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Reincarnation and Resurrection – the Afterlife of the European Communities Act 1972 in the Withdrawal Bill

The UK Government has published its long-awaited European Union (Withdrawal Agreement) Bill (the “WAB”) that – if enacted – will give legal effect to the revised Withdrawal Agreement negotiated between the EU and the UK. The revised Agreement settles the terms of the UK’s departure from the EU in respect of citizens’ rights, the financial settlement and the new arrangements to avoid customs and regulatory checks on the border between Ireland and Northern Ireland.

Domestic legislation is needed because the Withdrawal Agreement is in essence an international treaty between the EU and the UK and without an Act of Parliament it would not have direct domestic legal effect. Also the European Union (Withdrawal) Act 2018 expressly states that the UK cannot ratify the Withdrawal Agreement – and so cannot bind itself in international law to the Agreement – until the necessary implementing legislation is in place. In short, the Bill is the foundation of the legal framework by which the terms of the UK’s exit from the EU will be implemented domestically.

The WAB is a biggish bill containing forty clauses and six schedules. It is also complex because it amends the European Union (Withdrawal) Act 2018 meaning that the two pieces of legislation need to be read together. One reason for this is that it is the 2018 Act that repeals the European Communities Act 1972, the legislation which prior to exit gives effect to the UK’s membership of the EU. It is the 1972 Act which makes EU law a source of law and which ensures that UK law continues to comply with EU law as it changes over time.

For the purposes of this post, the issue is simply this: if the 1972 Act is repealed, how is the Withdrawal Agreement and the EU law it continues to apply during the transition period (and after) to be given legal effect in the UK and in a way that complies with specific obligations under the Withdrawal Agreement? It will become clear that notwithstanding the repeal of the 1972 Act it will enjoy a strange afterlife – reincarnated in certain respects to give effect to the Withdrawal Agreement and resurrected to give effect to the transition period created by the Agreement.

Implementing the Withdrawal Agreement – Meeting the Demands of the Withdrawal Agreement

In order for the provisions of the Withdrawal Agreement to have domestic legal effect, the WAB must be passed by Parliament. However, the WAB must be compatible with the Withdrawal Agreement. The Agreement identifies the type of legal effect that must be created in UK law by its implementing legislation.

Article 4(1) of the Agreement states that

… this Agreement and the provisions of Union law made applicable by this Agreement shall produce in respect of and in the United Kingdom the same legal effects as those which they produce within the Union and its Member States

This rather elliptical provision identifies that the binding nature of EU law and its capacity for application and enforcement within the legal systems of the Member States has to be secured in the UK after membership. Article 4 goes on to clarify what this means in practice:

… legal or natural persons shall in particular be able to rely directly on the provisions contained or referred to in this Agreement which meet the conditions for direct effect under Union law.

In other words, provided a provision of the Agreement or any other applicable provision of EU law is clear, sufficiently precise and unconditional and so is capable of being enforced – if needs be, before a UK court – the UK must ensure that this effect is facilitated and not prevented by UK legislation. Indeed Article 4(2) of the Agreement spells out further the consequences of the UK’s obligation. It encompasses:

… the required powers of its judicial and administrative authorities to disapply inconsistent or incompatible domestic provisions, through domestic primary legislation.

This is clearly a very strong obligation that the WAB needs to create. Not only must individuals and companies be able to invoke provisions of the Agreement and applicable EU law in domestic proceedings, the WAB must ensure that UK authorities and courts have the power to disapply inconsistent and incompatible national provisions.

How then does the WAB approach this task?

It draws a distinction between implementation of the Withdrawal Agreement in general and the implementation of particular parts of the Agreement including the provisions relating to the transition period. Implementing the transition period will be discussed further below and what follows concerns how the implementation of the Withdrawal Agreement generally complies with Article 4 of the Agreement.

Reincarnating the European Communities Act – How Does the WAB Give Effect to the Withdrawal Agreement

How any Member State gives effect to EU law depends on its own constitutional and legal approach and so it might be difficult to determine whether the UK has complied with Article 4 by reference to how this is achieved in the other Member States. Instead what really matters is whether the WAB gives effect to EU law differently from how EU law was given legal effect under the European Communities Act 1972.

