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The United Kingdom Internal Market Bill: Part 5 Contents

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Chapter 3: The United Kingdom Internal Market Bill

The objectives of the Bill

39.The United Kingdom Internal Market Bill, according to its long title, is a Bill to “make provision in connection with the internal market for goods and services in the United Kingdom”. As part of this overarching objective it also makes provision “in connection with provisions of the Northern Ireland Protocol relating to trade and state aid”.32

40.This domestic focus is reflected in the Bill’s use of terminology. It uses the term ‘Northern Ireland Protocol’ throughout, rather than the full title, the ‘Protocol on Ireland/Northern Ireland’. Clause 55 (Interpretation) explains: “‘Northern Ireland Protocol’ means the Protocol on Ireland/Northern Ireland in the EU withdrawal agreement.” This contrasts with the European Union (Withdrawal Agreement) Act 2020, which uses the terms ‘Protocol on Ireland/Northern Ireland’ and ‘Ireland/Northern Ireland Protocol’ interchangeably.33

41.The following sections analyse Part 5 of the Bill, as introduced in the House of Lords, on the Protocol on Ireland/Northern Ireland.

Clause 42: Northern Ireland’s place in the UK internal market and customs territory

42.Clause 42(1) of the Bill states that an “appropriate authority” (defined as Ministers of the UK and devolved governments, including the Northern Ireland Executive, and any other public authority) must, when “implementing, or otherwise dealing with matters arising out of, or related to, the Northern Ireland Protocol”,34 have “special regard” to the need:

• to maintain Northern Ireland’s “integral place in the UK’s internal market”;35
• to respect its place “as part of the customs territory of the UK”;36 and,
• to facilitate “the free flow of goods between Great Britain and Northern Ireland” with the “aim of streamlining trade” and “maintaining and strengthening the integrity and smooth operation” of the UK’s internal market.37

43.These considerations are consistent with Article 1(2) of the Protocol, which states that the Protocol “respects the essential State functions and territorial integrity of the United Kingdom”, but they make no reference to the balancing objectives set out in Article 1(3) of the Protocol, which are to address the unique circumstances on the island of Ireland (including maintaining the necessary conditions for continued North-South cooperation and avoiding a hard border), and to protect the 1998 Belfast/Good Friday Agreement in all its dimensions. Nor is there any reference to the recitals to the Protocol. In other words, clause 42 is selective, requiring Ministers, in implementing the Protocol, to have regard only to its inward-looking, domestic objectives, not those that relate to the unique circumstances on the island of Ireland.

Clause 43: unfettered access

44.Clause 43 supports “the delivery of the UK Government’s commitment to unfettered access for NI goods moving from Northern Ireland to Great Britain”.38 It does so by preventing any “appropriate authority” (see paragraph 42) from introducing any new checks or processes on goods moving from NI–GB.39 The Bill provides for a number of exceptions to this principle where, for example, these are necessary:

• to facilitate access for qualifying Northern Ireland goods to the internal market in the UK;40
• to give effect to international agreements or arrangements that the UK is, or will be, a party to;41
• where goods have been declared for a voluntary customs procedure;42
• for the purposes of VAT or excise duty;43 or,
• to deal with a threat to biosecurity in Great Britain.44

Clause 44: export declarations

45.Clause 44 is titled “Power to disapply or modify export declarations and other exit procedures”. It gives UK ministers (but not other ministers or public authorities) the power to make provisions about the application of exit procedures to goods moving from NI to GB.45 This explicitly includes the power to disapply “any exit procedure that is applicable by virtue of the Northern Ireland Protocol” (clauses 44(2) and (4)). In using this power, Ministers are to take into account the need for unfettered access for Northern Ireland goods to Great Britain, and the need to “maintain the smooth operation of the internal market” in the UK.46

46.Clause 44(5) states that any provision made using this power may provide for requirements arising as a result of “any international or domestic law, not to be recognised, available, enforced, allowed or followed”.

