114.Some professional and business service providers require recognition of their qualifications to be able to work in, or export their services to, another country. The Government cited “legal, engineering and accounting services” as examples of “the top professions conducting trade which potentially rel[y] on recognition”.
115.In our March 2017 report Brexit: trade in non-financial services we noted that the recognition of professional qualifications between EU Member States was facilitated by the Mutual Recognition of Professional Qualifications Directive. The Directive is complemented by sector-specific measures such as the Statutory Audit Directive, which sets out specific provisions for the recognition of auditors’ qualifications, and the Lawyers’ Services and Lawyers’ Establishment Directives, which enable EU lawyers to work in any Member State under their home state title on a temporary or longer-term basis. We urged the Government to ensure that any future UK-EU agreement “includes provisions on the mutual recognition of professional qualifications”—a point echoed by several witnesses to this inquiry.
116.Article 27 of the Withdrawal Agreement provides a partial solution, setting out that recognition decisions granted before the end of the transition period under EU law shall “maintain [their] effects in the respective State”. Dr Dimitrios Syrrakos, Senior Research Associate, Manchester Metropolitan University, told us that the provisions of Article 27 meant that the “overwhelming majority of professional qualifications” would continue to be recognised. But Article 27 does not cover all existing forms of mutual recognition. Giulio Marini, a lawyer qualified in several European jurisdictions, observed for example that it would not enable UK lawyers to continue providing legal advice under their home state title (and vice versa) on a temporary basis.
117.In its joint submission with the UKTPO and City-REDI, the Managing Partners’ Forum reported the results of a poll it carried out on 12 June 2020 among senior executives and managing partners of UK professional services firms:
“Nearly 80% of respondents indicated that the recognition of their qualifications was either ‘important’ (32%), ‘essential’ (32%) or even a ‘pre-requisite’ (15%) when providing services to clients outside of the UK.”
118.Underlining this conclusion, the Chartered Institute of Management Accountants (CIMA) felt that the “recognition of qualifications” was the industry’s “biggest concern”, characterising it as the area of the future UK-EU relationship which “will have the most impact for the accountancy sector”. Similarly, RIBA described it as a “priority for architects”. It further noted that the “benefits of an ongoing agreement” on recognition of qualifications lie not only in facilitating trade but also “in ensuring that those offering the services of an architect are able to be monitored by our own regulatory body”.
119.The legal profession is also directly affected. David Joseph QC, Vice Chair, Commercial Bar Association, explained that recognition of qualifications enabled UK lawyers “to be part of a team” advising, for example, “on complex cross-border insolvency or EU provisions in relation to competition”. To his mind, leading international law firms “have a presence in London precisely because they want to be able to advise on these valuable cross-border transactions”. Audley Sheppard agreed, telling us that “mutual recognition is very useful in arbitration”, where “a lawyer who is expert in construction and engineering is more important than someone of that particular legal system”. We discuss this further in Chapter 6.
120.Any obstacles to the recognition of UK-issued qualifications could also have knock-on effects on non-regulated service sectors that have strong links with regulated sectors. The Recruitment and Employment Confederation (REC) noted, for example, that “losing the mutual recognition of professional qualifications with the EU” would “have a negative impact on recruitment agencies”, by making it more difficult to hire UK regulated professionals for jobs in the EU and vice versa.
121.Witnesses emphasised that a good UK-EU agreement on recognition of qualifications would be mutually beneficial. Nick Owen observed that “in the 20 years up to until 2019, 142,000 people had their professional qualifications recognised and were able to move from the EU to the UK, whereas only 27,000 went in the opposite direction”. RIBA felt that the reciprocal benefits of an agreement in this area are “understood” by “both the UK and EU architecture sector”. It cited as evidence a 2018 motion by the Architects Council of Europe—a pan-European confederation of architectural professional bodies—”in support of an ongoing agreement”. Andrew Forth said that even in the absence of a broader UK-EU arrangement, there would be “eagerness in Europe to make a good offer to British architects”.
