In this post, our former head of chambers, the prominent EU lawyer Sir Jeremy Lever, KCMG QC, considers whether the Supreme Court will have to make a reference to the CJEU in the Miller case and sets out an alternative analysis of the legal issues.

With regard to the potential need for a reference by the UK Supreme Court to the CJEU in the Brexit appeal proceedings in December, I think that the position can be summarised as follows.

In order to uphold the decision of the High Court in the Miller case on the ground argued by Lord Pannick Q.C., the Supreme Court would almost certainly have to make a reference to the CJEU of the question whether a notice given by a Member State under Article 50 of the Treaty on European Union (“TEU”) can be unilaterally withdrawn by the Member State that gave the notice. Lord Pannick’s argument was that service of such a notice was like pulling the trigger of a rifle: the bullet thus released cannot be recalled by the marksman.

The High Court did not need to decide whether the basis of that argument, namely that an Article 50 notice can no more be recalled than a bullet can be, was correct since it was common ground between the parties that an Article 50 notice cannot be unilaterally withdrawn.

However, the established practice of the House of Lords’ Judicial Committee was, and I think that the practice of its successor the Supreme Court must be, that their Lordships will not decide questions of law on the basis of concessions by Counsel.

Whether or not an Article 50 notice can be unilaterally withdrawn is certainly not “acte clair” in the sense of being either obvious or already the subject of a relevant earlier decision by the CJEU. The opinion of respected academic legal scholars that a notice can be unilaterally withdrawn is on record; and Lord Kerr of Kinlochard, who was involved in the drafting of the TEU, has publicly stated that that too is his opinion.

If the question remains relevant to the decision of the Supreme Court it will therefore itself have to find an answer to it and, unlike the High Court, will not be able to proceed simply on the basis that the answer was “common ground” between the parties”. As the UK’s court of final appeal, it will then be obliged, by EU law, to seek the opinion of the CJEU. Indeed as a matter of common sense, only the CJEU could give a definitive ruling on what is a pure question of EU law.

Even apart from the pending litigation, there would be a strong public interest in knowing definitively whether such a notice can be unilaterally withdrawn. First, it cannot be ruled out that a future British Government might wish to withdraw a notice that had been given in March 2017. Secondly, the possibility of unilateral withdrawal of the Article 50 notice is also relevant to foreseeability of the time when Brexit will occur following the service of Article 50 notice which is also of huge relevance to those who would be affected by Brexit. Thirdly, it would significantly affect the dynamics of the negotiations between the UK and the EU27.

However, having regard to everything that would need to be done if a reference to the CJEU were necessary, I myself cannot foresee how, even using the CJEU’s expedited procedure, the CJEU could give judgment on a reference to it before the second quarter of 2017. If that is so, the Supreme Court would then not be able to hand down judgment in the Brexit appeal before,at the earliest, the second quarter of 2017.

Even though it might be of huge importance for the United Kingdom to obtain, before the British Government served notice under Article 50,  a definitive answer to the question of whether the notice could be unilaterally withdrawn, one has to recognise that the consequent delay would be likely to be politically highly controversial.

There is however an alternative basis on which the Supreme Court could uphold the decision of the High Court, being a basis that I believe would not require a reference to the CJEU.

The wording of Article 50 TEU makes it clear (i) that a notice can be served by a Member State under the Article only if the Member State has “decided” to leave the EU and (ii) that the decision in question is to be ascertained by reference to the constitutional rules of the Member State in question.

The European Union Referendum Act cannot, it is thought, be construed as providing that a majority vote in favour of leaving the EU would constitute, or itself authorise, the Government to take, a decision to leave the EU, though, when the Bill was being debated in the House of Commons, the then Foreign Secretary indicated that the Government would take the necessary steps to give effect to, a majority vote in favour of leaving the EU.

As the High Court found in its judgment, if the United Kingdom leaves the EU, British citizens and companies will lose many important legal rights that they currently enjoy, as a matter of UK law, by reason of UK membership of the EU. Some of the rights that would be lost could not, post-Brexit, be secured, even approximately, by UK legislation and, it is thought, none could be perfectly replicated by the UK Parliament post-Brexit. A British Government cannot, without legislative authority, take a decision that would have such an effect. It can decide to seek from Parliament, the necessary legislative authority and can decide to use all the means available to it to pass the necessary legislation through Parliament. But unless and until such legislation has been passed there is no decision by the United Kingdom to leave the EU.

If that analysis were accepted by the Supreme Court, it would not have to refer any question to the CJEU.

