The National Security and Investments Act 2021 (the “NSI”)
The NSI established a new, stand-alone statutory regime for government scrutiny of, and intervention in, acquisitions and investments for the purposes of protecting national security. The NSI grants the Secretary of State a range of powers including to: “call-in” a transaction for further review; require parties to provide information concerning the transaction; and approve (or by failing to approve, block) a transaction taking place.
If a person is aggrieved by a decision of the Secretary of State, for instance to approve (or not to approve) a transaction then, under s.49 of the NSI, the party can apply for judicial review. Judicial review is primarily not concerned with the merits of a decision, but rather whether it was lawfully made. An application for judicial review can be brought on the grounds of illegality, procedural unfairness, unreasonableness/irrationality, or for a breach of the Human Rights Act 1998.
Ordinarily, an application for judicial review must be made “promptly and in any event within three months” of the decision under challenge. However, s.49(4) NSI modifies this such that an application must be made within 28 days of any decision (extendable in exceptional circumstances).
Additionally, under the NSI, there is a statutory appeal route if a person receives a monetary penalty or cost recovery notice. Under s.50 NSI, although an affected person still only has 28 days to challenge the imposition of such a penalty or notice, the affected person can seek a full merits review of the decision, and is not limited to judicial review grounds.
Subsidy Control Bill (the “SCB”)
Following the end of the Brexit transition period on 31 December 2020, the UK ceased to be subject to the EU's state aid regime.4 The UK’s subsidy regime is now drawn from a combination of (a) the subsidy control commitments set out in the UK-EU Trade and Cooperation Agreement, (b) the Northern Ireland Protocol, (c) international free trade agreements with third countries and (d) the WTO subsidy rules. The SCB sets out the framework for implementing the UK's international commitments on subsidy control and is currently making its way through Parliament.
Clause 70 of the SCB provides that an interested party (e.g. a business whose interests are affected by the grant of a subsidy to a competitor and the Secretary of State) can challenge a decision to grant a subsidy or create a subsidy scheme on judicial review grounds (as noted above these are illegality, procedural unfairness, unreasonableness/irrationality, or for a breach of the Human Rights Act 1998). This challenge must be made to the Competition Appeals Tribunal (the “CAT”) within one month (extendable in exceptional circumstances), beginning with the relevant date for the challenged decision.
Clause 72 of the SCB empowers the CAT to grant the range of remedies that would be available to a Court on an application for judicial review, including a quashing order (quashing the decision) or mandatory order (requiring the public body to do something). The CAT can also grant a “recovery order” which would allow the public authority that has given a subsidy to recover the amount of the subsidy from the beneficiary.
The Online Safety Bill (the “OSB”)
The OSB establishes a new regulatory regime to address illegal and harmful content online. It imposes duties of care in relation to illegal content and content that is harmful to children on providers of internet services which allow users to upload and share user-generated content and on providers of search engines which enable users to search multiple websites and databases.
The OSB also imposes duties on such providers in relation to the protection of users’ rights to freedom of expression and privacy. Providers of user-to-user services which meet specified thresholds (called category 1 services) are subject to additional duties in relation to content that is harmful to adults, content of democratic importance and journalistic content.
The OSB confers powers on Ofcom to oversee and enforce the new regulatory regime. These include powers to issue confirmation decisions requiring service providers to take specific steps to comply with duties imposed on them and penalty notices fining service providers up to 10% of global revenue. The OSB also requires Ofcom to prepare codes of practice to assist providers in complying with their duties of care. The OSB is due to be introduced to Parliament this Spring.
Clauses 104 and 105 of the OSB provides that anyone which a “sufficient interest” can challenge a decision of Ofcom as to the categorisation of services (for instance whether a service falls in category 1 and therefore should be subject to further duties), or the issuance of a confirmation decision or penalty notice, on judicial review grounds. The challenge must be made to the Upper Tribunal, which is empowered to quash the decision being challenged. Clauses 104 and 105 do not shorten the time period for such a challenge, so the ordinary rule in judicial review (i.e. that a challenge must be brought promptly and in any event within 3 months) will apply.
Anyone other than the recipient of a confirmation notice or penalty notice must obtain the permission of the Upper Tribunal before mounting a challenge.
There are, however, a number of other powers granted to Ofcom, for instance, to promulgate codes of practice, or issue use of technology notices, where a specific method of challenge is not provided by the OSB. If a service provider wishes to challenge these decisions, therefore, this would be by way of “ordinary” judicial review to the Administrative Court.
Each of the NSI, SCB and OSB provides for a modified version of judicial review. If your business is likely to be affected by any of these regimes, and you would like help on engagement with Government decision-making or judicial review, please do get in touch.
Authored by Louis Biggs and Julia Marlow.
2 In July 2021, the Government published the Judicial Review and Courts Bill (the “JRC Bill”). The JRC Bill seeks to address a number of recommendations of the Independent Review of Administrative Law. For instance, the JRC Bill removes the ability of an individual to challenge, by way of judicial review, the decision of the Upper Tribunal to refuse permission to appeal against a decision of the First Tier Tribunal. The JRC Bill is currently making its way through Parliament.
3 Although the Government has sought to modify the application of judicial review in these three contexts (for instance by shortening the time limit in which an appeal can be brought), the fundamental principles remain the same.
4 The EU state aid regime regulated the granting by Member States of advantages to organisations that could potentially distort competition.