122.In some professional and business services sectors, the recognition of qualifications by third country authorities is crucial to enabling cross-border trade. We reiterate the recommendation in our March 2017 report, Brexit: trade in non-financial services, that an agreement reached with the EU should include provisions facilitating the continued recognition of UK professional qualifications in the EU, and vice versa.
123.One of our witnesses’ principal requests was that any future UK-EU agreement on the recognition of professional qualifications should allow for the conclusion of supplementary bilateral arrangements between the UK and Member States. As the PBSC put it, “it would be important to provide a clear route for … bilateral mutual recognition agreements (between one or several EU states and the UK)”. Sally Jones warned against the risk that an overarching UK-EU arrangement on recognition of qualifications might be construed as lifting “the level of regulatory co-operation … to Commission level without allowing Member States to come to their own bilateral negotiations”. She saw this as one of the “very few” examples where a bad deal [would be] worse than no deal. The Law Society of England and Wales advocated “provisions that leave the possibility for national regulators to enter into mutual recognition agreements … with equivalent regulators of their choosing”. The Bar Council highlighted the “long-standing practice” of bilateral arrangements between EU and non-EU bars and regulators, which “are not considered incompatible with either EU law or international trade rules”.
124.techUK identified a risk that a UK-EU agreement might be “partial in coverage”, arguing that “the two sides should set out detailed information on which sectors are covered by the agreement, similar to a positive list approach”. At the same time, it highlighted the need to leave the door open for bringing new qualifications in scope of the agreement, in response to technological developments.
125.The need for flexible arrangements is well illustrated by the legal sector. The Law Society of England and Wales told us that a “‘one-size-fits-all’ approach to mutual recognition of qualifications [would have] difficulties taking into account the diversity of the legal services sectors and the justice systems”. They identified two forms of recognition as most relevant to the legal professions: recognition of a lawyer’s “home state title”; and recognition of “(part of) existing qualifications and academic experience for the purposes of requalification into the host state profession”.
126.The Bar Council agreed that any future recognition framework should allow for both “reciprocal market access under home State title, i.e. without the need for acquisition of the host State title”, and for “a clear path to requalification into the host State’s legal profession”.
127.The Law Society of England and Wales explained that requalification in a EU jurisdiction carries “important rights”, including the “ability to advise on EU law” and the “protection of lawyer-client communications by legal professional privilege”. The Law Society of Scotland also stressed the importance of continued protection of legal professional privilege for UK lawyers operating in the EU, and vice versa, to ensure that “confidential communications between companies or individuals and their legal advisers” may not be “disclosed in legal proceedings or to regulators or other third parties”.
128.The Bar Council proposed that any future UK-EU agreement on recognition of qualifications should also allow for “less than full requalification”, including a ‘limited licence’ enabling “the holder to practise under the host title in the host State in matter of international law”. It noted that there is precedent for this in the WTO/GATS regime.
129.The Law Society of England and Wales warned that, in some EU jurisdictions, EEA nationality was a prerequisite for requalifying into the host state profession. This suggests that, in the absence of robust national treatment provisions, a UK-EU arrangement on recognition of qualifications may not in itself confer full requalification rights on UK lawyers.
130.Lawyers have raised concerns about the impact of nationality restrictions on rights of audience before EU courts, including the CJEU, and potentially national courts within Member States on the UK’s legal sector. The Bar Council suggested that there would be scope for preserving some rights of audience as part of UK-EU mutual recognition arrangements, by including a mechanism known as ‘temporary call’. This would enable lawyers to appear “in a single case or series of related hearings” noting that this option “is already available for third country lawyers in the UK jurisdictions”.
