UKSC 41
On appeal from:  EWCA Civ 1276
R (on the application of Lumsdon and others) (Appellants) v Legal Services Board (Respondent)
Lord Neuberger, President
Lady Hale, Deputy President
JUDGMENT GIVEN ON
Heard on 16 March 2015
Tom de la Mare QC
Mark Trafford QC
(Instructed by Baker & McKenzie LLP)
Nigel Giffin QC
Martin Chamberlain QC
(Instructed by Fieldfisher)
|Intervener (Bar Standards Board)
Timothy Dutton QC
(Instructed by Bevan Brittan LLP)
LORD REED AND LORD TOULSON: (with whom Lord Neuberger, Lady Hale and Lord Clarke agree)
"(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 -
(a) the authorisation scheme does not discriminate against a provider of the service,
(b) the need for an authorisation scheme is justified by an overriding reason relating to the public interest, and
(c) 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 2007 Act
"(1) In discharging its functions the Board must comply with the requirements of this section.
(2) The Board must, so far as is reasonably practicable, act in a way -
(a) which is compatible with the regulatory objectives, and
(b) which the Board considers most appropriate for the purpose of meeting those objectives.
(3) The Board must have regard to -
(a) the principles under which regulatory activities should be transparent, accountable, proportionate, consistent and targeted only at cases in which action is needed, and
(b) any other principle appearing to it to represent the best regulatory practice."
The principles set out in section 3(3)(a) are known as the "Better Regulation Principles".
The BSB proposal of November 2012
The decision under challenge
"28. The Board considers that the proposed scheme has the potential to provide reliable and sustained evidence for approved regulators to measure and improve the quality of criminal advocacy over time. The Board further considers that it is important that where there is opportunity, through a proportionate and targeted mechanism of accreditation, for relevant approved regulators to measure and enhance the quality of criminal advocacy, they should do so. In that regard, the Board concludes that the scheme is proportionate because it addresses the risk in a structured way that allows the scheme to be adjusted on the basis of evidence gained from its actual implementation. This is consistent with the Better Regulation Principles enabling a consistent, proportionate and targeted approach to regulation.
29. The Board is further assured by the commitment from the applicants to review the scheme after two years. The Board understands from the application that this review will 'provide a comprehensive analysis of the scheme including the assessment of the performance of key processes'. The review will also assess whether the scheme promotes the regulatory objectives and improves criminal advocacy standards. With the experience and lessons gained from the operation of the scheme, the Board considers it should be possible to further calibrate it so that there continues to be a proportionate regulatory response to the risk posed from poor criminal advocacy. The Board will actively engage with the review in its oversight role."
"The Board considers that, on balance, the applicants have responded to issues raised during consultation and have adjusted the scheme to make it proportionate and targeted without undermining its potential effectiveness."
The ground of challenge
Proportionality in EU law
"Under the principle of proportionality, the content and form of Union action shall not exceed what is necessary to achieve the objectives of the Treaties."
It is also reflected elsewhere in the EU treaties, for example in article 3(6) TEU:
"The Union shall pursue its objectives by appropriate means commensurate with the competences which are conferred upon it in the Treaties."
The principle has however been primarily and most fully developed by the Court of Justice in its jurisprudence, drawing upon the administrative law of a number of member states.
"For that to be the case, the provision of national law at issue must in general fall into one of three categories. It must implement EC law (irrespective of the degree of the discretion the member state enjoys and whether the national measure goes beyond what is strictly necessary for implementation). It must invoke some permitted derogation under EC law. Or it must otherwise fall within the scope of Community law because some specific substantive rule of EC law is applicable to the situation."
The principle only applies to measures interfering with protected interests: R (British Sugar plc) v Intervention Board for Agricultural Produce (Case C-329/01)  ECR I-1899, paras 59-60. Such interests include the fundamental freedoms guaranteed by the EU Treaties.
