The Aarhus environmental costs protection regime,judicial review reform,and the Fingleton Nuclear Regulatory Review

The ‘single bite of the cherry’

The Review supports limiting a claimant's ability to apply for permission to bring a judicial review in relation to the nuclear sector to a ‘single bite of the cherry’, that is, a single opportunity to seek permission. This looks to extend the restriction beyond NSIP challenges so that it also includes nuclear site licensing and permitting decisions. It also proposes that if claimants lose on an issue relating to the grant of DCO, ‘they should not be able to re-run the same dispute at the site licensing or environmental permitting stages’. ²⁶ Within the infrastructure context, ²⁷ the ‘bites of the cherry’ proposal follows from Lord Banner's independent review in relation to NSIPs, which recommended removing the initial paper permission stage such that all permission applications are first heard orally, but left open whether to reduce the ‘three bites’ to ‘two or one’. ²⁸ The Planning and Infrastructure Act, informed by the Banner Review, ultimately retained two bites – orally in the Administrative Court and Court of Appeal – but claims certified as Totally Without Merit in the Administrative Court have one bite and cannot renew the permission application at the Court of Appeal. ²⁹

There is therefore some uncertainty as to the relationship of the Fingleton Review's proposals to the Banner Review: does the recommendation for a ‘single bite’ refer simply to claims certified as Totally Without Merit, or does the recommendation propose to remove the Court of Appeal stage in all cases? It would appear odd to change the process introduced in the government's centrepiece legislation so soon after it has entered force. There is also some uncertainty in the proposal that claimants losing a judicial review on an issue relating to development consent should not be able to ‘re-run the same dispute’ later. It is unclear whether claimants who have already challenged a DCO should be barred from any future challenge to decision-making on the same scheme, or, more likely, only challenges alleging the same grounds or on the same set of facts (albeit that the grounds would be directed to a different administrative decision). These proposals might give rise to creative litigation strategies in response, wherein groups operate in collaboration and each fronts a legal challenge at a different project stage. From the government's response to the Fingleton Review in March, which commits only to ‘extend the recent judicial review reforms beyond NSIPs’, ³⁰ it appears however that there are no plans to go further than the Banner Review, save for extending its scope. Whilst this extension itself does deserve further scrutiny given the array of other planning judicial reviews impacted, the Banner Review reforms do appear to have been sensible and potentially applicable more broadly – albeit there is an ongoing need to monitor their impact to ensure clarity in this area. ³¹

Judicial review indemnification

The Fingleton Review's second solution is far less familiar and, while outstanding questions remain, could come to represent a creative approach which ‘de-risks’ development without undermining access to justice. As indicated above, the core concern with judicial review on the litigant power view is not that claimants regularly succeed, but how developers and administrators seeking to minimise the threat of judicial review may pre-emptively adopt overcautious and risk averse practices. To this end, the Review recommends that the Treasury ‘should commit to indemnifying nuclear developers against any damages they incur’ from proceeding with a project ‘while a judicial review is being decided’. ³² While developers sometimes keep working during a judicial review, they often stop, at high cost, given the problems which would arise in the (relatively unlikely) event a claim succeeds. ³³ Indemnifying developers in respect of planning decisions on nuclear reactors and decommissioning sites ‘unless exceptional circumstances apply’ therefore enables some works to proceed while awaiting the outcome of litigation, and also potentially disincentivises judicial reviews brought ‘purely as a delaying tactic’. ³⁴

This proposal is not entirely novel, having been used for the Net Zero Teesside/Northern Endurance Partnership carbon capture, usage and storage NSIP. ³⁵ There, the Department for Energy Security and Net Zero indemnified the developer against a series of contingent liabilities while the (ultimately unsuccessful) Boswell judicial review challenge to the grant of DCO was proceeding. ³⁶ Had the signing of contracts between the government and developer been deferred until after the Court of Appeal decision in Boswell, this would have added ‘material additional costs because supply chain bids would have expired and required renegotiation’, ³⁷ and lenders may not have invested in the programme due to risk exposure amid ongoing litigation. The government therefore contractually indemnified the developer so that it could bring compensation claims in the event the DCO was quashed due to a Qualifying Change in Law. ³⁸ The maximum exposure, should proceedings have been prolonged to an unlikely degree, was assessed at £6bn, with the Department estimating a reasonable worst-case scenario of £2bn compensation to Net Zero Teesside and £1.7bn to Northern Endurance Partnership in the event of a Supreme Court ruling in Boswell's favour by April 2026 (which did not arise). ³⁹ The Department regarded this exposure as appropriate ‘to avoid further subsidy increases and prevent delays in carbon abatement and job creation’. ⁴⁰ This approach also appears to be being used in the HyNet carbon capture cluster, ⁴¹ and a judicial review insurance strategy may increasingly be applied to other infrastructure projects, and possibly in other public administration contexts.

