3 - Regulation (Continued x 2)

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PUBLIC LAW II 2010/11

Part I: Contemporary techniques of governance

A. Regulation and Governance (continued x 2)

4. Regulatory Agencies process and accountability

The Ofdog model

To recap, we n ot ed in th e previ ous lec tu re ho w Co ns erva t ive priva t is a t io n p o licies fedreg u lat io n in th e gu is e o f th e Ofd o g mo del :

y A single, independent reg u lato ry agency, h eaded by a Direc to r-General, f o r eac h ind ust ry

o S o u lt ima t ely, th e b u lk o f th e reg u lato ry p o wer ve st ed in th e DGy W ith in a general reg u lato ry framew o rk pr o vided by th e priva t is a t io n st a tut e,

prac t ical o pera t io ns predica t ed o n a s yst em o f licensing o E. g. to be a wa t er su pplied, y ou h ad to h ave a licen s e fr o m th e DG w h ich o f

cou rs e w ou ld h ave T s and C s wh ich cou ld h ave reg u la to ry req u iremen ts wri tt en in to th em .

y Co n t ro l o f th e d o minan t firm via a price-cap formula , in t ended to incen t ivis e grea t erefficiency [RPI-X]

y Th e DGs as par t o f a reg u lato ry network , th e co mpe t it io n a utho rit ies inclu dedy La tt erly, emp h as is o n quality reg u lat io n a s par t o f th e ec o no mic reg u lat io n

o Needed a s th e price-cap wa s sho wn to h ave a p ot en t ially adver s e effec t .

Th is so rt o f inst itut io nal arc h it ec tu re o f reg u lat io n came to be h eavily cri t icis ed e s pecially bypu blic lawyer s . Th e ch ief c o ncern wa s th is idea o f giving th e s e p o wer s to an individ u al (th eDG) as th es e legal p o wer s were very s ignifican t indeed .

- E. g. th e DG f t elec o mm u nica t io ns wou ld decide w h ich co mpanie s cou ld en t er th emarke t place, th e price-cap o n th e d o minan t firm, ho w m u ch new en t ran ts wou ldpay to en t er e t c S ignifican t deci s io ns affec t ing both co nsu mer s and c o mmercialen t erpri s e s .

Th e arg u men t wa s th a t th ey were given a hu ge am ou n t o f dis cre t io n and th ere were manylegi t imacy i ssu es st emming fr o m giving su ch a large am ou n t o f po wer to an individ u al. It allo ws f o r very per so nali s ed f o rm s o f reg u lat io n and al so , a real lack o f t ran s parency in m u ch o f th e deci s io n making .

Th e st a tuto ry framew o rk s e t u p u nder th e co ns erva t ive s wa s de t erminably o pen-ended o rvagu e . It is qu it e clear th a t th e co ns erva t ives , thou gh mo ving to an American m o del o f priva t e o wner sh ip wi th reg u lat io n, were keen to avo id th e elemen ts o f h eavy de t ailedframew o rk wh ich came wi th mu ch lit igat io n s aid to h ave c h arac t eri s ed th e Americans yst em .

S ources of legitimacy for agency action



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Co ncern s ab out a lack of procedural safeguards and o f insufficient accountability in th e ca s eo f th e Ofdo gs s pu rred a s earc h f o r agency legi t imacy - as expre ss ed in t erm s o f th e co revalu es wh ich agencie s need to s a t is fy in o rder to meri t and receive p u blic appr o val. Indeed,th is became a lei t mot if o f UK pu blic law in th e 1990 s . An important link was being made withregulatory effectiveness : many reg u lato rs o pera t e wi thout su fficien t legi t imacy to do th eir

jo

b with

f u

ll co

nfidence, weakeningth

e regu

lato

ry enviro

nment

and pro

mpting agencie

s to

o pera t e defen s ively .1

A standard template was produced for the purposes of agency design and evaluation:

y Legi s lat ive manda t ey Exper t is ey Efficiency and effec t ivene ss y Du e pr o ce ss y Accou n t abili t y

Legi s lat ive manda t e

S o agencie s were req u ired to h ave a clear and u nder st andable legi s lat ive manda t e . Th e ideah ere o f cou rs e is th a t an agency need s a clear p u rp os e w h ich shou ld be s e t out in st a tut eand th a t it shou ld be given clear p o wer s to perf o rm th a t manda t e .

