“Successfully delayed the introduction of interconnection”
“Competition delayed the ability to sell interconnection services but has resulted in an enormous benefit to the Company overall”
“Lack of” or “Delay in”
“what is the minimum period (if any) and what is the maximum period (if any) in which all aspects of interconnection (i.e. both physical and contractual interconnection as explained in paragraph 19 of the Amended Particulars of Claim) should reasonably be completed in a jurisdiction?”
“The negotiation process and incentives 65. As noted above, the prevailing model for interconnection negotiations as reflected in the WTO Reference Paper, the EU Directives and the APEC Principles is one where the incumbent operator is obliged to provide interconnection to an entrant in a timely fashion. This model relies upon direct negotiations between the parties, commonly with the backdrop of a RIO and of general principles for interconnection either set out in legislation or prescribed by the national regulator. Should the negotiations fail, either party may request the regulator to intervene. The form of intervention may include a direction from the regulator to resume negotiations or to complete negotiations within a prescribed period, or alternatively, or as well as, mediation, arbitration, or a regulatory determination of the matters in dispute. 66. Faced with a legal obligation to interconnect, coupled with obligations to negotiate in good faith and to provide interconnection in a timely fashion, an incumbent fixed network operator providing both wholesale access services and retail services has an incentive to comply with those obligations and to avoid losing influence over the negotiation process as a result of a compliance failure. In addition, where governments are committed to market liberalization, as in the territories, incumbent operators face a material reputational risk if they should fail to achieve physical and contractual interconnection with credible entrants . [Footnote: In my experience, it is common for entrants to actively use the media and to lobby politicians and officials with complaints concerning the pace of interconnection negotiations.] 67. An interconnection agreement contains many terms that are likely to be uncontroversial. There are however terms with significant commercial implications, discussed earlier in this report. To the extent that these key commercial terms have not been predetermined by a regulatory decision or a published reference interconnection offer, both parties will wish to make offers and to try to maximize their commercial positions. 68. As I have noted above, generally, the most difficult commercial issue to be resolved in contractual interconnection is the charge to be made by a terminating operator to the originating operator for the termination of a call. I am instructed that in each of the territories, there were three main termination rates to be negotiated: termination on the relevant Cable & Wireless fixed network of a call from a Digicel mobile customer to a Cable & Wireless fixed customer (fixed termination); termination on the relevant Cable & Wireless mobile network of a call from a Digicel mobile customer to a Cable & Wireless mobile customer or vice versa (mobile-to-mobile termination); and termination on the Digicel mobile network of a call from a Cable & Wireless fixed customer to a Digicel mobile customer (fixed-to-mobile termination). [Footnote: I am instructed that in each of the territories, Cable & Wireless offered only interconnection with its fixed network. As a result, calls from a Digicel mobile customer to a Cable & Wireless mobile customer would transit the fixed network before termination on the Cable & Wireless mobile network. Calls originating from a Cable & Wireless mobile customer to a Digicel mobile customer would be handled in the same manner and would transit the Cable & Wireless fixed network before presentation to Digicel for termination.] 69. The fixed termination rate will compensate the fixed network operator for the use of the fixed network in terminating an inbound call. The mobile-to-mobile and fixed-to-mobile termination rates will compensate the terminating mobile operator for the use of the mobile network in terminating an inbound mobile or fixed call. Mobile-to-mobile and fixed-to-mobile termination rates are commonly the same, absent regulatory intervention, as both call types make the same use of the terminating mobile network. The two types of mobile termination rate are typically significantly higher than the fixed termination rate, reflecting the higher unit cost of call carriage on a mobile network in comparison to a fixed network. 70. I would expect that where a mobile operator seeks interconnection with a fixed operator providing termination both on the fixed network and on its own mobile network, agreement on each termination rate and on the relativities between those rates would be seen as of major importance by all parties. I refer in this regard to the discussion of call charging at paragraphs 41.5-41.12 of this report. 71. Within the scope of its legal obligations, to the extent that it is permitted to do so by the regulatory regime, an incumbent operator has an incentive to maximize its bargaining position and to use the time allowed for negotiation. There are two reasons for this. 72. First, as a response to the incentive of the entrant to shorten the negotiating period and therefore to accelerate market entry. This incentive reflects the potential benefits of market entry at a time that is favourable to the entrant, such as prior to an important marketing period, or prior to the potential entry of other competitors. It also reflects the benefit of earlier revenues to offset set-up costs. It would be rational for an incumbent operator to use the incentive of the entrant to conclude negotiations by withholding agreement on issues where an improved outcome from the perspective of the incumbent may be available. 73. Second, entry will inevitably reduce the market share of the incumbent operator and will probably lead to a reduction in retail margins as price competition erodes monopoly rents. The length of the bargaining process determines the monopoly rents retained by the incumbent operator. The incumbent operator has a weak incentive to support interconnection for the opportunity to receive interconnection revenue, but this is typically outweighed by the benefits of later competitor market entry. Competition will usually also expand the market through the introduction of pricing and service differentiation to target under-served potential users. Again though, it would be rational for an incumbent operator to seek to retain its market dominance and monopoly rents for as long as possible within the requirements of the law and the regulatory framework. 74. With a regulatory backstop, however, both parties will have an incentive to avoid regulatory intervention, since this will lead to uncertain pricing outcomes. For the entrant, intervention by the regulator remains preferable to a failure to reach a negotiated agreement. The trade-off between the incentive of the incumbent operator to preserve its monopoly position for as long as possible and that of the entrant to refer a dispute to the regulator is the middle ground that will generally result in an agreed, rather than a regulated, outcome. 75. Referral of a dispute over interconnection terms generally does not ‘stop the clock’ on continuing negotiations. The parties are able to continue to negotiate until the regulator has issued a final decision on the interconnection terms. This allows either party the opportunity to improve its position in the negotiations as the regulator’s range of possible outcomes becomes more apparent during the regulatory process. 76. Rather than taking over a dispute referred to it, the regulator may in some jurisdictions require that the parties continue to negotiate for a fixed period after the dispute has been referred. In these circumstances, the party that has the opportunity to make the last offer before the deadline, which may be either the incumbent operator or the entrant, has the stronger bargaining position. However, if the regulator instead sets a minimum bargaining period before it will consider the dispute, the incentive of the incumbent operator is to use that entire period and therefore to gain the monopoly profits. There is then no downside for the incumbent operator in the referral to the regulator so long as the parties retain the option to negotiate post-referral. 77. In summary, where an incumbent operator is under an obligation to provide interconnection, and to negotiate in good faith and in a timely manner, the incentives faced by the parties are as follows: 77.1 The incumbent operator will prefer to comply with its obligations rather than be in breach, with both reputational risk and the risk of losing influence over the negotiation as a result of regulatory intervention; 77.2 Both parties will aim to achieve the best possible outcomes on key commercial terms, particularly related to interconnection rates for each network; 77.3 The incumbent operator will have an incentive to use the negotiating space allowed to it by the regulatory regime, both to achieve better outcomes in the interconnection terms and to preserve monopoly rents for as long as possible; 77.4 The entrant will have an incentive to shorten the negotiating period to accelerate market entry; 77.5 With a regulatory backstop, both parties have an incentive to avoid regulatory intervention, but the entrant has a greater incentive to request intervention if it appears that negotiations may fail; 77.6 Once the regulator has intervened, there is an incentive for the parties to continue negotiations if possible, shaped by the narrowing of options as the regulator’s preferences become apparent; 77.7 If the regulator sets a minimum bargaining period before it will consider the dispute, the incumbent operator has an incentive to use that full period to maximize the monopoly rents or to otherwise achieve an improved commercial outcome.”
