“A debtor-creditor-supplier agreement is a regulated consumer credit agreement being: ... (b) a restricted-use credit agreement which falls within section 11(1)(b) and is made by the creditor under pre-existing arrangements, or in contemplation of future arrangements, between himself and the supplier …” (The OFT does not pursue any argument based on the contention that the card arrangements give rise to an unrestricted use credit agreement under section 12(c).) Section 11(1)(b) defines a restricted use credit agreement as a regulated consumer credit agreement to “finance a transaction between the debtor and a person (the “supplier”) other than the creditor”
“A declaration that section 75 (1) of the Act does not apply where the contract between the debtor and the supplier of goods or services has the following characteristics: (1) the contract was made wholly outside the United Kingdom; and (2) the contract was governed by a foreign law; and (3) the goods were delivered, or the services were supplied, outside the United Kingdom. Further, the defendants invite the court to rule that it makes no difference to the non-application of section 75 (1) that: characteristic (1) above differs in that the acts of offer and acceptance were done partly within the United Kingdom and partly outside the United Kingdom (“characteristic (1A)”) and/or characteristic (3) above differs in that the goods were despatched outside the United Kingdom for delivery within the United Kingdom (“characteristic (3A)”). Further, the defendants invite the court to rule that section 75(1) does not apply where: characteristics (2), and (3) or (3)(A), are present, but not characteristics (1) or (1A); or any one of the characteristics (1), (1A), (2), (3) or (3A) are present.”
“A consumer credit agreement shall be treated as entered into under pre-existing arrangements between a creditor and a supplier if it is entered into in accordance with, or in furtherance of, arrangements previously made between persons mentioned in sub-section (4)(a), (b) or (c).”
“An associate includes …”
“It is sufficient to constitute an arrangement between A and B, if (1) A makes a representation as to his future conduct with the expectation and intention that such conduct on his part will operate as an inducement to B to act in a particular way, (2) such representation is communicated to B, who has knowledge that A so expected and intended, and (3) such representation or A’s conduct in fulfilment of it operates as an inducement, whether among other inducements or not, to B to act in that particular way.”
“and since it must be an arrangement “under which restrictions are accepted by two or more parties2, it involves mutuality in that each party, assuming he is a reasonable and conscientious man, would regard himself as being in some degree under a duty, whether moral or legal, to conduct himself in a particular way or not to conduct himself in a particular way ...”
“Arrangements shall be disregarded for the purposes of subsection (1) or (2) if (a) they are arrangements for the making, in specified circumstances, of payments to the supplier by the creditor, and (b) the creditor holds himself out as willing to make, in such circumstances, payments of the kind to suppliers in general.” (a) they are arrangements for the making, in specified circumstances, of payments to the supplier by the creditor, and (b) the creditor holds himself out as willing to make, in such circumstances, payments of the kind to suppliers in general.”
“It is of course implicit in our recommendations that a lender who incurs a liability to the borrower in the circumstances we have described should have a right of indemnity from the dealer or supplier who caused the trouble. To avoid any doubt, this right of indemnity should be expressly stated in the enactment.”
“It is well-settled law that English legislation is primarily territorial: Ex parteBlain(1879) 12 Ch D 522 , 528 per Brett J ... Put into the language of today, the general principle being there stated [in Blain] is simply that, unless the contrary is expressly enacted or so plainly implied that the courts must give effect to it, United Kingdom legislation is applicable only to British subjects or to foreigners, who by coming to the United Kingdom, whether for a short or a long time have made themselves subject to British jurisdiction.”
“(1) Although an enactment may be expressed in general terms, the area over which it is law excludes territories where Parliament lacks jurisdiction, It also excludes territories for which the legislator did not intend to legislate. (2) Parliament has ordinary jurisdiction to legislate for any of Her Majesty’s dominions, except Her Majesty’s independent dominions. In addition, Parliament has extraordinary jurisdiction to legislate for New Zealand. Parliament has no jurisdiction to legislate for any other country.”
“Unless the contrary intention appears, and subject to any relevant rules of private international law, an enactment is taken not to apply to foreigners and foreign matters outside the territory to which it extends …”
“What authority or right has the court to alter in this way the status of foreigners who are not subject to our jurisdiction? If Parliament had conferred this power in express words then, of course, the court would be bound to exercise it. But the decisions go to this extent, and rightly, I think, in principle, that unless Parliament has conferred upon the court that power in language which is unmistakable, the court should not assume that Parliament intended to do that which might so seriously affect foreigners who are not residents here and might give offence to foreign governments. Unless Parliament has used such plain terms as show that they really intended us to do that, we ought not to do it.”
