Burmah Oil Co Ltd v Lord Advocate [1965] AC 75

During WWII, the British Government ordered destruction of Burmah Oil's installations in Burma to prevent them falling into Japanese hands. The House of Lords held by majority that the Crown's exercise of prerogative required payment of compensation, prompting Parliament to pass the War Damage Act 1965 reversing the decision.

Facts

The appellants were associated Scottish-registered companies owning extensive oil installations, pipelines, refineries and petroleum stocks in Burma. Following the Japanese invasion in early 1942, His Majesty’s Government directed the GOC Burma to destroy these facilities to prevent them falling into enemy hands. Preparations were supervised by an expert sent from the United Kingdom. Following the British defeat at the Sittang River on 22 February 1942, evacuation and demolition orders were issued on 6 March 1942, and the installations were destroyed between 7 March and 19 April 1942. The pursuers averred that the destruction was not intended to secure the defence of Burma but to gain time to build up the defences of India and deny industrial resources to the enemy. It was admitted that the demolitions were lawful and carried out by exercise of the royal prerogative.

The pursuers sued the Lord Advocate under the Crown Suits Act 1857, seeking compensation. The Lord Ordinary (Lord Kilbrandon) allowed proof before answer, but the First Division dismissed the actions on relevancy. The pursuers appealed to the House of Lords.

Issues

The principal issue was whether an exercise of the royal prerogative by which the Crown lawfully takes or destroys a subject’s property in wartime gives rise to a legal right to compensation. A subsidiary issue was whether the particular destruction fell within an exception for ‘battle damage’ in respect of which no compensation is payable. Also raised was the applicability of the Public Authorities Protection Act 1893.

Arguments

Appellants

The demolitions were carried out under the royal war prerogative, and such exercise of the prerogative entails an obligation to pay compensation. The civilian writers, particularly Vattel, supported a distinction between damage done deliberately and by way of precaution (compensable) and damage caused by inevitable necessity in the heat of battle (not compensable). The destructions here, being part of a strategic denial policy rather than battle damage, fell within the first category.

Respondent

The Crown argued that the destruction was an act of necessity giving no right to compensation, analogous to the rights of necessity available to any subject in emergency. Alternatively, if carried out under prerogative, the prerogative to take property in wartime carried no obligation of compensation. The destruction was in any event battle damage. Reliance was placed on In re A Petition of Right [1915], Lord Parker’s dictum in The Zamora, and the United States Supreme Court decision in United States v Caltex.

Judgment

By a majority of three to two (Lord Reid, Lord Pearce and Lord Upjohn; Viscount Radcliffe and Lord Hodson dissenting), the House of Lords allowed the appeal, restored the Lord Ordinary’s interlocutor and remitted for proof before answer.

Majority reasoning

Lord Reid held that the demolitions could not have been carried out under any individual right of self-help and must have been an exercise of the royal prerogative. Reviewing the authorities, the historical researches conducted in Attorney-General v De Keyser’s Royal Hotel [1920] AC 508, the practice of Parliament in requiring compensation under successive defence statutes, and the writings of the civilian jurists (particularly Grotius, Bynkershoek and Vattel), he concluded that the general rule is that compensation is payable where property is taken or destroyed in exercise of the prerogative. An exception exists for ‘battle damage’ — both accidental and deliberate damage done in the course of actual fighting operations. However, the destruction here was not battle damage: it was done as economic warfare to deny resources to the enemy, and would have been carried out even had there been no fighting in Burma.

Lord Pearce agreed, emphasising that from early times, by bargain or statutory compensation, the Crown has always paid. He held that the dividing line identified by Vattel — between damage done deliberately by way of precaution and damage caused by inevitable necessity in battle — best marked the boundary. The destruction of the oil wells, being a deliberate long-term strategy, fell on the compensable side of the line.

Lord Upjohn agreed that the prerogative, where exercisable, generally carries an obligation to pay. He regarded Vattel’s classification as authoritative and held that the destructions clearly fell within the first (compensable) class, since they were ordered by the War Cabinet as a matter of overall global strategic importance, not to assist General Alexander in battle.

Dissenting reasoning

Viscount Radcliffe doubted whether the acts were properly to be regarded as prerogative acts at all, inclining to the view that destruction of property to deny it to an advancing enemy fell within acts of necessity in the face of the enemy for which the common law provided no remedy. He found no tradition or authority establishing a legal right (as opposed to a public expectation) of compensation for prerogative war damage, and considered such matters properly for Parliament rather than the courts. He regarded the US Supreme Court’s decision in United States v Caltex 344 US 149 as highly persuasive.

Lord Hodson held that the institutional writers were of persuasive rather than binding authority, that the doctrine of eminent domain had not been incorporated into the common law in such a way as to permit a subject to sue, and that the destruction here was so intimately connected with military operations that it could not sensibly be separated from battle damage.

Cross-appeals

The House unanimously dismissed the Crown’s cross-appeal on the Public Authorities Protection Act 1893.

Measure of compensation

Lord Reid expressly declined to decide the measure of compensation, indicating that it might have to reflect the fact that the installations would otherwise have fallen into enemy hands.

Implications

The decision established, as a matter of common law, that the exercise of the royal prerogative to take or destroy property of the subject in time of war generally gives rise to a legal right to compensation, save where the damage falls within the limited category of ‘battle damage’ — accidental or deliberate damage done in the course of actual fighting operations. The case clarified the modern scope of the war prerogative and confirmed that the prerogative, though available where not displaced by statute, does not entitle the Crown to take without payment.

The decision is of considerable constitutional importance in defining the relationship between prerogative power and the rights of the subject, and in recognising the influence of civilian writers (particularly Vattel) on the common law in areas where domestic authority is sparse. It also illustrates the limited scope of the ‘battle damage’ exception, which does not extend to strategic denial operations or economic warfare conducted in advance of, or independently of, immediate fighting.

The practical significance of the decision was largely undone by Parliament’s subsequent enactment of the War Damage Act 1965, which retrospectively removed any right to compensation for lawful damage caused during wartime. Nevertheless, the judgment remains an authoritative exposition of the war prerogative and the principle that, absent clear exclusion, expropriation for the public good attracts compensation. The measure of such compensation was left open, with Lord Reid indicating that it may be tempered by considerations such as the likelihood that the property would otherwise have been lost to the enemy.

Verdict: Appeal allowed (by a majority of 3 to 2). The interlocutors of the First Division were recalled, the Lord Ordinary’s interlocutor allowing proof before answer was restored, and the cases were remitted for proof before answer. The Crown’s cross-appeals on the Public Authorities Protection Act 1893 were dismissed. The appellants were awarded costs in the House of Lords and expenses in the Court of Session since 14 August 1962.

Source: Burmah Oil Co Ltd v Lord Advocate [1965] AC 75