There is no doubt that cybercrime and complex fraud are ever-increasing threats to businesses of all sizes, national and international. The legal profession is no stranger to this, the global ransomware attack on DLA Piper in June 2017 being a rude awakening for some.
Cybercrime and complex financial fraud are now inextricably linked. Will the latest proposal for a ’state-of-the-art, multi-purpose’ court primarily focusing on fraud, financial crime and cybercrime be part of the answer to the fast evolving problem? The City of London Corporation and Ministry of Justice hope so.
Plans were announced on 9 October 2017 for a new 18 courtroom facility located on or around Fleet Street. The court will replace existing courts including the City of London Magistrates’ Court and the Mayor’s and City of London Court. While focusing on fraud and cybercrime, it will hear other criminal and civil cases, including tenancy disputes. As yet, there are limited details about how the new court would work in practice. To make it a justifiable investment which is truly fit for purpose, given the potential complexity of cases that will be heard, it might make sense to have a Competition Appeal Tribunal-esque panel with judges sitting alongside those with relevant specialist knowledge. There has been no suggestion of this but only time will tell.
As with so many current developments, the proposal is partly driven by Brexit. Justice minister Dominic Raab is quoted in the City of London Corporation’s newsroom announcement as saying that the ’new flagship court will build on UK legal services’ unique comparative advantage, by leading the drive to tackle fraud and crack down on cybercrime […] By reinforcing the City’s world-leading reputation as the number one place to do business and resolve disputes, it’s a terrific advert for post-Brexit Britain’.
Yet the launch of the proposal has been curiously low-key. Given many UK lawyers are unaware of the proposal, it seems unlikely that overseas lawyers and businesses will be following developments with interest. In contrast, the French and Dutch plans for certain courts to hear cases in English is widely reported and aimed squarely at international trade. According to the HMCTS chief executive, the proposed cybercrime and complex fraud court will be ’fully equipped with 21st century technology’ although this concept has not quite gone viral. At the time of writing, the City of London Corporation’s newsroom announcement has 39 ‘likes’ on Facebook and 161 ‘shares’ on LinkedIn: not entirely in-keeping with the 21st century terrific advert it has been described as. While the global legal profession has not so far been chanting the name of other jurisdictions to the tune of The White Stripes’ Seven Nation Army, if the aim of the court is as described, there does appear to be a sense of complacency within the English judicial system.
However, the proposal is still in the early stages. The City Corporation will commission a feasibility study to consider costs and possible funding sources (expected to complete in early 2018) and a study to quantify the economic benefits to London as a legal services centre. Particularly given its unashamed ties to Brexit, those behind the concept may simply be erring on the side of caution, having learned lessons not to make premature or notional promises (on the side of a bus or otherwise).
Although critics see the project as expensive pageantry and many would argue that limited resources could be better utilised following cuts to the Legal Aid budget and closures of county courts around the country, there is no doubt that the English judicial system needs to be suitably equipped for what has become a major threat to businesses and consumers. According to the Crime Survey for England and Wales, there were 3.4m instances of fraud in the year to March 2017, 57% of which were cyber-related.
The announcement was made in the wake of the Criminal Finances Act 2017 which came into force on 30 September. Amongst other things, the Act gives the High Court the power to make an unexplained wealth order, for individuals to explain how they obtained property, and introduces corporate criminal offences for failure to prevent the facilitation of tax evasion (UK or non-UK) by an associated person. With the clampdown on tax evasion and after a significant increase in prosecutions brought by the Serious Fraud Office, it is easy to see a role for the new court. There may be difficulties in finding a process which caters simultaneously for tax evasion, smaller-scale consumer fraud and larger cases of institutional fraud, but with proper consultation, a workable solution should be feasible.
The need to protect against cybercrime is fundamental for data protection. It has been suggested that the new court could play a part in enforcing laws under the Data Protection Act 2018 (which is likely to replicate as far as possible the Data Protection Act 1998) and the new General Data Protection Regulation (due to come into force on 25 May 2018) but it is more difficult to see how this would work in practice. The Information Commissioner’s Office (ICO) is the independent public body responsible for overseeing and enforcing compliance with data protection regulations. Under the GDPR, the ICO will have the power to impose fines of up to €20m or 4% of global annual turnover and there is no clear role for the new court in that enforcement process. One possibility may be to hear follow-on claims after decisions by the ICO. These could be brought by individuals who may be at risk of damage or identity theft following data breaches, or class-actions brought on behalf of consumers who individually would not have claims that could be pursued at a proportionate cost. The latter does not seem far-fetched since the deadline for bringing PPI claims expires in August 2019 and claims companies will be searching for a new topic of conversation for their cold calls.
Will the court be a strong statement on the UK’s position on cybercrime and complex fraud, enhancing the UK’s pre-eminence as the go-to jurisdiction for international business? Possibly, but as with so many live issues at the moment, we will have to wait and see.
Judy Krieg is partner and Douglas Campbell a solicitor in the Commercial Disputes and Regulation Team at Shepherd and Wedderburn LLP