The EU (Withdrawal) Bill: some initial thoughts

13 Jul 2017

The Government has today published the first draft of the most significant piece of UK legislation for 40 years: the European Union (Withdrawal) Bill, formerly known as the Repeal Bill.

This is by no means the end of the story.  One MP has forecast that the Bill will end up looking “like a Christmas tree because of the number of amendments that will be hung on it”.  It won’t all be over by Christmas either – Parliament will still be debating it well into next year.

But starting points are important and the draft Bill is of profound interest to anyone concerned with Brexit.

In extremely broad terms the Bill is in line with what was expected, given the White Paper published in March. However, the details matter hugely given the significance of the legal consequences that will flow from them – and there are a lot of details to consider in a Bill of 66 pages.

The Government’s proposed approach throws up numerous interesting questions that will no doubt form the subject of future blog posts, including in relation to devolution issues, implementation of the UK’s withdrawal agreement and the extent to which people will be able to challenge the validity of EU-derived laws after Brexit. But some of the more general, headline points are as follows.

  • Clause 1 states that the European Communities Act 1972 will be repealed on exit day.
  • Clause 2 provides that EU-derived domestic legislation, i.e. primary and secondary legislation passed to implement EU law in the UK, should continue to have effect after Brexit.
  • Under clause 3 directly effective EU legislation, i.e. regulations and decisions etc., will also continue to form part of domestic law after exit.
  • Clause 4 states that rights and liabilities flowing from directly effective EU Treaty provisions will continue to be recognised and enforceable under domestic law even after Brexit.

Clauses 5 and 6, discussed further below, set out how these pieces of ‘retained EU law’ are to be interpreted.

Clause 7 and legal uncertainty

The most controversial provision, however, is likely to be clause 7, which would empower the Government to use secondary legislation to adjust UK laws they consider would not work properly after Brexit.  Clause 7(1) states:

“(1) A Minister of the Crown may by regulations make such provision as the Minister considers appropriate to prevent, remedy or mitigate —

(a) any failure of retained EU law to operate effectively, or

(b) any other deficiency in retained EU law,

arising from the withdrawal of the United Kingdom from the EU”.

The scope of these powers is both incredibly broad and poorly defined.  Clause 7(2) sets out a non-exhaustive list of deficiencies including where legislation refers to European Commission activities relating to the UK or reciprocal cooperation between UK and EU institutions that will no longer take place after Brexit.

But there is going to be massive scope for argument as to whether after Brexit retained EU laws would, without amendment, be deficient or not operate effectively – and upon such arguments will hang the Government’s ability to pass hundreds of pieces of secondary legislation.

To take one example, section 60 of the Competition Act 1998 provides that our domestic competition rules should be interpreted so far as is possible consistently with the approach under EU competition law.  UK courts could continue to apply section 60 after Brexit – there would be no technical difficulty in doing so.  But many may think that after Brexit it will no longer be appropriate for UK law to be tethered to EU law in this way.

Under these circumstances, will the Government have the power under clause 7 of the Bill to amend section 60?  After spending several minutes pouring over the wording of clause 7 you find yourself, in F.E. Smith’s famous phrase, better informed but none the wiser.  Such uncertainties will arise in virtually every area touched by EU law.

If that were not bad enough, there are at least two additional problems.

First, as the Bill will spend several months being debated in Parliament, the final wording of clause 7 – and therefore the scope of the Government’s powers under it – is unlikely to be known until the second half of next year, at the earliest.  By then, Brexit will be only a few months away.

Second, as and when the Government does bring forward regulations under clause 7, it could find itself beset by legal challenges. While most challenges to secondary legislation take place after the provision has come into effect, it is possible to bring applications for judicial review in respect of draft statutory instruments.

While courts could reject such challenges as premature, there may be sound reasons for hearing them: if a piece of Brexit-related legislation is unlawful, it may be better for all concerned to find that out before rather than after Brexit.  If such challenges are not heard, numerous laws covering huge swathes of legal and economic activity could come into effect on exit day only to be immediately challenged in the courts.

