29 JULY 1989, Page 23


how US judges provoke British censorship

WHILE I was in Hong Kong last week, I read in the Asian Wall Street Journal that Sir James Goldsmith, the prime mover in the world's second largest (£13.2 billion) takeover bid, aimed at the vast British American Tobacco Industries plc, had been advised by his lawyers not to have any dealings with the American press while his bid was on offer. This included not grant- ing interviews to journalists from US news- papers and magazines and even excluding them from his press conferences. Jimmy Goldsmith is about the last man on earth to duck encounters with the press, or Con- gressional inquisitors for that matter — he has scored overwhelming victories over both — and the fact that he is apparently following the advice given to him points to a significant development in international relations: the growth of American judicial imperialism.

American judges are far more politically minded than ours. Many of course have to go through the process of getting them- selves elected at some stage in their careers. Those appointed to the US Sup- reme Court are chosen partly for political reasons and are often blocked by the Congressional majority entirely for politic- al reasons, as witness the recent disgraceful treatment of Judge Bork. In the last half-century the Supreme Court has been Pushing forward the frontiers of its consti- tutional powers to the point where it sometimes, in practice, wields more leg- islative power than Congress: thus it has dominated the field of abortion, which is Perhaps the most explosive popular issue in America today, first by liberalising the law In the 1970s, now by restricting it. The American electorate has never been given the chance to vote either way on the question, which has been settled by a handful of unelected old legal folk.

In this imperialist, power-grabbing pro- cess, lesser courts have taken their cue from the Supreme Court. There is nothing exactly new in this of course: US folklore is full of cases of frontier judges making as Well as administering the law. Hitherto, however, American judicial greed has merely affected Americans. Now, with the internationalisation of financial dealings, shareholders big and small all over the world are liable to fall under the shadow of the US judiciary. For American securities laws are very fierce in many ways and seem to be subject to the broadest possible interpretation. It looks, for instance, as though the biggest takeover battle in the history of the American media and enter- tainment business, which will decide whether Time Inc. merges with Warner Brothers or whether Time Inc. itself is swallowed by Paramount, will be settled not, as it should be, by the millions of shareholders involved but by a few dusty judges in the state of Delaware's courts. Yes; but at least Time Inc., Warner Bros and Paramount are as American as blueberry pie. Ilow come Sir James's London bid for an essentially British com- pany is in peril of US law? The answer is that there are a number of alarming precedents. Only this year, Minorco's bid for Consolidated Goldfields, another Brit- ish firm, was halted not by a decision of the shareholders — most of them were in favour of it — but by a verdict handed down by judge in a New York court. Goldfields is now in process of being taken over by Lord Hanson and it remains to be seen whether shareholders will get a- better deal. But it is entirely possible for a US judge sitting thousands of miles away to prevent British shareholders selling a Brit- ish company and thereby to deprive them of millions. British and US laws on the subject are out of sync, and this can be fatal if there is an element of American involvement. In English law, a takeover bidder must complete an exchange offer within 60 days. But if securities involved in the offer are sold in the United States, it may take more than this period for the US Securities and Exchange Commission simply to complete the paperwork. All kinds of judges can throw a legal spanner in the works.

The element of press censorship comes in because in 1986 a district court in Delaware ruled that a British firm, GEC, bidding for another British firm, Plessey, did not have to comply with certain aspects of US securities law, especially its obnox- ious paperwork, precisely because canny Arnold Weinstock of GEC had banned the US media from his news conferences. Now such bans really make little sense in prac- tice. The Economist, for instance, though a British publication and therefore subject to no ban, has a huge American sale and perhaps has as much influence on Amer- ican financial opinion as top US publica- tions like Business Week, Forbes or the Wall Street Journal itself. Again, what precisely is a British paper? The Times and the Sunday Times, both very influential in the financial field, are both owned by Rupert Murdoch, who is now an American citizen. Does that make them American? I can hear a gritty-voiced US district judge banging his gavel, just like in the movies, and ruling either way.

Some people here fear, and with good reason, the imminent spectre of European courts overruling our native justice on issues which are dear to our liberties. But the threat of US judicial interference on issues dear to our wallets is just as real. Oddly enough, it has all happened before. With the growth of the international sys- tem of papal justice in the later Middle Ages, there was a similar tendency for cunning English litigants to sneak off to Rome or Avignon and for imperialistic canon lawyers there to give them satisfac- tion at the expense of English judicial procedures. The Crown eventually re- sponded with the great statute of Praemu- nire (1353), one of the most drastic laws ever to pass through Parliament. Two centuries later, Thomas Cromwell made it the prime engine of the Reformation and crushed papal justice in England for good. When US judicial interference in English affairs reaches the point where British subjects, going about their lawful business, are forced to resort to blacklisting part of the media, perhaps the time has come to exude a whiff of Praemunire again.