Opera t io n o f th is crit eria sh if t ed wi th NL; th e C s cen t red o n price c o n t ro l and th is wa s s eento be too narr o w . Under NL, th es e manda t es increa s ed f o r vir tu ally all agencie s to t ake in to acc ou n t so cial and envir o nmen t al aim s . Of cou rs e, wi th mo re aim s , co me m o re c o mpe t ingin t ere sts and thus , mo re agency di s cre t io n h a s is bu ilt into th e s yst em .

Exper t is e

Go es back to th e arg u men t th a t we h ave agencie s beca us e th ey re mean t to h ave exper t is ein th e relevan t field . S o it h as to be en su red th a t th e exper t is e o f th e agency d o es indeedco ver th e area th ey re reg u lat ing .

Efficiency and effec t ivene ss

Efficiency o f th e agency i ts elf b ut also , o f th e reg u lat ed s ec to r wh ich th e agencyi s reg u lat ing . Not e th a t both o f th e s e can be very diffic u lt to ass ess :

E. g. with race di s crimina t io n, it s s elf-eviden t th a t race di s crimina t io n h as not beeneradica t ed . Do e s th a t mean th a t a reg u lato r su ch as th e co mmi ss io n f o r racial eq u alit y wa s

ineffec t ive? Th e o nly su it able c o mpara to r wou ld be a parallel w o rld w h ere th e co mmi ss io nf o r racial eq u alit y wa s not ar ou nd in th e fir st place .

1Constitutional Reform Centre, µRegulatory Agencies in the United Kingdom¶ (1991) 44 Parl. Affairs 504, 507.



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Du e pr o ce ss

Th is refer s to th e pr o ced u re s a reg u lato ry agency u nder t ake s bef o re i t make s deci s io ns . W ewou ld expec t th a t bef o re a reg u lato ry agency imp os es a s e t o f req u iremen ts o n th a t en t erpri s e, th a t th e en t erpri s e h as a rig ht to be h eard e t c... W e d expec t also th ere d beo pp o rtu nit ies f o r co nsu lt a t io n am o ng wider in t ere st grou ps .

A maj o r cri t icis ms o f th e Ofd o gs is th a t wh ile th ey w ou ld co nsu lt with th e reg u lat eden t erpri s e, th ere were n o clear legal req u iremen ts as king th em to o pen th e deci s io n-makingpr o ce ss mo re generally to oth er s ec to rs .

Accou n t abili t y

W h a t ma tt er s is th e co llec t ive just ificato ry p o wer o f th e arg u men ts th a t can bemade u nder th e five h eading s . S t ro ng claim s acr oss th e b o ard p o int to reg u lat io nth a t de s erve s su pp o rt , generally weak claim s indica t e a l o w capaci t y to just ify I t can [al so ] be a s ked w h e th er perf o rmance o n o ne o f th e five fr o n ts can be

impro

vedsignifican

tly wi

thoutma

terial l

oss o

n anoth

er.

(Th

is

kindo

f disc

ussio

n is th e mea t and drink o f most reg u lato ry deba t es .)

Des igner s o r ref o rmer s o f reg u lat io ns shou ld bear in mind, ho wever, th a t perf o rmance u nder so me h eading s may be linked, u nder cer t ain c o ndi t io ns , to perf o rmance u nder oth er h eading s Thus , if a reg u lato ry regime i s perceived by th epu blic to be u nfair, th e reg u lato r may enj o y lo w level s o f co -o pera t io n and th is mayimpede perf o rmance in s a t is fying th e manda t e W h a t ever th e p h iloso ph y o f th ereg u lato ry de s igner o r ref o rmer, th a t individ u al o r inst itut io n shou ld be wary o f end o rs ing reg u lato ry de s igns th a t s co re c o ns picuous ly badly o n any o f th e fivet ests H o w, th en, can legi t imacy be impr o ved in th e real w o rld? Th e an s wer i s by

t aking st ep s to impr o ve ra t ings acco rding to th e five t e sts .2

S o th is t empla t e wa s devel o ped really in re s po ns e to wh a t wa s s een a s perceived defec ts inth e C s Ofdo g mo del .