Section 2(1) of the 1972 Act provides:

All such rights, powers, liabilities, obligations and restrictions from time to time created or arising by or under the Treaties, and all such remedies and procedures from time to time provided for by or under the Treaties, as in accordance with the Treaties are without further enactment to be given legal effect or used in the United Kingdom shall be recognised and available in law, and be enforced, allowed and followed accordingly; and the expression  “enforceable EU right” and similar expressions shall be read as referring to one to which this subsection applies.

The European Union (Withdrawal) Act 2018 repeals the European Communities Act and so switches off this domestic legal mechanism for giving effect to rights and obligations derived from an EU legal source. The challenge for the WAB, therefore, is how to create something to replace Section 2(1) of the 1972 Act while also complying with Article 4 of the Withdrawal Agreement.

Clause 5 of the WAB inserts a new section 7A into the 2018 Act which states:

(a) … all such rights, powers, liabilities, obligations and restrictions from time to time created or arising by or under the withdrawal agreement, and

(b) all such remedies and procedures from time to time provided for by or under the withdrawal agreement,

as in accordance with the withdrawal agreement are without further enactment to be given legal effect or used in the United Kingdom.

When we compare this with section 2(1) of the European Communities Act 1972 we see that the same terminology is deployed. The clear intention of the WAB is to replicate and reproduce in the 2018 Act the constitutional qualities of the 1972 Act. Accordingly, the WAB states that the Withdrawal Agreement is to be “recognised and available in domestic law” and “enforced, allowed and followed accordingly”. All of which is, no doubt, also to reassure the EU that the UK will – as it has done during memnbership – ensure that EU law is given its correct legal effect.

But the WAB does something that the 1972 Act does not, namely to assert the sovereignty of Parliament. It has always been a difficult constitutional question whether the 1972 Act limited parliamentary sovereignty and whether the effect that it gave to EU law could be limited by a future Act of Parliament. The principle of the primacy of EU law would suggest that Parliament does not have the sovereignty to enact rules inconsistent with EU law and indeed UK courts have disapplied Acts of Parliament that conflicted with EU obligations. Back in 2011, the European Union Act 2011 sought to clarify how the legal effects derived from EU law were recognised in UK law. Section 18 of the 2011 Act made clear that these effects were available solely by virtue of the 1972 Act and so sought to reconcile the primacy of EU law with the sovereignty of Parliament as expressed in the 1972 Act.

The 1972 is repealed by the 2018 Act and Clause 5 will vest in the 2018 Act the power to give effect to the Withdrawal Agreement. But this will now have to be read alongside Clause 36 of the Bill which Mike Gordon suggests is a development of the idea behind section 18 of the 2011 Act.

Clause 36 states:

(1) It is recognised that the Parliament of the United Kingdom is sovereign.

(2) In particular, its sovereignty subsists notwithstanding—

(a) directly applicable or directly effective EU law continuing to be recognised and available in domestic law by virtue of section 1A or 1B of the European Union (Withdrawal) Act 2018 (savings of existing law for the implementation period),

(b) section 7A of that Act (other directly applicable or directly effective aspects of the withdrawal agreement),

(3) Accordingly, nothing in this Act derogates from the sovereignty of the Parliament of the United Kingdom.

On the one hand, it might be said that this clause does nothing other than state a principle of the sovereignty of Parliament that endured through membership. On the other hand, and in the context of a new Act that makes provision for the UK’s exit from the EU, this is a strong assertion of the sovereign power of the UK Parliament including expressly in respect of the obligation laid down in Article 4 of the Withdrawal Agreement to secure its legal effects. It is an overtly political move and one that is unnecessarily antagonistic. After all, if the principle of the sovereignty of Parliament is the cornerstone of the constitution nothing in the WAB could change that. We don’t expect other Acts of Parliament to assert the continuing sovereignty of Parliament because it is a principle that is inherent in the constitutional architecture. Whatever its precise legal effects, this is an exercise in political messaging, underlining the “Take Back Control” refrain of the Leave campaign. The 1972 Act may have been reincarnated but it wears a bell round its neck tolling the bell of sovereignty.