“Subject to subsection (5), a telecommunications provider who operates a public telecommunications network shall not refuse, obstruct, or in any way impede another telecommunications provider from making an interconnection with his or her telecommunications network.”
“No person shall enter into any interconnection agreement, implement or provide interconnection service without first submitting the proposed agreement to the Commission for its approval, which approval shall be in writing.”
“Where a breach of this Act or licence has been committed by a person other than an individual any individual including a public officer who at the time of the breach was director, manager, supervisor, partner or other similarly responsible individual, may be found individually liable for that breach if, (a). having regard to the nature of his of St Lucia or her functions; (b). and his or reasonable ability to prevent that breach; the breach was committed with his consent or connivance or he or she failed to exercise reasonable diligence to prevent the breach.”
“A carrier shall provide, on request from any other carrier, interconnection services to its public telecommunications network for the purpose of supplying telecommunication services in accordance with the provisions of sub section (2).”
“Requests for interconnection”
“28(1) A person who wishes to interconnect with the telecommunications network of a telecommunications provider shall so request that provider in writing giving sufficient information as is reasonably required by a provider to allow for a response to the requests. (2). Where an RIO is in effect with respect to an interconnection provider, and the person seeking interconnection accepts the terms and conditions set out in the RIO, the parties shall sign an agreement in accordance with those terms and conditions of the RIO within 90 days of the receipt of the request. (3). Where a person requests an interconnection pursuant to subsection (1) on terms other than those of the RIO that is in effect in relation to the interconnection provider, the parties shall negotiate in good faith to reach an agreement on the terms and conditions of the interconnection; and the negotiations shall commence within 30 days of the receipt of the written request. (4). A request for interconnection to a public telecommunications network may be refused by an interconnection provider for the following reasons: (a). for the protection of the (i). safety of a person; (ii). security of the network; (iii). integrity of the network; or (b). the difficult technical and engineering nature of the interconnection. (5). Where there is a refusal by the provider under sub section (4), the person seeking interconnection may refer that refusal to the Commission for review.”
“(i). deliberately and/or unreasonably abusing its dominant position in the telecommunications market in Barbados in breach ofsection 16(1) of the Fair Competition Act 2002 ; and/or (ii). deliberately and/or unreasonably conspiring combining agreeing or arranging with another person to unduly restrict or injure competition in breach ofsection 34(1) of the Fair Competition Act 2002 .”
“by impeding, obstructing and/or delaying interconnection C&W restricted and prevented Digicel’s entry into the telecommunications market in Barbados and limited the telecommunications services available to the public in contravention of inter alia sections 16(1) and 16(3)(a),(b),(e)and (h) of theFair Competition Act 2002 respectively. Digicel does not yet know exactly how C&W dealt with its own mobile operation and therefore reserves the right to allege other abuses of dominance as may be supported in evidence in these proceedings. Further details in the response relate to evidence.”
“(1). In addition to the acts and practices referred to in sections 5 to 9, any act or practice, in the course of industrial or commercial activities, that is contrary to honest practices shall constitute an act of unfair competition. (2). Any person damaged or likely to be damaged by an act of unfair competition shall be entitled to the remedies obtainable under the civil law of Trinidad and Tobago”. (3). This section and sections 5 to 9 shall apply independently of, and in addition to, any legislative provisions protecting inventions, industrial designs, trademarks, literary and artistic works and other intellectual property subject matter.”
“Whatever may be the position in some criminal or other contexts (see, for instance, Reg. v Ghosh[1982] QB 1053 ), in the context of the accessory liability principle acting dishonestly, or with a lack of probity, which is synonymous, means simply not acting as an honest person would in the circumstances. This is an objective standard. At first sight this may seem surprising. Honesty has a connotation of subjectivity, as distinct from the objectivity of negligence. Honesty, indeed, does have a strong subjective element in that it is a description of a type of conduct assessed in the light of what a person actually knew at the time, as distinct from what a reasonable person would have known or appreciated. Further, honesty and its counterpart dishonesty are mostly concerned with advertent conduct not inadvertent conduct. Carelessness is not dishonesty. Thus for the most part dishonesty is to be equated with conscious impropriety. However, these subjective characteristics of honesty do not mean that individuals are free to set their own standards of honesty in particular circumstances. The standard of what constitutes honest conduct is not subjective. Honesty is not an optional scale, with higher or lower values according to the moral standards of each individual. If a person knowingly appropriates another’s property, he will not escape a finding of dishonesty simply because he sees nothing wrong in such behaviour. In most situations there is little difficulty in identifying how an honest person would behave. Honest people do not intentionally deceive others to their detriment. Honest people do not knowingly take others’ property. Unless there is a very good and compelling reason, an honest person does not participate in a transaction if he knows it involves a misapplication of trust assets to the detriment of the beneficiaries. Nor does an honest person in such a case deliberately close his eyes and ears, or deliberately not ask questions, lest he learn something he would rather not know, and then proceed regardless.”
