Advocate General Sharpston has today delivered a substantial Opinion in proceedings under Article 218(11) TFEU concerning the EU Singapore Free Trade Agreement, concerning the allocation of competences of the EU and Member States in entering into trade agreements it has obvious significance for the UK’s forthcoming discussions.  The short summary is that the Advocate General concludes that the trade agreement can only be concluded by the EU and the Member States acting jointly.

She identifies a number of aspects of the agreement that fall within the EU’s exclusive competence but identifies various matters that fall into an area of shared competence.  These include matters of real significance such as transport, including government procurement relating to transport and services linked to transport; intellectual property; certain labour and environmental matters; and issues concerning disputes and transparency.  She also concludes that the EU has no competence to be bound by that part of the agreement which purports to terminate existing bilateral agreements between Singapore and individual Member States.  She expressly acknowledges that this outcome would render the process of ratification both cumbersome and complex and may have adverse effects on the relations between the EU and the state it is trying to reach agreement with.  She notes also that if the agreement goes forward for approval by Member States they are left with the choice of accepting or rejecting the whole agreement but that if a Member State were to reject the agreement on grounds relating to matters on which the EU enjoys exclusive competence that Member State would be acting in breach of its Treaty obligations.

The full text of the Opinion can be found here.

The full transcript of yesterday’s (the fourth and final day’s) proceedings in the Supreme Court in the Article 50 case can be found here.

The Justices will now take time to further review the written and oral submissions, and deliver their judgment(s) in the New Year. The Court has stated that it aims to give at least three working days’ notice before publishing the decision.

All the written arguments from the parties are linked to here.

Four members of Monckton are instructed for different parties in the case:

Gerry Facenna QC, David Gregory, and Jack Williams are instructed by Bindmans LLP on behalf of the Pigney Respondents/Interested Parties (known as “The People’s Challenge”).

Anneli Howard is instructed by Mischcon de Reya to represent Mrs Gina Miller, the First Respondent.

The full transcript of yesterday’s proceedings in the Supreme Court in the Article 50 case can be found here.

Four members of Monckton are instructed for different parties in the case:

Gerry Facenna QC, David Gregory, and Jack Williams are instructed by Bindmans LLP on behalf of the Pigney Respondents/Interested Parties (known as “The People’s Challenge”).

Anneli Howard is instructed by Mischcon de Reya to represent Mrs Gina Miller, the First Respondent.

The full transcript of today’s proceedings in the Supreme Court in the Article 50 case can be found here.

Four members of Monckton are instructed for different parties in the case:

Gerry Facenna QC, David Gregory, and Jack Williams are instructed by Bindmans LLP on behalf of the Pigney Respondents/Interested Parties (known as “The People’s Challenge”).

Anneli Howard is instructed by Mischcon de Reya to represent Mrs Gina Miller, the First Respondent.

Yesterday the Government opened its appeal to the Supreme Court in the Article 50 case. The full transcript of the day’s proceedings can be found here.

 

The UK Government’s appeal against the Divisional Court’s ruling in the Article 50 litigation is due to be heard in the Supreme Court starting on Monday 5th December. The case was “leapfrogged” directly to the Supreme Court on account of its constitutional importance. All 11 Supreme Court justices are sitting.

In anticipation of the widespread public interest and engagement in this historic case, the Supreme Court has (with consent) published the written cases of the majority of the parties. These can be read here. The Court has also published (at the same link) a timetable of the oral proceedings, which can be watched online via the Supreme Court’s website. A link to the live stream is here.

Four members of Monckton are instructed for different parties in the case:

Gerry Facenna QC, David Gregory, and Jack Williams are instructed by Bindmans LLP on behalf of the Pigney Respondents/Interested Parties (known as “The People’s Challenge”).

Anneli Howard is instructed by Mischcon de Reya to represent Mrs Gina Miller, the First Respondent.

Introduction

Does Brexit entail an obligation for the United Kingdom to notify the European Economic Area (EEA) of its intention to withdraw? This question has arisen recently in the context of the different ways in which the UK could maintain its links with the single market. This blog entry will address this question in the light of EEA law – it will not examine the domestic constitutional law issues pertaining to the appropriate procedure for withdrawing from the EEA.

Leaving the EEA – Article 127 EEA

 The EEA consists of the EU, the EU’s Member States, Norway, Iceland, and Liechtenstein. The contracting parties may withdraw from the Agreement under Article 127 EEA. This provision reads as follows:

Each Contracting Party may withdraw from this Agreement provided it gives at least twelve months’ notice in writing to the other Contracting Parties.

