Chapter 3: Retained EU law
Introduction
16.Clauses 2–4 set out the general approach of the Bill, which is to make all existing EU and EU-derived law11 part of domestic law post-exit. The Bill creates a novel category of law known as “retained EU law”,12 consisting of three main elements:
- “EU-derived domestic legislation” that is saved by clause 2. This includes domestic secondary legislation made under the ECA for the purpose of implementing EU directives.
- “Direct EU legislation” that is rendered part of domestic law by clause 3. This includes EU regulations, EU decisions and EU tertiary legislation (e.g. provisions made under regulations and directives) as they had effect in EU law immediately before exit day.
- Directly effective EU law that is saved by clause 4. Clause 4 saves directly effective EU law that had effect in the UK by virtue of the ECA and that is not already saved by clause 3. Clause 4 will therefore, for instance, domesticate directly effective treaty provisions and (at least some) provisions in directives that are capable of direct effect.
17.Along with these three categories of “retained EU law”, the Bill makes provision about the post-exit domestic relevance of case law of the Court of Justice of the European Union (CJEU) and general principles of EU law. This gives rise to new domestic categories of “retained EU case law” and “retained general principles of EU law”, both of which are defined in clause 6(7).
18.“Retained EU law” will form a discrete, novel and legally significant category of law. As we concluded in our interim report, “it is imperative, in the interests of legal certainty, that there is maximum clarity as to what counts as retained EU law” on and after exit day.13 In the rest of this chapter, we consider what constitutes retained EU law. In the following chapters, we examine the status of that body of law, the application of the “supremacy principle” to it and its interpretation by the courts.
Types of retained EU law
EU-derived domestic legislation
19.Clause 2(1) provides: “EU-derived domestic legislation, as it has effect in domestic law immediately before exit day, continues to have effect in domestic law on and after exit day.” As we noted in our interim report, clause 2 casts the net very wide in terms of what counts as EU-derived domestic legislation.14 The following are examples of things that will fall within it:
- Secondary legislation made under the ECA that implements EU directives or other EU obligations or that otherwise relates to the EU or the European Economic Area (EEA).
- Provisions of secondary legislation made under other primary legislation that implement EU directives or other EU obligations or that otherwise relate to the EU or the EEA.
- Provisions in Acts of the UK Parliament that implement EU directives or other EU obligations or that otherwise relate to the EU or the EEA.
- Provisions in devolved primary and secondary legislation that implement EU directives or other EU obligations or that otherwise relate to the EU or the EEA.
20.Retained EU law will therefore have many different legal forms. This already complex picture is made more complicated as it will not always be clear whether something is or is not retained EU law. Judgement will often have to be brought to bear—ultimately, by the courts—on whether, for instance, a given domestic legal provision relates to the EU or the EEA. One consequence is that some parts of a given piece of domestic primary or secondary legislation might constitute retained EU law, while other parts of the same piece of legislation might not.
21.Most of these categories of domestic legislation would remain in force even without clause 2. Most obviously, provisions in Acts of Parliament—such as the Equality Act 2010—that implement EU obligations would not be repealed or otherwise rendered inoperative either by withdrawal from the EU or by repeal of the ECA. As we concluded in our interim report, clause 2 appears significantly broader than it needs to be.15
22.This has implications when it comes to understanding how the powers to amend retained EU law in clause 7 will work—and, in particular, how far they will extend. (These powers are considered in more detail in Chapter 8.) Clause 7 creates ministerial powers to amend “retained EU law”, which includes, by virtue of clause 6(7), “anything which, on or after exit day, continues to be, or forms part of, domestic law by virtue of section 2.”16 Although legislation that would have continued in force with or without clause 2 cannot continue to be or form part of domestic law “by virtue of” that provision, the Bill provides in clause 14(3) that, in effect, EU-derived domestic legislation is to be treated as continuing to be domestic law “by virtue of” clause 2 irrespective of whether it would have continued to be domestic law anyway. In this way, the Bill captures EU-related domestic legislation and treats it as “retained EU law” even when such domestic legislation does not need to be sustained by the Bill because it would have continued to form part of domestic law in any event. The effect is to inflate the range of domestic law—including primary legislation—in relation to which the ministerial “correction” powers conferred by the Bill can be exercised. This, in turn, raises questions about the constitutional appropriateness of those powers, given that their appropriateness turns in part on the range of domestic legislation that is subject to their exercise. It is not constitutionally necessary or appropriate for primary legislation, which will continue in force in any event, to be treated as “retained EU law” by clause 2 and subject to the powers of amendment in clause 7.
