British
and Irish Legal Information Institute
Freely Available British and Irish Public Legal Information
[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]
Scottish Court of Session Decisions
You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> AA, PETITION OF AGAINST THE SECRETARY OF STATE FOR BUSINESS, ENERGY AND INDUSTRIAL STRATEGY AND THE COMMISSION FOR EQUALITY AND HUMAN RIGHTS [2018] ScotCS CSOH_54 (01 June 2018)
URL: http://www.bailii.org/scot/cases/ScotCS/2018/[2018]_CSOH_54.html
Cite as: [2018] CSOH 54, [2018] ScotCS CSOH_54
[New search] [Printable PDF version] [Help]
Page 1 ⇓
OUTER HOUSE, COURT OF SESSION
[2018] CSOH 54
P249/17
OPINION OF LORD TYRE
in the Petition of
AA
Petitioner
against
THE SECRETARY OF STATE FOR BUSINESS, ENERGY AND
INDUSTRIAL STRATEGY
Respondent
and
THE COMMISSION FOR EQUALITY AND HUMAN RIGHTS
Intervener
Petitioner: JJ Mitchell QC, Blair; Drummond Miller LLP
Respondent: Johnston QC, Komorowski; Office of the Advocate General
Intervener: Springham QC; Equality and Human Rights Commission
1 June 2018
Introduction
[1] In September 2015, the petitioner commenced proceedings in the employment
tribunal in Glasgow against her former employer and former line manager, alleging
harassment on the grounds of sex, race and religion. Following a hearing on the merits, the
tribunal issued a judgment in August 2016 making 29 findings in the petitioner’s favour.
The respondents were ordered, jointly and severally, to make payment to the petitioner of a
Page 2 ⇓
2
sum of around £75,000 plus interest and expenses in respect of loss and damage, including
psychological damage, suffered by her.
[2] After the judgment was issued and before any payment had been received, the
petitioner’s legal adviser obtained information suggesting that the individuals in charge of
her former employer were intending to take steps to close down the existing business and
transfer its funds to another entity, with a view to defeating the award made to the
petitioner by the tribunal. An interim interdict was sought and obtained at Glasgow Sheriff
Court. By October 2016, however, the sum at credit of the employer’s bank account had
fallen to about £4,000. The petitioner has not to date received any of the sums that the
tribunal ordered the respondents to pay to her.
[3] In the present application, the petitioner states that she would not have found herself
in the position of being unable to recover the sums awarded to her if she had been able to
effect arrestment on the dependence against her former employer at the time of
commencement of the tribunal proceedings. An employment tribunal judge, however, has
no power to grant an order for diligence on the dependence. The petitioner contends that
the absence of such a power constitutes a breach of the community law principles of
effectiveness and equivalence. She seeks judicial review of what she claims to be the
respondent’s failure properly to implement in Scotland a right, consequent upon the
obligations incumbent on the Crown under two EU directives, to arrest on the dependence
of a community law-based claim to the employment tribunal. She seeks inter alia an award
of compensation from the respondent for such failure. The Commission for Equality and
Human Rights sought and was granted leave to enter the petition procedure as intervener in
support of the petitioner’s argument.
Page 3 ⇓
3
Equal treatment: the EU Directives
The Framework Directive
[4] Council Directive 2000/78/EC laid down a general framework for combating
discrimination on the grounds of religion or belief, disability, age or sexual orientation as
regards employment and occupation, with a view to putting into effect in member states the
“principle of equal treatment”, ie the principle that there shall be no direct or indirect
discrimination on any of the grounds just mentioned. Harassment is a form of
discrimination for these purposes (article 2(3)). Under article 9(1), member states must
ensure that judicial and/or administrative procedures for the enforcement of obligations
under the directive are available to all persons who consider themselves wronged by failure
to apply the principle of equal treatment to them. In terms of article 17, member states are
obliged to lay down rules on sanctions applicable to infringement of national provisions
adopted pursuant to the directive. Sanctions, which may include payment of compensation
to the victim, must be effective, proportionate and dissuasive.
The Equal Treatment Directive (recast)
[5] Directive 2006/54/EC of the Parliament and the Council brought together and
amended various existing directives for the purpose of ensuring the implementation of the
principle of equal opportunities and equal treatment of men and women in matters of
employment and occupation. To that end, the directive contains provisions to implement
the principle of equal treatment in relation to inter alia working conditions, including pay.
Harassment is once again included within the definition of discrimination. Article 17
contains an obligation to make available judicial procedures for enforcement of obligations
under the directive, similar to those in the Framework Directive. Article 18 likewise requires
Page 4 ⇓
4
the introduction of measures to ensure “real and effective compensation or reparation” for
damage sustained as a result of discrimination on grounds of sex.
