Company Chairman Case

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Company Chairman Case – EU free movement rights for company chairman

The company chairman was represented by Gherson and Co in a case where he successfully asserted his EU free movement rights as chair of a company registered in Austria wanting to come to the UK. He is the chair of the Austrian-registered company Nordex. He lives in Austria and has dual Russian and Israeli nationality. The challenge to the refusal to let him come to the UK was unique in British public law for its length and complexity. At all stages of the case, the law and proper procedures were clarified to the benefit of EU companies, their chairs and managers. The UK eventually agreed to let him come to the UK rather than try to defend the decision against him and made a substantial payment to him in compensation.

This was a case that required all the tenacity for which Gherson and Co is known. It took over 10 years of representations and legal challenges to establish the extent of the EU free movement rights of company chairs who are not nationals of the member State in which they live. On 1 July 2005 the UK High Court (Mr Justice Moses) ruled that EU law gave the non-national chairman of an EU registered company the right to travel within the EU to transact business on behalf of the company unless a fair hearing established that there were compelling policy grounds to exclude him.

The company chairman was excluded from the United Kingdom in December 1994 on the grounds of unspecified allegations against Nordex's business activities. He argued that his right to come to the UK was a matter of EU law, because Nordex was an EU company. The Home Office continued to refuse him. He challenged their decision in 1996 by an application for judicial review in the UK High Court. The Home Office agreed to pay his costs and review the decision, and that if they refused him again they would give him a right of appeal. Therefore the High Court challenge went no further and important rights of challenge had been established.

The Home Office took a long time to re-examine the case, and then decided that they would continue to refuse the company chairman. During this period, he successfully sued The Times newspaper in 2001 for libel. The Times relied on the Home Office exclusion as part of its defence. It took a judicial review application to the High Court to persuade the Home Office to allow him to visit the UK to give evidence against The Times in Court, an important protection for him.

The company chairman appealed the Home Office refusal. The case was heard before the Special Immigration Appeals Commission, (SIAC). Complex legal arguments were presented and SIAC ruled that the Home Office had failed to explain or to justify why they had excluded him. SIAC required the Home Office to produce more evidence. The rights to an explanation protected by this decision are of benefit to many EU nationals. The Home Office did not produce the evidence. Instead, in May 2004 just days before the deadline for producing the evidence, the Home Office chose to change their decision. They revoked the exclusion order made against him and he was finally able to make business visits to the UK.

The interference with the company chairman's rights had been substantial and Gherson and Co continued to represent him to seek financial compensation: both damages and also payment of his legal costs. These are not matters that can be dealt with before SIAC. The Home Office rejected the claim. It was necessary to apply for a judicial review in the High Court. The Home Office argued that he had no right to damages and costs, but the High Court ruled that he did have that right, again, a decision establishing rights of benefit to a wide group of people. The Home Office then agreed to deal with the question of compensation. This was negotiated and a substantial payment was made to him.

The company chairman has not only succeeded in reversing the order excluding him from part of the EU, but has also secured important rights of procedural protection for thousands of EU businesses, in particular those whose chairs and leading managers do not happen to have the nationality of the EU state in which they live.

The case is reported as R (on the application of Loutchansky & ors) v Secretary of State [2005] EWHC 1779 (Admin).