Julia Black: The Modern Law Review, Vol. 59, No. 1. (Jan., 1996), Pp. 24-55

Constitutionalising Self-Regulation
Julia Black
The Modern Law Review, Vol. 59, No. 1. (Jan., 1996), pp. 24-55.
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Constitutionalising Self-Regulation
Julia Black*
Introduction
A member of a professional body is disciplined by that body and her licence to
practice taken away. A firm is refused membership of an exchange or trading body
on a ground not contained in the body's rules. A person complains that the rules of
a sporting association are discriminatory. Each seeks to challenge the associations'
decisions in the court. In the absence of legislation, how should the court respond?
Should it define and uphold the person's rights against the actions of the
association? Should it preserve and respect the autonomy of the association to
make and interpret its own rules, or to determine its own membership? Should the
association be subjected to principles of public responsibility and be required to act
fairly or rationally, or to make its decisions in the interests of its members, the
association or the public?
When faced with the question of whether and how to review the decisions of
self-regulatory associations (SRAs), the court's current response is based on where
it draws the boundary between public and private law. Where and how it currently
draws that line is notoriously uncertain, couched largely in procedural terms and
dogged by tensions between the role of the body and the legal nature of its
relations with its members. Such pre-occupations obscure the main issue: what
should be the response of law when faced with what are in effect mini-systems of
collective government? It is a question of how to constitutionalise self-regulation.
The aim of this article is to begin to answer this question; to understand the
constitutional issues raised by SRAs and the ways in which these are and could be
addressed. The aim is not to reach the ultimate stage, a new theory for judicial
review of self-regulatory associations, but to explore how we may begin that
process and to offer a way forward which draws on some of the insights of
reflexive law. It is suggested that before we can fully answer the question of how,
and indeed why, to regulate SRAs, three steps have to be taken.' First, there has to
be a greater understanding of the nature of the 'public' sphere. This involves, inter
alia, a recognition of the changing nature and structure of the state, the ways in
which bodies which are not part of the traditional institutions of the state
participate in the political process, and an awareness of the wider role these bodies
play in society. Second, there is a need to develop an understanding of the role of
law in the context of a functionally differentiated society, which is to ensure the
integration of the political, economic and social spheres. Third, the courts have to
build on this understanding of law's role to identify which aspects of an SRA
require judicial supervision and to develop a response which is flexible and multi-
faceted.
* Lecturer, London School of Economics.
This article has benefited greatly from the comments of Tim Cross, Denis Galligan, Carol Harlow, Chris
McCrudden and Gunther Teubner, all of whom I thank. Views, errors and omissions remain my own.
1 The form of regulation focused on throughout is judicial review, and the term regulation is used to
refer to the courts' supervisory role.
0 The Modern Law Review Limited 1996 (MLR 59:l. January). Published by Blackwell Publ~shers,
24 108 Cowley Road. Oxford OX4 IJF and 238 Main Street, Cambridge. MA 02142, USA
January 19961 Constitutionalising Self-regulation
The article proposes a definition of self-regulation and draws on the theories of

autopoiesis and reflexive law to offer a conceptualisation of SRAs' nature and role.
The second and third parts examine the current state of public law debate and case
law on the regulation of SRAs and conclude that there is a failure both to gain an
adequate understanding of SRAs and to develop a conception of 'public' which
embraces their nature and role. In particular, the governmental interest test which
has been developed shows an inadequate conceptualisation of SRAs and gives rise
to inconsistencies in judicial approaches to them.
The article turns in the fourth part to examine how we could move from the
present, largely unsatisfactory position to begin to develop principles for judicial
review of SRAs. It asks whether the insights which reflexive law has as to
regulatory strategy and legal technique could provide a basis for this process. It
does not seek to use reflexive law to analyse the current development of the law,2
but rather takes the normative aspect of reflexive law, its reforming agenda, to see
what the application of that agenda would mean for the regulation of SRAs. It is
argued that although we can use the insights of autopoiesis and reflexive law to
understand the nature of SRAs and the regulatory strategies that law should adopt,
reflexive law does not easily provide us with the substantive values on which to
base the move from theory to doctrinal principles. Finally, the article suggests that
we could nonetheless build on its insights as to system autonomy and legal
technique and use these in conjunction with articulated substantive constitutional
values to begin to develop a principle of 'constitutionalised autonomy' for SRAs.
Self-regulation - a growth industry?

Self-regulation is neither a new phenomenon, nor one which is likely to disappear.
Professions, sports, the press, advertising, financial services, to give but a few
examples, are regulated by self-regulatory bodies. Bodies which have no formal
legal or institutional links with government are designated competent authorities to
implement European Union legi~lation.~ Self-regulatory bodies can be significant
sources of law in particular areas, and networks of self-regulatory systems exist in
which different SRAs demand compliance with each others' rules.4
The use of self-regulation is also advocated by an increasingly wide range of
writers in political science, regulation, law and economics and socio-legal theory.
In the political science literature, Streeck and Schmitter argue that self-regulation
could overcome the problems of implementation and legitimation associated with
state interventi~n.~ In the legal regulation literature, Ayers and Braithwaite argue
2 For examples of recent articles that have used the insights of reflexive law and the theory of
autopoietic systems in which it is based to analyse current political, legal and social debates see
Nobles and Schiff, 'Miscarriages of Justice: A Systems Approach' (1995) 58 MLR 299; Jabbari,
'Critical Theory in Administrative Law' (1994) 14 OJLS 189.
3 For example, the Advertising Standards Authority and the Stock Exchange.
4 An area in which this is particularly prevalent is companies and securities regulation: for example, the
Stock Exchange Listing Rules require compliance with Code of Best Practice produced by the
Cadbury Committee on the Financial Aspects of Corporate Governance; self-regulatory organisations
which regulate financial services require their members to comply with the City Code on Takeovers
and Mergers.
5 Streeck and Schmitter, 'Community, Market, State - and Associations? The Prospective
Contribution of Interest Governance to Social Order' in Streeck and Schmitter (eds), Private
Interest Government: Beyond Market and State (London: Sage, 1985) pp22-25; they also consider its
advantages over market competition and voluntary community action.
0 The Modern Law Review Limited 19% 25

The Modem Law Review [Vol. 59
that '[plublic regulation should promote private market governance through

enlightened delegation of regulatory function^.'^ They advocate 'responsive
regulation' in which different regulatory strategies are identified and applied in
particular situations depending on the legal, constitutional, social and historical
context. This may take a variety of forms, for example co-regulation, defined as
'industry-association self regulation with some oversight or ratification by
government', or 'enforced self-regulation', in which negotiations between the
state and individual firms are used to formulate flexible, particularistic standards
and enforcement strategies. Writing from an economic perspective, Ogus argues
that different models of self-regulation, with or without an external constraint, may
be a superior form of regulation to traditional statutory regulation.' Finally in
socio-legal theory, both European and American theorists, albeit from somewhat
different bases, are advocating the use of intermediary institutions to mediate
between different systems within ~ o c i e t y . ~
Although the terminology used in these debates may be similar, the meanings
which are ascribed to the term self-regulation vary greatly. Two particular
clarifications must be made: first, the definitional issue of what is meant by self-
regulation; second, the question of what role self-regulating bodies play. Such
clarity is essential if we are to understand the issues which arise in considering the
review of SRAs and to begin to develop principles for their regulation.
Defining self-regulation
In discussions of self-regulation three sources of confusion emerge:9 what is meant
by 'self, what is meant by 'regulation', and what is the nature of the state's
involvement. The term 'self' is used to mean two different things: self as in
individual, and self as in collective. Thus the term 'self-regulation' is used to
describe the disciplining of one's own conduct by oneself,1° regulation tailored to
the circumstances of particular firms,ll and regulation by a collective group of the
conduct of its members or others.I2 The definition of regulation varies from the
'command and control' model of regulation, to regulation by the market,13 to
voluntary decisions of each individual to control their own behaviour. Finally, the
- - - - ~
6 Ayers and Braithwaite, Responsive Regulation: Transcending the Deregulation Debate (Oxford:
OUP, 1992) p4.
7 Ogus, 'Re-thinking Self Regulation' (1995) 15 OJLS 97.
8 See Teubner, Law as an Auropoieric System (Oxford: Blackwells, 1993), Chapter 5; Unger, 'Legal
Analysis as Institutional Imagination', (1996) 59 MLR 1.
9 The sense in which self-regulation is used in the theoretical socio-legal literature is highly specific and
is not included here: see below pp 28-29.
10 A definition frequently used in financial services regulation by both regulators and regulated.
1I Ayers and Braithwaite's 'enforced self-regulation' is an example (op cit n 6), as is Ogus's 'consensual
self-regulation' (op cit n7). An example in practice is the UK system of health and safety regulation.
12 See for example, Page, 'Self Regulation: The Constitutional Dimension' (1986) 49 MLR 141 and Sir
John Donaldson MR in R v Panel on Takeovers and Mergers, ex p Datafin (1987) 1 All ER 564 at
567.
13 An example is Ogus's first model of competitive self-regulation, unconstrained market competition
(in which a firm adopts standards of product quality in response to consumer demand and which may
incorporate industry wide practices) and some forms of his second model, independent agency-
assisted competition, in which an agency accredits or certifies the quality of the product and
accreditation is sought by the firm for competitive purposes (eg kitemarks). Competition may also
develop between accrediting regimes. Ogus, op cit n 7.
26 O The Modern Law Rev~ewLimited 19%

term can be used to imply no relationship with the state at all, or to describe a
particular, corporatist arrangement. l4
It is argued here that the essence of self-regulation is a process of collective
government. The term 'self is thus used to describe a collective. 'Self-regulation'
describes the situation of a group of persons or bodies, acting together, performing
a regulatory function in respect of themselves and others who accept their
authority. As such it should be distinguished from what may be termed
individuulised regulation. The two may co-exist, but they are analytically
distinct and raise significantly different public law issues. Individualised
regulation is regulation which is tailored to the individual firm. Ayers and
Braithwaite's 'enforced self-regulation' is an example of such individualised
regulation, as is Ogus's 'consensual' self-regulation. Individualised regulation may
exist within a self-regulatory framework,15 or a statutory one.16
No particular relationship with the state is implied by the term 'self-regulation'.
This interpretation contrasts with some of the corporatist or neo-corporatist
approaches which see self-regulation as simply a species of the genus
corporatism.l7 Broadly, we can identify four types of possible relationship:
mandated self-regulation, in which a collective group, an industry or profession for
example, is required or designated by the government to formulate and enforce
norms within a framework defined by the government, usually in broad terms;18
sanctioned self-regulation, in which the collective group itself formulates the
regulation, which is then subjected to government approval;19 coerced self-
regulation, in which the industry itself formulates and imposes regulation but in
response to threats by the government that if it does not the government will
impose statutory regulation;20 and voluntary self-regulation, where there is no
active state involvement, direct or indirect, in promoting or mandating self-
regulation.21 Further, self-regulation may vary not only in its relationship with the
state but in the nature of its participants (which may be solely members of the
14 Streeck and Schmitter, op cit n5; Birkinshaw, Lewis and Harden, Government by Moonlight: The
Hybrid Parts of the State (London: Routledge, 1990) p3; Graham, 'Self Regulation' in Genn and
Richardson, Administrative Law and Government Action (Oxford: OUP, 1995).
15 Such as the Basle Institute of International Settlements' system for the regulation of risk exposure of
international banking firms.
16 Far example, health and safety regulation in the United Kingdom and the United States.
17 Birkinshaw et al, op cit n 14, p3; Graham, op cit n 14, p 190.
18 Examples would be the regulation of financial services under the Financial Services Act 1986, or the
implementation of EC directives on advertising and listing by (respectively) the Advertising Standards
Authority and the London Stock Exchange which, as noted, have been designated as competent
authorities for this purpose.
19 In return the industry could be exempted from other statutory requirements. An example is the codes
of practice produced by trade associations and then approved by the Office of Fair Trading; for details
see Ramsay, 'The Office of Fair Trading: Policing the Consumer Marketplace', in Baldwin and
McCrudden, Regulation and Public Law (London: Weidenfeld and Nicholson, 1987).
20 Political scientists argue that this is the most common form of self-regulation, and indeed that for self-
regulation to be effective the threat needs to be real and continuing. Examples of the effect of
government threat on the reform of self-regulation are the Press Complaints Commission and the
initiation of the City Panel on Takeovers and Mergers. What is often ignored in the theoretical
debates, however, is that an SRA may become institutionalised, ie accepted, legitimated, or infused
with value, in which case the continued threat of state intervention may not be necessary for self-
regulation to be effective. Arguably such institutionalisation has occurred in the case of the Panel.
21 Examples are sporting bodies or bodies regulating the professions. To describe a system of self-
regulation as voluntary does not mean that the government may not implicitly or explicitly rely on the
body's regulatory function (ie it does not rule out corporatist or neo-corporatist relations); the key
criteria is that the industry desires self-regulation, for whatever reason, and takes the initiative in the
formation and operation of the regulatory system.
8 The Modem Law Review Limited 19% 27

The M o d e m Law Review [Vol. 59
collective or may be outsiders), its structure (there may be a separate agency or it

may be a cartel), its enforcement (it may enforce its own norms or it may rely on
individuals to enforce), and its rule type (its rules may be of legislative, contractual
or no legal status, be general or specific, vague or precise, simple or complex).22
The role of self-regulatory associations