“The Judge stated the law in terms largely derived from the advice of the board given by Lord Nicholls of Birkenhead in Royal Brunei Airlines Sdn Bhd v Tan[1995] 2 AC 378 . In summary, she said that liability for dishonest assistance requires a dishonest state of mind on the part of the person who assists in a breach of trust. Such a state of mind may consist in knowledge that the transaction is one in which he cannot honestly participate (for example, a misappropriation of other people’s money), or it may consist in suspicion combined with a conscious decision not to make enquiries which might result in knowledge: see Manifest Shipping Co Limited v Uni-Polaris Insurance Co Limited[2003] 1 AC 469 . Although a dishonest state of mind is a subjective mental state, the standard by which the law determines whether it is dishonest is objective. If by ordinary standards a defendant’s mental state would be characterised as dishonest, it is irrelevant that the defendant judges by different standards. The Court of Appeal held this to be a correct state of the law and their Lordships agree.”
“Nothing in the preceding provisions of this section shall be construed as preventing the use of a registered trade mark by any person for the purpose of identifying goods or services as those of the proprietor or a licensee. But any such use otherwise than in accordance with honest practices in industrial or commercial matters shall be treated as infringing the registered trade mark if the use without due cause takes unfair advantage of, or is detrimental to, the distinctive character or repute of the trademark.”
“The court also gave guidance on the meaning of “honest practices etc”
“… the test is objective and one of simple causation – if the defendant in fact caused significant deception, albeit innocently, there is no defence. He must pay for the damage he unwittingly caused. The position for the past is the same as for the future.”
“So the real question is, whether the use in the comparative lists is “in accordance with honest practices in industrial or commercial matters”
“This makes sense, since the wording of the proviso to article 12 appears to reflect article 10 bis (2) of the Paris Convention for the Protection of Industrial Property, which provides “any act of competition contrary to honest practices in industrial or commercial matters constitutes an act of unfair competition.”
“[t]his would include affording to Digicel the same treatment it affords its own mobile network in relation to its landlines and vice versa.”
“Given the breadth of section 4 of [PAUCA], it is more than arguable that such a practice is unfair”
"Non-discrimination and Fair Trading"
“Without limiting the generality of clause 13.4 above, any act or omission which leads, or is likely to lead, to a substantial lessening of competition in the market for any telecommunications network or telecommunications service is prohibited. The Commission will issue Guidelines describing, or may otherwise determine, what constitutes a substantial lessening of competition and the procedures for assessing it.”
“Cable and Wireless (West Indies) Ltd (“C&W”) and Digicel (Turks and Caicos) Ltd, (“Digicel”) (“C&W” and “Digicel” are each hereinafter also referred to as the “Party” and collectively, as the “Parties”) agreed to commence and complete the physical and technical interconnection necessary to interconnect their respective networks in the Turks and Caicos Islands immediately and ahead of signing of an interconnect agreement. This work includes but is not limited to: (a). ordering the required interconnect equipment and fiber and C&W notifying, within one week of its having ordered the interconnection equipment, Digicel of the type of such equipment; (b). undertaking, at the same time as ordering the interconnection equipment, all civil works associated with, installation of and testing of fiber link(s) and C&W informing, on at least a weekly basis, Digicel of the current location of the interconnection equipment and its date of delivery to C&W in TCI; (c). commence installing the interconnection equipment within one week of the date of delivery to C&W, and commence commissioning and testing the interconnection equipment and the links within one week of completion of installation. Digicel agrees to pay C&W the sum of US$90,000 as a deposit, to cover fifty to sixty percent (50-60%) of C&W’s estimated costs associated with the civil works and equipment required to achieve physical and technical interconnection. This deposit shall be applied by C&W (once the Interconnect Agreement is executed) to the once-off charges set out in the Tariff Schedule of the Interconnect Agreement, and owed by Digicel to C&W for the civil works and equipment. Any surplus difference between the deposit and the once-off charges will be refunded. Any short fall will be invoiced to, and paid by, Digicel in accordance with the terms of the Interconnect Agreement. In accordance with sub-section 25(1) of the Telecommunications Ordinance and paragraph 15(2)(a) of the Interconnection Regulations, Digicel shall be responsible for paying to C&W the full costs of the civil works and equipment, including but not limited to the items listed in (a) through (c) above, necessary to complete the physical and technical interconnection of C&W and Digicel networks. While the Parties agree to be bound by the terms of this Agreement, this Agreement is subject to any decision or instruction of the Turks and Caicos Islands Telecommunication Commission concerning in particular section 25.1 of the Telecommunications Ordinance 2004 and/or section 15.2 of the Interconnection Access to Telecommunication and Facilities Regulations. Digicel agrees not to use the interconnection equipment and links for the exchange of traffic between the Digicel and C&W networks prior to the execution of the Interconnect Agreement, except for the purpose of testing the equipment and the links. If you are in agreement with these terms, please sign below and return this letter along with the above mentioned payment to the above address as soon as possible in order for the parties to proceed with physical and technical interconnection. In signing this letter agreement, you acknowledge the receipt and sufficiency of the consideration given, and agree to be bound by the terms herein stated.”
“The Parties recognise that rates for Incoming International Calls to a Mobile may need to be adjusted from time to time pursuant to negotiations between the Parties, including to take into account international settlement rates, but for the avoidance of doubt, will only be adjusted in a manner that ensures that the rates for Incoming International Calls to a Mobile remain reciprocal.”
