The UK’s plan for preserving its chemicals regulation in a ‘no-deal’ Brexit scenario appears to be a deceptively straightforward one: the UK’s European Union (Withdrawal) Act 2018 turns existing EU law into UK law on the moment of exit on 29 March.
The real issue, as those in the chemicals industry are only too aware, is that it's not quite as simple as that.
To make sure the systems still function, detailed and complex UK statutory instruments are being rushed through the UK parliament to provide new mechanisms to address those roles, responsibilities, rights and obligations currently held by the EU institutions.
The blueprint for a new UK REACH is contained within the 60 pages of the draft 'REACH etc. (Amendment etc.) (EU Exit) Regulations 2019' (the draft Regulations). Despite the dull name and dense drafting, this statutory instrument has significant implications for chemicals management. The UK had been aiming for a 'copy and paste' of EU REACH into UK law but, somewhat inevitably, the reality is that there are a number of important differences and distinctions between the two regimes.
In this article, the focus is on the UK’s replacement for the Echa Board of Appeal (BoA). The UK government has chosen to give the functions exercised by Echa to the UK's Health and Safety Executive (HSE).
Some might have thought that the UK government would therefore create an HSE Board of Appeal, operating in exactly the same way as Echa’s BoA, to provide an independent review of the HSE’s decisions under UK REACH. However, that is not the path the UK government has chosen to follow.
Instead, the draft Regulations provide that appeals against decisions of the HSE under UK REACH will go into the UK's tribunal system. Having taken cases before both the Echa BoA and the UK tribunal system, we can say with some certainty that the two bodies are quite different beasts. This article highlights some of the similarities and some of the differences, and provides some thought on the consequences for the chemicals sector.
Not so different?
It will be a relief to the chemicals industry to hear that not everything is changing. To reassure the sector that there is some continuity, here are the rules that are staying broadly the same:
Standing to bring a challenge and the role of intervening parties
Under both regimes, decisions of the agency (whether Echa or HSE) may be challenged by the natural or legal person to whom the decision was addressed, or by another person to whom the decision is of direct and individual concern.
For intervening parties, the position is less clear. Under EU REACH, the details of the appeal are published on the Echa website and any person establishing an interest in the result of the case can apply to be an intervening party within two weeks.
Under the rules of the First Tier Tribunal, it is possible to have intervening parties, but there is no automatic publicity of the appeal that would serve to notify the wider public, and the criteria for intervening are based on UK rules. This might be an area where revisions to the procedural rules will be forthcoming, but for the moment, potential intervening parties in the UK are at a disadvantage.
Suspensive effect of the decision during appeal
The suspensive effect of an appeal on a challenged decision will continue to apply to the UK regime. Under Article 91(2) of EU REACH, when an appeal is lodged to the BoA, the contested Echa decision is suspended and the appellant is not required to apply the decision until the BoA has made its ruling. Appealed HSE decisions will be similarly suspended, as Article 91(2) has been retained by the draft Regulations.
Powers of the appellate body
The decision-making powers of each appellate body are very similar under each regime: both have the power to substitute their own decision for the original agency (Echa or HSE) decision. The Echa BoA 'may exercise any power which lies within the competence of the [Echa] or remit the case to the competent body of the [Echa] for further action' (Article 93(3), EU-REACH).
The draft Regulations remove Article 93(3) but instead the First-Tier Tribunal has equivalent powers to dismiss an appeal or allow an appeal, and either quash the decision and remit it to the HSE to take again, or to substitute its own decision.
Under EU REACH, appellants have three months from the date that they were notified of the contested decision to file their appeal (or three months from the date on which they became aware of the decision if it was not addressed to them). This time limit has been replaced by a similar requirement in the First-Tier Tribunal Procedure Rules, however it is expressed as 90 days rather than three months. It’s a minor difference, but often it’s those minor differences where people get caught out, so it’s important to do the maths right each time.
One particularly useful feature of the EU-REACH appeal regime is the ability of the executive director of Echa to ‘rectify’ a decision within 30 days of the appeal being lodged: this allows a short window for the executive director to take a fresh look at the decision and decide whether to fight or to concede.
This useful ‘check’ has been preserved in UK REACH but – importantly – the draft Regulations only specify that it’s the HSE who can rectify, rather than a specific person within the HSE. Our concern here is one of governance.
By specifying that the executive director was responsible for rectification, EU REACH put the responsibility onto the desk of the most senior person within the organisation. Unless the HSE puts into place its own arrangements, there is a danger that the opportunity to have this senior review within the organisation is lost. Clearly, it is harder to persuade the original decision-maker of the error than a third party looking at the point fresh.
Or really quite different?
Other changes made by the draft Regulations are far more significant, and some of these are simply a consequence of the UK government selecting to use an existing tribunal – one that already exists as part of Her Majesty's Courts and Tribunals Service (HMCTS) – rather than creating a bespoke HSE BoA.