The principles of effectiveness and equivalence
[6] It is common ground that the vindication of rights derived from community law is
subject to the principle of effectiveness and the principle of equivalence. Those principles
were conveniently stated by the Grand Chamber of the Court of Justice in Impact v Minister
for Agriculture and Food [2008] 2 CMLR 47 at paragraph 46 as follows:
“…As is apparent from well-established case law, the detailed procedural rules
governing actions for safeguarding an individual’s rights under Community law
must be no less favourable than those governing similar domestic actions (principle
of equivalence) and must not render practically impossible or excessively difficult
the exercise of rights conferred by Community law (principle of effectiveness).”
It is also common ground that those principles apply to the rights which the petitioner in
this application sought to vindicate before the Employment Tribunal.
Domestic law: The Equality Act 2010
[7] The Equality Act 2010 (“the Act”) deals separately with discrimination and
harassment. Section 13(1) provides that “a person (A) discriminates against another (B) if,
because of a protected characteristic, A treats B less favourably than A treats or would treat
others”. Section 26(1) provides as follows:
“A person (A) harasses another (B) if –
(a) A engages in unwanted conduct related to a relevant protected characteristic,
and
(b) the conduct has the purpose or effect of –
(i) violating B’s dignity, or
(ii) creating an intimidating, hostile, degrading, humiliating or offensive
environment for B.”
Page 5 ⇓
5
The relevant protected characteristics listed in section 26(5) include race, religion or belief,
and sex. Chapter 1 of Part 5 of the Act (“Work”) contains prohibitions in relation to
employment. These include section 40(1), in terms of which an employer (A) must not
harass a person (B) who is an employee of A’s or who has applied to A for employment.
[8] Part 9 of the Act deals with enforcement, and any proceedings relating to a
contravention of the Act must be brought in accordance with that Part. As a general rule in
Scotland, the sheriff court is given jurisdiction by section 114(1) to determine claims relating
to alleged contraventions. The exception to the rule concerns complaints relating to a
contravention of Part 5 (ie by an employee or prospective employee). Under section 120,
jurisdiction to determine such complaints is given not to the sheriff court but to the
employment tribunal. The two jurisdictions are mutually exclusive, and the remedies
available are not identical. No provision is made in the Act for the granting of diligence,
either on the dependence or in execution, by an employment tribunal. Section 15(2) of the
Employment Tribunals Act 1996 provides that any order for the payment of any sum made
by an employment tribunal in Scotland may be enforced as if it were an extract registered
decree arbitral bearing a warrant for execution issued by the sheriff court of any sheriffdom
in Scotland.
The issue
[9] The issue that arises for decision is whether, by failing to make statutory provision
for the granting of diligence on the dependence by an employment tribunal, the United
Kingdom is in breach of its community law obligation to provide the petitioner with a
remedy for harassment, in connection with her former employment, that is compliant with
the principles of effectiveness and equivalence.
Page 6 ⇓
6
Argument for the petitioner
[10] The argument for the petitioner focused upon the principle of effectiveness. As
regards the principle of equivalence it was recognised that in Totel Ltd v HMRC
[2017] 1 WLR 2313, the Court of Appeal had held that because some domestic law claims such as
for unfair dismissal were subject to the same employment tribunal regime as community
law-based claims, the principle of equivalence was not breached. Totel had, however, been
appealed to the Supreme Court and so the matter could not yet be regarded as settled.
[11] It was not in dispute that the employment tribunal had no power to order diligence
on the dependence (or any equivalent protective order like a freezing injunction in England).
Nor, it was submitted, did any Scottish court have power to grant diligence on the
dependence in relation to a discrimination claim in the employment tribunal. Exclusive
jurisdiction was given to the tribunal by the Act. In contrast to the parallels suggested by
the respondent (such as arbitration), no such application could competently be presented to
a court. It was far from clear what the legal basis would be for a parallel action that was
manifestly incompetent. The wording of the relevant provisions of the Debtors (Scotland)
Act 1987 gave no indication that a warrant to arrest could be granted with regard to a
complaint in a different action. Any proceedings raised in the sheriff court for the purpose
of obtaining arrestment would be met by an unanswerable or at least strongly arguable plea
of lis alibi pendens. An award by the employment tribunal was enforceable in terms of the
1996 Act without any sheriff court involvement, so the hypothetical protective sheriff court
proceedings would have no subsequent purpose. Without a mechanism for interim
protection, the principle of effectiveness was breached: cf R v Secretary of State for Transport,
ex parte Factortame (No 2) [1991] 1 AC 603.