Resurrecting the European Communities Act – Giving Effect to Transition

The most difficult part of the WAB lies in its treatment of the transition period created by Part 4 of the Withdrawal Agreement. During transition, the UK will remain bound by EU law as if it were still a Member State. The transition period lasts until 31 December 2020 unless a decision is made to extend transition for one or two years.

If the 2018 Act did not repeal the European Communities Act then the UK could have continued to give effect to EU law in the same way as it did during membership. But with the repeal of the 1972 Act, the WAB might have approached the transition period in the same way as it deals with the Withdrawal Agreement itself, namely to apply Clause 5 to Part 4 of the Agreement. Instead – and despite the repeal of the 1972 Act – Clause 1 of the WAB seeks to “save” the 1972 Act for the purposes of giving effect to Union law during the transition period.

Clause 1 of the WAB inserts a new section 1A into the 2018 Act. Instead of reproducing and replicating the technique deployed by the 1972 Act (or even not repealing or delaying the repeal of the relevant provisions of the 1972 Act) the Bill states that:

The European Communities Act 1972, as it has effect in domestic law or the law of a relevant territory immediately before exit day, continues to have effect in domestic law or the law of the relevant territory on and after exit day so far as provided by subsections (3) to (5).

It is as if the 1972 Act still operated, with the Withdrawal Agreement in respect of the transition period added to the list of treaties to which the effects created by the 1972 Act apply. It is an exercise in temporary resurrection, although rather euphemistically, the Explanatory Notes to the WAB describe its function as a “repurposing” of the 1972 Act.  At the end of the transition period – what the Bill describes as “IP Completion Day” – the means of giving effect to EU law during this transition period are finally turned off and the 1972 Act is finally laid to rest.

The WAB has a difficult balancing act to pull off that is underpinned by what is self-evidently a highly political decision namely the repeal of the European Communities Act. With that legal device switched off, the WAB has to find a means of switching it back on for the enduring purposes of giving effect to the Withdrawal Agreement, and more temporarily for the purposes of the transition period, all the while ensuring compliance with Article 4 of the Withdrawal Agreement. The picture is also complicated because the 2018 Act as enacted domesticated EU law as of “exit day”. This creates the obvious risk of EU law having effect both as domestic law under the 2018 Act as enacted and then via the WAB amending the 2018 Act applying the effects of the 1972 Act. Clause 25 of the WAB, therefore, delays the domestication of EU law until after the end of the transition period. So the WAB temporarily switches back on the effects of the 1972 Act until the end of the transition period whereupon EU law becomes domesticated and effective in terms of the 2018 Act.

Giving Effect to New EU Rules During The Transition Period

The transition period created by the Withdrawal Agreement and given effect by the WAB does not simply maintain the application of EU law as it stood at exit day to the UK as if it were a Member State. New EU rules adopted and coming into force during the transition period also form part of the body of law which must be given domestic legal effect. Saving the effects of the 1972 Act also saves its ambulatory capacity under section 2(1) of the 1972 Act to give effect to “directly applicable” EU law including any new or amended directly applicable provisions up until the end of the transition period (clause 25(3)). These directly applicable provisions are then domesticated as UK retained law at the end of the transition period.

The question is what to do about new EU directives coming into force during the transition period. How these are given effect depends upon how the 2018 Act deals with directives. The 2018 Act recognises that with the repeal of the 1972 Act, statutory instruments which gave domestic effect to directives would no longer have a valid legal basis and so existing instruments are “saved: via section 2 of the 2018 Act. That technique works inasmuch as the instruments did once have a valid legal basis when enacted and that legal effect is preserved by the 2018 Act.

