Supreme Court delivers landmark decision on proportionality in EU cases

The Supreme Court has clarified in R (Lumsdon) v Legal Services Board; Bar Standards Board (Intervener) [2015] UKSC 41that the concept of proportionality is different in an EU context, as compared to an ECHR context. This case has implications for those involved in areas affected by EU legislation.

24/06/2015

R (on the application of Lumsdon) v Legal Services Board; Bar Standards Board (Intervener) [2015] UKSC 41

The Supreme Court has clarified that the concept of proportionality is different in an EU context, as compared to an ECHR context. This case has implications for those involved in areas affected by EU legislation.

Facts

QASA is a scheme for the assessment of criminal advocates.  It was approved by the Legal Services Board (LSB) on 26 July 2013. QASA was challenged by a group of criminal barristers backed by the Criminal Bar Association by judicial review proceedings in the High Court and the Court of Appeal. The Claimants appealed to the Supreme Court and were given permission to appeal on the single question of whether the decision to approve the scheme by the LSB was contrary to regulation 14 of the Provision of Services Regulations 2009 ("the Regulations").

The Regulations were made in order to implement the Services Directive (2006/123/EC). Regulation 14 provides as follows:

  1. "A competent authority must not make access to, or the exercise of, a service activity subject to an authorisation scheme unless the following conditions are satisfied.
  2. The conditions are that -
    1. the authorisation scheme does not discriminate against a provider of the service,
    2. the need for an authorisation scheme is justified by an overriding reason relating to the public interest, and
    3. the objective pursued cannot be attained by means of a less restrictive measure, in particular because inspection after commencement of the service activity would take place too late to be genuinely effective.”

The Appellants argued that the QASA scheme fails to meet the conditions in regulation 14(2)(b) and (c). As those provisions are derived from article 9(1)(b) and (c) of the Services Directive, and must be interpreted so as to give effect to the Directive, it was common ground that the argument was in substance a submission that the scheme falls within the ambit of the Directive and fails to comply with article 9(1)(b) and (c).

Proportionality in EU law

The Supreme Court made clear at the outset that the principle of proportionality in EU law is neither expressed nor applied in the same way as the principle of proportionality under the European Convention on Human Rights (ECHR). Accordingly, and although there is some similarity, the four-stage analysis of proportionality which was explained in Bank Mellat v. Her Majesty's Treasury (No 2) [2013] UKSC 39 in relation to the justification under domestic law (in particular under the Human Rights Act 1998) of interferences with fundamental rights, is not applicable to the concept of proportionality in EU law.

The division of responsibility between the Court of Justice and national courts

Issues of proportionality may arise either directly before the ECJ (for example when the legality of an EU measure is challenged in direct proceedings or when enforcement proceedings are brought by the Commission against a member state in relation to a national measure) or may arise before national courts. A national court may not declare an EU measure to be illegal, but if an allegation of the same is considered to be well-founded the issue may be referred, or in the case of a final court, an issue may be referred if it is other than acte clair.

On the other hand, the Supreme Court considered that if the validity of a national measure is challenged before a national court on the ground that it infringes the EU principle of proportionality, it is in principle for the national court to reach its own conclusion.

The nature of the test of proportionality

The Supreme Court stated that proportionality as a general principle of EU law involves a consideration of two questions:

  1. Whether the measure in question is suitable or appropriate to achieve the objective pursued; and
  2. Whether the measure is necessary to achieve that objective, or whether it could be attained by a less onerous method.

There is some debate as to whether there is a third question namely: whether the burden imposed by the measure is disproportionate to the benefits secured, although the Supreme Court noted that the court usually omits this question from its formulation of the proportionality principle.

The Supreme Court stated that as a generalisation, proportionality as a ground of review of EU measures is concerned with the balancing of private interests adversely affected by such measures against the public interests which the measures are intended to promote.

The Supreme Court noted that the other critical aspect of the principle of proportionality is the intensity with which the principle has been applied. Accordingly, the Supreme Court considered that it might be helpful to describe the Court's general approach in relation to three types of cases as follows:

1. The review of EU measures

Where EU legislative or administrative institutions exercise a discretion involving political, economic or social choices, especially where a complex assessment is required, the court will usually intervene only if it considers that the measure is manifestly inappropriate. The Supreme Court's view was that whilst the ECJ has not explained how it determines whether the inappropriateness of a measure is or is not manifest, its practice in some cases suggests that it is sufficient to establish that there is a clear and material error, in law, or in reasoning, or in the assessment of the facts, which goes to the heart of the measure. In other cases, the word suggests the degree of obviousness with which the impugned measure fails the proportionality test. Where a measure is challenged on the ground that it interferes with fundamental rights, article 52(1) of the EU Charter of Fundamental Rights is also relevant.

2. The review of national measures relying upon derogations from general EU rights

The Supreme Court noted that issues of proportionality have arisen most often in relation to national measures taken in reliance upon provisions in the Treaties or other EU legislation recognising permissible limitations to the "fundamental freedoms" (i.e. the free movement of goods, workers, and capital, and the freedom of establishment and freedom to provide services), but are also relevant to the justification of national measures falling within the scope of EU law, such as the right to equal treatment.