Page 7 ⇓
7
[12] In any event, even if such a course of action could be taken, it would require parallel
proceedings in two different fora. The obvious expense (including court fees) and
inconvenience that this would involve was, in the absence of a satisfactory justification by
the respondent, sufficient to render such a course excessively difficult and thus breach the
principle of effectiveness. The existence of after-the-event remedies such as sequestration or
liquidation of a former employer was irrelevant for present purposes: they did not address
the mischief of an employer who was deliberately dissipating the assets of a business to
defeat a tribunal award. Similarly, doing diligence after the tribunal had issued its decision
would not assist a claimant in the petitioner’s position.
[13] For these reasons, the remedy afforded by the Act to discrimination claimants who
were required by statute to pursue their claims in the employment tribunal was not effective
in comparison to claimants who required to pursue their claims in the sheriff court where
protective diligence could be sought. There was just as much need for protection of
employment tribunal claimants as sheriff court claimants. The fact that arrestment on the
dependence would not be granted in all cases was irrelevant; the claimants to whom it
would be granted if available were those whose rights were breached. The difficulties faced
by employment tribunal claimants had been highlighted in published reports of surveys
showing that the majority of successful employment tribunal claimants did not recover their
awards in full. It would be entirely feasible to confer power on employment tribunals to
order arrestment on the dependence. In the absence of such a power, the principle of
effectiveness was breached, and declarator should be pronounced accordingly.
Page 8 ⇓
8
Argument for the intervener
[14] On behalf of the intervener it was agreed that the core issue was whether the
principle of effectiveness was breached by the absence of a procedural rule enabling
protective measures to be taken in respect of a discrimination claim in the employment
tribunal. Effective judicial protection sometimes required national procedural rules to be
adapted to meet the member state’s obligations under community law. The principle of
effective judicial protection was also enshrined in the European Convention on Human
Rights, and the importance of effective enforcement procedures was recognised in
Strasbourg case law. As regards the availability of protective measures in the sheriff court in
respect of an employment tribunal claim, senior counsel adopted the submissions on behalf
of the petitioner, noting that it did not appear that any claimant had ever taken or attempted
to take this course of action.
[15] It was readily apparent from the reports that had been lodged (a 2013 study by the
Department for Business Innovation & Skills of payment of tribunal awards; and a 2014
report to the Citizens Advice Bureaux on enforcement of employment tribunal awards) that
there was a problem, especially in Scotland. The former study indicated that in Scotland,
even where the claimant had taken enforcement action, 46% had received no payment and a
further 13% had been paid in part only. The 2014 report contained similar findings. Certain
other EU jurisdictions had protective procedures in employment-related claims.
[16] The present system also breached the principle of equivalence. According to Totel,
the court required to identify the comparable domestic action and then, if it was governed
by different procedural rules, examine the justification for the difference. In the present case
the petitioner’s situation should be compared with a claimant seeking redress for
harassment, victimisation or discrimination on the grounds of religion in a non-employment
Page 9 ⇓
9
context, such as in the provision of a service or in the context of further or higher education.
Such a claimant would be required by the Act to pursue her claim in the sheriff court and
would have the benefit of being able to seek arrestment on the dependence. In the absence
of justification, the principle of equivalence was not met.
[17] In addition, article 21 of the European Charter of Fundamental Rights prohibited
discrimination on any ground in the implementation of community law. The Act
discriminated in its implementation of the Gender Goods and Services Directive and the
Equal Treatment Directive by selecting different fora for different disputes. The Directives
contained no justification for such discrimination. It was for the respondent to justify the
difference in treatment under reference to article 52(1) of the Charter, which stated that
limitations on the exercise of rights recognised by the Charter could be made only if they
were necessary and genuinely met objectives of general interest or the need to protect the
rights and freedoms of others.
Argument for the respondent
[18] On behalf of the respondent it was submitted that the prayer of the petition should
be refused. It was a matter for each member state what remedy was provided, so long as the
suite of remedies were of sufficient quality to be regarded as effective. It could not be said
as a generality that after-the-event remedies were always irrelevant or insufficient.
[19] The fact that a court did not possess the power to determine the merits of a case did
not mean that it did not have jurisdiction to grant security for a claim or to enforce a party’s
rights once ascertained. This was true both where the claim was made in a foreign court
(Hawkins v Wedderburn (1842) 4D 924; Fordyce v Bridges (1842) 4D 1334) or in an arbitration
(Motordrift A/S v Trachem Co Ltd 1982 SLT 127). The proposition should apply a fortiori to
Page 10 ⇓
10
public tribunals constituted under the law of Scotland. It was not barred by lis alibi pendens
(Hawkins), nor by exclusive jurisdiction resting with another authority (Fordyce). In the
present circumstances, the exclusive jurisdiction conferred on the employment tribunal to
determine the merits of the petitioner’s complaint was not incompatible with a court
rendering assistance, if required, to make the remedy effective.
