Recovery of Medical Costs for Asbestos Diseases (Wales) Bill (Reference By The Counsel General For Wales)

Factual and Procedural Background

The Counsel General for Wales referred the Recovery of Medical Costs for Asbestos Diseases (Wales) Bill (“the Bill”) to the Supreme Court for a determination of whether it fell within the legislative competence of the National Assembly for Wales (“the Assembly”) under the Government of Wales Act 2006 (“GOWA”). The Bill would oblige persons who make compensation payments for asbestos-related diseases (“compensators”) to reimburse the Welsh Ministers for National Health Service (“NHS”) costs and would extend existing employers’ liability insurance policies to cover those new charges. The Association of British Insurers, anonymised here as Company A, intervened. The principal focus was on section 14 of the Bill, which imposed liability on insurers for the new NHS charges. The case was argued before a panel headed by Judge A; Judge B (with whom Judge C agreed) wrote a concurring judgment taking a narrower route.

Legal Issues Presented

1. Whether the provisions of the Bill, particularly sections 2 and 14, “relate to” the subject “Organisation and funding of national health service” in paragraph 9 of Part 1, Schedule 7 to GOWA, so as to fall within section 108(4) of that Act.
2. If section 14 is not within section 108(4), whether it is nevertheless permissible under section 108(5) as enforcement, incidental or consequential provision linked to section 2.
3. Whether, assuming the Bill is within section 108(4) and/or (5), it is outside competence under section 108(6) because it is incompatible with Article 1 of Protocol 1 to the European Convention on Human Rights (“A1P1”).

Arguments of the Parties

Submissions of the Counsel General

• Paragraph 9 (“Organisation and funding of national health service”) is broad enough to include raising money for the NHS by imposing charges on compensators and their insurers.
• Section 14 is either enforcement of, or incidental to, the scheme created by section 2 and therefore authorised by section 108(5).
• The Bill pursues legitimate social and economic aims; any interference with insurers’ property rights is proportionate and justified, so A1P1 is not infringed.

Submissions of Company A (Intervener)

• Paragraph 9 concerns only allocation of existing NHS funds, not the creation of new fiscal liabilities; there is no express power to impose charges.
• Section 14 is a freestanding rewrite of private insurance contracts, not enforcement of section 2, and therefore falls outside section 108(5).
• The Bill retrospectively deprives compensators and insurers of possessions, fails the “fair balance” test and therefore contravenes A1P1.

Table of Precedents Cited

Court's Reasoning and Analysis

(1) Competence under section 108(4)
Judge A held that “organisation and funding” could not reasonably be read so widely as to authorise the creation of wholly new liabilities on third parties unconnected with NHS service delivery. Section 2’s liability on compensators had at best a “loose or consequential” link with NHS funding; section 14’s interference with historic insurance contracts was even more remote.

(2) Incidental power under section 108(5)
Sections 5–13 (information, certificates, recovery, appeals) genuinely facilitate enforcement of section 2. Section 14, however, targets a separate relationship—compensator and insurer—and therefore is not enforcement, incidental or consequential for the purposes of section 108(5).

(3) Human Rights Assessment
Assuming competence existed, the majority assessed compatibility with A1P1. Imposing new, retrospective financial burdens on employers and insurers constituted an interference with “possessions”. Applying Strasbourg authority (e.g., Pressos), retrospective legislation needs “special justification”. The Bill merely shifted historic NHS costs without establishing such justification, and section 14 in particular upset settled contractual expectations. The measure failed the “fair balance” stage of proportionality.

(4) Concurring View
Judge B agreed that section 14 was ultra vires and incompatible with A1P1, but would have upheld competence and conventionality of the direct charge on employers under section 2, characterising it as permissible funding of the NHS. However, because section 14 could not be severed without altering the legislative scheme, he concurred in the overall disposal of the reference.

Holding and Implications

DISALLOWED: The Supreme Court ruled that the Recovery of Medical Costs for Asbestos Diseases (Wales) Bill is outside the legislative competence of the National Assembly for Wales. Section 2 did not have the necessary connection with NHS funding, and section 14 was neither within the devolved subject nor incidental to it; in any event, section 14 would breach A1P1.

Implications: The decision prevents the Bill from being enacted in its current form and affirms limits on devolved power to impose novel liabilities or to rewrite private contracts. Devolved legislatures must demonstrate a close, non-retrospective link to devolved subjects and ensure Convention compliance when designing funding mechanisms for public services.