Dr Gilbert N M O Morris of The Landfall Centre for Finance Trade and International Affairs in the Bahamas reports that the jurisdiction’s Court of Appeal yesterday set aside a judgement of the Supreme Court under which new financial services legislation was protected from constitutional review.
The judgement of Mr. Justice Sir Burton Hall, Chief Justice of the Bahamas Supreme Court. had been handed down on the 30th of July 2002, and had refused an application made for interim relief from eleven pieces of financial services legislation which the Government had rushed into place in 2000 in response to the country’s ‘blacklisting’ by the FATF.
The application had been made by local lawyers protesting against the damage done by the new legislation to established principles of privacy and professional privilege. In effect the litigants complained that the new laws inappropriately designated law firms as financial services institutions, for the purposes of regulation by the Financial Intelligence Unit (FIU). Maurice O. Glinton and Leandra Esfakis, joined by the Bahamas Bar Association, had claimed that to the extent that the legislation subjected “financial services providers” (including lawyers) to routine inspection of their offices and client lists, this placed the lawyer in direct conflict with his or her sworn duty to protect the clientﾴs confidentiality.
In the Learned Chief Justiceﾴs judgement he submitted that he would have given Glinton-Esfakis relief from the legislation but that he was bound by a ruling of the Court of Appeal in another case – Ingraham, et al. V. McEwan: Civil Appeal No. 24 of 2002 ﾖ which he determined limited his jurisdiction to grant interim relief in a matter of constitutional law.
Glinton-Esfakis-Maynard argued that the learned Chief Justice erred in his reliance on McEwan, since the Supreme Court had original jurisdiction under Article 28 (1) of the Bahamas Constitution to grant interim relied on an interlocutory application in constitutional matters. They argued further that even if the learned Justiceﾴs reliance upon McEwan was right, he could not do so without hearing the parties objections on the grounds of natural justice. The Appeals Court ruled that Mr. Justice Sir Burton Hall must grant the order of interim relief and hear the substantive matter in the Glinton-Esfakis Statement of Claim. This means that the constitutionality of the 11 pieces of Financial Services legislation, the Qualified Intermediary Rules, the powers of the FIU and the validity of the TIEA and the OAS Agreement on Terrorism will all come under review for their constitutionality under the Constitution of the Bahamas.
“The Justices of Appeal were in excellent form” says Dr. Morris. “In a real sense, Glinton-Esfakis have already won their argument in other jurisdictions insofar as the application of the financial services laws to lawyers is concerned. For two years we have been saying these laws will not stand up to legal challengeﾅand they have not”. Dr. Morris said the “deluge of legal precedent against large sections of these laws began in Canada ﾖ which is showing itself as a fine legal jurisdiction making great advances in law with each ruling”. Dr. Morris says that there are no fewer than 23 separate cases in which the lawyers of Canada have been exempted from the effects of these laws.
Dr. Morris says that the Bermuda Supreme Court has also made rulings supportive of the Canadian position, with ultimate support coming from the House of Lords in Regina v Special Commissioner and Another, Ex P Morgan Grenfell & Co Ltd.
Dr. Morris adds: “It does not mean that there will be no money-laundering laws in these jurisdictions. What it does mean is that we shall have more intelligent laws, more amenable to our constitutions. It will also mean that our BAR Associations, Accounting Institutes, our Insurance Agencies and professional bodies will have to get into the game; putting resources into getting good research and remaining well-informed and educated on the cutting edge of these issues. I do not think clients of our various jurisdictions will stand another shock to the system as result of our flinging ourselves thoughtlessly at the feet of some arbitrary new initiative.”
