Publication of the Independent Review of Administrative Law’s Report and a Government Consultation into Judicial Review

On 18 March 2021, the Independent Review of Administrative Law (the “IRAL”) published its report on reform to the judicial review process (the “IRAL’s Report”) in which it made two substantive recommendations and a number of procedural recommendations. The Lord Chancellor and Secretary of State for Justice agreed with those recommendations and was “also interested in exploring proposals beyond these”. This was the basis upon which on the same day the Ministry of Justice published a consultation on judicial review reform (the “Consultation”).

Background

On 31 July 2020 the Government announced that it had appointed a panel of experts to examine if there is a need to reform the judicial review process and other aspects of public law decision making. The intention of the IRAL was to be wide-ranging in its scope. The Terms of Reference of the IRAL stated that it would “examine trends in judicial review of executive action, in particular in relation to the policies and decision making of the Government”. As part of its review the IRAL’s call for evidence invited submissions on how well or effectively judicial review currently balances, on the one hand, the legitimate interest in citizens being able to challenge the lawfulness of executive action with, on the other, the role of the executive in carrying on the business of Government.

While much can be said in respect of the IRAL’s Report and the Consultation, we have focussed on the key issues.

The IRAL’s Report

In summary, the IRAL made the following recommendations for changes to the substantive law:

  • Abolishing Cart JRs: Applications for judicial review against a decision of the Upper Tribunal (the “UTT”) to refuse permission to appeal against a decision of the First-tier Tribunal (the “FTT”) on the basis that the FTT’s decision was affected by an error of law and therefore the UTT’s decision was also so affected are referred to as applications for a “Cart JR”. The IRAL received a request from judges to examine Cart JRs, which some of those who gave evidence thought adds an additional layer of appeal that is unnecessary and unintended. After conducting investigations, the IRAL concluded that in only 0.22% of all applications for a Cart JR since 2012 has granting permission to pursue an application for a Cart JR resulted in an error of law on the part of a FTT being identified and corrected. On that basis the IRAL concluded that the continued expenditure of judicial resources on considering applications for a Cart JR could not be defended, and recommended that the practice of making and considering such applications should be discontinued.
  • Allowing courts to suspend quashing orders: The remedies that are potentially available when an application for judicial review is successful are set out in section 31 of the Senior Courts Act 1981: a mandatory, prohibiting or quashing order; a declaration or injunction; damages, restitution or the recovery of a sum due. The IRAL’s recommendation in this area was that section 31 should be amended to give the courts the option of making a suspended quashing order, i.e. a quashing order which will automatically take effect after a certain period of time if certain specified conditions are not met. It is the view of the IRAL that by issuing such an order the Court would be able to acknowledge the supremacy of Parliament in resolving conflicts between the courts and the executive as to how public power should be employed.

The IRAL also made some further recommendations and suggestions, including for non-legislative changes, which are more procedural in nature. For example, it stated that there is a need to clarify the scope of the duty of candour (i.e. the requirement that a public authority, when presenting its evidence in response to an application for judicial review, to set out fully and fairly all matters that are relevant to the decision that is under challenge). The IRAL suggested that this clarification be achieved by revisiting the Treasury Solicitor’s Guidance. It also stated that some amendments be made to the Civil Procedure Rules, such as a formal provision for a Reply to be filed by a Claimant within 7 days of receipt of the Acknowledgement of Service. With regard to the time limit within which a claim for judicial review must be brought by filing a claim form at court, CPR 54.5 states that it must be “no later than three months after the grounds to make the claim first arose” but the first requirement is that this must be done “promptly”. The IRAL states that there may be a case for abolishing the requirement of promptitude and it would “certainly not favour” any tightening of the current time limits for bringing a judicial review. Also, the IRAL recommends that the criteria for permitting intervention should be developed and published, “perhaps in the Guidance for the Administrative Court”.

The IRAL explicitly ruled out some possible reforms. For instance, it rejected the concept of statutory codification because “the grounds for review are well established and accessibly stated in the leading textbooks”. However, it acknowledged that codification could make judicial review more accessible to non-lawyers. The IRAL also recommended that Parliament does not pass any comprehensive or far-reaching legislation regarding non-justiciability, but instead legislate in response to particular decisions. The IRAL warned that broader legislation in this area that purported to roll back certain developments in the law on non-justiciability would be regarded as amounting to an ouster clause and that while the use of such a clause would be justified, it is likely to face a hostile response from the courts and robust scrutiny by Parliament.

Language deferential to Parliament’s role as a legislature was incorporated throughout the IRAL’s Report, as illustrated at paragraph 2.78:

We should emphasise that our reasons for not favouring making large changes to this area of law do not include any argument that it might be inappropriate for Parliament to legislate in this area. On the contrary: we are of the firm view that it is entirely legitimate for Parliament to pass legislation making it clear what sorts of exercises of public power (or issues relating to such exercises) should be regarded as non-justiciable. We strongly agree with the view advanced by Baroness Hale in her submission to us that: ‘If Parliament does not like what a court has decided, it can change the law.’ This is the case in every other area of law, and it is hard to see why it should not be in relation to the law on judicial review.