An advantage of proceeding on the basis of that analysis would therefore be that the litigation in the Supreme Court could be completed without delay. The corresponding disadvantage would be that, if a notice under Article 50 were in due course then served, it would be served in ignorance of the answer to the highly relevant question of whether such a notice could subsequently be unilaterally withdrawn by the British Government.

The foregoing is intended to cast light on the important constitutional issues raised by the Brexit litigation. As the High Court made clear in its judgment, the analysis of whether an Act of Parliament is required to trigger Article 50 is independent of the merits or demerits of Brexit. It concerns the more fundamental question of what is consistent with the rule of law within the British constitution.

There has been much excitement generated by the possibility that, in order to resolve the Miller case, the Supreme Court might have to make a reference to the Court of Justice of the EU (“ECJ”).

The excitement is partly generated by the fact that the question that it is thought might have to be referred – the question of whether a notification under Article 50 TEU can be withdrawn unilaterally by the Member State concerned – is one with major political significance, since a positive answer would mean that the United Kingdom retained the option, at any time until the day it actually left the EU, of changing its mind and remaining a member on current terms.  But it is also due to the fact that a reference to the ECJ would take time (thereby having significant implications for the Government’s proposed notification timetable): and the idea that the ECJ, a court never popular with politicians hostile to the EU, would seem to have a say in the United Kingdom’s decision to make an Article 50 notification would be, to say the least, controversial in certain quarters.

In a recent piece here, Philip Moser QC rightly pointed out that, although the Divisional Court was prepared to proceed on the basis of an agreement between the parties that Article 50 notification is irrevocable, the Supreme Court is unlikely to be prepared to proceed on the basis of such an agreement (even if it persists, which it appears it may not).  He also explained, in my view entirely correctly, that if the answer to the question in Miller does depend on whether an Article 50 notification is revocable, then the Supreme Court will have no option but to make a reference of the revocability question: though (in my view) the arguments that an Article 50 notification can be revoked are compelling, for reasons set out here  by Professor Paul Craig, the question cannot be regarded as acte clair (i.e. so clear that there is no need to trouble the ECJ).

So the key question is whether the Claimants’ case does depend on the proposition that an Article 50 notification cannot be revoked unilaterally by the United Kingdom.  In my view, however, it does not: the Claimant’s case, as accepted by the Divisional Court, survives even if that proposition is incorrect.

The effect of a notification under Article 50 is that the United Kingdom is set on a path which leads by default to the United Kingdom leaving the EU two years later (with all the immediate effects on domestic law set out by the Divisional Court).  I say “by default” because several events could intervene: the period could be extended by agreement with all other EU States; an Article 50 agreement could provide for a later date; a further Treaty could be agreed between the United Kingdom and the other Member States; or all Member States could agree to the United Kingdom revoking the Article 50 notice (a possibility accepted even by those who argue that it is not unilaterally revocable).  However, none of those events are ones within the control of the United Kingdom: they all involve the agreement of other Member States, which might not be forthcoming.

That makes the “irrevocability” hypothesis an attractive one from the Claimants’ point of view: as soon as Article 50 is triggered, on this hypothesis, all UK citizens’ rights derived from EU membership automatically vanish after 2 years, with nothing the United Kingdom, and in particular the UK Parliament, can do to prevent it without the agreement of other Member States, over which Parliament has no control.

However, though the irrevocability hypothesis is an attractive simplifying assumption from the Claimants’ point of view, it is not in my view a necessary assumption.

That is because the key constitutional principle lying behind the Claimants’ case is the principle that an act of the Royal Prerogative cannot remove statutory rights granted by Parliament: the principle most famously set out in the Case of Proclamations of 1610.  And that principle would apply even if, having notified under Article 50, the United Kingdom were able unilaterally to withdraw that notification.

That that is so can be seen from the following example.  If the Crown purported, by a proclamation given under the Royal Prerogative, to remove a domestic law right granted under the XYZ Act as from March 2019, it is clear that, under the Case of Proclamations, that proclamation would have no legal effect.  But it would make no difference to that analysis if the proclamation had a clause which said something like “unless Parliament passes an Act before March 2019 re-affirming the XYZ Act.”  The point is that, leaving aside cases where Parliament has conferred specific powers on the Crown, the removal of a statutory right requires a positive act by Parliament, namely the passage of an Act of Parliament removing that right.  In short, the Royal Prerogative cannot make Parliamentary inaction have the same effect as an Act of Parliament.

