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The United Kingdom Internal Market Bill: Part 5 Contents

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Chapter 4: The compatibility of the United Kingdom Internal Market Bill with international law

The Government’s legal argument

66.The United Kingdom Internal Market Bill triggered controversy even before it was published. On 8 September 2020, following media reports that the Government was planning to use the Bill to breach its obligations under the Protocol, the Secretary of State for Northern Ireland, Rt Hon Brandon Lewis MP answered an urgent question in the House of Commons. In his opening answer he stated that the Government was “fully committed to implementing the withdrawal agreement and the Northern Ireland Protocol”. But responding to a supplementary question from Sir Robert Neill MP, he said: “Yes, [the Bill] does break international law in a very specific and limited way. We are taking the power to disapply the EU law concept of direct effect, required by article 4, in certain very tightly defined circumstances.”62

67.Two days later, on 10 September, following publication of the Bill, the Government published its legal position on the legislation.63 The paper acknowledged that what is now clause 47 of the Bill “partly disapplies Article 4 of the Withdrawal Agreement because it removes the possibility of challenge before the domestic courts to enforce the rights and remedies provided for in the Withdrawal Agreement”. The Government accepted the need to discharge treaty obligations in good faith, but argued that “it is important to remember the fundamental principle of Parliamentary sovereignty”. It went on to contend that, as a matter of domestic law, the UK Parliament can pass legislation which is in breach of the UK’s treaty obligations and that Parliament “would not be acting unconstitutionally” in enacting such legislation. The paper claimed that due to the UK’s dualist legal system “treaty obligations only become binding to the extent that they are enshrined in domestic legislation”.

68.This last point is clearly wrong in law. The correct view is that treaties are binding in law on the international plane. In the Miller judgment the Supreme Court was clear that the “dualist theory” is based on a clear distinction between international and domestic law:

“International law and domestic law operate in independent spheres. The prerogative power to make treaties depends on two related propositions. The first is that treaties between sovereign states have effect in international law and are not governed by the domestic law of any state. As Lord Kingsdown expressed it in Secretary of State in Council of India v Kamachee Boye Sahaba (1859) 13 Moo PCC 22, 75, treaties are ‘governed by other laws than those which municipal courts administer’. The second proposition is that, although they are binding on the United Kingdom in international law, treaties are not part of UK law and give rise to no legal rights or obligations in domestic law.”64

69.It follows that while the principle of Parliamentary sovereignty allows Parliament to legislate in a manner contrary to international obligations, such legislation is only operational in the domestic sphere.65 Thus the safeguards added to the Bill in the Commons (described in paragraph 64), whatever their domestic import, do nothing to prevent or mitigate the breach of the Withdrawal Agreement and the Protocol that is explicitly contemplated in Part 5.

70.This conclusion is reinforced by the terms of the Vienna Convention on the Law of Treaties 1969. Article 26 is entitled Pacta sunt servanda.66 It states: “Every treaty in force is binding upon the parties to it and must be performed by them in good faith.” In case this is not clear enough, Article 27 provides: “A party may not invoke the provisions of its internal law as justification for its failure to perform a treaty.”67

71.A more nuanced defence of the Government’s position was advanced on 15 September by the then Advocate General for Scotland, Lord Keen of Elie QC, giving evidence to our Security and Justice Sub-Committee. He suggested that the Secretary of State had answered the “wrong question”. He emphasised that he had reached his conclusions on the basis of the “factual matrix as it has been identified by Her Majesty’s Government”—in essence, the facts of the case as reported to him by his client, the Government. This ‘factual matrix’ (which we explore in more detail at paragraph 81 below) suggested that the EU had not been acting in good faith, and was therefore in breach of the Withdrawal Agreement. Lord Keen recalled that Article 16 of the Protocol allows the United Kingdom to take “unilateral safeguard measures” in the event of serious economic, societal or environmental difficulties arising from the operation of the Protocol, but noted that Article 4 of the Withdrawal Agreement, establishing the direct effect and primacy of EU law, would make it “very difficult to take the steps required in the event that Article 16 is triggered”. The provisions in the Bill were therefore necessary, since “at the 11th hour, we might be required to respond to what we regard as a failure of good faith on the part of the EU”. On this basis he believed that the Government was “adhering to the rule of law”.68