More difficult, however, is the idea that notwithstanding its repeal, the effects of the 1972 Act – in particular the power to make statutory instruments under section 2(2) of the 1972 Act – can be saved and applied to new EU directives. Clause 1 inserts a new section 1A(3)(b) which amends section 2(2) of the 1972 Act and so assumes that the power contained in the 1972 Act still applies to allow Ministers to make regulations to implement new directives entering into force during the transition period. However, it is one thing to save or preserve a legal effect of an instrument that at the time of its adoption had a valid and in force statutory authority. It seems decidedly odd to seek to preserve a statutory rule-making procedure in respect of new EU acts when that underlying statute is explicitly repealed. Once again one cannot help but be drawn to the conclusion that it would have been better not to repeal the 1972 Act until after the transition period.

For new EU rules adopted during the transition period the WAB introduces an innovation in clause 29 which inserts a new section 13A into the 2018 Act. This gives the European Scrutiny Committee of the House of Commons a power beyond its current powers under Standing Orders (119 and 143) to highlight issues of political and legal significance arising from new EU rules. Rather if the Committee thinks that a new rule raises issues of “vital national interest” and publishes a report accordingly, a Minister must within 14 sitting days move a motion for a debate and a vote. However, this does not give either the Minister or the Commons a veto over new EU rules and the Withdrawal Agreement itself does not empower the Joint Committee to restrict the application to the UK of new rules adopted during the transition period if there is any domestic objection. There is provision for the Joint Committee to become engaged if new EU rules become applicable to the UK in respect of Northern Ireland  under Article 13(4) of the Protocol on Ireland/Northern Ireland but this applies only in respect of Northern Ireland and after the transition period has ended.

Post-Transition EU Rules – The Protocol on Ireland/Northern Ireland

After the transition period, the UK is not obliged to give continuing effect to EU rules except if it precommits to doing so. In respect of the revised Protocol on Ireland/Northern Ireland, the UK has committed to continue to apply certain EU rules including on manufactured goods, food and veterinary checks with a view to avoiding regulatory checks. These rules are often subject to amendments and replacements. Article 13 of the Protocol makes clear that the UK – in respect of Northern Ireland – will be bound to apply amendment and replacement rules. Where the EU adopts a wholly new provision that falls within the scope of the Protocol, there is a procedure involving the Joint Committee that can decide whether to add the new EU provision to the relevant annexes to the Protocol. This creates a shifting legal landscape for the WAB to seek to implement.

Unsurprisingly, the WAB deals with this changing legal background by empowering Ministers – and devolved institutions within their competences – to enact regulations both to give effect to the Protocol and to any provision of EU law made applicable by virtue of the Protocol. In this way, a new power to give effect to EU rules for part of the United Kingdom is created. The issue then is what legal effect to ascribe to these regulations. In other words is their status a wholly domestic one or does Article 4 of the Withdrawal Agreement continue to apply. The revised Protocol does not expressly identify what legal effect provisions of EU law made applicable to the UK in respect of Northern Ireland should have but the context of Article 13 of the revised Protocol suggest that Article 4 of the Withdrawal Agreement remains applicable. Indeed, Article 13(2) of the revised Protocol makes clear that the obligations contained in Article 4(4)-(5) of the Withdrawal Agreement – to interpret EU law in conformity with the case law of the Court of Justice – endure after the end of the transition period.

Conclusion

Piecing this together requires one to read across the Withdrawal Agreement and the Protocol on Ireland/Northern Ireland to establish what legal obligations the WAB must seek to implement. The WAB itself has to be read in conjunction with the 2018 Act and the European Communities Act 1972. This is not an entirely easy task and the analysis here has focused on the broad structure of implementation rather than the finer detail where one finds real complexity in joining all the bits of the legal jigsaw together.

It is easy to complain and wring one’s hands about the difficulty of it all. That is not a reason in itself to be dismissive of the WAB and clearly a great deal of work has gone into making the legal framework operational. Yet one cannot ignore that much of this complexity is generated by political decisions, most notably that the European Communities Act 1972 had to be repealed. The very limited time that is available to parliamentarians to scrutinise this complex legal framework is also a political choice and one which the Prime Minister has sought to underscore by threatening to pull the Bill if the proposed timetable for scrutiny is not adhered to. It remains to be seen whether the Bill dies before it has a chance to reincarnate and resurrect aspects of the 1972 Act.

