EXTRA DIVISION, INNER HOUSE, COURT OF SESSION
Lord Carloway Lord Bonomy Lord Osborne	[2012] CSIH 80 P576/10 OPINION OF THE COURT delivered by LORD CARLOWAY in the reclaiming motion by SINCLAIR COLLIS LTD Petitioners and Reclaimers; against THE LORD ADVOCATE Respondent: _______________

Act: Wolffe QC, Gill; Pinsent Masons LLP

Alt: Mure QC, Poole; Scottish Government Legal Directorate

10 October 2012

1. Legislative Background

[1] In terms of section 2 of the European Communities Act 1972 (c 68), the various Treaties of the European Union, which are detailed in section 1, are given legal effect in the United Kingdom. Questions relating to the interpretation of the Treaties are to be determined in accordance with the principles laid down by the European Court of Justice ("ECJ") (1972 Act s 3). These principles have primacy over national laws (Opinion 1/91 Re Draft Agreement relating to the Creation of a European Economic Area [1991] ECR I - 6079, para 21).

[2] Paragraph 3 of Article 3 of the Treaty on European Union establishes the "internal market". Chapter 3 of the Treaty on the Functioning of the European Union is headed "Prohibition Of Quantitative Restrictions Between Member States". Article 34 states:

"Quantitative restrictions on imports and all measures having equivalent effect shall be prohibited between Member States".

This is qualified by Article 36 which permits:

"...prohibitions or restrictions on imports, exports or goods in transit justified on grounds of... the protection of health and life of humans... Such prohibitions or restrictions shall not, however, constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States".

[3] Article 1 of the First Protocol of the European Convention on Human Rights states:

"Every ... legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law...

The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest...".

[4] Section 29(2)(d) of the Scotland Act 1998 (c 46) provides that an Act of the Scottish Parliament is outside its legislative competence if it is incompatible with the European Convention on Human Rights and Fundamental Freedoms or with European Union law. This litigation is concerned with whether, notwithstanding the certificates of compliance issued by both the Cabinet Secretary for Health and Wellbeing and the Presiding Officer, section 9 of the Tobacco and Primary Medical Services (Scotland) Act 2010 (asp 3) falls into that category. Section 9 provides that it is an offence for a person having the management or control of premises to have a vending machine available for use on those premises. A vending machine is defined as meaning "an automatic machine for the sale of tobacco products".

[5] The purpose of section 9 was described in a Policy Memorandum, which was issued by the Scottish Government when the Bill was introduced to Parliament on 25 February 2009. It stated (para 2) that the Bill would enable the Government to continue its drive to improve Scotland's health. Smoking was one of the most damaging factors to health and was associated with a quarter of deaths each year. The Memorandum continued:

"3 ...Given that some 80% of smokers start smoking in their teens, a key component of the Scottish Government's health improvement drive is to protect children and young people from the impact of tobacco smoking. Statutory controls on the display and sale of tobacco products to reduce the attractiveness and availability of tobacco products to children and young people have an important role to play in that process".

The ban on the sale of cigarettes from vending machines was one of several measures proposed in the Bill, including restrictions on the display of cigarettes and the registration of tobacco retailers. In relation specifically to tobacco products, the Memorandum said:

"7 The measures contained in the Bill are aimed at reducing smoking among children and young people through updated statutory controls on the display and sale of tobacco products in Scotland".

[6] The Memorandum noted the content of earlier reports, namely the United Kingdom Government White Paper, entitled "Smoking Kills", published in 1998 and the action plan on tobacco control for Scotland, called "A Breath of Fresh Air for Scotland", issued in 2004. It took cognisance of the previous legislation which had introduced a ban on smoking in certain enclosed public places and raised the legal age of sale for tobacco products from sixteen to eighteen. Despite these measures, the Memorandum recorded (para 10) that 15,000 young people began to smoke every year. Accordingly, the Memorandum said, the Government proposed that further "bold and decisive" action was necessary to protect young people from smoking. The Memorandum referred to two further reports, namely "Towards A Future Without Tobacco", developed by the Smoking Prevention Working Group of experts on 22 November 2006, and "Scotland's Future is Smoke Free - A Smoking Prevention Action Plan", produced by the Scottish Government in May 2008. The former had contained a comprehensive series of recommendations, although none had been concerned with vending machines. The latter had observed that, by their very nature, sales from vending machines did not involve routine age checks.

[7] The Memorandum (at para 24) referred to an estimate of in excess of 36 million cigarettes being sold annually from some 6,500 vending machines in Scotland. It recorded that:

"In 2006, one in 10 of regular smokers aged 13 and 15 reported buying from cigarette vending machines accounting for some 14.2 million cigarettes annually".

The Memorandum proposed that "everything possible" should be done to prevent young people from accessing cigarettes. Since, by their very nature, vending machines did not involve routine age-checks prior to purchase, by comparison with the sale of alcohol, fireworks and solvents, the Government's position was that it could think of no strong argument for continuing to allow cigarettes to be available from such machines. The Government concluded:

"The only way to be absolutely certain that underage young people do not access cigarettes from vending machines is to ban the sale of cigarettes from vending machines completely in Scotland and measures contained in the Bill will debar the sale of tobacco products from vending machines".

[8] Part of the statistical material in the Memorandum had been derived from the Scottish Schools Adolescent Lifestyle and Substance Use Survey (SALSUS) National Report upon smoking, drinking and drug use among 13 and 15 year olds in Scotland in 2006. This report had highlighted the ability of children of that age to buy cigarettes from shops and vending machines. It (SALSUS, para 2.2.6) had contained the "one in 10" statistic. The content of the Memorandum had also, in part, come from a Regulatory Impact Assessment (RIA) on the Bill's provisions. This had analysed the impact of three options, viz: (1) to do nothing; (2) to introduce age-restriction mechanisms; and (3) to ban vending machines. It was the RIA which had created the figure of about 6,500 vending machines in Scotland as a pro rata by population estimate based on an United Kingdom total of 78,000. It had also produced the figure for Scottish vending machine sales at in excess of 36 million. It proceeded to note the SALSUS results. Using the "one in 10" statistic, it somehow came up with the figure of 14.2 million cigarettes, some 36-40% of the total, being bought by under eighteens. The RIA concluded (para 2.15) from the statistics that "a disproportionate number of 13 and 15 year olds obtain cigarettes" from machines. It estimated, again using the SALSUS findings, that 70% of under eighteens would be able to buy their cigarettes elsewhere in the event of a ban. This, it said, would mean that there would still be a reduction in sales to that group of some 4.25 million cigarettes. Given the experience of young people's ability to circumvent age-restrictions on the sale of goods, it was assumed that 25% would be able to circumvent age-restriction mechanisms. If it were correct that 10% of sales to under eighteens were from vending machines, this would mean a 2.5% reduction in sales

[9] It was accepted by the respondent that there were significant flaws in the figures employed in the RIA and in its application of basic arithmetic to them. For example, SALSUS had not said, as the RIA held, that one in ten under eighteens bought cigarettes only from vending machines.

[10] In the Memorandum (para 40 et seq), the Government considered the alternatives of doing nothing and introducing are-restriction mechanisms. It ruled out the first as failing to prevent sales to young people and as producing no gain to public health. It considered "infra-red control, ID coin mechanism, or electronic age-verification" devices but repeated (para 42) that, "While this may have an impact on underage sales...the only guaranteed way of preventing underage sales is to ban sales from vending machines completely".

