Legal Briefing

Dr Dolittle and the ECHR

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Public Sector | 04 July 2011

One of the animals encountered by Dr Dolittle on his travels was the ‘pushmi-pullyu’, a cross between a unicorn and a gazelle. It had two heads, at opposite ends of its body and when it moved it tried to go in two different directions at once. Several recent decisions suggest that there is an element of pushmi-pullyu in the courts’ approach to Article 1 Protocol 1 (A1P1) of the European Convention of Human Rights (ECHR).

At the same time as there are cases where the range of A1P1 is being expanded by an ever-widening understanding of what can be a ‘possession’ so as to attract the protection of A1P1, there are also cases where the degree of protection provided is being diminished by a very broad notion of what can be in the ‘public interest’ so as to justify interference with a possession. Two recent cases, AXA General Insurance Ltd & ors v The Scottish Ministers & ors [2011] and Brosset-Triboulet & ors v France [2010] illustrate these trends well.

A1P1 OVERVIEW

A1P1 can be characterised as protecting the right to property. It is the only ‘human’ right within the Human Rights Act 1998 that is expressly available to corporate bodies:

‘Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.

The preceding provisions shall not, however, in any way impair the right of a state to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.’

In very general terms, the European Court of Human Rights (ECtHR) has analysed A1P1 as containing three distinct but connected rules:

  1. the general rule of peaceful enjoyment set out in the first sentence of the article;
  2. the rules concerning deprivation of property (second sentence); and
  3. the rules concerning state control of use (second paragraph).

In theory, at least, courts should assess whether the second two rules are applicable before considering whether the first rule has been complied with. In practice, a less structured approach is normally taken, with courts first assessing whether there has been any form of interference with possessions and then assessing the justification for that interference.

A1P1 also has an implicit procedural obligation – there must be a reasonable opportunity to put a case to challenge the measures constituting the interference with possessions. Most often the procedural obligation will overlap almost entirely with the procedural protection granted by Article 6 of the ECHR since any ‘interference’ is likely to amount to a determination of a civil right. A good illustration of this can be seen in Bank Mellat v HM Treasury [2011]. Bank Mellat, an Iranian bank, was subject to a financial restrictions order that effectively excluded it from the UK financial market. As of part of its unsuccessful (so far – the case is likely to go to the Supreme Court) challenge to the order, Bank Mellat argued that there had been a breach of the A1P1 procedural obligation in that the restrictions order had been made before it had been given notice of the Treasury’s reasons for making the order and the chance to make representations against it. This was run in parallel to an Article 6 claim. The majority in the Court of Appeal were satisfied that the opportunity to challenge the order on judicial review grounds, after the event, was sufficient in the particular circumstances to meet both the procedural obligation under A1P1 and also Article 6.

POSSESSIONS AND INTERFERENCE

In Axa the court’s consideration of the notion of ‘possessions’ was bound up with its consideration of ‘interference’. The background to Axa lies in the Supreme Court decision in Rothwell v Chemical & Insulating Co Ltd & anor [2006]. In Rothwell it was held that asymptomatic pleural plaques did not cause damage to an individual and therefore did not give rise to an action in tort (pleural plaques, often caused by exposure to asbestos, had long been the subject of personal injury litigation against employers on the basis that the plaques can cause considerable anxiety since they are an indicator – without being a cause – that an individual has a greatly increased lifetime risk of mesothelioma). The Rothwell decision was controversial and in Scotland the Scottish Parliament enacted the Damages (Asbestos-related Conditions) (Scotland) Act 2009 (the 2009 Act), which effectively reversed it, providing that asbestos-related pleural plaques were actionable personal injuries. Several large insurance companies, each of whose business included employers’ liability insurance, brought judicial review proceedings to establish that the 2009 Act was unlawful and the grounds included a claim that it infringed their A1P1 rights.

The ‘possessions’ in Axa were the capital resources of the insurance companies and in a sense that was not strongly disputed. The court did take the opportunity, however, to confirm that the notion of possessions was to be given a very wide interpretation:

‘The general protection afforded by A1P1 extends to what might properly be said to constitute the patrimony of the person concerned, whether that person be natural or juristic.’

What was controversial in Axa was whether the 2009 Act ‘interfered’ with the insurance companies’ possessions. There were two main strands to this argument. First was the issue of whether the imposition retroactively by the state of an obligation on a citizen (in this case an employer, but standing behind the employer the insurance company) to pay money to another citizen (the employee with pleural plaques) could be an interference. The court had little difficulty, relying on an analogy with the imposition of taxation that the ECtHR had clearly held in principle to be an interference, in concluding that it was. The second strand of the argument was whether the fact that the insurance companies’ liability was secondary or derivative – the liability created under the 2009 Act being on the employer – meant that this was too remote to be an interference. In assessing this, the court took account of the general principle that the protections conferred by the ECHR ‘must be real and effective’, and also looked at what actually the Scottish Parliament was trying to do. It concluded that:

‘The plain reality was that the employer’s liability insurers were the party who would have to “foot the bill” for claims relying on the 2009 Act. That was manifestly the contemplation of the Scottish Parliament when it enacted the legislation.’

