In the UK, litigants are encouraged strongly, by both courts and lawyers, to settle prior to any court hearing. It is standard practice, and very much recommended, for any number of reasons. The best legal outcome is when both sides reach an agreement over the matter in dispute without recourse to the formalities and uncertainties of a court hearing.
Such good advice stretches beyond the UK legal jurisdiction, and beyond the average family or civil matter.
In a German court recently, F1 supremo Bernie Ecclestone recently settled a multi-million pound dispute out of court. Mr Ecclestone, 83, was accused of bribery and corruption regarding a partial F1 sale in Germany several years ago. In April he was accused of paying Gerhard Gribkowsky, a banker at BayernLB, $44m in order that a company Mr Ecclestone favoured would be able to buy a stake in F1. As such, Mr Ecclestone would still be in total control of his F1 empire. Mr Ecclestone has denied the allegations, claiming that he made the payment to Mr Gribkowsky after he threatened to make false allegations regarding the F1 chief’s tax status.
After several months of hearings, the trial was ended in early August. The German civil code allows for trials to be ended upon a making a payment to the court authorities, if the court deems it appropriate given the case and other factors, and agrees to such a measure. This provision exists to ease the burden on the courts, and to deal with cases where a clear verdict might be difficult to arrive at.
Presiding over the Munich court, Judge Peter Noll agreed to end the trial for a payment of $100m; $99m would be given to the Bavarian state treasury, with $1m to children’s hospital. With Forbes placing his wealth recently at $4.2bn (the 12th richest UK billionaire), such a sum is easily affordable for Mr Ecclestone.
As a result, the trial was terminated under German law. Mr Ecclestone was found neither guilty nor innocent, and (crucially) can continue to run F1. Mr Gribkowsky, however, was sentenced to eight and half years in prison for his part in the bribery.
Although perfectly legal, the agreement has attracted some criticism. Writing on the Spiegelonline website, lawyer Franz Bielefeldwrote that it was unusual for the provison to be used half way through proceedings; usually it is invoked at the start of a trial. Further, former politician Sabine Leutheusser-Schnarrenberger criticised the use of the provision, stating that it allowed the rich to go free, and left those not able to afford such payments facing prison. According the former Justice Secretary, it was “not just bad taste – it’s really insolent”.
However, such a (mid) trial agreement was not a total victory for the F1 supremo. In separate hearings, an offer of $34m to end proceedings brought by the bank in question was rejected. Public sector bank BayernLB claims that Mr Ecclestone undervalued its stake in F1 (which it sold in 2005) and collected commissions. With the rejection of the offer, the bank could launch further proceedings, or negotiate another offer.
Although settling out of court prior to any hearings (or, in Mr Ecclestone’s case, half way through the trial) is ideal, and recommended here in the UK, sometimes the consequences can be slightly bizarre, perhaps slightly one sided or unfair, and not totally in the best interests of natural justice.
A trial, with both sides setting forward their case and arguments, and all the facts being discussed in open court, is undoubtedly the best way to settle a legal dispute morally. Practically, however, such drawn out, costly, emotive and time consuming proceedings can be avoided by reaching a settlement prior to any hearing. Whatever the benefits of that, the party with the dominant position (or more money) is often in a position to dictate terms, or to heavily influence any negotiations. It is for each party to weigh up the morality and justice of a trial, with the unfair practicalities of a settlement.
Of such is the nature of UK law; legality and fairness and morality and ethics do not necessarily go together in the legal world.