“In recognition of the fact that C&W and C&W Grenada and Digicel STL, Digicel SVG and Digicel Grenada are associated companies and that the parties agreed to link the negotiation of the modification of the STL agreement and SVG agreement with the good faith negotiations of the Grenada agreement;”
“seeing xmas activity shared with new entrants and erosion of our ability to better establish our own GSM credentials as the sole provider.”
“… it is not known whether C&W could have done more to procure an earlier delivery of the equipment, or at least the optical equipment itself such as to allow installation and testing to commence.”
“as agreed between C&W and Digicel installation and testing of terminal equipment will not commence until after the signing of a formal interconnect agreement between the two parties.”
“the overall completion of interconnection should be completed sometime at the end of March 2006 or 3 months after signing the interconnection agreements (right after the issuance of Concessions), whichever occurs last…”
“I am sure you are aware Martha is involved from what I hear Carlos called her about this. We may want to make sure she reviews also before sending forward.”
“TSTT has made, and continues to make, all efforts to expedite the completion of the activities related to providing interconnection to both parties. However, as TSTT stated in the meetings on September 15th and 20th the timelines associated with most of the tasks presented in its schedule are out of its control, including the delivery time of interconnection equipment by the relevant supplier, which may be further delayed due to circumstances beyond TSTT’s or the supplier’s control, i.e. Hurricane Katrina. TSTT reminds the Authority of the evidence provided of this delivery time at the meeting on September 15th. TSTT undertakes to ensure that every effort is made to complete interconnection with the companies that won the Authority’s auction within the shortest possible timeframe.”
“TSTT stresses that regardless of which approach is taken to achieve interconnection, all of the activities outlined in this proposed timetable will have to be completed, and that the tasks identified present the shortest possible timeframe for completion. TSTT once again reaffirms its commitment to support the liberalization efforts of the Government of Trinidad and Tobago and the Authority as evidenced particularly by its agreement to have discussions on interconnection with prospective new entrants in advance of the award of concession.”
“This is to advise you that we are in receipt of a request form (sic) your Technology Organization for the development and implementation of a comprehensive solution to accommodate the interconnection of the two new mobile entrants to the TSTT NGN network. I would like to assure you that this request will be given top priority in Nortel, however, I would like to take a few moments to outline what is involved so that expectations are clearly understood by TSTT, the two new Market Entrants, the Nortel Engineering Operations teams and all other stakeholders. We have examined the current capacities of both your TDM (legacy) and Next Generation Networks and can clearly state that no additional traffic can be accommodated without major extension (in fact your network is currently under provisioned in many areas today). We would strongly recommend interconnection with the new Market Entrants using the NGN infrastructure. As you are aware we are currently in the process of implementing Phase 2 of the NGN infrastructure rollout which is due to be completed March 31, 2006. My Operations team has confirmed that Phase 2 is on schedule and will complete as originally scheduled. However, Phase 2 did not take into account any of the interconnect requirements that was just provided by your team, consequently a new project has to be developed now. Attachments 1 and 2 of this letter provide the typical timeframes required to develop and implement a project of this size and complexity, which include major expansion to the switching, data core, optical, signaling (sic) and synchronisation networks. As you can see the timeframes vary between 170 working days (when equipment is forecasted to our factory) and 185 working days (when equipment is not forecasted to our factory). Unfortunately your interconnection requirements were not forecasted with our factory. I must also emphasise that there will need to be great co-ordination between the current NGN deployment team and the new team that will be doing the interconnect requirements because both projects will be running concurrently and will have many dependencies and overlaps. Based on the above scenario it is my view that we can implement the interconnection project concurrently with the NGN infrastructure rollout project and have it completed by April 30, 2006 working extended hours and weekends. I would like to emphasise this is a best-case scenario and does not leave any room for unforeseen situations.”
“Based on the above scenario it is my view that we can implement the interconnection project, concurrently with the NGN infrastructure rollout project and have it also complete by March 31, 2006. I would like to emphasise that this is a best case scenario and does not leave any room for any unforeseen situations.”
“heading down the road of pissing off Carlos and Bernard [of TSTT] by trying to advance Digicel interconnect project to February 17th and not advancing the core project from April 30th”
“With the detailed requirements, Nortel has now had the opportunity to poll our supply chain and we are pleased to inform you that we will be securing better ship dates for some of, if not all of the interconnect equipment. Based upon this and the request by the minister, we would like to request that we meet to revisit the interconnect schedules to reflect possible improvements. Please let us know the availability of your team to do so.”
“Admittedly, answering how far in advance of the March 31, 2006, pre-fixed date interconnection could have been completed does, to some extent, remain speculative because there was never any interest or attempt to achieve an earlier completion date.”
“TSTT has embraced the liberalisation process and will do all in its power to carry that process forward”
“Every carrier and service provider must offer to provide and provide interconnection on a timely basis not to exceed 90 days subject to section 8, after requested by another licensee, and on the basis of terms and conditions that are transparent and reasonable, having regard to economic feasibility.”
“The principles applicable in determining whether such statutory cause of action exists are now well established, although the application of those principles in any particular case remains difficult. The basic proposition is that in the ordinary case a breach of statutory duty does not, by itself, give rise to any private law cause of action. However a private law cause of action will arise if it can be shown, as a matter of construction of the statute, that the statutory duty was imposed for the protection of a limited class of the public and that Parliament intended to confer on members of that class a private right of action for breach of the duty. There is no general rule by reference to which it can be decided whether a statute does create such a right of action but there are a number of indicators. If the statute provides no other remedy for its breach and the Parliamentary intention to protect a limited class is shown, that indicates that there may be a private right of action since otherwise there is no method of securing the protection the statute was intended to confer. If the statute does provide some other means of enforcing the duty that will normally indicate that the statutory right was intended to be enforceable by those means and not by private right of action: Cutler v Wandsworth Stadium Limited[1949] AC 398 ; Lonrho Limited v Shell Petroleum Co Limited (No. 2)[1982] AC 173 . However, the mere existence of some other statutory remedy is not necessarily decisive. It is still possible to show that on the true construction of the statute the protected class was intended by Parliament to have a private remedy. Thus the specific duties imposed on employers in relation to factory premises are enforceable by an action for damages notwithstanding the imposition by the statutes of criminal penalties for any breach: see Groves v Wimborne (Lord )[1898] 2 QB 402 .”
