Joint Committee On Human Rights - Seventeenth Report

Joint Committee On Human Rights Seventeenth Report

Bills not requiring to be brought to the attention of either House on human rights grounds

Bills that raise no significant risk of incompatibility

6 Energy Bill

Date introduced to the House of Lords

Date introduced to the House of Commons

Current Bill Number

Previous Reports

27 November 2003

22 April 2004

House of Commons 123

None

Background

6.1 The Energy Bill is a Government Bill, introduced into the House of Lords on 27 November 2003. Exhaustive Explanatory Notes have been published which deal with the human rights implications of the Bill in a thorough manner and we would like to take this opportunity to thank the Department for this.[70] The Bill received its First Reading in the House of Commons on 22 April 2004 and its Third Reading on 13 July 2004. The Secretary of State for Trade and Industry, Rt Hon Patricia Hewitt MP, has made a statement of compatibility with Convention rights under section 19(1)(a) of the Human Rights Act 1998.

The human rights implications of the Bill

The Civil Nuclear Industry

6.2 Chapter 1 creates a new regime for decommissioning nuclear facilities, the National Decommissioning Authority (NDA).[71] The NDA will decommission designated sites. Where a site is under the control of any person other than a Crown appointee, the UKAEA, a publicly owned company or the NDA, it may only be designated with the consent of the person having control of the site.[72] We are satisfied the designations under Chapter 1 should not therefore impact upon property rights under Article 1 of Protocol 1.

6.3 Chapter 2 provides for "nuclear transfer schemes" allowing for the transfer of property, rights or liabilities to or from the NDA.[73] The explanatory notes also point out that Schedule 5 to the Bill (which has effect under clause 38(5)) provides for compensation to any third parties whose rights are interests are effected by a transfer.[74] In the light of this, we are satisfied that Chapter 2 would comply with Article 1 of Protocol 1.

6.4 Chapter 3 establishes the Civil Nuclear Constabulary (CNC) for the purpose of protecting nuclear sites and nuclear material.[75] Chapter 3 does not create any new powers, beyond those already enjoyed by the police, but accords existing police powers to the CNC, including stop and search powers under section 44 of the Terrorism Act 2000. As these powers would otherwise be exercised by the police or the UKAEA, we do not anticipate that they would create problems of human rights compliance. Interferences with rights under Article 8 or Article 1 of Protocol 1 of the ECHR, consequent on the CNC exercise of police powers, would be open to justification on grounds of the protection of public safety, protection against crime, and protection of the rights of others.

6.5 Members of the CNC are excluded from membership of any trade union under clause 67, although provision is made for a Civil Nuclear Police Federation under clause 54. The exclusion of trade union membership is unlikely to breach Article 11 ECHR as Article 11(2) specifically allows for the imposition of lawful restrictions on the exercise of rights of freedom of association of members of the police, armed forces or those involved in the administration of the State.[76] Both the European Social Charter,[77] and the ILO Convention on Freedom of Association and the Right to Organise,1948,[78] allow national law to determine how far the right to organise shall be applied to the police and the armed forces.

Sustainability and Renewable Energy Resources

6.6 Chapter 2 of Part 2 (Offshore Production of Energy) allows for the designation by Order in Council of renewable energy zones in areas outside UK territorial waters[79] and makes provision for their administration. Provision may be made for the exercise of UK police powers within these zones.[80]

6.7 Under clause 94, where there is a proposal to construct, extend or decommission a renewable energy installation at sea, the Secretary of State may declare a safety zone around it, where this is considered necessary for safety reasons. Within this zone, restrictions on the movement and activities of vessels apply. The declaration may amount to a determination of civil rights and obligations under Article 6.1. Schedule 16 allows the Secretary of State to make regulations setting out procedures for the giving of notice and the consideration of objections (including the establishment of a public inquiry where necessary). These procedures should provide a basis for compliance with fair hearing standards under Article 6.1. Although no provision is made for rights of appeal, given the nature of the declaration as a policy decision, the availability of judicial review should be sufficient to satisfy the right to determination by an independent and impartial tribunal.[81]

6.8 Clause 100 allows the Secretary of State by order to extinguish, suspend or restrict rights of public navigation in respect of sites of renewable energy installations. Such an order may constitute a determination of civil rights and obligations which attracts the protection of Article 6(1). Schedule 16 to the Electricity Act 1989, which applies to orders under clause 100, sets out procedures in relation to notice, consultation and hearing of objections, and provides for public inquiries to be held in certain cases. This should meet Article 6.1 standards. There is no provision for an appeal, but, as in relation to clause 94, judicial review should be sufficient to meet Article 6.1.

6.9 Clause 96 creates offences relating to unauthorised entry of vessels into safety zones designated around renewable energy zones. Offences under clause 96 are subject to defences that the accused did not know of the existence of the zone, and could not have known of it from reasonable inquiries (clause 96(6) and 96(7)) or that all reasonable steps were taken to prevent commission of the offence (clause 96(8)). These defences are reverse onus clauses, which must be established by the accused.