[11] The Parliament's Health and Sport Committee was nominated as the lead committee to consider the Bill. It received over 100 responses to the Bill and held four sessions of oral testimony. Only the petitioners and the National Association of Cigarette Machine Operators gave evidence regarding age-restriction mechanisms. Their evidence proposed a remote-controlled radio frequency device, which would require staff to verify the age of the prospective purchaser before enabling the machine to dispense its product. It included the results of an independent pilot in England (organised by NACMO) which recorded an 80% success rate, which was deemed a "great achievement" when compared with over-the-counter transactions. Despite this, the Committee remained:

"to be convinced that this system could be made to work in practice across the range of situations in which a vending machine might be installed - for example, in crowded city-centre pubs where there are many distractions for bar staff".

[12] During the later Committee stages (see eg Health and Social Committee Official Report 11 November 2009 col 2394), amendments were proposed to exclude remote, that is to say radio, controlled vending machines from the prohibition. These were rejected on the basis that the Government did not consider it appropriate to sell a "dangerous and addictive age-restrictive product" from a self service machine. It again repeated that a ban was the only way in which to prevent under eighteens from accessing cigarettes from this source.

[13] Parliament had been presented with the Memorandum and the RIA. It was also given various additional reports and papers to consider along with the evidence submitted to the Health and Sport Committee. It had submissions from various health organisations, including the British Heart Foundation Scotland, which supported a ban on vending machines. Parliament considered the proposed amendments to the Bill allowing radio controlled mechanisms. It noted the considerable amount of evidence tabled by the tobacco industry. On the other hand it had considerable material detailing the harmful effects of smoking and it noted especially the statistic that 80% of smokers started in their teens. It had material demonstrating that the removal of a source of cigarettes to under age smokers would reduce the attractiveness and availability of tobacco to them and lead to a reduction in smoking.

The Petitioners' Contentions

[14] The petitioners lodged a detailed written argument, which they adopted as part of their oral submissions. What appears here is not a precise repetition of the written case. It is an attempt to summarise how that case was developed in what was a differently structured oral presentation.

[15] The petitioners are a wholly owned subsidiary of Imperial Tobacco. They own and operate tobacco vending machines throughout Scotland. They import these machines from Spain at the rate of about 100 per annum and obtain spare parts from Spain and Germany. Their broad contention is that the effect of section 9 would be that the use of such machines would cease to be legal. The measure would have the effect of restricting the importation of the machines, since the section prohibited their use. It would accordingly interfere with trade between the United Kingdom and both Spain and Germany. It therefore contravened Article 34 and would be illegal unless justified by the state under Article 36.

[16] The fons et origo of the principles derived from Article 34 was Procureur du Roi v Dassonville [1974] ECR 837 in which the ECJ said:

"1. All trading rules enacted by Member States which are capable of hindering, directly or indirectly, actually or potentially, intra-Community trade are to be considered as measures having an effect equivalent to quantitative restrictions".

This was applied in Rewe-Zentral v Bundesmonopolverwaltung für Branntwein (Cassis de Dijon) [1979] ECR 649, in which a prohibition on importing spirits with an alcohol level of less than 32% was said to infringe the article (see also Commission v Greece [2006] ECR I-10341, para 37).

[17] In Keck and Mithouard [1993] ECR I-6097, contrary to its previous judgments, the ECJ distinguished (paras 15 and 16) between illegal obstacles created by rules relative to the form, size, weight, composition, presentation, labelling and packaging of goods and, what were deemed, legal measures relative to "selling arrangements", such as prohibitions on resale at a loss applicable to all traders operating in a particular state which did not hinder trade.

[18] This approach was criticised by the Advocate General (Bot) in Commission v Italy [2009] ECR I-519 (at para 10), but he did not consider that the ECJ jurisprudence ought to be departed from (paras 84-85) and the ECJ did not do so (paras 33-37). It found that a prohibition on the use of moped drawn trailers contravened what is now Article 34, unless it could be objectively justified on public interest grounds under Article 36. In determining the level of safety to be enforced in a particular state, that state was afforded a "margin of appreciation". The fact that one state's rules were less strict than another did not mean that the latter's were "disproportionate" (para 65). However, it was for the state to demonstrate that its rules were appropriate and necessary to attain the legitimate objective permitted by Article 36.

[19] A similar result had flowed in relation to "personal watercraft" in Åklagaren v Mickelsson and Roos [2009] ECR I-4273. The ECJ emphasised (para 28) that national regulations, which had the effect of preventing the use of items, hindered access for those items to the domestic market. They constituted measures having an equivalent effect to quantitative restrictions prohibited by Article 34, in the absence of a justification under Article 36 (see Commission v Portugal [2008] ECR I-2245, paras 35-37). There was no justification for the view that, because section 9 applied only to tobacco products, it was only a selling arrangement in terms of Keck and Mithouard (supra). That position had not been adopted by the United Kingdom government in the proceedings relative to the equivalent provision in England (infra). Article 34 had clearly been engaged. Although it might be argued that the ban was a selling arrangement in relation to cigarettes, it still hindered intra-European Union trade in vending machines.

[20] The cases founded upon by the respondents (Criminal Proceedings against Banchero [1995] ECR I-4663; and Punta Casa v Sindaco del Comune di Capena [1994] ECR I-2355) were not concerned with regulations prohibiting the use of goods. In Philip Morris Norway v Norway [2012] 1 CMLR 24 the EFTA Court had held (para 45) that prohibitions on cigarette visual displays amounted to a selling arrangement, but that did not assist in relation to a ban on product use. In R (Countryside Alliance) v Attorney General [2008] 1 AC 719, the House of Lords had declined to make a reference to the ECJ on a point said not to be an "acte claire", but that decision had predated the clarity provided by Commission v Italy (see Lord Hope at para 70; see also R(Lunt) v Liverpool City Council [2009] EWHC 2356, Blake J at paras 65-67; R (Petsafe Ltd) v Welsh Ministers [2011] Eu LR 270, Beatson J at para 58). There was no requirement for a reference in this case. The situation was an acte claire, ie "so obvious as to leave no scope for any reasonable doubt as to the manner in which the question raised is to be resolved" (Srl CILFIT v Ministry of Health, no 283/81, 6 October 1982, para 16; cf the Lord Ordinary's Opinion at para 51).

[21] In relation to Article 36 justification, the Commission had produced a Guide ("Free movement of Goods"), which contained a helpful summary of the law. It stated (para 6.3) that:

"The measure in question has to be necessary in order to achieve the declared objective; the objective could not be achieved by less extensive prohibitions or restrictions, or by prohibitions or restrictions having less effect on intra-EU trade".

The question was not whether vending machines could be regulated, but whether a ban was justified. If there were a less restrictive alternative, which could achieve the same end, the measure could not be proportionate. The burden of proof was on the state attempting to introduce the measure (ibid para 6.4) and a risk assessment might be required before doing so (ibid para 6.1.2). In Commission v Austria, no. C-28/09, 21 December 2011, the ECJ had recently stated (para 140) that, before adopting a radical measure, such as a total traffic ban on a section of motorway, the state was under a duty to consider carefully the possibility of using less restrictive measures.