“A conspiracy to injure by lawful means is actionable where the claimant proves that he has suffered loss or damage as a result of action taken pursuant to a combination or agreement between the defendant and another person or persons to injure him, where the predominant purpose of the defendant is to injure the claimant. (2) A conspiracy to injure by unlawful means is actionable where the claimant proves that he has suffered loss or damage as a result of unlawful action taken pursuant to a combination or agreement between the defendant and another person or persons to injure him by unlawful means, whether or not it is the predominant purpose of the defendant to do so.”
“cet animal est très méchant; quand on l’attaque, il se défend”
“reverse our judgment an it please you, but at least say something clear to help in the future”
“The tort of conspiracy as the law has developed today, consists of the agreement of two or more persons to act in combination in order to injure the plaintiff without justification, and where in pursuance of that object something is done whereby the plaintiff suffers damage. Justification may be found in self-protection or in the advancement of the personal interests of the defendants where such is the predominant object of the combination. However, justification cannot be established where the defendants agree to resort to an unlawful act.”
“149 Although the need for “unlawful means” is well established, the same cannot be said about the content of this expression. There is some controversy about the scope of this expression in this context. 150 One view is that this concept comprises, quite simply, all acts which a person is not permitted to do. The distinction is between “doing what you have a legal right to do and doing what you have no legal right to do”: Lord Reid in Rookes v Barnard[1964] AC 1129 , 1168– 1169. So understood, the concept of “unlawful means” stretches far and wide. It covers common law torts, statutory torts, crimes, breaches of contract, breaches of trust and equitable obligations, breaches of confidence, and so on. 151 Another view is that in this context “unlawful means” comprise only civil wrongs. Thus in Allen v Flood itself Lord Watson described illegal means as “means which in themselves are in the nature of civil wrongs”:[1898] AC 1 , 97– 98. A variant on this view is even more restricted in its scope: “unlawful means” are limited to torts and breaches of contract. 152 The principal criticism of the first, wider view is that it “tortifies” criminal conduct. The principal criticism of the second, narrower view is that it would be surprising if criminal conduct were excluded from the category of “unlawful” means in this context. In the classical “three-party” form of this tort the defendant seeks to injure the claimant's business through the instrumentality of a third party. By this means, as Lord Lindley said, the claimant is “wrongfully and intentionally struck at through others, and is thereby damnified”: Quinn v Leathem[1901] AC 495 , 535. It would be very odd if in such a case the law were to afford the claimant a remedy where the defendant committed or threatened to commit a tort or breach of contract against the third party but not if he committed or threatened to commit a crime against him. In seeking to distinguish between acceptable and unacceptable conduct it would be passing strange that a breach of contract should be proscribed but not a crime. In Rookes v Barnard[1964] AC 1129 , 1206– 1207, Lord Devlin noted it was “of course” accepted that a threat to commit a crime was an unlawful threat and continued: “It cannot be said that every form of coercion is wrong. A dividing line must be drawn and the natural line runs between what is lawful and unlawful as against the party threatened.” 153 These different views are founded on different perceptions of the rationale underlying the unlawful interference tort. On the wider interpretation of “unlawful means” the rationale is that by this tort the law seeks to curb clearly excessive conduct. The law seeks to provide a remedy for intentional economic harm caused by unacceptable means. The law regards all unlawful means as unacceptable in this context. 154 On the narrower interpretation this tort has a much more limited role. On this interpretation the function of the tort of unlawful interference is a modest one. Its function is to provide a claimant with a remedy where intentional harm is inflicted indirectly as distinct from directly. If a defendant intentionally harms a claimant directly by committing an actionable wrong against him, the usual remedies are available to the claimant. The unlawful interference tort affords a claimant a like remedy if the defendant intentionally damages him by committing an actionable wrong against a third party. The defendant's civil liability is expanded thus far, but no further, in respect of damage intentionally caused by his conduct. 155 In my view the former is the true rationale of this tort. The second interpretation represents a radical departure from the purpose for which this tort has been developed. If adopted, this interpretation would bring about an unjustified and unfortunate curtailment of the scope of this tort. 156 On either interpretation complications may arise in the application of this tort in certain types of cases, notably where the civil rights of a third party infringed by the defendant are statute-based. The existence of these perceived complications is not a pointer in favour of either interpretation. 157 Take the case of a patent. A manufacturer seeks to steal a march on his rival by employing a novel, patented process. In order to sell his product more cheaply, he does so without paying any licence fee to the owner of the patent. By means of this patent infringement he undercuts his law-abiding rival. He has damaged his rival's business by an unlawful means. But this conduct, however reprehensible, cannot afford the rival manufacturer a cause of action for damages for interference with trade by unlawful means. Parliament has specified the nature and extent of the remedies available for infringement of patents. Remedial relief for infringement of a patent is available to patentees and exclusive licensees. It would be inconsistent with the statutory scheme if the common law tort were to afford a remedy more widely. 158 Thus in Oren v Red Box Toy Factory Ltd[1999] FSR 785 , 800, para 42, Jacob J said in the context of a claim for unlawful interference with contractual relations: “the right to sue under intellectual property rights created and governed by statute are inherently governed by the statute concerned. Parliament in various intellectual property statutes has, in some cases, created a right to sue, and in others not. In the case of the [Copyright, Designs and Patents Act 1988 ] it expressly re-conferred the right on a copyright exclusive licensee, conferred the right on an exclusive licensee under the new form of property called an unregistered design right … but did not create an independent right to sue on a registered design exclusive licensee. It is not for the courts to invent that which Parliament did not create.” 