Self-Incrimination and "Direct Use Prohibition"

The recent judgment in Competition Commission v Nutanix & Ors, CTEA 1/2017, 3 October 2017, refers to a legislative trend to replace the privilege against self-incrimination with a so-called "direct use prohibition" (or "immunity"). Paragraph 43 of the judgment states:

"It is common ground that the privilege against self-incrimination is not absolute and may be abrogated by statute. Statutory abrogation of the privilege such as found in s. 45 is not uncommon whether in Hong Kong or other jurisdictions."

This should be of particular interest (or concern) to all lawyers that advise clients in regulatory proceedings. In short, whereas in times gone by, a person may have had a general right to refuse to answer questions or to provide documents on the basis of self-incrimination, in many instances, this right has been replaced by a limited form of statutory "protection"; namely, that answers or documents may not be used against the person in specified circumstances.

In the Nutanix case the matter arose in the context of statements made by a person during interviews pursuant to s.42 of the Competition Ordinance (Cap.619). The main issue for determination was the scope of the "direct use prohibition" in s. 45(2) of the Competition Ordinance as regards the beneficiary of the prohibition.

The case decides that the restriction on use contained in s. 45(2) benefits the person to whom a "s. 42 notice" is addressed but no other third party. Therefore, for example, an employee to whom a "s. 42 notice" is addressed cannot claim the "protection" on behalf of his or her employer, even where the employer is the subject of an investigation by the Competition Commission. Further, in these circumstances, the employer cannot claim the "protection" on behalf of an employee. However, a corporate entity can claim the "protection" in its own right if it is served with a "s. 42 notice".

Where the privilege against self-incrimination applies, the judgment suggests that it should be claimed by and for the person or entity being questioned. A person cannot claim the privilege on behalf of a third party (although, note the position as regards "spouses"). For example, an individual otherwise subject to a requirement to answer questions in regulatory proceedings cannot normally refuse to do so on the basis that this might incriminate his or her employer or a company of which he or she is a director.

Context is everything and, as the judgment makes clear, the precise scope of the abrogation of the privilege and the restriction on use ultimately depends on the wording of the statute in question (para. 44). For example, the legion of regulatory lawyers in Hong Kong will be familiar with (among other things) s. 179 ("Power to require etc"), s. 184, s.184D ("Offences etc – Investigations") and s. 187 ("Use of incriminating evidence in proceedings") of the Securities and Futures Ordinance (Cap. 571).

Amid all of this, one might be forgiven for querying how the fundamental rights of corporate entities are protected when (for example) regulators and law enforcement agencies can direct their powers at individuals they believe have relevant information. There is also the overarching concern, for respondents and their lawyers, that a "direct use prohibition" does not necessarily prevent a "derivative use"; that is to say, in lay terms, once a prejudicial answer or document is given the "cat is out of the bag".


Partner, RPC

Senior Consultant, RPC