Power and authority

The decision of the Supreme Court in Axa General Insurance v Lord Advocate [2011] UKSC 46 represents not only a long awaited victory for pleural plaques sufferers in Scotland, but also a groundbreaking judgment in constitutional terms. The decision affirms the validity of the Damages (Asbestos-related Conditions) (Scotland) Act 2009; defines, for the first time, the constitutional relationship between the Scottish Parliament and the Supreme Court; and overturns the previously unduly restrictive rules on title and interest in judicial review proceedings in Scotland.

Following the decision of the House of Lords in Rothwell v Chemical Insulating Co Ltd [2007] UKHL 39 that pleural plaques (asymptomatic scarring of the lung tissue caused by exposure to asbestos) were not capable of giving rise to a claim in damages, the Scottish Parliament passed the Damages (Asbestos-related Conditions) (Scotland) Act 2009, which restored the right of pleural plaques sufferers in Scotland to claim damages for personal injury.

Immediately following the introduction of the Act, several insurance companies holding employers’ liability policies raised a petition for judicial review of the Act. The insurers argued their case on two fronts: that the Act breached their ECHR (article 1 of Protocol 1, or A1P1) right to peaceful enjoyment of their possessions, and that the Act was an unreasonable, irrational and arbitrary exercise of the Scottish Parliament’s legislative authority (an article 6 claim was also included in the original petition but was dropped in the appeal to the Inner House).

The insurers’ petition was dismissed and the reclaiming motion refused, leading to the appeal to the Supreme Court. The judgment of the court raises three main points: (1) whether the Act breached the A1P1 rights of the insurers; (2) whether Acts of the Scottish Parliament are subject to judicial review on the grounds of unreasonableness, irrationality and arbitrariness; and (3) whether the third to tenth respondents (all pleural plaques sufferers) had standing to be convened as parties to the proceedings.

“Victims” and social policy

In examining the insurers’ A1P1 claim, the court first held that the insurers were directly affected by the Act and that as a result, they did have victim status. They further held that the money the insurers would be required to pay under their policies was a possession for the purposes of A1P1. The key part of their reasoning came when examining whether the Act pursues a legitimate aim by reasonably proportionate means.

It is well accepted in the Strasbourg jurisprudence that the European Court of Human Rights allows national authorities a wide margin of appreciation in judging what is in the public interest, and will respect such judgment unless it is manifestly without reasonable foundation. The Supreme Court agreed that the Scottish Parliament was entitled to view the predicament of pleural plaques sufferers as a social injustice and to legislate accordingly. It then considered the insurers’ claim that the Act imposed a disproportionate burden on them. The court stated that this argument did not carry much weight, and that the “interference” with the insurers’ possessions was clearly within the area of risk which they undertook when entering into long-term policies to indemnify employers’ negligence.

The effect of the court’s ruling with regards to A1P1 is therefore to reaffirm the respect accorded to national legislatures in judging issues of social and economic policy, whilst maintaining a sufficiently wide definition of victim status to ensure access to the courts for individuals seeking to challenge the ECHR compliance of legislation.

Lawmakers subject to law

The insurers’ common law ground of appeal raised an issue which, as Lord Hope stated, is of great constitutional importance and one which, until now, had astoundingly remained unresolved: are Acts of the Scottish Parliament open to judicial review on common law grounds? And if so, on what grounds are they reviewable?

The arguments by all parties focused on the question whether Acts of the Scottish Parliament constitute primary or secondary legislation, and accordingly whether they are open to common law judicial review. The court eschewed this approach, with Lord Reed neatly sidestepping the question by noting that the classification of legislation is not in fact determinative of its susceptibility to judicial review. Instead, the court considered to what extent judicial review can extend to the lawmaking powers of a devolved legislature.

Lord Hope described the Scottish Parliament in the following terms, at para 46: “The Scottish Parliament takes its place under our constitutional arrangements as a self-standing democratically elected legislature. Its democratic mandate to make laws for the people of Scotland is beyond question. Acts that the Scottish Parliament enacts which are within its legislative competence enjoy, in that respect, the highest legal authority.”

