Scottish Court of Session Decisions

[1] In this petition for judicial review, which was presented in March 1999, the petitioners seek certain remedies relative to the making of the Diseases of Fish (Control) Regulations 1994 ([1994] S.I. 1447). The initial respondent was the Secretary of State for Scotland but, since the coming into force of the Scotland Act 1998, the Scottish Ministers have been substituted in his place.

[2] These Regulations ("the 1994 Regulations") were made jointly by the Minister of Agriculture, Fisheries and Food and the Secretary of State purportedly in exercise of the powers conferred on them by Section 2(2) of the European Communities Act 1972; they bore to implement Council Directive 93/53/EEC ("the 1993 Directive").

[3] The petitioners conduct the business of salmon farming from a number of sites in Scotland. In 1998 those sites included several farms in marine waters in the West of Scotland. On various dates in the summer of 1998 the Secretary of State served on the petitioners notices under Regulation 5 of the 1994 Regulations relative to fish stocks held by them at several farms. The notices were in respect of stocks of fish suffering from infectious salmon anaemia ("ISA"). Those notices required the destruction and disposal by prescribed methods of fish showing, in the opinion of an inspector, clinical signs of the disease. Fish of a commercial size might be slaughtered for marketing or processing for human consumption, provided that there were satisfied certain strict requirements, including that they showed, in the opinion of an inspector, no clinical signs of disease. Further requirements were made by the notices. The petitioners complied with those notices.

[4] The petitioners claim that, as a result of their compliance, they have sustained substantial financial losses. They applied to the Secretary of State for compensation but he responded that no compensation would be paid. That position is maintained by the present respondents.

[5] The 1993 Directive introduced minimum Community measures for the control of certain fish diseases. It required that Member States bring into force before 1 July 1994 the laws, regulations and administrative provisions necessary to comply with it. The 1993 Directive classified fish disease by reference to two lists (list I and list II) referred to in Annex A to Directive 91/67/EEC ("the 1991 Directive"). The 1991 Directive was amended by Directive 93/54/EEC which replaced Annex A to the 1991 Directive with a new Annex A, again containing a list I and a list II. ISA appeared as the only disease on list I (as replaced), Atlantic salmon being identified as a susceptible species. List II (as replaced) included viral haemorraghic septicaemia ("VHS"), turbot being identified as one of several susceptible species. The essential difference between the two classes of disease is that ISA, which appears in list I, is exotic to the Community and VHS and the other diseases in list II are endemic to it. That classification is reflected in the 1994 Regulations which by Schedule 3 classifies diseases into two Parts, Part I and Part II. ISA is the only disease appearing in Part 1. VHS is one of two diseases appearing in Part II. Regulations 4 and 5 prescribe control measures relative to Part I disease. Regulations 6, 7 and 8 prescribe control measures relative to Part II disease.

[6] In 1994 there was an outbreak of VHS among turbot being farmed at a site on the Isle of Gigha. Notices served on the operators by the Secretary of State under the 1994 Regulations required in some cases the destruction and in others the slaughter of fish. These notices were complied with by the operators who later applied to the Secretary of State for compensation for their losses. That application was refused. The operators assigned their claim to Booker Aquaculture Limited which in January 1997 presented to this court a petition for judicial review. The Secretary of State lodged answers to that petition. In May 1998 the Lord Ordinary pronounced an order in favour of the petitioners. The Secretary of State reclaimed. The reclaiming motion was heard by the First Division at about the beginning of July 1999 and advised on 12 August 1999. It is reported as Booker Aquaculture Limited v Secretary of State for Scotland 2000 S.C. 9. The First Division ordered that the case be put out By Order with a view to hearing submissions from parties as to whether the court should make a reference to the Court of Justice of the European Communities on the point identified in the Lord President's Opinion. By the time the case was heard By Order (on 1 November 1999) the Scottish Ministers had been substituted for the Secretary of State as respondents. Following discussion on that date the First Division was satisfied that a reference should be made to the Court of Justice. The case was further continued for settlement of the terms of the reference. On 19 January 2000 the First Division referred the case to the Court of Justice under reference to a Request for a Preliminary Ruling in terms of Article 234 of the Treaty of Rome.

[7] In paragraph 12 of that Request it is stated inter alia:

The full citation of the case of Bostock referred to above is The Queen v Ministry of Agriculture, Fisheries and Food, ex parte Dennis Clifford Bostock (case C-2/92) [1994] ECR I-955 and that of Flip is Flip C.V. and O. Verdegem NV v Belgian State (case C-315/93) [1995] ECR I-913.