[22] It was not suggested that the aim of reducing smoking amongst young people was not legitimate, but it was maintained that there was a less restrictive alternative available to achieve that aim in the form of remote (radio) controlled machines in the context of highly regulated premises and staffing regimes (see eg Licensing (Scotland) Act 2005 s 20 and The Licensing (Training of Staff)(Scotland) Regulations 2007 (2007 SSI No 397)). The machines would require to be activated for each transaction by a member of the bar staff, who would do so only if satisfied that the proposed purchaser was over 18 years of age. Evidence of their practical viability was a matter for the commercial judgment of licensees, but such machines had to be regarded as serious alternatives (see the Affidavit of Kevin Pascall, the petitioners' managing director dated 22 October 2010). Although the SALSUS report referred to children using vending machines, were such machines to be banned, children would be likely to buy cigarettes elsewhere. It had not been demonstrated that a ban on machines would reduce smoking amongst children (cf the Opinion of the Regulatory Policy Committee dated 1 March 2010). The RIA had not demonstrated that a ban would be more effective. In these circumstances, the state had to prefer the less restrictive alternative.

[23] The Lord Ordinary had held (Opinion, para [40]) that the nature of the decision maker and the subject matter and context of the legislation called for a wide "margin of discretion" being accorded. The respondents had contended (Answer 51(c)) that the petitioners had to show that the measures taken were "manifestly inappropriate" to achieve the objective. That was the phraseology used when the ECJ was reviewing the proportionality of EU legislation or national measures implementing EU policy, where there required to be a balance between private and public interests. It was not used when looking at national measures interfering with fundamental freedoms, where the scrutiny was stronger in the context of balancing EU and state interests. In that context, tests of "necessity" and "least restrictive alternative" were applicable (Tridimas: General Principles of EU Law pp 137-138; Craig: EU Administrative Law (2^nd ed) pp 617, 619, 629-630).

[24] In summary, (1) free movement of goods is one of the fundamental principles of the European Union Treaties; (2) the onus is on the state to show that a measure contravening that principle is objectively justifiable; (3) the measure must satisfy the requirements of proportionality; (4) it must not go beyond what is "necessary" to achieve the objective; (5) if there were a less restrictive alternative, the measure could not be necessary; (6) the measure had to be necessary; (7) any justification had to be based upon a proper analysis of the evidence; and (8) the precautionary principle could only be invoked on the basis of the most reliable data. The law was intended: (a) to protect free movement of goods; and (b) to apply to particular areas not covered by European Union regulation.

[25] The need for a proper analysis of the evidence was evident. In Asociación Nacional de Expendedores de Tabaco y Timbre (ANETT) v Administración del Estado, no C-456/10, 26 April 2012, the ECJ stressed (para 50), under reference to Bressol v Gouvernement de La Communauté Francaise [2010] 3 CMLR 20 (para 71), that the onus was on the state to show that the measure was appropriate for securing the attainment of the objective and did not go beyond what was necessary to attain it. The reasons invoked had to be accompanied by an analysis of proportionality and by specific evidence substantiating the arguments. This was not the kind of language found in cases involving the review of EU legislation, where a "broad discretion" was permitted relative to political, economic and social choices by the relevant EU institution (The Queen, on the application of Alliance for Natural Health v Secretary of State for Health [2005] ECR I-6451 at para 52). In the case of state measures, in the absence of harmonisation, it remained for the states to decide on the level of human health protection. There was a wide discretion in that area, where uncertainties existed regarding the results of scientific research (the "precautionary principle"). However, that discretion had to comply with the principle of proportionality, which meant that the measure selected required to be confined to what was necessary and least restrictive in terms of its effect on intra-EU trade (De Peijper [1976] ECR 613 at p 622; Commission v Denmark [2003] ECR I-9693, paras 38-51; Commission v France [2004] ECR I-1277; Walter Rau Lebensmittelwerke v De Smedt PvbA [1983] 2 CMLR 496, para 12; Commission v Greece [1991] ECR I-727, paras 18-19; Commission v France [1991] ECR I-659, paras 17 -21; Säger v Dennemeyer & Co [1991] ECR I-4221, paras 15-17; Commission v Italy [1991] ECR I-709, para 15; Kraus v Land Baden-Württemberg [1993] ECR I-1663, para 32; Gebhard v Consiglio dell'Ordine deglui Avvocati e Procuratori di Milano [1995] ECR I-4165, para 37; Arblade v Leloup [1999] ECR I-8453, para 35-39; Canal Satélite Digital SL v Administración General del Estado [2002] ECR I-607 at para 33; Re the Prohibition of Marketing of Enriched Foods: Commission of the European Communities v Denmark [2003] CMLR 29, para 45; Re Sports Foods: Commission of the European Communities v Italy [2004] 3 CMLR 26, paras 22-26; Omega Spielhallen- und Automatenaufstellungs GmbH v Bundesstadt Bonn [2005] 1 CMLR 5, para 36; ATRAL SA v Belgium State [2006] 1 CMLR 42, para 67; Re Automatic Fire Detection: Commission of the European Communities v Belgium [2007] 3 CMLR 13, para 36; Re Garlic Preparations in Capsule Form: Commission of the European Communities v Germany [2008] 1 CMLR 36, paras 88, 90, 96; Re Marketing of Herbal Medecines: Commission of the European Comunities v Spain [2009] ECR I-1353, paras 88-89; Ker-Optika, case no C-108/09, 2 December 2010, paras 60, 65, 74).

[26] It was recognised that the Court of Appeal in England had reached a view contrary to the petitioners' argument on the issue of justification (R (Sinclair Collis Ltd) v Secretary of State for Health [2012] 2 WLR 304). This decision was not supported by the cases cited by that court. In Rosengren v Riksåklagaren [2007] ECR I-4071 (para 50) the ECJ made the standard observations on necessity and the least restrictive alternative in holding that a ban on all individuals importing alcohol went "manifestly" beyond what was necessary. Aragonesa de Publicidad Exterior SA v Departmento de Sanidad y Seguridad Social de la Generalitat de Cataluña [1991] ECR I-4151 concerned the proportionality of a limited prohibition on the advertising of alcohol (see paras 15-18) and was not concerned with a less restrictive alternative (see also Commission v France [2004] ECR I-6569). In Hartlauer Handelsgesellschaft v Wiener Landesregierung [2009] ECR I-1721, the ECJ said (para 55) that a measure would be regarded as appropriate only where it genuinely reflected a concern to attain it in a consistent and systematic manner. That required the identification, in advance, of objective criteria (Kakavetsos-Fragkopoulos v Nomarchiaki Aftodioikisi Korinthias [2011] 2 CMLR 39). In The Queen v Secretary of State for Health (ex parte British American Tobacco (Investments) Ltd) [2002] ECR I-11453 the Advocate General (Geelhoed) stressed (eg para 120) the need for the assessment of scientific evidence (see also Arnold André GmbH v Landrat des Kreises Herford [2004] ECR I-11825).

[27] In England, the breadth of the margin of appreciation was said to be at its greatest when a court was dealing with primary legislation in an area where a general policy of the EU had to be given effect in the particular state's economic and social circumstances (R v Secretary of State for Health, ex parte Eastside Cheese Co [1999] 3 CMLR 123, Lord Bingham CJ at para 48). However, that did not support the proposition that the legislature was to be given a broad margin when deciding whether to implement EU legislation or to interfere with a fundamental freedom. R (Countryside Alliance) v Attorney General [2008] 1 AC 719 had categorised the ban on hunting as a "social reform" not directed to the regulation of commercial activity, but the need for proportionality could not be elided by categorising a measure in this way.