Direct EU legislation
23.Unlike EU directives, directly effective EU law does not need to be implemented by means of domestic transposition. Instead it has direct effect through section 2(1) of the ECA, which provides for direct effect insofar as that is required by the UK’s treaty obligations. Section 2(1) will be repealed, and those treaty obligations will be extinguished, on exit day. For both of those reasons, directly effective EU law that currently has domestic effect under section 2(1) of the ECA would, if it were not for the Bill, cease to have such effect when exit day arrives.
24.Clause 3 saves a number of forms of EU law that are capable of direct effect: namely, most EU regulations, EU decisions and EU tertiary legislation to the extent that such instruments have effect in EU law immediately before exit day. Regulations, directives and tertiary legislation appear to be saved in their entirety, irrespective of whether each individual element of the relevant legislative instrument is directly effective. Whereas clause 2 purports to save many instruments that do not need to be saved, clause 3 bites on EU law that does need to be saved, at least in the short term, for reasons of legal certainty and continuity.
25.The relationship between retained EU law saved by clauses 2 and 3 may become complex. When some or all of an EU decision, EU regulation or piece of EU tertiary legislation is already given effect by a domestic enactment that is saved by clause 2, it does not constitute “direct EU legislation”: it is clause 2, not clause 3, that operates in such circumstances. It is possible, however, to envisage circumstances in which only part of a relevant EU instrument is reflected in domestic legislation. In that scenario, those parts of the EU instrument that are reflected in domestic legislation will be saved (to the extent necessary) by clause 2 while the other elements will be domesticated by operation of clause 3. Thus, post-exit, certain EU instruments may persist in domestic law through the combined effect of clauses 2 and 3, such as some provisions of the Equality Act 2010.
Treaty rights
26.Some EU law that is directly effective, and is given domestic effect by the ECA, falls outside the definition of “direct EU legislation” and is therefore not incorporated into domestic law by clause 3 on exit day. The most significant category of directly effective EU law that is outside the scope of clause 3 is directly effective treaty provisions, which are dealt with by clause 4. It provides that any “rights, powers, liabilities, obligations, restrictions, remedies and procedures” which were recognised and available in domestic law pre-exit by virtue of section 2(1) of the ECA will continue to have domestic effect on and after exit day.
27.Some directly effective treaty provisions create rights that can straightforwardly continue to apply post-exit. This will be the case when treaty rights do not turn on reciprocal commitments and arrangements that presuppose membership of the EU. For instance, Article 157 of the Treaty on the Functioning of the European Union (TFEU) enshrines “the principle of equal pay for male and female workers for equal work or work of equal value”. This right does not depend on EU membership, and treating it as a domestic law right post-exit, on the grounds that it becomes part of retained EU law under clause 4, is unproblematic. Such rights, however, stand in contrast to treaty provisions that do presuppose EU membership or which create rights that are reciprocal in nature. Such rights will make little, if any, sense post-exit. For instance, the Government acknowledges that Article 110 TFEU, which prohibits Member States from using discriminatory taxation measures against products from other Member States, will become domestic law under clause 4.17 However, it is hard to see why or how this law would be retained once the UK has fully left the EU. Similarly, many reciprocal rights—such as the right of EU nationals under Article 49 TFEU to establish and operate a business in another Member State—will become retained EU law under clause 4, but will make little sense post-exit (unless the UK remains part of the single market). Clause 4 will therefore domesticate all directly effective treaty provisions, whether or not they will be capable of meaningful application following exit.
