The Court of Appeal has given judgment on BT and TalkTalk's appeal of the decision of the Administrative Court of April 2011 dismissing their judicial review of certain controversial provisions in the Digital Economy Act 2010 (the 'DEA') concerned with illegal file-sharing.
- The compatibility of acts or omissions by UK public bodies with applicable EU law can be a ground of judicial review in the English courts, as a species of illegality.
- Applicable EU law takes different forms – from EU regulations or directives that are directly effective in the UK, to EU law that has been incorporated into domestic law.
- Compatibility can often turn on matters of interpretation: the alleged breach needs to be sufficiently material, and there should be more than a "linguistic tussle".
- The appellants were partially successful - the Court of Appeal enlarged the declaration of the High Court, that the draft Copyright (Initial Obligations) (Sharing of Costs) Order 2011 (the 'Costs Order') would be unlawful contrary to Article 12 of the Authorisation Directive (2002/20/EC) to the extent that it sought to impose certain administrative charges on the internet service providers ('ISPs').
- However, the appellants failed to show that the provisions of the DEA in relation to online infringement of copyright were incompatible with the other relevant EU directives.
As explained in our e-bulletin of 13 May 2011, the DEA was introduced by the Government to insert new sections into the Communications Act 2003 as a response to the increasing problem of subscribers to internet services breaching copyright by uploading and accessing material online. The contested provisions provide for the approval or making of a code, which may impose 'initial obligations' on ISPs to notify subscribers of copyright infringement reports received from copyright owners and to provide copyright infringement lists to copyright owners. The DEA also allows for provision in the code to require payment by ISPs of contributions towards 'qualifying costs' incurred by Ofcom or the appeals body in carrying out functions under the copyright infringement provisions. The Costs Order is to be made in the exercise of that power.
The main grounds of challenge in the High Court were on the basis of illegality and related to the alleged incompatibility with provisions of EU law. However, in addition, BT and TalkTalk argued that the contested provisions represented a disproportionate restriction on the free movement of services and / or the right to privacy and / or the right to freedom of expression.
The proportionality arguments were not carried through to the appeal stage. The appeal rested on four areas of alleged incompatibility with certain EU directives. For more detail, please see our IP team's newsflash of 16 March 2012 .We concentrate here on the public law points.
Arguments of the Appellants
The appellants argued that the contested provisions (1) should have been notified to the EU Commission in draft pursuant to the Technical Standards Directive (98/48/EC) and were therefore unenforceable; and (2) were incompatible with four EU directives, namely the Electronic Commerce Directive (2000/31/EC), the Data Protection Directive (Directive 95/46/EC) and / or the Privacy and Electronic Communications Directive (2002/58/EC), and the Authorisation Directive (2002/20/EC as amended by 2009/140/EC).
Judgment of the Court of Appeal
The appeal was allowed in part. It was held that 'case fees', namely those costs incurred by Ofcom or the appeals body in carrying out functions under the copyright infringement provisions are 'qualifying costs' and therefore 'administrative charges' for the purposes of Article 12 of the Authorisation Directive. Therefore, they could not be imposed on ISPs.
The other arguments were unsuccessful. However, the Court of Appeal made several notable points which are of general application in cases of statutory interpretation and useful to bear in mind when challenging statutory provisions on the grounds of illegality. In particular:
- In relation to notification pursuant to the Technical Standards Directive, a central issue was whether the legislation had actual legal effects capable of impacting on those seeking to exercise the freedom of movement of services or other freedoms. The Court of Appeal relied on Court of Justice case law and held that there was no breach: the contested provisions were for the most part reliant on a code being in force and therefore until the code was in force there were no actual obligations or 'legal effects' on the ISPs.
The Court of Appeal did identify one exception. However, it was held that although the particular provision should have been notified and was technically unenforceable through want of notification, this did not provide a 'good enough reason' for treating the entirety of the contested provisions in the same way.
- In relation to the Electronic Commerce Directive, the Data Protection Directive and / or the Privacy and Electronic Communications Directive, and the Authorisation Directive, the following points of statutory interpretation were emphasised.
- It is unrealistic to impute to the EU legislature an intention to give a phrase a meaning that relates to provisions that have not yet been adopted, unless there is clear, express language to that effect.
- Meanings cannot be given to phrases that are contrary to what is 'plainly necessary' for the purposes of a provision at issue.
- When, as in this case, statutory interpretation requires an analysis of the relationship between different directives, it is relevant to consider what supports or undermines the interpretation. In addition, if there is a choice between a restrictive meaning and a wider meaning, the wider meaning should be preferred where there is no obvious reason for choosing the restrictive meaning, particularly where general interest objectives and sector specific national measures are at stake.
This case demonstrates the potential complexity of challenges involving alleged incompatibility with EU law. It is noteworthy that the Court of Appeal agreed with Parker J in the High Court that it would not be appropriate to refer the case to the Court of Justice, since the questions of EU law had 'clear answers'. The decision also illustrates the importance of materiality in advancing grounds of judicial review.
The absence of argument in the Court of Appeal on proportionality fosters uncertainty as to its application in English law. Since our e-bulletin of 13 May 2011, the Court of Appeal delivered its judgment in R (Sinclair Collis Limited) v Secretary of State for Health  EWCA Civ 437, which questions the place of the 'least onerous means' aspect of the test most commonly applied when proportionality arises as an issue in EU law. However, Sinclair Collis may be confined to its facts, or at least to the consideration of proportionality in EU law when matters of public health are at stake.
R (British Telecommunications plc & TalkTalk Telecom Group plc v Secretary of State for Culture, Olympics, Media and Sport  EWCA Civ 232