In principle, this could be seen as a neat response to the particular concern around judicial review in this context: not the rate of successful challenge or threat of judicial power, but the pre-emptive risk aversion embedded in project development by the prospect of legal challenge. It could be said to represent a more nuanced and targeted attempt to lessen the administrative burdens of judicial review than the remedial flexibility introduced in the Johnson government's suspended and prospective quashing order reforms, ⁴² or the coalition government's ‘no substantial difference’ principle. ⁴³ By contrast to remedial reform, which applies only to successful claims, indemnification is tailored to the particular litigant power concerns of litigation delays and risk of successful challenge embedding cautious decision-making, lessening the risk and rebalancing incentives for developers and lenders of both delays and quashing orders. Yet it is also in principle more acceptable to claimants: unlike reforms modifying the judicial review procedure, availability of remedies, or claimants’ costs exposure, indemnifying developers does not restrict judicial review. However small the likelihood of a quashing may be, the consequences in the event of quashing are significant, and so it is rational behaviour for even an unlikely prospect to weigh heavily in the development sector's risk appetite. Indemnifying could therefore help to de-risk projects and rebalance the decision-making matrix such that important development is not abandoned at an early stage due to risk aversion. There are however a number of outstanding questions about this proposal.

First, some may raise concern at considerable public expenditure being allocated to (often) private sector developers. Arguably this is a reasonable approach and use of public spending in view of the role of nuclear projects in the nation's energy security and energy transition, and the wider costs of any projects which would not be pursued due to legal risk. However, an outstanding question here is whether such an approach would be directed towards specific projects which government has determined are acutely important – as has been the case with the Net Zero Teesside project, and as the government's commitment to ‘offer targeted indemnification’ indicates – ⁴⁴ or whether this will represent a default approach applying to nuclear projects ‘unless exceptional circumstances apply’ per the Review's phrasing. ⁴⁵ Second, there may be a risk that works are undertaken while awaiting the resolution of challenge that are, for example, environmentally disruptive, the impacts of which are difficult to reverse in the event of development consent being quashed. This is, in effect, a moral hazard argument: that the insurance coverage will reduce incentives on the insured party to take due care, as their liability will be covered by another. ⁴⁶ It is likely that part of the government's implementation of a ‘targeted’ scheme will involve designing appropriate filters on which activities they are and are not satisfied to cover. As such, the precise design of the scheme may help to alleviate concerns in this regard, but more detail on these safeguards will be necessary before making a full judgement as to the wisdom of this proposal. Third, and most fundamentally, the indemnification strategy depends on an underlying gold-plating critique – that unduly cautious procedures are adopted to mitigate legal risk, unnecessarily driving up costs and discouraging developers from proceeding – which is far from universally accepted. While framed as incentivising proportionate preparatory work and reducing over-proceduralism, others may regard it as facilitating developers to cut important corners in satisfying their legal commitments by shifting most of the financial consequences to the public purse – albeit that avoiding successful litigation will remain in developers’ best interests. As such, the gold-plating critique continues to require empirical attention, to inform a clearer assessment of the wisdom of this proposal. ⁴⁷

The environmental costs protection regime

The Review's most controversial judicial review proposals concern the Environmental Costs Protection Regime (ECPR) contained in Part 46 of the Civil Procedure Rules. The ECPR caps the costs liability owed to the other side by unsuccessful claimants in judicial review or certain statutory review proceedings to £5,000 if they are an individual or unincorporated association, or £10,000 if they are a group. Where a claimant succeeds, the defendant's costs liability is reciprocally capped at £35,000. The ECPR is commonly referred to as the ‘Aarhus costs cap’, because the rules were introduced to comply with the UK's international commitment under the Aarhus Convention. This provides that domestic access to environmental justice is (inter alia) ‘not prohibitively expensive’. ⁴⁸ While the Convention does not require the specific costs-capping approach in the CPR, the UK government introduced these provisions in 2013 in anticipation of the CJEU ruling that the UK was not adequately implementing its international obligations (as the EU is also a signatory to the Convention and adopted its obligations within directly effective Directives). ⁴⁹