Returning to Article 50, the key point is that, even if the United Kingdom can revoke an Article 50 notification, the effect of a notification under Article 50 is that, unless Parliament acts (for example, by passing an Act of Parliament requiring the notification to be withdrawn), all the rights UK citizens enjoy under the EU treaties vanish two years later (subject only to events depending on the actions of other States).  The fact that Parliament could, on the revocablity hypothesis, intervene to prevent that default consequence arising is not relevant: the principle is that the Royal Prerogative should not be able to remove statutory rights without a positive act by Parliament, namely a specific statutory power or an Act of Parliament.  Parliamentary silence is not enough.

It may be noted that this argument closely resembles an argument accepted by the Divisional Court about so-called “category (i)” rights, namely EU-derived rights that Parliament could re-instate in domestic law if it wished to do so: see §58 of the judgment.  (Examples of category (i) rights include rights derived from EU Regulations – which are not incorporated into domestic statute – such as rights to payments under the Common Agricultural Policy.  They also include rights implemented under the European Communities Act 1972 (“ECA 1972”) and which would need to be re-enacted under a different domestic legal basis once the EU Treaties cease to apply to the United Kingdom, such as consumers’ rights under the Unfair Terms In Consumer Contracts Regulations.)  The Divisional Court said at §64 that:

“As to category (i) rights, we consider that the claimants are correct in their submission that it is the ECA 1972 which is the principal legislation under which these rights are given effect in domestic law of the United Kingdom: and that it is no answer to their case to say that some of them might be preserved under new primary legislation, yet to be enacted, when withdrawal pursuant to Article 50 takes place. The objection remains that the Crown, through exercise of its prerogative powers, would have deprived domestic law rights created by the ECA 1972 of effect.

In other words, the fact that Parliament could re-enact those rights was no answer to the point that the use of the Royal Prerogative to trigger Article 50 and hence bring about their removal was contrary to the principle set out in the Case of Proclamations.  Similarly, in my view, if the Claimants’ case on the extent of that principle is well-founded, it is no answer to it to say that even after Article 50 is triggered Parliament could (if the revocability hypothesis is correct) force a revocation.

My view, therefore, is that the Claimants’ case, as accepted by the Divisional Court, does not depend on the assumption that Article 50 notification is irrevocable: that is no more than a simplifying assumption.  If that is right, the Supreme Court not only does not have to, but cannot, make a reference of that question to the ECJ.  That is because, under Article 267 TFEU, a national court has no power to make a reference of a question of EU law just because it would be generally helpful to know the answer: it can make a reference only if it has to know the answer in order to give judgment.

That said, there would be nothing to stop the Supreme Court from expressing its views on the revocability question: though those views would be what lawyers call “obiter dicta” (i.e. remarks by a court that form no part of its essential reasoning and which do not create a binding precedent), obiter dicta of the Supreme Court always carry weight and could well inform the political debate on the role that Parliament can and should play in the Article 50 process.  But whether the Supreme Court chose to venture into those waters would, if I am right, be entirely a matter for it.

In an earlier blog, I commented on a summary of a talk given by Judge Baudenbacher (President of the EFTA Court) to the Centre for European Law at King’s College London on 13 October. The full text of his speech is now available here.

The following points are worth drawing attention to.

• It is “hard to imagine” that access to the single market will be possible in the absence of a “non-national surveillance and court mechanism”;
• The UK will lose EEA membership on leaving the EU unless it both joins EFTA and becomes a contracting party to the EEA agreement (which would require the agreement of the EEA States plus Switzerland).　 He believes that that would be forthcoming.
• He considers that some EEA politicians have partly overstated the absence of “co-decision” in the making of EU law; in his view they have not made sufficient use of the co-determination rights that they have.
• He suggests that EU leaders should be prepared to contemplate a compromise on free movement of persons.
• He points out that the EEA States do not pay into the EU budget; they have their own organisation and their own projects.　 He also observes that Norway, “as good Christians”, gives more of its oil money away that it needs to under EEA law.
• He observes that, in the EFTA Court, there would be a UK judge sitting on every case.
• The EFTA Court leaves the EEA States more sovereignty: there are no doctrines of direct effect or primacy in EEA law (legal effects occur only when they have written EEA law into their own law); there is no penalty payment for non-compliance; EFTA Court judgments are not formally binding and there is more flexibility; and there is never an obligation on national courts to make a reference.
• He considers that (compared with the European Court of Justice) EFTA Court jurisprudence is more willing to engage with economic argument, more in favour of openness, less paternalist, more in favour of free trial rights, and less tolerant of legal fictions and presumptions: the EFTA court “is already on some sort of a common law track”. That tendency is increased by the fact that the Court works in English (albeit “EFTA English” rather than “real English”).
• The UK cannot have unrealistic expectations.

