T & Anor, R. (On Application of) v Financial Conduct Authority

A court considering whether to stay concurrent regulatory and civil proceedings exercises an original jurisdiction. A stay is exceptional and requires a real risk of serious prejudice capable of leading to injustice. Mere duplication of issues, additional expense or ordinary litigation prejudice is insufficient. If that threshold is met, the court balances the risk against the strong public interest in prompt and effective regulatory enforcement. The assessment is fact-sensitive. A stay may be justified where regulatory allegations are substantially contingent on issues being determined by a specialist court, particularly where those issues fall outside the regulator’s ordinary expertise and the delay is limited. Open justice remains the governing principle in satellite litigation; statutory confidentiality provisions governing regulatory investigations do not create a general entitlement to a private court hearing.

The First Claimant sought judicial review of the FCA Regulatory Decisions Committee’s refusal to stay disciplinary proceedings arising from an alleged dividend-arbitrage strategy and purportedly dishonest claims for Danish withholding-tax rebates. The FCA proceedings concerned whether the First Claimant had breached Principle 1 of the FCA’s Statements of Principle for Approved Persons.

Parallel Commercial Court proceedings brought by the Danish tax authority involved substantially overlapping issues of Danish tax law, the Denmark-US Double Taxation Treaty and market practice. A six-week Validity Trial was listed to determine preliminary issues central to both proceedings. The issues were whether the RDC proceedings should be stayed and whether the judicial review hearing should be conducted in private.

1. Open justice. The application for a private hearing was refused. CPR 39.2(3) requires both an applicable ground and necessity for private proceedings to secure the proper administration of justice. Sections 348 and 391 FSMA regulate confidentiality within FCA investigations and regulatory proceedings. They do not operate as general privacy protections in satellite litigation. Once a party invokes the court’s jurisdiction by judicial review, proper weight must be given to open justice, as explained in R (Willford) v Financial Services Authority [2013] EWCA Civ 674. Anonymity, document-access restrictions and an order preventing publication of the complaints provided adequate protection.
2. Applicable jurisdiction and test. The court exercised an original jurisdiction rather than conducting a Wednesbury review. The principles summarised in R v Executive Council of the Joint Disciplinary Scheme ex parte Land [2002] Pens LR 545 were adopted. A stay must be exercised sparingly and with great care. It must be refused unless there is a real risk of serious prejudice which may lead to injustice. If that risk is established, it must be balanced against countervailing considerations, including the strong public interest in prompt regulatory enforcement. The regulator’s view attracts considerable weight, but the court remains the ultimate arbiter of fairness.
3. Application. The First Claimant established the necessary risk. The RDC allegations substantially depended on the same matters as the Commercial Court proceedings. The RDC proceedings were properly described as a satellite of the Commercial Court litigation. The Validity Trial would determine issues of Danish law, treaty interpretation and market practice which were central to whether Principle 1 had been breached. Those issues were outside the ordinary expertise of the RDC panel, whereas the Commercial Court would determine them using forensic procedures and expert evidence. The risk was therefore not merely the burden of fighting on two fronts; the RDC’s conclusions ought to take account of the specialist court’s imminent findings.
4. The subsidiary arguments based on financial resources, possible disclosure and prejudice to other defendants were speculative or unsupported. The public interest in prompt enforcement was substantial, but the alleged misconduct was historic, the Claimant was no longer engaged in financial services, and the proposed delay was limited. The benefit of regulatory conclusions informed by the Commercial Court’s findings also served the public interest.
5. Disposition. The RDC proceedings were stayed pending judgment of the Commercial Court on the Validity Trial issues.

First-instance judicial review in the Administrative Court. The court refused a private hearing and granted a stay of the FCA Regulatory Decisions Committee proceedings.