The Banner Review noted there is ‘little doubt’ that the ECPR has ‘contributed towards the proliferation of challenges’ to DCOs. ⁵⁰ It has lowered the financial bar for public-spirited citizens and campaign groups to access the judicial review process, and has accordingly been a regular target of critique as facilitating (sometimes unmeritorious) legal opposition to housebuilding and infrastructure. ⁵¹ It is also precisely the sort of innovation which state capacity critics might argue was introduced for good reasons – ensuring access to environmental justice for affected communities and publicly-motivated interest groups – but which contributes to stasis when viewed in combination with the wider regulatory environment structuring the development process. For these critics, it may therefore represent an ideal target for procedural sacrifice – a ‘green bargain’ – ⁵² which accepts change to the judicial role to speed up the timescale for important infrastructure in a climate crisis. ⁵³ The Fingleton Review continues this line of thinking, arguing that the ‘cap does not affect strong legal challenges, but may encourage weaker ones’ and that ‘the “subsidy” it provides is greatest the weaker the basis for appeal’. ⁵⁴ The basis of this claim is questionable and further explanation for this statement should have been provided. Inevitably, weaker challenges will be facilitated (and likely weeded out at the permission stage), but it does not follow that the ECPR ‘does not affect’ stronger claims. Without the ECPR, even more meritorious claims would be abandoned: legal aid funding is contingent on a means test and not widely available in planning challenges, and a picture is emerging of high and unpredictable costs bills by defendants in some (strongly arguable) claims. ⁵⁵ It is possible the Review's reasoning was that meritorious public interest claims can be granted a costs capping order, made only upon being granted permission, ⁵⁶ but even so this approach involves claimants in potentially meritorious claims willingly adopting the risk that they could be refused permission and incur uncapped costs – this claimant-side risk matrix is liable to chill meritorious claims, particularly as public authorities now appear to consistently seek high costs at early stages of proceedings. ⁵⁷

Despite these issues, the Review makes five recommendations to reform the ECPR, ⁵⁸ which I outline in turn. One recommendation is to double the cap for each stage of a challenge, for example a cap of £10,000 at first instance increasing to £20,000 at the Court of Appeal. Another is that, where the court determines there has been a ‘misuse of judicial review’, costs protection should be automatically removed – noting fairly that the Aarhus Convention does not protect misuse of the judicial process. This recommendation also identifies that claimants’ legal representatives should certify that a claim's grounds ‘have a more likely than not chance of success’. The Review does not define ‘misuse of judicial review’ but cites the aforementioned Boswell claim as an example. The Court of Appeal regarded one ground in that claim as ‘a classic example of the misuse of judicial review in order to continue a campaign against a development … once a party has lost the argument on the planning merits’. ⁵⁹ Adopting this as a standard to remove costs protection entirely is, though, problematic: such claimants could be unexpectedly exposed to significant liability having initially planned to litigate on the basis of capped costs. The offending ground of challenge in Boswell had in fact been granted permission in the rolled-up Administrative Court hearing below, ⁶⁰ but even if a claim certified as a ‘misuse’ was refused permission, the aforementioned apparent trend of high costs being claimed and awarded at early stages of proceedings (including pre-permission) means unexpectedly uncapped costs could be remarkably high. ⁶¹ An alternative approach to this substantive conception of ‘misuse’ might be to consider what can be done as to procedurally unreasonable behaviour by parties or their representatives during litigation which results in costs being unnecessarily incurred, such as the very late introduction of copious evidence. ⁶² Meanwhile, the proposal for claimants’ legal representatives to certify the claim's likelihood of success appears of doubtful use – it would be an odd situation for the claimant's counsel to certify a claim is unlikely to succeed (perhaps while seeking permission on the basis of arguability).