Self-regulatory associations (SRAs) combine the governmental function of
regulation with the institutional and often legal structure and interests of a
private body. They impose conditions of membership and expulsion, they
formulate their own rules and impose their own discipline. In the regulation
literature, self-regulation is advocated as a more effective technique of regulation,
although as we have seen, the form of regulation that these writers envisage is not
always self-regulation in the collective sense. In modem political and socio-legal
theory SRAs play a more fundamental role, acting as intermediaries linking
different parts of society. It is this role of SRAs as linkages which it is suggested
should form the basis for developing principles for their regulation. In different
strands of socio-legal theory SRAs act as vital institutional linkages between
various sections of society.23Their use to perform one particular intermediating
role, that of developing and furthering public policy, is captured in the corporatist
and neo-corporatist literat~re.?~ Streeck and Schmitter use the term 'private interest
government' to describe both SRAs and to refer to the arrangements under which
an attempt is made to make the associative, self-interested, collective action of
these bodies contribute to the achievement of public policy objective^.?^ Their role
is not simply to be consulted on issues but to implement public policy: '[el-
ssentially, it means sharing in the state's authority to make and enforce binding
decision^.'^^
What concerns us here is the nature of the intermediation which SRAs provide,
which in turn rests on a particular conception of society. In the socio-legal
literature, as in Streeck and Schmitter's conception of neo-corporatism, the role of
the SRAs is not to act as a go-between, mediating between the state and the
individual within a hierarchical framework which has the state at the top and the
individual at the base. SRAs do not sit in the middle of such a hierarchy, acting as
the principal link between the state's interests and the individual's interests. In the
fragmented society envisaged by modernism no such hierarchical relationship is
possible: politics, like economics, law or religion, is decentered. In place of the
hierarchy of 'state - individual' there is a heterarchy of different spheres of
-~
22 For an elaboration of these terms and a discussion of the use of different rule types within a self-
regulatory system see Black, ' "Which Arrow?" Rule Type and Regulatory Policy' [I9951 Public
Law 94.
23 See references cited at n 8.
24 This literature, which is largely in political science does not necessarily itself recognise or accept the
socio-legal conception of SRAs. See generally Streeck and Schmitter (eds), Private Interest
Government: Beyond Market and State (London: Sage, 1985); Schmitter and Lehmbruch (eds), Trends
Towards Corporatist Intermediation (London: Sage, 1979) and Patterns of Corporatist Policy Making
(London: Sage, 1982); Cawson (ed), Organised Interests and the State (London: Sage, 1985). For a
consideration of the extent and nature of corporatist and neo-corporatist arrangements in the U K see
Crouch and Dore, Corporatism and Accountability; for an application to a particular industry see
Moran, The Politics of the Financial Services Revolution (London: Macmillan, 1991).
25 op cit n 5, p 17.
26 ibid p 20.
0 The Modern Law Review Limited 1996

society.27 SRAs thus mediate in a horizontal manner between these different

spheres, for example the state, the market and the community.28It is suggested that
this conception of the nature of society and the role of SRAs is crucial to
developing an understanding of their 'publicness' and to developing principles for
their regulation. In acting as horizontal linkages between different systems, SRAs
link politics not with the individual but with other specialised sectors of society.
They participate simultaneously within those different sectors; the legal rules
governing their public status and those governing their internal democratic
processes thus need to be reformulated in the light of the different claims of these
sectors.29
Whether and how to regulate: the public law debate

This heterarchical analysis has largely been ignored in public law debates
concerning the extension of judicial review to SRAs. These debates are
characterised by an under-developed understanding of the nature of SRAs and
reveal a struggle to devise a conceptualisation of 'public' which will be adequate
to capture their nature and role.30 In turn, the debates are fragmented, and
arguments for and against the extension of judicial review see the issue from a
variety of perspectives. In order to aid discussion and analysis we can construct
models of the types of arguments, some of which can be associated with particular
writers, others which feature as recurrent themes in a range of work. One type of
public law argument in favour of judicial review of SRAs focuses on the power
which such bodies can wield. At its broadest, the power argument eschews the
publiclprivate divide as the basis for defining the application of judicial review and
argues that the role of judicial review is to regulate all forms of power; any
exercise of power, public or private, by state or companies should be subject to
principles of 'liberty, fair dealing and good admini~tration'.~' In focusing on
power, the argument contains a kernel of appeal, however it does too much: it
assimilates all forms of power under one rubric and applies the same principles to
them. Arguably, assessing whether a decision of a company was in the public
interest or whether irrelevant considerations had been taken into account3*cannot
be based simply on the same rationale as review of administrative bodies, and if it
were to add anything to the current principles of company law it would involve, for
example, developing principles of corporate social responsibility. This may or may
not be desirable, but it asks too much of judicial review to perform this function
without further conceptual and policy d e ~ e l o p m e n tNarrower
.~~ forms of the power
--
27 Teubner, 'Polycorporatism in Germany' (1993) 2 Brigham Young UniversiQ Law Review 553; H .
Willke, 'Societal Guidance through Law?' in Teubner and Febbrajo (eds), Stare, Law, Economy as
Autopoeitic Systems (Milan: Guiffre, 1992), and see further pp51-52 below.
28 Streeck and Schmitter, op cit n5.
29 ibid pp 22-29; Teubner, op cir n 27, pp 554-8, and see below Part E.
30 Law and economics writers alone remain untroubled by this issue: economists argue that SRAs should
be regulated only if they are threatening to develop into monopoly or cartel-like structures;
considerations of 'public' or 'private' are irrelevant to this analysis. See for example Ogus, op cit n 7.
3 1 Borrie, 'The Regulation of Public and Private Power' [I9891 Public Law 552 at p 559. See also Woolf,
'Public Law - Private Law: Why the Divide?' [I9861 Public Law 220 and 'Droit Public English
Style' [I9951 Public Law 57; Oliver, 'Is the Ultra Vires Rule the Basis of Judicial Review?' [I9871
Public Law 543.
32 Advocated by Woolf, ibid (1986). p 238.
33 For a discussion of the debates on this area see Lord Wedderburn, 'The Legal Development of
Corporate Responsibility' in Hopt and Teubner, Corporate Governance and Directors' Liabilities

argument which focus on the exercise of monopoly power,34 or on the actual

delegation by the state to the SRA of the state's power to regulate35(the delegation
or governmental interest argument) are in this respect more attractive. The notion
of publicness which drives these differs, however: in the former it is the amount of
power, in the latter it is the SRA's actual association with the state, which leads to
the conclusion that the body is 'public' .
A second type of argument is the more subtle version of the governmental
interest argument provided by Streeck and Schmitter. Here the need for regulation
arises from and is directed at the role SRAs play in the political process. In order to
prevent neo-corporatist SRAs from becoming merely a haven for interest groups to
pursue their own self-interests, a 'pluralist colonisation of the state', the state needs
to ensure that they remain responsive to general or public interests.36SRAs need to
be made to internalise as much as possible the costs that their self-interested
behaviour may have on other interests. Thus they argue that 'self-interested self-
regulation, if it is not to result in a loss of public accountability, requires the
protection and/or creation of corporative-associative actors and policy-making
arrangements which, by their inherent institutional dynamics, arrive at interest
definitions which are, at least in part, compatible with the objectives of public
In proposing ways to ensure this they draw on the 'procedural regulation'
advocated by Mayntz. This is not another label for procedural fairness; rather it
means that the focus of regulatory systems should be on designing processes and
organisational structures to ensure that the association takes into account other,
wider interests in its decisions.38
A third line of argument in favour of review of SRAs takes a different
perspective. It sees SRAs not simply as instruments of power but as loci of civic
participation in political life. This argument, to which we may apply the broad
label of republicanism, is more familiar in the United States than the United
Kingdom. At its core is the idea of freedom as individual self-government through
politics: 'active engagement in a self-directive process that is cognitive as well as
volitional, hence . . . public as well as private, political as well as personal.'39 Self-
government, which in this context means individual not collective government, is
not the pursuit of self-interest, but the determination of values which should
control public and private life. Freedom as self-government involves constant
mediations between the individual's own interests and the norms of the
community. Ensuring that such mediation occurs and that the essential civic
virtues of the community are upheld is essential if each individual is to attain his or
her own freedom in this sense. The role of the courts is thus to engage in a
dialogue, determining the community's central values and upholding them, even if
this appears to intrude on the autonomy of an individual or group. The focus on
community norms if not on civic participation finds echoes in the UK context in
the work of writers such as Allan who emphasise the role of the courts in
developing and applying constitutional principles and protecting individual rights
(Berlin: de Gruyter, 1985) and see generally Parkinson, Corporate Power and Responsibility (Oxford:
OUP. 1993).
34 Pannick, 'Who is Subject to Judicial Review and in Respect of What?' [I9921 Public Law I .
35 See, eg Cane, 'Self Regulation and Judicial Review' (1986) Civil Justice Quarterly 324.
36 op cir n6, p21 and see further below text accompanying n 142.
37 ibid.
38 Mayntz. 'The Conditions of Effective Public Policy: A New Challenge for Policy Analysis' (1983) 1 1
Policy and Politics 123. See further below, pp46-47.
39 Michelman, 'Foreword: Traces of Self-Government' (1986) 100 Harvard LR 4 at 73; Sunstein, Afrer
the Rights Revolution: Re~,onceivingthe Regulatop State (Harvard: Harvard UP, 1990) p35.
30 O The Modern L a w R e v ~ e wL ~ m ~ t e1996

d
based on common law values.40 For present purposes, by extrapolating the two
themes of community values and civic participation an argument can be
constructed which would require the review of SRAs to ensure that in their
internal processes they acted in accordance with community norms and values,
respecting each individual's freedoms, rights and ability to participate fully in the
self-governing process.
Public law arguments against the extension of judicial review are more diverse.
They can be grouped into five main forms, some of which have greater merit than
others. Intellectually the weakest arguments are the pragmatic argument and the
technical or jurisdictional argument. The pragmatic argument is essentially a
flood-gates argument and focuses on the pressure an increased case-load may place
on the judicial review procedures if judicial review was extended to cover all
S R A S . The
~ ~ technical or jurisdictional argument is concerned with ensuring that
only appropriate cases are brought under the Order 53 procedure.42It tends to be
more concerned that the appropriate procedures are followed than what legal
principles should apply to different bodies, and the 'tests' for public or private are
defined in these terms.
The more intractable arguments against the extension of judicial review focus on
the conceptual strain that may result if the principles of judicial review are
extended to all SRAs and the desire to protect the body's autonomy from court or
state interference. The concern of the conceptual argument is that such an
extension may damage the coherence of the principles of judicial review, and it lies
at the root of the criticisms of the broad power argument mentioned above. The
autonomy argument takes two forms, not often distinguished. The legal dominion
argument focuses on the legal autonomy of the body, and argues that to impose
judicial review would be to subject the body to legal norms and interpretations of
its own rules which would be inappropriate. This has practical and principled
aspects. In practical terms, it is argued that such judicial imperialism can have
detrimental impacts on the area which it is trying to regulate. In terms of principle,
the argument seeks a recognition of legal pluralism. The unitary conception of law
in which judicial review is rooted should give way to a pluralistic conception
which recognises the operation of other spheres of legal relations.43Familiar in the
context of administrative bodies, the argument can be extended to SRAs to argue
that they are mini-legal systems which should be allowed to formulate and apply
their own rules; the courts should recognise the plurality of such systems and not
seek to 'cast the net of legal over them. The political autonomy argument
40 Allan, 'The Limits of Parliamentary Sovereignty' [I9851 Public Law 614; 'The Limits of
Parliamentary Sovereignty' (1988) 104 LQR 422 and Law, Liberty and Justice (Oxford: OUP,
1993); see also Galligan, Discretionary Powers (Oxford: OUP, 1986) and Hutchinson, Dwelling on
the Threshold: Critical Essays on Modem Legal Thought (1988), 92. For an account of the '-
community' image of judicial review which these writers represent, see Cotterrell, 'Judicial Review
and Legal Theory' in Richardson and Genn, Administrative Law and Government Action (Oxford:
OUP, 1995).
41 For criticism of the dominance of principle by pragmatism in this area see Pannick, op cit n34.
Further, the current strains on the judicial review procedure, which are considerable, arise principally
from the lack of appellate systems in the areas of homelessness and immigration: Law Commission,
Administrative Law: Judicial Review and Statutory Appeals NO. 226 (London: HMSO, 1994) para
2.16.
42 For a discussion of reforms which focus predominantly on this question see Fredman and Moms, 'The
Costs of Exclusivity: Public and Private Re-examined' [I9941 Public Law 69. This is also the
dominant approach of the Law Commission's recent report, ibid.
43 Arthurs, 'Rethinking Administrative Law: A Slightly Dicey Business' (1979) 17 Osgoode Hall LR 1 .
44 Dickinson, Administrative Justice and the Supremacy of Law in the United States (Harvard: Harvard
UP, 1927) p 126.
8 The Modern Law Review Limited 1996 31

stresses the desirability of preserving the body's autonomy from interference in its
decision making, and also has practical and principled aspects. In its practical form
it stresses the damage to the body's effective operation that would be consequent
on the application of judicial review: the lack of speed, expertise or finality in
decisions. In terms of principle it has a neo-liberal hue: SRAs represent a sphere of
private relations which should be free from state interference, the state should
simply provide the facilitative framework in which the body can operate.45
With the exception of the pragmatic and technical arguments, each of the
arguments for and against review of SRAs has some intellectual force. SRAs can
exercise significant power, sometimes on behalf of the state. Individuals should be
protected from abuses of that power, and if that power is exercised on behalf of the
state it should be exercised in the public interest. SRAs can also be seen as
valuable centres of civic life, in which individuals can participate in systems of
collective government but in which there may be a tension between individual self-
interest or the self-interest of the group and wider community norms which the
courts have to mediate. In these arguments the fact of exercising significant power,
or particularly state power, and the fact that the associations are systems of
government suggest degrees of 'publicness'. The fact that they are separate from
the state suggests however a need to respect their autonomy from legal domination
and state interference, either in the name of liberalism or of legal and political
pluralism. In the light of these dilemmas, how should judicial review of SRAs
proceed, if it should proceed at all? We will now turn to consider how the courts
have answered this question.
Whether and how to regulate: the judicial response