159 The difficulties here are more apparent than real. The answer lies in keeping firmly in mind that, in these three-party situations, the function of the tort is to provide a remedy where the claimant is harmed through the instrumentality of a third party. That would not be so in the patent example. 160 Similarly with the oft-quoted instance of a courier service gaining an unfair and illicit advantage over its rival by offering a speedier service because its motorcyclists frequently exceed speed limits and ignore traffic lights. The unlawful interference tort would not apply in such a case. The couriers' criminal conduct is not an offence committed against the rival company in any realistic sense of that expression. 161 Nor am I persuaded that the effect of the broader interpretation of “unlawful means” is to impose civil liability on a defendant simply because he reached his victim through an agent rather than directly. I am far from satisfied that, in a two-party situation, the courts would decline to give relief to a claimant whose economic interests had been deliberately injured by a crime committed against him by the defendant. 162 For these reasons I accept the approach of Lord Reid and Lord Devlin and prefer the wider interpretation of “unlawful means”
“44 The situation that is contemplated is that of loss caused by an unlawful act directed at the claimants themselves. The conspirators cannot, on the commissioners' primary contention, be sued as joint tortfeasors because there was no independent tort actionable by the commissioners. This is a gap which needs to be filled. For reasons that I have already explained, I do not accept that the commissioners suffered economic harm in this case. But assuming that they did, they suffered that harm as a result of a conspiracy which was entered into with an intention of injuring them by the means that were deliberately selected by the conspirators. If, as Lord Wright said in Crofter Hand Woven Harris Tweed Co Ltd v Veitch[1942] AC 435 , 462, it is in the fact of the conspiracy that the unlawfulness resides, why should that principle not apply here? As a subspecies of the tort of unlawful means conspiracy, the case is virtually indistinguishable from the tort of conspiracy to injure. The fact that the unlawful means were not in themselves actionable does not seem, in this context at least, to be significant. As Professor Joe Thomson put it in “An island legacy-The delict of conspiracy”, Comparative and Historical Essays in Scots Law, ed Carey Miller and Meyers (1992), p 148, the rationale of the tort is conspiracy to injure. These factors indicate that a conspiracy is tortious if an intention of the conspirators was to harm the claimant by using unlawful means to persuade him to act to his own detriment, even if those means were not in themselves tortious. 45 I would hold that the decision of the Court of Appeal in Powell v Boladz[1998] Lloyd's Rep Med 116 was erroneous and that it should be overruled. I would also hold, in agreement with all your Lordships' that criminal conduct at common law or by statute can constitute unlawful means in unlawful means conspiracy. …”
“My Lords, in agreement with my noble and learned friends and for the reasons they have given I too would hold that criminal conduct can constitute unlawful means for the purposes of a tortious conspiracy to injure by unlawful means: see para 95 of Lord Walker's opinion. It must, in my opinion, be kept in mind that the whole of this branch of the law of tort is the result of a step-by-step development by judges of the action on the case. We were taught at law school that the action on the case was the means whereby our judicial forbears allowed tortious remedies in damages where harm had been caused in circumstances where the conduct of the authors of the harm had been sufficiently reprehensible to require the conclusion that they ought to be held responsible for the harm. The law whereby harm caused by negligence can be remedied by an action in tort for damages results from a development of the action on the case. The law enabling an action for tortious damages to be brought where two or more persons have joined together with the predominant intention of injuring another person and have successfully carried out their intention is another, and for present purposes highly relevant, example of a judicial development of the action on the case. This is the so-called “lawful means” conspiracy which is tortious notwithstanding that the means employed to cause the harm are themselves neither criminal nor tortious. The essential ingredient of this type of action is the combination of people all intent on causing harm to the victim, not on the type of means employed for doing so. As it was put by Viscount Simon LC in Crofter Hand Woven Harris Tweed Co Ltd v Veitch[1942] AC 435 , 445: “ If that predominant purpose is to damage another person and damage results, that is tortious conspiracy. If the predominant purpose is the lawful protection or promotion of any lawful interest of the combiners (no illegal means being employed), it is not a tortious conspiracy, even though it causes damage to another person.”
“89 My Lords, faced with this confusion in the recent case law, the House must, I suggest, go back to the general principles to be derived from the older cases in which the economic torts have been developed. It is however necessary to bear in mind that their development has been a long and difficult process, and may not yet be complete, as Lord Templeman observed (with the concurrence of the majority) in Lonrho plc v Fayed[1992] 1 AC 448 , 471. A particular difficulty is that it has been generally assumed, throughout the 20th century cases, that “unlawful means” should have the same meaning in the intentional harm tort and in the tort of conspiracy. A good deal of legal reasoning in the speeches and judgments (as to the ingredients of one or other of these torts) has been based on the assumption that the meaning must be the same in both. That assumption is however challenged, if the commissioners are correct, by the speech of Lord Hoffmann in OBG Ltd v Allan[2008] 1 AC 1 (with which the majority concurred). I shall have to come back to that difficulty. 90 In searching for general principle I start with a very simple, even naïve point. The man in the street, if asked what an unlawful act was, would probably answer “a crime”
“ the word ‘unlawfully’ must here be construed to mean ‘ unlawfully’ in the wide general sense in which the word is used with reference to acts which if done by conspirators are indictable, though not if they are done by individuals. This general sense may, I think, be said to be ‘immoral and mischievous to the public’. I do not agree with the doctrine that the word ‘unlawfully’ is used here in this wide sense. The use of the word in relation to conspiracy appears to me to be exceptional.”