The division of responsibility between the Court of Justice and national courts
The nature of the test of proportionality
Measures of EU institutions
"122. As a preliminary point, it ought to be borne in mind that the principle of proportionality, which is one of the general principles of Community law, requires that measures implemented through Community provisions should be appropriate for attaining the objective pursued and must not go beyond what is necessary to achieve it ...
123. With regard to judicial review of the conditions referred to in the previous paragraph, the Community legislature must be allowed a broad discretion in an area such as that involved in the present case, which entails political, economic and social choices on its part, and in which it is called upon to undertake complex assessments. Consequently, the legality of a measure adopted in that sphere can be affected only if the measure is manifestly inappropriate having regard to the objective which the competent institution is seeking to pursue."
"13. The court has consistently held that the principle of proportionality is one of the general principles of Community law. By virtue of that principle, the lawfulness of the prohibition of an economic activity is subject to the condition that the prohibitory measures are appropriate and necessary in order to achieve the objectives legitimately pursued by the legislation in question; when there is a choice between several appropriate measures recourse must be had to the least onerous, and the disadvantages caused must not be disproportionate to the aims pursued.
14. However, with regard to judicial review of compliance with those conditions it must be stated that in matters concerning the common agricultural policy the Community legislature has a discretionary power which corresponds to the political responsibilities given to it by articles 40 and 43 of the Treaty. Consequently, the legality of a measure adopted in that sphere can be affected only if the measure is manifestly inappropriate having regard to the objective which the competent institution is seeking to pursue."
"Where the Community legislature is obliged to assess the future effects of rules to be adopted and those effects cannot be accurately foreseen, its assessment is open to criticism only if it appears manifestly incorrect in the light of the information available to it at the time of the adoption of the rules in question." (para 84)
"Such a procedure must be accessible in the sense that it must be expressly mentioned in a measure of general application which is binding on the authorities concerned. It must be capable of being completed within a reasonable time. An application to have a substance included on a list of authorised substances may be refused by the competent authorities only on the basis of a full assessment of the risk posed to public health by the substance, established on the basis of the most reliable scientific data available and the most recent results of international research. If the procedure results in a refusal, the refusal must be open to challenge before the courts."
"Any limitation on the exercise of the rights and freedoms recognised by this Charter must be provided for by law and respect the essence of those rights and freedoms. Subject to the principle of proportionality, limitations may be made only if they are necessary and genuinely meet objectives of general interest recognised by the Union or the need to protect the rights and freedoms of others."
Where a fundamental right is not absolute, the court has said that it must be viewed in relation to its social purpose:
"Consequently, its exercise may be restricted, provided that those restrictions in fact correspond to objectives of general interest pursued by the Community and do not constitute a disproportionate and intolerable interference, impairing the very substance of the rights guaranteed" (British American Tobacco, para 149).
National measures derogating from fundamental freedoms
"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." (para 37)
"Whilst it is true that a member state seeking to justify a restriction on a fundamental Treaty freedom must establish both its appropriateness and its proportionality, that cannot mean, as regards appropriateness, that the member state must establish that the restriction is the most appropriate of all possible measures to ensure achievement of the aim pursued, but simply that it is not inappropriate for that purpose. As regards proportionality, however, it is necessary to establish that no other measures could have been equally effective but less restrictive of the freedom in question."
"51. It has to be remembered that the reasons which may be invoked by a member state in order to justify a derogation from the principle of freedom to provide services must be accompanied by appropriate evidence or by an analysis of the expediency and proportionality of the restrictive measure adopted by that State, and precise evidence enabling its arguments to be substantiated ...
52. Therefore, in order to enable the court to determine whether the measures at issue are necessary and proportionate to the objective of safeguarding public policy, the Grand Duchy of Luxembourg should have submitted evidence to establish whether and to what extent the [contested measure] is capable of contributing to the achievement of that objective."
"Whilst it is true that it is for a member state which relies on an imperative requirement to justify a restriction within the meaning of the EC Treaty to demonstrate that its rules are appropriate and necessary to attain the legitimate objective being pursued, that burden of proof cannot be so extensive as to require the member state to prove, positively, that no other conceivable measure could enable that objective to be attained under the same conditions."