72.The following day, however, the Secretary of State for Northern Ireland repudiated Lord Keen’s arguments, telling the House of Commons Northern Ireland Affairs Committee: “The Government’s legal advice, as the Attorney General set out, is clear. The comments I made last week reflect that legal advice.”69 Lord Keen then resigned, and his resignation letter to the Prime Minister states: “I have endeavoured to identify a respectable argument for the provisions at clauses [44 to 47] of the Bill but it is now clear that this will not meet your policy intentions.”70

73.In evidence to this Committee on 7 October, the Chancellor of the Duchy of Lancaster, Rt Hon Michael Gove MP, repeatedly emphasised that the Government continued to negotiate in good faith and was seeking agreement through the Joint Committee. He described the Bill as a “safety net”, which would only be invoked if those discussions with the EU did not reach a satisfactory conclusion:

“They are intended to ensure that if there are areas that require to be addressed, as there are, first the Joint Committee should address them. Then, if no agreement can be reached in the Joint Committee, an arbitral process, of course, kicks in. We reserve the right, and the legislation is there, to ensure that the integrity of the United Kingdom is protected if no agreement has been reached.”71

74.Mr Gove therefore argued that “we have not breached the agreement”, emphasising that “we absolutely do believe in the rule of law”.72

75.Mr Gove’s arguments for the lawfulness of the Government’s actions are thus similar in outline to those advanced by Lord Keen, prior to his resignation. This makes it all the more puzzling that the Government should also have stood by the Secretary of State for Northern Ireland’s statement that the Bill, by disapplying the direct effect of EU law, as required by Article 4 of the Withdrawal Agreement, breaks international law.

The European Commission’s response

76.In a statement published after an emergency meeting of the Withdrawal Agreement Joint Committee on 10 September, Maroš Šefčovič, the EU’s lead representative on the Joint Committee, called on the UK Government to “withdraw these measures from the draft bill in the shortest time possible and in any case by the end of the month”. Mr Šefčovič said that the EU “would not be shy in using” the dispute resolution procedures contained in the Withdrawal Agreement (described at paragraphs 37 and 38).73

77.On 1 October 2020 the European Commission duly initiated infringement proceedings by sending the UK Government a letter of formal notice alleging that it had breached obligations under the Withdrawal Agreement. In launching these proceedings the Commission made use of provisions in the Withdrawal Agreement that enable the Commission, until the end of the transition period (and for four years after the end of transition period for breaches committed before the end of the transition period) to bring infringement proceedings74 and refer potential breaches of EU law to the Court of Justice of the European Union (CJEU), as if the UK were still a Member State. These provisions also apply to alleged breaches of the Withdrawal Agreement during the transition period.75

78.In an accompanying press release, the Commission highlighted Article 5 of the Withdrawal Agreement, the “good faith” provision, described at paragraph 36 of this report. The President of the European Commission, Ursula von der Leyen, also made a statement reiterating that the tabling of the Bill and the UK Government’s refusal to remove the contentious clauses of the Bill amounted to a breach of the duty of good faith contained in Article 5 of the Withdrawal Agreement.

79.The Commission has given the UK until the end of October to submit its observations in response to the letter of formal notice.76 At the end of that period, the Commission has indicated that it may decide, in accordance with the EU’s infringement procedure, to issue a ‘reasoned opinion’. If the UK fails to comply with that opinion, the matter could then be referred to the Court of Justice of the European Union.

Government allegations against the EU

80.The Government has justified the provisions contained in the Bill by claiming that they are necessary to protect the United Kingdom against unreasonable behaviour on the part of the EU. In his speech opening the Second Reading debate on the Bill on 14 September, the Prime Minister stated:

“Some in the EU are now relying on legal defaults to argue that every good is ‘at risk’, and therefore liable for tariffs … The EU is threatening to carve tariff borders across our own country, to divide our land, to change the basic facts about the economic geography of the United Kingdom and, egregiously, to ride roughshod over its own commitment under article 4 of the Protocol, whereby ‘Northern Ireland is part of the customs territory of the United Kingdom.’”77

