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Gareth Bell

Privy Council

On 29th October, Advocate Gareth Bell appeared in the Privy Council (Guernsey's highest court of appeal) in the case of Emerald Bay Worldwide Limited v Barclays Wealth.  This was the first Guernsey case to reach the Privy Council since the case of Spread Trustee Company Ltd v Hutcheson in 2011 – it doesn't happen very often!

However, just as the hearing began, the parties settled their differences after over 5 years of hard fought litigation and, rather to their bemusement, their Lordships weren’t called upon to decide the interesting point that the case turned on: whether a BVI company can indemnify its own directors in respect of claims brought against them by the company itself or its liquidators (something which has been illegal in England since 1929 and in Guernsey since 2008).  Given that hundreds of thousands of BVI companies are used throughout the World, this is a very significant issue for the offshore trust and corporate administration industries, and the answer is still not completely clear.

"the first Guernsey case to reach the Privy Council since the case of Spread Trustee Company Ltd v Hutcheson in 2011"

Emerald Bay had sued its former directors, Barclay's entities, in respect of breaches of their duties of care on the purchase of a jet aircraft in 2008. There was a two week trial before the Deputy Bailiff in November 2012 when he found that the Barclays directors had been negligent and that their negligence had caused Emerald Bay's loss. However, he also found that an indemnity in the company's articles of association was valid and afforded the directors a complete defence.

Emerald Bay appealed the Deputy Bailiff's finding on the indemnity point and the defendants cross-appealed against his findings on causation - they did not appeal against his findings that they had been negligent.  The appeal was heard by the Court of Appeal in December 2013, who upheld the Deputy Bailiff's decision on the indemnity point and allowed the cross-appeal in relation to causation.  Emerald Bay sought permission to appeal to the Privy Council and, on 16 July 2014, Her Majesty (acting on advice from the Privy Council) granted permission.

So the wait for an answer to the question of whether BVI law affords directors far greater protection than most of the common law world, and for a Guernsey case to be heard by the Privy Council, goes on…


Thomas Cutts-Watson

Taxidermy: Would Uber be stuffed in Guernsey?

Uber, the app-based company which allows users to order car rides on their smartphones, was celebrating recently.

On 16th October 2015 the High Court ruled that Uber's operations were legal in London and that the way that its drivers calculate fares – via GPS on external servers– was not treading on the toes of licensed black cabs, which use meters (and jump through some pesky regulatory hoops for the privilege).

Uber, for those unfamiliar with it, gives users the opportunity to hail a driver to their exact location using their smartphone. The destination is also added, at which point the app calculates the approximate cost of the ride and sends the job to Uber drivers in the area. Once a job is accepted by a driver, the user is able to see the driver's location on their phone in real time, and once picked up the app shows the fastest route and ETA. All payments are carried out electronically using a pre-prepared payment method (such as credit card) through the app. Crucially, Uber drivers are generally not required to be licensed taxi drivers, meaning almost anyone can apply to become a driver and earn money working flexible hours, for example on evenings or at weekends.

The recent court decision was been met with predictable responses: jubilation from Uber bosses and consternation from the 25,000 London cabbies currently working in the capital.

Uber is probably right to feel upbeat at present. Despite a number of mishaps (from legal setbacks and PR disasters to safety worries and pricing concerns) in Australia, India, France, Spain and the USA, Uber's expansion and worldwide momentum has been impressive.

It's even become a verb. People are now Ubering around a host of jurisdictions, especially cities.

So, could Guernsey be next?

Whether Uber would consider Guernsey to be a commercially viable jurisdiction in which to operate is debatable. Those on delayed evening flights into the Island might have spotted a gap in the market.

But, if Uber or a similar company was to train its sights on the Channel Islands and on Guernsey in particular, what could local taxi drivers point to in order to stop it?

Well, the law, potentially.

Guernsey, like most jurisdictions, has a set of rules, regulations and laws governing methods of public transport, including taxis.

The snappily named Public Transport Ordinance, 1986 and the Road Traffic (Permits to Drive Public Service Vehicles) Ordinance, 1986, together with a number of other associated rules, provide that for someone to drive a taxi in Guernsey they must be in possession of a proper permit and licence.

Drivers are issued with permits only after testing of their driving ability, knowledge of the Island's roads (a Guernsey version of 'the knowledge'), medical fitness and suitability for the role. The cars drivers use also need to be approved and licensed and are subject to annual inspections by the Police mechanics.

It's an onerous and expensive process, and one that an incoming company would obviously look to avoid if possible – Uber's business model, for example, is built upon easy access, quick arrangements and a lack of red tape.

Regardless of how the service was delivered in Guernsey, owing to the 'hire / reward' element involved it would almost certainly fall under the purview of the Environment Department and drivers would be required to obtain a permit and a road service licence to operate the cars.

So what are the chances of Uber, or another similar company, starting operations in Guernsey, from a legal perspective?

Probably slim. The viability of Uber in Guernsey, legally, would depend largely on the States of Guernsey's view as to whether it was offering taxi services or not. If so, they would be subject to the same stringent conditions (and quotas) as the other cabs on the Island.

Guernsey isn't alone in its current approach to taxi licensing, with Spain and Thailand already banning Uber from their cities because its drivers didn't meet local licensing rules.

Ultimately, given the legal position, were Uber to operate in Guernsey there would either need to be a strong indication from the Environment Department that it would class Uber's operations as those of a private-hire business or a fundamental shift in the regulation of taxis and public transport on the Island.

The market would need to be opened up, in other words. The consequences of that could be far-reaching on an industry that has grown familiar with the relatively heavy regulation it attracts in comparison to the UK.

Is there the requisite appetite for that change amongst local politicians and, indeed, drivers? We know that there is in Jersey but it remains to be seen whether that will be followed up with action, and whether Guernsey would follow suit.

Something to ponder when next waiting at the rank.