"... it is for the member states to determine the level of protection which they wish to afford to public health and the way in which that level is to be achieved. Since the level may vary from one member state to another, member states must be allowed discretion." (para 19)
"61. In the absence of fully harmonising provisions at Community level, it is for the member states to decide upon the level at which they wish to ensure road safety in their territory, whilst taking account of the requirements of the free movement of goods within the European Community ...
65. With regard ... to whether the said prohibition is necessary, account must be taken of the fact that, in accordance with the case-law of the court referred to in para 61 of the present judgment, in the field of road safety a member state may determine the degree of protection which it wishes to apply in regard to such safety and the way in which that degree of protection is to be achieved. Since that degree of protection may vary from one member state to the other, member states must be allowed a margin of appreciation and, consequently, the fact that one member state imposes less strict rules than another member state does not mean that the latter's rules are disproportionate."
In a context closer to that of the present case, the same approach can also be seen in Alpine Investments BV v Minister van Financiën (Case C-384/93)  ECR I-1141, para 51, concerned with the regulation of the provision of financial services.
"35. First ... if a prior administrative authorisation scheme is to be justified even though it derogates from such fundamental freedoms, it must, in any event, be based on objective, non-discriminatory criteria which are known in advance to the undertakings concerned, in such a way as to circumscribe the exercise of the national authorities' discretion, so that it is not used arbitrarily ...
36. Second, a measure introduced by a member state cannot be regarded as necessary to achieve the aim pursued if it essentially duplicates controls which have already been carried out in the context of other procedures, either in the same state or in another member state.
39. Third, a prior authorisation procedure will be necessary only where a subsequent control is to be regarded as being too late to be genuinely effective and to enable it to achieve the aim pursued.
41. Finally, it should be noted that, for as long as it lasts, a prior authorisation procedure completely prevents traders from marketing the products and services concerned. It follows that, in order to comply with the fundamental principles of the free movement of goods and the freedom to provide services, such a procedure must not, on account of its duration, the amount of costs to which it gives rise, or any ambiguity as to the conditions to be fulfilled, be such as to deter the operators concerned from pursuing their business plan."
"80. ... Consequently, the exercise of those rights may be restricted, provided that the restrictions in fact correspond to objectives of general interest and do not, taking account of the aim of the restrictions, constitute disproportionate and unacceptable interference, impairing the very substance of the rights guaranteed ...
81. In those circumstances, the interests involved must be weighed having regard to all the circumstances of the case in order to determine whether a fair balance was struck between those interests.
82. The competent authorities enjoy a wide margin of discretion in that regard. Nevertheless, it is necessary to determine whether the restrictions placed upon intra-Community trade are proportionate in the light of the legitimate objective pursued, namely, in the present case, the protection of fundamental rights."
Applying that approach, the court accepted that the action in question had been proportionate.
National measures implementing EU measures
"... 'manifestly inappropriate' is language used by the ECJ in relation to testing EU institution measures (or national measures implementing EU law) (see eg R v Secretary of State for Health, Ex p British American Tobacco (Investments)  ECR I-11453, para 123). There the balance is between private and public interests. It is not applicable when testing the legitimacy of state measures against fundamental principles contained in the EU Treaties where the balance is between EU and state interests." (para 56)
At the same time, Lord Carloway recognised that there was "a margin of appreciation afforded to the state not only in determining the general health objective of reducing smoking but also in selecting the manner in which the reduction in health risk is to be achieved" (para 59). Applying that approach, the Inner House arrived at the same conclusion as the majority of the Court of Appeal.