47.Any regulations made under clause 44 in the first six months after it comes into force will be subject to “made affirmative procedure”—that is to say, they will come into effect immediately, and only subsequently be subject to affirmative resolution in both Houses.47 After the first six months have passed, regulations made under clause 44 will be subject to normal affirmative resolution.48

48.It is clear that the explicit legislative intent behind clause 44 of the Bill is to disapply the obligation imposed by Article 5 of the Protocol (voluntarily assumed by the UK in January) to ensure that the Union Customs Code is applied to Northern Ireland, including (as we anticipated in January 2020) the requirement for exit summary declarations for goods moving from Northern Ireland to Great Britain. Unlike the Protocol, the clause makes no reference to the desirability of avoiding the imposition of customs or other controls at the border between Northern Ireland and Ireland; nor does it refer to Ireland’s obligations as a member of the EU internal market and customs union.

Clauses 45 and 46: State aid

49.Clauses 45 and 46 relate to State aid. Clause 45 introduces a power for the Secretary of State to make provision about how Article 10 of the Protocol (State aid) is to be interpreted for the purposes of domestic law.

50.Regulations under this provision would be able to disapply or modify the effect of Article 10. As the Government’s Explanatory Notes to the Bill acknowledge, subsection (3) then provides examples of the “broad way in which regulations may be used for this purpose”.49 These would include, for instance, provision for Article 10 “not to be interpreted in accordance with case law of the European Court”50—despite the fact that the essential purpose of Article 10 is to apply provisions of EU State aid law (which fall within the exclusive jurisdiction of the CJEU) to the UK in respect of Northern Ireland.

51.Clause 46 is a statutory requirement that no one apart from the Secretary of State may notify or inform the European Commission of State aid, or proposed State aid, where required under Article 10. The Explanatory Notes to the Bill indicate that:

“This does not prevent others doing so on behalf of the Secretary of State where they are authorised to do so. This reflects the status quo, namely that this function is presently performed by the Foreign Secretary via the UK Mission in Brussels. The Secretary of State will be subject to regulations made under clause 43(1) when interpreting Article 10.”51

52.The Institute for Government has noted that, taken together, clauses 45–46 would “allow UK Ministers to apply State aid law according to the UK rather than the EU’s interpretation”.52

Clause 47: incompatibility with international or domestic law

53.Put simply, clause 47 of the Bill states that regulations made under clauses 44 and 45 cannot be deemed to be unlawful on the basis of incompatibility with international or domestic law. For instance, any regulations made under clause 45 will have effect, regardless of any relevant international or domestic law with which they are incompatible or inconsistent. Thus, if enacted, clause 47 means that the Government could use the delegated powers just described to overturn commitments entered into not just by means of the Protocol, but also by means of the Withdrawal Agreement—regardless of whether or not those commitments have previously been implemented in primary legislation.

54.The clause (originally introduced in the Commons as clause 45, and subsequently amended by the Commons) was subject of immediate commentary by legal academics. Professor Catherine Barnard described it as “a remarkable step for the UK government to take”,53 and Professor Mark Elliott called it “constitutional dynamite”.54

55.It follows also that clause 47 is in direct conflict with Article 4 of the Withdrawal Agreement, and with section 7A of the European Union (Withdrawal) Act 2018, which, as we have shown, provide for the primacy and direct effect of any EU law applying by virtue of the Withdrawal Agreement.

56.Professor Elliott also noted that the clause went further, insofar as it conflicts directly with the new section 7A of the European Union (Withdrawal) Act 2018 (see paragraph 53 above), which, in implementing Article 4 of the Withdrawal Agreement, provides for the direct effect and primacy of any EU law applying by virtue of that Agreement. In Professor Elliott’s words, the clause “is flatly inconsistent with this key aspect of the Agreement”. Professor Kenneth Armstrong agreed, commenting that it “drives a coach and horses through the UK’s implementation of the Withdrawal Agreement”.55 Their argument is that the presence of these elements of clause 47 alone leads to a potential breach of the provisions of the main text of the Withdrawal Agreement, as well as the Protocol.

