Case Comment: Anwar v The Advocate General (representing the Secretary of State for Business Energy and Industrial Strategy) [2021] UKSC 44

In this post, Mitchell Abbott, an Associate in the Disputes team at CMS, comments on the Supreme Court’s decision in Anwar v The Advocate General (representing the Secretary of State for Business Energy and Industrial Strategy) [2021] UKSC 44, which concerns the availability of interim protective remedies for employment tribunal claimants in Scots law and whether the Scottish regime meets EU requirements.

On 13 October 2021, the Supreme Court handed down its decision in Anwar v The Advocate General (representing the Secretary of State for Business Energy and Industrial Strategy) [2021] UKSC 44. The Supreme Court adhered to the lower court’s finding (previewed here) that Ms. Anwar could have sought interim protective measures from the Scottish courts in support of her employment tribunal claim with the aim of preventing her previous employer from (allegedly) dissipating funds so as to frustrate her financial award. In doing so, the Supreme Court also held that the EU principles of effectiveness and equivalence had not been breached by the Scottish system.

The factual background

Ms. Anwar brought employment tribunal proceedings against her former employer and line manager alleging harassment on the basis of her race, sex, and religion. Ms. Anwar was successful in those proceedings, obtaining an award of £74,647.96.

However, Ms. Anwar has been unable to fulfil her award due to her previous employer’s lack of funds. From the judgment, it appears that Ms. Anwar has only been able to recover £2,967.32. Ms. Anwar alleges that she received information that her former employer was to be shut down and a new entity was to be started in its place so as to frustrate her award.

Ms. Anwar’s difficulties in enforcing her employment tribunal award are not uncommon. The Equality and Human Rights Commission (who were interveners in the case) highlighted statistics to the Court on the difficulties claimants face. For example, a 2013 survey found that 34% of English claimants received no payment and 16% received only a partial payment of their award. In Scotland, the figures stand at 46% and 13% respectively. The Court also noted that this is a problem acknowledged by the UK Government.

In Scots law, claimants can obtain interim protection of their future award in certain situations through “diligence on the dependence”, which takes the form of either an arrestment (i.e. a freeze) of movable property in the hands of a third party (often, money in a bank account) or an inhibition (which prevents the dealing of land and buildings).

Ms. Anwar argued that the Scottish regime does not permit claimants before employment tribunals to obtain diligence on the dependence, and argued that this alleged failure breached the EU principals of effectiveness and equivalence. Ms. Anwar’s alternative argument was that even if such remedies are available, the procedure for obtaining them breached the principles of effectiveness and equivalence

Issue 1 – Diligence on the dependence in support of employment tribunals

The Equality Act 2010 gives employment tribunals exclusive jurisdiction to hear workplace discrimination and harassment claims such as Ms. Anwar’s. Ms. Anwar argued that as a result it is not competent to seek diligence on the dependence from the courts and, as employment tribunals cannot grant diligence, diligence on the dependence was unavailable to claimants in employment tribunals.

The Court rejected Ms. Anwar’s argument, holding that claimants in employment tribunals can apply to the courts for diligence on the dependence in support of their employment tribunal claim. The Court noted that the Scottish courts have historically granted diligence on the dependence in support of foreign proceedings and in support of arbitration. Notably, in such cases, the Scottish courts will have no jurisdiction over the merits of the action or their jurisdiction will have expressly been excluded. The Court found that the same principles applied to employment tribunal claims.

The Court also rejected an argument that the 2007 reforms to the law of diligence (Part 1A of the Debtors (Scotland) Act 1987) comprehensively prescribe the courts’ powers of diligence. They noted that many issues relating to diligence still fall to be determined by the common law and in any event obtaining diligence on the dependence in support of a claim which the Scottish courts have no jurisdiction over is consistent with the statutory scheme.

As such, having rejected Ms. Anwar’s first argument the Court turned to consider whether the Scottish system breached the EU principles of equivalence and effectiveness.

Issue 2 – Has there been a breach of the EU law principle of effectiveness?

The principle of effectiveness requires that the enforcement of EU law rights is not rendered “practically impossible or excessively difficult” (Impact v Minister for Agriculture and Food [2008] 2 CMLR 47).