[20] It followed that proceedings could be presented in the sheriff court seeking a sum
representing the anticipated award from the employment tribunal, with an application for
diligence on the dependence. Procedural rules had to be interpreted in such a way as to
contribute to attainment of effective judicial protection (Factortame). The court would have
discretion to grant diligence in such circumstances under section 15C of the Debtors
(Scotland) Act 1987. Similar security had been granted in England: Amicus v Dynamex
Friction Ltd (2005) IRLR 724).
[21] Separate court proceedings to obtain security would not be practically impossible or
excessively difficult. All that would be required would be a short hearing on the application
for diligence, and not a lengthy satellite litigation. No question of limitation of fundamental
rights arose in this case: the question was simply whether an effective remedy was
available. It was recognised that the reports referred to by the petitioner and the intervener
indicated that the current situation regarding enforcement of employment tribunal awards
was unsatisfactory, but the petitioner had focused on the wrong target. Pursuers and
claimants in both courts and tribunals were exposed to the risk of a defender’s insolvency or
inability to pay, and did not obtain automatic protection against that risk. Pursuers in court
actions were not automatically entitled to the protection of arrestment on the dependence.
[22] As regards the intervener’s submissions, the same considerations applied to the
assessment of effectiveness under human rights law as under community law. There was no
Page 11 ⇓
11
rule precluding a state from imposing upon a party some or all of the costs of enforcement
of a tribunal award; the same applied to the costs of seeking diligence on the dependence.
With regard to equivalence, it was a complete answer that certain statutory rights under the
Employment Rights Act 1996, such as the right not to be unfairly dismissed, were similar
claims that had to be pursued in the tribunal. It was irrelevant that discrimination claims in
the employment field were comparable to discrimination claims that could be litigated in the
sheriff court. The respondent was not obliged to advance a policy justification for
differences between the sheriff court and employment tribunal regimes, provided that the
protection afforded to claims relying on community law was equivalent as a totality to that
afforded to comparable national law claims. If any justification was required, it consisted of
the careful scrutiny required of applications for diligence on the dependence. The different
treatment of discrimination in the field of employment and discrimination in the field of
goods and services did not itself constitute discrimination on a ground such as sex, race etc
in the sense used in article 21(1) of the Charter of Fundamental Rights.
Decision
The principle of effectiveness
[23] It is common ground among the parties that the principle of effectiveness requires
the UK to provide an effective remedy for a claim to the employment tribunal, and that the
tribunal has no power to grant diligence on the dependence or any equivalent measure
protecting the claimant against a respondent’s inability to pay or, indeed, its wilful
dissipation of resources prior to determination of the claim. I agree with the petitioner’s
submission that after-the-event remedies which may permit protective action to be taken
Page 12 ⇓
12
during the process of enforcement of a tribunal award are not of themselves sufficient to
provide an effective remedy.
[24] I accept also that the principle of effectiveness would be breached by the absence of
any mechanism such as diligence on the dependence to protect, prior to determination of his
or her claim, an employment tribunal claimant’s prospective right to compensation from the
risk of a respondent’s failure to meet an award. That seems to me to follow from the
decision of the Court of Justice in Factortame (No 2), applied by the House of Lords at the
reference above cited. The judgment of the Court of Justice (set out at page 644-5) was that
“Community law must be interpreted as meaning that a national court which, in a
case before it concerning Community law, considers that the sole obstacle which
precludes it from granting interim relief is a rule of national law must set aside that
rule”.
The form of interim relief at issue in Factortame (No 2) was interim injunction, which the
House of Lords had held the courts had no jurisdiction to grant in terms that would involve
either overturning a UK statute in advance of a decision by the Court of Justice that it
infringed community law or granting an injunction against the Crown. In my view,
however, the principle established is sufficiently broad to encompass interim relief in the
form of diligence on the dependence. The matter was helpfully discussed by the Advocate
General (Tesauro), who addressed the fact that there was likely to be a gap in time between
the assertion of the existence of a community law right and its establishment by judicial
decision as follows (paragraph 18):
“…Interim protection has precisely that objective purpose, namely to ensure that the
time needed to establish the existence of the right does not in the end have the effect
of irremediably depriving the right of substance, by eliminating any possibility of
exercising it; in brief, the purpose of interim protection is to achieve that
fundamental objective of every legal system, the effectiveness of judicial protection.
