Navigating commercial judicial review: challenging Acts of Parliament

In this mini-series, Fieldfisher's tier 1 ranked Public law team outline a few hot topics for claimants in commercial judicial review cases.

In this final edition of the mini-series, Partner Matthew Lohn and Senior Associate Olivia Rogers provide an overview of the issues for businesses to consider when new primary legislation (that is, an Act of Parliament) impacts them.

A case study in the Leasehold and Freehold Reform Act

An example of a piece of primary legislation that will have significant impacts on businesses is the Leasehold and Freehold Reform Act 2024, which was the last bill to receive Royal Assent in the 'wash up' period in the final days of the last UK government.

The Act will make it easier and cheaper for leaseholders to buy their freehold, but it is not without controversy: the Government's approach to valuing freeholds (referred to as 'enfranchisement value') has been widely criticised by freehold owners and managers for representing an unjustified deprivation of their property interests. 

We have assisted a number of institutional property funds with challenging the Act in both the High Court in London and the European Court of Human Rights on the basis that certain provisions are incompatible with Article 1, Protocol 1 (A1P1) of the European Convention on Human Rights. A1P1 provides that:

"Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law."

Drawing on our experience, in this article, we explore the issues to consider as soon as you identify that primary legislation is likely to have an adverse impact on your business.

What can you do if you want to challenge primary legislation?

There are only very limited grounds on which primary legislation can be challenged by way of judicial review. If the proposed primary legislation looks like it could interfere with your property rights, there is scope to bring a claim under A1P1 of the European Convention.

You need to act quickly – in the English courts, you must bring a claim promptly and within three months from the date the Act of Parliament receives Royal Assent. But there is a lot you can do to protect your business before the law hits the statute books.

Things to consider before challenging primary legislation

1. How much information do you have about the proposed policy and its likely impact? When a new Bill is being considered by the government, gather as much information as you can about the proposed policy and then start to collate evidence of the likely impact of the proposals on your business. Is it possible to quantify the likely financial impact at this stage? Consider instructing a valuer or expert to give you a clear view on your level of exposure. If you are thinking about bringing an A1P1 claim, you need to understand exactly how the policy is likely to deprive you of your property rights.

More generally, in order to bring a judicial review claim, you must have a 'sufficient interest' in the matter to which the application relates in order to have standing, so it is vital to carry out this initial assessment to determine how your business is likely to be affected by the proposed primary legislation.

2. Do you have an opportunity to make your views known? Often the sponsoring government department will run a consultation about the proposed policy before it is finalised. This is an important opportunity for anyone who is likely to be affected by the proposed policy to put forward their views, share concerns and suggest alternatives before a policy is decided.

If the consultation lacks the information that you need in order to understand what is being proposed, there may be scope to challenge the consultation itself. See our overview on challenging consultations here: Navigating commercial judicial review: consultation challenges | Fieldfisher.

3. How widely is the impact likely to be felt? Are other businesses in your sector likely to be affected? What action have they taken? Grouping together can be an effective way of making your collective voice known to government.  

What does a claimant need to show to succeed with an A1P1 claim?

In order to succeed with an A1P1 claim, you would need to establish that the primary legislation will deprive you, or restrict your use, of your property and that, in all of the circumstances (including having regard to any compensation available), this does not strike a 'fair balance' between your property rights and the wider public interest. It will be for the courts to weigh up whether the proposed legislation in question strikes a fair balance between these competing interests.

What can a claimant achieve from a successful A1P1 claim?

The courts cannot overturn or quash primary legislation passed by Parliament. This is because Parliament is sovereign. Instead, it is open to the court to issue a 'declaration of incompatibility' (under section 4 of the Human Rights Act 1998) if the court determines that a piece of primary legislation cannot be read compatibly with a Convention right.

It is then up to Parliament to change the law to make it compatible with the European Convention. This is discretionary and there is no obligation to do so (because Parliament is sovereign). This means that there is a risk that the challenge may not result in remedial action. However, in practice, the typical course is for the Government to remedy the breach of the Convention right, by either rectifying the legislation or taking some other remedial action.

It is not possible to seek an order for damages from a Court where the challenge is to a provision of primary legislation. However, the Court may award compensation if it determines that there has been a violation of Convention rights. Again, this is discretionary.

When should organisations reach out for advice on bringing an A1P1 challenge?

Judicial review is a remedy of last resort and compensation is not guaranteed even with a declaration of incompatibility.

The most effective way to challenge the relevant legislation (if you've identified the issue early enough) is to engage with Government early and seek to highlight your concerns with, and suggestions for, the proposed legislation before it passes into law.

If you see a Bill going through Parliament that looks like it could negatively impact your business, seek advice as soon as possible. 

If you would like to discuss any of the issues raised in this blog, please get in touch with our team.

The content of this blog does not constitute legal advice and is provided for general information purposes only. Specific legal advice should be sought before taking any actions based on the content of this blog.