Lloyd's Maritime and Commercial Law Quarterly
PUBLIC LAW NORMS IN PRIVATE LAW CONTRACTS: A FAILED TRANSPLANT (BRAGANZA RE-EXPLAINED)
Julian Ghosh *
The notion of a so-called “Braganza duty” is now entrenched in English contract law. But the Supreme Court’s approach, applying Wednesbury to private contracts, to identify implied terms, is both wrong in principle and has been problematic in application. And the issue could have been more simply and better addressed by established private law techniques of construction, terms implied in fact and (perhaps more controversially) good faith. Indeed, any one of these latter notions is a more satisfactory basis to explain the court’s actual conclusions (both for the majority and the minority) in Braganza, rather than an application of Wednesbury.
I. INTRODUCTION
In Braganza
1 the Supreme Court was faced with a real problem of at least potential “abuse” of certain contractual powers. It considered this problem with reference to the two-limbed test for challenging the exercise of administrative powers (“Wednesbury-process rationality” and “Wednesbury-outcome rationality”) laid down by the Court of Appeal in Wednesbury,2 ie:
“[1] whether they have taken into account matters which they ought not to take into account, or conversely, have refused to take into account or neglected to take into account matters which they ought to take into account. [2] Once that question is answered in favour of the local authority, it may still be possible to say that, although the local authority have kept within the four corners of the matters which they ought to consider, they have nevertheless come to a conclusion so unreasonable that no reasonable authority could ever have come to it.”
* KC; Bye-Fellow, Peterhouse, University of Cambridge; Visiting Professor, King’s College London. I am very grateful for generous and valuable discussions with Professor Edwin Peel, Keble College, University of Oxford, Laurie Rabinowitz KC, One Essex Court, Dr Kalpana Sivabalah, University of Middlesex (Mauritius), Professor Hector Macqueen, University of Edinburgh, Professor Rebecca Williams, Pembroke College, University of Oxford, Professor Paul Craig, St John’s College, University of Oxford, Sir Martin Chamberlain, Judge of the High Court, King’s Bench Division, and Harry Stratton, Barrister, One Essex Court. All errors and omissions are mine.
1. Braganza v BP Shipping Ltd [2015] UKSC 17; [2015] 2 Lloyd’s Rep 240; [2015] ICR 449; [2015] 1 WLR 1661 (“Braganza”).
2. Associated Provincial Picture Houses Ltd v Wednesbury Corp [1948] 1 KB 223 (“Wednesbury”), esp 233–234 (Lord Greene MR) (the numbers for the two limbs of the test have been added, for clarity).
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