NL re s po nded to th is and came u p wi th (de s cribed by o ne c o mmen t a to r a s) a newreg u lato ry m o del f o r a NL go vernmen t ; so me o f wh ich we ve tou ch ed o n already .

N ew Labour: new regulatory model 3

y Regu lato ry co mmi ss io no A deci s ive m o ve away fr o m giving p o wer s to an individ u al DG. W e n o w h ave

reg u lat io n by c o mmi ss io n/c o mmi tt ee .

2 R. Baldwin and M. Cave, Unde rsta nd ing Regu latio n (Oxford: OUP, 1999).

3T. Prosser, µThe Powers and Accountability of Agencies and Regulators¶, in D. Feldman (ed.),

E ng lish P ub lic Law (Oxford: OUP) 2 nd edn, 2 009.



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o E. g. Equ alit ies and HR c o mmi ss io n o r FSA , th ey h ave a c h air and direc to r b ut also , a s erie s o f co mmi ss io ner s who h ave an u lt ima t e c o llec t ivere s po ns ibilit y f o r wh a t th e agency d o es . S o th is co llec t ive deci s io n makingpr o vide s a s erie s o f in t ernal c h eck s and balance s .

o A lso , th e idea o f a reg u lato ry co mmi ss io n is mean t to balance out th e

increase in di

scre

tio

n acco

mpanying wider dut

ies .

y Clarifica t io n o f key d ut ies , wi th prio rit y given to co nsu mer s and c o mpe t it io n, and

injec t io n o f so cial and envir o nmen t al o bjec t ives (beginning wi th Ut ilit ies Act 2 000) . y Enh anced enf o rcemen t po wer s ( wider and deeper ) (u nderwri tt en in R ESA 2 008))y Height ened pr o ce ss req u iremen ts , su ch as t ran s parencyy Expanded ex p ost fac to f o rm s o f acc ou n t abili t y ( ans werabili t y )

S o o n th e o ne h and, we h ave m o re p o werf u l agencie s , t ypically given wider di s cre t io n o ver alarger n u mber o f area s . On th e oth er h and, th ey h ave m o re d ut ies to increa s eacc ou n t abili t y.

This culminates in An age of super-agencies , not least:

Financial Service s A utho rit y (FSA ),Office o f Co mm u nica t io ns (OFCOM),Equ alit y and H u man Rig hts Co mmi ss io n (EHR).

- In par t , th is s eem s to be largely ab out th e na tu re o f cer t ain in st itut io nal st ru ctu re s . W h ere th ey are s imilar, th e thou ght is th a t by co mbining th em, th ere will beeco no mie s o f s cale, le ss inst itut io nal fragmen t a t io n, and al so , cross learning .

- W ith oth er area s thou gh , t ech nical devel o pmen ts s eem to be th e driving f o rce . E. g.

with th e FSA , th e idea wa s th a t co mpanie s t ended to be reg u lat ed by a n u mber o f differen t bo die s so th e idea wa s th e reg u lato ry agency shou ld enc o mpa ss all th a t .

o E. g. in OFCOM, we s aw t ech no lo gies like br o adband and c o mm u nica t io nco ming to ge th er .

o Or wi th hu man rig hts and eq u alit y, th ey o f t en played out to ge th er,es pecially wi th th e p h en o mena o f mu lt iple di s crimina t io n, w h ere anindivid u al is dis crimina t ed again st o n m u lt iple gr ou nd s .

S o th ere are idea s o f inst itut io nal de s ign b ut also , br o ader marke t and p o licy view s .

Like m ost th ings ho wever, o nce y ou re s po nd to o ne s e t o f crit icis m, you o pen u p an oth er

W e st ar t to s ee c o ncern s expre ss ed o f th es e su per agencie s a s s prawling empire s ;los ingre s po ns ivene ss , los ing f o cus and in th e ca s e o f th e Equ alit y and H u man Rig hts Co mmi ss io ninpar t icu lar, a s erious co ncern ab out th e in t ernal g o vernance arrangemen ts o f th is s prawlingempire(re su lt ing in s ignifican t no o f co mmi ss io ner s in th e EHRC res igning) .