It was not disputed by either party that EU law requires interim remedies to be available to protect EU law rights. However, Ms. Anwar argued that the procedure for obtaining diligence on the dependence rendered the enforcement of her EU law rights  “practically impossible or excessively difficult” so as to breach the principle of effectiveness. She also argued that the availability of diligence on the dependence was so unclear as to breach the principle of effectiveness.

Case Law

In reliance upon case law, Ms. Anwar advanced several arguments as to what standards the principle of effectiveness required national legal systems to meet and why the Scottish regime breached the principle. Each of these were rejected by the Court.

The Court’s reasoning can be summarised as follows:

while case law showed that national bodies must have the power to disapply laws inconsistent with EU law, that is different from requiring national bodies to have the power to directly order interim remedies;
while in some cases the Court of Justice of the European Union (“the CJEU”) had found that rulings in civil law jurisdictions on interpretation of statute did not provide sufficient clarity for EU law, that context is distinguishable from the common law context which has a strong tradition of judge-made law;
while the CJEU had in the past found that certain UK judicial remedies did not properly protect EU law, that decision was fact-specific instead of establishing a general principle that legal rules laid down in case law cannot meet the level of legal certainty required;
while the CJEU had found that it was necessary for a national body to be able to provide interim relief in some contexts (such as the suspension of national law and environmental challenges), that context is distinguishable from the context of interim orders to secure financial claims; and
absent any requirement in the directives, the Court found that there was no reason why interim measures could not instead be available from the general law of domestic legal systems.

In the circumstances, the Court concluded that the existence of diligence on the dependence to support employment tribunal claims was not too uncertain.

Impossibility and difficulty

The Court then considered the procedure for employment tribunal claimants obtaining diligence on the dependence and held that the requirement to obtain it in ancillary proceedings before a court did not render the remedy practically impossible or excessively difficult.

The Court first noted that were diligence on the dependence to be available directly from an employment tribunal, it would likely require many of the same procedural steps as an application to the courts. For example, both would require written pleadings, evidence of insolvency, and potentially a hearing. Similarly, claimants can appear in both forums without legal representation should they choose. The Court also noted that it was likely that the employment tribunal would charge a fee for such applications.

In the circumstances and on the evidence before it, the Court noted that obtaining diligence on the dependence from a sheriff court was likely to be at most £414.15 more expensive than if it were available direct from an employment tribunal.

The Court concluded that that the additional procedure and expense of having to make an application to the court did not make the exercise of EU law rights “impossible in practice or excessively difficult”. As such, the principle of effectiveness had not been breached.

The Court also rejected an argument that the Scottish procedure breached Article 52 of the Charter of the Fundamental Rights of the European Union (2012/C 326/02), and that the principal of effectiveness had been expanded by recent case law.

Issue 3 – Has there been a breach of the EU law principle of equivalence?

The principle of equivalence requires that rights deriving from EU law are not to be treated less favourably than similar domestic law rights.

In a brief couple of paragraphs, the Court rejected Ms. Anwar’s argument that the principle had been breached. The Court held that the lower courts were correct to identify the appropriate comparator as claims before employment tribunals which are based on domestic law. As diligence on the dependence is also not available directly from an employment tribunal in those cases, there had been no breach of the principle of equivalence.

Case Comment

This is potentially a significant judgment. First, as noted by the lower court, there have previously been few, if any, applications to the courts for diligence on the dependence in support of employment tribunal claims. This series of judgments opens up new tactical choices for claimants before employment tribunals and as such will be of interest to employment law practitioners.

However, the Court is clear that diligence on the dependence will not in itself cure the difficulties claimants face in enforcing employment tribunal awards – the Court noted that Ms. Anwar’s ex-employer’s insolvency appeared to be for reasons other than to frustrate the enforcement of Ms. Anwar’s award.

The reasoning in the judgment is applicable not just to employment tribunals but claims before other tribunals as well. The Scottish courts may issue further judgments clarifying the availability of diligence on the dependence in support of other tribunals and proceedings in the coming years.

Finally, the Court’s re-confirmation that diligence on the dependence is available in support of arbitration will be welcome news to arbitration practitioners.

 

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