Case No: C1/2011/1437
Neutral Citation Number: [2011] EWCA Civ 1229
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN’S BENCH DIVISION
(MR JUSTICE KENNETH PARKER)

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: Friday, 7th October 2011

Before:

LORD JUSTICE LEWISON
- - - - - - - - - - - - - - - - - - - - -

	The Queen (on the application of) BT plc & Another 
	
Applicant	
	- and -		

Secretary of State for Business, Innovation and Skills 
& Others

Respondent	
- - - - - - - - - - - - - - - - - - - - -

(DAR Transcript of 
WordWave International Limited
A Merrill Communications Company
165 Fleet Street, London EC4A 2DY
Tel No:  020 7404 1400  Fax No: 020 7831 8838
Official Shorthand Writers to the Court)

- - - - - - - - - - - - - - - - - - - - -

Mr Antony White QC and Kieron Beal (instructed by BT Legal) appeared on behalf of the Applicant.

The Respondent did not appear and was not represented.

- - - - - - - - - - - - - - - - - - - - -
Judgment

Lord Justice Lewison:

1.	BT and TalkTalk renew their application for permission to appeal against the decision of Kenneth Parker J.  The judge refused an application for judicial review with one limited exception, challenging certain provisions of the Digital Economy Act 2010 (“the 2010 Act”).  The challenge is based on two broad grounds.  First it is said that the contested provisions are not enforceable because of a failure to notify them to the European Commission before they were enacted.  Second it is said that as enacted they are incompatible with certain aspects of European law.  The judge refused permission to appeal and that refusal was confirmed by Sir Richard Buxton on the papers.  
2.	The background is summarised in the very full skeleton argument which the appellants have prepared, and I will take this from paragraph 2 of that skeleton argument:
3.	The contested provisions of the 2010 Act made a series of amendments to the Communications Act 2003.  They require internet service providers, (“ISPs”, to receive notifications (“copyright infringment reports” -  CIRs”), from copyright owners (“rights holders”) of alleged infringements of copyright committed using the internet connection provided to the ISP’s subscribers.  The ISP is then required to notify its subscribers of their alleged infringements and keep records of the number of notifications received in respect of each subscriber.  The ISP may then be required to send a rights holder who requests (1) a copyright infringement list (“CIL”) setting out the number of notifications sent by the ISP to individual subscribers, together with salient details.  Provision is also made for the possible, future introduction of certain “technical obligations”, aimed at suspending, curtailing or limiting a subscriber’s access to the internet.
4.	The judge set out the contested provisions of the 2010 Act, which he summarised accurately.  He referred to s.124A in considerable detail and said that the obligations contained in these various sections, which were referred to in the Act as the “initial obligations”, were dependent for their content as well as for their effect on the making of an initial obligations code which was required to be made under section 124C or s.124D
5.	The judge pointed out that s.124D required an initial obligations code to be made by Ofcom within the period prescribed by the Secretary of State (currently by 31 March 2011, as he then said) if a code had not previously been made by others and approved by Ofcom.  The Act also contained provisions about what the code should contain.
6.	The first ground of appeal asserts that the judge was wrong in holding that the contested provisions of the 2010 Act, on their own and without having been fleshed out by the contemplated code, amounted to a technical regulation which should have been notified in draft to the European Commission in accordance with the Technical Standards Directive.  
7.	The judge quoted the definition of “technical regulation” contained in the Directive and carefully analysed a number of cases in the European Court which had considered what kinds of legislation fell within the definition.  After extensive discussion, the judge said in paragraph 71:

“In my judgment, the true test that emerges from the cited passages is whether the measure in question ‘by itself’ has ‘legal effect for individuals’; and that, therefore, for a measure to have legal effect by itself it must be binding and be sufficiently precise and specific so as to be enforceable against an affected individual.”

8.	The appellants do not criticise that formulation of the appropriate test but they say that when the judge came to apply it he introduced a further requirement; namely that the contested provisions must have immediate effect.  In my judgment, that mischaracterises the judge’s analysis, as he said that:
“...the incidence of the initial obligations on ISPs is made expressly contingent upon the promulgation and enactment of the Code.  Without the Code, the initial obligation simply beat the air in legal terms, Secondly, the initial obligations are not yet sufficiently particularised as to be enforceable...”
9.	Neither of those reasons entails the proposition that the contested provision must have immediate effect, and in my view that is reinforced by the judge’s paragraph 89 in which he considers the effect of an enacted piece of legislation not yet brought into effect by a commencement order.
10.	The appellants go on to argue that, even applying the test formulated by the judge, he did not correctly assess the contested provisions.  They argue that the contested provisions do have legal effect by themselves.  They point out that the obligations are said to be created by the contested provisions themselves and that there is a mandatory obligation to create and promulgate a code.  They also point out that the judge also thought that if need be the 2010 Act could be amended under the European Communities Act 1972 if the draft code itself was drastically amended; but that would defeat the purpose of the notification requirement.  In my judgment there is a sufficient prospect of success in these arguments to attract the adjective “real” and I grant permission to appeal on that ground.
11.	The second ground is that the contested provisions infringe Articles 12 and 15 of the E-Commerce Directive.  The judge held that in Article 12 the legislator had struck a careful balance between conflicting interests which led him to conclude that the language of the code should not be stretched beyond its natural meaning for fear of promoting one interest at the expense of another.  
12.	The argument advanced this morning is that the liability for information transmitted, referred to in Article 12 of the Directive, should be interpreted as meaning responsibility as a result of the transmission of information.  Mr White QC argues that this construction does not stretch the language beyond its natural meaning and is consistent with the policy objectives behind the Directive, including the establishment of a level playing field across all Member States.
13.	In my judgment, those arguments do have a real prospect of success and I grant permission to appeal in relation to Article 12.
14.	So far as Article 15 is concerned, I find the judge’s reasons for his preferred construction compelling and convincing, and I do not consider that there is any real prospect of success on that ground.  The judge’s reasons are, in my judgment, unassailable.
15.	The next relevant provision is Article 3 of the E-Commerce Directive.  The question here is the extent of the carve out for “copyright” contained in the appendix to the directive.  It is submitted that the European Data Protection Supervisor and the judge had reached opposite conclusions and that the European Commission, in commenting on French legislation, has also taken a view which is contrary to the judge’s.  In my judgment, that does provide sufficient grounds to justify an appeal to this court.
16.	The third ground of appeal is a contention that the contested provisions infringe the Data Protection Directive and the Privacy and Electronic Communications Directive.  The essential question here is whether the processing of data would be permissible under Article 8(2)(e) of the Data Protection Directive because it would be necessary for the establishment, exercise or defence of legal claims.  The judge held that it would.
17.	I have considerable sympathy with the judge’s view but again, the judge has disagreed with the view expressed by the European Data Protection Supervisor and in those circumstances, I consider that there is sufficient reason to grant permission to appeal.
18.	So far as Article 15 of the Privacy and Electronic Communications Directive is concerned, the appellants have support in their contention from the Opinion of the Advocate General in Scarlet Extended SA v SABAM Case No: C-70/10, dated 14 April 2011 and, again, I consider that there are sufficient reasons to grant permission to appeal.
19.	The fourth ground of appeal relates to the infringement of the Authorisation Directive and again, there is a disagreement between the judge and the European Commission which again, in my judgment, gives good reason for the grant of permission.
20.	The upshot then is that I refuse permission to appeal on the Article 15 point, but otherwise I grant permission to appeal.
Order:	Permission to appeal refused on Article 15 point; permission to appeal granted on all other grounds.