The extension of judicial review in Datafin4'j to bodies whose source of power lay
neither in statute nor in the prerogative has left the courts facing the question of
where to draw the boundary between public and private law, and on what basis. As
is well-known, the judges in Data$n stated that if the body is exercising a public
law function,47 or its power has a public element,48 then it would be subject to
review. The case poses two almost intractable problems. First, the notion of 'public
law function' or 'public element' used in the case is explanatory, not d i s p ~ s i t i v e . ~ ~
Secondly, whereas source and function together are the test for whether the body is
public, source is the sole test for establishing that is private. Both Lloyd LJ and Sir
John Donaldson MR agreed that if the body's sole source of power is consensual
submission to its j u r i s d i ~ t i o n ,or
~ ~is c o n t r a c t ~ a lthen
, ~ ~ it is not subject to review.
There is thus a long observed tension in the case between the recognition of
institutional power as a reason for subjecting a body to review and the exclusion of
bodies with a contractual source of power.52
This tension is heightened by the decision in Law.53Law was decided prior to
45 See for example, Hayek, Law, Legislation and Liberty, vol. 3 (London: Routledge, 1982).
46 R v Panel on Takeovers and Mergers, ex p Datafin plc and another [I9871 1 All ER 564.
47 [I9871 1 All ER 564 at 583 (per Lloyd LJ).
48 [I9871 1 All ER 564 at 577 (per Sir John Donaldson MR).
49 Cane, op cit n 35.
50 [I9871 1 All ER 564 at 577 (per Sir John Donaldson MR).
51 [I9871 1 All ER 564 at 583 (per Lloyd LJ).
52 See Beatson, 'The Courts and the Regulators' (1987) Professional Negligence 121.
53 L u n v National Greyhound Racing Club [I9831 3 All ER 300.
32 O The Modem Law Review Limited 19%

Datafin and with the recent decision of O ' R e i l l ~ringing

~ ~ in its ears. It was
dominated by the technical concerns of the correct application of Order 53.55The
court held that the applicant could not use the procedure to seek a declaration that
the decision by the National Greyhound Racing Council to suspend his licence was
void. Firstly, declarations and injunctions under the Order 53 procedure were
available only where prerogative orders could previously have been given; and
secondly prerogative orders had never been given to a body, such as the NGRC,
whose sole source of power lay in contract.56Order 53 was simply a procedural
rule which did not purport to enlarge the jurisdiction of the court.57
Despite the fact that it pre-dates Datafin, the courts have refused to re-assess
Law and indeed have repeatedly emphasised its continuing r e l e v a n ~ eThe
. ~ ~ dicta
in Law that Order 53 is not available to bodies based in contract coupled with the
dicta in Datafin that consensual submission or contractual source of power
excludes judicial review has dominated the reasoning in the Jockey and
Football A s s o ~ i a t i o ncases,
~ ~ and in cases concerning Lloyds6l and the Insurance
O m b ~ d s m a nthe
~ ~ question of public function has been obscured and indeed
largely precluded by the definition of 'public' which has been implicitly adopted.
The result is that in 'pure' Datafin cases where the body has no visible means of
legal support, judicial review has been held to apply. Indeed it would appear that
the less means of support the better: a body with no statutory, prerogative or
contractual power exercising a regulatory function is perhaps now one of the
clearest cases for the availability of judicial review.63However, when a body has a
contractual source of power significant tensions arise.
Two examples of the current confusion are R v Lloyd's, ex p BriggP and R v
Insurance Ombudsman, ex p Aegon Life Assurance Ltd.65 In these cases the
contractual source of power was seen either to deny any public element by
definition, or to be the more dominant test. In ex p Briggs the applicants were
Lloyd's Names who had been granted leave to seek judicial review for the purpose
of injunctive relief to delay payment of a 'cash call' made by Lloyd's managing
54 O'Reilly v Mackman [I9821 3 All ER 1124.

55 Order 53 of the Rules of the Supreme Court and s 3 1 of the Supreme Court Act 1981 provide that an
application for an order of mandamus, prohibition or certiorari or for a declaration or injunction shall
be made by way of an application for judicial review.
56 Relying on the dicta of Parker LJ in R v Criminal Injuries Compensation Board, ex p Lain [1967] 2
QB 864 and R v BBC, ex p Lavelle [I9831 1 All ER 241.
57 [I9831 3 All ER 300 at 304 (per Lawton LJ).
58 In R v Jockey Club, ex p RAM Racecourses [I9931 2 All ER 225 and R v Disciplinary Committee of
the Jockey Club, ex p Massingberd Mundy [1993] 2 All ER 207 the High Court held that if it were not
for the decision in Law, review should have been granted, but felt, it is submitted wrongly, bound by
the earlier decision; in R v Disciplinary Committee of the Jockey Club, ex p Aga Khan [1993] 2 All
ER 853 the Court of Appeal argued that Datafin did not affect the decision in Law and that Law was
binding on the case (at 872, per Farquharson LJ and 874-5, per Hoffman LJ). For criticism see Beloff,
'Judicial Review 2000 - A Prophetic Odyssey' (1995) 58 MLR 143 at pp 146-7 and Woolf, op cir
n31 at p64.
59 R v Disciplinary Committee of the Jockey Club, ex p Massingberd Mundy [I9931 2 All ER 207; R v
Jockey Club, ex p RAM Racecourses [1993] 2 All ER 225; R v Disciplinary Committee of the Jockey
Club, ex p Aga Khan [I9931 2 All ER 853.
60 R v Football Association, ex p Football League [I9931 2 All ER 833.
61 R v Lloyd's, ex p Briggs [1993] Lloyd's LR 176.
62 R v Insurance Ombudsman, ex p Aegon Life Assurance Ltd, The Times, 7 January 1994.
63 See R v Advertising Standards Authorify, ex p The Insurance Service plc (1990) 2 Admin LR 77; R v
Code of Practice Committee of the British Pharmeceutical Society, ex p Professional Counselling

Aids (1990) 3 Admin LR 697.
64 [1993] Lloyd's LR 176.
65 The Times, 7 January 1994.

agents. Leggatt LJ held that all the powers in dispute were exercised by Lloyd's
over members of the Society who had agreed to be bound by the decisions and
directions of Lloyd's Council. In ex p Aegon Life Assurance Ltd66 Rose LJ held,
following Briggs, that the Insurance Ombudsman Bureau (IOB) was not subject to
review on the basis that even though it was performing a complaints function under
the Financial Services Act 1986, its foundations lay purely in contract and
membership of the scheme was ~ o l u n t a r y .Rose
~ ~ LJ stressed the 'negative
implications as to judicial review' which arose if the body's power was derived
from consent which had been emphasised in Briggs, and argued that even if the
IOB had subsequently been incorporated into the regulatory system under the 1986
Act, the source of its power remained contractual and its decisions were of an
arbitrative nature in private law.68
The significance of the contractual source of power and the denial of relevance
of institutional power is evidenced in the courts' rejection of the exercise of
monopoly power as a ground for review. It is clear from the cases that even if the
power exercised is monopolistic and submission cannot realistically be held to be
c0nsensual,6~this does not make the power public so as to render it susceptible to
review.70 The position is most clearly put by Hoffman LJ in the Aga Khan case.
After examining the powers and functions of the Jockey Club, he concluded,
All this leaves is the fact that the Jockey Club has power. But the mere fact of power, even
over a substantial area of economic activity, is not enough. In a mixed economy, power may
be private as well as public. Private power may affect the public interest and livelihood of
many individuals. But that does not subject it to the rules of public law.71
This denial of the relevance of institutional power is a clear rejection of the

argument that all power should be subject to judicial review. The 'public power'
test of Datafin has in fact been modified in the subsequent case law, and the test
which has been evolved is the 'governmental interest' test. The phrase first
appeared in the decision of Simon Brown LJ in R v Chief Rabbi, ex p
Wa~hmann,~"ho stated that 'to attract the court's supervisory jurisdiction there
67 The IOB was established as an unlimited company in 1981 by three insurance companies to resolve
complaints by customers. It was subsequently recognised by Lautro (an SRO operating under the
Financial Services Act 1986) as performing a complaints investigation function under the Act, and
Lautro encouraged its members to join. The IOB agreed to rely on the rules of Lautro and IMRO in
deciding on disputes.
68 Transcript, p 14.
69 In R v Chief Rabbi of the United Hebrew Congregations, ex p Wachmann [1993] 2 All ER 249 Simon
Brown J argued that there was no real consent to the jurisdiction of the Chief Rabbi: if a person
wanted to pursue the vocation of a rabbi he had to succomb to that person's jurisdiction. The exclusion
only properly applied to arbitrators or private or domestic tribunals (at 254). However, in Aga Khan
Farquharson LJ argued that although the invitation to consent 'was very much on a take it or leave it
basis', this did not undermine the reality of the consent: R v Disciplinary Committee of the Jockey
Club, ex p Aga Khan [I9931 2 All ER 853 at 873.
70 R v Chief Rabbi of the United Hebrew Congretations, ex p Wachmann [1993] 2 All ER 249; R v
Football Association, ex p Football b a g u e [I9931 2 All ER 833; R v Jockey Club, ex p Aga Khan
[I9931 2 All ER 853.
71 [I9931 2 All ER 853 at 875. Inconsistencies are not slow to arise, however. While the existence of
monopoly power will not lead the court to conclude that the body is subject to review, in Aegon Life
the fact that the Insurance Ombudsman did not exercise monopolistic power was held to be a
significant factor indicating that the body was not susceptible to review: transcript pp 1 4 1 5 . See also
R v Lloyd's, ex p Briggs [I9931 Lloyd's LR 176 at 185. Monopoly power therefore does not of itself
merit protection in public law; however its absence has been used to support the conclusion that public
law should not apply.
72 [I9931 2 All ER 249. The 'public law' or 'public element' wording of Datajin had been used in the
earlier cases of R v Advertising Standards Authority, ex p The Insurance Service plc (1989) 2 Admin
34 0 The Modem Law Review Limited 19%

must not be merely a public but potentially a governmental interest in the decision
making power in question.'73 This did not mean a purely voluntary regulation of
some area of public life, but a 'twin track system of control', a body operating as
an 'integral part of a regulatory system which, although itself is non-statutory, is
nevertheless supported by statutory powers and penalties clearly indicative of
government concern.' In applying this test to the Chief Rabbi, he argued that the
appropriate level of governmental interest was not shown as the Chief Rabbi was
not regulating a field of public life, and it could not be suggested that 'but for his
offices the government would impose a statutory regime'.74
The governmental interest test is a significant reformulation of the test in
Datafin. As developed and applied in the cases it has two limbs: what we may
describe as the 'but for' test and the 'integration' test. The 'but for' test was used in
the W ~ c h r n a n n ,Football
~~ A s ~ o c i a t i o nand
~ ~ Aga Khan cases.77 It may have a
superficial appeal: indeed, as it was applied in Wachmann it seems intuitively
correct. Parliament would not regulate the Jewish faith. However, on further
probing the test disintegrates. The main weakness of the test is that it depends on
proving a counter-factual, requiring the court to second-guess the legislature on the
basis of little or no evidence as to the legislature's intention. As the Aga Khan
judgements illustrate, it thus has the potential to collapse into an unseemly
pantomime game with judges replying to the hypothetical question, 'but for this
body would the government regulate?' with cries of 'oh yes they would, oh no they
wouldn't'. In that case, the three judges differed in their opinions as to whether the
government would intervene to regulate racing in the absence of the Jockey Club.
Whereas Farquharson and Hoffmann LJJ thought that it would not, Sir Thomas
Bingham MR thought it would, but then decided this was not relevant.78 Further,
even if it could conclusively be shown that the government would not regulate, it is
not clear why the conclusion should automatically follow that judicial review
should not lie. A government may not be prepared to regulate directly itself but
still rely on the regulation provided by another. Whether a government chooses to
regulate directly or rely on a body unattached to government to do so is largely a
matter of political ideology, history, and perceptions of regulatory effectiveness. It
should not necessarily be an indicator of whether the body should be subject to
judicial review.
The second limb of the test, the integration test, is in principle more coherent.
Various phrases have been used to describe the nature of integration required: a
'twin track system of control',79 a 'surrogate organ of government' or a '-
privatisation of the business of government itself .so Evidence of such integration
LR 77; R v Code of Practice Committee of the British Phurmaceutical Sociery, ex p Professional
Counselling Aids Ltd (1990) 3 Admin LR 697; R v Jockey Club, ex p Massingberd Mundy [I9931 2
All ER 207 and R v Disciplinary Committee of the Jockey Club, ex p RAM Racecourses [I9931 2 All
ER 225.
73 [I9931 2 All ER 249 at 254. The test is analogous to that adopted by the European Court of Justice for
the purposes of determining whether a body is an emanation of the state such that a directive can be
directly effective against it: see Foster v British Gas [I9911 1 QB 405 at 427. The comments and
criticisms made herein are confined to the formation of the test in the English context.
74 [I9931 2 All ER 249 at 254.
75 R v Chief Rabbi, ex p Wachmann [1993] 2 All ER 249.
76 R v Football Association, ex p Football League [I9931 2 All ER 833.
77 R v Disciplinary Committee of the Jockey Club, ex p Aga Khan [1993] 2 All ER 853.
78 In R v Insurance Ombudsman, ex p Aegon Life Rose LJ held that he did not regard Sir Thomas
Bingham's difference on this point as affecting the validity of the test: transcript pp 12-13.
79 R v Chief Rabbi ex p Wachmann [1993] 2 All ER 249.
80 R v Disciplinary Committee of the Jockey Club, ex p Aga Khan [I9931 2 All ER 853 at 874, per
Hoffman LJ.

