Damages awarded for breach of human rights act

A recent decision of the Court of Appeal serves as a relatively rare example of damages being awarded for a breach of human rights. Another rare feature of the case is that the parties awarded the damages were commercial entities: the power companies Infinis PLC and Infinis Re-Gen Limited.

The Gas and Electricity Markets Authority ("GEMA") had determined that the Infinis companies were not entitled to accreditation for Renewables Obligation Certificates ("ROCs") in respect of two of their electricity generating stations. Under the Electricity Act 1989 and associated statutory instruments the Infinis companies would be entitled to obtain a ROC if they made certain arrangements to secure electricity from non-fossil fuel sources. If they did not make such arrangements, they would be required to pay a charge. GEMA found that there were Non-Fossil Fuel Order ("NFFO") arrangements in place for both sites which provided for the building of a generating station which had not yet been commissioned. Under the Renewables Obligation Order 2006, such arrangements render a generating station an excluded station for the purposes of ROCs. GEMA therefore found that the two stations were excluded generating stations so no ROC could be issued and nor could they subsequently be granted accreditation.

The Infinis companies applied for judicial review of the decision saying that the Replacement Power Purchase Agreements entered into between the previous owner and the Non-Fossil Purchasing Agency were of no force and effect by the time GEMA made its decision because the stations had not been built by the designated date, so no NFFO arrangements subsisted. They therefore argued that the ROCs should have been issued. The judge at first instance found in favour of the Infinis companies. As a result of the ROCs not being issued when they rightfully should have been, the Infinis companies were deprived of a financial benefit to which they were entitled (the monetary value of the ROCs), which amounted to a breach of Article 1 of Protocol 1 of the Human Rights Act 1998. The first instance judge held that as a result of this the Infinis companies should be awarded a sum representing the monetary value of the ROCs which should have been issued (based on the average sale price of each ROC). The Court of Appeal upheld the decision of the first instance judge and went on to discuss the way in which the quantity of damages should be decided.

There is no automatic right to damages for breach of one or more of the rights protected under the Human Rights Act 1998. Damages will only be awarded where "necessary to afford just satisfaction". The courts have discretion about whether to make an award and, if so, how much. There is fairly limited guidance on levels of award: "perhaps the most striking feature of the Strasbourg case law, to lawyers from the United Kingdom, is the lack of clear principles as to when damages should be awarded and how they should be measured". It is therefore sometimes difficult to predict how the courts will treat cases where damages are sought. This is particularly so in relation to cases where the damage done is hard to quantify in monetary terms. In such cases, damages awarded have generally been low, for example £2,000 where a prisoner's right not to be treated in an inhuman and degrading way was deemed to have been breached by him being forced to be involved in "slopping out".

In the Infinis case, however, there was clear financial loss. GEMA had wrongfully refused the Infinis companies accreditation to which it was entitled under a statutory scheme. The Court of Appeal relied on an earlier judgement in which the Court of Appeal said that someone whose rights had been breached "should, in so far as this is possible, be placed in the same position as if his Convention rights had not been infringed. Where the breach of a Convention right has clearly caused significant pecuniary loss, this will usually be assessed and awarded". The court therefore held that this principle should be applied and the Infinis companies were awarded a sum equalling the financial loss which they had suffered. This sum is yet to be published but could amount to over £3 million.

The decision demonstrates that, although such cases have not arisen frequently so far, the courts will grant damages to commercial entities for breaches of human rights.

If you have any queries about the issues raised in this e-update, or wish to discuss the implications of the decision for you, please get in touch with one of the team below.