Burma Oil Company v Lord Advocate [1965] AC 75

PREROGATIVE POWERS – EXECUTIVE

Facts

The claimant, Burma Oil Company, brought proceedings against the UK government (who were represented in the case by the Lord Advocate) seeking compensation for the destruction of oil fields in Burma by British forces in 1942 (during the Second World War). The destruction had been considered necessary to prevent the installations from falling into the hands of the Japanese, which would have been devastating to the Allies war effort.

Issue

There were two questions at stake in the case: firstly, whether the destruction had been within the limits of the prerogative powers of the executive and therefore lawful; secondly, whether the government was liable to pay compensation for the damage to the claimant.

Held

The House of Lords held by a majority of 3 to 2 that although the damage was within the executive’s prerogative powers and was therefore lawful, the power in question required the payment of compensation as it was equivalent to requisitioning the property. Any act of requisition was done for the good of the public, at the expense of the individual proprietor, and for that reason, the proprietor should be compensated from public funds.

(It should be noted that the specific decision on the compensation issue was subsequently frustrated by a retrospective legislation the War Damage Act 1965, which was passed retrospectively to exempt the British Government from liability for damage caused during war. However, the House’s comments on the scope of the royal prerogative remain good law and were cited by the Supreme Court as recently as this year in Miller v Secretary of State for Exiting the European Union [2017] UKSC 5).

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