“219 Accordingly, it appears to me that your Lordships' House is free to decide the issue as it sees fit. However, we should plainly resolve the issue on a principled basis, in so far as that is possible in this very tricky area. 220 At para 57 of his opinion in OBG Ltd v Allan[2008] 1 AC 1 , Lord Hoffmann (expressing the majority view in this House) said that the fact that the means involve a crime, without also involving a civilly actionable wrong, was insufficient to establish a claim for loss caused by unlawful means. Given the obvious desirability of consistency and coherence as between the economic torts, it can fairly be said that the same rule should apply to a claim in unlawful means conspiracy. Further, the point made by Lord Hoffmann that “it is not for the courts to create a cause of action out of a … criminal statute which Parliament did not intend to be actionable in private law” can fairly be said to be as applicable to unlawful means conspiracy as to causing loss by unlawful means. 221 On the other hand, it appears that the law of tort takes a particularly censorious view where conspiracy is involved. Thus, a claim based on conspiracy to injure can be established even where no unlawful means, let alone any other actionable tort, is involved. That tort is therefore frequently described as anomalous; yet its existence is very well established. Its centrally important feature is that the conspiracy must have as its primary purpose injury to the claimant. [In] my judgment, given the existence of that tort, it would be anomalous if an unlawful means conspiracy could not found a cause of action where, as here, the means “merely” involved a crime, where the loss to the claimant was the obvious and inevitable, indeed in many ways the intended, result of the sole purpose of the conspiracy, and where the crime involved, cheating the revenue, has as its purpose the protection of the victim of the conspiracy. The difference between intending to make a profit at the claimant's expense and intending to cause injury to the claimant is pretty fine and, in economic terms, artificial: that point emerges most clearly from the discussion in Lord Hoffmann's opinion in OBG, at paras 130– 134. 222 I do not think that the conclusion, at least on the facts of in this case, that the “mere” crime of cheating the revenue can constitute unlawfulness for unlawful means conspiracy can be said to involve illegitimately creating a tort out of a crime, as mentioned in OBG , para 57. First, there is the narrow point that the crime (or at least the crime primarily relied on in the commissioners' argument) in the present case is a common law one, and therefore there is no question of disregarding the legislature's intention, which only arises where the [crime] is statutory. Secondly, there is the more general and telling point that the tort in this case involves the element of conspiracy, which is, of course, lacking in the tort considered in OBG. The importance of the ingredient of conspiracy has been examined and explained by Lord Walker and Lord Mance in their speeches, and is, as already mentioned, underlined in the field of economic torts by the anomalous tort of conspiracy to injure (or lawful means conspiracy). Thirdly, as already mentioned, the crime in the present case exists for the protection of the victim. [Note: I have changed the word “tort” to “crime” in the square brackets in this paragraph to correct what seems to be a slip.] 223 Further, in para 61 of his speech in OBG, Lord Hoffmann made it clear that his “ discussion of unlawful means” was limited to cases involving “ interference with the actions of a third party in relation to the plaintiff” , and did not necessarily apply to “a case of ‘two party intimidation’”, which, he said, “raises altogether different issues”
“111. A further feature of the tort of conspiracy, which is also found in criminal conspiracies, is that, as the judge pointed out (at p 124), it is not necessary to show that there is anything in the nature of an express agreement, whether formal or informal. It is sufficient if two or more persons combine with a common intention, or, in other words, that they deliberately combine, albeit tacitly, to achieve a common end. Although civil and criminal conspiracies have important differences, we agree with the judge that the following passage from the judgment of the Court of Appeal Criminal Division delivered by O'Connor LJ in R v Siracusa(1990) 90 Cr App R 340 at 349 is of assistance in this context: 'Secondly, the origins of all conspiracies are concealed and it is usually quite impossible to establish when or where the initial agreement was made, or when or where other conspirators were recruited. The very existence of the agreement can only be inferred from overt acts. Participation in a conspiracy is infinitely variable: it can be active or passive. If the majority shareholder and director of a company consents to the company being used for drug smuggling carried out in the company's name by a fellow director and minority shareholder, he is guilty of conspiracy. Consent, that is agreement or adherence to the agreement, can be inferred if it is proved that he knew what was going on and the intention to participate in the furtherance of the criminal purpose is also established by his failure to stop the unlawful activity.' Thus it is not necessary for the conspirators all to join the conspiracy at the same time, but we agree with the judge that the parties to it must be sufficiently aware of the surrounding circumstances and share the same object for it properly to be said that they were acting in concert at the time of the acts complained of. In a criminal case juries are often asked to decide whether the alleged conspirators were 'in it together'. That may be a helpful question to ask, but we agree with Mr Brodie that it should not be used as a method of avoiding detailed consideration of the acts which are said to have been done in pursuance of the conspiracy. 112. In most cases it will be necessary to scrutinise the acts relied upon in order to see what inferences can be drawn as to the existence or otherwise of the alleged conspiracy or combination. It will be the rare case in which there will be evidence of the agreement itself. Curiously this is such a case, although it appears to us that in crucial respects it is also necessary to draw inferences as to the extent of the agreement from what happened after it. Thus the essential nature of the agreement can be seen in part from the evidence of Mr Al Bader and Captain Stafford, although, especially in the case of Captain Stafford, the extent of the agreement will depend upon inferences to be drawn both from the surrounding circumstances and subsequent events.”
“[49] First, a director will not be treated as liable with the company as a joint tortfeasor if he does no more than carry out his constitutional role in the governance of the company - that is to say, by voting at board meetings. That, I think, is what policy requires if a proper recognition is to be given to the identity of the company as a separate legal person. Nor, as it seems to me, will it be right to hold a controlling shareholder liable as a joint tortfeasor if he does no more than exercise his power of control through the constitutional organs of the company - for example by voting at general meetings and by exercising the powers to appoint directors. Aldous LJ suggested in Standard Chartered Bank v Pakistan National Shipping Corp (No 2)[2000] 1 Lloyd's Rep 218 at 235 - in a passage to which I have referred - that there are good reasons to conclude that the carrying out of the duties of a director would never be sufficient to make a director liable. For my part, I would hesitate to use the word 'never' in this field; but I would accept that, if all that a director is doing is carrying out the duties entrusted to him as such by the company under its constitution, the circumstances in which it would be right to hold him liable as a joint tortfeasor with the company would be rare indeed. That is not to say, of course, that he might not be liable for his own separate tort, as Aldous LJ recognised at paras [16] and [17] of his judgment in the Pakistan National Shipping case. [50] Second, there is no reason why a person who happens to be a director or controlling shareholder of a company should not be liable with the company as a joint tortfeasor if he is not exercising control through the constitutional organs of the company and the circumstances are such that he would be so liable if he were not a director or controlling shareholder. In other words, if, in relation to the wrongful acts which are the subject of complaint, the liability of the individual as a joint tortfeasor with the company arises from his participation or involvement in ways which go beyond the exercise of constitutional control, then there is no reason why the individual should escape liability because he could have procured those same acts through the exercise of constitutional control. As I have said, it seems to me that this is the point made by Aldous J (as he then was) in PLG Research Ltd v Ardon International Ltd[1993] FSR 197 . [51] Third, the question whether the individual is liable with the company as a joint tortfeasor - at least in the field of intellectual property - is to be determined under principles identified in CBS Songs Ltd v Amstrad Consumer Electronics plc[1988] 2 All ER 484 ,[1988] AC 1013 and Unilever plc v Gillette (UK) Ltd[1989] RPC 583 . In particular, liability as a joint tortfeasor may arise where, in the words of Lord Templeman in CBS Songs v Amstrad[1988] 2 All ER 484 at 496,[1988] AC 1013 at 1058 to which I have already referred, the individual 'intends and procures and shares a common design that the infringement takes place'. [52] Fourth, whether or not there is a separate tort of procuring an infringement of a statutory right, actionable at common law, an individual who does 'intend, procure and share a common design' that the infringement should take place may be liable as a joint tortfeasor. As Mustill LJ pointed out in Unilever v Gillette, procurement may lead to a common design and so give rise to liability under both heads.”