Immediately after the notification of the intended withdrawal, the other Contracting Parties shall convene a diplomatic conference in order to envisage the necessary modifications to bring to the Agreement.

The above provision sets out a process markedly different from that laid down in Article 50 TEU: it imposes a notification requirement on the withdrawing party, but does not provide for a negotiation process with the remaining parties. Instead, it is the latter that are to discuss how to adjust the Agreement to the new circumstances. Article 127 EEA is also silent on the consequences of non-compliance with the provision laid down thereunder.

The UK as a contracting party

 The EEA Agreement refers expressly to the United Kingdom as an autonomous contracting party. In doing so, it differs from other international agreements in which the UK participates along with the EU and the bilateral nature of which is clear. Compare it, for instance with the 2000 Cotonou Agreement which was concluded between ‘the African, Caribbean and Pacific Group of States of the one part, and the European Community and its Member States, of the other part’.

The autonomous nature of the UK’s membership is also borne out by Article 2(c) EEA which defines the term ‘Contracting Parties’ in relation to the Community (as it then was) and the EC Member States as ‘the Community and the EC Member States, or the Community, or the EC Member States’. The meaning of this formulation ‘in each case is to be deduced from the relevant provisions of this Agreement and from the respective competences of the Community and the EC Member States as they follow from the Treaty establishing the European Economic Community …’.

Two points follow from the above. First, whilst Article 2(c) EEA confirms the autonomous nature of the UK’s membership (‘or the EC Member States’), it also suggests that the latter is a party in the context of its EU membership. Secondly, the UK’s EEA membership is to be understood in relation to the areas where competence has not been passed on to the EU. In other words, whilst autonomous, the UK’s membership is also limited.

The question that would, then, arise is whether, in the light of the above, there is scope in the EEA Agreement for continuing membership once the UK has left the EU. The scope of its existing membership and its link with EU membership, in the light of Article 2(c) EEA, would suggest a negative answer. This conclusion is also supported by other features of the Agreement.

 The territorial clause – Article 126 

Article 126 EEA defines the territorial scope of the EEA Agreement. It provides that the latter ‘shall apply to the territories to which the Treaty establishing the European Economic Community … is applied and under the conditions laid down in that Treaty … , and to the territories of Iceland …, the Principality of Liechtenstein and the Kingdom of Norway …’ (Article 126(1) EEA). Article 126(2) EEA provides for an exception in relation to Åland Islands.

The above clause defines the territorial scope of the EEA Agreement with reference to the territorial scope of the EU’s primary law. As, following Brexit, the UK would not be part of the latter, it would also be excluded from the former.

The binary system set out under the EEA Agreement

 The EEA Agreement establishes a system that is binary in its conception, and involves EU and European Free Trade Area (EFTA) members. In its preamble, the Agreement ‘reaffirm[s] the high priority attached to the privileged relationship between the European Community, its Member States and the EFTA States…’ (second paragraph).

This view is also borne out by the institutional characteristics of the EEA. The membership of the EEA Council, for instance, consists of the members of the EU’s Council and Commission and one member of the Government of each of the EFTA States (Article 90(1) EEA). As for the EEA Joint Committee, whilst its membership is couched in broader terms (‘shall consist of representatives of the Contracting Parties’: Article 93(1) EEA), its decisions are to be taken ‘by agreement between the Community, on the one hand, and the EFTA States speaking with one voice, on the other’ (Article 93(2) EEA).

In terms of judicial supervision, there is provision for the EFTA Court (Article 108(2) EEA) the jurisdiction of which would cover the enforcement of the Agreement in the EFTA States and the settlement of disputes between EFTA States. The EEA Joint Committee is responsible, amongst others, for reviewing the development of the case-law of the Court of Justice of the European Union and the EFTA Court. It would be difficult to envisage the participation of a member which would be subject to the jurisdiction of neither court.

The role of monitoring and enforcing the Agreement is conferred on two institutions, namely the EFTA Surveillance Authority and the European Commission, the latter acting in conformity with EU primary law (Article 109 EEA).

 It follows from the above that EEA membership is tied in with EU or EFTA membership. This conclusion is also borne out by Article 128(1) EEA which provides that ‘[a]ny European State becoming a member of the Community shall, and the Swiss Confederation or any European State becoming a member of EFTA may, apply to become a party to this Agreement. It shall address its application to the EEA Council’. This provision does not expressly confine EEA membership to EU or EFTA members. Viewed, however, in the light of the logic and structure of the Agreement, it supports the view that there is no scope within the existing Agreement for a third type of a contracting party, the latter being neither an EU nor an EFTA member.