Articles 52(1) and 62 of the Treaty of the Functioning of the European Union recognises permissible limitations to certain rights justified upon grounds of public policy, public security, or public health. This is particularly relevant in the field of legal services provision. The Supreme Court particularly noted that in this field, the ECJ has accepted that restrictions on freedom of establishment or the provision of services can be justified by the need to protect the interests of the recipients of those services, and by the public interest in the administration of justice.

The Court's general approach is set out in the case of Gebhard v. Consiglio dell’Ordine degli Avvocati e Procuratori di Milano (Case C-55/94) [1995] ECR I-4165:

National measures liable to make less attractive the exercise of fundamental freedoms guaranteed by the Treaty must fulfil four conditions: they must be applied in a non-discriminatory manner; they must be justified by imperative requirements in the general interest; they must be suitable for securing the attainment of the objective which they pursue; and they must not go beyond what is necessary in order to attain it.

3. The review of national measures implementing the EU law.

Member states must also comply with the requirement of proportionality, and with other aspects of EU law, when applying EU measure such as Directives. To the extent that the directive requires the national authority to exercise a discretion involving political, economic or social choices, especially where a complex assessment is required, the court will in general be slow to interfere with that evaluation. The Supreme Court stated that in applying the proportionality test in circumstances of that nature, the court has applied a "manifestly disproportionate" test (see for example R v Minister of Agriculture, Fisheries and Food, Ex p National Federation of Fishermen's Organisations and Others (Case C-44/94) [1995] ECR I-3115).

Where the member state relies on a reservation or derogation in a directive in order to introduce a measure which is restrictive of one of the fundamental freedoms guaranteed by the Treaties, the measure is likely to be scrutinised in the same way as other national measures which are restrictive of those freedoms.

The Supreme Court noted that Court of Appeal in Lumsdon had based its approach upon the judgment of the Court of Appeal in R (Sinclair Collis) v. Secretary of State for Health [2011] EWCA Civ 437, and had based its approach on whether the scheme was "manifestly inappropriate", but that approach could be open to criticism because it reflects the approach of the ECJ in a different context.

Application of principles to QASA

It was identified that the "overriding reason relating to the public interest" justification for the scheme was the protection of consumers and other recipients of the services in question. It was further noted that the central issue was the particular character and purpose of the judicial assessment which takes place after the advocate has been practising at the level in question on the basis of his or her self-assessment.

Taking into account the case law of the court, the Supreme Court stated that consideration of whether the relevant objectives could be attained by means of a less restrictive measure:

"It is clear from the case law of the court, summarised in paras 55-67, that consideration of that issue in a context of this kind requires scrutiny of the justification put forward for rejecting the less stringent alternative. A “manifestly inappropriate” or “manifest error” test is not appropriate in this context; but, as we have explained, that is not to say that no discretion is allowed to the primary decision-maker as to the level of protection which should be afforded to the public interest in question or as to the choice of a suitable measure…

The court must apply the principle of proportionality and reach its own conclusion…

A decision of the present kind is disproportionate if a less restrictive measure could have been adopted, provided that it would have attained the objective pursued."

The Supreme Court said that in the circumstances it was necessary for the matter to be reconsidered on the proper basis. In particular:

  1. It is for the court to decide whether the scheme is proportionate, as part of its function in deciding upon its legality.
  2. In so doing it should approach the matter in the same way in which the Court of Justice would approach the issue in enforcement proceedings
  3. Article 9(1)(c) requires the court to decide, in the present case, whether the Board has established that the objectives pursued by the scheme, namely the protection of recipients of the services in question, and the sound administration of justice, cannot be attained by means of a less restrictive scheme, and in particular by means of the procedure set out in the BSB proposal.
  4. That decision does not involve asking whether the Board’s judgment was “manifestly wrong”, or whether the scheme is “manifestly inappropriate”. The court must decide for itself, on the basis of the material before it, whether the condition set out in article 9(1)(c) is satisfied.
  5. In considering the question of necessity arising under article 9(1)(c), it should be borne in mind that EU law permits member states to exercise a margin of appreciation as to the level of protection which should be afforded to the public interest pursued. It also allows them to exercise discretion as to the choice of the means of protecting such an interest, provided that the means chosen are not inappropriate.

In summary, the Supreme Court found that the QASA scheme was proportionate to the identified objectives, and that the judgement made by the LSB in approving the scheme had not fallen outside the appropriate margin of appreciation.

The Supreme Court accordingly did not consider that it was necessary to reach a conclusion on whether QASA is an authorisation scheme falling within the scope of the Directive, although observed that the answer to that question did not appear straightforward.

Bevan Brittan have a wealth of experience working with public, private and third sector organisations around providing legal advice in relationship to EU regulations.  If you have any questions regarding this decision as it relates to your organisation, please get in touch.

Iain Miller and Amy Tschobotko acted for the Bar Standards Board in this case in the High Court, Court of Appeal and Supreme Court.

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