“Finally, there is the question of intention. In the Lumley v Gye tort, there must be an intention to procure a breach of contract. In the unlawful means tort, there must be an intention to cause loss. The ends which must have been intended are different. South Wales Miners' Federation v Glamorgan Coal Co Ltd[1905] AC 239 shows that one may intend to procure a breach of contract without intending to cause loss. Likewise, one may intend to cause loss without intending to procure a breach of contract. But the concept of intention is in both cases the same. In both cases it is necessary to distinguish between ends, means and consequences. One intends to cause loss even though it is the means by which one achieved the end of enriching oneself. On the other hand, one is not liable for loss which is neither a desired end nor a means of attaining it but merely a foreseeable consequence of one's actions.”
“The analysis of intention by the Court of Appeal in my opinion illustrates the danger of giving a wide meaning to the concept of unlawful means and then attempting to restrict the ambit of the tort by giving a narrow meaning to the concept of intention. The effect is to enable virtually anyone who really has used unlawful means against a third party in order to injure the plaintiff to say that he intended only to enrich himself, or protect himself from loss. The way to keep the tort within reasonable bounds is to restrict the concept of unlawful means to what was contemplated in Allen v Flood; not to give an artificially narrow meaning to the concept of intention.”
“In my judgment, the alleged conspiracy is established in respect of these three defendants, and they are not exempt from liability on account of counsel's opinion or because they may have believed in good faith that the transaction did not transgress s 54. If all the facts which make the transaction unlawful were known to the parties, as I think they were, ignorance of the law will not excuse them: see Churchill v Walton ([1967] 1 All ER 497 at 503,[1967] 2 AC 224 at 237). That case was one of criminal conspiracy, but it seems to me that precisely similar principles must apply to a conspiracy for which a civil remedy is sought. Nor, in my opinion, can the fact that their ignorance of, or failure to appreciate, the unlawful nature of the transaction was due to the unfortunate fact that they were, as I think, erroneously advised excuse them (Cooper v Simmons, and see Shaw v Director of Public Prosecutions,where the appellant had taken professional legal advice). If they had sincerely believed in a factual state of affairs which, if true, would have made their actions legal, this would have afforded a defence (Kamara v Director of Public Prosecutions ([1973] 2 All ER 1242 at 1252,[1974] AC 104 at 119)); but on my view of the effect of s 54 in the present case, even if£500,000 had been a fair price for the share capital of Maximum and all other benefits under the agreement, this would not have made the agreement legal. So a belief in the fairness of the price could not excuse them.”
“The next question is whether or not the defendants were guilty of conspiracy. A conspiracy is an agreement between two or more persons to effect an unlawful purpose which results in damage to somebody (see Crofter Hand Woven Harris Tweed Co Ltd v Veitch ([1942] 1 All ER 142 at 147,[1942] AC 435 at 440) per Viscount Simon LC). A person is a party to a conspiracy if he knows the essential facts to constitute that conspiracy even though he does not know that they constitute an offence (see Churchill v Walton). Since there was a breach of s 54 and the defendants through their directors made all the arrangements and knew all the facts constituting the breach, it would follow that they conspired together to contravene s 54, the object of their conspiracy being Belmont, and if Belmont suffered damage they are liable.”
“[a] high degree of blameworthiness is called for, because intention serves as the factor which justifies imposing liability on the defendant for loss caused by a wrong otherwise not actionable by the claimant against the defendant.”
“Although my conclusion on the issue of unlawful means makes it unnecessary to decide the point, I would support Arden LJ's view, at para 127, that it is a defence to an action for conspiracy to injure by unlawful means if the defendant not only acted to protect his own interests but did so in the belief that he had a lawful right to act as he did. Just as the tort of conspiracy to induce breach of contract is not committed if the defendant believes that the outcome sought by him will not involve a breach of contract (the Mainstream case[2005] IRLR 964 ), so a defendant should not be liable for conspiracy to injure by unlawful means if he believes that he has a lawful right to do what he is doing. This is consistent with Lord Hoffmann's comment in the OBG case[2008] 1 AC 1 , para 56, when considering the tort of causing injury by unlawful means, that the common law in this area is designed only to enforce basic standards of civilised behaviour. Moreover, Lord Nicholls was not addressing such a situation in the passage set out at para 125 above. (I would note two supplementary points. First, for avoidance of doubt, I do not consider that this conclusion is inconsistent with the decision of the House of Lords in R v Churchill (No 2)[1967] 2 AC 224 , which concerned a very different issue, namely, the mens rea element of the crime of conspiracy in the context of an agreement which led to the commission of a strict liability offence. Secondly, we are not in this case concerned with the alternative form of conspiracy to injure, where the intent to injure is the defendant's dominant intention and questions of the lawfulness of the means do not arise.) I would also concur with Arden LJ's conclusions about intent on the evidence before the judge.”