Interim protection is intended to prevent so far as possible the damage occasioned by
the fact that the establishment and the existence of the right are not fully
contemporaneous from prejudicing the effectiveness and the very purpose of
Page 13 ⇓
13
establishing the right, which was also specifically affirmed by the Court of Justice
when it linked interim protection to a requirement that, when delivered, the
judgment will be fully effective…”
In my opinion that statement of purpose is applicable to interim protection of effective
exercise of a right to compensation for breach of the community law principle of equal
treatment. A rule of national law which precluded such protection would have to be set
aside.
[25] The principal issue between the parties therefore comes to be whether, as a matter of
law, the UK provides an effective system for protection of the rights of persons with claims
for breach of the community law principle of equal treatment which fall within the
jurisdiction of the employment tribunal in Scotland. More specifically, the issue is whether a
mechanism exists whereby such claimants can obtain diligence pending the outcome of their
tribunal claim. The subsidiary issue is whether, if so, that mechanism is such as not to
render the exercise of those rights practically impossible or excessively difficult.
[26] In Hawkins v Wedderburn (supra), an action for payment was brought in an English
court against defendants domiciled in England who owned property in Scotland. An action
on the same grounds was subsequently raised in the Court of Session. The pursuers stated
candidly that they only intended to insist in the Scottish action for the purpose of obtaining
diligence against the defenders’ property in Scotland, and did not intend to pursue the
merits of the case in the Scottish court. The defenders argued that the Scottish action was
incompetent, or in any event fell to be dismissed on the ground of lis alibi pendens. The
Second Division having been equally divided in opinion, the other judges were consulted. It
was held by a clear majority that the Scottish action was competent and did not fall to be
dismissed. Delivering an opinion with which most of the others agreed, Lord Mackenzie
stated (page 940):
Page 14 ⇓
14
“…There seems prima facie no room for doubt, that if, in favour of the defenders,
proceedings be sisted until the issue of the suit in the English court, that is the utmost
the defenders can ask. For by that the defenders are entirely relieved from the
hardship of double discussion, or discussion in the Court least qualified to
investigate the facts and law of the case; and the only effect of sustaining process
with such a sist is, that after decree shall be pronounced in England, the action here
will then be more speedy than if it had to be raised de novo; and legal and just
diligence in this country for due execution of judgment in the case will be better
had.”
In a concurring judgment, Lord Justice-Clerk Hope observed (page 944-5):
“… I think a party is entitled to raise and keep up an action for the very purpose of
securing himself by ultimate payment, although he may not be in a condition—and it
seems to me to be of little moment from what cause, if he is not to blame—to follow
out the action at the time, but must wait the decision of another tribunal. I take the
case of a matter being under submission by regular deed, which completely bars the
second trial and prosecution of the matter before any other tribunal. Yet an action
may be raised, and will be sustained for the purpose of security, and that although
the submission is not noticed or founded on in the summons… By a process which is
in dependence, the party may be subjected in liability to the pursuer. The debt is not
yet constituted or liquidated; neither is it when a common action is raised in this
country for a debt. Whether it is to be liquidated by a decree in a submission, or by a
decree in the cause in Scotland, or by production of a decree to be obtained in the
English Court, does not appear to me to affect the competency of obtaining and
maintaining security over property in this country, by an action with diligence on the
dependence.”
[27] Much the same point came before the court again a few months later in Fordyce v
Bridges (supra). An heir of entail of Scottish property and the beneficiary under an English
will had raised proceedings in England to set aside various earlier English court orders. He
then raised an action in Scotland, ostensibly for reduction of the English court orders but in
reality to enable him to use diligence on the dependence against the Scottish property. The
case differed from Hawkins v Wedderburn in one material respect: the substantive
proceedings to set aside English court orders could not competently have been pursued in
Scotland. It was held, however, that the earlier case was not distinguishable on this ground,
the Lord Justice-Clerk stating (page 1343):
Page 15 ⇓
15
“…In the view I take of the question involved in this case, and decided by the
judgment in Wedderburn, I do not think the competency of such an action as the
present depends at all on the enquiry, whether this Court has jurisdiction to try the
question on the merits between the parties. The principle which I stated in
Wedderburn, on which I apprehend that judgment rests, was this: a party has a suit in
England in which he may obtain decree, and he finds that his debtor has property in
Scotland which it may be necessary for him to secure, in order to meet and satisfy the
decree, if he obtains it in England. He comes into this Court with a summons
narrating the English suit, averring, of course, that he will obtain decree. He sets
forth that as his interest and civil right to us who have jurisdiction over the property
of his adversary, and he raises his action here to secure property to make that decree
effectual; and, on obtaining that decree, asks for judgment and execution in terms of
it.”
[28] Taken together, these cases established that:
It was competent to raise an action in the Court of Session for the sole purpose of
obtaining diligence pending the outcome of proceedings in a foreign court;
Such an action was not to be dismissed on the ground of lis alibi pendens; and
It was of no consequence that the Scottish court had no jurisdiction to decide the
merits of the action.