131.In addition, the Chartered Institute of Trade Mark Attorneys (CITMA) raised a particular concern about UK Chartered Trade Mark Attorneys losing their right to represent clients at the European Union Intellectual Office (EUIPO)—estimating the cost at “between £789 million and £1.7 billion per year”. The Intellectual Property Office (IPO), an executive agency of BEIS, told us that rights of audience before EU courts did not, in themselves, form part of the Government’s negotiating requests, as they were “the preserve of the Single Market”. CITMA described the Government’s stance as “hugely disappointing”.
132.CITMA also noted that EU/EEA trade mark attorneys were likely to retain the right to appear before the UK IPO, and urged the Government to “act immediately and introduce statutory instruments to amend current legislation and correct this imbalance that favours EEA practitioners over British ones”. The IPO undertook a consultation on this matter, which closed on 14 August. A Statutory Instrument will be brought to Parliament in November to prevent EEA lawyers from appearing before the UK IPO after the end of the transition period.
133.Bespoke arrangements, in addition to an FTA, are likely to be required in some professional and business services sectors. This is one area where a bad deal, which prevents the agreement of bilateral supplementary agreements on mutual recognition, could be worse than a no deal. We urge the Government to ensure that an agreement explicitly allows for the conclusion of supplementary bilateral arrangements on the mutual recognition of professional qualifications, including at the Member State level.
134.Several witnesses to the inquiry made representations regarding the impact on the legal sector of the UK joining the 2007 Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters—known as the ‘Lugano Convention’. This international treaty was concluded between the EU (on behalf of its Member States), Iceland, Norway and Switzerland. Its purpose is two-fold: to determine jurisdiction over a civil or commercial dispute—in other words, establish which country’s courts should deal with that dispute; and to ensure recognition of the resulting judgment.
135.We note that the EU Security and Justice Sub-Committee has considered this matter in significant detail in recent weeks, including taking evidence from the then Advocate General for Scotland, Lord Keen of Elie QC, on 15 September.
136.The EU’s approach, outlined in Article 5.14 of its draft ‘Regulatory Framework’ Chapter, is closely modelled on Chapter 11 of CETA, and would establish a framework for professional bodies from both Parties to consult with each other and, where deemed appropriate, recommend the conclusion of a (pre-negotiated) mutual recognition agreement to a Partnership Council. Based on their experience with CETA, our witnesses doubted the effectiveness of such a mechanism. Simon Davis told us: “All CETA does is say that it would be a good thing to have some kind of mutual recognition … but nothing has happened.” The PBSC agreed that while CETA “sets out an admirable framework”, it “has yet to achieve a single Mutual Recognition Agreement”.
137.The Government’s proposals on recognition of qualifications, set out in Chapter 13 of the Government’s draft legal text, depart from precedent. In Sam Lowe’s words: “The UK is proposing a framework in which, the moment a UK-registered professional applies for their qualification to be recognised in an EU member state, the default is that that recognition is granted, subject to an aptitude test.” BEIS explained that the Government’s approach would have the advantage of giving professionals “access to pathways to gain recognition of their qualifications in the other party’s jurisdiction from the date the agreement comes into force”. The Minister clarified that this would not be tantamount to “automatic recognition” of qualifications, describing suggestions from the Commission that the Government may be seeking to ‘cherry pick’ elements of the Single Market as a “mischaracterisation”.
138.On the question of supplementary bilateral arrangements, the Minister told us that he saw no reason “why the UK or EU proposals would make such bilateral or multilateral arrangements impossible”, as “many regulatory authorities have independent powers to make such arrangements”. He emphasised the Government’s commitment to preserving “the independence of professional bodies to agree independent bilateral or multilateral arrangements”.
139.Several witnesses praised the level of ambition shown by the Government. Shanker Singham suggested that the Government may have taken as a model the mutual recognition arrangements in place between Australia and New Zealand, which he described as “the most advanced … anywhere in the world”. Nick Owen agreed that the Government’s approach would be “an improvement” on the framework offered by the EU.