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S o th ere s a need to th ink ab out a be tt er de s ign. Do we g o back to ward s s maller and m o reco mpac t agencie s o r st ick wi th su per agencie s ? Again, i t will be in t ere st ing to s ee ho w th eco alit io n re s po nd s . Th is links in to th e pr o mis ed b o nfire o f th e q u ang os .

A ccountability issues

W e re t alking ab out th e need f o r reg u lato ry agencie s to just ify th em s elve s . To be su bjec t to crit icis m and per h ap s to be s anc t io ned o r allo w f o r remedie s again st th em . (Pu blic cri t icis m,legal s anc t io n e t c... ) Th ere s alway s a q u e st io n o f who reg u lat es th e reg u lato rs (and th is bec o me s mo re imp o rt an t th e m o re p o wer th ey t ake o n)

Hous e o f Lo rd s Selec t Co mmi tt ee o n th e Co nst itut io n, T he Regulatory State: Ensuring itsaccountability , 6 th Repo rt o f Sess io n 2 00 3 -04

- Th ey did a maj o r rep o rt and came u p wi th a nice s ch eme o f reg u lato ryaccou n t abili t y

- Se ts out th e differen t line s /c h annel s o f acc ou n t abili t y to wh ich th es e agencie s may

besu

bject .

- S o th ere s th is 3 60 degree view o f acc ou n t abili t y :s ee diagram bel o wo Typically h as th e m o re f o rmal c h annel s o n to p (parliamen t , mini st er s ,

cou rts ) and th e le ss f o rmal f o rm s (t ypically th rou gh pre ssu re fr o m vari ous grou ps ) o f acc ou n t abili t y o n th e b otto m (co nsu mer s and in t ere sts grou ps )

- S o th e arg u men t is th a t th ere are many eye s loo king o ver th e shou lder s o f th ereg u lato ry agencie s

- Read up in textbook

Not es in so me par t icu lar t ech niq u es :

A u dit : Na t io nal A u dit Office and P u blic Accou n ts Co mmi tt ee

- Th is h a s been q u it e p o werf u l asth e Na t io nal A u di t h a s th e abili t y to au dit accou n ts and all th e w o rking s o f reg u lato ry agencie s

- Th e Na t io nal a u dit o ffice th en rep o r ts to th e Pu blic acc ou n ts co mmi tt ee in th e HCwh ich is pr o bably th e m ost po werf u l s elec t co mmi tt ee .

- Regu lato rs can th en be su mm o ned in and q u est io ns o n th eir effec t ivene ss .

S elec t Co mmi tt ee s : f o r example H ous e o f Co mm o ns Bus ine ss , Inn o va t io n and Skills Co mmi tt ee

- Th es e s elec t co mmi tt ee s are s e t u p o n a depar t men t al ba s is

- Differen t s elec t co mmi tt ee s will also be s crut inis ing thos e reg u lato ry agencie s su bjec t to mini st erial p o wer s o f direc t io n in th eir relevan t depar t men t .

o E. g. a s elec t co mmi tt ee sh ad o wing a b us ine ss depar t men t f o r in st ancewou ld al so be sh ad o wing a n u mber o f reg u lato ry agencie s in th a t area .

- Typically th e co verage h ere i s very u neven (wi th regard s to ho w clos ely th ey m o nito rth e relevan t reg u lato ry agency) . S o mu ch depend s o n q u alit y o f s elec t co mmi tt eeand t ime and re sou rce c o nst rain ts o n th a t s elec t co mmi tt ee .



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- S o we s ee th a t in t erm s o f s crut iny by parliamen t , it is do ne in a very piecemeal, adho c manner .

Legal Accou n t abili t y: Adju dica t io n:

Ju dicial su pervi s io n deference

- A f t er all th e ref o rm s , wh en t alking ab out reg u lato ry agencie s , we are n ot dealingmainly wi th st a tuto ry agencie s , so th e general p o wer s o f th e cou rts in t erm s o f HRwill apply .

- Th ere are p ot en t ially issu es o f ju ris dict io n wi th regard s to s elf-reg u lat io n b ut generally, th e cou rts h ave t aken an expan s ive appr o ac h in th e la st 2 0 year s (to JRmo re generally even) and br ou ght th em wi th in th e ambi t o f HR.