Composition of the Tribunal
Appeals to Echa’s BoA are heard by three members and of those three members, at least one member must be legally qualified and at least one member must be technically qualified. Members are selected from a list of qualified candidates produced by the Commission and are appointed on the basis of their relevant experience and expertise in the field of chemical safety, natural sciences or regulatory and judicial procedures.
We have yet to see the detail on the composition of the tribunals for HSE appeals, as the Tribunals Judiciary Practice Statement has not been updated to reflect the new appeals coming through. However, it might be that the UK government sticks with the current practice in the General Regulatory Chamber, in which environmental regulatory cases are always heard by a judge and sometimes (but not always) the judge is supported by one to two non-legal tribunal members with 'substantial experience of environmental matters'.
Our expectation is that the Practice Statement will need to be amended to make it mandatory that technically qualified members sit with a judge on REACH appeals – the subject matter is simply too complicated and technical for a judge with no technical background to take the decisions alone. However, that’s not guaranteed under the current rules, and HMCTS still need to recruit these non-technical members, so there remains some concern over how appeals will operate as the new UK-REACH regime beds in.
Adversarial nature of tribunal hearings
As part of HMCTS, the First-Tier Tribunal is, by its very nature, an adversarial arena: it is a forum for litigation. The procedure is a formal one and the appeals are overseen by legally qualified members of the UK judiciary, whether or not there is also assistance from technical lay-members.
Indeed, First-Tier Tribunal proceedings were deemed 'sufficiently adversarial in nature to give rise to litigation privilege' in the Upper Tribunal case of R v First-tier Tribunal (Immigration and Asylum Chamber) , on the basis that 'there are two opposing sides; there are areas of factual and legal dispute between the parties; the issues in dispute are identified' and 'the outcome is binary; an appeal is either dismissed or allowed'.
The BoA, in contrast, is an independent appeal body with Echa, not a court. The process is one of independent review in which a second decision can be reached.
Clearly, both are independent appellate bodies considering opposing cases and coming to a decision, but they are not the same, and in our view, with experience of both, it will be important for businesses to understand the nature of the audience they are addressing.
There is a presumption that the First-Tier Tribunal will want to be addressed at a hearing. Under its procedure rules, the First-Tier Tribunal must hold a hearing before making a decision which disposes of proceedings, unless each party consents to proceed without a hearing, or the Tribunal is satisfied that a hearing is not required. In contrast, the BoA is only required to hold a hearing if it considers this to be necessary or if a party so requests, allowing some appeals to be dealt with on the papers.
The risk of paying adverse costs
One of the big concerns in litigation is the potential to be ordered to pay the costs that the other party has incurred in fighting the appeal (the adverse costs risk).
Under EU REACH, there is no adverse costs risk: the only risk is that, if the appellant does not succeed in the appeal, it does not get a refund of its appeal fee. Therefore, the costs risks of appealing a decision are easy to quantify at the start.
However, the First-Tier Tribunal has discretion as to costs and the 'full power to determine by whom and to what extent the costs are to be paid' under the UK’s Tribunals, Courts and Enforcement Act 2007. The starting presumption is that each side will be responsible for their own legal costs, however the Tribunal has a discretion to make a costs order, either in light of unreasonable behaviour from one of the parties, or on account of wasted costs.
The costs powers of the First-Tier Tribunal introduce an element of uncertainty into the appeal process. While an unsuccessful appeal to the BoA would result in a loss of the appeal fee and the appellant’s own costs of preparing for the appeal, an appeal lodged in the First-Tier Tribunal carries the risk that the appellant could also be lumbered with the costs of the HSE in defending the appeal, which might be substantial.
This underlines the formal and adversarial nature of the First-Tier Tribunal, and could deter those adversely affected by an HSE decision from lodging an appeal.
What difference does it make?
For many businesses who avoid adversarial proceedings as much as possible, the differences between the two appeal bodies might seem moot. However, we can foresee some significant consequences.
First, under the parallel nature of EU-REACH and UK-REACH, with Echa and the HSE potentially coming to quite different decisions on substantively the same data, there is more room to play the two systems against each other, with arguments to the Echa BoA citing HSE decisions as a reason why Echa is wrong, and vice versa.
Second, the adversarial nature of the First-Tier Tribunal might be fertile ground for challenging HSE decision-making, where judgements are often made on fine margins, and where there is always room for more than one opinion.
Third, the fact that the tribunal judges will hear a wider range of cases than just REACH cases will allow them to bring alternative perspectives to their decision-making, which again may well lead to a divergence in decision-making from the Echa BoA.
In the end, the most significant impact may be less about the differences between the two appellate bodies, and more about the simple fact that there are two bodies: both those who wish to defend the use of chemicals against unduly restrictive regulatory decisions, and those who think the regulatory decisions are too soft, would have two arenas in which to fight their cause.
When the stakes are high enough, we can be certain that stakeholders will want to use this opportunity to their advantage.