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Is the ‘Backstop’ a Trampoline to the Future UK-EU Trade Relationship

Following the publication of the text of the Withdrawal Agreement on 14 November, the full text of the Political Declaration on the future UK-EU relationship is now keenly awaited (the outline was published on the same day as the text of the Withdrawal Agreement). It will set out the aspirations for an ambitious economic relationship between the UK and the EU to be negotiated once the UK has left the EU on 29 March 2019. EU leaders will consider these documents at a special summit to be held on 25 November.

The Withdrawal Agreement itself is not just the ‘divorce’ agreement but also sets out two routes to a new UK-EU relationship.

The apparently obvious route is to be found in the part of the Agreement establishing a ‘transition period’. In essence, the transition period is a legal ‘stand-still’ during which time the UK will remain bound by EU law obligations but without being a Member State and without any of the representation in the EU’s institutions that flows from EU membership. The transition period is intended to give the UK and EU time to negotiate agreements governing their future relationship. The transition period lasts until 31 December 2020 unless – before the end of July 2020 – the UK and EU agree to exercise an option to extend the transition period. Although the Withdrawal Agreement does not determine how long this extension might last, the use of the formulation ‘up to [31 December 21XX]’ suggests at least a year up until the end of 2021, although Michel Barnier has indicateda willingness to accept a transition period up until the end of 2022. Extending transition will entail making future budget contributions for the additional years that the UK remains in the transition period.

The longer that the UK remains in transition, the longer the UK and the EU have to negotiate a future relationship without the need for the provisions of the Protocol on Ireland and Northern Ireland – the ‘backstop’ – to be triggered. Until the transition period ends, frontier controls on the island of Ireland will continue to be eliminated because the UK will remain in the Customs Union and the Single Market. While offering a relatively smooth transition from EU membership – things would remain more or less as they are until the new agreement became applicable – an extended transition period has certain drawbacks.

A longer transition opens the UK Government to the accusation of delivering a ‘zombie’ Brexit that transgresses its own red lines. In transition the UK will have formally left the EU but will remain within the Customs Union, the Single Market – including free movement of people – and remain subject to the jurisdiction of the Court of Justice. Extending transition also entails additional budgetary contributions. The other less obvious but potentially significant problem with parking the UK in transition is that it doesn’t help identify what the UK would be transitioning towards and so might make it less easy for businesses to anticipate the adjustments they may need to make. That said, the political declaration ought to go some way towards illuminating the path towards the future relationship even if it stops short of building a direct legal bridge towards the ultimate destination.

The less obvious route to a future relationship with the EU is through the ‘backstop’. There are two reasons why we have perhaps not given sufficient thought to the backstop as an additional bridging device. The first is that we have tended to treat the ‘Irish problem’ as somehow distinct from the wider discussion about the UK-EU future relationship. This was odd given that it should have been clear that any solution to the border issues on the island of Ireland was always going to be a strong signifier of how the UK and the EU might structure their economic relationship to reduce any friction on trade. It would be a tall order to devise one solution to manage the border issues in Ireland as a ‘backstop’ and at the same time devise a different but equivalent solution for the future relationship. Nonetheless, with some factions pushing the Government towards a more minimalist free trade agreement – which would leave unresolved the Irish border issues – treating the backstop as an exceptional device became part and parcel of how we thought about it. Secondly, the language of ‘backstop’, or ‘insurance policy’ or ‘safety net’ has underscored the idea that this is a device which is not intended to be used.  Instead the focus has been on agreeing the future relationship to avoid ever having to invoke the backstop’s provisions.

However, when we consider what the UK and the EU have agreed as a backstop it becomes much clearer that this may be less a residual fall-back and more of a policy choice as a way of bridging the gap between EU membership and a future relationship. The backstop may turn out not to be a safety net, but a trampoline.