[8] The remedies sought by the present petitioners from this court are set out in Statement 3 of the petition. They are in the following terms:

[9] In Statement 11 (as amended) the petitioners challenge the making of the 1994 Regulations and the notices given to them thereunder on the following grounds:

Statement 11 also contains a paragraph 11.4 which puts in issue on comparative grounds the validity of the denial of compensation in respect of the destruction or slaughter of fish affected by list I disease, which is characterised as being "more serious" as regards the Community than list II disease. This paragraph was reformulated by Mr Davidson for the petitioners in the course of the hearing before me and Mr McCreadie for the respondents indicated that he wished further time to consider his position in relation to it. I accordingly leave it out of account for present purposes.

[10] When the petition called before me for a first hearing Mr Davidson moved a motion enrolled in the following terms:

[11] Mr Davidson explained that there had recently been discussion between the parties' representatives resulting in a general accord that a reference in the present case would be of advantage. It had been ascertained that, if such a reference were made in early course, it could be conjoined with that made in Booker Aquaculture and the two references could then be heard together by the Court of Justice. A draft Request had been prepared by the petitioners in this case. If the court were to decide that a reference should be made, the terms of that draft could then, Mr Davidson explained, be adjusted between the parties and placed before the court for any adjustments it might require. What was sought at this stage were directions in terms of Rule of Court 65.3(1). Mr McCreadie confirmed that the respondents were content that a reference be made. The respondents had certain qualifications about its scope and terms but these were capable of being resolved by adjustment between the parties of the draft Request.

[12] Article 234 (formerly Article 177 as amended) of the Treaty of Rome provides:

[13] Mr Davidson referred me to Brown v Secretary of State for Scotland 1989 SLT 402 where Lord Clyde, sitting in the Outer House, made a reference to the Court of Justice under the then Article 177. In that case both parties moved the court to make such a reference. At p. 406 Lord Clyde observed - "....I have first to be satisfied that such a reference is necessary". He then referred to Commissioners of Customs and Excise v ApS Samex [1983] 1 All E.R. 1042 (where Bingham J. at first instance made a reference) and to the four guidelines formulated by Lord Denning M.R. in H.P. Bulmer Ltd v J. Bollinger S.A. [1974] Ch 401 at pps.422 and following. These, as summarised by Lord Clyde, were "(1) The point must be conclusive. (2) There should be no previous ruling on the point by the European Court or at least no such ruling which ought to be reconsidered. (3) The point should not be of a nature of an acte clair; and (4) The facts should be ascertained". It may be added that satisfaction of these guidelines will not necessarily result in a reference being made. As is clear from the English cases cited and as Lord Clyde noted at pp. 409-10 in Brown, the national judge (except when sitting in the final national court) still has a discretion to refer or not to refer. Considerations relevant to the exercise of that discretion are fully discussed by Bingham J. in Samex at pp. 1055-6.

[14] Paragraphs 11.2 and 11.3 of the present petition put in issue the validity of the 1994 Regulations as made. Paragraph 11.2 asserts that as made they are illegal and ultra vires. Paragraph 11.3 makes a similar assertion but with particular reliance on the principle of proportionality. Both assertions are based on the fundamental right to property enshrined in Article I of Protocol I of the Convention on Human and Fundamental Rights. They are to the effect that the 1994 Regulations as made failed to have due regard to that fundamental right. The Regulations were made and the notices under them issued prior to the coming into effect of the Scotland Act 1998. It is not, it appears, suggested that the adoption and maintenance after July 1999 by the respondents of the earlier refusal by the Secretary of State to provide compensation is itself unlawful under that Act as being incompatible with any Convention right or with Community law. What do, however, arise under those paragraphs are issues similar, though not identical, to those discussed before the First Division in Booker Aquaculture and which led to a reference in that case to the Court of Justice. In particular, the "key issue" identified by the Lord President at page 26H as material to whether there should be a reference is paralleled in the present case. That issue was:

In the present case the issue concerns not list II diseases but the only list I disease, namely, ISA. But similar, though not identical, questions arise. The contentions in both proceedings are based on the fundamental right of property relative to the denial of compensation to a person required by the state, in furtherance of the 1993 Directive and the 1994 Regulations, to destroy or slaughter farmed fish. There is, however, a distinction in the classes of fish in respect of which the requirements have been made. Separate and distinct provision (apparently based on the difference between exotic and endemic diseases) is made in the 1993 Directive for each class. The difference is also reflected by provision in relation to list II for a system of approved zones and approved farms, no such system being provided for in relation to list I. That difference is replicated in the 1994 Regulations.

