CHAPTER 11: Improving the Appeals Mechanisms
219. Challenge constitutes the most powerful
form of accountability. The courts may overturn the decision of
a regulator. Public bodies are subject to judicial review. Decisions
of certain regulators may also be challenged on the merits of
220. In addition to judicial review, both the
Competition Commission and the Competition Appeal Tribunal have
roles in reviewing regulatory decisions. Where the regulator of
a privatised utility seeks to modify a condition of licence, which
modification is not accepted by a licence holder, the regulator
must refer the matter to the Competition Commission which can
propose its own modifications. This is in effect an appeal in
all but name.
The Competition Appeal Tribunal, which operates under the Competition
Act 1998 and the Enterprise Act 2002, hears appeals on the merits
from the decisions of the Office of Fair Trading and sectoral
regulators in relation to agreements restricting competition and
to abuses of a dominant position in the market.
The Competition Appeal Tribunal also hears appeals by way of judicial
review only in relation to merger and market investigations.
Apart from a few specified decisions of certain regulators, the
above are the only situations where appeals on the merits are
221. We have noted already the problems with
judicial review. Appeal to the courts is a powerful weapon. The
prospect of it may serve as a deterrent to regulators. It can
certainly be argued that it ensures that they are rigorous in
their attachment to due process in the reaching of decisions.
Nonetheless, taking a case to judicial review is expensive and
time-consuming. Delay can result in regulatory drift. For those
who are regulated, seeking judicial review may create more problems
than the one they seek to resolve by taking such action. For many,
therefore, judicial review is not a viable option. It is also,
as we have noted previously, essentially a negative weapon and
one that is narrow in focus. The test of unreasonableness is a
difficult one to meet. There are, as we have just recorded, few
other means of challenging a decision of a regulator.
222. There is thus a prima facie case
for considering looking at the appeals process to see if it can
be simplified and better access afforded to those affected by
regulation. In undertaking such a study, one has to balance the
rights of the regulated and other affected parties and the problems
that may be caused by excessive recourse to the courts or other
statutory appeals bodies, especially when undertaken as part of
a game-playing exercise or to undermine the effectiveness of the
223. Some think the current balance is about
right. Stephen Timms, Minister of State at the DTI, told us that
"On the whole I think the balance is now about right and
the arrangements are working pretty well".
Tom Winsor told us that he thought "Network Rail have all
the appeal rights that they need".
224. There are those who think there should be
greater rights of appeal. According to Professor Prosser, "The
safest course is to provide a full right of appeal on the merits
whenever a regulatory decision may have substantial consequences
for a regulated enterprise".
Royal Mail told us that lack of appropriate appeal mechanisms
meant more confrontation in the regulatory relationship.
The Electricity Association, noting the development of the Competition
Appeal Tribunal, suggested that the answer would be a comprehensive
'new animal', a regulatory appeals tribunal.
Professor Prosser supported an enhanced role for the Competition
though his views were questioned by the Competition Commission,
which suggested that its expertise and resources made it a suitable
focus for any fast track appeals.
225. There are those who suggest that change
is coming anyway. Professor Prosser advised us that judicial review
is developing towards taking account of the merits.
The Communications Act 2003 has set a generic precedent of appeals
on the merits (substance) of the case to an independent tribunal.
Management of the appeals mechanism therefore becomes the important
issue. Sir Christopher Bellamy told us that "We would strike
out frivolous appeals in a summary way if that became a problem".
226. The situation is a dynamic one. There are
various developments internationally that have a bearing, not
least in the European Union, as well as nationally. There is the
relative newness of 'super complaints'. There is a review of the
appeals process by the DTI and a growing trend towards granting
greater appeal rights.
227. These developments could form the basis
of arguing that there should be a pause until the picture becomes
clearer. We reach the opposite conclusion. The present situation
is not static and as such creates uncertainties for the regulated
and those affected by the actions of regulators. We believe that
there should be greater coherence. We blend principle with practice
in contending that there should be a move towards allowing appeals
based on the merits of the case. We believe that this right should
be introduced over time and accorded to all those who are subject
to regulation, subject to the right of the appeals body to reject,
and penalise those responsible for, unwarranted appeals.
228. We have looked at fast track appeals and
we have benefited considerably from the evidence given to us by
the Competition Appeal Tribunal and the Competition Commission.
We have been impressed by the way in which such procedures presently
operate, appeals being dealt with expeditiously. Such expeditious
treatment not only reduces the financial cost but also limits
the prospect of regulatory uncertainty.
229. We believe that fast track appeals on specific
issues and other arbitration mechanisms should be developed, contingent
on the approval of the appeals body, where there is opposition
from one of the parties. We welcome the Competition Commission's
willingness to play a part in this process.
However, the Commission and the Competition Appeal Tribunal do
not cover all independent regulators. We therefore find persuasive
the argument advanced by the Electricity Association that a Regulatory
Appeals Tribunal be created, though we would see this as appropriate
only for those regulators not presently covered by the Competition
Commission or the Competition Appeal Tribunal. The effect would
be to ensure that coverage of the regulatory state was comprehensive,
enabling appeal on the merits of the case.
230. Appeals should provide an opportunity
for the regulated to have their objections reviewed on the merits
of the case, subject only to the condition that the appeal body
should have the clear ability and power to identify and penalise
appeals designed to frustrate equitable regulation.
231. Simplified systems of fast track appeals
and arbitration should be developed for decisions by the Competition
Commission and the Competition Appeal Tribunal and made available
subject to the agreement of each of the parties concerned.
232. We further recommend that a Regulatory
Appeals Tribunal should be set up to cover regulatory decisions
that do not fall within the jurisdiction of either the Competition
Commission or the Competition Appeal Tribunal, with a similar
provision for fast track appeals and arbitration.
193 Vol.II p180, para 20: Vol.II p351, para 13 Back
QQ1005-7, Vol.II p355 Back
QQ1009-12, Vol.II p356 Back
Q1119, Vol.II p398 Back
Q616, Vol.II p224 Back
Vol.II p53 Back
Q641, Vol.II p233 Back
Q501, Vol.II p171 Back
Vol.II p 60 Back
Vol.II p326, para 11 Back
Vol.II p51, para 2 Back
Vol.II pp352-353, paras 20 and 35 Back
Q1025, Vol.II p357 Back
Q919, Vol.II p322-323; and Vol.II p314, para 17 Back