“What is the widow’s claim here? She is claiming, not as a party to the contract, not as claiming any rights under a contract made by her or by any person through whom she claims, but she is simply claiming the performance by the defendants of a statutory duty, which statutory duty is said to be found in the Workmen’s Compensation Act. Now that brings us face to face with this proposition. What is the ambit of the statute and what is the scope of its operation? It seems to me reasonably plain that this is a case to which the presumption which is referred to in Maxwell on the Interpretation of Statutes in the passage at p 213 … must apply: ‘In the absence of an intention clearly expressed or to be inferred from its language, or from the object or subject-matter or history of the enactment, the presumption is that Parliament does not design its statutes to operate beyond the territorial limits of the United Kingdom.’”
“The question is one purely of the construction of the statute. The words of s 1, sub-s 1, are so wide that some limitation must necessarily be affixed to them. The words are, ‘If in any employment personal injury by accident arising out of and in the course of the employment is caused to any workman’, and so on. To my mind the words ‘any employment’ there must be restricted to employment within the ambit of the United Kingdom or on the high seas as provided by s 7.”
“Although an Act may contain no express provisions rendering it operative in relation to foreigners outside the Act’s territory, such operation may be implied. The implication must be strong enough to overcome the reverse implication that an Act is intended to apply only to persons and acts within its territory.”
“This important provision, going well beyond anything contained in the 1935 Act, is well worthy of the careful exposition it receives in the sub-section”
“The fact that the supply contract is governed by foreign law would not appear to affect the creditor’s liability under s 75 of the Act, assuming that the credit agreement is itself within the Act and is not exempt … Thus, a bank issuing a credit card under a regulated consumer credit agreement will be liable under s 75 if the cardholder uses the card abroad to purchase goods or obtain services and the supplier commits a misrepresentation or breach of contract. This may seem hard; but it has to be remembered that liability is imposed on the creditor only as the result of the credit being extended pursuant to or in contemplation of arrangements between him and the supplier, and it is therefore for the creditor to exercise care in selecting overseas suppliers with whom to conclude arrangements. Indeed, it can be argued that the consumer needs even greater protection in dealings with a foreign supplier than with a trader in his own country, for the problems of litigating abroad are formidable”. (emphasis added) The italicised words arguably support the defendants because what the OFT is seeking to achieve is to impose section 75 liability in relation to suppliers whom the bank most certainly has not selected. Professor Goode also recognises that the extension of section 75 to overseas transaction would be “hard” (on creditors). I also accept Mr Hapgood’s submission that Professor Goode’s concluding point is misplaced. If the problems of litigating abroad are formidable, why should the problem be borne by the bank rather than the debtor who voluntarily went abroad to a country of his choice and purchased goods or services from a local supplier there? (ii). Professor Guest In the Encyclopaedia of Consumer Credit Law by Guest and Lloyd, the editors do not express a concluded view at 2074-2075, but rather canvas the following competing arguments: “There is no specific provision, as is found in s. 9(2), whereby for the purposes of s 75(3)(b) a cash price in a foreign currency is to be treated as a cash price in sterling of an equivalent amount; and the reference to a claim against the supplier in respect of ‘a misrepresentation or breach of contract’ suggests a claim in English or Scots law, and not a claim under some comparable or similarly characterised principle in a foreign law. Further, there is the ‘extraterritorial’ principle of statutory interpretation whereby the courts are reluctant (where the statute does not so provide expressly) to give statutes extraterritorial effect. On the other hand, there is no good policy reason why a s 75 claim should be confined to cases where the supply contract has no foreign connection, On the contrary, it is in just such cases where the consumer is most at risk and ill-equipped to bring a direct claim against the supplier. Moreover, so interpreting s. 75 only gives the section ‘extraterritorial’ effect in the indirect sense that the creditor’s liability is determined by foreign law. Finally, s 16(5)(c) contemplates that the Act may apply to cases with an overseas connection and provides a mechanism for exempting credit agreements with such a connection.” (iii). Paget’s Law of Banking The contributor to the consumer credit chapter in Paget’s Law of Banking (Neil Levy of Counsel) considers that section 75 does not extend to overseas transactions: “A question also arises whether connected lender liability would extend to a claim by the debtor in respect of a transaction made abroad with a foreign supplier and which may be subject to foreign law. Although the statutory wording seems wide enough to cover such a case, this would be tantamount to according the Act extraterritorial character. It is suggested that the application of s 75 ought not to be given that effect in the absence of words making it clear that this was Parliament’s intention, and because it imposes an artificial liability upon the creditor which would not otherwise arise. This adverse effect is mitigated by the creditor’s right to join the supplier to the proceedings to recover from him by virtue of the statutory indemnity, but these rights may not be capable of effective enforcement against a foreign supplier. In addition, the use of the terms ‘misrepresentation’ and ‘breach of contract’ may also be read as supporting the view that the only claims which Parliament had in contemplation as giving rise to connected lending liability were those of England and Wales or under Scottish law.”