Zai Corporate Finance Ltd v AIM Disciplinary Committee of the London Stock Exchange Plc & Anor

A rule providing that disciplinary hearings will usually be private, while giving a nominated adviser the right to ask for a public hearing, confers a discretion on the disciplinary committee. The phrases right to ask and requiring must be read together and in context; they do not create an absolute entitlement to publicity. The committee may consider confidentiality, market-sensitive information and prejudice to third parties. A party seeking a departure from privacy should identify case-specific reasons. Even if Article 6 applies, a private hearing is permissible where publicity would prejudice the interests of justice. The appeal was dismissed because the committee adopted a rational approach and the Convention was not breached.

ZAI, an AIM nominated adviser, challenged directions by the AIM Disciplinary Committee that disciplinary proceedings be heard in private. It argued that Rule C22.1 gave an automatic right to a public hearing, that the Committee’s discretion had been irrationally exercised, and that privacy breached Article 6. Mostyn J rejected the challenge in the Administrative Court: [2017] EWHC 778 (Admin). The Court of Appeal considered whether C22.1 conferred an entitlement or merely a right to request publicity, whether the Committee had acted unlawfully, and whether the private hearing was Convention-compliant.

Disposition. The appeal was dismissed and ZAI’s application to quash the Committee’s decision was refused.

1. Construction of Rule C22.1. The phrases right to ask and requiring such hearing to be conducted in public had to be read together and consistently with the Handbook as a whole. The rule gave a nominated adviser a right to request a public hearing, not an absolute right to compel one. The Committee retained a discretion whether to direct a public hearing.
2. Relevant context. The principle that justice is ordinarily administered in public is subject to exceptions where publicity would defeat the interests of justice, particularly by exposing confidential information or causing serious prejudice. The court relied on Scott v Scott [1913] AC 417 and R v Chief Registrar of Friendly Societies, ex p New Cross Building Society [1984] QB 227. In a regulated financial and commercial market, reputational harm, market-sensitive information and prejudice to uninvolved third parties were legitimate considerations. Rules C18.3, C22.8.3, C23.6 and C25.1 reinforced that contextual reading.
3. Exercise of discretion. ZAI had never advanced case-specific reasons for publicity before the Committee. It therefore could not complain that the Committee had failed to address a discretionary case. In any event, the Committee’s reasoning was rational and sensible. The court agreed that case-management decisions may properly be concise.
4. Article 6. The court did not decide whether Article 6 applied to the Committee or whether civil rights and obligations were engaged. Assuming that Article 6 applied, the Strasbourg decision in B v United Kingdom, P v United Kingdom (2001) 34 EHRR 529 showed that the general rule of public hearings permits exceptions where publicity would prejudice the interests of justice. The private hearing was therefore Convention-compliant.
5. The court tentatively indicated that, once a nomad exercised its right to ask for publicity, the Committee might have to justify retaining privacy rather than requiring the nomad to justify its request. That observation did not affect the result because ZAI had supplied no specific reasons and the Committee had given reasons.

1. Court of Appeal (Civil Division) — Appeal dismissed; application to quash the private-hearing direction refused.
2. High Court of Justice, Queen’s Bench Division, Administrative Court — Mostyn J rejected the challenge to the Committee’s direction that the disciplinary hearing be private: [2017] EWHC 778 (Admin).