- S o generally we can s ay th a t reg u lato ry agencie s are su bjec t to su pervi s io n by th eadmini st ra t ive c ou r t

When we think about judicial supervision and JR, we need to think about the different

sources of law which may be applied:CL

- Regu lato ry agencie s will be su bjec t to all th e CL t ests devel o ped o ver th e year s

ECHR

- S o me agencie s may find th em s elve s sus cep t ible to ch allenge o n th e gr ou nd s o f co nven t io n rig hts .

- E. g. vio lat io n o f ar t . 6 is th e m ost o bvious example- But mo re generally, an agency w h ich affec ts pe o ple s pr o per t y rights f o r example

need s to co ns ider th e ju ris pr u dence o n peacef u l enj o ymen t o f poss ess io ns u nderProto co l 1

- Of a media reg u lato r wou ld h ave to be wary o f ar t . 10

EU law

- Th is is o f par t icu lar imp o rt ance in many s ph ere s o f co mmercial reg u lat io n beca us eo f th e s ingle marke t .

- Many p o wer s o f th e reg u lato ry agencie s may be derived fr o m EU law and eq u ally,EU law give s us a s e t o f general principle s o f JR wh ich ou r d o me st ic cou rts arereq u ired to apply in d o me st ic legal pr o ceeding s .

- E. g. , if a reg u lato r is o pera t ing an EU law sou rce regime, y ou might h ave a c h allengeo n gr ou nd s o f pr o po rt io nali t y. S o you ve got lots o f poss ibilit ies and l ots o f pot en t ialh ere .

Intensity of Review

Ho w far are th e cou rts go ing to push in th is t ype o f area? Clearly th ere are many differen t kind s o f reg u lat ed s ec to rs , so you can t generali s e acr oss th e w ho le field . But th ere are g o ing



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to be arg u men ts h ere ab out reg u lato ry exper t is e, c o mplexi t y, t ech nicali t ies , th a t are g o ingto be rai s ed, wi th th e re su lt th a t it is o f t en su gge st ed th a t th e cou rts shou ld t ake adeferen t ial o r a re s pec t f u l appr o ach to reg u lato ry deci s io n making .

Tradi t io nally, if we t ake th em a t o ne a t a t ime, a t CL, you lls ee th a t f o r many year s , th e CL h ad a really h and s o f appr o ach to JR o f agencie s . Parliamen t h ad s e t th em u p a s individ u alcen t re s o f excellence th e relevan t field s and so , cou rts wou ldn t push th em h ard

Indeed, i t is st ill th e ca s e th a t a ch allenge to an agency s deci s io n o n su bst an t ive gr ou nd s (e .g. W ednesbury in its su bst an t ive s en s e) is h ard to win .

CL cou rts h ave ho wever bec o me m u ch mo re in t ere st ed in pr o ced u ral f o rm s o f review . Andth ere h ave been a n u mber o f s ignifican t deci s io ns in th is area in th e la st 10 year s o r so .

Not e ho w th e th eme o f re s pec t o r deference n ot o nly inf us es th e CL but can al so be s eenboth in th e realm s o f EU law and ECHR rights . Not lea st in th e s en s e o f pr o po rt io nali t yt est ing .

W e s ee c ou r ts giving th e agencie s a s ignifican t margin o f apprecia t io n w h en th ey apply th epr o po rt io nali t y t est .

In tuto rials th ink ab out wh e th er th e appr o ach devel o ped by c ou rts h ere i s appr o pria t e .