Nonetheless, it is interesting that the IRAL chose to incorporate its observations that while R (Miller) v Secretary of State for Exiting the European Union [2018] AC 61 and R (Miller) v Prime Minister [2020] AC 373 represented “substantial setbacks for the [Government] and were of considerable constitutional importance, [the IRAL is] not convinced that the decisions (novel as they were) in those cases are likely to have wider ramifications given the unique political circumstances” at the time. Indeed the IRAL goes so far as to state that for “every controversial decision, there are many others (less publicised and less commended-upon) where judges have shown ‘restraint’”.

The Consultation

The Government agrees with the IRAL’s recommendations regarding Cart JRs and adding a remedy for suspended quashing orders, as well as removing the requirement for a claim to be issued “promptly”; providing further guidance for interveners; and providing for an extra step in the process for a Reply to be filed within 7 days of receipt of the Acknowledgement of Service. The Consultation seeks further views on these issues.

The Lord Chancellor and Secretary of State for Justice is “also interested in exploring proposals beyond these [recommendations]”. The Consultation makes clear that now is not the right time to propose far-reaching, radical structural changes to the system of judicial review, but that there is a case for targeted, incremental change. To that end the Government is now consulting on the following topics:

  • legislating to clarify the effect of statutory ouster clauses;
  • legislating to introduce remedies which are of prospective effect only, to be used by the courts on a discretionary basis;
  • legislating that, for challenges of Statutory Instruments, there is a presumption or a mandatory requirement for any remedy to be prospective only;
  • legislating for suspended quashing orders to be presumed or required;
  • legislating on the principles which lead to a decision being a nullity by operation of law; and
  • making further procedural reforms (which would need to be considered by the CPR Committee).

The Consultation closes on 29 April 2021.

Conclusion

Despite the wide remit conferred upon it at the outset of its review, the IRAL’s relatively modest recommendations may be underpinned by its view that while it “understands the [Government’s] concern about recent court defeats, [the IRAL] considers that disappointment with the outcome of a case (or cases) is rarely sufficient reason to legislate more generally.” However, it is clear that the Government continues to feel strongly that the courts should remain deferential to Parliament:

[It] cannot be emphasised enough that Parliament is the primary decision-maker here and the courts should ensure they remain, as Lady Hale put it, ‘the servant of Parliament’.

We note that that the Lord Chancellor and Secretary of State explains that he wants to “focus attention first on the most pressing issues, namely ouster clauses and remedies, before considering whether any broader reforms are necessary”. This suggests that upon concluding the Consultation, the Government may propose further reforms to judicial review and public law matters.

Previous related blog posts

https://hsfnotes.com/publiclaw/2020/08/03/government-launches-panel-to-consider-the-judicial-review-process/

https://hsfnotes.com/publiclaw/2020/09/08/governments-terms-of-reference-for-review-of-the-judicial-review-process/

https://hsfnotes.com/publiclaw/2020/10/27/hsf-responds-to-the-call-for-evidence-for-the-governments-independent-review-of-administrative-law/

 

Andrew Lidbetter
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Nusrat Zar
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Jasveer Randhawa
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Shameem Ahmad
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Climate change and the role of regulators

In November 2020, the government announced an ambitious ten-point plan to boost green jobs and reach net-zero. The plan was a recent recognition at a national-level of the pressing need to combat climate change. It addresses an expansive set of topics: from offshore wind to walking and cycling; from carbon capture to finance. The proposals suggest regulatory changes in respect of nuclear power, buildings and finance form part of the plan.

The Climate Change Committee expects that businesses will be the primary drivers of the net-zero emissions target and provide the majority of investment required for the green transition. Therefore, any new regulations and regulatory action in this area must take into account the reality for businesses and consumers. This will provide the most effective means of switching to low-carbon solutions in circumstances where businesses are expected to be significant contributors to reach net-zero.

We have prepared a paper focusing on the extent to which regulators are currently obliged to take into account climate change policy when making decisions to better inform businesses of the direction of travel in this area. We provide an overview of the general legislative landscape in respect of climate change, considering whether and how regulators are impacted by that high-level legislation. We then consider the variety of tools that regulators are using in respect of climate change in the energy, transport, finance and construction sectors.

Please click here to read our paper on these issues.

Andrew Lidbetter
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Nusrat Zar
Nusrat Zar
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Jasveer Randhawa
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Shameem Ahmad
Shameem Ahmad
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Independent Human Rights Act Review launches a public call for evidence

On 13 January 2021, the Independent Human Rights Act Review (the “IHRAR“) published a call for evidence. The IHRAR is a panel of experts appointed by the Government to consider whether there is a need to reform the Human Rights Act (“HRA“) “to ensure it continues to meet the needs of the society it serves”.

The call for evidence is structured to cover two broad themes:

  • The relationship between domestic courts and the European Court of Human Rights (the “ECtHR“) in the context of section 2 of the HRA. Pursuant to section 2, domestic courts and tribunals are required to “take into account” the case law of the ECtHR, albeit they are not bound by that case law under the usual rules of precedent. The Review will consider how section 2 has been operating and whether there is any need for reform.
  • The impact of the HRA on the relationship between the judiciary, the executive and the legislature. In particular, the IHRAR will consider the way the HRA balances those roles, including whether the current approach risks “over-judicialising” public administration and draws domestic courts unduly into questions of policy.