At the core of the backstop is the ‘single customs territory’ encompassing the customs territory of the EU and the customs territory of the whole of the UK including Northern Ireland. Good produced in either territory move without payment of any customs duties, as do goods from third countries that have paid the relevant tariffs applied by the EU and the UK to goods from outside the single customs territory (the UK will align its tariffs and its trade policy with that of the EU).

During the operation of the backstop, the UK has committed to certain ‘level playing field’ obligations in respect of taxation including compliance with EU and international standards as well as certain EU directives. In the spheres of environmental, social and employment regulation, there are  ‘non-regression’ clauses. These commit the UK to not reduce its level of protection in things like air quality targets and waste management. The UK has also agreed to implement a system of carbon pricing in line with the EU’s carbon trading system. In the area of employment protection, the Protocol requires the UK not to reduce standards in areas such as health and safety at work, working conditions and employment standards (but without application of the dispute resolution mechanism laid down in the Agreement).

In addition to all of this, the Protocol requires the UK to comply with EU state aid rules (with certain exemptions for agricultural production) albeit enforced not by the European Commission but the UK Competition and Markets Authority (the UK’s competition regulator). That said, the European Commission is to be allowed to bring cases in UK courts for alleged breaches of state aid rules. The EU’s competition rules on cartels and abusive market behaviour is also applicable.

In short, while the backstop means that the UK is out of the EU Customs Union and its Single Market, the coordination of the UK and EU customs territories and the maintenance of certain obligations aimed at ensuring that competition is not distorted ensure that the whole of the UK will enter into an economic relationship with the EU that may anticipate the type of future relationship that the UK and EU might seek to build. To be sure, an agreement on a future relationship will seek to go beyond this not least in terms of trade in services and other non-economic spheres of cooperation like foreign and security policies. But at least as regards trade in goods, entering into a backstop arrangement pending the finalisation of a complete package of agreements on a future relationship might seem preferable to an extension of the transition period.

What then becomes interesting is that the other provisions of the backstop that are specific to North-South relations on the island of Ireland and which would keep Northern Ireland more closely aligned with the EU Single Market than the rest of the UK – in order to avoid non-tariff barriers to trade on the island of Ireland – becomes the exceptional part rather than the dominant part of the agreement.

That the backstop may perform a more active role in defining what happens after 29 March 2019 can be easily evidenced. The Preamble to the Protocol itself makes clear that:

‘HAVING REGARD to the Union and to the United Kingdom’s common objective of a close future relationship, which will establish ambitious customs arrangements that build on the single customs territory provided for in this Protocol, in full respect of their respective legal orders.’

The UK Government’s own explanation of what the Withdrawal Agreement entails – while describing the backstop as an ‘uncomfortable arrangement’ – nonetheless states that:

‘If the future relationship is not going to be ready by 1 January 2021, the UK has two choices: request an extension of the [transition period] or activate the backstop.’

This presents the backstop as a distinctive policy choice. It would move the UK out of a stand-still transition in which the UK would have the obligations and not the benefits of EU membership into what would in effect constitute an ‘interim agreement leading to the formation of a free trade area/customs union’ within the meaning of Article XXIV of the General Agreement on Tariffs and Trade 1994. The enforcement mechanisms contained in the Withdrawal Agreement would apply in place of the normal enforcement mechanisms that apply to EU Member States and which will apply to the UK during transition. The free movement of people would come to an end.

Legally, using the backstop as an interim trade deal is not without its difficulties and may even be incompatible with the use of Article 50 TEU as a legal basis particularly if the backstop dragged on. Indeed, while there has been much discussion about the inability of the UK to unilaterally exit the backstop, were the backstop to become an enduring basis of UK-EU relations the legality of the arrangement would likely be challenged.

If the Withdrawal Agreement ever enters into force – and currently it looks unlikely to obtain approval in the House of Commons – we may yet look back and realise that turning the backstop into an interim trade arrangement was the key to making Brexit happen.