[28] The context of R (Sinclair Collis Ltd) v Secretary of State for Health (supra) was different from that of the petitioners. The United Kingdom government's original view had been that the less restrictive alternative had to be applied. It had passed legislation allowing the Secretary of State to prohibit sales of tobacco from vending machines but not to regulate their use. The alternative to a ban was a voluntary code and it was decided that the Secretary of State had a broad margin of appreciation in determining that such a code was not an equally suitable means of securing the objective of protecting human life by reducing smoking. Arden LJ had maintained (para 116) that the test, or level of intensity of review, to be applied in assessing proportionality in the case of a public health measure, was whether the measure was "manifestly inappropriate". This involved a low level of scrutiny. Her view, that such a test could be employed in determining whether a measure interfered with a fundamental freedom, was erroneous. It was simply wrong to suggest that the test of the less restrictive alternative was disapplied. Lord Neuberger MR considered (para 255) that, in order to succeed, a challenge would have to show that no reasonable decision maker could have implemented the measure, since otherwise the court would be trespassing into the realm of policy making. However, such a view inverted the onus of proof. It was for the state to justify the measure as proportionate. The Lord Ordinary had been in error in applying a wide margin of discretion.

[29] The report "Towards A Future Without Tobacco" had contained a comprehensive series of recommendations, including those aimed at discouraging young people from smoking. None had been concerned with vending machines. "Scotland's Future is Smoke Free - A Smoking Prevention Action Plan" had been concerned with how illegal sales of cigarettes from vending machines might be combated. It had not envisaged a ban. The Policy Memorandum had contained no analysis of any alternative means of meeting the objective of restricting access by children to cigarettes. The possibility of introducing age-checks would address the problem, but this had not been considered. There had been no evidence of what impact age-restriction mechanisms might have. In any event, contrary to the Memorandum, banning vending machines could not prevent under age sales, so long as there were alternative sources of supply.

[30] The only evidence to justify the vending machine ban had been in the RIA but, as the Lord Ordinary had found, it had contained a number of flaws. It had erred: (1) in its assessment of the number of cigarette vending machines in Scotland. The petitioners' own figures were that they sold less than 7 million cigarettes from vending machines; (2) in its assumption, based on SALSUS, that 10% of all sales to under eighteens came from vending machines. The SALSUS study revealed only that 10% of that age group customarily bought cigarettes from vending machines; (3) in stating that under eighteens bought 14.2 million cigarettes from vending machines. The petitioners had 50% of the market. If the RIA were correct, almost all sales from vending machines would be to under eighteens; (4) in assuming that only 70% of under eighteens would seek alternative sources of supply in the event of a ban. The SALSUS report did not justify this conclusion; and (5) in assuming that as many as 25% of under eighteens would continue to use age-restriction governed machines. There was no basis for this assumption.

[32] In order to establish an Article 36 justification, the Scottish Government required to prove that: (a) a certain number of under eighteens purchased cigarettes only from vending machines; (b) if there were a ban, a certain proportion would have no alternative source; (c) if age-restriction mechanisms were introduced, a certain number of under eighteens would be unable to buy cigarettes from vending machines; (d) in that event, a proportion of that number would have no alternative sources of supply; and (e) the difference in the numbers of those unable to source cigarettes was sufficiently large to warrant the conclusion that a ban was necessary and appropriate. The Lord Ordinary had erred (Opinion, para [49]) in concluding that Parliament was entitled to decide that the age-restriction mechanisms would not be as effective as a ban in achieving a reduction in under age smoking. Parliament had not addressed that issue nor had it ingathered evidence to that effect. The Public Health and Sport Committee and the Government had looked at the alternatives in the wrong way, viz by putting the onus on the petitioners to demonstrate their effectiveness instead of discovering whether there was evidence to justify a ban as the least restrictive measure available to achieve the declared objective.

[33] In order to be satisfied that a ban was the least restrictive measure to achieve the aim of reducing smoking amongst the under eighteens, the Parliament would have had to have asked itself: (a) how many under eighteens bought cigarettes only from vending machines; (b) how many would have no alternative sources of supply in the event of a ban; (c) how many would be unable to buy cigarettes if age-restriction mechanisms were introduced; (d) how many of those would have no alternative sources of supply; (e) whether, comparing those unable to do so as a result of the ban with those unable to do so as a result of age-restriction measures, this produced an inevitable conclusion that a ban was both appropriate and necessary; being the least restrictive alternative capable of achieving the policy aim; and (f) whether that aim could also be achieved by other measures which did not create any hindrances on intra-European Union trade in vending machines, such as a ban on sales from independent newsagents. Instead, Parliament adopted the Government's fundamental policy position and refused to give proper consideration to the alternatives.

[34] In relation to the First Protocol, Parliament had failed to strike the correct balance between the general interest and the private interests of the petitioners. The arguments relative to proportionality were equally applicable here. It was accepted that this was a control of use measure rather than one involving a deprivation of property. In terms of JA Pye (Oxford) v United Kingdom (2008) 46 EHRR 45 (at para 75), the margin of appreciation open to the state was wide, both in relation to selecting the means of enforcement and to ascertaining whether the consequences of enforcement were justified in the general interest for the purpose of achieving the object of the law in question. The ECJ would respect the legislature's judgment as to what was in the general public interest, unless that judgment was "manifestly without reasonable foundation". The court required to adopt the three stage test identified by Lord Hope in R v Shayler [2003] 1 AC 247 (para 61). It was not enough simply to ask whether the decision had been a reasonable one. Where it interfered with a fundamental right, the court required to determine whether the objective was sufficiently important to justify limiting such a right. It needed to see if the means selected were rational, fair and not arbitrary. It had to see if these means were the minimum reasonably possible (see also R (Countryside Alliance) v Attorney General [2008] 1 AC 719). A fair balance had not been struck.

The Respondent's Answer

[35] In relation to proportionality and Article 36 justification, there were three general points which had been lost in the argument. First, national autonomy persisted in areas not regulated by European Union law. Health was an example of such an area. Tobacco vending machines had been banned in England, Wales and Northern Ireland. They were also banned in 12 states of the European Union. It may not be permissible for Scotland to join that group, but there was certainly no general prohibition on such bans and the international dimension favoured reducing the incidence of smoking in young persons.

[36] The World Health Organisation's European Tobacco Control Report 2007 provided an overview (p 5) on progress towards reducing smoking amongst young people. This had been referred to in the RIA and Parliament had been aware of its terms. Despite bans on tobacco sales to minors, cigarettes remained widely available to them. The report outlined areas in which European states could strengthen controls and thereby reduce the "significant health burden associated with tobacco consumption". Reference was made to the EU information and communication (advertising) campaigns targeted at teenagers. The report summarised the restrictions in Europe on the availability of tobacco to young people; notably prohibitions on the sale of cigarettes to young persons or of single cigarettes. It narrated that the European Strategy for Tobacco Control, adopted in 2002, had recommended that strategic national action ought to include the banning of sales through vending machines. Twenty two countries had already done so. Thus Scotland was not alone in its efforts to ban vending machines on the basis that it reduced the incidence of smoking. Where EU states had introduced bans, they had not been opposed on the basis that they disproportionately affected trade.

[37] Secondly, in relation to the access to markets, whereas free movement of goods required preservation of the ability to sell, it did not require the protection of a market. The market in vending machines had collapsed in the United Kingdom. There was no obligation to preserve a market for them in Scotland, when it did not exist in other countries.