Conclusion

 Whilst a party to the EEA, the UK’s membership is conditioned by its EU membership. Notification pursuant to Article 126 EEA is a procedural duty which would need to be complied with. Failure to notify, however, would not maintain EEA membership, unless either the EEA Agreement was amended or the UK became an EFTA member (on the latter, see this report). Instead, leaving the EU without having notified the EEA under Article 126 EEA would have consequences for the UK in the public international law sphere. The other EEA members, for instance, would be able to consider Brexit a fundamental change of circumstances (under Article 62 of the Vienna Convention on the Law of Treaties) and terminate the Agreement.

The above analysis has been carried out in the light of the EEA Agreement as it currently stands. The outcome of the negotiations between the EU and the UK under Article 50 TEU may well entail adjustments of the system set out under the Agreement. In legal terms, however, such adjustments would require an amendment of the Agreement.

Monckton Chambers has submitted its response to the Brexit Competition Law Working Group (BCLWG) Issues paper.*

Our response makes a number of specific suggestions as to how the Government could best respond to a hard Brexit, but also highlights some more general points which bear emphasis given the current political climate.

Brexiteers often argue that by substituting UK for EU law, the regulatory burdens on UK companies will be reduced, allowing the UK economy to become more dynamic and productive. Whatever the position elsewhere, that line of reasoning does not apply in the field of competition policy.

That is for two reasons. First, this is not an area in which one set of rules can simply be substituted for another: the EU competition regime will continue to operate in parallel with the UK regime, and UK companies will need to comply with both. This task will be more straightforward if the UK retains a modified version of s.60 CA98, so that the domestic antitrust rules continue to develop broadly in parallel with Articles 101 and 102.

In order to minimise the dual regulatory burden on UK companies, as well as to ensure the UK regime operates effectively, the Government will need to negotiate arrangements enabling the CMA and the European Commission to cooperate closely in a post-Brexit world. Among other things, it would be helpful if the two regulators were able to share information and analysis when investigating the same matters in parallel, assisted each other in organising dawn raids and mutually recognised leniency applications.

The second reason why the standard arguments in favour of Brexit do not apply is that competition law is not an area of EU law which imposes disproportionate regulatory burdens going beyond what we, in the UK, consider to be appropriate. On the contrary, the UK deliberately chose to model its domestic antitrust rules on the EU provisions – because we thought they were sensible rules to adopt. As a result, UK and EU law prohibits exactly the same sorts of anti-competitive agreements and conduct.

Successive UK governments have taken steps to encourage private actions for breaches of competition law, recognising that effective enforcement benefits consumers and boosts UK productivity. That applies in particular to EU competition law, as many of the largest distortions to competition in the UK will be the result of anti-competitive practices operating across several European countries which fall foul of the EU prohibitions.

In our view, an important conclusion follows from this, which is that the Government should ensure that it remains easy for parties to bring actions in the domestic courts for breaches of EU competition law, including by retaining a version of s.47A CA98 so that claimants do not need to ‘re-prove’ infringements that have already been the subject of a Commission decision.

It is unrealistic to expect the CMA will have the resources to duplicate the Commission’s casework, so there will be many Commission decisions finding infringements of Articles 101 or 102 without a corresponding CMA decision finding an infringement of Chapter I or Chapter II. The experience of the past decade shows that far fewer private actions will be brought if claimants have to establish the infringement for themselves, given the complexity of many competition cases.

If s.47A is amended so that it no longer applies to Commission decisions, private actions will have lower prospects of success and fewer people will be willing to fund them. As a result, fewer UK consumers and small businesses will be compensated where they are harmed by anti-competitive practices that are contrary to both the (virtually identical) UK and EU rules, but which are only subject to an infringement finding at the EU level.

A good example is the follow-on claim currently being brought in the Competition Appeal Tribunal against MasterCard on behalf of all UK consumers. The claim, said to be the largest ever brought in the UK courts, is worth £14 billion and relies on a Commission infringement decision. If the claimants can establish that the established breach of EU law harmed UK consumers, millions of UK citizens will receive financial compensation.

Such claims should continue to be possible after Brexit. For UK consumers these actions are effectively a free lunch. The Government should not take it away.

* Our response took into account comments from a number of members of chambers but does not necessarily represent the views of any individual member.