Illustrative Cases:

R v Panel of T ake-overs and Mergers, ex p. Datafinplc [198 7 ] QB 81 5 (s elf-reg u lato rs sus cep t ible to JR)

Held, th a t th e su pervi so ry ju ris dic t io n o f th e High Cou rt wa s adap t able and c ou ld beex t ended to any b o dy w h ich perf o rmed o r o pera t ed a s an in t egral par t o f a s yst em w h ich perf o rmed p u blic law d ut ies , wh ich wa s su pp o rt ed by p u blic law s anc t io ns and w h ich wa s u nder an o bliga t io n to ac t ju dicially, b ut whos e sou rce o f po wer wa s not s imply th e co ns en t o f thos e o ver w ho m i t exerci s ed th a t po wer ; th a t althou gh th e panel p u rp o rt ed to be par t o f a s yst em o f s elf-reg u lat io n and to derive i ts po wer so lely fr o m th e co ns en t o f thos e w ho m i ts deci s io ns affec t ed, i t wa s in fac t o pera t ing a s an in t egral par t o f a go vernmen t al framew o rkf o r th e reg u lat io n o f financial ac t ivit y in th e Cit y o f Lo nd o n, wa s su pp o rt ed by a perip h ery o f st a tuto ry p o wer s and penal t ies , and wa s u nder a d ut y in exerci s ing w h a t am ou n t ed to pu blicpo wer s to ac t ju dicially ; th a t , th eref o re, th e cou r t h ad j u ris dict io n to review th e panel' s deci s io n to dis miss th e applican ts ' co mplain t ; but th a t s ince, o n th e fac ts , th ere were n o grou nd s f o r in t erfering wi th th e panel' s deci s io n, th e cou rt wou ld decline to int ervene

South Yorkshire T ransport v Monopolies and Mergers Commission [199 3 ] 1 W LR 2 3 . (example o f su bst an t ive review failing)

Here, th e applican t acq u ired an oth er b us co mpany giving i t co n t ro l o f all b us es in 1 .65% o f th e UK. Th e Secre t ary o f S t a t e f o r Trade and Ind ust ry referred th is to th e M o no po lies andMerger C o mmi ss io n; th e ju ris dict io nal prec o ndi t io n h ere wa s th a t th e reference area



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shou ldbe a su bst an t ial par t o f th e UK . Th ey decided su bst an t ial mean t mo re th an n o minaland acc o rdingly o rdered th e applican t to dive st th em s elve s o f th eir acq u is it io n .

On appeal a t first inst ance and in th e CA , ju dgmen t wa s given f o r th e applican t as th ereference area wa s too s mall to co nst itut e a su bst an t ial par t o f th e UK

HL rever s ed th is and re sto red th e deci s io n o f th e co mmi ss io n . su bst an t ial par t c o nn ot ed apar t o f su ch s ize, c h arac t er and imp o rt ance a s to make i t wo rth co ns idera t io n f o r th epu rp os e s o f th e Act ; th a t th e co mmi ss io n h ad n ot mis direc t ed i ts elf and in th e circ u mst ance s h ad rig ht ly co nclu ded th a t th e reference area wa s su fficien t ly wo rth y o f co ns idera t io n

R (Eisai Ltd) v National Institute for Health and Clinical Excellence [2 008] EW CA Civ 43 8; (su cce ss f u l pro ce ss review)

Du ring a c o nsu lt a t io n peri o d, th e applican t s were given a read o nly file sho wing th e m o delth e co mmi ss io n h ad us ed to reac h cer t ain c o nclus io ns . Th ey req u est ed a f u lly exec ut able fileand were ref us ed .

Appeal all o wed Th e in st itut e wa s su bjec t to th e general principle s o f pro ced u ral fairne ss inrela t io n to th e apprai s al pr o ce ss and, in par t icu lar, h ad to ac t fairly in th e co nsu lt a t io nexerci s e . In co nd u ct ing th e apprai s al pr o ce ss , th e in st itut e wa s dis ch arging an imp o rt an t pu blic f u nc t io n w h ich engaged a st ro ng p u blic in t ere st . Th e in st itut e accep t ed th e need f o r avery h igh degree o f t ran s parency in th e pr o ce ss , with an excep t io nal degree o f dis closu reand c o nsu lt a t io n . Th a t wa s th e co n t ex t with in wh ich th e n o n-di s closu re o f th e f u llyexec ut able m o del h ad to be a ss ess ed . Th e imp o rt ance o f th e m o del wi th in th e apprai s alpr o ce ss wa s not in d ou b t . It wa s cen t ral to th e apprai s al co mmi tt ee' s de t ermina t io n o f adr u g's cost -effec t ivene ss . Th e r o bust ne ss o r reliabili t y o f th e m o del wa s th eref o re a keyqu e st io n . Fo r th e tho rou gh t e st ing o f reliabili t y, a f u lly exec ut able ver s io n wa s req u ired

