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Ports as public authorities - a growing reality?

    • Shipping
    • Transport


    The suggestion that ports are public bodies may seem a little strange. By far the greater majority are now private entities being either trust ports or private limited companies.

    But the position may not be quite as clear cut as it first looks.  The legal landscape is shifting and recent legal developments suggest that the concept of public body is an expanding one.

    If ports could be regarded as public bodies the implications could be significant in all sorts of areas of operation.   The focus of this briefing however is to consider whether there may be a risk that the decisions of port authorities could be challenged by judicial review proceedings.   And if they are, what would be the implications for ports and those who do business with them?

    What is a judicial review?

    Judicial review is the means by which the courts supervise public decision making functions to ensure they are made lawfully and fairly.

    The detailed rules about judicial review challenges are beyond the scope of this briefing but, put simply, it is about ensuring that proper process has been followed.  It is not about re-opening the merits of the decision which has been reached.

    The sort of grounds upon which a judicial review claim might be brought are that, in reaching a decision, it has failed to follow its established processes; the decision is irrational or  “Wednesbury” unreasonable or; that the decision has been pre–determined or is tainted by bias.

    What that also means therefore is that if the decisions of ports could be challenged by judicial review proceedings then their internal processes could be open to scrutiny as never before.

    Who's decisions can be challenged by judicial review?

    If judicial review is a means of scrutinising public law decision making then historically it has been very obvious who has been carrying out those functions.  Traditionally they have been the preserve of central and local government.

    In reality however, many private companies, quangos and voluntary sector organisations now carry out activities which historically fell within the remit of the state.

    The critical issue therefore has become whether the entity in question is exercising a “public law function”.  If it is, that decision could be open to judicial review challenge.

    According to case law, the sort of factors which might demonstrate that “public functions” are being exercised are:

    • Whether the functions in question are underpinned by public statute;

    • Whether, but for the existence of a non-statutory body, the Government would itself almost inevitably have intervened to do or regulate the activity in question; and

    • Whether the body is exercising monopolistic powers. If individuals have no alternative but to submit to regulation in order to participate in the activity concerned, that might be evidence of a public function.  

    Applying these principles has led to a number of private companies (and other organisations) being deemed to be exercising public law functions.  Amongst them a privately owned psychiatric hospital and a company set up under an initiative by a local authority to run a farmers’ market.    

    What does all this mean for ports?

    Most major harbour authorities in the UK are now constituted as private companies (or subsidiaries of such a company).  Some are trust ports, originally established by private Act of Parliament and now operating under Harbour Revision Orders.  They are therefore also constituted as private entities.

    Very few ports are directly managed by local authorities and can be regarded as “public bodies” in its purest sense therefore.

    But do ports exercise public law functions which could be challenged by judicial review? The point has never been tested but a recent case in the European Court suggests that the time is approaching when that might happen. 

    The expanding concept of public authority - the Fish Legal

    That case was Fish Legal and Emily Shirley v Information Commissioner, United Water Utilities Plc, Yorkshire Water Services Limited and Southern Water Services Limited (Case C-279/12).

    It posed the question of whether three water companies were bound by the Environmental Information Regulations (the Regulations) – which embody the EU directive on Public Access to Environmental Information 2003/2004 into UK law. 

    One of the key questions it specifically considered was whether or not the water companies fell within the definition of ‘public authority’ for the purpose of the regulations.

    Article 2 (2) of the EU directive  defines “public authority” in three different ways.  For our purposes the relevant issue related to paragraph b) of Article 2 (2) which establishes the concept of a public authority being a person performing “public administrative functions”. 

    In the Fish Legal case, the European Court has concluded that the definition was met if it could be said that the entity was performing “services of public interest… and which are for this purpose vested with special powers beyond those which result from the normal rules applicable in relations between persons governed by private law”.  

    The sort of issues which the European court said would be relevant to that analysis were matters such as the power to make byelaws and the power to regulate access to the service (in the case of water companies by imposing hose pipe bans and cutting off the water supply).  

    How in fact this test is to be applied within the specific context of the Fish Legal case has been referred back to the UK Upper Tribunal.  The precise implications for UK law have therefore yet to be resolved.  There must, however, be a risk of a conclusion that some of the powers exercised by the water companies fall within the European Court’s definition of  “public administrative functions”.  

    Furthermore, given the parallels between the privatised water industry and ports, the final determination of the Fish Legal case could also have important implications for ports. 

    The practical implications of public law challenge for ports

    Applying the principles laid down by the European court in Fish Legal, it is arguable that a range of activities carried out by harbour authorities constitute the exercise of “public functions”.  

    Under section 33 of the Harbours Docks and Pier Clauses Act 1847, in return for payment of harbour dues, port authorities are required to allow public access to the harbour or port.

    Their functions – including those of navigation and dredging - are intended to regulate that access.

    They too have the power to make applications to the Secretary of State to expropriate land.   They also control the operation of ports through bye laws.

    But for the existence of the harbour authorities, the government would almost certainly have to intervene and regulate the activities of ports.  Theirs is also a regulatory framework which individuals have no alternative but to submit to in order to access ports.

    Furthermore, if there is a risk of some of the activities of ports being deemed to be public functions, then there is also a risk that the decisions of a port authority could be challenged by judicial review.

    What does this mean in practice?

    The prospect of decisions by ports authorities being susceptible to judicial review challenge introduces a new dimension to the way they are made.  If a port authority is exercising public law functions it must concern itself in how – as well as what- it decides.

    The prospect of the lawfulness of decisions being challenged by judicial review proceedings also presents the risk of greater uncertainty for both the ports themselves and those with whom they do business.   Full blown judicial review proceedings can take over a year to resolve - with all the uncertainty about the status of the decision under challenge in the meantime.

    High profile judicial reviews are also on the increase.  Recent years have seen challenges to decisions such as the future of the Olympic stadium, GCSE English results and even the burial place of Richard III.   Such cases serve to emphasise the reputational sensitivities for judicial reviews played out in the media spotlight.

    On one level ports have nothing to fear from this possibility if their processes are fair and robust.   The fact remains however that the potential for judicial review challenge raises the possibility of scrutiny not previously experienced by ports.  They would therefore be well advised to consider what the implications might be for their internal systems and decision making processes as the possibility of this legal development looms over the horizon.