The specific questions on which the IHRAR has invited responses are listed in its terms of reference. See this blog post for further details of the terms of reference and the formation of the IHRAR. The call for evidence closes on 3 March 2021.

Sir Peter Gross, the Chair of the IHRAR, stated upon publication of the call for evidence that the ’review proceeds on the basis that the UK will remain a signatory to’ the European Convention on Human Rights.

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Shameem Ahmad
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Government launches independent review of the Human Rights Act 1998

The Government has announced that a panel of experts led by former Court of Appeal Judge, Sir Peter Gross, will conduct an Independent Human Rights Act Review (the “IHRAR”). The Human Rights Act 1998 (the “HRA”) incorporates the fundamental rights and freedoms set out in the European Convention on Human Rights (the “Convention”) into domestic British law. The purpose of the review is to consider whether there is a need to reform the HRA. The Panel will take “a fresh look at the [HRA] – how it operates and protects human rights – to ensure it continues to meet the needs of the society it serves”.

Context

The 2019 Conservative Manifesto was not the first Conservative manifesto to make reference to the HRA. The 2017 Conservative Manifesto committed to “consider” the human rights legal framework after Britain had left the European Union, whereas the 2015 Conservative Manifesto promised to “scrap” the HRA, introduce a Bill of Rights and “curtail” the role of the European Court of Human Rights (the “ECtHR”). Therefore, it was foreseeable that a prospective Conservative government in 2019 would also make a commitment in respect of the human rights framework. The 2019 Conservative Manifesto promised to “update” the HRA.

Terms of Reference

The Terms of Reference of the IHRAR refer to the United Kingdom’s contribution to human rights law, which it states is founded in the common law tradition and continued with the drafting of the Convention. Citing the impact which the HRA has had on relations between the judiciary, the legislature and the executive and the “perception” that, under the HRA, the courts have increasingly been presented with questions of policy as well as law, the Government considers that it is timely to review the operation of the HRA.

There are two overarching themes that the IHRAR will consider:

  1. The relationship between the domestic courts and the ECtHR: Domestic courts and tribunals are not bound by the jurisprudence of the ECtHR. However, pursuant to section 2 of the HRA, in so far as relevant, domestic courts and tribunals must “take into account” that jurisprudence when determining a question that has arisen in connection with a Convention right. The Panel will consider (among other questions):
    1. How the duty under section 2 has been applied in practice?
    2. How have domestic courts and tribunals dealt with issues falling within the margin of appreciation? When applied, this legal doctrine gives a public authority a degree of discretion when making decisions.
    3. Does the current approach to ‘judicial dialogue’ between domestic courts and the ECtHR satisfactorily allow domestic courts to raise concerns as to the application of ECtHR jurisprudence, having regard to the circumstances of the United Kingdom?
  2. The impact of the HRA on the relationship between the judiciary, the executive and the legislature: The Panel will consider whether the HRA balances those roles, including whether there is “over-judicialising” of public administration, drawing domestic courts unduly into questions of policy. By way of illustration, these are examples of questions that the Panel will consider:
    1. Section 3 of the HRA requires the courts to read and give effect to primary and subordinate legislation in a way which is compatible with Convention rights. Should any changes be made to this framework?
    2. Should any change be made to the framework of the section 4 HRA duty i.e. that if the court is satisfied that a provision is incompatible with a Convention right, it may make a declaration of that incompatibility?
    3. How have courts and tribunals dealt with provisions of subordinate legislation that are incompatible with the HRA Convention rights?
    4. In what circumstances does the HRA apply to acts of public authorities taking place outside the territory of the United Kingdom?
    5. Section 10 of and Schedule 2 of the HRA provide ministers with the power to make remedial orders, i.e. to amend legislation that has been found incompatible with the Convention. Should this be modified, for example by enhancing the role of Parliament?

The IHRAR will not consider potential changes to the operation of the Convention or the ECtHR, which are not within the scope of this Review.

Next steps

The Panel is expected to report its recommendations in Summer 2021, after which the Government will respond to the report.

A further point to note is that the 2019 Conservative Manifesto also promised to review the constitution and administrative law, including the relationship between the Government, Parliament and the courts; the functioning of the Royal Prerogative; the role of the House of Lords; access to justice and judicial review. The 2019 Conservative Manifesto undertook to establish a Constitution, Democracy and Rights Commission to consider these issues, as well as the HRA, in depth.

On 31 July 2020, the Government established the Independent Review of Administrative Law (the “IRAL”) to consider options for reform to judicial review. In its latest announcement the Government has stated that the IRAL and the IHRAR, together with other workstreams which will be announced in due course, will deliver the Commission on Constitution, Democracy and Rights. Therefore, it is likely that we will see further reviews taking place to address remaining constitutional issues referred to in the 2019 Manifesto.