Clause 7 and political controversy

As well as being uncertain in scope, clause 7 would confer executive powers on the Government to bring about major legal and institutional changes that would normally be the subject of detailed parliamentary debate and scrutiny.

These are so-called Henry VIII powers: as confirmed by the express statement that when making regulations under clause 7 the Government will be able to do anything that could be done through an Act of Parliament – including repealing or amending existing pieces of primary legislation.

Almost as if to highlight this, clause 7(5) expressly notes that the Government will be able to create new domestic regulatory bodies to take over any functions previously carried out by EU entities or public authorities in other Member States – “including making an instrument of a legislative character”.

In other words, the Government will be able to pass a regulation creating a new domestic body which is itself empowered to create new UK laws. No doubt some Government department has suggested this is necessary in order to prevent the emergence of a regulatory vacuum emerging after Brexit.  But in constitutional terms it is pretty extraordinary.

The Bill suggests that certain types of regulation made under clause 7 – including those which establish a new public authority or create powers to legislate – should be subject to the affirmative resolution procedure (requiring the approval of both Houses of Parliament), with other regulations subject to the negative resolution procedure (under which they become law unless vetoed by one of the Houses). Parliament is unlikely to consider that an adequate level of scrutiny, so concessions will probably be required if the Bill is to pass.

The interpretation of retained EU laws

While clause 7 will be the most politically contentious provision, clauses 5 and 6 are of considerable interest to lawyers – for they set out how retained EU laws will be interpreted after Brexit.

It will not surprise anyone that clause 5(1) provides that the principle of the supremacy of EU law will not apply to any new laws made after the date of Brexit.   But the principle of supremacy will, according to clause 5(2), continue to apply after Brexit – for the purpose of interpreting any enactment or rule of law passed before exit day.  Arch Eurosceptics may be displeased, but that is consistent with the Government’s stated goal of ensuring that, so far as practicable, the law should be the same the day after Brexit as it was the day before.

Arguably inconsistent with that goal, though, is the statement in clause 5(4) that “The Charter of Fundamental Rights is not part of domestic law on or after exit day”.  Leaving to one side whether it would be preferable for the Charter to remain part of our law as a matter of legal policy, the technical difficulty with this is that up until the date of Brexit all EU rules fell to be interpreted in the light of the Charter (given the need for consistency with it).

When you are applying EU-derived rules after Brexit, do you therefore need to ask whether their pre-Brexit meaning was influenced by the Charter, and if it was work out what the rule would have meant absent the Charter?  This is exactly the sort of legal rabbit hole that the Government says it wants to avoid.

Last (for now) but not least, clause 6 provides that retained EU laws that have not been modified by regulations made under clause 7 should be interpreted in line with pre-Brexit judgments of the EU courts. The only general exception is that the UK Supreme Court is not so bound, thereby effectively conferring Supreme Court status on all pre-Brexit EU judgments.

But there is an obvious flaw with this, which I wrote about in March when the White Paper was published.  According to the Government, the rationale for its approach is to ensure that “for as long as EU-derived law remains on the UK statute book, it is essential that there is common understanding of what that law means”.

But what happens when EU law develops from the state it was in at the date of Brexit?  In that situation there is little point in UK courts continuing to be bound by (outdated) pre-Brexit judgments, and the Supreme Court will not have the capacity to hear appeals in every case where that has happened. One possible solution might be to provide that UK courts should not be bound by pre-Brexit judgments where EU law has subsequently developed, although that would raise issues about what constituted a sufficiently material development for that purpose.

The interpretive obligation does not apply, however, where a retained EU law has been modified by a regulation made under clause 7.  One civil servant recently told me that they thought the vast majority of EU derived law would need some form of modification.  That might have the happy consequence of reducing the scope of these interpretative difficulties, but it also emphasises the scale of the task ahead.