 

This post seeks to cover key aspects of the legislation that will be necessary to give effect to the consensus reached in the Brexit negotiations.

Is the civil service ready for the challenge of implementing Brexit?

1. There has been a great deal of media comment about whether  the UK civil service has the capacity to give effect to the eventual Brexit consensus, whenever the negotiations are completed. Giving evidence to Parliament, three former heads of the civil service have expressed varying degrees of confidence in the civil service’s capability to deliver the outcome effectively.

2. This is scarcely surprising. The scale of the challenge is unprecedented. Moreover, over many years, other pressures such as the need to develop commercial expertise and the increase of powers vested in the EU institutions have resulted in less focus in Whitehall  on EU professionalism.

3. The parliamentary bills which will be necessary to give effect to the Brexit consensus will be complex and will stretch the civil service and Parliament. But the implications are not all doom and gloom. The civil service is a highly professional and disciplined organisation. When, in 2011, the Government announced the Red Tape Challenge to reduce the regulatory burden imposed by UK legislation (excluding EU legislation) , the exercise was received  with scepticism. In fact the civil service, assisted by 30,000 stakeholders, examined every domestic regulatory burden imposed legislatively and came up with plans to amend, revoke or preserve every such burden seriatim. According to the Government, the exercise resulted in 3000 legislative reforms. That was a masterly exercise. But Brexit will outstrip the Red Tape Challenge in its scale and complexity. Lawyers could do a great deal to support the Government in the challenging working environment that lies ahead.

UK parliamentary bills to give effect to Brexit

4. The negotiations with the EU under Article 50 will be multi-layered. The ideal outcome might be intended to be a perfectly solved Rubik’s cube. In fact the colours are unlikely to match and the outcome could be messy. So what should practitioners take into account when mapping the future?

5. By way of preface, the Government’s intention seems to be to introduce a bill or bills in the next session of Parliament. That would imply the introduction of a bill or bills some time after May 2017. But it is far from clear what early introduction would mean in practice, since the bill(s)  could not possibly reach Royal Assent until the negotiations were nearing completion.

6. The first aspect of the implementing legislation would need to reflect the consensus reached with the EU. Once the UK leaves the EU at the international level,  the  European Communities Act 1972, as well as subsequent  Acts of Parliament giving effect to further European treaties, would have no meaning and would need to be repealed.

7. The second aspect of the legislation  would need to reflect the interplay between EU Law and rights and obligations arising under a host of other international treaties which occupy the same fields as EU Law already does, such as in the environmental field. Since the Prime Minister has said that the UK will continue to comply with its international obligations, this is bound to be a significant and complex aspect of the future legal framework.

8. The third aspect would need to reflect any further complexity resulting from the giving of notice of withdrawal from the EEA Treaty. While all 28 EU Member States are also members of the EEA Treaty , it is probable that  Article 127/EEA would need to be triggered by the UK. That must be done by written notice of at least 12 months to the other 30 contracting parties. If withdrawal from the EEA were to necessitate  ratification by any other  Member State in line with its constitutional requirements, and if  consequential  referenda were needed, the UK domestic legislative timescales could need  adjustment.

9. The fourth aspect would need to cover the protection of the first of the three categories  of rights identified by the High Court in R (on application by Miller and others) v Secretary of State for Exiting the European Union, paragraph 58, namely the rights which are capable of replication in domestic law. This is the aspect which most obviously falls within the scope of the Great Repeal Bill first described by the Prime Minister on 2 October. In fact the bill would be far from being merely a repeal bill. As described, it would of course repeal the European Communities Act and subsequent legislation giving effect to later European treaties. But it is also intended to convert the existing body of EU Law into domestic law, pending further review and re-enactment or revision or repeal by virtue of primary or  secondary legislation.

10.  The most intriguing category of rights to be addressed would be the category of transnational rights identified by the High Court, viz, those enjoyed by UK nationals in other Member States. In this regard, there is every sign that a game of cat and mouse will be played out . Self-evidently, the UK Parliament could not legislate for the protection of UK citizens’ rights  in another Member State. But in order to ensure adequate reciprocity, the Government could  decide to play the question long before introducing domestic provision to protect EU citizens’ rights in the UK.

11. To the extent not subsumed under the other aspects identified above, the fifth aspect would be to cover transitional matters. These include transitional provisions that are necessary while a final resolution of a number of issues is reached, for example,  in respect of other international treaties to which the UK is a party which might need renegotiation,   or otherwise, for example, in respect of the role of the CJEU in determining cases already before it at the time of exit.