To read more about the IRAL, please see the following blog posts:

 

Andrew Lidbetter
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Nusrat Zar
Nusrat Zar
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Jasveer Randhawa
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Shameem Ahmad
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Parliamentary Committee considers remit of the proposed Constitution, Democracy and Rights Commission

The House of Commons’ Public Administration and Constitutional Affairs Committee (the “PACAC”) is conducting a Call for Evidence as part of its inquiry (the “Inquiry”) in relation to the commitment in the 2019 Conservative Party manifesto (at page 48) that the Government would establish a Constitution, Democracy and Rights Commission (the “Commission”).

Background

According to the manifesto commitment, the Commission’s purpose would be to make proposals “to restore trust in our institutions and in how our democracy operates”. The manifesto stated that the role of the Commission would be to examine: the relationship between the Government, Parliament and the courts; the functioning of the Royal Prerogative; the role of the House of Lords; and access to justice for ordinary people. It appears the intention was that the Commission would also “update” the Human Rights Act and administrative law, as well as ensure that judicial review is “available to protect the rights of the individuals against an overbearing state, while ensuring that it is not abused to conduct politics by another means or to create needless delays”.

The Government subsequently announced that it had appointed a panel of experts to examine whether there is a need to reform the judicial review process and there was a Call for Evidence by the Government’s Independent Review of Administrative Law (the “IRAL”; see Public Law Notes updates of 3 August 2020 and 27 October 2020). As regards the remaining commitments, the Government has made no announcements about the form or timing of the Commission except in the Queen’s Speech.

The Call for Evidence seeks submissions on the form which the Commission should take, its main purpose and output, and any particular issues which should be a priority for the Government. This Call for Evidence gives members of the public the opportunity to have their say and influence the findings of the Inquiry.

Evidence to the Inquiry

Oral evidence has been given to the Inquiry by a number of individuals including Lord Sumption, former Justice of the Supreme Court, and academics.

The focus of the oral evidence given so far has been on what should be the priorities for the Commission. The suggestions covered a broad array of topics including (among others):

  • The context of the reforms that the Commission would consider in that Brexit is “affecting the relationships between the different institutions in the Constitution” in any case and so it may be sensible to consider significant constitutional issues at this juncture;
  • The opportunity to “rebuild public trust” in the institutions following the divisive Brexit debates;
  • The electoral system;
  • The House of Commons’ ability to control the legislative agenda;
  • The implications of the Human Rights Act 1998;
  • The separation of powers;
  • The role of the public and how the public might be engaged with the Commission;
  • Whether the Government is approaching the issues which the Commission will consider with an open mind.

The PACAC has not yet stated when the findings of the Inquiry will be published.

Selecting a tactical or strategic approach to constitutional reform

The New Labour Government’s constitutional reform programme in the 1990’s and 2000’s took what some have described as a “piecemeal” approach as it introduced devolution, enacted the Human Rights Act 1998; established a freedom of information regime and reformed the House of Lords. Given the pressure of COVID-19, the Government may find that it does not now have the time to consider constitutional reforms in the round. Therefore, there is a real possibility that this Government could replicate New Labour’s approach, by thinking about issues tactically and thus leaving some dissatisfied.

Evidence given to the Inquiry by Professor Russell, Director of the Constitution Unit at University College London, suggested that there has been a “sort of scattergun” approach by Government, including proposals such as moving the House of Lords to York; abolishing certain regulators or weakening their powers; and establishment of the IRAL. Further, there have been reports over the weekend that the Government is backing plans to reform the Supreme Court by reducing the number of Justices and renaming the institution. Lord Lisvane, a Member of the Constitutional Reform Group Steering Committee, has also suggested that the overlap between the Commission and the IRAL is “a recipe for unconstructive confusion”.

Lord Lisvane has rightly pointed out to the Inquiry the potential scale of the Commission’s remit:

The daunting thing about what is proposed is the sheer size of the canvas. As soon as you start unpacking the individual elements they expand further. For example, how do you do Government and Parliament relations without looking at the devolution settlements? How do you do access to justice for—in the condescending phrase—ordinary people without looking at the structure and resourcing of the justice system and legal aid? As soon as you start looking in more detail, the sheer size of the task starts to increase. I think that that is going to be a major challenge…

The Call for Evidence closes on 16 November. It will be interesting to see how the Committee’s findings fit with the remit of and any recommendations made by IRAL, which is due to report back later this year.

Andrew Lidbetter
Andrew Lidbetter
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Nusrat Zar
Nusrat Zar
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Jasveer Randhawa
Jasveer Randhawa
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Shameem Ahmad
Shameem Ahmad
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HSF responds to the Call for Evidence for the Government’s Independent Review of Administrative Law

Herbert Smith Freehills’ public law team has responded to the Government’s Call for Evidence for the Independent Review of Administrative Law (“IRAL”) which was announced on 31 July 2020. In a previous blog post, we discussed the Government’s publication of the IRAL’s Terms of Reference.

The Call for Evidence

The Call for Evidence invited submissions on how well or effectively judicial review currently balances, on the one hand, the legitimate interest in citizens being able to challenge the lawfulness of executive action with, on the other, the role of the executive in carrying on the business of government. One of the overriding concerns was whether procedural reforms to judicial review are necessary to “streamline the process” of judicial review.

