Explanatory Notes

Clause 3: Incorporation of direct EU legislation

78 EU legislation does not form part of our legal system in the same way as domestic legislation - it is given legal effect in the UK via section 2(1) of the ECA, which describes how such legislation is to have effect "in accordance with the EU Treaties". It is this which ensures that, for example, EU regulations are directly applicable and fully binding in all member states.1

79 This legal order is possible because the UK is a member of the EU and subject to the treaties. Upon exit, the UK will no longer be bound by the treaties and so EU legislation can no longer have effect in accordance with them. The Bill ensures that, where appropriate, EU legislation continues to have effect in our legal system post-exit. Clause 3 addresses this, by converting ‘direct EU legislation’ into domestic legislation at the point of exit.

80 Subsection (1) therefore provides for the conversion into domestic law of this direct EU legislation. Where legislation is converted under this clause, it is the text of the legislation itself which will form part of domestic legislation. This will include the full text of any EU instrument (including its recitals2). Subsection (2) describes the types of legislation which form part of this ‘direct EU legislation’ (see also paragraph 22 of these notes).

81 Subsection (2)(a) converts EU regulations, certain EU decisions and EU tertiary legislation (now known as delegated and implementing acts), as they have effect immediately before exit day. These terms are defined at clause 14. Clause 14 and Schedule 6 provide that certain instruments are exempt EU instruments. These exemptions reflect that certain EU instruments did not apply to the UK because the UK did not adopt the Euro, or because the UK did not participate in certain aspects of the EU acquis, in the area of freedom, security and justice. EU decisions which are addressed only to a member state other than the UK are not converted into domestic law. Additionally, so far as EU-derived domestic legislation under clause 2 reproduces the effect of an EU regulation, decision or tertiary legislation, these instruments are not converted under this clause. This is to avoid duplication on the statute book after exit.

82 Subsection (2)(b) and 2(c) ensure the conversion into domestic law of any relevant EU regulations, decisions and tertiary legislation as they apply to the EEA. As set out in the legal background of these notes, the European Economic Area Act 1993 makes the EEA Agreement one of the ‘EU treaties’ for the purposes of the ECA. Because of this, section 2(1) and (2) of the ECA applies to provisions of the EEA Agreement. In essence, direct EU legislation applies to the EEA by virtue of its inclusion in the Annexes to the EEA Agreement, with any adaptations that are necessary for it to apply in the EEA context. This direct legislation, as adapted, then flows into UK domestic legislation as a result of section 2(1) of the ECA. Protocol 1 to the EEA Agreement contains horizontal adaptations which set out general interpretative provisions that apply throughout the Annexes to the Agreement. For instance, whenever EU acts refer to nationals of an EU member state, the references shall, for the purposes of the EEA Agreement, also be understood as references to nationals of EFTA states.

83 Subsection (2)(b) therefore converts any Annex to the EEA Agreement to the extent that it relates to those EU instruments which are converted by subsection (2)(a). The effect of this is to bring into domestic law EU regulations, decisions and tertiary legislation as they apply, and are adapted for, the EEA context. As with the EU version of instruments, where domestic enactments saved under clause 2 reproduce the effect of an EU instrument (as adapted for the EEA) those adapted instruments are not converted under this clause. Again, this is to avoid duplication on the statute book after exit. Subsection 2(c) converts Protocol 1 to the EEA agreement as it was immediately before exit.

84 Under this clause, direct EU legislation is only converted and incorporated into domestic law "so far as operative immediately before exit day". Subsection (3) clarifies what this means. As discussed in paragraph 49 of these notes, some EU legislation applies in a staggered way over time, and the Bill ensures that, so far as a relevant instrument has entered into force and applies before exit day, it will be converted into domestic legislation. Where the date of application falls after exit day, the provision is not converted. In the case of EU decisions, if the date of notification to the addressee (for example the UK or a person in the UK) falls before exit day then that decision is converted.

85 Subsection (4) clarifies that clause 3 will only convert the English language version of existing direct EU legislation into domestic legislation. However, other language versions can continue to be considered as aids to interpretation by the courts.

86 Subsection (5) provides that the saving of direct EU legislation is subject to the exceptions in clause 5 and Schedule 1.

1 See Article 288 TFEU

2 Recitals will continue to be interpreted as they were prior to the UK’s exit from the EU. They will, as before, be capable of casting light on the interpretation to be given to a legal rule, but they will not themselves have the status of a legal rule. See Casa Fleischhandels, Case 215/88, paragraph 31.

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Prepared 13th July 2017