AXA General Insurance Ltd v Lord Advocate

Facts

In Rothwell v Chemical and Insulating Co Ltd [2007] UKHL 39 the House of Lords held that pleural plaques, symptomless scarring of the lungs caused by exposure to asbestos, did not give a cause of action in damages. The Scottish Parliament then passed the Damages (Asbestos-related Conditions) (Scotland) Act 2009, which made pleural plaques actionable in Scots law. Insurers who would have to pay the resulting damages challenged the Act.

History

The insurers petitioned the Court of Session for judicial review of the Act. The petition was dismissed at first instance and by the Inner House, and the insurers appealed to the Supreme Court.

Issue

Whether an Act of the Scottish Parliament may be challenged at common law on grounds of irrationality, unreasonableness or arbitrariness, or on the basis of fundamental rights or the rule of law, and whether the Act breached the rights of the insurers under Article 1 of the First Protocol to the European Convention on Human Rights.

Held

Appeal dismissed. Acts of the Scottish Parliament are not open to review at common law on grounds of irrationality or unreasonableness, and the Act did not infringe the rights of the insurers under Article 1 of the First Protocol.

Ratio

• An Act of the Scottish Parliament is primary legislation of a democratically elected legislature, and it is not subject to judicial review at common law on the ordinary grounds of irrationality or unreasonableness; it may be challenged only on the grounds in the Scotland Act 1998, such as lack of legislative competence and incompatibility with Convention rights.
• The Act interfered with the possessions of the insurers, but it pursued a legitimate aim and was within the wide discretion of the legislature as to the means chosen, so that it struck a fair balance and did not violate Article 1 of the First Protocol.

The judgments

Key reasoning

• The Scottish Parliament has a democratic mandate and its Acts are the product of a legislative process, so that review on grounds of reasonableness would put the courts in the position of second guessing political judgments.
• The Scotland Act 1998 provides a complete scheme for testing the validity of Acts of the Scottish Parliament, and the courts should apply it rather than adding common law grounds.
• The challenge under the Convention failed since the legislature had a legitimate aim in ensuring that those exposed to asbestos were compensated, and the insurers were not entitled to rely on the decision in Rothwell as fixing the position on liability.

Obiter

• Lord Hope stated that the rule of law is the ultimate controlling factor in the constitution and that the courts might in exceptional circumstances be entitled to intervene if the Scottish Parliament sought to abolish judicial review or deprive people of access to the courts.

Where it fits in the module

In the Constitution course the case is used to examine the nature of parliamentary sovereignty and the status of devolved legislatures. It shows the Supreme Court contrasting the Scottish Parliament with the Parliament at Westminster, and raises the question of whether the common law rule of law can limit legislatures, a question linked to the dicta in Jackson v Attorney General [2005] UKHL 56.

Criticisms

• The reasoning that the courts may not review for irrationality but may intervene in extreme cases to protect the rule of law is open ended, since it does not explain where the line lies or why the rule of law is a ground of review only in extreme cases.
• Treating the Scotland Act 1998 as a complete scheme sits uneasily with the view that the Scottish Parliament is subject to the rule of law as a constitutional principle which the common law protects.
• The case underplays the argument that legislation which retrospectively alters accrued rights and liabilities on the insurers is the kind of arbitrary state action against which a court should have a power of review.