has been found in reticence to legislate in the area, governmental and legislative
reliance on the rules of the body, a surrounding system of regulation of which that
of the body in question forms a part, and the existence of public law sanctions for
non-complian~e.~~ Its pre-eminence over the contractual source of power in
determining whether a body was subject to review was stressed by Hoffman LJ in
Aga Khan,82and is the natural conclusion to take from the cases in which the Stock
Exchange and the SRAs operating under the Financial Services Act 1986 have
been subjected to review.83
The nature of the power is now defined as public if it is governmental; it is
governmental if it is woven into a statutory system of control. Public power or
public element has thus been defined, as we have seen above, in terms of
governmental interest, which in turn has been defined as integration into a
governmental system of regulation. However, whereas 'public element' focuses on
the nature of power, 'governmental interest' looks at the context of power. It is in
fact a substantial narrowing of the initial Datafin test. The context in which
something occurs is analytically distinct from its nature; the context in which
power is exercised could provide evidence of its nature, as indeed in Datafin, but if
the two are equated then the definition of nature is artificially narrowed. 'Public'
need not necessarily be confined to situations in which a body is operating within
the context of statutory powers. The most favourable interpretation of the evolution
of the Datafin test is that it represents a desire, apparent in Datafin, to keep judicial
review to a coherent rationale of regulating the exercise of government power but
to allow it to adapt to meet the changing structure of government by extending the
court's supervisory jurisdiction to those exercising power on behalf of the
government. The development of the governmental interest test can thus be seen as
an attempt to address the tensions between the source and nature of power arising
from Datafin through a focus on the context of power. However, it has occurred
without judicial elaboration or even recognition.
The development of the case law since Datafin may be seen as an example of
what Cotterell has described as the 'imperium' image of judicial review: the courts
are simply part of, and limited by, the hierarchy of political authority within the
state.84The court's role is to ensure that the administration keeps within the legal
bounds set by Parliament: judicial review is simply the application of the state's
law to the state itself. It is not the expression of a set of principles found in a
general political morality of society.85 In expanding the scope of review beyond
statutory and prerogative bodies Datafin threatened this imperium image; in re-
tying the scope of judicial review to the exercise of state power, albeit by proxy,
the courts are re-affirming it.
In so doing, they leave a caselaw which is marked by internal inconsistencies
and tensions. We have already noted the incoherent nature of the 'but for' limb of
the governmental interest test, and there is a continuing tension between this
81 See, for example, R v Panel on Takeovers and Mergers, ex p DataJin [I9871 1 All ER 564; R v
Adverfising Sfandards Authority, ex p The Insurance Service plc (1990) 2 Admin LR 77; R v Code of
Practice Commiftee of the British Phamceufical Society, ex p Professional Counselling Aids Lfd
(1990) 3 Admin LR 697.
82 [I9931 2 All ER 853 at 874-5.
83 R v Sfock Exchange, ex p Else [I9931 1 All ER 420; Bank of Scofland v IMRO [I9891 SLT 432; R v
Fimbra, ex p Cochrane, The Times, 23 June 1989 (CA); R v AFBD, ex p Mordens Lfd, The Times, 6
September 1990; R v Lautro, ex p Ross [I9931 1 All ER 545 (CA), [I9921 1 All ER 422. But see
below, pp40-42.
84 Cotterrell, op cif n 40.
85 See further ibid, pp 24-7.
36 O The Modem Law Revlew Limited 1996

interest and a contractual source of power: a contractual basis tends to be seen as a

prima facie indication, and on occasion as conclusive evidence, that review should
not lie. In addition, the courts are confusing the questions of whether the body is
subject to review with whether this particular decision is r e v i e ~ a b l e Such
.~~ a
confusion leads to suggestions, for example, that although there is no
governmental interest in its operation, a body may be subject to review in
relation to decisions which do not arise from contract.87
Further, the adherence to Law means that the courts are having to re-interpret
earlier cases in which public law principles of natural justice and irrationality were
applied to bodies which now would not pass the governmental interest test. These
principles have been applied both where there isg8 and where there is nots9 a
contract between the applicant and the body. The explanation provided by Rose J
in Football Association that cases such as Breen and Enderby 'are no more than
examples of the courts injecting principles of natural justice into the decision
making processes of domestic b ~ d i e sdoes
' ~ not however provide any indication
of when such principles will be injected and when they will not. Will they be
imposed on all bodies, on all contracts, on all non-contractual relationships
between associations and individuals? The courts are clearly making distinctions
between those situations when such principles will be imposed and when they will
not; however they are declining to say on what basis, and with what justification.
Rationales underlying the judicial response

Which, if any, of the arguments for and against judicial review outlined in the
previous section underly the courts' approach? The courts' reluctance to extend
judicial review to bodies such as the sporting associations seems to be rooted
largely in technical and pragmatic concerns. The pragmatic argument, that
extending the scope of judicial review would be a misapplication of scarce judicial
resources, is made for example in the Football Association case.91The technical/
jurisdictional argument, that the conflict should not be heard under the Order 53
procedure, was dominant in L U W and , ~ ~the post-Datafin cases suggest that it is still
relevant.93 The courts' preoccupation with this argument is understandable: the
86 For example, in Massingberd Mundy the question posed by Roch J to determine whether the body was
subject to review was: 'was the person or body performing a public duty when carrying out the act or
reaching the decision in respect of which the applicant seeks judicial review?': [I9931 2 All ER 207 at
221, and the decision was explained in Aga Khan on the basis that the decision in issue was 'purely
domestic': [I9931 2 All ER 853 at 865 (per Bingham MR). Such a confusion also runs through Law in
which it is sometimes unclear whether the court is referring to the nature of the decision or the nature
of the body in refusing to review: [I9831 3 All ER 300. It is dominant in Briggs, where it seems on
occasion that the judge extrapolates from the decision that the relationship between Names and
managing agents is not subject to review, that Lloyd's is not subject to review: [I9931 1 Lloyds LR
176 at 184-5.
87 R v Disciplinary Committee of the Jockey Club, ex p Aga Khan [I9931 2 All ER 853 at 867 (per
Bingham MR) and 873 (per Farquharson LJ). This question was also left open by both judges in R v
Disciplinary Commitee of the Jockey Club, ex p Massingberd Mundy [I9931 2 All ER 207 at 220 (per
Neil1 LJ) and 224 (per Roch J).
88 Enderby Town Football Club Ltd v Football Association Ltd [I9711 Ch 591; Dickron v
Pharmaceutical Society [ 19701 AC 403.
89 Mclnnes v Onslow-Fane [I9781 3 All ER 211; Nagle v Fielden [I9661 2 QB 633, Breen v
Amalgamated Engineering Union [I97 I] 2 QB 175.
90 R v Football Association, ex p Football League [I9931 2 All ER 833 at 842.
91 R v Football Association, ex p Football League [I9931 2 All ER 833 at 849 (Rose J).
92 [I9831 3 All ER 300.
93 See for example R v Disciplinary Committee of the Jockey Club, ex p Aga Khan [I9931 2 All ER 853
at 867 (per Sir Thomas Bingham MR), 872 (per Farquharson LJ).

question of the availability of review arises in the context of applications to strike

out on the grounds that the wrong court is hearing the conflict. However, the result
is that judicial review is being denied not necessarily on the grounds that judicial
supervision is inappropriate on fundamental theoretical or even policy grounds, but
because the existing procedural rules which govern applications for judicial review
do not permit it.
The relevance of the more fundamental arguments concerning power, autonomy,
community values and conceptual strain is not always clear. The exception is the
(negative) significance of institutional power. The courts have rejected the
argument that the exercise of power per se or the exercise of monopoly power
provides a justification for judicial review. They have however expressed concern
at the conceptual overload which would be involved in a wide application of
judicial review. This is most clearly stated by Rose J in the Football Association
case:
to apply to the governing body of football, on the basis that it is a public body, principles
honed for the control of abuse of power by government and its creatures, would involve
what, in today's fashionable parlance, would be called a quantum leap.94
Although, as was noted, the conceptual argument has some force, it may be
overstated. Judicial review is not a monolithic tool which is applied with equal
intensity to all areas subject to its jurisdiction. The courts have made it clear that
when reviewing different bodies, different approaches to review may apply. In
reviewing the procedural fairness of a decision, they have long recognised that 'the
principles of natural justice are not carved on tablets of stone',95 and that the
procedures which should be required vary according inter alia to the statutory
context, the interests affected, and the nature of the decision maker.96With respect
to the substantive review of discretion, different intensities of review may also be
di~cerned.~'
Concerns relating to a body's autonomy are more veiled in the cases, and tend to
find themselves in tension with the judicial desire first to maintain a monopoly
over legal interpretation, and second to ensure that certain values are upheld. The
cases do not give express recognition to the political autonomy argument, and
unless the willingness to rely on private law can be interpreted as a desire to
respect the political and operational autonomy of the body, which it is argued that
in these cases it cannot easily be, there is little attention paid to it by the courts.
Paradoxically, statements expressing concern for the body's autonomy are to be
found in those cases where judicial review has been given. For example, Sir John
Donaldson MR in Datafin stressed that, in order to preserve finality and certainty
in the Panel's decisions and to ensure the smooth operation of the market, the
94 [I9931 2 All ER 833 at 849 (Rose J).

95 Lloyd v McMahon [I9871 AC 625 at 702 per Lord Bridge.
96 R v Civil Service Appeal Board, ex p Cunningham [I9911 4 All ER 3 10; R v Home Secretary, ex p
Doody [I9931 3 WLR 154.
97 See for example the assertions that a very high degree of irrationality would be required before the
court would intervene in a decision of the Takeover Panel and the Parliamentary Commissioner for the
Administration: R v Panel on Takeovers and Mergers, ex p Datajin [I9871 1 All ER 564 and R v
Panel on Takeovers and Mergers, ex p Guinness plc [I9901 1 Q B 146; R v Parliamentary
Commissioner for the Administration, ex p Dyer [I9941 1 All ER 375 and further Craig,
Administrative Law (Sweet & Maxwell, 1994, 3rd edition) p 403. For arguments that substantive
review should develop the flexibility of procedural fairness, see Laws, 'Is the High Court the Guardian
of Fundamental Rights?' [I9931 Public Law 59. For evidence of a differentiating approach in the
context of SRAs. see n 179 below.
38 0 The Modem Law Review Limited 1996

court's relationship with the Panel should be historic rather than

contemporane~us.~~ This was also as much to prevent the misuse of judicial
review as a tactical tool in takeover battles, however, as it was to ensure the
Panel's operational autonomy.99
In the Datafin line of cases, there is little explicit awareness of the legal
dominion argument, the plea for legal pluralism, although it possibly underlies the
decision in Wachmannloonot to review the decision of the Chief Rabbi, and it may
underly the decisions not to review sporting bodies. There is again greater
emphasis on the need to be sensitive to the body's own operations and
understanding of its rules where judicial review is being granted than where it is
not. In Datafin Sir John Donaldson MR emphasised that the court would be slow to
interpret the Panel's rules, and would confine itself to ensuring the Panel did not
step outside its own defined powers and purpose.lol
It may be that whether or not the issue of legal pluralism comes to the forefront
of judicial attention depends upon how the question is posed. If it is posed in the
form of 'is this body subject to review?', the Datafin question, then there is little
evidence that the courts pay much attention to it. If the question is posed in the
form of 'are this body's rules subject to review', the Anisminic102question, then as
that line of cases illustrates, concerns of legal pluralism are raised but are
discounted in favour of a unitary conception of legal interpretation.1°3 It is still
difficult to predict, however, when the courts would review the interpretation of a
body's rules. A judicial concern not to become involved in the interpretation of the
rules of non-statutory associations is evident in Page itself. The pre-occupation
that contract precludes review led the court to exclude review of rules based in
contract in R v IBA, ex p Rank.'" Such sensitivities contrast with Lord Denning
MR's robust assertion in Enderby that the rules of the Football Association,
although based in contract, operated as a legislative code and were subject to the
control of the courts.105Further confusion arises from Mercury Communications
Ltd v Director General of Telecommunications, in which the court held that British
Telecom's licence, formed under statute, was akin to a commercial contract made
by a government department; however the final arbiter as to its terms was the
court, not the DGT.lo6 There is no clear line at all as to when and whether
regulatory rules will be subject to judicial attention, or what form that attention
will take.
To the extent that it exists, reluctance to become involved in the minutae of a
body's operation also lies in tension with a judicial desire to ensure that certain
procedural values are upheld, and the imposition of duties of fair procedure
suggests that the courts may be concerned to apply norms and values in the sense
advocated by the community argument. The courts are happy to apply principles of
98 [1987] 1 All ER 554 at 579.

