Is the triggering of Article 50 a good argument for making a reference to The Court Of Justice now?

24 May 2017

As all readers of this post will know, the United Kingdom gave notice of its decision to withdraw from the EU on 29 March 2017. Under Article 50 TEU, that means that (subject to a different date being provided for in a withdrawal agreement or an extension by unanimity) the UK will cease to be subject to the Treaties on 30 March 2019.

Unless any different provision is made in a withdrawal agreement, the Court of Justice of the EU will cease, on that date, to have jurisdiction to rule on questions of EU law referred to it by UK courts under Article 267 TFEU.

Since the Court of Justice takes between 12-18 months to answer a request for a preliminary ruling, parties to litigation that raises questions of EU law may well be concerned that, unless a reference is made soon, there will be a serious risk that any reference will not be answered before Brexit day and so will never be answered. If parties think that the CJEU is more likely to give a favourable answer than the UK courts, they will want to accelerate the making of a reference so that it happens now or in the next few months, to avoid any Brexit risk.

In Coal Staff Superannuation Scheme Trustees v HMRC [2017] UKUT 0137 (TCC), the Upper Tribunal (Rose J) was faced with an application by the Trustees for an immediate Article 267 reference of questions of EU law arising in tax litigation on the basis that, if one was not made now, it might never be made. Rose J refused the application, holding that the triggering of Article 50 was not a factor that pointed towards a reference.

The Trustee argued, first, that because (on the likely future timetable of the case) the Upper Tribunal was the last UK court that would be able to make an Article 267 reference in time for it to be completed before March 2019, it was, in reality, “a tribunal … against whose decision there is no judicial remedy under national law” for the purposes of Article 267. Rose J rejected that argument: the service of a notice under Article 50 could not change the settled interpretation of Article 267 now, even adopting the appropriate teleological approach.

The Trustee also argued that the impending exit of the United Kingdom from the EU meant that the Upper Tribunal should exercise its discretion in favour of making a reference now. Again, Rose J rejected that submission. First, she observed that: –

we do not know what kind of transitional provisions will be put in place by the Government and the CJEU or other EU institutions to deal with people in the same position that the Trustee anticipates being in as at the date of the UK’s exit, namely in the course of litigation to determine issues of directly applicable EU law that have arisen during a period before that exit took place” (§24)

She then continued: –

Some solution to the problem that arises in this case will have to be implemented because there are likely to be very many people in the same position as the Trustee may be on the date of exit. Whatever those arrangements are will apply to the Trustee and will be implemented by the courts in accordance with whatever the law dictates. It would not be right to pre-empt that by rushing a preliminary reference off to the CJEU in the hope that the Court will give a ruling before the UK exit.

Rose J therefore took the view that, because some arrangement was likely to be made to deal with litigants in ongoing cases dealing with periods where EU law was directly applicable, it would be wrong to pre-empt that arrangement.

Since, leaving Article 50 to one side, the other factors pointing to an immediate reference were not compelling, the application was refused.

It was perhaps inevitable that UK courts would not be keen to accept an argument that would result in a large number of references being made over the next few months and at an earlier stage than would otherwise be considered sensible. Nor, it may be assumed, would the Court of Justice have welcomed such a tsunami of UK cases. However, it is worth noting that Rose J’s argument implicitly assumes that the parties’ ability to have a case referred to the Court of Justice is a right with little or no weight, and that parties’ rights to the fair and resolution of disputes will not be adversely affected by whatever arrangements are made for ongoing litigation involving EU law issues. The first assumption is perhaps contentious, and the second (while almost certainly correct) is not as matters stand entirely certain.

It is also worth noting that paragraph 35(a) of the Commission’s draft negotiating mandate (published after Rose J’s judgment) provides that in:

Judicial proceedings pending before the Court of Justice of the European Union on the withdrawal date involving the United Kingdom, United Kingdom natural and/or legal persons (including preliminary references); the Court of Justice should remain competent to adjudicate in these proceedings and its rulings must be binding upon the United Kingdom;

If the United Kingdom agrees to that (and it has taken no public position on the point) then the problem raised by the Trustee in this case would go away.

This case is not, however, the end of the story. While uncertainty persists, the next question that will arise is the mirror image of the issue in Coal Trustees: once we are within 12-18 months of Brexit day, should UK courts decline to make a reference in cases which they would otherwise refer because of the uncertainty as to what is to happen to pending references on Brexit day? Or, if it becomes clear that there will be a withdrawal agreement containing the provision on existing references outlined above, will there be a rush to get references made before Brexit day? Stay tuned for the next exciting instalment …