 

The Comprehensive Economic and Trade Agreement (CETA) that the EU has negotiated with Canada has attracted considerable publicity. Its fate is uncertain at the time of writing, as the Walloon Parliament in Belgium has voted against its signature and provisional application (the signature of CETA was scheduled originally for Thursday 27 October 2016). Its outcome notwithstanding, this episode is instructive about the legal complexities of Brexit.

What is CETA? 

CETA is one of the most comprehensive trade agreements that the EU has negotiated.

Negotiations started in 2009. The Agreement introduces considerable liberalization in trade in goods, opens up public procurement in Canada at national, regional, and local level, and covers areas such as intellectual property rights and sustainable development. It also covers services, but does not liberalise financial services (and includes numerous exceptions and reservations). It covers technical standards but without introducing mutual recognition: the accredited standardisation bodies in the EU and Canada would be competent to confirm compliance with the standards of the other party, hence simplifying trade for business.

Which aspect of CETA has attracted attention? 

The approach of CETA to investment-State dispute settlement has attracted considerable attention. The Agreement provides for a permanent investment tribunal with jurisdiction to hear investor-State disputes. Companies may sue States directly before the tribunal for violations of the principle of non-discrimination, the most favoured nation treatment, the principle of favourable and equitable treatment, including denial of justice and fundamental breaches of due process, and expropriation without compensation. The tribunal is permanent and its members are appointed by the EU and Canada. The Agreement also provides for an appeal system.

The provision for a permanent investor tribunal was introduced by the EU after the text of CETA had been finalized. It illustrates a shift from the traditional investor-state dispute settlement system which is prevalent in international investor treaties and which is based on ad hoc arbitration. This system has attracted considerable attention recently. Its detractors attack the avoidance of national courts and suggest that the traditional investor-State dispute settlement system lacks transparency and undermines the regulatory authority of States. This criticism has been expressed in strong terms in the context of the negotiation of the Transatlantic Trade and Investment Partnership (TTIP) between the EU and the United States.

CETA is a mixed agreement  – what does this mean?

The procedure governing the signature and conclusion of an international agreement negotiated by the EU depends on the content of the agreement. If the latter falls within the exclusive competence of the EU, it is signed and concluded by the EU alone (eg the agreement on trade in wine between the EU and South Africa). This procedure may make the process of negotiating, signing, and concluding treaties easier (Article 207 TFEU, for instance, provides for qualified majority in the Council for the conclusion of agreements on trade in goods, and there is no need for ratification in Member States, as the latter are not parties to such agreements).

If, on the other hand, the agreement covers areas over which the EU and the Member States share competence, it is concluded by the EU and its Member States. This is a mixed agreement. The form of this agreement has implications for its application and entry into force: the ratification in each and every Member State, in accordance with national constitutional rules, is required.

Whether an international agreement should be an EU-only or a mixed agreement is often a matter of legal controversy. This is because this issue pertains to the politically sensitive question about the division of competence in international economic relations between the EU and the Member States. The European Court of Justice is currently considering these matters in a request by the Commission on the conclusion of the Free Trade Agreement that the EU has negotiated with Singapore (the controversial issue is competence over investment policy, transport services, intellectual property, and sustainable development).

Why is the vote of the Walloon parliament relevant?

Whilst the European Commission is of the view that CETA ought to be concluded by the EU alone, Member States disagreed. In order to avoid a delay in its application (and given the pending dispute before the Court of Justice), the Commission proposed in July 2016 that CETA be signed, provisionally applied, and concluded as a mixed agreement.

It is in this context that the vote at the Walloon parliament has attracted such attention. The signing and provisional application of CETA require the agreement of, amongst the other Member States, Belgium where all six regional assemblies would have to give their approval.

The objections raised by the Walloon assembly have to do with concerns about the impact of CETA on environmental, labour, and consumer standards, as well as the establishment of the investment tribunal and the impact this might have on national regulatory autonomy.

Is this a CETA-specific problem?

The legal and practical issues outlined above are not unique to either CETA or Belgium. The Netherlands has not ratified the Association Agreement that the EU negotiated with Ukraine following a non-binding referendum on 6 April 2016. As for CETA in particular, its signature was by no means a foregone conclusion in Germany and Austria. In Germany, the Federal Constitutional Court was asked to issue an injunction against the provisional application of the Agreement. It declined in a judgment rendered on 13 October 2016 (for a summary in English, see here.

The issues raised by the CETA episode may well arise in the context of any other comprehensive economic agreement negotiated by the EU, a point that the controversy surrounding the negotiation of TTIP illustrates all too clearly.

What does this tell us about Brexit?