The two cases appear to have attracted little judicial comment over the years, perhaps
because the law regarding enforcement of English judgments in Scotland (or vice versa) was
amended by the Judgments Extension Act 1868, section 2 of which provided that a judgment
of an English court, once registered in Scotland, was enforceable as if it were a decree of the
Court of Session. In Atkinson & Wood v Mackintosh (1905) 7F 598, in which a plea of forum
non conveniens was sustained, the pursuer, founding upon Hawkins and Fordyce, moved the
court to sist the action so that his arrestments on the dependence would remain in place
pending the raising of proceedings in England. The court refused to do so and dismissed
the action. Lord President Dunedin observed that if Hawkins had been in point, he would
have been minded to send the case before him to a larger court for reconsideration of
Page 16 ⇓
16
Hawkins in the light of differences created by the passing of the 1868 Act. Lord Pearson
observed:
“In [Fordyce], the opinion of Lord Justice-Clerk Hope, which may be regarded as
expressing the doctrine at its highest, distinctly says that it is the dependence of the
suit in England which gives jurisdiction in Scotland, to the effect of securing the
defender's property for the ultimate safety of the pursuer. For my part, while giving
all due obedience to the principle laid down by a majority of the whole Court in
Hawkins, I am not prepared to take a step further in the same direction, which we
should be doing if we were to sustain the present action to the limited effect of
enabling the pursuers to secure funds to answer a decree to be pronounced in an
English proceeding not yet begun…”
[29] Despite these statements, it does not appear that the continuing authority of Hawkins
and Fordyce was subjected to review in any subsequent case. The decisions themselves are
now superseded, in relation to proceedings in inter alia England and Wales, Northern
Ireland, or any Brussels or Lugano contracting state, by section 27 of the Civil Jurisdiction
and Judgments Act 1982, which authorises the Court of Session to grant warrant for
arrestment of assets in Scotland, inhibition over property situated in Scotland, interim
attachment of corporeal moveable property in Scotland, or interim interdict, where
proceedings have been commenced in another relevant jurisdiction.
[30] The situation regarding protective diligence for the purposes of arbitration
proceedings was considered in Motordrift A/S v Trachem Co Ltd (supra). A Norwegian
company raised an action in the Court of Session against an English company, using
arrestments of funds in Scotland to found jurisdiction. The defender sought recall of the
arrestments on the ground that the parties had agreed to resolve their dispute by arbitration
under English law, so that no decree would ever be pronounced in Scotland. Refusing the
motion for recall, the Lord Ordinary (Ross) said (page 128):
“It is to be assumed that when defences are lodged, the defenders will move for the
action to be sisted pending arbitration, and it seems likely that that will be done. I
am not, however, satisfied that a decree could never be pronounced in this action, as
Page 17 ⇓
17
counsel for the defenders suggested. The jurisdiction of the court is not wholly
displaced by an agreement to refer disputes to arbitration…
…If for any reason the arbitration in England were to founder, the issue between the
parties could still be resolved in the present process. However, even if the
arbitration in England reaches a conclusion, and that conclusion is in favour of the
pursuers, the pursuers may require to resort to the Scottish courts in order to enforce
their rights, and, in my opinion, the present process with a pecuniary conclusion
directed against the defenders would be a suitable means for enforcing these rights.
I accept that some amendment or adjustment might be necessary, but basically it
would remain an action against the defenders containing a pecuniary conclusion.
This is not a situation where a new and independent action would be required to
enforce any decree-arbitral; in my opinion, the pursuers would be entitled to use the
present process to enforce any decree-arbitral in their favour relative to the matters
raised in this action.
In these circumstances, I am unable to agree with counsel for the defenders that no
decree in the pursuers' favour could ever be pronounced in this process…”
It thus appears to have been a feature of Lord Ross’s reasoning that there was at least a
possibility that the court would one day be asked to pronounce decree in the action.
[31] Finally in this review of the authorities, I should mention the decision of the English
High Court in Amicus v Dynamex Friction Ltd (supra). It was held that the court had power to
make a freezing order in respect of a pre-existing cause of action before an employment
tribunal. Royce J noted that counsel for the defendant had contended that an employment
tribunal claimant could not be regarded as having a cause of action that could be afforded
protection by the court if the respondent appeared to be about to dissipate assets and thus
frustrate the proceedings, and observed that:
“…It would be highly unfortunate if this court did not have jurisdiction in
circumstances where a person with a very strong case for compensation in the
employment tribunal was frustrated by a respondent or defendant who is able to
dissipate assets and thus bring to an end any realistic prospect of that individual
recovering compensation.”
