Jim Gallagher: Constitution a matter of law, not sovereignty

It means a lot to people with pleural plaques. The insurers greeted the Lords judgment in Rothwell as an unexpected get-out-of-jail card, relieving them of substantial liabilities. They surely can’t have expected the courts to overturn the act of the Scottish Parliament which reversed it, but pursued the case to the bitter end.

That delayed payments, and distressed claimants, some of whom have died in the meantime. AXA may have thought the small fortune in counsels’ fees worthwhile in deferring the claims to which they were again exposed. But their persistence has – perhaps inadvertently – rendered other public services.

First of all, it has brought a remarkable rehabilitation of the Supreme Court in the previously jaundiced eyes of Scottish Ministers – once enemies of the people, now champions of the underdog. Justice secretary Kenny MacAskill must be astonished at how much the justices learned at this year’s visit to the Edinburgh Festival …

More seriously, the court has applied the test of compatibility with convention rights to an act of the Scottish Parliament which is, for once, not about criminal procedure. It said interesting things about who counts as a “victim” for these purposes – even a big insurer such as AXA.

Like the lower courts, the Supreme Court is clear that, in convention rights terms, social legislation of this sort pursues a legitimate aim, and does so proportionately. It also opens up the Scots law on title and interest in judicial review cases, which will no doubt be of interest to those who like that sort of thing.

So far, so sensible.

But the judgment moves on to serious constitutional territory when it considers to what extent acts of the Scottish Parliament can be reviewed by the courts. This matters very directly to Holyrood – and the other devolved legislatures – and says profoundly important things about the relationship between unelected courts and elected legislatures, including Westminster. The UK Supreme Court, led in this instance by two Scottish judges, has staked a big claim.

The Scotland Act is explicit that Holyrood acts can be judicially reviewed, and struck down if they stray beyond competence into reserved matters, or contravene EU law or the convention rights.

What’s interesting here is the challenge on so-called common law grounds. The Scottish Parliament is a creature of statute, a Westminster act, despite the romantic pretence of reconvening the old Scots Parliament. The courts have for many years asserted a supervisory jurisdiction over statutory bodies, to ensure they act within their powers, and in accordance with the law. Their actions are subject to judicial review. What about the legislative actions of a parliament?

The unhesitating answer at all three judicial levels – Lord Emslie at first instance, the Inner House, and the Supreme Court – was “yes”. Laws made by devolved legislatures were subject not just to the founding statute but to what the courts thought they ought be doing.

If Holyrood legislation were to be a flagrant and unconstitutional abuse of power, it was unthinkable the courts should hold themselves powerless to intervene. This follows inevitably from thinking of them as public bodies, subject to law like any other.

But it sets courts a puzzle. There are well-developed, arguably intrusive, grounds on which administrative actions can be reviewed. These include the notoriously ill-defined “irrationality” or “unreasonableness”. They apply even to delegated legislation such as a statutory instrument made by a Minister, which courts have been happy to overturn. But not to primary legislation, acts of Parliament debated and passed before receiving royal assent. Should they apply to Holyrood acts?

Here a wise judge will pause, and Lord Emslie did. Are Acts of the Scottish Parliament secondary legislation to be overturned in this way? Should unelected judges substitute their views of what is rational or reasonable for the view of an elected legislature? Surely making primary laws – which the courts must put into effect – is a process that must, at the minimum, be afforded greater latitude than administrative actions? The courts must find a different test from “Wednesbury” unreasonableness, arising from a council’s cinema licensing decision.

Judges, Emslie concluded, should avoid unwarranted scrutiny of the democratic legislative process, and a more demanding test should apply. Scottish acts were primary in nature: the grounds for reviewing them could be no wider and arguably narrower, than those for reviewing statutory instruments approved by parliament. He had, however, to cast around in the case law to find a new test, understandably taking the view it was not his job to make one up.

The result was not wholly satisfactory. Borrowing from a House of Lords case involving an English local council, he concluded Scottish acts were “not open to challenge on the grounds of irrationality short of the extremes of bad faith, improper motive or manifest absurdity”.

Even by the flexible standards of judicial review, these ringing phrases are hard to pin down. Extremes of bad faith sound very bad indeed, but what exactly might they be? Judge-invented tests, sounding applicable in only the most extreme cases – such as “something so absurd that no sensible person could ever dream that it lay within their powers” – turn out to apply to everyday events.

The Inner House agreed with Lord Emslie. Common law review could not be ruled out completely, but simple irrationality was not enough. Circumstances would have to be extreme; they were not in this case.

The Supreme Court, however, looked at the issue from first principles: what sort of review was appropriate for the output of a democratically elected legislature? Drawing on its own jurisprudence, it brushed aside notions of irrationality and staked out a claim both narrower and more powerful.

Narrower, because it recognised that tests devised for administrative actions were inappropriate for lawmaking. Parliaments could consider whatever the political process thought was relevant. Politics, you might say, properly includes a lot of irrationality; reason is after all, as Hume said, the slave of the passions.

More powerful, however, in that the court made more explicit than before that it would overturn legislation which undermined the rule of law. Just what this might encompass is not wholly clear, but Lord Hope unambiguously includes removing the right of individuals to access the courts. It is striking that the reasoning leading to this conclusion is an analysis of the proper functions of legislatures and courts – the latter better adapted to safeguarding individuals’ rights, especially unpopular ones – and not traditional notions of sovereignty.

The court did not have to decide how this applied to Westminster legislation. The logic, however, points exactly the same way: an act of parliament that undermined the rule of law would not be recognised by the courts. How, if at all, this can be reconciled with the – very English – notion of the sovereignty of parliament, the court has left for another day. But the hints of the answer to that question are now as clear as can be.

This tells us – more explicitly than ever – that the dominant principle in the British constitution is now the rule of law, not the sovereignty of parliament. Having made their point, wise judges will leave it at that – a theoretical jurisdiction, never exercised in practice; and wise legislators should be careful not to tempt the judges into using the powers they claim.

It is striking that the substantial judgments here are from two Scottish judges, Lord Hope and Lord Reed. Their colleagues have followed them on fundamental UK constitutional questions, staking another claim entirely.

• Jim Gallagher is a former head of the Scottish Executive’s Justice Department and was director general for devolution in the UK’s Ministry of Justice, 2007-2010.