[38] Thirdly, Parliament had had a wide variety of materials available to it. The RIA was one document lodged at the time of the Bill, but it was not a summary of what the Members of Parliament had before them. The Parliament had considered the alternatives. The Parliamentary process had to be looked at "in the round". It had been up to Parliament to decide what to look at and what view to reach, although it was accepted that the measure required to be justified objectively. The court had a cornucopia of material in that regard.

[39] Proportionality was a protean concept. It took its meaning from its context. The ECJ decisions on the subject were heavily fact sensitive. The ECJ often did not have the full factual background and it was sufficient that the subject matter of the dispute and the main issues raised for determination were stated (Liga Portuguesa de Futebol Profissional v Departamento de Jogos da Santa Casa da Misericórdia de Lisboa [2009] ECR I-7633, paras 40-41). The cases were not consistent, since proportionality was a flexible or open-textured concept. It was not a single uniform test but a flexible tool "used in different contexts to protect different interests" and entailed "varying degrees of judicial scrutiny" (Tridimas (supra) p 140; R v Secretary of State for Health, ex parte Eastside Cheese Company [1999] 3 CMLR 123, Lord Bingham CJ at para [41]). In relation to whether there would be an effect on trade as a result of a ban, the intention of the legislature was a factor, although not a determinative one (R (Countryside Alliance) v Attorney General (supra), Lord Hope at paras 69 and 87, Lord Bingham at para 50, Baroness Hale at para 131). The Lord Ordinary had correctly recognised the petitioners' concession that Parliament was allowed some "margin of discretion" but they had contended that it ought not to be allowed as wide a margin as the United Kingdom Parliament. Whether there required to be a "manifest" error was just a question of the degree of intensity of review by the court.

[40] It was apparent, from what the ECJ did, that the process of justification goes through stages. In Commission v Italy (supra), the Advocate General (Léger) had said (para 52) that, in the absence of harmonised rules, it was for the EU states to decide the level of moped driver safety and the manner of achieving it but that level required to comply with the terms of the Treaty and the principle of proportionality. The Advocate General had considered that the ban on moped driven trailers was not proportionate because of the existence of measures less restrictive to "intra-Community trade" (para 59). Before the Grand Chamber, the Advocate General (Bot) had agreed. He had summarised the case law and explained (para 64 - 67) the distinction between rules relating to the form or presentation of products different from the state of origin and "selling arrangements" relative to the promotion of goods applicable to all traders. He described these rules as disclosing a latent conflict between the ECJ's wish to prevent economic protectionism and its concern not to encroach upon domestic policy (para 75). He proposed a criterion for the assessment of state measures based upon their effect rather than their object (para 109). The measures had to be proportionate (para 164). That involved assessing, first, their appropriateness for the protection of the relevant interest and, secondly, whether they went no further than necessary to attain the objective (para 165).

[41] The Court too summarised its case law and repeated (para 59) that the measure "must be appropriate for securing the attainment of the objective pursued and not go beyond what is necessary in order to attain it". It held (para 61) that it was for member states to determine the levels of safety, whilst taking into account the Treaty requirements. The member states had to be allowed a "margin of appreciation" in determining that level and the means by which it was to be achieved. In that regard, the fact that one state imposed less strict rules than another, did not mean that the latter's were disproportionate (para 65). Although the burden of proof was on the member state to justify the measure in terms of appropriateness and necessity, that burden did not require proof that no other conceivable measure could enable that objective to be attained (para 66). States were not to be denied the possibility of attaining an objective by the introduction of "general and simple rules which will be easily understood and applied... and easily managed and supervised by the competent authorities" (para 67). The ECJ held the measures justified and this illustrated that the ECJ was ready to accord a margin of appreciation at this stage and to articulate both what was appropriate and necessary.

[42] In R v Secretary of State for Health ex parte British American Tobacco (Investments) [2002] ECR I-11453, the Advocate General (Geelhoed) had stressed that the ECJ did not intervene in legislative evaluations but examined whether the EU legislature had "overstepped the bounds of its discretion" (para 116). The same applied to state measures (para 120). In assessing proportionality, the exercise was not in weighing two interests but in deciding whether the measure was appropriate and whether there was any other less intrusive measure providing equal protection (para 230). The ECJ re-iterated that proportionality required the measure to be appropriate and necessary but the legislature had to be allowed a "broad discretion" in areas involving political, economic and social choices. It was only where the measure was "manifestly inappropriate" that its legality could be successfully challenged (para 123). This use of language was simply an articulation of the margin of appreciation. Whatever language were used, the level of review by a court was low (see also Arnold André v Landrat des Kreises Herford [2004] ECR I-11825, Advocate General (Geelhoed) at para 114; Germany v Parliament and Council [2006] ECR 1-11573, Advocate General (Léger) at paras 209, 215 and 218, ECJ at paras 144-5). In summary, on a proper reading of the cases, there was a margin of discretion available to a legislature when health was in issue and that margin existed throughout the application of the proportionality principle. Protection of health ranked foremost in both EU and state legislation. The margin was wide when there was no intention that the measure effect trade. In this area, the court should adopt a "low intensity of review".

[43] In relation to the object of the legislation, the Policy Memorandum had stated the aims of the Bill in relation to the improvement of health; specifically the need to reduce smoking in children and young persons. It had highlighted the concerns and stated that the object of the ban was to produce that reduction, all with the intention of improving public health. The Government had considered the alternatives. However, it had been established that 20% of attempts by young persons to buy cigarettes from age-restricted vending machines had succeeded. This had been when the public house used in the pilot had not been busy. Following the dictum in Commission v Italy (supra, at para 67), the Government were entitled to adopt a measure which could be enforced effectively.

[44] Concern over age-restriction measures had been mentioned in the parallel litigation concerning the competence of Parliament (as distinct from the United Kingdom legislature) to enact section 9 (Imperial Tobacco, Petitioner 2012 SLT 749). Lord Reed had referred (para 134) to the effect of section 9 being consistent with the purpose of making cigarettes less readily available particularly, but not only, to children and young persons. He had commented (para 138) on the section ensuring that sales would not be impersonal. In looking at the object, the aim was to ban automatic sales, thus bringing them into line with other restricted product sales and hence reducing the incidence of smoking. The court could take that to be a legitimate object of the legislation. All elements of that legislation formed part of a legitimate aim of Parliament. The policy was aimed at reducing smoking amongst young persons but, in terms of paragraphs 24 and 42 of the Memorandum and other extrinsic material, there was a wider and more composite aim of reducing the availability of tobacco products and of protecting public health generally.