99 [I9871 1 All ER 554 at 578.
100 [I9931 2 All ER 249.
101 [I9871 1 All ER 554 at 579.
102 Anisminic Ltd v Foreign Compensation Commission [1969] 2 AC 147. See generally Craig, op cit
n97, Chapter 10; P. Cane, Introduction to Administrative Law (Oxford: OUP, 1993, 2nd edition),
Chapter 6.
103 See Page v Hull University Visitor [I9931 AC 682.
104 R v Independent Broadcasting Authority, ex p Rank Organisation plc LEXIS 26 March 1986.
105 Enderby Town Football Club v Football Association Ltd [I9711 Ch 591 at 606. For indications of the
court's approach in the context of financial services regulators, see further n 178.
106 The Independent, 16 February 1995, noted by Scott, 'The Life (and Death?) of O'Reilly?' (1995) 6
Utilities LR I.

natural justice to contractual and non-contractual relationships with trade and

sporting associations.lo7 The advocation of the principle of natural justice in
private law indicates that it is not judicial reticence or unwillingness to intervene in
the body's organisation and functioning which is in issue. Indeed the court will
intervene to apply the same principles, but under a different label.lo8Procedural
rights are not the only values the courts have indicated they are prepared to uphold.
In Nagle v Feilden, which Jowell and Lester have argued is essentially a
nondiscrimination case, it was held that rules which unreasonably restricted a
person's ability to work would be invalid.'@ In Aga Khan Farquharson LJ held that
the court would intervene to review the Jockey Club if it should abuse its rule
making power and make discriminatory rules.l1° It thus seems that even if there is
a latent concern to preserve an SRA's operational and perhaps political autonomy,
the court will not countenance the disregard of certain community or common law
values.
Finding a 'governmental interest'

The dominant test for the extension of judicial review is however, as we have seen,
the governmental interest test. This does not give the community values argument
much room to flourish, at least as a justification for the application of public law to
SRAs. It is the imperium image underlying this test which provides the main basis
for the courts' decisions whether or not to review. This argument contains a
considerable degree of force, particularly given the stress by neo-corporatists on
the need to regulate SRAs exercising state power to ensure they act in the public
interest.l12The courts' definition of what counts as state or governmental power is
however narrower and more formalistic than that of the neo-corporatists and their
understanding of the nature and role of SRAs is considerably less developed.
Even if we accept the imperium image of judicial review which drives this
narrower conception, however, there are still problems in its application. The
courts are failing to recognise the ways in which governmental power is exercised;
they are misreading the use that is being made of contract, failing to accept that
contract is being used not as an instrument of exchange but of regulation; and in
mis-characterising SRAs they are suggesting the application to them of legal
norms which are inconsistent and arguably inappropriate.
First, it is clear from the case law that in their application of the governmental
interest test the courts are in danger of doing what Lord Donaldson MR warned
against in Datafin: failing to recognise the 'realities of executive power' and
allowing their vision 'to be clouded by the subtlety and sometimes complexity of
the way in which it could be exercised'.l13 We have seen in this article the range of
107 For example, in Enderby Denning LJ argued that the courts would strike down rules if they were
contrary to natural justice: Enderby Town Football Club v Football Association [I9711 Ch 591 at 606.
On judicial review of sporting bodies see Beloff, 'Pitch, Pool, k n k . . . Court? Judicial Review in the
Sporting World' [I9891 Public L a w 95.
108 The court also exercises supervisory jurisdiction over the traditionally private law spheres of contract
and company law where principles are imposed of, in the case of contract, good faith and public policy
and in the case of companies, improper purposes and rationality.
109 [I9661 2 Q B 633; Jowell and Lester, 'Beyond Wednesbury: Substantive Principles of Administrative
Law' [I9871 Public Law 368 at pp377-378.
110 [I9931 2 All ER 853 at 873.
1 1 1 See also Cotterrell, op cit n 40, p 3 1 .
1 12 See above, text accompanying n 37.
1 13 [I9871 1 All ER 564 at 577.
40 0 The Modem Law Revlew Lirmred 19%

institutional arrangements, relationships with the state, and legal bases that SRAs
can have. Essentially what is happening when the courts look at an SRA is that
they are looking at only one or two signifiers as being legally relevant to the
question of whether or not to review.
Briggs and Aegon Life provide key examples. Despite Leggatt LJ's assertions in
Briggs that '[ilt does not help to refer to [Lloyd's] as Regulators or to describe the
system administered by the Corporation of Lloyd's as a regulatory regime',l14
under both the 'but for' test and the 'integration' test, Lloyd's is a body of such a
nature that it should be subject to review. Briefly, the 1982 Lloyd's Act was a
Private Act, encouraged by the government, who also enabled the passage of the
Bill through what can otherwise be a complex and fruitless procedure. Lloyd's was
specifically exempted from the Financial Services Act 1986 which sets the
framework for the regulation of investment business on the grounds that it was
already adequately regulated. l5 The debates concerning this exemption indicate a
clear governmental intention that regulation of this area of the insurance market
should be left to Lloyd's, but the Secretary of State retains the power under the
FSA to remove its exemption from those statutory requirements.'16 The framework
of its operation has clear parallels with that of the Licensed Dealer (Conduct of
Business) Rules relied on in Datafin to explain the context of the Takeover Panel's
operation^."^
A similar lack of judicial understanding of the nature of the regulatory system
was demonstrated in Aegon Life.ll*The Insurance Ombudsman Bureau (IOB) was
set up in 1981 to investigate complaints against member companies. The IOB has
been recognised by Lautro as performing the complaints investigation function
which Lautro is required to perform under the Financial Services Act 1986119and
was authorised by Lautro to perform its statutory duties.lZ0Yet Rose LJ held that
this did not mean that the body was susceptible to review. Finally, these cases
reveal an uncertainty as to the relationship between the two limbs of the
governmental interest test. Both courts indicated that because the body failed the
'but for' test, it failed the integration test, and that because it failed the integration
test, it failed the 'but for' test.
Secondly, there is a judicial misreading of the use that non-legal systems are
making of legal norms. In seeing the contractual basis of power to be a highly
significant, if not determinative factor in witholding review, the courts are
confusing the use of contract as an instrument of economic exchange with the use
of contract as an instrument of governmental or non-governmental organisation
114 [I9931 Lloyd's LR 176 at 185.

115 Section 42 FSA 1986. The exemption of Lloyds was fiercely criticised by Opposition and backbench
MPs (see for example the debates at HC Deb vol96 col979 and 198516 HC Standing Committee E col
207), and largely to assuage such critics the government commissioned a report from Sir Patrick Neill
to ensure that Lloyd's did in fact meet the requirements of regulatory bodies operating under the FSA:
Renort o f the Committee o-f Inquiry
. - into Regulatory Arrangements at Lloyds (London: HMSO, 1987).
116 S ;16 FSA 1986.
117 Moreover. the case made no reference to the earlier case of R v Discinlinan Committee o f Llovd's. ex
p ~ o s ~ a tThe
e : Times, 12 January 1983 in which Lloyd's was held i o be subject to review. '
119 Lautro was a self-regulatory organisation recognised under the FSA; its members were thereby
authorised to conduct investment business under the Act. It had to conform to certain statutory
requirements, set out in Schedule 2. Its functions have now been taken over by the Personal Investor
Authority (PIA).
120 Under paragraph 6(2) of Schedule 2 Lautro is required to have 'effective arrangements for the
investigation of complaints', which may make provision for the whole or part of that function to be
carried on by an independent body or person.

and regulation.12' The courts see the legal instrument of contract being used in the
SRA, and assume that it is being used in the way the law recognises: as an
instrument of exchange between broadly equal parties. In fact, society uses the
legal instrument in a multitude of different ways; and in this case it is being used
not as an instrument of exchange but as a vehicle for the exercise of discretionary
power.
Thirdly, a failure to understand the nature of both regulatory bodies and the
regulatory function, leads the courts to make inappropriate assumptions about the
role other parts of the legal system should play in their supervision. Again, the
approach which the courts are taking to such bodies appears to be dictated by a
judicial concern for the legitimate role for public law rather than a concern for their
political or legal autonomy. There is an indication that there should be control, but
in private law. Such an approach is taken by Hoffman LJ in Aga Khan, who argued
that control of bodies such as the Jockey Club should be found in the law of
contract, of restraint of trade and 'all the other instruments available in law for
curbing the excesses of private p ~ w e r . ' ' ~ ~
Relying on doctrines of restraint of trade and competition in private law to
regulate and control such bodies involves an assimilation between bodies
exercising an economic power and function, and bodies exercising a regulatory
function. It is by no means clear, however, that the principles underlying the
operation and regulation of economic activity should automatically be applied to
the function of regulation itself. It is suggested that a simple reliance on the market
and existing competition regulation to control the abuse of regulatory power is
misplaced. The doctrines and principles of one function cannot without
modification be transposed to the other. The rationale and concern of market
regulation is to prevent the accumulation of economic power and monopoly rents,
not the abuse of regulatory power; the regulatory prescriptions which welfare
economics suggests for the former may be highly inapposite to the latter.12"
In summary, the evolution of the governmental interest test may contain the
seeds of a defensible principle on which to base the application of judicial review,
but its formulation is not sufficiently sophisticated and its application leaves much
to be desired. On the whole, the post-Datafin cases indicate that in deciding
whether to review an SRA the courts have adopted a narrow approach to the
question, and have conceived the role of judicial review in the traditional terms of
the judicial regulation of executive power arising from the imperium image of
judicial review. Their approach reflects a pre-occupation with the technical or
jurisdictional argument, with a pragmatic concern at a potential flood of cases, and
with the conceptual strain that may be placed on judicial review itself if it is
applied to such bodies. They have not adequately addressed the power, autonomy
or legal dominion arguments concerning the regulation of SRAs, and if these
arguments underlie their approach they remain unarticulated. This approach is in
tension with the community approach evidenced in earlier cases concerning
121 On the use of contract as a tool of (mainly economic) policy by the state, see Daintith, 'Law as a
Policy Instrument' in Daintith (ed), Law as an Instrument of Economic Policy: Comparative and
Critical Approaches (Berlin: de Gruyter, 1988) and 'The Techniques of Government' in Jowell and
Oliver, The Changing Constitution (Oxford: OUP, 1994, 3rd edition). On the issues raised by the
increased use of contractual powers, see Freedland, 'Government by Contract and Public Law' [I9941
Public Law 86 and I. Harden, The Contracting State (Buckingham: Open University Press, 1992).
122 R v Disciplinaty Committee cfthe Jockey Club, ex p Aga Khan [I9931 2 All ER 853 at 873.
123 That regulatory competition may lead to sub-optimal regulation is expressed in the 'race to the
bottom' argument, the expression coined initially by Cary, 'Federalism and Corporate Law:
Reflections upon Delaware' (1974) 88 Yale LI 663.
42 0 The Modern Law R e v ~ e wL~rnited1996

sporting bodies and trade unions which would not now pass the governmental
interest test. In essence, the courts have thought of the question of whether and
how to regulate SRAs in terms only of the appropriate scope of public law, and a
public law which is defined largely in terms of an imperium image of judicial
review; they have not been concerned to address the question of the role law itself
should play in relation to SRAs.
Ways Forward: A Reflexive Approach?

At one level proposing a way forward that would meet these criticisms is relatively
simple. It would be to argue that all exercises of collective regulatory power should
be subject to review, irrespective of the interest of the state, and in determining the
nature of an SRA the focus should be on function not on form. As SRAs exercise a
regulatory or governmental function, all SRAs, whatever their association with the
state, should be subject to a common body of principles of natural justice,
rationality and illegality applicable in both public and private law, as indeed may
already be the case. This argument would go some way to addressing the power
argument, whilst avoiding the criticisms that may be levelled at it. Further, it could
be argued that those SRAs which are used by the state to implement public policy
should be subject to public law, which may involve a greater intensity of review
than review of other SRAs. This would recognise the force of the neo-corporatist
argument, although it would require the courts to improve their cognitive
awareness of the nature of regulatory systems, which demands a more
sophisticated understanding of the structure of regulatory systems and a re-
conceptualisation of contract as an instrument of regulation.
Such a proposal may be a way of rationalising the current situation. It is more
focused than the power argument in that it concentrates on one type of power,
regulatory power. It is wider than the neo-corporatist argument in that it sees
regulation, by whatever body, as requiring some kind of supervision. However, it
still uses an under-developed concept of 'public' and fails to meet the arguments
for either political or legal autonomy which a new approach has to address if it is to
be anything more than simply another argument for expansive review. Essentially,
it still reveals an uncertainty as to how to understand the role of SRAs and the
nature of the autonomy or control that SRAs should have.
The tensions between the arguments of power and autonomy reveal two
competing notions of SRAs: as surrogate organs of government (or their functional
equivalent) and as centres of private or community life. The preconditions for the
development of principles of review for SRAs identified at the beginning of the
article, a reconceptualisation of their nature and role and a consequent
reformulation of the role of law in relation to them, have not occurred. In terms
of understanding the nature of SRAs, the traditional debate on judicial review of
SRAs and the judicial response are essentially grounded in a hierarchical
conception of the relationship between the individual and the state. But as
explained, this runs contrary to the interpretation of socio-legal theorists and the
neo-corporatists of SRAs as 'horizontal' intermediators between different
functional systems within society. In the particular context of public policy,
SRAs represent at once a privatisation of public policy and an absorption into the
state of intermediate ass0ciations.12~On this view, the aim of law and of regulation
124 See further Teubner, op cit n27

The M o d e m Law Review [Vol. 59
should be to ensure that they perform this intermediating role effectively,

integrating competing discourses, and more specifically, designing processes and
organisational structures to ensure that an SFL4 takes into account other, wider
interests in its decisions.
In turn, the issue of whether and how to regulate SFL4s becomes the issue of how
law can ensure that they achieve this. Answering this question, and indeed
recognising its significance, requires an excursus into the theories of autopoiesis
and reflexive law. Reflexive law represents a change in regulatory technique in
which law ceases to command but aims to induce, inter alia, associations or
organisations to achieve particular outcomes through acting indirectly, providing
for their 'regulated autonomy'. The notion of 'regulated autonomy' is beguiling:
can it offer a basis for developing principles for the review of SRAs?
Autopoiesis and reflexive law

