Chapter 6: The protection of EU rights as acquired rights
Claims made before the referendum
55.Professor Douglas-Scott said that the topic of acquired rights had been “beset by confusion and misinformation.” This was regrettable, “because any future lack of protection of rights currently guaranteed under EU law is one of the most serious risks of a UK withdrawal from the EU. So further elucidation is needed.”70
56.Two principal claims were made in the run-up to the referendum: that Article 70 of the Vienna Convention on the Law of Treaties (the Vienna Convention) would safeguard EU rights post-Brexit; and that the customary international law71 doctrine of acquired rights would safeguard EU rights post-Brexit.
Acquired rights under the Vienna Convention on the Law of Treaties
57.Article 70(1)(b) of the Vienna Convention provides that termination of an international treaty “does not affect any right, obligation or legal situation of the parties created through the execution of the treaty prior to its termination”.
58.Professor Douglas-Scott explained that the “crucial point” to understand was that “parties” in this context referred to States, not to individuals or companies. The International Law Commission, in its commentary on the scope of the identically worded predecessor Article, made plain that it was not “in any way concerned with the question of the ‘vested interests’ of individuals”.72 Professor Barnard agreed that Article 70 of the Vienna Convention concerned the acquired rights of States, not individuals.73 Professor Vaughan Lowe QC of Essex Court Chambers also agreed that the “parties” in this context were the States Parties to that treaty: “Individuals and companies are not ‘parties’ to a treaty, and Article 70(1)(b) says nothing about their rights, obligations or legal situation.” The commentary of the International Law Commission made clear that this was intentional.
59.Professor Lowe also referred to Article 43 of the Vienna Convention, which clarified that when a treaty was terminated it no longer created or regulated the legal situation of individuals and companies who were previously affected by the treaty.74
60.It is evident that the term ‘parties’ in Article 70 (1)(b) of the Vienna Convention on the Law of Treaties refers to States, not to individuals or companies. In no sense, therefore, can this provision be said to safeguard individual rights under EU law that will be lost as a consequence of the UK’s withdrawal, in the absence of a negotiated settlement.
Acquired rights under customary international law
61.Professor Lowe explained that the principle of acquired rights had been developed in order to protect a range of property rights under international law, in circumstances where the enjoyment of those rights was threatened by a foreign State. One “archetypal scenario was that Government 1 in State A granted property rights to a foreign person, but was then overthrown by Government 2 in State A which disowned the acts of Government 1”.75 The legal principle underlying acquired rights obliged every State, in broad terms, to respect property rights acquired by non-nationals in such a situation.
62.While there was no authoritative definition of acquired rights under international law, Professor Lowe said that “the legal principles and rules that protect acquired rights … are, however, well established and recognized”.76 The essence of an acquired right was that it should be “a vested right, rather than a contingent expectation, and that it should have an economic value, which suggests that it should be capable of being transferred”.77
Scope of acquired rights under customary international law
63.Professor Douglas-Scott told us that the scope of the acquired rights recognised by customary international law was very narrow.78 Professor Lowe said that the “difficulty comes in defining the limits of property”.79 In written evidence80 he gave the following examples of rights that could, and could not, be classed as acquired rights:
- Ownership rights in real property and in personal property, both tangible (e.g. machinery) and intangible (e.g. intellectual property, shares and bonds) were acquired rights.
- Business goodwill was an acquired right.
- Certain contractual rights, whether arising from contracts with the State or with private individuals, were acquired rights. It was, however, “difficult to say precisely which contractual rights are included”. Concessions, franchises, licences or contracts giving express permission to engage in economic activity over a period of time were included—for example, running a railway or commercial television station for a certain period, or exploiting oil or gas reserves in a defined area. A simple contract for the sale of property would also be included. A contract for personal services, such as a contract for tuition at a college, “would almost certainly not give rise to an acquired right, however.”
- Accrued pension entitlements, rent, and bank deposits were examples of acquired rights “which were less obvious”.
- Court judgments and arbitration decisions were acquired rights.81
- Public or civic rights, such as the right to vote or to reside in a State, were not acquired rights.