140.The Minister also indicated that the Government was seeking to lock in “some form of home title rights” as part of the future relationship agreement. Under these proposals, “UK or EU lawyers who practise the law of their home jurisdiction or international law in each other’s markets should be able to do so using their home professional title”. Asked about the rights of audience, the Minister said that “rights of representation before individual member state courts are determined by the regulatory rules” in individual Member States.
141.The mutual recognition of professional qualifications is one area where the Parties’ negotiating stances differ fundamentally. The Government has proposed that mutual recognition should be the default position. The Commission’s proposal allows UK and EU-wide professional bodies to negotiate sector-specific mutual recognition agreements which would have to be approved by a Partnership Council, as under CETA. Our witnesses were unanimous that CETA’s mutual recognition provisions have been ineffective so far, having failed to produce a single mutual recognition agreement. We welcome the Government’s efforts to secure inclusion of its more ambitious proposals in any final UK-EU agreement.
142.With the UK’s exit from the Single Market, UK legal professionals will lose some of their existing rights, such as the ability to advise on EU law under their home state title and represent clients before EU courts and institutions. It may not be feasible, in our view, to preserve these rights as part of the current negotiations. Nevertheless, the Government’s efforts to secure some form of recognition of legal qualifications is welcome. We urge both negotiating parties to come to an understanding on this matter, given the potential reciprocal benefits for UK and EU legal professionals, businesses and citizens.
149 Written evidence from BEIS ()
150 European Union Committee, (18th Report, Session 2016–17, HL Paper 135), Box 6
151 Directive 2014/56/EU of the European Parliament and of the Council of 16 April 2014 amending Directive 2006/43/EC on statutory audits of annual accounts and consolidated accounts, , 16 April 2014, and Directive 2006/123/EC of the European Parliament and of the Council of 12 December 2006 on services in the internal market, , 12 December 2006
152 Law Society, ‘Communities, How to practice in the EU’: [accessed 1 September 2020]
153 European Union Committee, (18th Report, Session 2016–17, HL Paper 135), para 120
154 HM Government, Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community, 19 October 2019, Article 27: [accessed 1 September 2020]
155 Written evidence from Dr Dimitrios Syrrakos ()
156 Written evidence from Giulio Marini ()
157 Written evidence from the UK Trade Policy Observatory (UKTPO), The Managing Partners’ Forum and CityREDI ()
158 Written evidence from CIMA ()
159 Written evidence from RIBA ()
162 Written evidence from the REC ()
164 Written evidence from RIBA ()
166 Written evidence from the PBSC ()
168 Written evidence from the Law Society of England and Wales ()
169 Written evidence from the Bar Council ()
170 Written evidence from techUK ()
171 Written evidence from the Law Society of England and Wales ()
172 Written evidence from the Bar Council ()
173 Written evidence from the Law Society of England and Wales ()
174 Written evidence from the Law Society of Scotland ()
175 Written evidence from the Bar Council ()
176 Written evidence from the Law Society of England and Wales ()
177 Written evidence from the Bar Council ()
178 The European Union Intellectual Property Office (EUIPO), known as OHIM until March 2016, is a decentralised EU agency offering Intellectual Property rights protection, registration of the EU trade mark and the registered community design to businesses operating across the EU’s Single Market.
179 Written evidence from the UK Intellectual Property Office ()
180 Written evidence from CITMA ()
182 Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, , 21 December 2007
183 Ministry of Justice, ‘Support for the UK’s intent to accede to the Lugano Convention 2007’, 28 January 2020: [accessed 8 September 2020]. See also European Union Committee, (17th Report, Session 2016–17, HL Paper 134), Box 14
184 Oral evidence taken before the EU Security and Justice Sub-Committee, 15 September 2020 (Session 2019–21) (Rt Hon. Lord Keen of Elie QC)
186 Written evidence from the PBSC ()
188 Written evidence from BEIS ()