12. What is clear is that Parliament, contrary to the views of some commentators, will plainly play the pivotal role in the implementation of the new consensus. It cannot be sidelined.

13. The question of how many pieces of UK primary legislation would  be needed remains to be seen. But what is obvious is that primary legislation would  need to be underpinned by a myriad pieces of secondary legislation. Whereas primary legislation would be the object of proper scrutiny , it is not obvious that Parliament would  have the capacity to scrutinise the secondary legislation that would  inevitably be spawned by the Brexit exercise both at the time of exit and subsequently. A question to be addressed is whether the Government might  seek to persuade Parliament that it would  need  Henry VIII powers to amend primary legislation by secondary legislation. At the best of times, a proposal for the use of Henry VIII powers is often contentious , requiring collective, including legal, agreement at ministerial level. But in the current, fevered atmosphere, it is doubtful whether most MPs would accept the inclusion of such powers without significant safeguards against their arbitrary use.

Specific points in the light of the foregoing discussion

14. The UK adopts a dualist approach to implementation of International and EU Law. So, depending on the nature of the  consensus with the EU and EEA, as well as the future relationships to be enjoyed direct with third countries, the legislation (in all probability there will be more than one Act of Parliament) would need to cover at least the following (the list is not exhaustive) :

(a) Provision to reflect the changed relationship with the EU , possibly including some enabling powers of the kind in the 1972 Act itself;

(b) Provision reflecting  withdrawal from the EEA;

(c) Provision regarding the devolved administrations and Brexit;

(d) Transitional provision to reflect the  changed relationships with third countries since negotiations with them cannot begin in earnest while the UK remains a member of the EU. If, as indicated by the UK Government’s treaty website , it is right that the UK has signed some 14000 international treaties, the process of painstaking assessment of read across, if any,  to the UK’s  future legal framework, could be a time-consuming process ;

(e) Provision to make financial payments to the EU both in respect of exit and in relation to future funding payments  if they are the price of continuing access to the Single Market;

(f) Provision as to acquired rights  of EEA citizens in the UK;

(g) Provision as to the UK nationals who are office holders or staff employed by the EU institutions ;

(h) Provision as to health care and social security;

(i) Provision as to the continuing recognition of professional qualifications , of licences to operate cross-frontier and enforcement of standards;

(j) Provision as to cross-cutting subjects such as state aid, competition and public procurement;

(k) Since, according to the Prime Minister,  the Single Market acquis is to be treated as part of domestic law pending future review and amendment or revocation, the question will arise as to how amendments to the relevant provisions made after exit but before review should be handled;

(l) Provision as to the interpretation of EU  laws as they will continue to apply in the UK, including guidance to the UK courts,  as well as treatment of CJEU jurisdiction in respect of transitional cases already before the Court at the time of exit;

(m)  Provision as to enforcement of applicable EU laws if and to the extent that the Commission’s enforcement  role is to be extinguished;

(n) Provision as to membership of any EU agencies or other similar bodies of which the UK is a member , not least provision as to the relocation of any agencies currently in the UK.

15. The Great Repeal Bill has been heralded as the principal  way ahead. It is certainly an eye-catching proposition even if , as is obvious from the foregoing discussion, it is a misnomer.

16. The more detailed legal issues that will need to be addressed in the Great Repeal Bill are beyond the scope of this post.  But the Monckton Brexit blog posts referred to below will help the reader to understand more about the scale and complexity of what lies ahead.

17. In summary, in giving effect to a future Brexit consensus,  the scale and complexity of the legislative tasks ahead for Parliament and the Executive are unenviable. The exercise will require skill, expertise,  imagination and determination, as constructive dialogue with external experts and stakeholders. But unless and until the Government is transparent about its policy and strategic aims – which can, in my view, be achieved without undermining its negotiating strategy –  it will be impossible to assess just how big a legislative challenge lies ahead.

The content of this post was the subject of discussion at Eversheds LLP on 29 November 2016.

George Peretz (11 October) and I (5 October and 31 August 2016 ) have both written about what detailed aspects of the legislation might need to cover. Peter Oliver has written on what the Withdrawal Agreement might contain (20 July). Anneli Howard has written on the need for proper regulatory impact assessments of future legislation (12 July 2016). Panos Koutrakos has written on the problems to be faced in negotiating third country agreements (27 October 2016) , as well as the problems that are likely to be faced by the civil service in that regard .