Judicial review of the CSG: why Business Mauritius wants the Supreme Court in and why the government wants it out

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The Minister of Finance, Renganaden Padayachy, and the CEO of Business Mauritius, Kevin Ramkaloan, are now seeing the clash between their organizations over Padayachy’s new CSG system enter the courts.

The Minister of Finance, Renganaden Padayachy, and the CEO of Business Mauritius, Kevin Ramkaloan, are now seeing the clash between their organizations over Padayachy’s new CSG system enter the courts.

Can the courts wade into policy matters by reviewing government regulations regarding the Contribution Sociale Généralisée (CSG)? This is what the Supreme Court will have to decide as it heard arguments from Business Mauritius and the Ministry of Finance yesterday on why it should or not grant a judicial review on CSG regulations passed in September. With the economic case for and against the CSG already been made, now the debate over the CSG has taken on a new tack: whether it is constitutional, and whether the Supreme Court should have its say on this debate. L’express looks at the main arguments put forward by Business Mauritius and the government on what they think the Supreme Court should, or should not, open up government regulations concerning the CSG for judicial review. These are the questions that the Supreme Court will be examining as it mulls over whether or not to have its own say on the government’s CSG regulations.

Is it a challenge to parliament?

Business Mauritius is trying to undo an act of parliament. This is what the Ministry of Finance stated yesterday at the Supreme Court, arguing why it should reject the private sector lobby’s demand for a judicial review on the regulation (GN 214) passed in September last year determining the rate of funding for the CSG system. “One cannot attack a valid act of parliament through a judicial review” the government claimed, pitting Business Mauritius’ demand as one that challenged the supremacy of parliament. What Business Mauritius is attempting, through trying to get a judicial review on a regulation meant to implement a law passed through the last budget, the government side insisted, “is to attack the constitutionality of a valid act of parliament” in a roundabout way by attacking the CSG regulation. 

If the government is attempting to paint this as an issue of parliamentary supremacy (where the Supreme Court has little to offer), Business Mauritius made an interesting argument in court yesterday. Denying that the demand for judicial review into the CSG regulations is challenging parliament’s law making powers (“this is not at all the purpose” Business Mauritius lawyers argued), rather they insisted it was about the unfairness of the regulation itself (more on this below) and, interestingly, the failure of the Social Security Minister Fazila Jeewa-Daureeawoo in living up to another legal obligation. 

The argument put forward by Business Mauritius is an interesting one. By passing the CSG regulation, that set the rates for CSG contributions, to help fund a system that re-directs payments out of the National Pension Fund, Daureeawoo was failing in her obligation to keep the NPF humming, as she is supposed to do under the National Pensions Act 1976. According to section 38 of that law, “the minister shall, at intervals of not more than 5 years, cause an actuarial valuation of the fund to be made by actuary as the minister may appoint, and shall determine, in the light of such valuation, whether an adjustment is necessary to secure the future value of the fund”. Section 39 of the law goes on to state that she minister, she should produce accounts of the NPF and present them to parliament. What Business Mauritius is arguing in court is that by passing the CSG regulations – stopping contributions to the NPF and setting out the rates of contributions to the CSG instead, Daureeawoo has been put into a contradictory position. On the one hand, the regulations are supposed to ensure that the CSG is funded according to the bits of the National Pensions Act 1976 that were changed under the last budget, but on the other hand, by doing so, Daureeawoo is also “failing to discharge her statutory duties” in another part of the same law that requires her to make sure that the NPF does not go bankrupt. The failure of the social security minister, Business Mauritius’ case goes, has meant that the CSG reform has ensured that payments to the NPF have stopped, the NPF will be unable to sustain itself and its financial position will only get worse in future. By helping build finance minister Rengenaden Padayachy’s new CSG system through a regulation, the argument goes, Daureeawoo is at the same time tearing down the NPF she is legally obligated to protect. To this the government responded, “an act of parliament has been validly made, what should the minister of social security do? Not comply with the law?”

Did Business Mauritius wait too long?

One of the reasons the finance ministry has cited for the Supreme Court to dismiss Business Mauritius’ request for judicial review is that it took too long to lodge its case. The new CSG system was announced in the 2020 budget back in June, with the payments to the National Pension Fund abolished in August and the new payments to the CSG being started as from 1 September. “They waited until the last minute of the last month,” the ministry’s lawyer told the court. The issue of Business Mauritius’ lack of speed in lodging the request for a judicial review is a major point from the government side. 

While the general rule of thumb is that judicial reviews should be lodged within three months of when the supposed act takes place, this is far from a hard and fast rule. The case of the Mauritius Shipping Corporation in 2019 was brought up. Sued by 11 employees that the MSC fired between November 2015 and January 2016, the Employment Relations Tribunal ruled, in May 2016, that the dismissals were unjustified and ordered the MSC to pay severance to these 11 employees. In July 2016, the MSC wanted the Supreme Court to carry out a judicial review of the tribunal’s decision, only to be told that not only did they not have good arguments to overturn the tribunal’s decision but that they were not quick enough in lodging their demand. 