The theory of autopoiesis is complex, and it is necessary here to emphasise only
those elements which are most immediately relevant,125namely the fragmentation
of society into differentiated functional systems and sub-systems: law, politics,
religion, economy, and the nature of these systems. Systems are autopoietic: self-
generating and self-referring, producing and reproducing their own elements
through the interaction of those elements. Each has its own rationality and is
dependent on its environment. Such systems are 'normatively closed, but
cognitively open'. They are cognitively open in that they can observe other
systems and their environment, and be indirectly affected by them. However, they
are normatively closed in that they recognise no norms other than those which they
produce as being valid. The validity of legal norms is thus based solely on legal
norms; it is not dependent on the external norms of politics, morality, science or
religion.
In such a differentiated society integration has a high premium. Autopoietic
systems are self-generating: they will continue to evolve in accordance with their
own definition of themselves and their f ~ n c t i 0 n . As l ~ ~each system operates in an
entirely self-referential manner, it may fail to take account of the impact of its
operations on other systems. To prevent this occurring, law needs to ensure that
each system is responsive to its e n ~ i r 0 n m e n t . lIt~ can
~ do this by requiring each
system to take into account in its own operations the effect of its externalities: by
requiring science to consider, for example, the political or ethical implications of
nuclear weapons or genetic engineering.
Arguments for the need for regulation thus arise not from arguments about
power or political autonomy, but from the nature of autopoietic systems. Their
regulation is necessary to ensure system integration. However, the autopoietic
125 See further Teubner, op cit n 8, 'Evolution of Autopoietic Law' in Teubner (ed), Autopoeitic Low: A
New Approach to Law and Sociefy (Berlin: de Gruyter, 1988); Luhmann, 'Law as a Social System'
(1989) 83 NWULR 136; for a comparison of autopoiesis with systems theory see Luhrnann, 'The
Unity of the Legal System' in Teubner (ed), Autopoeitic Low: A New Approach to Law and Society
(Berlin: de Gruyter, 1988). For a useful introduction see King, 'The Truth about Autopoiesis' (1993)
20 JLS 2 18.
126 Teubner, op cit n 8, Ch 4.
127 See further ibid, Ch 5; Teubner, 'Substantive and Reflexive Elements in Modern Law' (1983) 17 Law
& Soc Rev 239, pp254, 273; Teubner, 'After Legal Instrumentalism? Strategic Models of Post-
Regulatory Law' in Teubner (ed), Dilemmas ($Low in the Weyare State (Berlin: de Gruyter. 1985);
Willke. 'Societal Regulation through Law?' in Teubner and Febbrajo (eds), State, Law, Economy as
Auropoietic Systems (Milan: Guiffre, 1992).
44 8 The Modem Law Rev~ewL~rnited 1996

nature of systems leads not only to demands for integration and regulation, but
imposes limitations on the ways in which this can be achieved. One of the
implications of autopoeisis is that no one system can declare its world view as the
only view and as binding on all others,lZ8and no system can transcend the internal
complexity and impenetrability of other highly developed systems and sub-
s y s t e m ~ .Although
'~~ it is law's function to ensure integration,130 it is limited by its
own autopoiesis and that of other systems. It cannot simply 'reach out' of its own
system and into another. The economic system, for example, will recognise as
valid only economic and not legal norms. Legal norms are simply external 'noise'
which it will filter and reconstruct in accordance with its own rationality of
efficiency (hence the notion of 'efficient breach of contract'). Law cannot simply
require the economic system to act in the way law demands. It has to regulate by
observing and recognising the autopoiesis of other systems; by assessing their
process of self-production and self-reference and adapting its intervention
accordingly.
Autopoietic theory thus has several implications for law. First, the function of
law is to ensure social integration, not to control or legitimise power or protect the
private from the public sphere. Second, it sees autonomy as an inescapable social
fact, not as an optional characteristic which may be more or less politically
desirable and varied by legislative or judicial intervention. Third, it affects the
strategies law can adopt to regulate other systems.
Reflexive regulation
The theory of reflexive law may be seen as the 'reforming' element of the theory
of autopoiesis, and it is not one which all autopoieticists share. It was developed in
the context of concern at the failure of regulatory programmes to achieve their
desired ends, a concern shared by writers in a range of different fields.131A number
of reasons have been identified:132 ineffective implementati~n;'~~ a 'mismatch'
between regulatory techniques and the issues requiring regulation;134a failure of
law to become policy orientated and respond to the social and economic
conditions and consequences of its operation;135 or because regulation imposes
unjustifiable social and economic costs and prevents the optimal allocation of
128 Willke, ibid, p 383.

129 See further, ibid, Teubner op cit n 8 and n 127 (1983), (1985); 'Regulatory Law: Chronicle of a Death
Foretold' (1992) Social & Legal Studies 451. Luhmann goes further and argues that no system can
regulate another; regulation of self-regulation is not possible: Luhmann, 'Some Problems with
Reflexive Law' in Teubner and Febbrajo (eds), State, Law, Economy as Autopoietic Systems (Milan:
Guiffre, 1992) at p397.
130 Autopoiesis draws a distinction between a systems' function, performance and reflection: function is
its relationship with other sub-systems, and reflection, its relationship with itself; see further Teubner,
op cit n 127 (1983), p272.
13 1 The phrase 'the crisis of the welfare state' is frequently used in continental writing; this phrase refers
simply to the observed inability of law to change society in a purely instrumental manner, and can be
applied equally to all forms of regulatory programmes.
132 For the range of models of law which these prompt, see Teubner, op cit n 127 (1985).
133 Mayntz, op cit n38.
134 See, for example, Breyer, Regulation and its Reform (Harvard: Harvard UP, 1982); Mitnick, The
Political Economy of Regulation (New York: Columbia UP, 1980); Stewart, 'Regulation and the
Crisis of Legalisation in the US' in Daintith (ed), Law as an Instrument of Economic Policy (Berlin: de
Gruyter, 1988).
135 Nonet and Selznick, Law and Society in Transition: Towards Substantive Law (New York: Harper and
Row, 1978).

resources through the market, so interfering with individual Teubner's

conceptualisation of the problem is more radical. It is that the regulatory 'crisis' is
caused by the incompatibility of the internal logics of different subsystems.137The
remedy is not to improve implementation, 'match' regulatory strategy to a
particular problem, to know and understand every single aspect of the regulatory
subject more fully, or to leave things to the market. It is to recognise the
impossibility, which is analytical as opposed to merely practical, of regulating
directly and to change regulatory strategy to regulate indirectly, to induce actions
rather than command them.
Law thus has to recognise the normative c!osure of autopoietic systems, and
make use of their cognitive openness.138It has to orientate its own development to
that of the particular system in question, analyse how it operates, and intervene
~ t r a t e g i c a l l y .By
~ ~ ~way of illustration, Teubner draws analogies with the '-
rhinoceros theory' of regulation familiar in socio-legal work.140 In order to get a
rhinoceros to walk a plank ashore, no amount of persuasion or bullying, pulling or
pushing will have the desired effect. The rhinoceros will simply not understand the
threats or cajoles, and will respond to the physical efforts by immobility or attack.
A bag of straw held tantalisingly in front of its nose whilst the bearer walks down
the plank will however achieve the desired result.
Law can adopt a range of indirect regulatory strategies.141That which interests
us most here is the use and regulation of organisations. As was stressed above,
integration is of central importance in autopoietic theory. Organisations play a
valuable role in this respect and provide considerable potential for law to intervene
as they can form the basis for inter-system 1ir1kages.l~~ They thus enable systems to
gain indirect access to other systems, an advantage recognised in the neocorporatist
literature. As organisations provide the structured opportunity for inter-system
relationships, law may through them adjust the nature of these relationships. Here
we pick up the conceptualisation of organisations and associations outlined at the
beginning of the article: that SRAs act as such linkages, not simply mediating
between the realm of politics or the state and individuals but between the different
systems of society.
One of the roles of reflexive law is to ensure that organisations perform this
integrative function. This can be achieved through 'procedural regulation'.14"e
aim of procedural regulation is to structure the processes of the system in such a
manner that ensures that the system takes into account the impact that its operation
may have on other systems, but without trying to control the substantive outcome
of any decision. In achieving this, procedural regulation goes beyond public
136 Hayek, Law, Legislation and Liberty, vol 1: Rules and Order (Chicago: Chicago U P , 1973).
137 Teubner, op cit n 127 (1985), p 307 and n 8, pp 72-77.
138 'Operationally closed systems remain cognitively open through information and interference, and it is
this which makes social regulation through law possible.' Teubner, op cit n 8, p97.
139 The phrase 'structural coupling' is used to describe the process by which the legal system triggers the
self-regulatory mechanisms of itself and another system so that the two run in parallel: Teubner,
'Juridification: Concepts, Aspects, Limits, Solutions' in Teubner (ed), Juridification of the Social
Spheres (Berlin: de Gruyter, 1987).
140 Teubner, op cit n 129 (1992). It is also analogous to the strategy of 'structuring incentives' often
advocated in law and economic analysis.
141 As the theory of autopoiesis has developed, so has Teubner's analysis of the means by which law can
intervene in different systems: see initially op cit n 127 (1983) and (1985), and for the fullest
development, op cit n 8, Ch 5.
142 Teubner, op cit n 8, pp 95-97
143 See further ibid; Mayntz, op cit n 38; Willke, op cit n 127; and Teubner, op cit n 129 (1992) and n 127
(1983).
46 0 The Modem Law Review Lirmted 1996

lawyers' traditional conceptions of 'fair procedure'. Procedural regulation, as used

in this theoretical context, means patterning decision processes, changing
organisational structures and altering power relationships. The latter element
deserves emphasising, and is perhaps the most radical element of procedural
regulation. Both Teubner's and Willke's conception of reflexive law see it as
playing a significant role in the redistribution of power relationships. Power is not
seen primarily as a source of injustice but as a social instrument for the effective
transfer of decisions. The task of the law is still to control power abuses but the
central problem becomes to design institutional mechanisms that mutually increase
the power of members and leaders in private organisations. The aim of such
redistribution is again to ensure responsiveness, although the redistribution which
is necessary to achieve this is not necessarily power equalisation.
Reflexive law through procedural regulation thus aims to provide for the '-
regulated autonomy' of different s u b - s y s t e m ~It. ~is~ ~
important to recognise that
this is both an empirical and a normative proposition. Even though reflexive law
cannot successfully impose substantive ends, Teubner argues that it should not.
This normative aspect of reflexive law is expressed most clearly in the idea of
juridification and the regulatory trilemma. In its most extreme form, juridification
represents the use of law to impose 'modes of functioning, criteria of rationality
and forms of organisation which are not appropriate to the 'life world' structures of
the regulated social areas and which therefore fail to achieve the desired results or
do so at the cost of destroying these structures'.145Building on Habermas, Teubner
argues that the juridification of the social state which is consequent on the
development of purposive regulatory programmes has to be avoided. In using law
to implement such programmes, law's function, legitimation and norm structure
have altered in a manner which is undesirable. Its function is now political
intervention and societal guidance, not conflict resolution; its legitimacy is
contingent not on its autonomy but on its success in achieving purposive goals; and
its norm structure changes from generality to particularity, with increasing
emphasis on purposive interpretation. The result is the regulatory t1i1emma.l~~Law
is either ignored by the system, or it destroys that system's traditional norms of
behaviour; or it is itself disintegrated by the pressures imposed on it by the political
and social systems. It is the regulatory trilemma, the dysfunctional consequences
of juridification of the social system, which reflexive law aims to address.
'Reflexive review'? Norms, values and reflexive law

Can reflexive law and procedural regulation, in the form described above, provide
a basis for developing principles of 'reflexive review'? Using socio-legal theory as
a source for the development of public law principles was suggested by Prosser in
1982147and has recently been reiterated by L o ~ g h 1 i n . lProsser
~~ focused on
Habermas and argued that his work on communicative competence could provide a
justifying basis for the adoption of new organising principles of public law,
participation and accountability. The theories of autopoiesis and reflexive law have
144 Teubner, o p cit n 127 (1983).
145 Teubner, o p cit n 139, p4.
146 ibid pp 19-27.
147 Prosser, 'Towards a Critical Public Law' (1982) 9 JLS 1 .
148 Loughlin, Public Law and Political Theory (Oxford: OUP, 1992) pp 250-264, but see criticisms of his
use of the theory in King and Schutz, 'The Ambitious Modesty of Niklas Luhmann' (1994) 21 JLS
261. Loughlin bases his argument primarily on Luhmann's work rather than that of Teubner.

