Amway UK v BERR: What’s next?

I’ve been getting quite a few emails from nervous and curious IBOs/ABOs about the status of the BERR case in the UK, hopeful I might have some inside information. Well, alas, not much. As reported a few days ago, hearings finished last Thursday, so I’m guessing we’re simply awaiting the Judge’s decision.

In order to understand what he may be considering I did some research and discovered the following –

  1. The function of the court on a petition under section 124A is summarised in the judgment of Lord Justice Nicholls in Re Walter L Jacob Ltd [1989] BCLC 345 at page 353 in this way:-
  2. "The court’s task, in the case of so called "public interest" petitions, as in the case of all other petitions invoking the courts winding up jurisdiction under section 122(1)(g), is to carry out the balancing exercise described above, having regard to all the circumstances as disclosed by the totality of the evidence before the court. In respect of all such petitions, whoever may be the petitioner, the court has to weigh the factors which point to the conclusion that it would be just and equitable to wind up the company against those which point to the opposite conclusion. It is to the court that Parliament has entrusted this task in all cases. Thus where the reasons put forward by the petitioner are founded on considerations of public interest, the court, if it is to discharge its obligation to carry out the balancing exercise, must itself evaluate those reasons to the extent necessary for it to form a view on whether they do afford sufficient reason for making a winding up order in the particular case.

    In the case of "public interest" petitions, the court will, of course, carry out that evaluation with the assistance of evidence and submissions from the Secretary of State and from other parties. When doing so the court will take note that the source of the submissions that the company should be wound up is a government department charged by Parliament with wide ranging responsibilities in relation to the affairs of companies. The department has considerable expertise in these matters and can be expected to act with the proper sense of responsibility when seeking a winding up order. But the cogency of the submissions made on behalf of the Secretary of State will fall to be considered and tested in the same way as any other submissions. His submissions are not ipso facto endowed with such weight that those resisting a winding up petition presented by him will find the scales loaded against them. "

It would seem then that this isn’t a simple matter of whether any laws have been broken and a great deal of responsibility rests with the judge to make a fair and equitable decision. I’m told that if the decision does happen to go against Amway that the story is a long way from over, with two further avenues of appeal available.

I’ve been trying to find and read as many similar cases as I can to see what kind of precedent’s apply. It has been a little difficult to get a good idea however, as from what I can tell, it appears that if BERR fails in it’s petition to wind-up a company, then the findings are generally not publicised in order to try to prevent any damage to the companies reputation. Similar reasoning is behind BERR making no public statements while investigating and prosecuting the case.

From the cases I have read I would think that perhaps the largest factor not in Amway UK’s favour is their failure to provide statistics on the numbers of people who "succeed" in Amway and average incomes and such, similar to that provided to all prospects in the US. I myself have tried without luck in the past to get this information from Amway Europe. This lack of disclosure is I think a major negative for Amway and something that should be rectified in all Amway markets as soon as possible.

On a bright note, the court has indicated in a number of cases that they do consider what changes a company may have made in reaction to any investigation. That should hopefully weigh in Amway’s favour.

Hopefully we’ll have a positive answer soon. If not, there’s a long road still to travel!

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