.

Subcontractors appealed against the decision of a sheriff granting absolvitor in their action for declarator and payment against the main contract, in which the sub-contractor sought damages in respect of the alleged breach of contract on the part of the main contractor. The action had been sisted for arbitration in terms of the contract in August 1995 but no arbitration took place. 

When the subcontractor sought to recall the sist and re-enrol the cause for further procedure in July 2002 the sheriff recalled the sist but granted decree of absolvitor claiming to exercise an inherent jurisdiction in respect of the subcontractors inordinate and unexplained delay to pursue the action.   In dismissing the appeal against this decision, the Sheriff Principal held that the sheriff’s decision was a proper exercise of the court’s inherent jurisdiction and his conclusion that the litigation had to be brought to an end was not only justifiable but also unavoidable where the public interest in the administration of justice demanded the action should not be allowed to proceed.