[32] The circumstances of the present case are not exactly on all fours with any of the
Scottish authorities to which I have referred. In Fordyce and in Motordrift it was held
Page 18 ⇓
18
competent to bring proceedings before a Scottish court in order to obtain interim protection
in the form of diligence on the dependence, even though it would not have been competent
to pursue the substantive issue because another forum had exclusive jurisdiction. In both of
those cases, however, there was envisaged at least a possibility that the Scottish court
proceedings might have to be used at some future date in connection with enforcement of
the order of the competent forum: ie the order of the English court in Fordyce, or the decree
arbitral in Motordrift. That is not the position with regard to an order by an employment
tribunal for payment of compensation which, as I have mentioned, is by virtue of section 15
of the Employment Tribunals Act 1996 enforceable as if it were an extract registered decree
arbitral bearing a warrant for execution issued by a sheriff. Indeed, there do not appear to
be any circumstances in which the protective court action would ever have to be used for
anything other than its initial purpose of facilitating diligence on the dependence. Does that,
then, render incompetent an action raised purely to obtain diligence on the dependence?
[33] In my opinion it does not. As a starting point, I can identify no rule of law which
would have this effect. Section 15A of the Debtors (Scotland) Act 1987, which confers upon
inter alia the sheriff the power to grant warrant for diligence by arrestment or inhibition on
the dependence is in general terms. Under section 15A(2), warrant for arrestment requires a
conclusion for payment of a sum other than by way of expenses, but section 15C provides
that it is competent to grant diligence on the dependence for a future or contingent debt.
There is no requirement that the contingency be resolvable in the action in which the
warrant is granted. Any argument by the defender that the action should be dismissed on
the ground of lis alibi pendens would, in my opinion, be excluded by the authority of Hawkins
and Fordyce. In any event I do not regard such an argument as sound in principle. The
mischief with which the plea of lis alibi pendens is concerned is the need to contest two
Page 19 ⇓
19
actions with the same subject matter at the same time. As Lord Mackenzie observed in
Hawkins, the defender is protected from such risk by the sisting of the protective action
pending the outcome of the substantive proceedings elsewhere.
[34] The matter goes further, however, when one bears in mind that the arguments in
these proceedings concern effective enforcement of community law rights. Just as
Factortame (No 2) provided the foundation of the petitioner’s argument that national law
must provide effective interim protection pending the establishment of the existence of a
claimant’s community law right to compensation, so it is destructive of the argument that
UK law currently fails to provide protection in relation to employment tribunal claims in
Scotland. If it were the case that there was a rule of domestic Scots law that diligence on the
dependence could not be sought in a Scottish court in order to protect such claims, then the
principle of effectiveness would, according to Factortame, require that rule to be set aside.
[35] In reaching the above conclusion, I see no reason to distinguish between the powers
of the sheriff court and the Court of Session respectively. The 1987 Act makes no difference
between the two in conferring power to grant warrant for diligence on the dependence, and
it follows that if, as I have held, it is competent for a Scottish court to grant protective
diligence for employment tribunal proceedings, there is no basis for restricting that
competency to the Court of Session.
[36] Nor do I attach any weight to the statement made in the course of argument that the
intervener was unaware of any such action having been taken by an employment tribunal
claimant. There may be a number of reasons for that: in particular, it may only be in a
minority of cases that the ability and willingness of a respondent to satisfy an award of
compensation is in doubt at the time of commencement of the tribunal proceedings. I agree
with senior counsel for the intervener that the reports drawn to my attention paint a
Page 20 ⇓
20
concerning picture regarding enforcement of tribunal awards. They do not, however, allow
any conclusion to be drawn as to the extent to which the availability or otherwise of interim
protective diligence has been a material factor. In only a minority of cases was the reason
for non-payment stated to be the employer’s refusal or inability to pay, and even in such
cases it is not possible to ascertain from the data in the reports whether arrestment on the
dependence would have made any difference. Warrant for diligence on the dependence is
not now, of course, granted automatically. I am not persuaded that the petitioner, were she
to have raised a protective action in the sheriff court for a sum representing a reasonable
estimate of the amount likely to be awarded by the tribunal if she were successful, would
have been in a worse position than that of a pursuer in a non-employment-related sheriff
court action against the same defenders.
[37] I turn then to the question whether the need to raise protective proceedings in a
separate action renders the exercise of the petitioner’s community law right practically
impossible or excessively difficult. On behalf of the petitioner it was submitted that any
limitation on the exercise of a community law right, including additional expense or
inconvenience, was illegitimate unless it could be justified by the member state as
proportionate. Here there was (i) a limitation, consisting of the need to raise parallel court
proceedings, (ii) an alternative available solution, consisting of conferring a statutory power
to award diligence on the dependence upon employment tribunal judges; and (iii) no
adequate policy justification to enable the court to assess proportionality. The situation was
employment tribunal fees.