6.10 Reverse onus clauses are permissible under Article 6(2) where they are confined within reasonable limits.[82] In this case, the burden on the accused appears to be persuasive rather than evidential (in that it requires the accused to prove something essential to guilt or innocence rather than merely to raise evidence to suggest it). However, the reversal of the onus of proof relates only to particular defences rather than to a central element of the offence, and relate to matters likely to be peculiarly within the knowledge of the accused.[83] It is therefore unlikely that the provisions would be found to be in breach of Article 6(2), in particular since the offence concerned is regulatory in nature.

6.11 Chapter 3 concerns the decommissioning of offshore installations. It establishes a system for the Secretary of State to require those constructing, altering or decommissioning a renewable energy installation, to submit a decommissioning programme to the Secretary of State in respect of the installation. It is an offence to decommission the installation except in accordance with this programme.[84] Although this scheme may interfere with property rights under Article 1 Protocol 1, such interference would be likely to be justified in the public interest on grounds of safety.

6.12 The offence of failure to comply with a notice requiring compliance with a decommissioning programme contains a reverse onus clause, which states that it is a defence for the defendant to show "that he exercised due diligence to avoid the contravention." This clause is likely to be justified on similar grounds to those identified in respect of the reverse onus clause in Chapter 2 above.

Energy Regulation

6.13 Chapter 1 of Part 3 amends the statutory regime for licensing of electricity provision with the aim of establishing "a single competitive wholesale electricity market for the whole of England, Scotland and Wales".[85]

6.14 Schedule 18, which has effect under clause 134, allows for "property transfer schemes" to be made by GEMA on the application of the system operator or a relevant licence holder. These schemes may involve the compulsory acquisition of property of a licence holder by the system operator. Applications for property transfer schemes may be made only within three months of the legislation coming into force,[86] and are designed to ensure a smooth transition to the new system. The explanatory notes state that—

… this facility is required to ensure that the new trading and transmission arrangements are implemented in a timely and efficient manner and that the system operator has access to and use of all the property and equipment required to do its job effectively before the new trading and transmission arrangements can commence operation.[87]

6.15 A transfer scheme may be made only where GEMA determines it to be "necessary or expedient" for implementing the new arrangements,[88] or where the licence holder agrees to the scheme. A right of appeal (within 7 days) from decisions on transfer of property lies to the Competition Appeal Tribunal.[89]

6.16 Under Article 1 Protocol 1, a deprivation of property may be justified in the public interest, but will generally, except in the most exceptional circumstances, require payment of compensation, even where very strong public interest considerations operate.[90] Schedule 18 makes provision for compensation to third parties.[91] There is no express provision for GEMA to provide compensation to the licence holder (though it may make supplemental or incidental provision to the scheme). However the Competition Appeal Tribunal may, on appeal, award compensation in overturning, upholding or amending the scheme.[92] Given the importance of adequate compensation in ensuring that deprivations of property comply with Article 1 of Protocol 1, it would be preferable for compensation to be available at first instance, since under the scheme of the Bill, GEMA is likely to be acting in breach of the ECHR in any case where it orders a deprivation of property. Nevertheless the scheme as a whole should be capable of application in accordance with the Convention. The Competition Appeal Tribunal, acting as a public authority with obligations to uphold the Convention rights under s.6 HRA, would be required to award compensation in all but the most exceptional cases, in order to ensure that the scheme complied with Article 1 of Protocol 1.

6.17 Chapter 3 establishes an administration regime for holders of electricity or gas transmission or distribution licences. Such licence holders may be the subject of a court order appointing an administrator to the company, where the company is unable or likely to be unable to pay its debts or where there is a petition for winding up the company in the public interest under s124A of the Insolvency Act 1986. This regime has the clear potential to interfere with property rights. In particular, clause 152 and Schedules 20 and 21 make provision for transfer schemes, under which assets of an energy company in administration can be transferred to another company to the extent necessary to ensure that the objectives of energy administration are met. If used in accordance with these objectives, any interference with property rights is likely to be justifiable in the public interest.

New Clause

Imposition of Civil Penalties

6.18 A series of new clauses introduced to the Bill at Report stage in the House of Commons create a regime designed to ensure that transport fuel suppliers supply a specified level of renewable transport fuel (the "renewable transport fuel obligation").[93] This requirement may be imposed by way of "renewable transport fuel (RTF) orders" made by the Secretary of State.[94] Such an order may also appoint an Administrator[95] with responsibility for implementation of the provisions on renewable transport fuel obligations. The Secretary of State may, by way of an RTF order, provide for the Administrator to impose a civil penalty for contravention of a designated provision of the relevant part of the Act.[96] Provision is made for the person on whom the civil penalty notice is imposed to object to the penalty[97] and for the Administrator to review the penalty in light of the objection. Civil penalties may also be appealed,[98] by way of rehearing, to the High Court.[99]

6.19 Although the penalty under the new clause is characterised as civil in the Bill, this is not in itself determinative of whether the penalty attracts the protection of the criminal due process guarantees under Article 6 ECHR, including the presumption of innocence under Article 6.2 and criminal procedural rights under Article 6.3, as well as the more general protection of Article 6.1. The term "criminal charge" in Article 6 has an autonomous meaning.[100] Whether proceedings are to be considered civil or criminal under Article 6 will depend on three primary factors: the classification of the proceedings in domestic law; the nature of the offence; and the severity of the penalty that may be imposed.[101] The second and third elements of the test carry more weight than the first.

