Almost five years on from the order of the UK Secretary of State for the Home Department (the “Home Secretary”) that Ian Norris, former CEO of UK-listed engineering company Morgan Crucible plc, should be extradited to the United States to face charges relating to alleged price-fixing, the US Department of Justice (“DoJ”) appears to have finally got their man.

The DoJ had been thwarted in pursuing extradition in connection with alleged antitrust violations. Nevertheless, the judgment of the UK Supreme Court (until October 2009 known as the House of Lords) on 24 February 2010[1], which rejected Mr. Norris’s appeal against extradition to face charges in the US relating to obstruction of justice, provides important lessons for businesses and their senior executives.

The US charges: price-fixing and obstruction of justice

In September 2004, the US authorities indicted Mr. Norris in connection with allegations that, along with co-conspirators, he had engaged in price-fixing conduct relating to certain carbon components used to power trains and sold in the United States and elsewhere. In addition, charges of obstruction of justice included allegations that Mr. Ian Norris and/or his co-conspirators:

• knowingly and willfully conspired and agreed with unnamed co-conspirators, both known and unknown to the Grand Jury, to knowingly and willfully commit offences against the United States to corruptly persuade and attempt to corruptly persuade other persons known to the Grand Jury with intent to influence their testimony in an official proceeding and to corruptly persuade and attempt to corruptly persuade other persons known to the Grand Jury with intent to cause or induce those other persons to alter, destroy, mutilate or conceal records and documents with the intent to impair their availability for use in an official proceeding; 
• interfered with and obstructed the investigation being conducted by the United States Department of Justice, Antitrust Division, through the Federal Grand Jury sitting in the Eastern District of Pennsylvania, in that the defendant and his co-conspirators provided false and fictitious relevant and material information in response to the Federal Grand Jury investigation into the carbon products industry;
• prepared a "script" containing false material information which was to be followed by anyone questioned by either the Antitrust Division or the Federal Grand Jury;
• contacted other persons who had information relevant to the investigation being conducted by the Antitrust Division and the Federal Grand Jury and distributed the "script" to them with instructions to follow the "script" when answering questions posed by either the Antitrust Division or the Federal Grand Jury;
• removed, concealed or destroyed from business files any documents which contained evidence of an anticompetitive agreement or reflected contacts between or among their competitors;
• persuaded, directed and instructed other persons to remove, conceal or destroy any documents which contained evidence of an anticompetitive agreement or reflected contacts between or among their competitors.[2]

The extradition proceedings

The US government sought to extradite Mr. Norris, a UK national, to the United States to face price-fixing charges. On 29 September 2005, the Home Secretary ordered that Mr. Norris should be extradited under the UK Extradition Act 2003.

However, in 2008 the House of Lords allowed an appeal in favour of Mr. Norris, ruling that the conduct alleged in relation to the price-fixing charges, although an offence under US law at the relevant time, was not capable of amounting to an “extradition offence” under the Extradition Act 2003.[3] Prior to the coming into force of the UK’s Enterprise Act 2002 in June 2003 the price-fixing conduct alleged had arguably not been a crime under English law.

Continuing its pursuit, in July 2008 the US government sought extradition of Mr. Norris to face the charges relating to obstruction of justice. A district judge agreed to the request, and in September 2008 the Home Secretary approved the order.

Mr. Norris appealed against the extradition to the High Court,[4] contending that given his physical and psychological health (Mr. Norris is in remission from prostate cancer) and that of his wife, the fact that the couple are in their late 60s, and the effect of possible separation, extradition would amount to a breach of his right to private and family life under article 8 of the European Convention on Human Rights (the “Convention”). The Extradition Act 2003 provides that a judge “must decide whether the person’s extradition would be compatible with the Convention rights within the meaning of the Human Rights Act 1998”.[5] If yes, an order for extradition must follow. If no, the person must be discharged. The High Court held that extradition in this case was not incompatible with Mr. Norris’ rights under the Convention.

While Mr. Norris accepted that it would only be in exceptional circumstances that extradition would be refused on the ground that it involves a disproportionate interference with article 8, he argued that the High Court had erred in requiring that he demonstrate such exceptional circumstances. On 24 February 2010, the Supreme Court, sitting with its full quota of nine judges, unanimously dismissed the appeal, finding that a test of exceptional circumstances had not been applied. In any event, in an extradition case “the consequences of any interference with article 8 rights would have to be exceptionally serious before this could outweigh the public importance of extradition”[6]. The Supreme Court held that this was not such a case, finding that “it is of critical importance in the prevention of disorder and crime that those reasonably suspected of crime are prosecuted and, if found guilty, duly sentenced. Extradition is part of the process for ensuring that this occurrs, on a basis of international reciprocity”.[7]

Further, the Supreme Court acknowledged that the High Court had "rightly observed" that “the offences of obstructing justice, taken at their face value, were very grave indeed”[8] and that "one has to consider the effect on the public interest in the prevention of crime if any defendant with family ties and dependencies such as those which bind Mr Norris and his wife was thereby rendered immune from being extradited to be tried for serious wrongdoing. The answer is that the public interest would be seriously damaged. It is for this reason that only the gravest effects of interference with family life will be capable of rendering extradition disproportionate to the public interest that it serves. This is not such a case".[9]

The UK press speculates that Mr. Norris will now take his case to the European Court of Human Rights in a final bid to avoid extradition.[10]

Comment

The Norris case is something of a transitional case in the antitrust context. The House of Lords in 2008 blocked the extradition of Mr. Norris to face price-fixing charges in the US on the basis that the US government failed to satisfy the “dual criminality” provisions of the Extradition Act 2003 (i.e. that at the relevant time the conduct in question was an offence both in the UK and the country seeking the extradition).

However, under the Enterprise Act 2002, price-fixing, market-sharing and bid-rigging activities conducted after 20 June 2003 constitute a criminal offence under the law in the UK. Consequently, it is unlikely that future “Norris-type” extradition cases will face the same stumbling blocks.

Nevertheless, the case provides important lessons in the antitrust context:

• Businesses and individuals must not destroy or damage documents or evidence or unnecessarily prevent the antitrust authorities from conducting an investigation. The conduct cited in the Norris case provides a very clear example. The repercussions of such conduct will be very serious.
• US companies engaging in the acquisition of European-based subsidiaries, and the hiring of senior executives, must conduct careful due diligence to guard against allegations relating to anti-competitive conduct and related tampering with evidence. Companies and their advisers should, where appropriate, consider reporting any issues to the relevant regulators under various leniency or amnesty programmes.
• Businesses must put in place internal procedures and training programmes to ensure a culture of compliance is effective across the organisation. Ensuring that staff are prepared for ‘dawn raids’ by antitrust regulators (particularly in relation to the treatment of evidence) is one vital aspect.
• The US and UK regulators, with the support of the courts in the respective jurisdictions, are now working closely to share information and to ensure that effective enforcement action is taken for breach of antitrust law.

This article was prepared by Rod Lambert (rlambert@fulbright.com or +44 0 20 7832 3606), in London and Layne Kruse (lkruse@fulbright.com or +1 713 651 5194) in Houston, together co-chairs of Fulbright & Jaworski’s global Antitrust and Competition Practice, and Ian Pegram (ipegram@fulbright.com or +44 207 832 3645), a professional support lawyer in the Global Disputes practice at Fulbright & Jaworski International LLP in London.