64.We asked Professor Lowe whether a company’s right of establishment in any EU Member State82 under EU law would be protected as an acquired right. He was clear it would not:
“A company that had exercised its right of establishment and had set up a factory, trading operation or whatever would have acquired rights in the factory—in the material it has there. It is those secondary rights, which would be protected: the rights it has acquired consequent on the exercise of its freedom of establishment. It would not, as a legal principle, protect the right to establishment itself.”83
65.He gave a further example in relation to the right to establishment:
“If I set up a small grocery shop or window-cleaning business, I would have rights in the shop that would be protected—they could not be taken away from me—but the actual right to come and to set up that business itself would not be protected afterwards. That flows from membership of the club, as it were—from the EU.”84
66.Professor Lowe thought that the case law of the European Court of Human Rights (ECtHR) on the scope of Article 1 of the First Protocol of the European Convention on Human Rights (A1P1 ECHR) could become a template for the type of property protected by the principle of acquired rights. We explore the protection afforded by A1P1 ECHR in the following chapter.
Enforcement of acquired rights under international law
67.Acquired rights, as a customary international law doctrine, were difficult to enforce: “The legal mechanisms that would be available for individuals and corporations to use to vindicate those [acquired] rights would be very narrow indeed.”85 There was “no realistic chance” of using the rule of international law as an independent cause of action in an acquired rights case in a UK court. At best, it could be used in the context of a judicial review application that decisions taken by the Government must be in conformity with the obligations of the UK under international law.86
68.Litigation on acquired rights could arise in an international court (such as the International Court of Justice) or an international arbitral tribunal, but only if the national State of the affected person brought a claim against the wrongdoing State and both States had agreed to accept the jurisdiction of the court or tribunal. Any such case would be preceded by a negotiation between the two States, and the case would only go to court if the dispute was not resolved by a negotiated settlement. If the complaint was that a national of the applicant State had been injured by a denial of the national’s rights, the case could be brought only after available domestic remedies had been exhausted. As a consequence, Professor Lowe thought it was “unlikely that these circumstances would all arise: the chances of an international court case are very low”.87
Overall assessment
69.Professor Lowe thought it very unlikely that the international law doctrine of acquired rights would play a significant role in the legal processes arising from the implementation of Brexit:88
“Part of the problem is that the notion of acquired rights is a very useful label to describe people’s expectations, having relied on EU rights in the past and wanting them to persist. But the actual doctrine of acquired rights under international law is much narrower. Frankly, I do not think it is useful. As I have said in my written comments, the substantive protection given by the international law doctrine of acquired rights is pretty well eclipsed by the protection given by the European Convention on Human Rights, for example. There is no obvious reason why anyone would try to rely on the acquired rights doctrine, rather than rely on the European Convention.”89
70.Professor Douglas-Scott agreed: “in answer to your first question on the extent to which the principle of acquired rights could be relied on to protect rights derived from EU law—specifically property and contractual rights—I think the answer is very little.”90 She also drew our attention to comments of Jean-Claude Piris, the former Director General of the Legal Service of the Council of the EU, in a policy paper entitled ‘Should the UK withdraw from the EU: legal aspects and effects of possible options’:
“Personally, I would not think that one could build a new legal theory, according to which ‘acquired rights’ would remain valid for millions of individuals (what about their children and their grandchildren?), who, despite having lost their EU citizenship, would nevertheless keep its advantages for ever (including the right of movement from and to all EU Member States? Including the right to vote and to be a candidate in the European Parliament?). Such a theory would not have any legal support in the Treaties and would lead to absurd consequences.”91
Conclusions
71.The evidence we received makes very clear that the doctrine of acquired rights under public international law will provide little, if any, effective protection for former EU rights once the UK withdraws from the EU. The scope of acquired rights is limited to certain contractual and property rights which, even were they to coincide with EU rights, are highly unlikely to be enforceable. Reliance on the doctrine before the referendum as a means of protecting EU rights was therefore misplaced.
72.Litigation is always possible, however, where valuable rights have been lost. There is, therefore, a strong incentive for the Government to address the underlying causes of such potential litigation in the withdrawal agreement.
71 Article 38(1)(b) of the Statute of the International Court of Justice describes customary international law as “a general practice accepted as law”: http://www.icj-cij.org/documents/?p1=4&p2=2 [accessed 7 December 2016]
82 The right of EU individuals and companies to work permanently in other Member States are set out in Articles 49–55, TFEU, OJ C 202 (7 June 2016)
91 Foundation Robert Schuman, 15 May 2015, p 10: http://www.robert-schuman.eu/en/doc/questions-d-europe/qe-355-en.pdf [accessed 12 November 2016]