Rainbow Insurance Company Ltd v The Financial Services Commission & Ors (Mauritius)

Easter Term
[2015] UKPC 15
Privy Council Appeal No 0065 of 2013

JUDGMENT

Rainbow Insurance Company Limited (Appellant) v The Financial Services Commission and others (Respondents) (Mauritius)

From the Supreme Court of Mauritius

before

Lord Neuberger
Lord Mance
Lord Kerr
Lord Clarke
Lord Hodge

JUDGMENT GIVEN ON

Heard on 26 and 27 November 2014

Appellant Sir Hamid Moollan QC Iqbal Moollan Salim Moollan (Instructed by Mr Omar I A Bahemia Solicitor)		Respondent (1) Mr Désiré Basset SC Nandraj Patten Jean-Gaël Basset (Instructed by Blake Morgan LLP)

		Respondent (2) Geoffrey Cox QC Edward Risso-Gill (Instructed by Royds Solicitors)

		Co-Respondent Rishi Pursem SC (Instructed by Fladgate LLP)

LORD HODGE:

The Financial Services Commission ("the FSC") regulates the developing non-banking financial services industry of Mauritius. On 24 September 2007 the FSC suspended with immediate effect the registration of Rainbow Insurance Co Ltd ("Rainbow") as an insurer for general insurance and life insurance business and appointed an administrator over its business. That suspension followed (a) an earlier decision by the FSC on 1 March 2007 directing Rainbow not to issue new insurance policies or to renew such policies and proposing to suspend Rainbow's registration and (b) the decision by the Minister of Finance and Economic Development ("the Minister") on 21 September 2007 to support the FSC's proposal. Rainbow challenged the decision of the Minister and the FSC's decision of 24 September 2007 by judicial review application, which the Supreme Court in Mauritius refused in a judgment dated 18 October 2010. It appeals to the Board with the leave of the Supreme Court.

Rainbow has mounted a wide-ranging challenge to those decisions. The challenge may be summarised under several headings, namely (i) procedural unfairness because the decision to suspend registration was effectively made on 1 March 2007 without proper consultation, (ii) illegality and abuse of power as the FSC had no lawful basis to suspend Rainbow's registration and because of an improper delegation of powers, (iii) irrationality because Rainbow was treated in a discriminatory manner in the calculation of its expected recoveries from third parties by subrogated claims ("recoverables"), and because of the speed with which the FSC acted, and (iv) breach of Rainbow's legitimate expectation that it would be given sufficient time to adapt to the FSC's new regulatory requirements. There are also factual disputes which the Board cannot resolve but they are not central to the challenge. At the heart of Rainbow's complaint is the assertion that it was not given a proper opportunity to formulate and agree with the FSC a turn-around plan before its business was suspended.

In order to address Rainbow's complaints it is necessary to summarise the relevant legislation and, because the first and fourth challenges are concerned with the history of the FSC's regulatory involvement, set out at some length the events which led to the impugned decisions.

The legislation

At the relevant time the Insurance Act 1987 ("the 1987 Act") governed the regulation of the insurance industry in Mauritius. Over time, and in response…