AXA GENERAL INSURANCE LIMITED AND OTHERS

COURT OF SESSION Judicial Review of the Damages (Asbestos-related Conditions) (Scotland) Act 2009 8 January 2010

Following a 22-day hearing in the Court of Session, Lord Emslie has rejected a three pronged challenge by major UK insurance companies to the validity of an Act of the Scottish Parliament.

The Damages (Asbestos-related Conditions) (Scotland) Act 2009, which came into force on 17 June last year, allows individuals to claim damages for pleural plaques and other long-term medical consequences of asbestos exposure, even at a stage when such conditions are neither symptomatic nor disabling.   In the Parliament’s view it would be wrong to regard these conditions as trivial, and a primary purpose of the Act is to ensure that a recent decision of the House of Lords to the opposite effect — sometimes referred to as the Rothwell ruling — should not apply in Scotland.

According to the petitioning insurers, the new Act (i) infringes Article 6 of the European Convention on Human Rights (unlawful legislative interference with pending court actions), (ii) violates Article 1 of the First Protocol to the Convention (unlawful interference with property rights), and furthermore (iii) is irrational at common law.   In particular, they complain that the Act seeks to benefit a small group of individuals who have, in fact and in law, suffered no harm, and by retrospectively “reconfiguring” historic insurance contracts  imposes a disproportionate and excessive burden on insurers running into hundreds of millions, if not billions, of pounds.

For more than 20 years prior to the Rothwell test cases reaching the House of Lords, UK insurance companies had regularly conceded liability to pay damages for asymptomatic pleural plaques and similar asbestos-related conditions.   Many claims were settled on that basis from about 1984 onwards, with awards being made by courts both north and south of the border, and it was only a sharp rise in the number and value of such claims in the early 2000s that provoked the test cases in question.

In deciding these cases in the defendants’ favour, the House of Lords applied settled principles of the law of negligence whereby damages cannot ordinarily be claimed for medical conditions which are asymptomatic and non-disabling, or for mere worry or anxiety, or for the risk of future harm, or even for a combination of these.   However, the application of such principles involves a value judgment as to whether an individual claimant’s condition is sufficiently serious to cross the threshold for a valid claim, and in borderline cases this may give rise to difficult questions of degree.   Significantly, more than one of their Lordships in Rothwell expressed regret that affected claimants would be left without a remedy, and it is in this area that the new Act reflects a more positive attitude in line with the 20 years or more of pre-Rothwell practice.

Although in most cases pleural plaques have no discernible effect on an individual’s day-to-day physical health or well-being, they are nevertheless abnormal and unwelcome pathological changes in the layers of tissue which lie between the lungs and the inside of the rib cage.   Radiologically diagnosed, they are dense, irregularly-shaped, collagenous masses which may, in size, be more than 10cm across and up to 1cm in thickness.   They may fuse together into large sheets and tend to calcify with time.   Not surprisingly, individuals diagnosed with pleural plaques are liable to become alarmed and anxious for the future, and this may severely reduce their enjoyment and quality of life.   The diagnosis confirms significant asbestos exposure in the past, of which they may or may not previously have been aware.   It underlines the much higher risk which they now face, many hundreds of times greater than for members of the general public, of contracting lung cancer, mesothelioma or asbestosis.   And it may bring to mind the suffering and perhaps death of friends, colleagues and relatives from these serious asbestos-related diseases.

The insurers’ petition for judicial review was strongly opposed by the Scottish Ministers and by a representative group of pleural plaques claimants whose position would suffer if the new Act were to be struck down.   Apart from branding the challenge as ill-founded in all of its branches, these respondents argued that no Act of the Scottish Parliament could be held irrational at common law where that did not appear among the permitted grounds of challenge listed in section 29 of the Scotland Act 1998.   In any event, according to the respondents, the petitioners lacked title and interest to bring these proceedings.   As mere insurers owing contractual obligations to negligent former employers (against whom claims would actually be brought), they could only be affected by the new Act in a secondary and indirect way.

In a 151-page judgment issued today, Lord Emslie has decided certain issues in the petitioners’ favour while, in the end, rejecting the merits of their challenge in all three branches.   In particular, on the fiercely-contested preliminary issue of title and interest to sue, chapter 2 of the judgment finds the petitioners’ connection with the new Act to be sufficiently close and direct to entitle them to be heard on the merits of their various complaints under the ECHR and at common law.   In parallel, chapter 3 confirms the title and interest of the representative pleural plaques claimants to appear as respondents in these proceedings.   Chapter 4 goes on to uphold the legal and constitutional competency of challenging an Act of the Scottish Parliament on the common law ground of irrationality.   While it might have been possible to exclude common law review in that context, the Scotland Act 1998 does not do so either expressly or by necessary implication.

Hwever, while expressing a degree of sympathy for the petitioners’ position, Lord Emslie dismissed their application on its merits.   Chapter 5 of his judgment rejects the Article 6 claim on the basis (i) that the petitioners as insurers are not parties to any affected court proceedings;  (ii) that the Act does not relevantly interfere with pending actions anyway;  and (iii) that the new legislation can in any event be justified on what the European Court of Human Rights at Strasbourg terms “compelling grounds of the general interest”.   Chapter 6 similarly rejects the claim under Article 1 of the First Protocol, this time on the ground (i) that the Act does not relevantly interfere with the petitioners’ “possessions” or property rights;  and (ii) that in any event it serves a legitimate social purpose and meets the test of proportionality in its scope and effects.   Whether historic insurance contracts are engaged or not, there is no obvious reason why negligent former employers should not be held liable in damages for resultant harm.  And, finally, chapter 7 rejects the common law challenge on the basis that the petitioners’ complaints fall short of the degree of “irrationality” which would be required in order to invalidate primary legislation passed by the democratically-elected Scottish Parliament.

 

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