[45] In R (Sinclair Collis) v Secretary of State for Health (supra) Laws LJ had analysed the proportionality test and had accepted (para 23) that the Government had a margin of appreciation, the scope of which was affected by both the identity of the decision maker and the subject matter of the decision. He had rejected (para 47) the argument that the measure required to be "manifestly inappropriate" in order to be successfully challenged in favour of the "standard" proportionality elements of appropriateness and necessity (see R v Minister of Agriculture, Fisheries and Food, ex parte Fedesa [1990] ECR I-4023, para 13); the latter involving the least restrictive alternative. It was on the basis of a failure to consider age-restriction mechanisms that Laws LJ had upheld the challenge (paras 79, 82), notwithstanding the existence of a broad margin of appreciation on health issues. Arden LJ had held that "manifestly inappropriate" described the level of intensity of review when applying the standard proportionality test (para 116). The ECJ had applied this level of review in Fedesa (supra, at paras 14, 15, quoted by Arden LJ at para 117-118) and not the "least intrusive means" principle (para 126). Agreeing with Lord Bingham in R v Secretary of State for Health, ex parte Eastside Cheese [1999] 3 CMLR 123 (para 46), she had considered that a considerable margin of appreciation applied to the "national legislature" (para 131) and the decision maker (para 161). In rejecting the challenge, she held (para 164) that it was sufficient that the decision maker's conclusion that there was no "less intrusive measure" was not "manifestly inappropriate". Although the respondent did not have to argue that the test was whether the measure was "manifestly inappropriate", Arden LJ could not legitimately be criticised for using it. Lord Neuberger MR also stressed the margin of appreciation (paras 200, 233) in rejecting the challenge. The three judges expressed themselves in different ways but all made it clear that there was a margin of appreciation and that, with this type of measure, the court should not be exacting in its demands when considering proportionality. When examining necessity, the court afforded space to the decision maker on whether or not a ban was more effective than pursuing age-restriction measures (see also R (on the application of Petsafe) v The Welsh Ministers [2011] Eu LR 270).

[46] The Lord Ordinary held that any errors in the RIA did not result in it being flawed or useless. The criticisms made by the petitioners had also been made at first instance. The Lord Ordinary noted that they had been made to Parliament too. If the RIA had overstated the sales to under eighteens from vending machines, the overstatement had applied to the options of age-restriction mechanisms and a ban. The reduction in cigarette sales to the under eighteens would be far greater in the event of a ban. The Lord Ordinary had rejected the argument that the RIA was wrong in stating, in the absence of clear and positive evidence or other research, that not all under eighteens would be able to source cigarettes from other outlets. He had held that it was a reasonable assumption that, if children were prevented from using vending machines, some would smoke fewer cigarettes.

[47] The RIA contained a large number of footnotes detailing its background material. This was broadly the same material as the Department of Health's Impact Assessment had adopted in England. It had estimated that, because 17% of regular smokers aged 11 to 15 reported that vending machines were their "usual" source of tobacco, restricting access to such machines would contribute to the objective of reducing tobacco sales to that group. There had been an assumption, based on test purchasing, that about 70% would find an alternative supply from shops. That was not unreasonable and it was not necessary to demonstrate the figure by empirical evidence. The RIA had assumed, from Table 2.9 in the SALSUS report, that 10% of sales to under eighteens was from vending machines, but that 25% of those under eighteens would be able to circumvent age-restriction mechanisms. There was nothing before the court to undermine the view that age-restriction mechanisms would not prevent children from acquiring cigarettes from vending machines.

[48] Against a background of substantial material having been presented to Parliament, the Lord Ordinary had been correct: (1) to find that there was an evidential basis for the banning of sales from vending machines; and (2) to consider that Parliament was entitled to the view that age-restriction mechanisms were not as effective as a ban in reducing under age tobacco use.

[49] Returning to proportionality, the authorities had a discretion on the measures appropriate to attain the objective. Section 9 was plainly appropriate. A ban was appropriate for the purpose. On necessity, was there an equally effective method of attaining the legislative aim and, if so, what level of scrutiny was the court required to apply to Parliament's approach? The measure was one of a series and could be looked at as systemic in removing one source. Some may be able to find another source, but it was legitimate for the national authority to adopt an easily enforceable measure.

[50] The Lord Ordinary held (para [26]) that there was considerable force in the petitioners' argument that section 9 was not a selling arrangement in terms of Keck and Mithouard (supra, para 16) and fell within Article 34. He did not agree that this was an acte clair. He would have referred the matter to the ECJ, had he not considered the measure to be justified under Article 36. If he was wrong in the latter respect and there was a reasonable doubt about the issue, a reference would be appropriate (Scotbeef v Palmero 2006 SC 1). In Philip Morris Norway v Norway [2012] 1 CMLR 24, a prohibition on the display of tobacco products was deemed to be a selling arrangement since it did not impede access of a foreign product to a market any more than it prevented access by domestic products (see paras 42-47; see also Criminal Proceedings against Banchero [1995] ECR I-4663, para 34; Commission v Greece [1995] ECR I-1621 paras 11-14; Punto Casa v Sindaco del Comune di Capena [1994] ECR I-2355, para 13; Commission v Austria, Case C-28/09, 21 December 2011; Commission v France [2004] ECR I-6569). Section 9 was similarly a measure concerned with the way in which a product (tobacco) was sold, although it may have an effect on the commercial interests of others. The matter was not, however, an acte clair. Where fundamental freedoms were involved, the protection of those freedoms was a legitimate interest justifying a restriction of the obligations under EU law (Omega Spielhallen-und Automatenaufstellungs v Bundesstadt Bonn [2004] ECR I-9609).

[51] In relation to Article 1 of the First Protocol to the Convention, the facts founded upon by the petitioners in relation to the economic impact of banning vending machines were not accepted. Social and economic policies can have costs for businesses, but national authorities were permitted a margin of appreciation of what was in the public interest (James v United Kingdom [1986] 8 EHRR 123, paras 46, 49; Countryside Alliance v United Kingdom (2010) 50 EHRR SE6, para 57). The existence of alternatives did not mean that a measure was not justified. There was no test of necessity (James v United Kingdom (supra), para 51) or a need to adopt the least restrictive alternative (Axa General Insurance, Petitioners 2011 SLT 1061, Lord Reed at para 131). A fair balance had been struck between the general public interest and those of the petitioners.

Decision
(a) The Application of Article 34
[52] The court takes, as its starting point, the preliminary observations of the ECJ in Commission v Italy
[2009] ECR I-519 (at 568) that:

"33 ... [A]ll trading rules enacted by Member States which are capable of hindering, directly or indirectly, actually or potentially, intra-Community trade are to be considered as measures having an effect equivalent to quantitative restrictions and are, on that basis, prohibited by Article [34] (see, in particular, [Procureur du Roi v] Dassonville [[1974] ECR 837], paragraph 5).

34 ... Article [34] reflects the obligation to respect the principles of non-discrimination and of mutual recognition of products lawfully manufactured and marketed in other Member States, as well as the principle of ensuring free access of Community products to national markets (see, to that effect Case 174/82 Sandoz [1983] ECR 2445, paragraph 26; Case 120/78 Rewe-Zentral [v Bundesmonopolverwaltung für Branntwein] ('Cassis de Dijon') [1979] ECR 649, paragraphs 6, 14 and 15; and Keck and Mithouard [[1993] ECR I-6097] paragraphs 16 and 17).

35 Hence, in the absence of harmonisation of national legislation, obstacles to the free movement of goods which are the consequence of applying, to goods coming from other Member States where they are lawfully manufactured and marketed, rules that lay down requirements to be met by such goods constitute measures of equivalent effect to quantitative restrictions even if those rules apply to all products alike (see, to that effect, 'Cassis de Dijon', paragraphs 6, 14 and 15; Case C-368/95 Familiapress [1997] ECR I-3689, paragraph 8; and Case C-322/01 Deutscher Apothekerverband [2003] ECR I-14887, paragraph67).

36 By contrast, the application to products from other Member States of national provisions restricting or prohibiting certain selling arrangements is not such as to hinder directly or indirectly, actually or potentially, trade between Member States for the purposes of the case-law flowing from Dassonville, on condition that those provisions apply to all relevant traders operating within the national territory and that they affect in the same manner, in law and in fact, the marketing of domestic products and of those from other Member States. Provided that those conditions are fulfilled, the application of such rules to the sale of products from another Member State meeting the requirements laid down by that State is not by nature such as to prevent their access to the market or to impede access any more than it impedes the access of domestic products (see Keck and Mithouard, paragraphs 16 and 17).