He went on to note that the Scottish Parliament is, nevertheless, a devolved legislature lacking the sovereignty of Westminster, and that as a result, its Acts must in principle be amenable to the supervisory jurisdiction of the courts at common law. The main question remained: on what grounds are such Acts subject to review?

Lord Hope noted that so long as the only legislature was the sovereign Westminster Parliament, such a question had never arisen, and as a result the court was in uncharted territory. He elegantly and succinctly summarises the relationship between the Supreme Court and the Scottish Parliament at para 49:

“The dominant characteristic of the Scottish Parliament is its firm rooting in the traditions of a universal democracy. It draws its strength from the electorate. While the judges, who are not elected, are best placed to protect the rights of the individual, including those who are ignored or despised by the majority, the elected members of a legislature of this kind are best placed to judge what is in the country’s best interests as a whole.”

Lord Hope affirms that his guiding principle is the rule of law, on which our constitution is based, and which requires that the courts retain the power to review legislation accordingly. However, he considers that the provisions in s 29 of the Scotland Act 1998 contain a sufficient limit on the legislative competence of the Scottish Parliament, and that it would be wrong for judges to substitute their views for those of a democratically elected legislature unless authorised to do so by the Scotland Act. Consequently, Acts of the Scottish Parliament are not reviewable at common law on the grounds of irrationality, unreasonableness or arbitrariness.

The unanimous agreement of the Supreme Court justices represents a resounding affirmation of the contention made throughout by the third to tenth respondents that the Scotland Act provides a comprehensive framework for the Parliament’s relationship to the courts, and that any challenge to the validity of Acts of the Scottish Parliament must be made on one of the grounds specified therein.

Standing before the court

Finally, the court considered whether the third to tenth respondents had title and interest to enter into judicial review proceedings. These respondents entered the process under rule 58.8(2) of the Rules of the Court of Session, which states that any person directly affected by any issue raised in proceedings for judicial review may apply for leave to enter the process. Whilst the Lord Ordinary had upheld the right of these respondents to enter the process, the Inner House considered that rule 58.8(2) was constrained by the rules on title and interest and that the respondents did not meet the test.

The Supreme Court noted that this created a paradox: if the pleural plaques claimants were not directly affected by the Act, how could the insurers of negligent employers be considered to be so? The suggestion that benefited third parties could not have the right to be heard ran counter to the rules of natural justice. The court gave short shrift to the previous Scottish jurisprudence in this area, sweeping away the requirement that private law title and interest had to be shown in actions for judicial review as having no place in applications to the supervisory jurisdiction. The very phase “title and interest” was stated by Lord Reed to be inappropriate in a public law context: the correct term is “standing”, based on demonstrating a sufficient interest in the issues raised in the proceedings. Lord Hope considered that the wording of rule 58.8(2) – “directly affected” – alone covers the essence of what is to be looked for in considering standing.

This represents a revolution in the rules on standing in public law cases in Scotland, which until now have lagged lamentably behind those in England. In widening access to the courts, one can expect a surge in public interest judicial reviews to be taken, with NGOs, charities, trade unions and campaign groups now all able to raise proceedings on behalf of their members and client groups. Individuals will also have a far greater scope for bringing challenges, to an extent which was previously unimaginable. It will be of great interest to observe how the Scottish courts interpret and apply the new definition of standing in applications for judicial review, and the directions in which public and constitutional law will develop as a result.