The problems raised by the signature of CETA illustrate the legal challenges that the UK may face in its effort to agree its future relationship with the EU. If the latter were governed by a rather basic trade agreement, confined, for instance, to traditional trade barriers in goods, the agreement could be concluded by the EU alone (it would require qualified majority in the Council and the consent of the European Parliament). If, on the other hand, the agreement had a more comprehensive scope, its conclusion would require ratification in all 27 remaining Member States, and the consent of the European Parliament.

The form of the agreement (as an EU-only or a mixed one) would be a matter of legal assessment and political expediency. As far as the former is concerned, the ruling of the Court of Justice on the EU-Singapore Agreement is expected to clarify the issue of competence in policy areas which might be covered (the hearing took place on 13 and 14 September 2016). As for the political dimension, it is recalled that the conclusion of CETA as a mixed agreement was viewed as politically necessary, even though, in legal terms, the Commission deemed the agreement within the Union’s exclusive competence.

The above legal constraints have policy and practical implications too. First, they illustrate the wide range of national concerns that would need to be addressed for the UK-EU agreement to materialize. These would have to reflect the economic, political, and policy interests of 27 Member States – and these interests may vary considerably, both between and within Member States. In the case of CETA, for instance, the Walloon assembly was against the Agreement while the Belgian Government was in favour of it.

Secondly, the legal constraints outlined above suggest that it might take longer for a comprehensive agreement on the future UK-EU relationship to be negotiated, let alone for such an agreement to enter into force. In other words, the mixed nature of such an agreement would have an impact on the practicalities of its negotiation and application. The ruling of the Court of Justice on the EU-Singapore Agreement would be important. The United Kingdom made written submissions before the Court in which it argued for the continuing competence of the Member States and against the Union’s exclusive competence. It is somewhat ironic that, were the Court to accept these arguments, yet another layer of complexity would be added to the UK-EU negotiations.

Thirdly, the legal and practical issues outlined above suggest that serious thought should be given to the application of transitional arrangements. These may be required for the period between the adoption of the withdrawal agreement and the application of the agreement on the future relationship between the UK and the EU.

The Brexit Competition Law Working Group (BCLWG), consisting of a group of eminent practitioners in competition law including Jon Turner QC, has just published an Issues Paper setting out issues for UK competition law that will need to be considered and resolved as a result of Brexit.  The paper covers mergers and market investigations, antitrust rules, and private enforcement, and looks at both areas that will have to be resolved before Brexit and issues that will need to be considered over a longer time-frame.

Comments are invited from practitioners and others by 30 November, and may be sent to contribute@bclwg.org.

In a lecture given to the Centre of European Law at King’s College, London, on 13 October, the President of the EFTA Court, Judge Baudenbacher, made a number of important observations about Brexit and possible models for the UK’s relationship with the EU and EEA. His handout is here.

Important points that he makes include: –

• He does not consider that EEA membership for the UK is automatic: the UK would have to apply to join EFTA (requiring consent from Switzerland, Norway, Iceland and Liechtenstein) as well as the EEA.
• He refers to the EU’s suggested arrangements between Switzerland and the EU under which the Swiss would take part in the EFTA Court and Surveillance Authority to the extent that they are dealing with Swiss/EU agreements: he suggests that as a possible model for the UK. 　He notes that acceptance by Switzerland of multilateral enforcement bodies is likely to be essential to future Swiss/EU arrangements.
• The UK would, he thinks, have to make financial contributions, though he notes that the EEA Member States choose the projects that they want to fund.
• He considers it to be an open question whether the UK would be happy with the “co-determination” right, but not voting right, of EEA Member States in relation to new EU law, but notes that in the 1980s Jacques Delors as Commission President offered the EFTA states a more structured partnership with common decision-making.
• On the question of whether the EFTA Court is the same (in effect) as the ECJ, he is recorded as saying this: –

In that regard, Baudenbacher referred to the fact that the EFTA Court is an independent court of law. Because of the EFTA pillar’s size, a British ESA College Member and a British judge would be involved in each case. The President of the EFTA Court also mentioned that the court system of the EFTA pillar leaves the EFTA countries more sovereignty than the court system of the EU pillar leaves the EU countries. This is reflected in the EFTA Court’s case law. Moreover, that case law is market-oriented and based on an image on man that is similar to that of the man on the Clapham omnibus. Baudenbacher foresaw that in case of British EEA membership that such reasoning would become even more relevant for his Court.

Judge Baudenbacher therefore emphasises the more “Anglo-Saxon” or “liberal” approach of the EFTA Court, its greater respect for EEA Member States’ sovereignty – and notes that the arrival of a UK judge (who would be one of four or five judges rather than one of 28 and who would sit on every case affecting the UK) might well accentuate that trend.”