37 Consequently, measures adopted by a Member State the object or effect of which is to treat products coming from other Member States less favourably are to be regarded as measures having equivalent effect to quantitative restrictions on imports within the meaning of Article 28 EC, as are the measures referred to in paragraph 35 of the present judgment. Any other measure which hinders access of products originating in other Member States to the market of a Member State is also covered by that concept".

The court does not consider that any restatement of this definitive analysis of the ECJ jurisprudence would assist.

[53] Were the court to be considering whether the prohibition on the use of vending machines infringed Article 34 in relation to the market in cigarettes, there would be much to be said for the proposition that it did not do so because, in relation to tobacco, the effect applied to all relevant cigarette sellers in Scotland whether domestic or from a member state. In that regard, therefore, the ban could be described as a selling arrangement in a similar manner as was found by the EFTA Court relative to cigarette displays in Philip Morris Norway v Norway [2012] 1 CMLR 24 (para 45). However, that is not the argument. Whatever the ultimate purpose of the challenge may be relative to the sale of cigarettes, the petitioners' position is that the ban hinders the trade between member states in the vending machines themselves. It might be more accurate to say that it ends that trade, in so far as it currently exists in Scotland.

[54] The court takes cognisance of the argument that there is no obligation under Article 34 to preserve a market in a particular product, consumable or otherwise, especially if no such market exists in several member states. Nevertheless the court is uncertain as to whether that argument ought to be sustained. If a market for a product exists in some member states, measures to close that market in a single state or in part of that state may be regarded as hindering intra-European Union trade in that product (see Åklagaren v Mickelsson and Roos [2009] ECR I-4273, para 28 and Commission v Portugal [2008] ECR I-2245, paras 35-37). At least the court does not consider that the answer to the question of whether Article 34 applies to such measures is so obvious as to leave no scope for any reasonable doubt (Srl CILFIT v Ministry of Health [1982] ECR 3415, para 16). Had the court been required to resolve this issue, it would, in the first instance, have done so by referring it to the ECJ for a preliminary ruling in terms of Article 267 of the Treaty on the Functioning of the European Union. In this respect the court agrees with the Lord Ordinary's reasoning.

(b) The Application of Article 36
[55] In determining whether section 9 is justified in terms of Article 36, the court again takes as a starting point, and does not consider that it should add any gloss upon, the judgment of the ECJ in Commission v Italy (supra). It stated:

"59 ... a prohibition may be justified on one of the public interest grounds set out in Article [36] or in order to meet imperative requirements (see, in particular Case C-420/01 Commission v Italy [2003] ECR I-6445, paragraph 29, and Case C-270/02 Commission v Italy [2004] ECR I-1559, paragraph 21). In either case, the national provision must be appropriate for securing the attainment of the objective pursued and not go beyond what is necessary in order to attain it (Case C-54/05 Commission v Finland [2007] ECR I-2473, paragraph 38 ([2007] 2 CMLR 33, paragraph 38), and Case C-297/05 Commission v Netherlands [2007] ECR I-7467, paragraph 75 ([2008] 1 CMLR 1, paragraph 75)).

...

61 In the absence of fully harmonising provisions at Community level, it is for the Member States to decide upon the level at which they wish to ensure ... safety in their territory, whilst taking account of the requirements of the free movement of goods within the European Community (see, to that effect, Case 50/83 Commission v Italy [1984] ECR 1633, paragraph 12, and, by analogy, Case C-131/93 Commission v Germany [1994] ECR I-3303, paragraph 16).

62 ... it is for the competent national authorities to show that their rules fulfil the criteria set out in paragraph 59 of the present judgment (see, to that effect, Commission v Netherlands, paragraph 76, Commission v Portugal, paragraph 39, and judgment of 24 April 2008 in Case C-286/07 Commission v Luxembourg, paragraph 37).

...

65 ... a Member State may determine the degree of protection which it wishes to apply in regard to ... safety and the way in which that degree of protection is to be achieved. Since that degree of protection may vary from one Member State to the other, Member States must be allowed a margin of appreciation and, consequently, the fact that one Member State imposes less strict rules than another Member State does not mean that the latter's rules are disproportionate (see, by analogy, Case C-262/02 Commission v France [2004] ECR I-6569, paragraph 37, and Case C-141/07 Commission v Germany [2008] ECR I-6935, paragraph 51 ([2008] 3 CMLR 48, paragraph 51)).

66 ... Whilst it is true that it is for a Member State which invokes an imperative requirement as justification for the hindrance to free movement of goods to demonstrate that its rules are appropriate and necessary to attain the legitimate objective being pursued, that burden of proof cannot be so extensive as to require the Member State to prove, positively, that no other conceivable measure could enable that objective to be attained under the same conditions (see, by analogy, Case C-157/94 Commission v Netherlands [1997] ECR I-5699, paragraph 58).

67 ... that Member States cannot be denied the possibility of attaining an objective such as ... safety by the introduction of general and simple rules which will be easily understood and applied by [the person to whom they apply] and easily managed and supervised by the competent authorities".

[56] The court understands that the specific objective of section 9 is to reduce the availability of cigarettes to under eighteens. The purpose of that is to reduce not only their consumption of tobacco but also that amongst older persons. It is part of a general strategy, which includes several other measures, designed to reduce smoking and thereby improve public health. It is not disputed that the objective is legitimate. The question is whether a prohibition upon vending machines is a proportionate method of attaining the objective.

[57] Proportionality requires that the measure is both "appropriate" ("suitable") to secure the objective and "necessary" as a means of doing so. A measure is suitable only if it genuinely reflects a concern to attain the objective in a consistent and systematic manner (Commission v Austria, no. C-28/09, 21 December 2011, paras 125-126). The court accepts that a measure cannot be necessary if there is an alternative which has a less restrictive effect on intra-European Union trade. In both respects, the court does not agree that the test for a successful challenge to a measure which infringes article 34 is that it requires to be "manifestly inappropriate" to attain the objective. The court does not therefore accept that the level of judicial scrutiny can be described as "low". The ECJ is clear in its requirement that the member state demonstrate that the measure is proportionate; that is to say appropriate and necessary in the manner already described. The court accepts the petitioners' submission that "manifestly inappropriate" is language used by the ECJ in relation to testing European Union institution measures (or national measures implementing EU law) (see eg R v Secretary of State for Health ex parte British American Tobacco (Investments) [2002] ECR I-11453, para 123). There the balance is between private and public interests. It is not applicable when testing the legitimacy of state measures against fundamental principles contained in the EU Treaties where the balance is between EU and state interests (see generally Tridimas: General Principles of EU Law (2^nd ed) pp 137-138).

[58] The court accordingly may be seen not to share the misgivings of Laws LJ in R (Sinclair Collis) v Secretary of State for Health [2012] 2 WLR 304 (para 47), about whether different tests ought to apply to the scrutiny of national measures and Community measures, but it does agree with what appears to be his ultimate conclusion (following R v Minister of Agriculture, Fisheries and Food, ex parte Fedesa [1990] ECR I-4023, para 13) that "necessity" is a component of whatever test is to be applied. The court agrees with Arden LJ (para 115) that the "core principle" of proportionality requires that the measure be "suitable and necessary" and that it must be shown that "the least intrusive means" has been employed. It has difficulty, however, in reconciling that approach with her adoption (para 164) of "manifestly inappropriate" as a test for determining whether the least intrusive means could have been selected.