R (Great North Eastern Railway Ltd) v Rail Regulator [2 006] EW HC 194 2 (An example o f su bst an t ive review failing)

R's appr o ach wa s co ns ist en t with th e Direc t ive and th e Reg u lat io ns pu rp os ively co nst ru ed a s a w ho le . Th e u nderlying th rust o f th e Direc t ive a s implemen t ed by th e Reg u lat io ns wa s th a t wou ld-be o pera to rs who were able to pay f o r th e costs th a t wou ld be direc t ly incu rred a s are su lt o f th eir o pera t io ns shou ld be enc ou raged to us e th e rail infra st ru ctu re, n ot dis cou raged fr o m us ing i t . A very wide di s cre t io n wa s aff o rded to R as to th e manner inwh ich it deal t with applica t io ns f o r appr o val o f direc t io ns in rela t io n to t rack acce ss agreemen ts .

Marcic v T hames W ater Utilities Ltd [2 002 ] EW CA Civ 64 ; [200 3 ] UKHL 66 . (S u bst an t ivereview failing u nder b oth CL and HR A pr o po rt io nali t y)

Held, all o wing th a t appeal, th a t a s ewerage u nder t aker wa s su bjec t to an elab o ra t e s ch emeo f reg u lat io n u nder th e 1991 A ct wh ich inclu ded an independen t reg u lato r with po wer s o f enf o rcemen t whos e deci s io ns were su bjec t to ju dicial review ; th a t th e st a tuto ry s ch emepr o vided a pr o ced u re f o r making c o mplain ts to th e reg u lato r wh ich th e plain t iff h ad c hos en



9

not to pu rsu e ; th a t a balance h ad to be st ru ck be t ween th e in t erests o f a per so n su bjec t to s ewer fl oo ding and th e in t ere sts o f thos e, incl u ding oth er c usto mer s o f th e s ewerageu nder t aker, w ho wou ld h ave to finance th e cost o f co nst ru ct ing m o re s ewer s ; th a t su ch abalancing exerci s e wa s be tt er u nder t aken by an ind ust ry reg u lato r th an a c ou rt ; th a t th eco mm o n law shou ld n ot imp os e o n a s ewerage u nder t aker o bliga t io ns wh ich wou ld be

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R (Mabanaft Ltd) v Secretary of State for Energy and Climate Change [2 009] EW CA Civ 22 4 (S u bst an t ive review failing a t EU)

Th e t erm s o f th e Direc t ive sho wed th a t th e o verriding c o ncern o f th e Co mm u ni t y legi s latu rewa s th e de s ire to h ave a h igh level o f s ecu rit y in th e su pply o f o il and o il pro du cts with in th eMember S t a t e s . Th e fir st s en t ence o f ar t .3 (2 ) pr o vided th a t Member S t a t es h ad to en su reth a t fair and n o n-di s crimina to ry co ndi t io ns applied in th eir sto ckho lding arrangemen ts . Thos e co ndi t io ns inclu ded c o ndi t io ns a s to th e all o ca t io n o f th e cost bu rden o f ho ldingsto cks . Th e o bliga t io n imp os ed by ar t .3 (2 ) co nferred freed o m o n th e Member S ta t e s to choos e th e me tho d by w h ich th ey w ou ld co mply wi th th eir o bliga t io ns u nder th e Direc t ive . It f o llo wed th a t u nder C o mm u nit y law th e cou rt h ad to allo w th e s ecre t ary o f st a t e a largemea su re o f dis cre t io n in c hoos ing an appr o pria t e me tho d . M' s co n t en tio n th a t th e s ecre t aryo f st a t e h ad to o b t ain so far a s poss ible ac tu al costs wa s a t o dd s with ar t . 3 (2 ). A rt icle 3 (2 )gave th e Member S t a t e th e freed o m to decide ho w to implemen t co mp u lso ry sto ckingo bliga t io ns and i t wa s inco ns ist en t with th a t freed o m to ho ld th a t a Member S t a t e cou ld in

fac t o nly exerci s e th a t o p t io n in o ne way . Th e

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3 - Regulation (Continued x 2)