developed considerably since then and the socio-legal theme has also been
continued by other public lawyers. Under the banner of 'regulated autonomy'
Birkinshaw, Harden and Lewis have introduced a range of prescriptions for the
regulation of SRAs which includes information and publicity, financial
accountability, dispute resolution and grievance procedures, codes of practice,
procedures for consultation and rule making, performance review and monitoring
and 'hard look' judicial review.149However, although they take their terminology
from Teubner, their conceptual roots are quite different.Is0 Their prescriptions are
founded in a concept of law in which law is 'a set of socially necessary tasks
concerned to institutionalise the legitimate foundations of the state' and relates to
procedures for performing the different law jobs of dispute resolution, goal setting,
implementation and allocation of decision making.lS1 In contrast, in Teubner's
analysis, as we have seen, the function of law is to integrate differentiated systems,
not to institutionalise or legitimise. If we reunite regulated autonomy with its
reflexive and autopoietic base it is not clear that the agenda for political and legal
reform which Birkinshaw et a1 advocate, and the substantive values on which it is
based, flow from it in such a straightforward manner.
If we are to base principles of public law and more specifically judicial review
on a theory of reflexive law, two principal questions have to be addressed. First, is
reflexive law simply an agenda for de-regulation and de-legalisation? Second, the
theory argues that substantive values cannot be pursued directly. Can any
substantive values be pursued at all? If we are considering the role of judicial
review we cannot do so in the absence of a political theory.Is2 Does reflexive law
provide one? Does it assume one? Does it preclude one?
In relation to the first question, its architects argue that reflexive law is not a
neo-liberal agenda; although direct state intervention may not be possible, this
does not mean that the law should simply serve to maintain the status quo.'s'
Rather it is argued that reflexive law seeks to alter existing social orders to the end
of ensuring that each system is responsive to the rationalities of other self-
regulating systems.lS4Reflexive law does not deny the need for state intervention,
it is simply that its form has to alter.
Solutions to the problem of juridification are sought which assume both the necessity of the
socio-political instrumentalisation of law and the necessity of structural coupling with self-
regulating areas of life. The problem can be formulated as follows: are there ways and means
by which law can change from direct regulatory intervention to more indirect, more abstract
forms of social regulation, i.e. to the politico-legal control of social ~ e l f - r e ~ u l a t i o n ? ~ ~ ~
The second question is more complex. Is reflexive law simply a technique of
intervention, a vessel into which any substantive purpose can be poured, or does it
restrict not only the means by which substantive goals can be pursued, but those
149 Birlunshaw et al, op cit n 14, p p 2 4 5 6 . Their definition of SRAs is narrower than that used in the
course of this article, and presumes that the SRA is operating in a neo-corporatist arrangement with
the state. See above, text accompanying n 14.
150 There is a slight terminological difference: regulated autonomy is used not only in Teubner's sense but
also to refer to the degree of oversight or regulation which they argue is necessarily retained when a
degree of autonomy is delegated to the private sector in undertaking public functions: ibid p240.
151 ibid p 246.
152 See Craig, Public Law and Dernocracj in the U K and the US (Oxford: OUP, 1990).
153 See, for example, Teubner, op cir n 129 (1992). p462; Willke, op cit n 127.
154 Teubner, op cir n 127 (1983), pp254, 273 and n 139 (1987), p32.
155 ibid (1987) pp 32-3. Teubner's more 'political' approach contrasts with that of Luhmann, who argues
that no politico-legal programme can be derived from the analysis of autopoiesis: Luhmann op cir
n 129. p 393
43 The Modem Law Rev~ewLimited 19%

that can be pursued at all? Teubner's response is that the material orientation of
reflexive law is to ensure responsiveness: 're-introducing the consequences of
actions of social subsystems into their own reflexion structure.'lS6 But how do we
know when a system has been made sufficiently responsive? To which aspects of
its environment does a system have to respond? Or, to re-pose the question, how
affected does an environment have to be before the system has to respond to it? Is
there an operational limit on the number of environments that can be considered in
practice?
The underlying aim of reflexive law, stated although not elaborated, is to
democratise social sub-systems: 'law must act at the subsystem-specific level to
install, correct and redefine democratic self-regulatory mechanisms.'157Exactly
what is meant by democratisation is not developed, but perhaps we can extrapolate
from the theory's emphasis on first, responsiveness and second, the inability to
have universal norms in a differentiated society to conclude that it means
essentially that all affected systems should have an effectively equal say in a
decision, and that no one system's view or rationality should dominate
a u t ~ m a t i c a l l y However,
.~~~ the advocation of consensus based decision making
also raises questions: what happens in the absence of consensus? What is the law to
say if these conflicts are then brought into the legal system?159
The theory of reflexive law does not fully address these questions. Extrapolation
of precise principles is not straightforward, partly because the theory operates at a
high level of a b s t r a ~ t i o n ,and
' ~ ~ partly, and perhaps most significantly, because the
theory exhibits internal tensions which need to be resolved. These can be briefly
highlighted. Take first the question of whether reflexive law is an agnostic legal
strategy, an empty vessel. Different expositions of the theory of reflexive law
contain suggestions either that no substantive programmes can or should be
imposed, or that reflexive law limits the types of substantive values that can be
pursued through law. The latter is suggested particularly by the stress on the
inability to have universal legitimating norms.161 The absence of legitimating
norms, Teubner has argued, means that flexible procedural regulation, adapted to
156 Teubner, op cit n 127 (1985). p321 and see (1983). p257.
157 Teubner, op cit n 127 (1983), ~ ~ 2 6 9 , 2 7Teubner
5; argues, drawing on Habermas, that the question of
which organisational structures and which discussion and decision mechanisms can produce
procedurally legitimate outcomes depends on concrete social and political conditions, on scopes of
disposition, information and so forth. Willke also sees law's function as restituting 'areas of
independence and autonomy as a precondition of a viable balance of power within society and . . . the
condition of collective communication', a function which 'without a doubt.. . brings legal theory back
in very close relations with democratic theory, op cit n 127, p383.
158 This notion of 'democratisation' has echoes in the debate between 'democratic' and 'technocratic'
regulation: Phildes and Sunstein, 'Reinventing the Regulatory State' (1995) 62 U Chi LR I.
159 Autopoietic theory itself, on which reflexive law is based, is not concerned with these questions. For
autopoiesis, what law categorises as legaVillegal and its basis for doing so is a matter internal to the
legal system; the question of what that categorisation should be is not for autopoieticists significant. In
particular, the theory draws no distinction between legislative and common law sources of values, an
issue which may not be pertinent in many areas of regulation but is at the heart of the question
concerning the role of the courts in the context of judicial review. If anything, autopoiesis presumes
that substantive values will come from the legislature. See, for example, Luhmann, op cit n 125; see
also Murphy, 'Systems of Systems: Some Issues in the Relationship between Law and Autopoiesis',
(1994) Law and Critique 24 1.
160 Although Teubner has applied the theory in the context of corporations and corporate governance: see
op cit n 8, Ch 6 and 'Corporate Fiduciary Duties and their Beneficiaries: A Functional Approach to the
Legal Institutionalisation of Corporate Responsibility' in Hopt and Teubner (eds), Corporate
Governance and Directors' Liabilities (Berlin: de Gruyter, 1985).
161 Willke argues that law is not in a position to establish a universalistic societal system rationality:
neither neo-liberal nor neo-absoltistic primacy of politics: op cit n 127, p383.

the circumstances of each functional subsystem, is the only legitimate form of

intervention. Teubner also restricts the values which are represented by reflexive
law. So he stresses that reflexive law is not about increasing individual
~articipati0n.l~~ It is not based on primary virtues such as sound judgement,
veracity or consensuality, but on secondary or derivative virtues such as keeping a
range of options open, tolerating a variety of opinions and guaranteeing interaction
and c o m m ~ n i c a t i o n . ~ ~ ~
On the other hand, Teubner lays considerable emphasis on the need for an
interventionist state and on the role of substantive values in procedural regulation:
'[tlo interpret [proceduralisation] as a recommendation to a 'post-interventionist'
regulator to do without substantive legal norms and rely exclusively on procedural
law instead would be to miss the point'.164The theory, as we have noted, appears
inherently democratic in the widest sense of the term. Further, the normative basis
for resisting the imposition of substantive values is social juridification. The
previous processes of juridification, the development of formal law, and the
legalisation of the political and administrative systems, are not seen as
pr0b1ematic.l~~ This has implications for the development of reflexive legal
strategies in public law. Although the logic of autopoiesis may require indirect
legal strategies, the normative basis of reflexive law is to avoid the juridification of
the social state, it is not concerned by the subjection of the administration to
principles of the rule of law, or the democratisation of the political process. The
imposition of substantive values in the latter contexts may thus be acceptable. The
relationship between the empirical and normative aspects of reflexive law is here
unclear: although the imposition of substantive values may be normatively
acceptable, law may have to act reflexively to ensure their successful recognition
by other autopoietic systems. Finally, juridification itself is a paradoxical process,
destroying but also guaranteeing freedoms; its destructive role, Teubner argues,
must be eliminated but its freedom-guaranteeing role preserved.166In this vein
Teubner has also suggested that reflexive law could be the basis for developing and
assuring constitutional rights.'(j7
The uncertainty of the theory on these issues has implications for the precise
translation of theoretical propositions into practical application. Teubner's
suggestion that reflexive law could be a means of assuring constitutional rights
deserves further exploration; it certainly appears that within the theory there is
room for participatory rights. However, whether we can simply download any
political or constitutional theory or theory of rights we want is uncertain;
moreover, the nonindividualistic basis of the theory of reflexive law means that
insofar as they are focused on individual rights, current constitutional theories or
aspects of them would have to be reform~1ated.I~~ Further, the relationship
between the role of law in upholding rights and the indirect regulatory strategies
which are advocated needs to be addressed. In short, reflexive law may provide
162 Teubner, op cit n 127 (1983), pp278, 273.
163 Teubner, op cit n 8 , p68.
164 ibid pp66-9, and see generally ibid Chapter 5.
165 Teubner, op cit n 139 (1987). pp 11-12.
166 ibid pp 13, 24.
167 Teubner, 'Juriditication: an Ultra-Cyclical Process', seminar paper given at the Socio-Legal Studies
Centre, Oxford, 22 May 1995.

168 It is this non-individualistic stance which accounts for the assertion that reflexive law is not concerned
with increasing individual rights of participation. It is also the reason why the analogies between
reflexive law and the American due process school cannot easily be drawn: contrast Birlunshaw et al,
op cit n 14, p 247.
50 8 The Modem Law Review L~rnited 1996

interesting suggestions for how law should intervene in the operation of social
systems, including SRAs, but it is not clear that it itself provides, restricts, or
indeed is at all concerned with providing the legitimising basis for the development
and application of any particular branch of law, in this case judicial review.
Developing principles of 'constitutionalised autonomy'

Should we therefore discard the theories of autopoiesis and reflexive law on the
grounds either that they are simply theory and thus automatically irrelevant to day-
to-day decisions of the courts ('academic' in the worst sense of the term), or
because although theory can sometimes help, these theories are particularly
abstract and provide no clear and immediate answers? Such out-of-hand dismissal
is not warranted; although the theories may not provide us with a blueprint of how
judicial review should respond to SRAs, they do provide valuable insights on
which we can draw. They suggest first, a complex understanding of the nature and
role of SRAs, second, a non-unitary concept of public, and third, an approach of
law which is flexible, strategic and contextual.
More broadly, we should draw from the emphasis reflexive law places on
regulatory strategy the lesson that the legal techniques which we should fashion to
implement constitutional values are as important as the values themselves. If we
were to take a two-pronged approach of articulating values and fashioning the
sophisticated and flexible strategies of reflexive law to implement those values,
what would this mean for judicial review? It is suggested that using such an
approach we could begin to develop a theory and doctrine of judicial review of
SRAs based on a principle of 'constitutionalised autonomy'. 'Autonomy' of an
SRA refers to its substantive autonomy (policy and operational independence in
making decisions) and its legal autonomy. The latter entails a recognition of legal
pluralism, of sources of law other than Parliament or the c0urts.16~ '-
Constitutionalised autonomy' would involve a recognition that the autonomy of
the body is a social fact, but require the body to operate within a context of
constitutional values implemented indirectly and strategically.
In order to develop such a principle, we need to develop a non-unitary notion of
'public' based on the understanding of the nature of SRAs as mediators between
different systems of society, not as mediators between state and individual. As the
role of SRAs is not to mediate between individuals and the state within a
hierarchical framework, but between systems within a heterarchical one, a notion
of 'public' which is defined solely in terms of the SRA's relationship with the state
is inadequate. 'Public' should thus not be confined to a particular relationship with
the institutions of the state, although it would include this. A body may be engaged
in a public function in lobbying, or in implementing state policy. However it may
also be public if the mediating role which it plays is a significant one within
society. This is likely to be manifested as the exercise of power, although it need
not be confined to that.170
Such a non-unitary notion of public is necessary to break away from public law's
focus on the state, but we should be wary of making it over-sufficient. The term
'public law' suggests that it is concerned with all that is 'public'; however we
169 The extent to which non-statutory legal systems can provide substantive amounts of law within a
particular system was indicated above, text accompanying n 4.
170 See further Teubner, op cit n27.
O The Modern Law Review Limited 1996 51

should distinguish the question of which issues may be the appropriate subject of
law from the question of which issues should be the subject of a particular set of
legal principles. The nature of the power or function which it is suggested public
law, and more particularly in this context judicial review, should be concerned
with is regulatory power. It is the exercise of collective regulatory or governmental
power, rather than corporate or economic power, which is the essence of self-
regulation,171which distinguishes SRAs from 'corporate barracudas' and which is
most suited to control through the principles of judicial review. This is not to say
that other forms of social action, including the exercise of power, are not in need of
judicial supervision, but such supervision should be tailored to the particular
problems that different forms of action raise. Developing principles, for example,
of corporate responsibility may be necessary, but it is a different task to developing
principles of public law.
In developing a multi-faceted concept of 'public' in this way, we can also
address the arguments of power and autonomy, pluralism and community. The
difficulty in resolving these arguments is that they tend to the absolute: that power
always has to be regulated; that the body has to be left alone. This absolutism
comes from a unitary notion of public. If we develop a more complex notion of
public, then we can accept that there may be degrees of regulation, degrees of
autonomy and that the appropriate degree of each may vary in different cases in
relation to different functions or different decisions.
This non-unitary conception of public and the role for public law which is
advocated clearly contrast with the courts' current approach. In developing the
governmental interest test they are beginning to recognise one aspect of publicness,
the absorption of SRAs into the state, but as we have seen, the test as currently
formulated is insufficiently sophisticated and in any case is being incorrectly
applied. But even a more developed form of the governmental interest test would
not be an exhaustive definition of public. Even if no neo-corporatist role is being
played by an SRA the collective regulatory power that it exercises means that the
body is public and should be subject to principles of public law. This has obvious
implications for the decisions in the Jockey Club and Football Association cases,
which as noted above172refuse to recognise the relevance of collective regulatory
power.
The essence of such a non-unitary concept of public is its flexibility. Only one of
a body's functions may be regulatory; only some of its decisions may be public.
This has implications not just for what is recognised as public, but what is looked
for. The question that the courts should ask is not one big question of 'is this body
public?', the answer leading to a once and for all categorisation from which all
subsequentjudicial treatment of the body flows. The approach taken in Datafin and
subsequent cases, which is to ask first, is the body subject to review, and second, if
it is, whether that decision is subject to review, has to be revised.17' The courts
should focus on the nature of that decision or action and ask whether that act or
decision is public, not whether the body is public. This would involve a recognition
that one organisation can perform a range of functions: the Stock Exchange, for
example, is at once a regulator, a market and a corporate actor. A quest for a single
definition of public which can provide such a global and final categorisation is
inapposite and leads only to confusion and contradiction.
17 1 See above, p 27.
172 Text accornpanylng nn 70-72, above.
173 For an explicit adoption of this two stage approach see R v Panel on Takeovers and Mergers. ex p
Datafin [I9871 1 All ER 564 at 573 (per Sir John Donaldson MR).
52 0 The Modern Law Review Lirmted 1996