[38] I reject this submission. In my opinion the absence of a power to grant diligence in
the employment tribunal, taken together with what I have held to be the availability of
Page 21 ⇓
21
interim protection in the sheriff court (or Court of Session), does not constitute a limitation
in the sense discussed in Unison. The question is not whether there is an adequate policy
justification for requiring protective proceedings to be raised in the sheriff court, but rather
whether that requirement renders the exercise of the right practically impossible or
excessively difficult: cf Impact (supra) at paragraph 51. There is no obligation on member
states to provide an ideal solution: the obligation is merely to provide a solution that does
not breach the principle of effectiveness. In my opinion the need to seek interim protection
in a court, rather than in the tribunal, does not breach that principle. The additional expense
and inconvenience occasioned by requiring to raise an action in the sheriff court which will
proceed no further than an application for a warrant to arrest is likely to be modest. The
cost of the application itself would be incurred regardless of the forum. The standard of
practical impossibility or excessive difficulty is a high one, and is not in my opinion met by
what would be required of a claimant who wished to obtain protective diligence, in an
appropriate case, from a court.
The principle of equivalence
[39] In Totel Ltd v HMRC (supra), it was noted by the Court of Appeal that there was
ample ECJ jurisprudence to support what was described as the no “most favourable
treatment” proviso as an established feature of the equivalence principle. In other words,
the court held (paragraph 47, per Arden LJ), that it was open to a member state to apply any
available set of rules which were already applied to similar claims to an EU-derived claim,
provided that an EU-derived claim was not selected for the worst treatment. In the present
case the question is whether the UK has acted in accordance with the equivalence principle
in treating employment-related discrimination-based claims in the same way as other
Page 22 ⇓
22
employment-related claims, or whether it breached the principle by failing to treat such
claims in the same way as non-employment-related discrimination-based claims.
[40] In my opinion, the conclusion that I have reached in relation to the principle of
effectiveness largely disposes also of the argument based upon the principle of equivalence.
If, as I have held, interim protection by way of an application to the court is available to
claimants such as the petitioner, then it makes no difference what domestic action her claim
is compared with, because in all cases interim protection is available one way or another.
Even if I were wrong in my primary conclusion, I am not persuaded that the appropriate
comparison is not with other employment-related claims. As Arden LJ observed in Totel at
paragraph 51, the ECJ case law does not make clear how a national court is to determine, for
the purpose of the equivalence principle, whether an action is “similar” to another action,
and that the degree of abstraction necessary to find whether similarity exists is a matter of
judgement for the national court. In my judgement, the appropriate comparison is with
employment law rights not derived from community law. It is clear from the titles and
recitals of both of the relevant directives that the employment context is central to their
purpose of securing equal treatment. I therefore regard it as appropriate, when considering
the principal of equivalence, to focus on the employment context, rather than upon
non-employment circumstances where discrimination, including harassment, might occur.
That being so, there is no material difference between the pursuit of a community law-based
claim for discrimination and a domestic law-based claim for, say, unfair dismissal. For these
reasons, I hold that the circumstances of the present case do not give rise to a breach of the
principal of equivalence.
Page 23 ⇓
23
Convention and Charter rights
reiterated (paragraph 54) that the right under article 6(1) ECHR to have a claim brought
before a court was not merely a theoretical right to secure recognition of an entitlement, but
also included the legitimate expectation that the decision would be executed. The Court
that the state has a positive obligation to organise a system for enforcement of judgments
which is effective both in law and in practice. In my opinion, however, the ECHR
jurisprudence takes the matter no further than the community law principles. If, as I have
held, arrestment is available to an employment tribunal claimant by means of a protective
action in a court, then there is no breach of the claimant’s article 6 rights because the UK has
provided a system for enforcement that is effective in law and in practice.
[42] Nor, in my view, is the intervener’s argument based upon article 21(1) of the
European Charter of Fundamental Rights well founded. I accept the respondent’s
submission that a difference in treatment between, on the one hand, discrimination in the
employment context and, on the other, discrimination in connection with supply of goods
and services, does not itself constitute discrimination based on a ground such as sex, race
etc, so as to fall within the scope of article 21(1). There is no reason why a member state
should not adopt different regimes for different types of interaction where discrimination
might take place, so long as the principle of non-discrimination is promoted within each of
those regimes. In any event, for the reasons set out above, I do not consider that there is a
material difference between the two regimes so far as interim protection is concerned.
Page 24 ⇓
24
Disposal
[43] For these reasons I shall sustain the third plea-in-law for the respondent and refuse
the petition.