"... the court has reservations about whether the margin can vary in accordance with the nature of the particular organ of the state which creates or implements the measure. It might appear strange if the manner in which a EU member state elects to organise government within its borders were capable of increasing or decreasing the margin of appreciation available to that state relative to measures challenged as infringing one of the EU Treaties' fundamental principles. The legality of a measure ought not to depend upon whether a measure is passed by a central, national, provincial or local government legislature or determined by an official or subsidiary body under delegated authority from such a legislature." (para 59)
"That means, in particular, that authorisation schemes should be permissible only where an a posteriori inspection would not be effective because of the impossibility of ascertaining the defects of the services concerned a posteriori, due account being taken of the risks and dangers which could arise in the absence of a prior inspection."
"Member states shall not make access to a service activity or the exercise thereof subject to an authorisation scheme unless the following conditions are satisfied:
(a) the authorisation scheme does not discriminate against the provider in question;
(b) the need for an authorisation scheme is justified by an overriding reason relating to the public interest;
(c) the objective pursued cannot be attained by means of a less restrictive measure, in particular because an a posteriori inspection would take place too late to be genuinely effective."
The issues arising under the Directive
"The BSB proposal was therefore one which involved self-certification at a particular level, with the possibility of judicial assessment at that level to follow subsequently. QASA proposed self-certification for the purposes of initial, provisional accreditation at a particular level, followed by judicial assessment for the purposes of the BSB determining whether the advocate is entitled to maintain full accreditation at the existing level, or to progress to a higher level."
"Member States should keep in mind that, in many situations, authorisation schemes can be ... replaced by less restrictive means, such as monitoring of the activities of the service provider by the competent authorities ..."
In essence, the appellants contend that this is such a situation.
The approach of the courts below
"It is not for the court to decide whether QASA is disproportionate."
We are unable to agree with that statement. It is for the court to decide whether the scheme is disproportionate. The court must apply the principle of proportionality and reach its own conclusion.
"The court is not entitled simply to substitute its own views for those of the LSB: see R (Sinclair Collis Ltd) v Secretary of State for Health  EWCA Civ 437,  QB 394, at paras 19-23 (per Laws LJ, dissenting), paras 115-155 (per Arden LJ) and paras 192-209 (per Lord Neuberger MR). We remind ourselves that we are reviewing the proportionality of the LSB's decision. Even under a proportionality test, the decision-maker retains a margin of discretion, which will vary according to the identity of the decision-maker, and the subject-matter of the decision, as well as the reasons for and effects of the decision. A decision does not become disproportionate merely because some other measure could have been adopted. We accept the submission of [counsel for the Board] that the decision-maker's view of whether some less intrusive option would be appropriate as an alternative is likewise not a question on which the court should substitute its own view, unless the decision-maker's judgment about the relative advantages and disadvantages is manifestly wrong." (emphasis in original)
"Having regard to the identity of the decision-maker and the nature and subject-matter of the decision, we consider that the LSB is entitled to a substantial margin of discretion in relation to the question whether the decision was proportionate." (para 103)
For the reasons we have explained, that was not the correct approach.
"In our judgment, the LSB was entitled to reject this proposal for the reasons that it gave. It was not 'legally irrelevant' that the LSB considered that, for reasons of consistency and in order to promote competition, it was in the public interest to have one scheme for all advocates. That was not, however, the only reason why the LSB rejected the November alternative. It judged that it was in the public interest that there should be a comprehensive assessment scheme and that the evidence indicated that there was a need to make assessments across the board. This was a judgment that it reached after considering a massive amount of material on which it brought its expertise as a regulator to bear. In short, the LSB was of the view that a separate 'enhanced quality monitoring' scheme for barristers could not be adopted without unacceptably compromising the objective (in the best interests of the public) of having a single accreditation scheme for all advocates." (para 107)
(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.
This court's analysis of the proportionality of the Board's decision
"27. Protecting the public interest and interest of consumers of criminal advocacy has been at the heart of the design and development of the Scheme.
28. The SRA, BSB and IPS believe that the proposed Scheme and regulatory changes are proportionate to the objective of protecting the interests of consumers of criminal advocacy. The proposed changes will ensure consistent and systematic assessment of competence of advocates and result in advocates taking on only those cases in which they are competent to act."
The scope of the Directive