Takeover Directive (Hansard, 13 April 2000)

§ Lord Sainsbury of Turville

As set out in my previous answer on 13 January(WA 132–33), in principle it is already possible for decisions of the Takeover Panel to be referred to the UK courts in an application for judicial review and for other matters connected with a bid to come before the UK courts in the usual way. However, at present the scope for judicial review of the panel's decisions is extremely limited, and the Court of Appeal has indicated in particular that it is only in exceptional circumstances that it would intervene so as to affect the outcome of a bid. Similarly, at present it is very unlikely (although not impossible) that any point of EC law could arise in connection with a panel decision which was the subject of UK court proceedings so as to make it necessary for the UK court to refer a question to the European Court of Justice. The concern has been raised that the adoption of the directive could make it more likely that points of both domestic and EC law would arise which required adjudication by the UK courts or by the European Court of Justice.

Her Majesty's Government have therefore negotiated the inclusion of a clause in the draft directive which is intended to allow the courts in the United Kingdom to continue their practice of not intervening in takeover bids and, by implication, of not referring questions to the European Court of Justice. This clause, Article 4.5, includes a provision stating that the directive does not affect the power which courts may have in a member state to decline to hear legal proceedings and to decide whether or not such proceedings affect the outcome of the bid. The Government have said that they would intend to make maximum use of the flexibility provided by Article 4.5 in order to maintain so far as possible the present legal position established by the courts with respect to takeover bids, and that they will consult widely on draft implementing legislation to ensure that they achieve this result in practice.