A further recommendation is to raise the Aarhus cap to account for inflation since 2013 and to link the cap to inflation moving forward. There is a straightforward, intuitive, logic here: the cap's default level was set in 2013 and has not increased since. Alongside this, many claims ‘technically fronted by individuals, are often backed by well-resourced crowd-funded initiatives’. These factors strengthen the Review's belief that ‘the levels are too low and incentivise claims which have no prospect of success and which delay development’. ⁶³ There is arguably a credible case, between years of inflation and the expansion of online crowdfunding from around 2015, to raise the default levels. The now commonplace practice of defendants (sometimes successfully) applying to vary claimants’ costs caps upwards may reflect this. ⁶⁴ Indeed, it might be argued that a slightly higher default cap, if associated with fewer applications for upward variation, could even provide greater certainty and stability for claimants, reducing the chills on action. However, the Review does not appear to intend that a higher default cap will reduce the instances of upward variation. Rather, it also suggests the issuing of guidance ‘encouraging courts to set higher caps, or maximally utilise their discretion, where there is a misuse of the process or where it is clear the intent is to delay development’. ⁶⁵ To some extent, this only reaffirms existing court discretion to vary caps upwards and encourages frequent use of that discretion. It does, though, rest on a questionable assumption that claims can be distinguished which do or do not intend to delay development. Perhaps this is intended to identify claims where grounds are in substance attempts to relitigate the planning merits. On the plain wording, whether a claim challenging a development is meritorious or not, it will in all likelihood be brought by those with an underlying interest in disrupting a project which they do not want to proceed. Except insofar as relevant to identifying claims challenging the planning merits rather than errors of law, this emphasis on underlying motive appears unhelpful. The more relevant consideration is whether the claimant's argument has any legal merit – something which can be managed through the permission stage and, indeed, the existing scope to certify claims as Totally Without Merit.

Fourth, in claims funded through crowdfunding, the cap should be set at 70% of the total funds raised. This is considered to balance access to justice and ‘the need for nuclear development without delay’. ⁶⁶ In principle, this 70% figure may achieve a reasonable balance – particularly considering that, when awarding costs-capping orders in non-environmental proceedings, courts must have regard to whether claimant lawyers are acting pro bono. ⁶⁷ However, this proposal to tie the costs cap to fundraising seems to have been designed with outlying cases of fundraising in mind. The Review gives the example that, if a campaign group fundraises £100,000, its cap would be £70,000. ⁶⁸ That appears proportionate, but in practice the vast bulk of planning and environment judicial reviews do not raise these amounts. In prior research, I found that the average crowdfunding page for a judicial review claim raises approximately £8,000 to £20,000. ⁶⁹ This research concerned judicial reviews across sectors, but 35% of the cases concerned planning and the environment. Many planning cases will therefore raise funds similar to the current ECPR limits of £5,000 or £10,000. This proposal may, therefore, be counterproductive if seeking to maximise defendant costs recovery or reduce incentives to litigate: setting the cap at 70% of funds could in many cases involve the defendant recovering lower costs than under the default cap. Say that a claimant which is an incorporated association fundraises £10,000 for an unsuccessful claim – at present, the defendant's costs recovery would be £10,000, but would be £7,000 under the Review's proposals. While challenges to large nuclear developments might be more likely to represent outlying cases which receive higher funds, this indicates the limited reach of this proposal if applied across the entire ECPR regime. We can therefore question the wisdom of tinkering with the existing ECPR method, rather than relying on judicial discretion to vary caps upwards in cases of significant fundraising, particularly as this change to the ECPR will inevitably produce fresh uncertainty, boundary disputes, and satellite litigation. ⁷⁰ For instance, what is the approach where funds are raised partially through online crowdfunding and partially traditional community fundraising? Directly tying the rate of the cap to funds raised may also introduce a downward incentive on fundraising: where is the incentive to raise higher funds if (for an unsuccessful claimant) this results only in higher costs recovery for the defendant? More fundamentally, the notion of caps being set case-by-case by reference to the portion of funds raised entails a reimagining of the ECPR altogether, at least in crowdfunded cases. This is more akin to the public interest judicial review costs-capping order regime, where caps are set at the permission stage, tailored to claimants’ means. ⁷¹ This includes their fundraising, as in APPG where the claimants’ cap was set at 40% of crowdfunds. ⁷² While the ECPR in its current form is not beyond reform, the efficacy of replacing the fixed default cap in crowdfunded cases with a percentage default cap, while retaining the fixed default cap in all other cases, is not clearly made out and, depending on the precise proposals, risks producing undesirable uncertainty.

The final recommendation is for the reciprocal cap on costs which a defendant owes to a successful claimant to be at least five times higher than the claimant's cap. This proposal roughly bisects the existing approach, where the £35,000 reciprocal cap is seven times higher than the £5,000 cap for individual claimants and 3.5 times higher than the £10,000 group claimant cap. If the claimant-side caps are indeed to be raised, this is an important safeguard.

The government response to the Review does not specify which of these five ECPR recommendations it adopts, but commits to inviting the Civil Procedure Rules Committee ‘to make relevant amendments’ to the ECPR ‘via the CPR by the end of 2027’, while emphasising that ‘all measures [will be] fully aligned with the UK's international obligations’. ⁷³