The penalty system for imposing fines on hauliers carrying illegal immigrants is in disarray after a Court of Appeal ruling. The Home Secretary can now either scrap the legislation or redraft it. Kay Pysden explains the implications for commercial motor insurers
Insurers offering cover to hauliers operating across Europe are on standby to reappraise their risks as a result of a recent Court of Appeal ruling on the transport of illegal immigrants into the UK.
The case involved the clandestine entrant penalty system, where the Home Office imposed financial penalties on hauliers found to have illegal immigrants in their vehicles on entry to the country.
A lower court ruled that the penalties were incompatible with the European Human Rights Convention enacted by the Human Rights Act.
The decision by the Court of Appeal in International Transport Roth Gmbh and Others v The Secretary of State for the Home Department supported the court on what was largely regarded as the most serious issue - that the penalty system was incompatible with the Human Rights Convention.
The position now is unclear for insurers because the Home Office has not yet decided whether to appeal the decision, nor has it taken heed of the judgment and redrafted the regulations in accordance with human rights legislation.
Mr Justice Sullivan, at first instance, found that, although the penalties were called civil penalties, they were in the nature of criminal penalties. As such, those served with such penalties were entitled to all the safeguards that the law requires with regard to trials relating to criminal issues.
Two out of the three Lord Justices in the Court of Appeal upheld that decision.
Breaches negligible
Mr Justice Sullivan also found that there had been breaches of articles 29 and 48 of the European treaty involving rights to property and free movement of goods. Unanimously, the Court of Appeal found that although there had been breaches, their effect was negligible and therefore the judgment at first instance was overturned.
The Court of Appeal unusually, but unsurprisingly given the importance of this decision, gave leave to all parties to appeal without being requested. Each party has three months in which to file an appeal.
The effect of the decision is complex. The legislation has been found to be incompatible but, because of the constitutional make-up of our legal system, the courts cannot force the government to act.
The appropriate steps for the Home Office to take would be to take heed of the judgment and act accordingly. Legislation provides for the Home Secretary to remove the offending legislation by a fast-track method, which would involve placing a redraft before parliament.
If he decided not to take such a step, he would be expected to strike down the legislation which penalises operators for carrying clandestine entrants into the country and go through the usual, longer parliamentary process.
Originally, the lower court ordered a stay on the Home Office pending an appeal. This would have prevented vehicles being detained and would have removed the right to enforce any penalty or surety.
No such stay was sought in the Court of Appeal and so no order for stay was granted. In the circumstances, the Home Secretary would be expected to have ceased operating the system which has been found to be incompatible, or invoked the fast track system by now.
At present, it is believed that of more than £14m worth of penalty notices served to date, only about £2m worth have actually been paid. The rest are being contested in the courts, with insurers set to bear much of the cost.
The Home Secretary would not be expected to make any attempt to enforce penalty notices served in extant legal cases, as the parties concerned would now have good grounds for raising a defence.
Furthermore, he would not be expected to commence litigation in cases where penalty notices have been served. As yet, no attempts have been made to enforce payment. But, there is the question of whether he will have to repay money to those who have already paid.
Appropriate insurance
As the situation stands at present, all hauliers should continue operating an appropriate system to avoid clandestine entrants boarding their vehicles. They should also ensure their drivers or subcontractors are apprised of the system in place and operate it accordingly on each journey. Appropriate insurance should also be considered. Those with insurance should continue with it.
The Home Secretary announced after the outcome became public that he intended the penalty system to continue. One would expect he meant he would be striking down the current legislation as soon as possible and re-drafting it to be Human Rights Convention compatible.
As far as the transport industry goes, it is calling for total reconsideration of policy concerning clandestine entrants.
This is a growing problem that needs to be addressed by the government on behalf of the country as a whole and should not be visited on the transport industry alone.
Kay Pysden is a partner at Davies Lavery