The AXA judgment: some key passages

Lords Hope and Reed draw up the boundaries of the Parliament’s and the courts’ powers

LORD HOPE

On the Convention challenge, quoting James v UK (1986) 8 EHRR 123: “Under the system of protection established by the Convention, it is thus for the national authorities to make the initial assessment both of the existence of a problem of public concern warranting measures of deprivation of property and of the remedial action to be taken…. The Court, finding it natural that the margin of appreciation available to the legislature in implementing social and economic policies should be a wide one, will respect the legislature’s judgment as to what is ‘in the public interest’ unless that judgment be manifestly without reasonable foundation.” (para 31)

On the common law grounds: The Scottish Parliament’s democratic mandate was “beyond question”, but it was nevertheless a body to which decision making powers had been delegated. There was very little guidance in the authorities as to the grounds on which its Acts might be challenged, and the issue had to be addressed as one of principle.

At para 49 he said: “The dominant characteristic of the Scottish Parliament is its firm rooting in the traditions of a universal democracy. It draws its strength from the electorate. While the judges, who are not elected, are best placed to protect the rights of the individual, including those who are ignored or despised by the majority, the elected members of a legislature of this kind are best placed to judge what is in the country’s best interests as a whole… This suggests that the judges should intervene, if at all, only in the most exceptional circumstances.”

At para 51: “…the rule of law enforced by the courts is the ultimate controlling factor on which our constitution is based. I would take that to be, for the purposes of this case, the guiding principle…. We now have in Scotland a Government which enjoys a large majority in the Scottish Parliament…. It is not entirely unthinkable that a Government which has [dominant] power may seek to use it to abolish judicial review or to diminish the role of the courts in protecting the interests of the individual. Whether this is likely to happen is not the point. It is enough that it might conceivably do so. The rule of law requires that the judges must retain the power to insist that legislation of that extreme kind is not law which the courts will recognise.”

On standing: the position of the individual claimants: “I think that the time has come to recognise that the private law rule that title and interest has to be shown has no place in applications to the court’s supervisory jurisdiction that lie in the field of public law. The word ‘standing’ provides a more appropriate indication of the approach that should be adopted.” (para 62)

“I would hold that the words “directly affected” which appear in rule 58.8(2) capture the essence of what is to be looked for…. A personal interest need not be shown if the individual is acting in the public interest and can genuinely say that the issue directly affects the section of the public that he seeks to represent.” (para 63)

LORD REED

“The Strasbourg court has recognised that the fact that legislation in the civil sphere has retroactive effects does not necessarily mean that it is incompatible with the rule of law or the Convention.” (para 122)

“Although the courts must decide whether, in their judgment, the requirement of proportionality is satisfied, there is at the same time nothing in the Convention, or in the domestic legislation giving effect to Convention rights, which requires the courts to substitute their own views for those of other public authorities on all matters of policy, judgment and discretion.” (para 131)

On the common law grounds: “As a general rule… [the Parliament’s] decisions as to how to exercise its law-making powers require no justification in law other than the will of the Parliament. It is in principle accountable for the exercise of its powers, within the limits set by s 29(2), to the electorate rather than the courts. Considerations of justiciability lead to the same conclusion.” (paras 147-148)

“Parliament did not legislate in a vacuum: it legislated for a liberal democracy founded on particular constitutional principles and traditions. That being so, Parliament cannot be taken to have intended to establish a body which was free to abrogate fundamental rights or to violate the rule of law. There is however no suggestion in the present case that the Scottish Parliament has acted in such a manner. That being so, and review for irrationality being excluded, it follows that the challenge to the validity of the 2009 Act on common law grounds must be rejected. (paras 153-154)

On standing: “A rights-based approach to standing is therefore incompatible with the performance of the courts’ function of preserving the rule of law, so far as that function requires the court to go beyond the protection of private rights… The exercise of [the supervisory] jurisdiction… must instead be based upon the concept of interests. … What is to be regarded as sufficient interest to justify a particular applicant’s bringing a particular application before the court, and thus as conferring standing, depends therefore upon the context, and in particular upon what will best serve the purposes of judicial review in that context. (paras 169-170)

• Lord Brown and Lord Mance agreed with both judgments, adding certain observations; and Lord Kerr, Lord Clarke and Lord Dyson agreed without adding any comments of their own.