In 2019, the Privy Council likewise insisted, that, “it is important to bear in mind that an applicant cannot rely upon having three months in which to launch a judicial review application. The primary requirement is that the application be made promptly”. Just how fluid this issue of ‘promptness’ can be was illustrated by another case that was referred to during the court proceedings: the case of C-Care (formerly Wellkin, formerly Apollo Bramwell). After dismissing five employees, the Employment Relations Tribunal ordered the hospital to pay them severance in October 2018. C-Care wanted the Supreme Court to carry out a judicial enquiry into the tribunal decision only to find that in their case, the court decided in January this year, the six weeks they took to lodge their demand for judicial review was too long. 

What Business Mauritius replied in court was that the time it took to lodge the demand for judicial review in November last year did not impose any hardship on the government and moreover, “there were ongoing discussions between Business Mauritius and the government right until the point when the three month period was near to expiring”. In other words, the business lobby argued that if they took time in lodging their demand, it was only because up until the very last minute they held out hope of sorting out a compromise through talks with the government.

Abusing the judicial process?

This was one of the arguments put forward by the government as to why the Supreme Court should reject Business Mauritius’ demand for a judicial review of the CSG regulations. What government has accused Business Mauritius of doing is adopting a “scattergun approach” to challenging the CSG. On the one hand, introducing a constitutional challenge to the CSG via the changes made in the National Pensions Act (specifically sections 13 (1a) to 13 (1b) and a new part VA inserted into the law) that abolished contributions to the National Pension Fund (NPF) as from 31 August last year, and then making another separate demand for judicial review of a regulation introduced in September to define the amount of contributions that would paid into the CSG. 

“There is already an application to challenge the amendment of the National Pensions Act” the government argued in court, “this is abuse of process with the same issues being debated in another case as well”. A case to challenge the constitutionality of a law, the government maintained, is set out in the law and requires producing witnesses and submitting evidence and documents, which “is a rare thing” in a judicial review. What the government is arguing is that Business Mauritius, having a separate legal challenge on the constitutionality of the CSG, is using a separate judicial review process, dealing with the same legislation and the same CSG policy, to try a second bite at the apple. 

Business Mauritius, for its part, insisted that these two cases are two separate things. The case contesting the constitutionality of the CSG is to contest changes in the National Pensions Act 1976 to discontinue contributions to the National Pension Fund and direct payments to the CSG instead, the government’s failure to engage in consultations before introducing the CSG reform, depleting the assets of the National pension Fund and misrepresenting the alleged benefits of the CSG system in parliament and the public. The judicial review, on the other hand, is to contest the regulation passed by government regarding how much, and who, pays into the CSG and the legal contradictions being faced by the Minister of Social Security. “These are two distinct actions, absolutely exclusive of one another” Business Mauritius insisted in court.

Where does the burden of proof lie?

The question that both Business Mauritius as well as the finance ministry placed before the court was on whom did the burden of proof lie in convincing the court whether to step in or stay out of deciding on the CSG regulations. 

With Business Mauritius’ demand for judicial review focusing on the legality of the government regulation (GN 214) of last year listing the contribution of each class of employee and employer to the government’s new CSG system, the government argued that the regulations were intended to give effect to a law passed through the budget in parliament, that introduced the CSG system. “How can those regulations be illegal, ultra vires or irrational when the enabling legislation (the amended National Pensions Act 1976) says that regulations will be used to set the rate of CSG contributions?” What the government maintained in court was that there was nothing in Business Mauritius’ affidavit showing how the regulations went against the law. In this case, changes made to the National pensions Act to establish the CSG system. “They (Business Mauritius) had to show that this law was badly made, in bad faith and with ulterior motives” the government side argued. At any rate, the government’s argument goes, deciding on how to finance the CSG falls firmly within the realm of government policy, with the courts “having scarcely anything to do with policymaking”. To further the argument, the government relied on the case of Chaumiére in 2001. In that case, Chaumiére and others wanted the Supreme Court to carry out a judicial review into the decision of the then-government not to levy capital gains tax on a development project on 1,200 arpents of land. Although partly successful, the court in that case pointed out that, “it is trite law that judicial review does not lie against governmental policy as such”. It was not the place of the Supreme Court to interfere in government policymaking and that the burden of proof is squarely on Business Mauritius to prove how the CSG regulations went against the law. 

What Business Mauritius argued, on the other hand, was the reverse; the government has to show why the Court should reject its demand for a judicial review. 

They relied on their own case law to buttress the argument. In the Shakuntala Boolell case in 1997, regarding alleged unfair promotions within the University of Mauritius, the Supreme Court deciding on whether or not to grant a judicial review argued, “on an application for a judicial review the court must be satisfied that the applicant has an arguable case, not in the sense that a positive case has been made for review but consideration should be given to the question whether, exceptionally, it is not judicially reviewable”. Another case that Business Mauritius brought up: that of Nivedita Nathoo in 2014. In that case, the court reasoned, “at leave stage, the general principle applicable is that the court will grant permission if it is satisfied that there is an arguable ground for judicial review having a realistic prospect of success”. 

At any rate, Business Mauritius argued, the fact there is some merit to the case was showed by the fact that when on 7 December last year, although the Supreme Court rejected its demand to halt CSG payments into the consolidated fund and keep them within the NPF, the court itself found that Business Mauritius was “that there is a serious question to be tried which involves the determination of the constitutionality of impugned amending legislation and regulations and which requires a complex factual and legal analysis”. Put simply, the Supreme Court itself recognized that Business Mauritius had raised an important point. Now they insist, It’s not up to them to prove why the court should step in via a judicial review, but rather, the finance ministry to prove why it should not.

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