The questions put forward in the Call for Evidence focused on a number of issues most of which were alluded to in the Terms of Reference, including whether:

  • the amenability of public law decisions to judicial review by the courts and the grounds of public law illegality should be codified in statute;
  • the legal principle of non-justiciability requires clarification;
  • the current rules are too lenient on unsuccessful parties or applied too leniently by the courts;
  • the costs of judicial review are proportionate;
  • the remedies available are too inflexible;
  • settlement is commonplace;
  • ADR is suitable to judicial review and should play more of a role; and
  • the rules of public interest standing are too lenient.

Our Response

In our response, we put forward the view that the current mechanism for judicial review and wider administrative law functions well and is not in any urgent need of major reform. The key objective behind judicial review is and always has been to ensure that government departments and public bodies are able to properly and effectively discharge their functions, according to the law.

In this vein, we believe that there is no need to place the substantive law of judicial review on a statutory footing nor is there a need to change the current law on justiciability. Neither of these initiatives are likely to promote clarity and accessibility in the law, nor increase public trust and confidence in the judicial review process.

From a procedural standpoint, we noted the 2012 – 2013 Government consultation on proposals for reform of judicial review which led to a number of procedural changes aimed at reducing the number of judicial review claims brought by filtering out unmeritorious claims and reducing delays. The general direction of reform of judicial review in previous years therefore appears to have been to seek to make claims harder from a procedural perspective. We do not believe there is any need for further reform along these lines. Indeed, further reform would risk tipping the balance of the judicial review system such that claimants’ ability to properly seek review of public bodies’ decisions is curtailed unduly, giving rise to serious concerns over access to justice.

On the detail of particular procedural suggestions, we consider that the need for proper compliance with the pre-action protocol should continue to be emphasised by the courts in order to minimise the need to proceed with judicial review. To this end, we are reluctant to see any shortening of the time limits for filing claims which would inevitably impact the ability to fully engage in the pre-action process.

By contrast, we do not think that formal methods of ADR or settlement are generally suitable to many of the situations which our clients face in the context of judicial review. Nor are further reforms to the current test for standing, the arsenal of remedies available to the courts or the costs regime necessary.

Although the Terms of Reference queried whether reform is needed in relation to the duty of candour, the Call for Evidence did not specifically address this issue. We nonetheless considered in our response that limiting or restricting the current rules on the duty of candour would not benefit the parties to judicial review.

Lastly, we noted that one specific area which may benefit from consideration and clarification is the position on expert evidence within judicial review.

Conclusion

The Government’s Call for Evidence provided an opportunity for practitioners, observers, commentators and litigants alike to share their experience of judicial reviews with the IRAL panel but, given the fundamental importance of many of the issues, we emphasised that any concrete proposals should be subject to a fair consultation including with those who would be directly impacted by such reform and those who would be able to offer views based on their experience of practising in the area. The scope of the questions and the importance of the issues touched upon highlight the potential for any reform to have long-term and far-reaching consequences for the accountability of public sector decision making and ultimately the rule of law.

Andrew Lidbetter
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Nusrat Zar
Nusrat Zar
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Jasveer Randhawa
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Policy Matters: An introduction to Public Inquiries

The Administrative and Public Law team hosted a Policy Matters webinar on public inquiries on Thursday 10 September 2020. Hosted by Associate Sahil Kher, the webinar featured insights from Andrew Lidbetter (the head of HSF’s Administrative and Public Law practice in London) and Nusrat Zar, who is also a partner in the team. Andrew and Nusrat both have considerable expertise of advising clients involved in public inquiries and select committee inquiries.

Some of the key issues covered on the webinar included:

  • The common features of different types of inquiries;
  • What it means to be a participant in an Inquiry;
  • Practical and commercial considerations including how a participant can deal with any potential criticism; and
  • The prospect of an inquiry into the UK Government’s handling of the COVID-19 crisis, and the wide range of commercial organisations who may be involved.

A recorded version of this webinar is now available here.

If you have any questions, please do not hesitate to get in touch with any of the contacts listed below.

Andrew Lidbetter
Andrew Lidbetter
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Nusrat Zar
Nusrat Zar
Partner
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Jasveer Randhawa
Jasveer Randhawa
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Sahil Kher
Sahil Kher
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Public Law Horizon-Scanning Podcast Series

We are pleased to share with you this three part horizon-scanning podcast series from the public law team.

In this series, Nusrat Zar and Shameem Ahmad are joined by James McBride from Hanbury Strategy, a strategic advisory firm that provides political insight and analysis. Together they will to look to the horizon and share their thoughts and analysis on the political and legal landscape after COVID-19 and Brexit as well as returning to the post-general election agenda.

Listen to the episodes using the links below and don’t forget to subscribe to the channel to receive updates on future podcasts.

We will continue to develop insights to keep you abreast of legal issues arising from COVID-19 that are affecting your business now and those you may face next. You can find further resources on our Catalyst Hub.

We welcome feedback so please do contact us (using the details below) if you’d like to discuss any of the topics in this podcast series or to suggest topics for future episodes.

