AXA, Asbestos and Administrative Law: The Case Files

In episode 5 of Brodies' podcast series 'The Case Files' Christine O'Neill QC and Laura McMillan discuss the significance of AXA General Insurance Limited and others v The Lord Advocate and others [2011] UKSC 42. The case changed the landscape on asbestos related claims for personal injury in Scotland, with lasting implications for the insurance industry, while also having a significant impact on constitutional and administrative law in Scotland.

In 2009 the Scottish Parliament passed the Damages (Asbestos-related Conditions) (Scotland) Act 2009, allowing asymptomatic pleural plaques to be treated as a condition that could be the basis of an action of damages for personal injury. The 2009 Act was passed following campaigning across Scotland and in response to the House of Lord's decision in Rothwell v Chemical & Insulating Co Ltd [2007] UKHL in which it was held that pleural plaques were not an injury that could be the basis of a claim for damages.

Brodies acted for four insurers who challenged the validity of the 2009 Act. Ultimately the insurers' challenge was rejected by the Supreme Court but the case has had a lasting impact.

The Impact - Insurance

In relation to asbestos related claims in Scotland, the decision means that the 2009 Act stands and individuals can bring claims for compensation for asymptomatic pleural plaques (and asymptomatic pleural thickening and asbestosis) in Scotland (and in Northern Ireland which passed similar legislation), while individuals in England and Wales cannot.

This has led to a new line of caselaw on the assessment of damages for these claims and in relation to limitation in respect of asbestos claims in Scotland.

How do you value a statutory injury which is asymptomatic? Following AXA, parties on both sides worked together to create a framework which gave a range of figures for resolving the existing claims which had been put on hold pending the decision. Once that framework fell away, there was a question mark over how to value these claims going forwards. Two Court of Session cases in 2015 and 2016, set down an approach which is now, generally, followed by all parties.

The cost of these claims, if successful, is borne primarily by the insurance industry but also self-insured bodies and companies whose insurers are now defunct.

The Impact - Constitutional and Administrative Law

In addition to having a substantial impact on insurance litigation, AXA established important principles in relation to the constitutional position of the Scottish Parliament and also rewrote the law on who is entitled to raise judicial review proceedings in Scotland.

Grounds on which an Act of the Scottish Parliament can be challenged: The insurers argued that ASPs are subject to judicial review on common law grounds in addition to the grounds specified in the Scotland Act 1998. The insurers' argued that the Scottish Parliament had acted irrationally in passing the 2009 Act

The Supreme Court held that an ASP can be judicially reviewed on the basis that it is contrary to fundamental rights or the rule of law but that the courts should intervene in "only the most exceptional circumstances". An ASP cannot be challenged on the grounds of irrationality, unreasonableness or arbitrariness.

Who can bring judicial review proceedings? Prior to AXA anyone seeking to bring judicial review proceedings in Scotland had to show that they had both title and interest in the case. This was a test which required challengers to have a legal relationship with the person whose decision or actions it sought to challenge. It was a harder test to meet than the standard of "sufficient interest" which had been adopted in the English courts and in practice it prevented campaign groups or individuals who wished to raise proceedings in the public interest from being able to do so.

The Supreme Court held that the more appropriate test was that of whether a challenger had "standing" which would be satisfied by the challenger having "sufficient interest" to raise proceedings. This more generous test allows NGOs and campaign groups to raise judicial review proceedings in the public interest or on behalf of a section of the public whose interests they represent.

Since AXA the "sufficient interest" test has been incorporated into legislation.

Further information

In episode 5 of the Case Files, Christine and Laura discuss in more detail the background to the case, Brodies' involvement and how the case still impacts the law today.

Click below to listen to 'The Case Files - AXA, Asbestos and Administrative Law' or find us on Apple Podcasts, Spotify or wherever you usually listen to your podcasts by searching for "Podcasts by Brodies."