57.In more detail, clause 47(1) provides that regulations made under clauses 44(1) and 45(1) “have effect notwithstanding any relevant international or domestic law with which they may be incompatible or inconsistent”. To underline the point, the Bill adds at clause 47(2):

“Regulations under section 44(1) or 45(1) are not to be regarded as unlawful on the grounds of any incompatibility or inconsistency with relevant international or domestic law (and section 6(1) of the Human Rights Act 1998 does not apply in relation to the making of regulations under section 44(1) and 45(1).”56

58.“Relevant international and domestic law” is defined exhaustively at clause 47(8). It encompasses:

(a)any provision of the Northern Ireland Protocol;

(b)any other provision of the EU Withdrawal Agreement;

(c)any other EU law or international law;

(d)any provision of the European Communities Act 1972;

(e)any provision of the European Union (Withdrawal) Act 2018;

(f)any retained EU law or relevant separation agreement law; and

(g)any other legislation, convention or rule of international or domestic law whatsoever, including any order, judgment or decision of the European Court or of any other court or tribunal.

The only aspect of domestic or international law excluded from the scope of clause 47 is Convention rights within the meaning of the Human Rights Act 1998.

59.Clauses 47(2)(b) and 47(7) make the specific changes to the effect of section 7A of the 2018 Act.

60.As initially drafted the provision also appeared to exclude judicial review of regulations made under the Bill in relation to both exit procedures and the State aid provisions, not only on the basis of incompatibility with EU law and the Withdrawal Agreement, but also on the grounds of normal domestic law or, potentially, Human Rights Act grounds.

61.The latest version of the Bill contains a number of new provisions, made by way of Government amendments in the Commons. These include clauses 47(4) ,47(5) and 47(6) which, rather than simply ousting the powers of the courts, seek to regulate the circumstances in which a court could entertain “any proceedings for questioning the validity or lawfulness of regulations made under section 44(1) or 45(1)”. Notably, clause 47(6) seeks to circumscribe the jurisdiction and powers of a court or tribunal, making them subject to clause 47(1) and (2). This may affect the remedies which could be granted by the courts. Professor Elliott has observed that while the new amendment could facilitate judicial review, it could leave claimants with a “purely Pyrrhic” victory, if the courts felt they were unable to quash the regulations due to the ‘notwithstanding clause’.57

62.In addition, a new clause 47(3) provides that regulations under section 44(1) or 45(1) are to be treated, for the purposes of the Human Rights Act 1998, as if they were within the definition of “primary legislation” in section 2(1) of that Act. This means that while the courts might be able to make a declaration of incompatibility in respect of the secondary legislation, they would not be able to quash it by reason of any incompatibility with a Convention right.58

63.All these provisions raise issues in respect of the rule of law. The Constitution Committee59 and the Joint Committee on Human Rights (JCHR)60 have both published letters to the Government addressing some of these, and will no doubt explore them further in any reports which they make on the Bill.

Clause 56: commencement

64.A further amendment, made to the Bill in the House of Commons, outlines the process whereby clauses 44, 45 and 47 will come into force. For all other clauses in the Bill, the Secretary of State can by regulation simply set a date for their ‘commencement’. But clause 56 provides, among other things, that such an instrument may not set a date for the commencement of clauses 44, 45 and 47 unless a Minister of the Crown has first moved a motion in the House of Commons to the effect that they may be commenced on or after a date specified in the motion, and that the motion has been approved by that House. In other words, the three clauses will remain inoperative until the House of Commons approves a motion allowing them to be activated.

65.A motion would also have to be tabled in the House of Lords, to ‘take note’ of the specified date. Such motions cannot be amended, and given their neutral wording there is “neither advantage nor significance in opposing them”.61

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