Horizon-scanning: Post-COVID-19

 

Horizon-scanning: Post-Brexit

 

Horizon-scanning: Picking up the post-general election agenda

 

Andrew Lidbetter
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Nusrat Zar
Nusrat Zar
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Jasveer Randhawa
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Shameem Ahmad
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Court of Appeal considers the legality of policies

In Bayer Plc v NHS Darlington Clinical Commissioning Groups [2020] EWCA Civ 449 the Court of Appeal had to consider the legality of a policy issued by NHS Clinical Commissioning Groups (“CCGs”) in the light of EU law.  The court concluded that a policy which would permit the prescription of Avastin, an off-label drug for the treatment of wet age-related macular degeneration (“WAMD”), thereby resulting in significant cost savings for the NHS, as compared with licensed alternatives for the treatment of WAMD, was lawful.

The key points are:

  • A policy should be construed in accordance with EU law and domestic legislation.
  • The fact that one of the ways in which a policy might be implemented is unlawful does not mean that the policy itself is unlawful. It is sufficient if there are lawful means of implementation that are both realistic and (at least in outline) envisaged at the time that it was promulgated.

Background

Bayer Plc and Novartis Pharmaceuticals UK challenged the lawfulness of a policy adopted by a number of CCGs, which asked NHS Trusts, servicing the CCGs, to use Avastin as the preferred treatment option for WAMD (the “Policy”). The use of Avastin (or in its compounded form, CB) was not licensed for WAMD but was recommended as being a cost effective treatment.

The National Institute of Clinical Excellence’s Guidelines (the “NICE Guidelines”) concluded that there was no significant difference between the effectiveness of CB and licensed alternatives and the General Medical Council (“GMC”) Guidance stated that where there was no distinction in treatment, clinicians should consider costs when recommending a particular treatment.

The companies argued that implementing the Policy would result in a breach of EU legislation regulating the marketing and manufacture of medicines and the associated implementing domestic legislation. Whipple J at first instance held the Policy to be lawful and the companies appealed. The Court of Appeal rejected the appeal. In doing so, the court considered four potential modes of CB supply under the Policy.

  • Mode 1: where the hospital would use Avastin in its uncompounded form (although the Court held that the Policy had not envisaged the use of Avastin in this manner in any event).
  • Modes 2 and 3: supply of CB by pharmacies
  • Mode 4: where a third party entity (not a pharmacy) provided CB to the Trusts.

Issues on appeal

The main questions before the court were:

Did the Judge get the test for reviewing the lawfulness of the Policy wrong or wrongly apply the test?

The court disagreed with Whipple J’s formulation of the test for the lawfulness of the Policy, namely, whether the Policy was “realistically capable of implementation by the NHS Trusts in a way which does not lead to, permit or encourage unlawful acts?” and concluded that the correct formulation, based on R (Letts) v Lord Chancellor [2015] EWHC 402, was “whether the Policy would (when construed objectively and purposively) lead to, permit or encourage unlawful acts”.

In the court’s view the Policy would realistically only be implemented with CB either being obtained from an NHS pharmacy (Modes 2 and 3) on the one hand or from a commercial compounder (Mode 4) on the other. Modes 2 and 3 were lawful. The court was unable to come to a conclusion on the lawfulness of Mode 4 but was willing to assume it was unlawful.

The companies argued that since the Policy could be implemented through Mode 4, the Policy was unlawful. However, the court concluded that the Policy could not be unlawful, just because it did not prescribe the lawful alternative and proscribe the unlawful. It was sufficient that there were lawful means of implementing the Policy which were realistic (at least in outline) at the time it was promulgated.

Was the Judge wrong to find Modes 2, 3 and 4 to be potentially lawful?

(a) Is CB a modification of Avastin such that when it is supplied under Modes 2-4 it is necessarily a new placing on the market? Is there in any event a placing on the market in relation to Modes 2-4 because there is a release into the distribution chain for each of these modes?

The court followed the decision of the Court of Justice of the European Union (“CJEU”) in Novartis Pharma GmbH v Apozyt GmbH (“Apozyt”), which established that the compounding of Avastin to produce CB would not be a “placing on the market”, and therefore not require a marketing authorisation, provided:

(i) there was no modification to the biological, chemical or physical attributes of the product and

(ii) the compounding was carried out solely on the basis of individual prescriptions (the “Marketing Exemption”)

The CJEU also concluded that a manufacturing authorisation was not required for the preparation of CB where compounding was carried out by pharmacists in dispensing pharmacies solely for retail supply (the “Manufacturing Exemption”). Individual prescriptions evidenced that the supply was for retail purposes and not wholesale distribution.

The Marketing Exemption and the Manufacturing Exemption are collectively referred to as “the Apozyt Exemption”.

The court concluded that, pursuant to the Apozyt Exemption, Modes 2 and 3 did not constitute a “placing on the market”.

The court further concluded that while the Policy did not appear to deal with the mechanics of an individual prescriptions system, the companies had failed to show that the implementation of such a system would be unrealistic.

The court could not come to a conclusion on the lawfulness of Mode 4 but did not consider this necessary to decide the appeal.

(b) Does the Policy unlawfully undermine the Directive (including if all the supply is done under the compounding exemption in Article 3 of the Directive?)

