A few weeks ago, the Competition Bulletin blogged on the standard of review that was likely to apply in subsidy control reviews conducted by the CAT under the Subsidy Control Act 2022 (SCA). This blog covers the procedural approach that the CAT seems likely to adopt. In short, early indications are that the watchwords will be speed, efficiency and, above all, costs control.
The first review under s. 70 of the SCA – The Durham Company Ltd v Durham County Council – is currently progressing through the CAT under the brisk case management of Sir Marcus Smith. At a CMC earlier in the year and in a subsequent judgment on cost capping ([2023] CAT 14), the President gave a firm steer as to how he wanted the appeal jurisdiction to operate in practice. The following are the key takeaways.
First, the President is clear that the jurisdiction “needs to be fast, cheap and simple” (§3(3)). The rationale is that properly granted subsidies should not be deterred by the prospect of expensive and slow challenges nor should legal costs subsume the subsidies themselves. The President has made similar comments outside the Tribunal. It seems that he sees this principle as a lodestar for the development of the jurisdiction.
Second, and relatedly, the President considers that the issues will generally be narrow in scope (limited to the lawfulness of a subsidy decision) and should not require extensive disclosure, witness and expert evidence. In Durham, the President has directed very limited issue-based disclosure and evidence. In his cost capping judgment, he went so far as to say that subsidy control cases should be viewed through the “lens” of the fast-track procedure under Rule 58 of the CAT Rules (§3(4)), whether or not any fast-track order was made. True to his word, the President has set down a timetable which progresses the Durham case to a final hearing within about six months and generally adopted a lean and no-nonsense case management approach (with page-limits on submissions, issues decided on the papers, and the like).
Third, and most strikingly, the President has signalled that this is a jurisdiction in which costs are going to be controlled. At the CMC in Durham, the President sua sponte proposed directing reciprocal costs caps. In the event, he limited the appellant’s recoverable costs at £50,000 and the respondent’s recoverable costs at £60,000 (see his cost capping judgment at §10). The President has suggested that, in many cases, a kind of stream-lined costs budgeting process should take place (rather than strict cost capping) but he has nevertheless emphasised that “a costs budget of more than £60,000 will receive very careful scrutiny from the Tribunal” (§8(4)). The President also referred approvingly to the rules of the Intellectual Property Enterprise Court (IPEC), where costs are generally capped at £60,000.
Although the CAT’s direction of travel has been made clear, it will be a surprise to some. Compare, for example, the conduct of the Bulb litigation in the High Court, which also involved subsidy points: although that case was determined quickly, it involved an array of complex issues, extensive disclosure / evidence and a level of resourcing which could probably not have been accommodated within a quasi-fast-track procedure. Moreover, leaving to one side undoubtedly weighty concerns about chilling effects, there is little in the statutory regime which suggests that subsidy control reviews should always be cheap and cheerful, or fast and furious, so one would hope that the new approach will be applied with flexibility. In other jurisdictions involving stripped-back procedures and costs control, there is generally some underpinning rule or legislation. IPEC, for example, is subject to CPR Part 63 and costs capping rules set out in CPR r. 46.21. In the case of the fast-track procedure, costs capping is mandated by rule 58(2) of the CAT Rules.
What the SCA does make clear is that, in determining review applications, the CAT should apply the same principles as would be applied by the High Court in judicial review (s. 70(5)). But in judicial reviews, costs control of the kind directed in Durham is not the norm: other than in environmental claims governed by the Aarhus Convention, cost capping is normally only available on an application for a protective costs order. The Court will only grant such an order in public interest cases where the claimant would have to withdraw proceedings absent costs protection. Section 70(5) does not displace the CAT’s own procedures but it might nevertheless be said that costs control should not be the norm in subsidy control reviews in the CAT any more than it is in the Administrative Court, where similar arguments could be made about chilling effects on public decision-making.
Perhaps unsurprisingly given its significance for the jurisdiction going forward, the costs capping judgment in Durham is under appeal. The President himself gave permission to appeal and the appellant’s Ground 1 is that the CAT was wrong to adopt a different starting point to costs management from that adopted by the High Court in judicial review proceedings. It remains to be seen what the Court of Appeal will make of the cheap and cheerful approach.