[59] In demonstrating proportionality, the onus is upon the member state to justify the measure objectively. This is likely to involve demonstrating, by reference to extraneous materials, that the measure is capable of attaining the stated purpose. Since the justification requires to be objective, this exercise is not one which involves an examination of the subjective reasoning of the decision making body (in this case a legislature), but one concerned with determining whether, as a matter of objective fact, there existed material which justified the measure in terms of the protection of health.

[60] The state does not require to prove that there are no conceivable alternatives to the measure. The practicalities of public understanding and ease of enforcement are relevant considerations (Commission v Italy (supra) at para 67). In this latter respect, there is a margin of appreciation afforded to the state not only in determining the general health objective of reducing smoking but also in selecting the manner in which the reduction in health risk is to be achieved. It may be that, in situations where EU policy is being implemented, a wider margin is given to measures passed by the central state legislature rather than those created by executive order (R v Secretary of State for Health, ex parte Eastside Cheese Co [1999] 3 CMLR 123, Lord Bingham CJ at para 48). However, in determining whether a measure contravenes Article 34 or is justified by Article 36, the court has reservations about whether the margin can vary in accordance with the nature of the particular organ of the state which creates or implements the measure. It might appear strange if the manner in which a European Union member state elects to organise government within its borders were capable of increasing or decreasing the margin of appreciation available to that state relative to measures challenged as infringing one of the EU Treaties' fundamental principles. The legality of a measure ought not to depend upon whether a measure is passed by a central, national, provincial or local government legislature or determined by an official or subsidiary body under delegated authority from such a legislature.

[61] The Government and Parliament had a substantial quantity of material to demonstrate the dangers of smoking by young persons, especially relative to their health in later life. They had a legitimate objective in reducing that smoking. The material demonstrated that many young persons obtained cigarettes from vending machines, which had no age-restriction mechanisms to prevent purchase. It was an appropriate or suitable step, as part of a wider effort to reduce smoking, to stop young persons from obtaining cigarettes from that source. The material available suggested that age-restriction mechanisms were not effective in respect that, even in a relatively calm environment, 20% of attempts by young persons to secure a purchase were successful. The Government and Parliament were entitled to the view therefore that such mechanisms were not effective to prevent sales to under eighteens and that only a complete prohibition would secure the legitimate objective of reducing sales by cutting off one source of supply. They were entitled to the view that the ingenuity of youth was quite adequate to circumvent age-restriction mechanisms, especially in dark, busy public houses and night clubs. The court does not consider that the Government or Parliament required to conduct a series of empirical scientific experiments to establish the obvious but, in any event, the statistical material, flawed in parts as it might have been, was sufficient to justify this type of conclusion.

[62] The ban would cut off completely one source of supply to young persons. It is clear that some of these persons would be able to find another source; notably a shop where the retailer failed to check the person's age. However, the Government and Parliament were entitled to the view that not all young persons would be able to find an alternative source. That much is perhaps clear in relation to young persons in city centre public houses late at night, where no retail outlets may be readily available. Once more, these matters would be apparent to both Government and members of Parliament and were also amply justified by the substantial background material made available. The court does not consider that, in relation to the analysis of that material, either the Government or the Parliament placed any onus of proof upon the tobacco industry. They simply reached decisions upon the material presented.

[63] In establishing proportionality, it is no doubt correct to state that, in practical terms, the ECJ would expect there to be evidence that the state devising or implementing a measure ex facie infringing Article 34: (a) did not intend the measure to effect intra-European Union trade; (b) had, in some way and at some time, considered material sufficient to justify the measure in public health terms; and (c) had also examined any less restrictive alternatives presented to it (see eg Kakavestos-Fragkopoulos v Normarchiaki Aftodioikisi Korinthias [2011] 2 CMLR 39). Despite the submissions of the petitioners, it is apparent from the documentation in this case that the Government and Parliament did not intend the measure to have any bearing on intra-EU trade. Rather it was part of a consistent and systematic programme to reduce smoking, especially by young persons. There was a significant amount of material justifying a ban upon vending machines as a method of excluding impersonal sales of an age-restricted product, thus bringing cigarettes into line with alcohol (see Imperial Tobacco, Petitioner 2012 SLT 749, Lord Reed at para 138). The Government and Parliament had both considered the alternative of age-restriction mechanisms but had, for sound reasons, rejected them as ineffective. Such an approach is consistent with the ECJ's dictum in Commission v Italy (supra at para 67) that a state is entitled to pursue an objective by using general and simple rules which are readily understood and easily managed and supervised. A prohibition on the use of vending machines, as distinct from the introduction of machines whose mechanisms could be circumvented, falls neatly into this category. In this regard, both Government and Parliament were entitled to the view that, where one rule results in the cessation of a source of supply and the other does not, the former alone is effective. They were also justified in concluding, both on the available material if not as a matter of common sense, that not all young persons who customarily use vending machines would be able to find an available alternative source at all relevant times. That fact in itself produces a reduction in tobacco consumption, which is the objective to be attained.

Article 1 of the First Protocol

[64] It is accepted that section 9 does engage Article 1 of the First Protocol relative to the control of the use of vending machines. The issue is whether, in terms of the Article, the measure is "in accordance with the general interest" and proportionate. The latter involves

"an assessment of whether a fair balance has been struck between the general interest of the community and the requirements of the protection of the individual's fundamental rights" (AXA General Insurance, Petitioners 2011 SLT 1061, Lord Reed at para [126]).

[65] The court accepts that it ought to apply the three part test identified by Lord Hope in R v Shayler [2003] 1 AC 247 (para 61) from Lord Clyde's adoption in de Freitas v Permanent Secretary of Ministry of Agriculture, Fisheries, Lands and Housing [1999] 1 AC 69 of Gubbay CJ's analysis in Nyambirai v National Social Security Authority [1996] 1 LRC 64. First, the court requires to determine whether the objective is sufficiently important to justify limiting the fundamental right. It was accepted by the petitioners that the margin of appreciation available to the state in determining what is in the general interest is wide (AXA General Insurance, Petitioners (supra), Lord Reed at para 131; James v United Kingdom [1986] 8 EHRR 123, para 46). The legislature's judgment in this area will not be interfered with by the courts unless it is shown to be "manifestly without reasonable foundation" (JA Pye (Oxford) v United Kingdom (2008) 46 EHRR 45, para 75; James v United Kingdom (supra, para 46).

[66] Secondly, there is the question of whether the particular measure is rational, fair and not arbitrary. Thirdly, the measure must constitute as minimum an interference as is "reasonably possible". Lord Hope comments that "a close and penetrating examination of the factual justification" is required. This might seem at odds with the low level of scrutiny apparently applicable were the "manifestly without reasonable foundation" test also to apply. However, given this court's rejection of low level scrutiny in connection with the EU challenge, for the reasons already given in relation to the analysis of proportionality in that challenge, the measure meets all three elements of the test and cannot be said to be disproportionate in Convention terms. The prohibition cannot be said to have failed to strike a balance between the public interest in maintaining good public health and the petitioners' private economic interest in its use of vending machines. Once more, on this aspect of the case, the court agrees with the conclusion of the Lord Ordinary.

Conclusion

[64] For these reasons, the court will refuse the reclaiming motion and adhere to the interlocutor of the Lord Ordinary dated 13 May 2011.