Does the European Union (Withdrawal) Bill provide legal certainty for EU entities?

14 Dec 2017

At the Franco-British Chamber of Commerce on 6 December. Christopher Muttukumaru CB argued that it was doubtful that the draft European Union (Withdrawal) Bill would provide sufficient legal certainty for EU entities.

“ How many times do I have to tell you – ” Brexit means Brexit”? ” A depiction of the Brexit negotiations. Illuminated manuscript from the Biblia Latina, an early 14th century bible in the Library of Gray’s Inn. With thanks to the Benchers and Librarian of the Honourable Society of Gray’s Inn for permitting its use.

Summary of presentation to the Franco-British Chamber of Commerce, used on 6 December 2017. The summary now incorporates additional material arising as a result of the Joint Report of the EU and UK negotiators, published after the seminar on 8 December.

Why, post Brexit, does the effective, national incorporation in the UK (a) of the EU acquis and (b) of the EU/UK agreements under Article 50 and otherwise matter to EU lawyers and EU commercial entities doing business in the UK, as well as to EU citizens living in the UK?

Because, whether you are doing business in the UK or working with UK partners or providing finance for a UK project, you should ensure that you understand how your rights in the UK will be effectively protected in a post Brexit world.  Rights do not exist in a vacuum.

In the UK’s dualist system, how many bills will be introduced in the UK Parliament to give national effect to Brexit? The context is that there  is a national aspect (avoiding a national legal vacuum) and a EU/UK aspect (there will be three EU/UK agreements to implement in national law – the Withdrawal Agreement , a transitional agreement and a permanent trade agreement).

According to the Queen’s Speech in the summer of 2017, over time eight bills would be introduced in the UK Parliament to give effect to Brexit in UK national law. The eight bills would include a Trade Bill (introduced in the UK  Parliament in November 2017) and an Immigration Bill.

The Joint Report of the EU and UK Negotiators published on 8 December (after this summary was first made available in Paris) adds a ninth bill to the list. The EU/UK Withdrawal Agreement (“WA”) will provide for citizens to be able to rely directly on its citizens’ rights provisions. Inconsistent laws will be disapplied . The UK Government will bring forward a Withdrawal and Implementation Bill, specifically to implement the WA.  The bill will fully incorporate citizens’ rights as specified in the WA. Once enacted, the Bill’s provisions will have primacy over inconsistent or incompatible national legislation unless the UK Parliament expressly repeals the Act. Since there has to be reciprocity, the WA will bind the EU institutions and the Member States.

The principal bill to give post-Brexit effect to  EU-derived rights. Most importantly, the EU acquis as it exists on the effective date of Brexit will become UK national law by virtue of the European Union (Withdrawal) Bill (“EUWB”). It is the first (and principal) concrete expression of the UK Government’s intentions. The acquis will be fossilised as at the operative date of Brexit. But the acquis may also be amended as it is converted into retained national law. Moreover it will be open to the UK Parliament to make further modifications in the future.

Yet the UK wishes to have full access to the Single Market in a transitional period following Brexit and beyond. How will legal uniformity across all 28 States be assured in any policy sectors to which the EU is prepared to allow full UK access?

What are the risks to legal uniformity in circumstances where the UK Government has embraced strong deregulatory ambitions, especially in respect of what it has frequently described as Brussels overregulation? Politically the UK Prime Minister signalled in Florence on 22 September that, in a transitional period, the UK would continue to comply with the “existing structure of EU rules and regulations”. But the words “within the existing structure” lack clarity.   Furthermore, in an article by Michael Gove (Secretary of State for Environment, Food and Rural Affairs)  on 9 December, he said that “ [a]fter the end of the  transitional period, the UK will be able to pass laws that strengthen our economy and enhance our environment with full freedom to diverge from EU law on the single market and customs union. We will have the freedom to negotiate and sign trade agreements with other countries around the world…without being fettered by EU law or the jurisdiction of the ECJ”.

Until the European Communities Act 1972 (which gave binding force to EU obligations) is repealed, the UK must (not “may”) respect its EU obligations. After the EUWB becomes the law, there will no longer exist any such EU obligation unless the EU/UK agree otherwise and unless the EUWB is amended.

Having regard to the present draft of the EUWB, there is an obvious risk to the consistency of law making in a post Brexit future unless the UK can guarantee that it will (unconditionally) follow post-Brexit laws adopted by the EU in a transitional period and beyond in any EU policy sector to which it gains access. The Delphic wording of the WA as it affects the Ireland/Northern Ireland border introduces a new element of complexity – “full alignment” with Single Market rules .  The WA notes that the United Kingdom remains committed to protect  North-South cooperation in Northern Ireland and to guarantee to avoid a hard border. These promises will be addressed in the context of the overall EU/UK relationship, but, in the absence of agreed solutions, guarantees “full alignment with [the] rules of the Single Market and of the Customs Union” which support North/South cooperation . There is also a guarantee that there will be no new regulatory barriers between Northern Ireland and the UK, unless otherwise agreed. The Common Travel Area will also be protected for the benefit of EU citizens. If there is to be no internal border in the Irish Sea, one view of this Ireland/Northern Ireland settlement is that it inevitably means – in practice – regulatory alignment with the EU across the UK in any policy area covered by the Northern Ireland settlement.

In the circumstances, it seems doubtful that the EUWB, as drafted, will provide adequate assurance to the EU negotiators or to commercial entities doing business in the UK in a transitional period and beyond.

The post Brexit role of the Court of Justice of the EU (“CJEU”). The UK considers that the CJEU should not have a (direct) post-Brexit enforcement role. The joint report  recognises that the “CJEU is  the ultimate arbiter of interpretation of Union law” and that , in respect of citizens’ rights, the UK courts will have regard to relevant CJEU jurisprudence. But the CJEU may be asked to give a preliminary ruling on relevant questions if they are necessary to enable the UK courts to give a judgment in any case brought within  a period of eight years from the operative date of the citizens’ part of the withdrawal agreement  . The implementation and application of citizens’ rights will be monitored in the EU27 by the Commission. In the UK, an independent  national authority will be set up . So far as the transitional agreement is concerned, there are political signs in the UK that the CJEU will continue to have jurisdiction of some degree  in that period, but not beyond it . It seems, however, that (in the UK’s view) the European Commission will not have a post Brexit role.

If the EUWB remains as drafted, enforcement of rights other than in the context of the WA will therefore become a matter for the UK national courts and for any regulatory bodies which are given powers in substitution for the Commission. The national courts will be bound to give supremacy to rulings of the CJEU in respect of retained EU law provided that those rulings were given before Brexit day. But the UK Supreme Court will alone have power to refuse to follow even pre-Brexit rulings of the CJEU. For the future, the UK courts may take account of EU law, but need not do so. There will be no preliminary references to the CJEU.

Vigilance  is the key watchword as this drama unfolds. Where businesses are planning for a long term future, especially  beyond a transitional period, they would be wise to plan on a twin track basis – a preferred soft Brexit scenario and a worst case scenario.