Lisa Nandy: don’t rush ambulance chasing curbs

We can all applaud Jack Straw’s victory over ambulance-chasing lawyers and their conspirators in the car insurance industry. It’s a great demonstration of how someone at the top of politics for so long can dedicate themselves to the ordinary concerns of their constituents when they return to the backbenches.

But, as a former Foreign Secretary and Justice Secretary, Jack Straw above all people should pause to consider the dangers of legislating too quickly to deal with one problem, and in the process exacerbating another, incredibly serious one, concerning matters – quite literally – of life and death.

With the soaring value of precious metals, timber and other commodities, and cut-throat competition across the world, more and more stories of human rights abuses are emerging from developing countries related to the presence of British-owned multinationals. It is not unusual to hear about the local police or army colluding with private company security forces when trying to deal with local opposition to mining.

The Catholic aid agency CAFOD specialises in providing support for rural people affected by these abuses. Often, they cannot find justice in their own countries and their only option is to pursue redress in the UK courts for misdeeds committed against them by British multinationals.

The Government’s new Legal Aid Bill seeks to prevent law firms using ‘no win-no fee’ arrangements to claim large success fees from defendants. It also caps the legal costs at a level below the compensation awarded, to deter law firms from running up huge legal bills in pursuit of relatively small claims. The ban on ‘referral fees’ obtained by Jack Straw will add another layer to these curbs.

However, the very same provisions will also pull the rug from under specialist law firms pursuing cases of human rights abuse committed by UK multinationals. Because of the cost and complexity of gathering evidence in these cases and the fact that the courts can only award compensation to foreign victims based on what they could reasonably expect to win in their own country, the legal costs will usually exceed the likely level of compensation. Abolishing the success fee that firms can claim will further reduce the economic viability of pursuing these cases.

In the case of foreign nationals bringing human rights cases, no legal aid is paid, so these provisions will do nothing to help the taxpayer.

This is no abstract problem. In 2005, dozens of poor Peruvian farmers protesting against the construction of the Rio Blanco mine by UK-owned Monterrico Metals said that they found themselves variously beaten, threatened, hooded, held captive, shot, sexually assaulted and threatened with rape by Peruvian police.

After the farmers failed to find justice in Peru, UK law firm Leigh Day took up their case, and the allegations of torture were due to be heard in the High Court next month. While not admitting liability, Monterrico agreed to an out-of-court settlement. Without the prospect of a success fee, and legal costs fixed below the level of compensation, the case could never have been pursued by Leigh Day, and the farmers would never have received compensation.

If the bill is adopted in its current form, it will become simply too expensive for UK lawyers to defend poor people against human rights abuses committed by British multinationals abroad. And unfortunately, if an unscrupulous company knows that the prospect of court action is limited, the deterrents that often curb their behaviour overseas will disappear.

CAFOD is calling for two vital amendments. First, human rights cases should be exempt from the abolition of the success fee. If found guilty of human rights abuses, a company should have to pay both the claimants’ lawyers’ normal fees and success fees. That recognises the enormous financial risk human rights’ legal teams take on in these kinds of cases. Second, if found guilty of human rights abuses, a company should pay all costs deemed necessary by the human rights’ legal team to prepare a credible base of evidence for the court case. Those costs should not be capped below the level of the compensation payments, and none of the costs should come out of the compensation paid to victims.

There are hundreds of poor people who cannot get justice in their own countries and look to the UK courts as their last resort. We cannot turn our back on them, and in doing so, turn a blind eye to the abuses committed by British multinationals. I hope that Jack Straw and other backbench MPs on all sides will persuade the Government to think again.

Lisa Nandy

Lisa Nandy chairs the All Party Parliamentary Group on Corporate Responsibility. For more information click here.

If you would like more information on CAFOD’s work in Parliament or would like to submit a comment piece please contact Susie Grady at gradyse@parliament.uk