AXA General Insurance Ltd v HM Advocate [2011] UKSC 46; [2012] 1 AC 868

Key point

  • Acts of the Scottish Parliament, and by extension the primary legislation of the other two devolved legislatures, are not subject to the ordinary principles of judicial review such as irrationality (ratio) but can be subject to judicial review for being contrary to the rule of law (obiter)
  • When reviewing the compatibility of legislation and executive actions that deal with social, economic and political issues with Convention rights, courts will grant the government and legislature a discretionary area of judgment in which less exacting proportionality test will be applied

Facts

  • The Scottish case Rothwell had held that asymptomatic pleural plaques did not constitute an injury capable of giving rise to a damages claim
  • In response, the Scottish Parliament passed the Damages (Asbestos-related Conditions) (Scotland) Act 2009, which gave individuals a right to a cause of action in damages if they had suffered asbestos-related conditions as a result of exposure to asbestos due to a negligent employer
  • It was evident that insurers would bear the burden of the cost of damages, which is why they wanted to invalidate the Act
  • Under section 29(2) Scotland Act 1998, an Act of the Scottish Parliament is outside of its legislative competence if it is incompatible with any Convention rights
  • AXA and several other insurance companies challenged the validity of the Act on two grounds:
    1. it was outside the legislative competence of the Scottish Parliament because it was contrary to their (the insurers’) right to property (the insurance companies’ right to profits/revenue) under Article 1 of Protocol 1 of the European Convention on Human Rights (A1P1, ECHR), and
    2. it was an irrational exercise of legislative authority which could be subject to judicial review at common law 

Held (Supreme Court)

  • The insurance companies’ appeal was dismissed – the Act was valid. Both arguments failed.

Lord Hope

Compatibility with the ECHR

  • Citing his speech in Kebeline, in issues that involve questions of social or economic policy, there is an area of discretionary judgment in which an elected body can determine whether it is pursuing a legitimate aim: [32]
  • The judgment of the Scottish Parliament that it should legislate to remove what it regarded as social injustice was not “without reasonable foundation or manifestly unreasonable: [32]
  • The measures of the Act were proportionate in accomplishing a legitimate aim, and therefore the Act was within the competence of the Scottish Parliament because it did not violate A1P1 of the ECHR: [41]

Judicial review under common law

  • Citing his own speech in Jackson, he considered that the principle of rule of law to be the ground for review for Acts of the Scottish Parliament (ASPs): “the rule of law enforced by the courts is the ultimate controlling factor on which our constitution is based”: [51]
  • In the hypothetical situation where the Scottish Parliament decides to abolish judicial review, “[t]he 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”: [51]
  • ASPs “are not subject to judicial review at common law on the grounds of irrationality, unreasonableness or arbitrariness”, that is not needed as the validity of ASPs is subject to compatibility with the Convention rights under section 29(2)(d) of the Scotland Act 1998 and judges should not substitute their views for the considered judgment of a democratically elected legislature unless authorised by the UK Parliament: [52]

Lord Hodge

Compatibility with the ECHR

  • Given the wide margin of appreciation properly accorded to a democratically elected body determining the public interest by reference, as here, to political, economic and social considerations, the Act is to be regarded as legitimate and proportionate and so immune from challenge under A1P1: [83]
  • The relevant question was whether the legislation was “manifestly without reasonable justification” rather than whether it was justified on “compelling grounds of public interest”: [83]

Lord Reed

Compatibility with the ECHR

  • He agrees with the rest of the judges that the current case lies in the field of social and economic policy for which domestic courts will accord a discretionary area of judgment to the legislature and government, in parallel to how the ECtHR accords a margin of appreciation to national legislatures and government: [131]

Judicial review under common law

  • Given that the powers of the Scottish Parliament is limited as the UK Parliament can modify ASPs, it is also subject to the jurisdiction of the courts: [146]
  • However, since the Scottish Parliament has plenary powers unlike administrative bodies which have limited powers granted for specific purposes, it is thus not subject to grounds of review designed to prevent administrative bodies from exceeding their powers or using them for an improper purpose or being influenced by irrelevant considerations: [146]
  • “As a general rule, and subject to the qualification which I shall mention shortly, its decisions as to how to exercise its law-making powers require no justification in law other than the will of the Parliament”: [146]
  • However, the Scottish Parliament is subject to rule of law review since “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”: [153]

 Commentary

  • Lord Hope’s analysis that courts ought to retain the option of reviewing ASPs if they come into conflict with the rule of law ([52]) can equally be extended to Acts of the Westminster Parliament. In such a light, this case appears to be an extension of the parliamentary sovereignty vs. rule of law debate: Elliot, ‘Holyrood, Westminster and judicial review of legislation’ (2012) 71(1) CLJ 9, 11