In light of that, the remoteness argument was not well founded.

The position in Brosset-Triboulet was that the ‘possession’ was not recognised in the domestic law of the state concerned, France, as a property right, but was nevertheless found by the ECtHR to have sufficient substance to gain the protection of A1P1. The background to the claim in Brosset-Triboulet was that, at the turn of the 20th century, a local authority in Brittany granted an authority to occupy and build a dyke on maritime coastal property in Brittany. The recipient of the authority built not just a dyke but also, and illegally, a house. Notwithstanding the construction of the house, the authority was regularly renewed by the local authority, which also received local property taxes. A provision of the original and all subsequent authorities granted was that if ever the authority was withdrawn, the site had to be restored to its original state. In 1993 the local authority, as a result of the implementation of new legislation concerning the use of coastal land, refused to renew the authority. It subsequently obtained an order that the house should be demolished so as to restore the site to its original state. In the A1P1 challenge to this, the first issue the ECtHR considered was whether, because in domestic law the revocable authority to occupy granted no ‘right’ in relation to the property, the occupiers could have acquired a ‘possession’. Confirming that the concept of ‘possession’ had an autonomous meaning and was independent from the formal classification in domestic law, the court concluded that they had:

‘In the present case the time that had elapsed had the effect of vesting in the applicants a proprietary interest in peaceful enjoyment of the house that was sufficiently established and weighty to amount to a “possession” within the meaning of… A1P1.’

The breadth of the interpretation to be given to ‘possessions’ can be seen from other recent cases, as well as Axa and Brosset-Triboulet. Examples include:

  • the contractual entitlement to interest at a favourable rate (Affaire Sud Parisienne de Construction v France [2010]);
  • commercially confidential information (Veolia ES Nottinghamshire Ltd v Nottinghamshire County Council & ors [2010]); and even, arguably,
  • the right of a businessman to enter the UK where refusal of entry has led to economic loss (Modi v United Kingdom Border Agency [2010]).

JUSTIFICATION

Establishing that there has been an interference with a possession is not sufficient to demonstrate a breach of A1P1 – a state can justify the interference. The general position on justification was neatly encapsulated in Axa:

‘The state could justify… by showing that the measure served a legitimate aim in the public interest and that the measure was proportionate, in the sense of striking a fair balance between the rights of the citizen concerned and the public interest.’

The proportionality requirement means that in cases where the interference amounts to a deprivation of property as opposed to some form of control over the use of property, it should only be in exceptional cases that it can be justified absent some measure of compensation. More generally, when considering both proportionality and the legitimate aim of a measure, the courts allow the state a very wide margin of appreciation indeed. That is strikingly illustrated in both Axa and Brosset-Triboulet where the courts accepted, even though these were in substance deprivation cases in which no compensation was payable, that the interferences were justified.

In Brosset-Triboulet, although (surprisingly) suggesting that it was not a deprivation case because the house had not yet been demolished, the ECtHR held that the lack of compensation (the house had been valued as being worth between €800,000 and €1m) did not mean that the interference was disproportionate. In reaching that view the court laid particular emphasis on the legitimate aim of the social policy being pursued in the new legislation that triggered the refusal to renew the authority to occupy – that there should be no interference with the natural state of the seashore and that there should be enhanced public access to that public seashore property – and also emphasis on the fact that the applicants must have known that they would one day be directed to demolish the house. A more convincing analysis is contained in the dissenting judgment, which highlighted that the local authority had not considered whether measures less radical than demolition could be effective. This, allied to a lack of compensation, led the dissenting judges to conclude that the interference was disproportionate.

Although there was no dissenting judgment in Axa, the court perhaps signalled a degree of unease by using the time-honoured expression ‘while we have not found these matters free of difficulty’ when explaining that it had concluded that the 2009 Act was justified and consequently that there was no infringement of the insurers’ A1P1 rights. In reaching that conclusion the court first accepted that the Scottish Parliament had been entitled to conclude that the effect of Rothwell produced a social injustice to those diagnosed with benign pleural plaques and as a result the 2009 Act had a legitimate aim. In respect of the proportionality of the 2009 Act, the court emphasised the wide margin of appreciation. Within that context, the court was persuaded in particular by two factors. First, that from 1984 until the Rothwell decision, it had been believed by the insurance industry that their insured were liable to meet pleural plaque claims and insurance premia had been set accordingly. Secondly, that insurers do take a risk in relation to common law developments leading to increases in liabilities – that:

‘It cannot be said that the decision to place financial responsibility on the insurers was one which lay outside the margin of appreciation which the legislature enjoys in this sphere.’

WHAT NEXT?

Axa is likely to go to the Supreme Court and, if the insurers lose, to the ECtHR bearing in mind the amount at stake – some insurance industry sources estimate the likely cost of the 2009 Act as being well in excess of £1bn. Either as a result of that, or in other cases, there will undoubtedly be further elaboration of what A1P1 requires. In the meantime advisers need to be astute to the very broad range of economic interests that in principle attract the protection of A1P1 but at the same time clear as to the difficulties that can be faced in actually securing that protection.