The companies argued that even if the Trusts’ use of CB to treat WAMD in accordance with one or more of the four modes could be brought within the terms of the Apozyt Exemption, “the invariable and systematic use” of the exemption would undermine the scheme of the Directive. The court concluded that this would have the effect of calling into question the Apozyt Exemption in circumstances where the CJEU had already accepted and validated the exemption. Further the court found that the Apozyt Exemption was not limited to small scale preparation and supply of CB. The limitation which the CJEU placed on the scope of the exemption was based not on scale but on the “downstream” or “retail” nature of the supply as manifested by the requirement for prior individual prescriptions. The court found that it did not need to reach a decision on safety as the NICE Guidelines had concluded that such use was safe and that conclusion was not challenged.

(c) Is the Policy contrary to the General Medical Council’s Guidance (the “GMC Guidance”) and if so does that make it unlawful?

Under Section 1 of the Medicines Act 1983, the GMC promotes and maintains proper professional standards. Under the GMC Guidance, doctors should take into account the NICE Guidelines and should usually prescribe licensed medicines. However, doctors are permitted to prescribe unlicensed medicines, where necessary, based on an assessment of individual patients and use resources efficiently for the benefit of patients and the public. In the light of the NICE Guidelines indicating that there are no clinically significant differences in the effectiveness and safety of Avastin as compared to its licensed counterparts, the GMC concluded that it would not be a breach of good medical practice for a clinician to prescribe Avastin off-label as it is cheaper than the licensed alternatives.

Conclusion

Public bodies including CCGs are not required to specify the lawful manner in which their policies can be implemented. As long as there is a lawful option to implement a policy, and the CCGs do not recommend an unlawful course of action, the policy will pass the threshold of lawfulness.

 

Andrew Lidbetter
Andrew Lidbetter
Partner
+44 20 7466 2066
Nusrat Zar
Nusrat Zar
Partner
+44 20 7466 2465
Jasveer Randhawa
Jasveer Randhawa
Of Counsel
+44 20 7466 2998
Sanam Zulfiqar Khan
Sanam Zulfiqar Khan
Senior Associate
+44 20 7466 2014

Navigating Public Procurement in the COVID-19 era

As with almost all areas of commercial activity, public procurement across all sectors is currently experiencing varying degrees of extreme disruption. The UK Cabinet Office has issued general guidance and support in the form of three Procurement Policy Notes: PPN 01/20, addressing how public authorities may meet their urgent and unexpected needs for certain goods, works or services during the COVID-19 outbreak, without infringing procurement law; PPN 02/20, which encourages public authorities to support their existing “at risk” suppliers, in particular by continuing to pay those suppliers promptly during the crisis; and PPN 03/20 advocating the use of procurement cards to ensure the prompt payment of suppliers.  The European Commission has also issued a communication, giving similar guidance to PPN 01/20 (the “EU guidance”).

While the UK and EU guidance give a helpful steer for public bodies and their suppliers alike, time will tell whether the legal framework will be sufficiently flexible to withstand the pressures being exerted by the pandemic.

Key points

  • PPN 01/20 and the EU guidance helpfully confirm that the COVID-19 crisis is an unforeseeable emergency which will generally justify the direct award of public contracts for vital, time-sensitive supplies (such as ventilators and PPE), without any prior competitive tendering procedure.
  • The existing regulations allow for such direct awards, but only where strictly necessary for reasons of extreme urgency. If the urgency is no longer acute, public authorities should instead use an accelerated version of a standard, competitive procedure.
  • Contracting authorities will need to be alive to whether an emergency direct award or an accelerated ordinary procurement procedure is appropriate and lawful.
  • Authorities should continue paying their vulnerable suppliers promptly during the crisis in order to ensure continuity of supply going forwards.
  • The PPNs and the EU guidance are not strictly binding, but ought to be followed where possible and fact-appropriate to do so.
  • Legal challenges might arise, as rival suppliers fight to survive, but courts may be even more deferential than usual towards the discretion of contracting authorities as they seek to manage the crisis.

The UK’s failure to join the EU’s joint procurement scheme

The challenges of procuring large quantities of essential medical equipment in a global health crisis have been highlighted by the recent headlines regarding the UK’s failure to participate in the EU’s joint procurement initiative.

Between 28 February and 19 March 2020, under a mechanism called the Joint Procurement Agreement, the European Commission launched four calls for tenders for personal protective equipment (“PPE“), ventilators and testing kits, on behalf of 25 EU Member States.  The UK did not participate (despite being eligible to do so) but, as has been widely reported, the precise reason is unclear.  In any event, it appears that the four calls for tenders by the Commission have had varying degrees of success and that, to date, none of them has actually resulted in the delivery of any items of equipment within the EU.

PPN 01/20 and the EU guidance

The headline message of PPN 01/20 and the EU guidance is that contracting authorities at a national level may deploy direct awards, without holding any advertised, competitive tendering procedure, where this is necessary to meet an urgent demand for goods, works or services triggered by the pandemic.  Such urgency may well exist for medical supplies such as ventilators and PPE, including masks and gowns.

The PPN advocates recourse to regulation 32(2)(c) of the Public Contracts Regulations 2015 (PCR), which permits a direct award where:

  • there is an extremely urgent need to procure the relevant goods, works, or services;
  • such urgency was triggered by events unforeseeable by the contracting authority;
  • the accelerated version of the ordinary open or restricted procedure would not be sufficiently rapid; and
  • the urgency is not attributable to the contracting authority.

