Karagul & Ors, R (on the application of) v Secretary of State for the Home Department

The EU-law principle of effectiveness applies only where a claimant identifies a directly effective EU right. It does not convert a standstill clause into a right to a particular domestic remedy. Administrative review and judicial review must be assessed together, and the system is unlawful only if exercise of the right is practically impossible or excessively difficult.

Common-law fairness generally requires a prior opportunity to answer a proposed finding of dishonesty or bad faith. In ECAA business applications, a concern that the applicant lacks a genuine intention to run the proposed business normally calls for an interview or written minded-to process. Administrative review cannot bar new evidence relevant to that allegation. These safeguards do not generally apply where refusal rests only on a defective business proposal.

Four consolidated judicial review claims were brought by Turkish nationals challenging refusals of leave to remain as businesspersons under the ECAA. Each refusal was followed by administrative review. The claimants argued that the replacement of statutory merits appeals by administrative review and judicial review breached the EU-law principle of effectiveness. They also argued that the decision-making process was procedurally unfair because the Secretary of State concluded that they lacked a genuine intention or wish to establish the proposed businesses.

Mr Ayten had previously appealed an ECAA refusal to the First-tier Tribunal, while Mr Yildiz’s attempted appeal was dismissed because no right of appeal existed. The central issues were whether the domestic remedies were effective and whether fairness required prior notice and an opportunity to answer the allegation of bad faith.

Disposition. The four claims succeeded on common-law procedural fairness grounds. The refusal and administrative-review decisions were quashed and the applications were remitted for fresh consideration. The EU-law effectiveness challenge was dismissed.

1. The principle of effectiveness could not be invoked in reliance on article 13 of the Ankara Agreement because that provision was not directly effective. Article 41(1) of the Additional Protocol was directly effective, but operated as a standstill clause against new restrictions on establishment. It did not create a right to additional procedural safeguards where no new restriction had been identified.
2. EU procedural autonomy left the United Kingdom to determine its domestic procedures, subject to equivalence and effectiveness. Administrative review and judicial review had to be considered together. The relevant question was whether the combined system made exercise of the EU right practically impossible or excessively difficult. Effective protection did not require a merits-substitution jurisdiction or a power to admit new evidence in every case.
3. Procedural fairness was an objective question for the court. The requirements were summarised and applied by reference to R (Citizens UK) v Secretary of State for the Home Department [2018] EWCA Civ 1812, R (Balajigari) v Secretary of State for the Home Department [2019] EWCA Civ 673, and Akturk v Secretary of State [2017] EWHC 297 (Admin).
4. Where a public authority proposes to find that an applicant has acted dishonestly, in bad faith or disreputably, fairness generally requires an interview or a written minded-to process. The applicant must know the substance of the concern, have an opportunity to respond, and have the response considered before the final decision. A review process which absolutely bars new evidence relevant to that allegation is highly likely to be unfair.
5. An application under paragraph 21 of HC510 involves a broad, evaluative and predictive assessment of business viability. Where refusal rests only on a defective business plan, there is ordinarily no duty to interview or operate a minded-to process. Where the Secretary of State uses language stating that the applicant lacks a genuine intention or wish, however, that language conveys an allegation of bad faith. The Guidance could not cure the unfairness by directing caseworkers to use inappropriate labels.
6. The unfairness was material because the court could not confidently conclude that prior notice, representations or additional evidence would have made no difference. Individual subsidiary complaints were dealt with in the Annexe: some merits complaints failed, but certain paragraph 4 decisions were inadequately reasoned or treated breaches as automatically fatal, and Mr Yildiz should have been asked for further evidence of experience.

These were first-instance judicial review claims. Mr Ayten had previously appealed an ECAA refusal to the First-tier Tribunal, which dismissed the appeal. Mr Yildiz’s attempted appeal against refusal was dismissed because no right of appeal existed. The four judicial review claims were consolidated before this court.