A “paradigm shift”: CAT Hands Down Landmark Ruling on Brexit’s Effect on Accrued Rights

26 Jul 2023

In the Merchant Interchange Fee Umbrella Proceedings, the CAT has today handed down its judgment on the “Volvo limitation issues”: [2023] CAT 49. Those issues were, principally: (i) did the CJEU find in Case C-267/20 Volvo that, as a matter of EU law, limitation did not begin to run against a claimant with a competition law damages claim until the relevant infringing activity ceased; and (ii) if so, should the CAT follow Volvo (which was handed down after 31 December 2020 or Implementation Period Completion Day / “IPCD”)?

The CAT’s judgment is of very wide significance because it represents the first explicit analysis in UK domestic law of the effect that the EU (Withdrawal) Act 2018 (“EUWA”) has had upon rights accrued under EU law prior to IPCD, and in particular of whether post-IPCD EU judgments are binding on UK courts adjudicating on such rights.

The Tribunal unanimously concluded, as to question (i) above, that CJEU in Volvo had made no binding finding on limitation in any event. However, this point remains under consideration by the CJEU in other cases.

Of wider importance in the UK, however, are the Tribunal’s responses to question (ii) which settle, in the negative, any argument as to whether post-IPCD EU judgments have binding effect in relation to rights accrued under EU law before IPCD.

On that issue, the merchant claimants argued that claims in respect of facts occurring before 31 December 2021 represented “accrued rights”, which ought to have been unaffected by Brexit, including as to the binding effect of post-IPCD EU judgments [50]-[51].

However, in the judgment of the majority (Marcus Smith J and Ben Tidswell), Parliament, by its enactment of EUWA, effected the “translation” of all rights, claims and remedies that had existed under EU prior to 31 December 2021 into rights, claims and remedies under retained EU law (i.e. domestic law), which are now preserved by virtue of section 4(1) of EUWA.

As majority put it, the UK’s “entire legal order has undergone a paradigm shift” [69(2)], and the preservation of accrued rights in an unchanged legal form would have been “inconsistent with what Parliament intended” by Brexit [69(1)].  Importantly, section 16 of the Interpretation Act 1978 had not been triggered to preserve those rights because no enactment under which they had substantively accrued had been repealed. Rather, in the majority’s analysis, the precise effect of the repeal of the European Communities Act 1972 had been to close a “gateway” through which substantive EU law rights had previously flowed into domestic law [69(3)].

Roth J’s concurring minority judgment did not agree that section 4(1) of EUWA was the mechanism by which accrued rights were converted into rights under retained EU law, noting that “[s]omewhat surprisingly, the 2018 Act does not set out a clear answer” as to what that mechanism was [101]. Nonetheless, Roth J considered that “the statutory scheme, considered as a whole, indeed has, in effect, converted or ‘translated’ rights which had accrued under EU law into rights under retained EU law, save insofar as it otherwise expressly provides” [102].

Ronit Kreisberger KC, Philip Woolfe, and Antonia Fitzpatrick, with Oliver Jackson at 11KBW, acted on behalf of a group of merchant claimants, instructed by Stephenson Harwood LLP.

Anneliese Blackwood with Nicholas Saunders KC and Aidan O’Neill KC appeared on behalf of the Class Representative in the Merricks Proceedings instructed by Willkie Farr & Gallagher (UK) LLP.

The judgment is available here.