Regulation of SRAs based on a principle of constitutionalised autonomy would

require not just a non-unitary notion of public, but seek to draw on the insights of
reflexive law as to how law can develop different regulatory strategies. Reflexive
law tells us that the normative closure of systems means that law cannot
successfully impose regulation which demands that a particular decision or quality
of decision be reached: any attempts to do so will simply lead to the regulatory
trilemma outlined above.174 Intervention should be strategic and contextual,
focusing on external relations and internal processes.
Adopting reflexive legal strategies in the context of judicial review would have
several implications. The cognitive requirements of judicial review would change.
As Jabbari has argued, the courts would have to have a greater knowledge of the
operation of the SRA.175 However, as judicial review would not be requiring
substantive principles to be satisfied, they would not need to know or understand
the full operation of the system in order to assess whether they have been achieved.
The courts do need greater knowledge, but they also need a particular type of
knowledge. They need only to understand how the system operates ('what makes it
tick') in order to intervene strategically, structuring its processes to ensure that the
system attains the values which are pursued, but not through law imposing them
directly. 176
More controversially the duties of rationality, relevancy and proportionality
would have to be 'procedurali~ed'.l7~ So within a principle of constitutionalised
autonomy, if an act or decision of an SRA was an exercise of collective regulatory
power, for example, or the implementation of public policy, the court should
require that the exercise of that power occur within a context of constitutional
values, which the court should articulate. However in imposing such values the
court should not operate by requiring the body to act rationally or proportionally,
but focus on structuring the SRA's external relations and internal organisation and
processes to ensure that those values are upheld, including if necessary altering
power relations. By external relations is meant the SRA's interaction with those
other than its members or applicants for membership; by internal organisation and
processes is meant decision making procedures and organisational structures, and
includes its relationship with members and applicants.
This would be a fundamental change for judicial review; would it be an
acceptable one? Views on that question are likely to differ widely; however in
considering whether indirect regulation is an appropriate strategy for public law to
adopt, three considerations should be borne in mind. First, if we are to take the
empirical aspect of reflexive law seriously we have to accept that indirect legal
strategies are the only form of regulation which is likely to be effective. Second, a
regulatory strategy which does not seek to impose a particular substantive outcome
appears to be compatible with judicial review. The court's jurisdiction is meant to
be simply that: review not appeal. The court does not seek to impose its own
decision. However the tendency for the line between review and appeal to become
blurred is the subject of any first year course. This is particularly the case in the
context of review on the grounds of rationality and is dominant in the debates on
174 Text accompanying n 146.
175 Jabbari, op cit n 2 .
176 To the extent that Jabbari's proposals are aimed at providing the court with complete information as to
a body's operation, they should be re-focused on providing the strategic information necessary to
understand its incentives and the constraints on its operation.
177 For an example of how this proceduralisation would operate in the corporate context see Teubner, op
cit n 160.

The Modern Law Review [Vol. 59
pr0portionality.l7~ It is also in these areas of review that the conceptual, legal

dominion and autonomy arguments are strongest. Further, the courts themselves on
occasion indicate reluctance to impose intensive review on these grounds to SRAs;
they are willing to apply the principles of natural justice and ultra vires (at least
when interpreting primary legislation as opposed to the regulators' rules), but
otherwise indicate a 'hands off' a p p r 0 a ~ h .Proceduralising
l~~ duties of rationality,
relevancy and to the extent it exists, proportionality, may thus be an idea worth
pursuing at least in the context of SRAs.
The third consideration is the most fundamental: are indirect legal strategies
appropriate for upholding rights? Arguably, reflexive law provides a more
satisfactory way of dealing with decisions in which there is no obvious right
answer and over which opinions may differ, the paradigmatic administrative or
polycentric decision. However, public law is ultimately concerned with the
development of political and administrative rights; as we have seen, in asking how
substantive values fit with reflexive legal strategies we are at the frontiers of the
theory's current development.lnOIt would appear, given the theory's inherent
democratic nature and the acceptance of the legal and political constitutionalising
thrusts of juridification,lnl that reflexive legal strategies are compatible with
constitutional values based on a form of democratic political theory. For example,
although reflexive law does not aim to provide them, principles of participation,
consultation, accountability and procedural fairness appear to be compatible with
the regulatory strategies it proposes. However, the relationship between rights and
reflexive law has not yet been explored; it is suggested that such an exercise has to
be undertaken if we are to develop further the principle of constitutionalised
autonomy. Moreover, its outcome is probably the litmus test for the acceptability
of any principle of public law based on reflexive legal strategies.
Given this important caveat, the full theoretical and doctrinal implications of a
principle of constitutionalised autonomy cannot be worked through here. Some
illustrations can nonetheless be given of how such a principle might apply in some
of the cases discussed above. To reiterate, the key elements are the non-unitary
notion of public, articulated values and indirect strategies for implementation. So,
for example, if an action was brought that a sporting body such as the Jockey Club
had formulated a discriminatory rule then the court should recognise that the
decision is public (the Club is exercising collective regulatory power: rule making
is part of that regulatory function), and require the Club to reformulate the rule in
accordance with a principle of equal treatment (assuming the value is to be
upheld). In order to ensure this, it should require the involvement of those
178 See, for example, R v Secretary of Stare for the Home Department, ex p Brind [I9911 1 AC 696,
particularly the speeches of Lords Ackner and Lowry. For a general discussion see Craig, o p cit n 97,
pp411421.
179 See, for example, R v Securiries and Furures Authority, ex p Panron LEXlS 20 June 1994 (CA), where
Sir Thomas Bingham stated that 'these bodies [the SRAs] are amenable to judicial review but are, in
anything other than very clear circumstances, to be left to get on with it', and the reluctance to
conclude there had been ultra vires in R v Luurro, ex p Kendall [I9941 COD 169 (interpretation of
Lautro rules). These contrast with the more interventionist approach in R v Secretary of Slate f i r
Trade, ex p R [I9891 1 WLR 372 (interpretation of s 105 Financial Services Act 1986; R v Luurro, ex
p Ross [I9931 QB 17 and R v Laurro, ex p Tee nyr (procedural impropriety). See also above, n97.
Such a differentiating approach is evidenced in a slightly different context in Page v Hull University
Visiror [I9931 AC 682 where the majority of the House of Lords held (Lords Slynn and Mustell
dissenting) that although the Visitor was subject to review, this would be confined to the grounds of
error of law going to jurisdiction, and natural justice.
180 See above, p49.
181 See above, p 50.
54 0 The Modern Law Review Linuted 19%

discriminated against in its reformulation, providing them with any empowerment

necessary to ensure active and real participation. Such an approach would require
greater attention to strategies of implementation, and provide a broader, principled
basis for Farqharson LJ's comment in Aga Khan that discriminatory rules of the
Club would be subject to review, a comment which in the context of the current
case law is at best specific to the Club and at worst confusing.lS2 The exercise of
disciplinary powers or powers of admission or expulsion (also part of the
regulatory function) should similarly be subjected to articulated constitutional
values implemented by indirect strategies.
In focusing on inducing not commanding outcomes, the principle would also
require that a body should be left to interpret its own rules; however fundamental
rule of law values of certainty and predictability could be upheld. Again this would
provide a coherent basis for Sir John Donaldson MR's statement in Datafin that the
Takeover Panel would be subject to review if it gave an interpretation for its rules
which was completely different from that which any person could reasonably
expect.lS3The basis would however differ: in Datafin the statement was based on a
principle of rationality; in the principle of constitutionalised autonomy it would be
grounded in the rule of law. The means of implementation would also differ: the
court would not impose its own interpretation but could require the Panel, in
conjunction with others affected by the rule, to reach an interpretation which
upheld those rule of law values. The principle would require a response targeted to
the particular matter in question. If a decision of an SRA, for example, to develop a
premier league or have fixtures at a particular racecourse was in issue then the
court should consider whether and in what respects that decision is public and
tailor its approach accordingly. For example, if in making that decision the SRA is
forming and implementing public policy, or the decision was in practice an
exercise of its regulatory power or function, then the decision is a public one. The
court's response should in turn be tailored to the particular nature of the decision.
If the SRA was implementing public policy the court should ensure that it was not
using that power to further its own self-interest. The court should not do this by
imposing a requirement that the body act 'in the public interest', but rather should
structure its decision processes, altering organisational design to incorporate those
who will be affected and empowering systems to ensure that the process does not
become a formalisation of existing power relationships and opportunities for
influence.
The central element of a principle of constitutionalised autonomy is that it
combines an emphasis on articulated values with a focus on regulatory technique
and a recognition of regulatory limitations. Clearly it is only a starting point in
developing constitutions for SRAs. However, it has properties which could perhaps
provide valuable foundations for such an exercise in constitutionalisation. In
incorporating a more complex concept of 'public' it emphasises the nature of
SRAs as mini-systems of collective government. In requiring flexibility it demands
a targeted and tailored approach, judicial responses being directed at the particular
decision in question. In separating technique from values, it cautions against the
prescription of one without the other, of regulatory reforms in the absence of an
articulated value base and vice versa. In demanding the articulation of values it
recognises that these may vary with different political theories. In short, it stresses
that constitutionalising self regulation is necessary; the constitutions developed
should be as varied as the acts and decisions of SRAs to which they relate.
182 R v Disciplinary Committee of the Jockey Club, ex p Aga Khan [I9931 2 All ER 853 at 873
183 R v Panel on Takeovers and Mergers, ex p Datafin [I9871 1 All ER 564 at 579.
O The Modern Law Review Limited 1996 55

Julia Black: The Modern Law Review, Vol. 59, No. 1. (Jan., 1996), Pp. 24-55

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Constitutionalising Self-Regulation

The Modern Law Review is currently published by Blackwell Publishing.

* Lecturer, London School of Economics.

The article proposes a definition of self-regulation and draws on the theories of

Self-regulation - a growth industry?

0 The Modern Law Review Limited 19% 25

that '[plublic regulation should promote private market governance through

26 O The Modern Law Rev~ewLimited 19%

8 The Modem Law Review Limited 19% 27

collective or may be outsiders), its structure (there may be a separate agency or it

The role of self-regulatory associations

0 The Modern Law Review Limited 1996

society.27 SRAs thus mediate in a horizontal manner between these different

Whether and how to regulate: the public law debate

8 The Modern Law Review Limited 19% 29

argument which focus on the exercise of monopoly power,34 or on the actual

30 O The Modern L a w R e v ~ e wL ~ m ~ t e1996

8 The Modern Law Review Limited 1996 31

Whether and how to regulate: the judicial response

47 [I9871 1 All ER 564 at 583 (per Lloyd LJ).

48 [I9871 1 All ER 564 at 577 (per Sir John Donaldson MR).

49 Cane, op cit n 35.

50 [I9871 1 All ER 564 at 577 (per Sir John Donaldson MR).

51 [I9871 1 All ER 564 at 583 (per Lloyd LJ).

53 L u n v National Greyhound Racing Club [I9831 3 All ER 300.

32 O The Modem Law Review Limited 19%

Datafin and with the recent decision of O ' R e i l l ~ringing

54 O'Reilly v Mackman [I9821 3 All ER 1124.

61 R v Lloyd's, ex p Briggs [1993] Lloyd's LR 176.

Code of Practice Committee of the British Pharmeceutical Society, ex p Professional Counselling

64 [1993] Lloyd's LR 176.

65 The Times, 7 January 1994.

0 The Modern Law Review Limited 19% 33

This denial of the relevance of institutional power is a clear rejection of the

34 0 The Modem Law Review Limited 19%

0 The Modem Law Review Limited 19% 35

36 O The Modem Law Revlew Limited 1996

interest and a contractual source of power: a contractual basis tends to be seen as a

Rationales underlying the judicial response

8 The Modern Law Review Limited 19% 37

question of the availability of review arises in the context of applications to strike

94 [I9931 2 All ER 833 at 849 (Rose J).

38 0 The Modem Law Review Limited 1996

court's relationship with the Panel should be historic rather than

98 [1987] 1 All ER 554 at 579.

0 The Modern Law Review Limited 1996 39

natural justice to contractual and non-contractual relationships with trade and

Finding a 'governmental interest'

40 0 The Modem Law Revlew Lirmred 19%

114 [I9931 Lloyd's LR 176 at 185.

0 The Modern Law Review Limited 19% 41

42 0 The Modern Law R e v ~ e wL~rnited1996

Ways Forward: A Reflexive Approach?

8 The Modern Law Review Limited 19% 43

should be to ensure that they perform this intermediating role effectively,

Autopoiesis and reflexive law

44 8 The Modem Law Rev~ewL~rnited 1996

128 Willke, ibid, p 383.

133 Mayntz, op cit n38.

0 The Modem Law Review Limited 19% 45

resources through the market, so interfering with individual Teubner's

137 Teubner, op cit n 127 (1985), p 307 and n 8, pp 72-77.

46 0 The Modem Law Review Lirmted 1996