Horns have been locked between the U.K. and the European Court of Human Rights over the question of whether a defendant has received a fair trial if the evidence against him is solely or decisively hearsay. Please see the earlier posts which contain links to the various judgments:
"Convicting solely or mainly on hearsay evidence: Strasbourg and London lock horns" - 20th April 2010
"A further bout with Strasbourg coming up?" - 22nd February 2011.
Treatment of hearsay in English law:
In the Criminal Justice Act 2003 Part 11 Chapter 2 Parliament enacted what is regarded as a complete code relating to when hearsay may be admitted in evidence at a criminal trial in England and Wales. The Act is based on the recommendations of the Law Commission in Law Com No. 245 (1997) - "Evidence in criminal proceedings: hearsay and related topics." (Annex A to the Law Commission's report contained a draft Criminal Evidence Bill though the CJA 2003 differs from this).
The common law hearsay rule sought to provide a safeguard against untested hearsay evidence being given a "probative force which it does not deserve" - R v Blastland  AC 41 at 53 (per Lord Bridge of Harwich). The common law rule could operate so as to exclude evidence of unquestionable reliability but, for many years, this was accepted on the basis that the accused should have the opportunity to test the evidence at trial. Some would have replaced the common law rule with an approach which would always have permitted hearsay evidence if the original source or 'best evidence' was not available - (see Review of the Criminal Courts of England and Wales - 2001 - Chapter 11). The Law Commission's report and the CJA 2003 rejected this approach and adopted a midway position.
In Al-Khawaja and Tahery v UK (January 2009) a Chamber of the European Court held that convictions based "solely or decisively" on hearsay evidence breached the right to a fair trial (Article 6 of the Convention). In R v Horncastle, Marquis, Graham and Carter  EWCA Crim 964 the English Court of Appeal upheld some convictions even though they were based mainly on hearsay and rejected the decision in Al-Khawaja. The Supreme Court of the U.K. subsequently agreed with the Court of Appeal - see judgment. The English judiciary considers that the 2003 Act scheme contains adequate safeguards for the accused so that a "sole or decisive" rule is not needed.
Meanwhile, in April 2009, the British government had requested the European Court to refer the case of Al-Khawaja and Tahery to the Grand Chamber Chamber.
The Strasbourg Grand Chamber decision in Al-Khawaja and Tahery: The Grand Chamber (of 17 judges) has issued judgment and held (15 to 2) that there was no violation of Article 6(1) in respect of Mr Al-Khawaja and has held unanimously that there was a violation in respect of Mr Tahery (who was awarded 6000 Euros by way of just satisfaction and 12000 euros for costs and expenses).
The court agreed with the domestic courts and found that a conviction based solely or decisively on the statement of an absent witness would not automatically result in a breach of Article 6(1). Counterbalancing factors had to be in place, including strong procedural safeguards, to compensate for the difficulties caused to the defence.
Article 6 requires an assessment of the overall fairness of criminal proceedings. The right to examine a witness - Art 6(3)(d) - is based on the principle that, before an accused can be convicted, all the evidence must normally be produced in his/her presence at a public hearing so that it can be challenged. Two requirements flow from this. (1) there must be a good reason for non-attendance of the witness. (2) a conviction based solely or decisively on the statements of an absent witness is generally considered to be incompatible with fairness under Article 6 ( the sole or decisive rule).
The sole or decisive rule was not to be applied inflexibly and Strasbourg would not ignore the specifics of the particular legal system concerned. The court looks at the overall fairness of the proceedings and weighs in the balance the competing interests of the defence, the victim, and witnesses and the public interest in the effective administration of justice. Where a conviction is based solely or decisively on the statement of an absent witness, counterbalancing factors must be in place, including strong procedural safeguards.
The full judgment of the Grand Chamber is Al-Khawaja and Tahery v United Kingdom - Application Nos. 26766/05 and 22228/06 - 15th December 2011. The judgment is also interesting in that the court looked at how hearsay is dealt with in other jurisdictions: Scotland, Ireland, Australia, Canada, Hong Kong, New Zealand, South Africa and the USA.
Reactions to the judgment:
An interesting reaction to the Strasbourg decision is that of barrister Eric Metcalfe (Monckton Chambers) writing in The Guardian 15th December. He claims that it is Strasbourg, rather than the English courts, which have upheld the ancient principle of common law that the accused should be able to face his accusers. See "Time for the UK Supreme Court to think again on hearsay."
Further reaction is at Solicitor's Journal "Strasbourg Court extends olive branch to UK over hearsay" and on the Head of Legal blog (Barrister Carl Gardner) - "Al-Khawaja and Tahery v UK: Lord Irvine vindicated."
Joshua Rozenberg - The Guardian 15th December - "Strasbourg heeds UK judges." (Article with public comments).