[15] In Booker Aquaculture the Lord President, having heard full argument on the matter, observed (at pp. 26-7) that the key issue "is a Community law issue which is critical to the final decision of this court on the dispute and it is one which ... I cannot at present with complete confidence resolve myself". Lord McCluskey and Lord Sutherland agreed. I did not myself hear full argument on the matter but, having read Bostock and Flip, I respectfully share the lack of confidence of the judges of the First Division in relation to the key issue in that case. I also consider that a like key issue arises in the present case in relation to list I disease.

[16] I am satisfied that in relation to that point there are met the four factors relevant to the issue whether a decision on the question of Community law is necessary to enable this court to give judgment in this case. As regards the first factor, the answer given by the Court of Justice will be conclusive in the sense that if the answer is adverse to the petitioners that will be the end of their case. As regards the second and third factors there appears to be a possible conflict between Court of Justice decisions which that Court ought to have the opportunity to resolve. As regards the fourth factor, the facts are (except in relation to the amount of the claim) essentially not in dispute, any minor discrepancies being capable of resolution in the course of adjustment of an appropriate Request.

[17] I am also satisfied that in the exercise of my discretion I should make a reference. There is a clear advantage, a reference having been made in Booker Aquaculture, that the similar issue arising in this case should also be referred and, if practical, heard in conjunction with that reference. It was not suggested by either party before me that any of the factors relevant to the exercise of my discretion were adverse to a reference being made. In my view these, considered with the circumstance that Booker Aquaculture is being referred, favour a reference. The distinctions between the cases may also be important. Accordingly, the alternative of a sist of the present proceedings is not attractive.

[18] There remains the matter raised by paragraph 11.1 of the present petition. That paragraph puts in issue the validity of the 1993 Directive. The remedies sought by the petitioners from this court do not, however, include any related directly to that Directive. That is because this court has no competency itself to rule that a Community act or instrument, such as the Directive, is invalid (Foto-Frost v Hauptzollamt Lübeck-Ost (case 314/85) [1987] V E.C.R. 4199). Only the Court of Justice has such competency, though national courts may consider the validity of a Community act and, if they consider the grounds put forward in support of invalidity are unfounded, may reject them, concluding that the measure is completely valid (paras. 14 and 15).

[19] No question was, it seems, raised in Booker Aquaculture about the validity of the Directive. Accordingly the First Division heard no argument on that matter and it did not require to consider whether it should itself reject any challenge to the validity of the Directive or refer that issue to the Court of Justice. I did not hear detailed argument on this aspect. I did, however, identify that the respondents do not concede the soundness of the challenge. Although, this matter having been introduced only very recently by amendment, Mr McCreadie was reluctant to commit the respondents to the particular grounds on which they would resist the challenge, it was clear that they would resist it.

[20] I am satisfied that, a reference being appropriate on the issue already identified, it is proper that the issue raised by this challenge should be included within that reference. In a sense it raises a question prior to that of the validity of the Regulations as made. It is also an issue on which a decision in favour of the petitioners can competently be made only by the Court of Justice. It would be very unfortunate if, this being a live issue between the parties, it was excluded from this reference in circumstances where there was a risk that it might require to be the subject of a future reference at a much later date. The point would appear to be conclusive in the sense that, if the petitioners are right, the legal structure on which the Regulations proceed may be undermined. There has not, it seems, been any previous ruling on the point by the Court of Justice. No additional facts arise. I have, however, some hesitation about factor (3). I have heard no argument from the respondents in relation to acte clair. Mr Davidson referred me in that connection to CILFIT v Ministry of Health (case 283/81) [1982] ECR 3415 at p.3430 where at para. 16 the Court of Justice observed:

Those observations were made in the context of a question concerning the circumstances in which a reference must be made by a court or tribunal of a Member State against whose decisions there is no judicial remedy under national law. They are not directly in point in relation to a discretionary reference. It is possible that, after hearing full argument, I might have been satisfied that it was so obvious that the Directive was valid as to leave no scope for any reasonable doubt on the matter. However, insistence on hearing full argument would cause delay and potentially imperil the prospect of the reference in this case being heard in conjunction with that in Booker Aquaculture. In these particular circumstances I am satisfied that I may properly make a reference including this aspect without first hearing full argument on it. I am also satisfied that it is appropriate that my discretion be exercised in favour of including this aspect in the reference.

[21] In the whole circumstances accordingly I am satisfied that a reference should be made. That reference will include questions similar to those posed in the Request made by the First Division in Booker Aquaculture and a question directed to the validity of the 1993 Directive. I direct that parties adjust inter se for consideration by the Court a proposed Request for a Preliminary Ruling. The case will be put out By Order with a view to settling the terms of such a Request.