28.The Government acknowledges this in the explanatory notes to the Bill. It lists (on a non-exhaustive basis) articles of the TFEU that will be incorporated into domestic law by clause 4, including several articles that deal with the customs union and the single market.18 However, as the explanatory notes go on to point out, provisions that are domesticated by clause 4 will be “subject to amendment or repeal” using the powers in clause 7, meaning that where a domesticated provision “has no practical application, or makes provision for reciprocal arrangements or rights which no longer exist or are no longer appropriate once the UK has left the EU, statutory instruments can be brought forward to repeal or amend the provisions.”19
29.We heard of concerns about the uncertain future of reciprocal rights.20 The Law Society of Scotland observed that “The explanatory notes state that it is ‘the right itself that is converted not the text of the article’” but in their view “it is very difficult to divorce the right from the text which creates it. Ministers should explain how this actually will work in practice.”21 Sir Keir Starmer told us: “The explanatory notes … tend to suggest that the modification powers in clause 7 would be used to get rid of reciprocal rights … It looks as if the Government are lining up to say that … we need not worry ourselves about how to deal with reciprocal rights, because we are going to get rid of them anyway.”22
30.This uncertain future for reciprocal rights was confirmed by the Government, which wrote:
“This clause deliberately acts as a broad ‘sweeper’ provision. It ensures that, as a starting point, all existing rights which are available in domestic law immediately before exit day as a result of section 2(1) of the ECA will continue to be available in our domestic law after we exit the EU … As with any other element of retained EU law, these rights may require amendment in order to function clearly and effectively in domestic law after our exit. The Government will consider how these rights can be given effect to in the context of our exit from the EU on a case-by-case basis ahead of exit day.”23
31.The Solicitor General, Robert Buckland QC MP, added that the Government was offering “further reassurance” in the form of paragraph 13(b) of schedule 7 to the Bill, which makes:
“provision for regulations to be made so as to make any provision that restates retained EU law to be clearer and more accessible. For example, some of these directly effective rights, whose wording might appear to be a bit weird because we are no longer a member, can be amended to make them understandable and accessible to retain their force. In other words, there can be reassurance that we are not going to tamper with them; we are just going to ensure that they are as clear as possible.”24
32.Clause 4 also extends to (at least some) directly effective provisions contained in EU directives. Directives do not have direct effect in the same sense as EU regulations, EU decisions and some EU treaty provisions. However, when a Member State fails to implement a directive, provisions in directives that satisfy certain criteria (such as clarity and unconditionality) can have a limited form of direct effect. An important limit is that in such circumstances directives are effective “vertically” (that is they are binding on public bodies) but not “horizontally” (they cannot straightforwardly be enforced in proceedings against individuals, companies and so on).
33.Clause 4 is ambiguous in a number of important respects. It presupposes that directives, to the extent that they comply with the criteria for direct effect, can be brought into domestic law. However, it is not clear from clause 4 whether, when brought into domestic law, directly effective provisions of directives will have effect only vertically.
34.Clause 4 also provides that directives will not be brought into domestic law if they are “not of a kind recognised by the European Court or any court or tribunal in the UK in a case decided before exit day”. It is unclear whether this means that there must be a judgment on the specific provision of the particular directive, holding that it has direct effect, or whether it simply requires that the provision in question satisfies the criteria that would be applied if the matter were to be judicially considered. The language of clause 4 supports the latter interpretation, but the explanatory notes appear to endorse the former.25
35.Clause 4 appears to domesticate directly effective provisions of directives irrespective of whether the directive has been implemented in domestic law by means of EU-derived legislation that will (where necessary) be saved by clause 2. This gives rise to the question whether the operation of clauses 2 and 4 will result in two versions of some EU norms coexisting within the domestic legal system—the version in EU-derived domestic legislation and the version domesticated by clause 4. An answer to this concern may be that clause 4 is intended to operate only on directly effective provisions in directives to the extent that such provisions have not already been domesticated through the medium of EU-derived domestic legislation. However, this is not clear from clause 4 as drafted. There may be conflict and dispute if, for example, a litigant argues that the rights under clause 4 give them greater rights than the domestic implementation of the EU instrument under clause 2, as the Bill does not tell the court which is to have priority. Lord Neuberger of Abbotsbury advised that “the nettle has to be grasped by a provision simply saying which will prevail.”26
36.The Government said that any “overlap should not result in any practical difficulties, as it would only arise in circumstances where domestic legislation fully implements the directly effective right. This is no different to the present situation, where domestic legislation may follow from a judgment which establishes that a provision of a directive has direct effect.”27 However, this explanation does not suggest how a conflict between two different types of retained EU law would be resolved, especially in light of the ambiguities in clause 5 that we turn to later.
37.The implications of the Bill for reciprocal rights remain uncertain, as such rights are inextricably linked to the legal relationship between the UK and the EU post-exit. The full impact of Brexit upon reciprocal rights will not be known until the UK’s future relationship with the EU is determined. This highlights a broader issue that the uncertain environment in which the Bill is being considered makes it difficult fully to assess its likely consequences, including its constitutional implications, at the time of its passage.
38.The ambiguities in the interpretation and effect of clause 4 will inevitably cause legal uncertainty about a fundamental provision of the Bill. This will undermine one of the Government’s main objectives in bringing forward this Bill. The ambiguities need to be resolved.
11 Other than the Charter of Fundamental Rights, which is excepted by clause 5(4)
13 Constitution Committee, European Union (Withdrawal) Bill: interim report (3rd Report, Session 2017–19, HL Paper 19), para 31
14 Ibid., para 24
15 Ibid., para 25
17 Explanatory Notes to the European Union (Withdrawal) Bill [HL Bill 79 (2017–19)-EN], para 93
18 Ibid., para 93
19 Ibid., para 95