81.The Prime Minister went further in evidence to the House of Commons Liaison Committee. Asked by the Chair of the Future Relationship with the European Union Committee whether he thought the EU was negotiating in good faith, he replied: “I am afraid, alas, as I have said, I don’t believe they are.” He cited in particular the EU’s failure to address the issue of “third country listing”—that is to say, the process whereby the EU has created an approved list of non-EU countries from which food can be imported into the EU’s Single Market.78 The implication, according to the Prime Minister, is that there could be a “potential blockade” on the movement of food and agricultural produce from Great Britain to Northern Ireland (which will be subject to Single Market rules):

“The EU has said that if we fail to reach an agreement to its satisfaction, it might very well refuse to list the UK’s food and agricultural products for sale anywhere in the EU … that decision would create an instant and automatic prohibition on the transfer of our animal products from Great Britain to Northern Ireland.”79

82.Given the justification the Government has advanced for the measures contained in the Bill, it is striking that the Bill does not in fact address the movement of food or other goods from Great Britain to Northern Ireland. It is also notable both that the allegation that the EU was seeking to withhold third country listing from the UK was quickly rejected by the EU’s Chief Negotiator, Michel Barnier,80 and that a week after the Prime Minister’s evidence to the Liaison Committee, the Chancellor of the Duchy of Lancaster was able to report to the House of Commons that “progress has been made” on the issue.81

83.On 17 September, the Government published a statement providing a further explanation of when and how it would activate the so-called ‘notwithstanding clauses’ contained in the Bill (clauses 44, 45 and 47).82 It stated that the Government will ask Parliament to support the use of these provisions, and any similar subsequent provisions relating to the movement of goods from Great Britain to Northern Ireland, only when, in its view, the EU is “engaged in a material breach of its duties of good faith or other obligations, and thereby undermining the fundamental purpose of the Northern Ireland Protocol”. It gave various examples of such behaviour, including:

• insistence that GB-NI tariffs be charged on goods in ways unrelated to the real risk of their entering the EU (including circumstances where this leads to a failure to reach agreement in the Joint Committee leading to the application of default provisions on goods moving from GB to NI);
• insistence on paperwork requirements for goods moving from NI to GB;
• insistence that the EU’s State aid provisions should apply in GB in circumstances when there is no link or only a trivial one to commercial operations taking place in NI; and
• refusal to grant third country listing to UK agricultural goods for “manifestly unreasonable or poorly justified reasons”.

84.The statement then added that “in parallel with the use of these provisions [the Government] would always activate appropriate formal dispute settlement mechanisms with the aim of finding a solution through this route”.

85.In his evidence to us on 7 October, Mr Gove did not in terms repeat the Prime Minister’s statement that the EU had not been acting in good faith, stating that “while negotiations are proceeding … I would not want to pronounce definitely on that question”. He suggested that “a fair minded third party might consider that the EU had not been negotiating in quite the way we would have wanted”. However, since the Prime Minister’s comments were made, there had been “clear signs” that “talks have been proceeding in a constructive way. … Michel Barnier has subsequently indicated that there will not be a problem with third-country listing”. Mr Gove also hinted at constructive discussions in relation to exit summary declarations and goods at risk. He said that the Government would have to “wait and see what happens in the negotiations” before considering the implications for amendments to Part 5 of the Bill, and that it would “if necessary” bring forward provisions on the movement of goods from Great Britain to Northern Ireland in the forthcoming Finance Bill, which he said would come before Parliament before the end of the year.83

The European Union Committee’s letter of 18 September 2020

86.We discussed the Bill at our meeting on 15 September, and decided to publish a report on the Bill before its second reading in the House of Lords. At the same time, we agreed to give the Government an opportunity to explain the reasoning behind the Bill and to provide any evidence to support the allegations being made against the EU.

87.On 18 September we therefore wrote to the Chancellor of the Duchy of Lancaster, Rt Hon Michael Gove MP, with nine questions, covering matters of both fact and law. In that letter, which is reproduced in full in Appendix 2, we asked whether the Government remained of the view that the Bill broke international law, and if so how. We asked for more information on the Government’s concerns about the EU’s interpretation of the Protocol, and on the steps it had taken to address these concerns through the institutions and processes set up under the Withdrawal Agreement. We asked the Government to provide any evidence in its possession to support the allegation that the EU had not acted in good faith, or that it had stated its willingness to ‘blockade’ Northern Ireland.84

88.We requested an answer to reach us by 25 September, to assist in the preparation of this report. At the time the report was agreed (13 October 2020) no answer had been received.

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