Reasons of extreme urgency triggered by unforeseeable events

In the immediate term, the message from the UK Government and the European Commission is that the COVID-19 crisis is clearly a circumstance of “extreme urgency”, which was wholly unforeseeable by contracting authorities. Procurements for goods that are urgently required for tackling the ongoing public health crisis (e.g. ventilators and PPE) will almost certainly satisfy these limbs, and will be difficult to challenge on any meritorious basis, depending on the exact circumstances.

As the crisis continues over time, it will progressively become less likely that circumstances can be considered sufficiently urgent and “unforeseeable” that it is lawful for a contracting authority to default to a direct award. Legal challenges to direct awards by contracting authorities could be seen in due course.

Accelerated procedure not sufficient

The recognition of urgency is not an unlimited pass for contracting authorities to make direct awards, circumventing the usual requirement for a competitive procedure. The accelerated ordinary procedures may be deemed sufficiently rapid. In particular, using a direct award is unlikely to be appropriate where it is not possible to put in place the contract in a timescale that is shorter than the minimum period permitted for completion of an accelerated competitive procedure.

Not attributable to the contracting authority

Contracting authorities are precluded from using the direct award procedure where their own actions (e.g. delay) have caused the need for an urgent process.  Hence, an authority may not revert to a direct award simply because it has been slow to start the necessary procurement process.

Other options

PPN 01/20 also sets out various additional options for contracting authorities to consider when meeting the demands of the crisis. These include the options of calling off contracts from existing framework agreements and of  extending their existing contracts in order to meet increased demand.  Such variations to an existing public contract are permitted by Regulation 72(1)(c) of the PCR, provided that the increase in demand was unforeseeable, the overall nature of the contract is not substantially altered and any additional sum payable does not exceed 50% of the value of the original contract. It would be prudent to limit any contract modifications to what is strictly necessary in order to deal with the present crisis.

PPN 02/20

PPN 02/20 focuses on relief for the existing contractors of public bodies. The key message is that public bodies should continue to make payments to any of their suppliers who are “at risk”, at least until 30 June 2020. Whether a supplier is “at risk” is a low bar.

Contracting authorities are advised to conduct a full review of their supplier portfolio at speed, in order to identify “at risk” suppliers. Simultaneously, they are asked to consider carefully the risks of continuing to make payments to such suppliers, and to balance such payments against the continuing need to achieve value for money for the taxpayer; although such checks should not delay payments being made. Suppliers who were already struggling to meet performance standards pre-crisis should not benefit from the relief.

PPN 02/20 also contains advice for contracting authorities dealing with suppliers who threaten to invoke the force majeure clause in their contract, or else claim that the contract has been frustrated. Broadly, force majeure is a contractual term that may permit a party to terminate the contract, or be excused from performing it to some degree; frustration is a common law doctrine whereby a contract may be automatically terminated because an event not contemplated by it has rendered performance of the contract impossible. Both concepts have a high bar. The main takeaway from PPN 02/20 here is that contracting authorities should engage with suppliers making such claims, attempt to maintain service continuity as far as possible, and otherwise seek legal advice.

PPN 03/20 follows up PPN 02/20 by urging Central Government authorities to use procurement cards as a means of ensuring the prompt payment of their suppliers.  It recommends that the spending limits for key card holders are increased to £20,000 per transaction and £100,000 per month.

The potential for future disputes and legal challenges

It is easy to see how an already overstretched public body in crisis mode may struggle to comply fully with its procurement law obligations and with the guidance. The added pressures associated with managing existing contracts may also adversely affect the timetabling of future procurements addressed by PPN 01/20, particularly if resource is stretched as result of the crisis such that the same team within the public body covers both areas.

It will be key for contracting authorities and their suppliers to proceed in as open and communicative a fashion as possible, in order to avoid any potential disputes. PPN 02/20 notably provides some guidance for contracting authorities facing claims of contract frustration or force majeure. Suppliers should exercise caution in invoking a force majeure clause, or claiming the contract has been frustrated, given the high bars applicable to such claims, and instead seek to come to a mutually agreeable arrangement as far as is possible.

In the event that a dispute does arise, COVID-19 will not be a “get out of jail free” card for contracting authorities. Courts, which are generally already deferential to public bodies in any public law challenge, are naturally likely to view any detours from the guidance through that lens, but will nonetheless scrutinise whether the public body’s contingency arrangements were adequate in the circumstances.

Nusrat Zar
Nusrat Zar
Partner
+44 20 7466 2465
Adrian Brown
Adrian Brown
Of Counsel
+44 20 7466 1822
Andrew Lidbetter
Andrew Lidbetter
Partner
+44 20 7466 2066
Tim Briggs
Tim Briggs
Partner
+44 20 7466 2806
Rachel Lidgate
Rachel Lidgate
Partner
+44 20 7466 2418
Chloe Woodward
Chloe Woodward
Associate
+44 20 7466 2280
Jasveer Randhawa
Jasveer Randhawa
Of Counsel
+44 20 7466 2998