AXA General Insurance Ltd v HM Advocate

The appellants, employers' liability insurers, sought declarator that the Damages (Asbestos-related Conditions) (Scotland) Act 2009 was unlawful. They challenged the Act as incompatible with article 1 of Protocol 1 to the European Convention on Human Rights (A1P1) and as an unlawful exercise of devolved legislative power at common law. The Supreme Court held that the insurers had victim status for the purposes of A1P1, but that the Act pursued a legitimate public interest aim and was not disproportionate in the circumstances, including having regard to its limited scope, the long latency of asbestos conditions and the insurers' exposure to long-term risk.

On the common law challenge the court held that Acts of the Scottish Parliament are not amenable to review on grounds of irrationality, unreasonableness or arbitrariness in the ordinary administrative-law sense; review for such grounds is unnecessary where Convention rights provide the statutory limitation on competence. Finally, the court allowed the cross-appeal of the third to tenth respondents: persons diagnosed with pleural plaques are "directly affected" within rule 58.8(2) of the Rules of the Court of Session and may enter the judicial review process.

The appellants were insurers who would, in practice, meet most costs of employers’ liability claims for asbestos-related conditions. The Damages (Asbestos-related Conditions) (Scotland) Act 2009 declared that asymptomatic pleural plaques, pleural thickening and asbestosis are non-negligible personal injuries and are actionable, and it treated sections 1 and 2 as having always had effect subject to specified savings. The insurers petitioned the Court of Session for reduction of the Act, arguing (i) incompatibility with A1P1 rendering the Act outside the Scottish Parliament’s legislative competence under section 29(2)(d) of the Scotland Act 1998, and (ii) that the Act was an unreasonable, irrational and arbitrary exercise of devolved legislative authority at common law. Third to tenth respondents, persons with diagnosed pleural plaques, sought to be parties to the proceedings under rule 58.8(2).

The issues framed by the court were: (i) whether the insurers had victim status under A1P1; (ii) if so, whether the Act interfered with "possessions" and, if so, whether the interference pursued a legitimate aim and was proportionate; (iii) whether Acts of the Scottish Parliament are amenable to common-law judicial review on grounds of irrationality; and (iv) whether the third to tenth respondents were "directly affected" for the purposes of rule 58.8(2).

The court reasoned that the insurers were members of a class at real risk of being directly affected by the Act and that the money potentially payable by them was a "possession" under A1P1. The Scottish Parliament's aim of remedying what it perceived as a social injustice for those diagnosed with asbestos-related conditions was a legitimate public interest objective within its margin of appreciation. On proportionality the court concluded that (a) the Act's effect was confined in scope (preserving defences and limiting retrospective effect by excluding settled or determined claims), (b) insurers operate in a risk-bearing commercial sector where unforeseeable long-term liabilities can arise, and (c) the Act remedied a situation where courts had for about twenty years treated pleural plaques as actionable; on that basis the increased burden on insurers was not disproportionate. Accordingly the A1P1 challenge failed.

On the common-law point the court held that, subject to constitutional constraints (including Convention rights and the rule of law), the Scottish Parliament is a democratically elected legislature with plenary devolved powers; ordinary administrative-law grounds of irrationality, unreasonableness or arbitrariness are not appropriate bases for review of primary legislation of that kind. Finally, the court reformed the approach to participation in Scottish judicial review: standing in the public-law context is to be expressed as "standing" based on a sufficient interest. The third to tenth respondents were held to be directly affected and entitled to enter the process under rule 58.8(2).

Appeal dismissed. The appellants had victim status under A1P1 but the Damages (Asbestos-related Conditions) (Scotland) Act 2009 pursued a legitimate aim and was reasonably proportionate, so it was within the Scottish Parliament’s legislative competence. The common-law challenge based on irrationality, unreasonableness or arbitrariness of primary devolved legislation was rejected. The third to tenth respondents were "directly affected" and entitled to enter the judicial review process under rule 58.8(2).

Initial petition dismissed by the Lord Ordinary (Lord Emslie): [2010] CSOH 2, 2010 SLT 179. The appellants reclaimed; the First Division allowed the reclaiming motion in part by repelling the answers for the third to tenth respondents on standing but otherwise refused the reclaiming motion: [2011] CSIH 31, 2011 SLT 439. The case was then appealed to the Supreme Court: [2011] UKSC 46 (this judgment).