6.20 The nature of the offence is more likely to be criminal where the rule giving rise to the offence is of a generally binding character, rather than applicable only to a defined group;[102] where the aim of the law is punitive or deterrent;[103] where conviction is dependent on a finding of culpability;[104] and where proceedings are instituted by a public body with general powers of enforcement.[105] Penalties imposed under the new clause appear likely to have a punitive or deterrent purpose, with the aim of ensuring compliance (and deterring non-compliance) with the renewable transport fuel obligation. They may depend on a finding of culpability, in failing to comply with the legislative scheme. They are to be imposed by a public body (the Administrator) although the extent of the Administrator's enforcement powers are not clear from the face of the Bill, and are to be established by Order of the Secretary of State.[106] It is not clear from the face of the Bill whether the penalty would depend on a finding of culpability. However, it is likely that such penalties would apply only to a defined group (transport fuel suppliers).

6.21 As to the nature of the penalty that may be imposed under the new clause, the Bill allows for a maximum penalty amounting to 10% of the turnover of a business, although a lower maximum penalty may be set by order. The Court has made clear that it is the severity of the potential penalty that may be imposed, rather than the penalty actually imposed, which is key to whether there is a criminal charge.[107] 10% of business turnover represents a substantial penalty, which may be sufficient in itself to render the penalty criminal for the purposes of Article 6. A substantial fine will not always render a penalty criminal[108] but where its purpose is punitive and deterrent, it may do so, even in the absence of any sanction of imprisonment.[109] However in a case closely analogous with the new clause, Societe Stenuit v France,[110] the Commission of Human Rights held a penalty to be criminal where a maximum penalty of 5% of a company's turnover could be imposed. Although the decision in that case was also influenced by other factors,[111] the ECtHR has held that the severity of a potential penalty may in itself be enough to establish the criminal nature of the offence.[112]

6.22 Whether penalties imposed under the new clause will be considered criminal in nature is to a large degree dependent on the terms of the RTF orders made under the statute. We consider, however, that RTF orders imposing such penalties will need to be carefully formulated if they are to fall outside of the category of criminal charge. In particular, we consider that RTF orders will need to set the maximum fine at a level lower than 10% of turnover, to ensure that penalties fall within the civil category.

6.23 However the civil penalties are classified, there is nothing on the face of the Bill which would prevent the procedures for implementing those penalties from complying with the criminal standards of due process established by Article 6. Given the possibility that a court would find the imposition of such a penalty to amount to a trial on a criminal charge, attracting Article 6 protection, we recommend that the procedures for imposition of penalties under new clause 12 should aim to comply with Article 6 criminal due process guarantees, including proof to a criminal standard. If such safeguards are applied, the scheme under new clause 12 is capable of application in accordance with the Convention rights.

Discharge of Obligation by Payment

6.24 As part of the same regulatory scheme, an RTF order may provide that where a renewable transport fuel obligation is not fully discharged in a specified period, it may be discharged by payment of a specified sum to the Administrator (new clause 11). The sum payable in lieu of compliance may increase if payment is delayed, and may be adjusted for inflation. New clause 11 also permits the Administrator to require a payment from all, or a specified class of, transport fuel providers subject to an RTF obligation, where there is a shortfall in payments in lieu of compliance with RTF obligations (under new clause 11). The level of payments is not specified on the face of the Bill, and is to be specified by Ministerial RTF order. New clause 11 provides that the Administrator may, to an extent specified in an RTF order, use sums received under this provision to meet the costs of exercise of his functions.

6.25 New clause 11 does not provide the same procedural safeguards as apply to civil penalty orders under New clause 12. There is no procedure for objection to an order for payment and no provision for appeal. We consider that, on the basis of the principles set out above, payments under new clause 12 are likely to be categorised as civil rather than criminal in nature, provided that the level of payments is not excessive. The payments may be required only from a defined class of persons, are at least in part compensatory rather than punitive in purpose (though they may also have a deterrent function) and do not depend on a finding of culpability. In setting maximum levels of payment under the clause, however, RTF orders will need to take into account the potential consequences of a high maximum level of payments in rendering the payment criminal for Article 6 purposes and requiring compliance with Article 6 procedural safeguards.

Conclusion

6.26 On balance, we conclude that, with the reservations outlined above at paragraphs 6.22, 6.23 and 6.25, the Bill does not give rise to any significant risk of incompatibility with Convention rights.

70 HLB 2-EN Back

71 Clause 1. Back

72 Clause 3(4). Back

73 Clause 38. Back

74 Section 11 of Schedule 5. Back

75 Clause 52. Back

76 Council for Civil Service Unions v UK 50 DR 228. Back