20 March 2017
Parliament has cleared the way for Article 50 notification which will be triggered by the end of the month. What happens next from a legal perspective?
What’s the issue?
The government is planning to trigger notification of the UK’s intention to leave the European Union under Article 50 of the Treaty of the Functioning of the European Union by the end of this month. After notification has taken place, alongside exit negotiations and other distractions like a second Scottish independence referendum, the UK will face the largest legislative challenge in its history as it moves to incorporate currently applicable EU-derived law and then reviews it both from a technical and then a substantive perspective.
Initially, this will take place under the ‘Great Repeal Bill’ (GRB), to be presented to Parliament at the next Queen’s Speech. The GRB will repeal the European Communities Act 1972 (ECA) which gives effect to EU Treaties, provides the legislative basis for transposing EU law into domestic law and gives precedence to binding provisions of EU law over inconsistent UK legislation. It is also intended to incorporate all then current EU law into UK law on the UK’s departure from the EU.
What’s the development?
Parliament has cleared the way for Article 50 notification which is likely to take place in the last week of this month. The publication by the House of Lords Select Committee on the Constitution (Committee) of its report on ‘‘The Great Repeal Bill’ and delegated powers’ highlights the complexity of the task ahead in ensuring that we have a fully functioning body of law on exit, and, in particular, focuses on concerns around the balance of power between the government and Parliament.
What does this mean for you?
Until now, much of the discussion around the Article 50 process and the GRB has been fairly esoteric but as we are now poised at the point of (arguably) no return it’s worth thinking about what happens next from a legal perspective.
Article 50 and the exit negotiations - what next?
The two year negotiation period will begin on notification. The Council will then negotiate and conclude an agreement with the UK for its withdrawal in accordance with certain guidelines it agrees on and subject to certain approvals. If the negotiations are not concluded within two years of the exit notification, the EU Treaties will cease to apply unless that two year period is extended by unanimous agreement of the Council and the UK.
The exit agreement will need to be approved by the European Parliament and agreed both by the Council (by an enhanced qualified majority or 20 out of 27 Member States) as well as by the UK and it seems unlikely that the initial two year period will be sufficient. The government has set out its priorities in a White Paper, making it clear that it will not accept any immigration controls and will not be seeking to remain part of the Single Market. What happens when the two year period expires is uncertain. If the negotiation period is not extended, the UK will fall out of the EU and will trade with it on WTO terms where applicable.
The exit agreement will not necessarily include an agreement on the future relationship with the EU; it may be mainly concerned with withdrawal arrangements and costs. The Prime Minister has indicated that a transition period would be desirable. It is unclear how long that period may be or what the arrangements will be during it.
The ‘Great Repeat Bill’
The complexities of making the GRB work are huge, due not only to the variety of different sources of EU law but also due to the fact that requirements are likely to change as the exit negotiations take place.
Sources of EU law
Broadly, the most significant EU-derived laws take the form of Regulations (which are directly applicable under s2(1) ECA and do not have to be implemented into Member State law) and Directives (which require Member State implementing legislation). Some Directives have been implemented in the UK as primary legislation (statute) and some by secondary legislation (statutory instrument) which often has s2(2) ECA as its basis. In addition, we have law derived from European courts and European regulator decisions as well as from lesser EU instruments such as Decisions.
The big picture
There are a number of overriding issues. The UK will need to take a decision about which EU legislation should survive our exit or what (if anything) should replace any legislation which goes at the time of exit. There is also a question of amending the legislation and any cross references to ensure it continues to work in a post-EU UK. The House of Commons Library estimates that 13% of legislation enacted between 1993 and 2004 is EU-related. It suggests the review which will be required to decide which legislation to keep, which to repeal and which to amend, will constitute one of the largest legislative projects ever undertaken in the UK.
While we can decide to keep or implement any EU laws we like once we leave, that does not mean the EU will regard us as being compliant for their purposes and this could act as a barrier to trade whatever the ultimate post-Brexit trading arrangements are.
One of the broader issues is what happens as EU law develops. EU laws will be passed between now and Brexit. Will those be implemented by the UK? Regulations (which are directly applicable and do not have to be implemented into local law) which come into force before we leave should, in theory, come into effect and be within the scope of the GRB, but does this also hold for a Regulation which is passed before we leave but which doesn’t apply until after we leave?
The situation with Directives is still more complicated. Directives usually come into effect with a date by which Member States must pass implementing legislation. Typically, this period is eighteen months to two years depending on the complexity of the legislation, although it can be as little as six months. So what happens when the EU passes a Directive during the exit negotiation period? Do we draft legislation to implement it or not?
Even if we do pull EU law which currently applies to us onto the UK’s statute books on exit, what happens when those laws are developed at an EU level? We will have to decide whether to progress with the EU (remembering that we will have no say in EU legislation) or to diverge, at which point the law is no longer the same and this could, again, impact on any future trading arrangements.
The Committee report on the GRB
It is currently unclear how many of these issues the GRB will attempt to deal with and in how much detail. The House of Lords Select Committee on the Constitution has looked in detail at the practicalities involved and has taken the unusual step of producing a report before publication of the GRB.
The report looks at:
- the challenges facing the UK government on repealing the European Communities Act 1972 (ECA); and
- the extent to which the government may be granted wide-ranging delegated powers under the GRB and how Parliamentary oversight is maintained.
What will the GRB do?
As the Committee notes, the intention is that the GRB will preserve EU law where it stands at the point of Brexit as a prelude to then reviewing EU-derived law and deciding what to keep, amend or repeal. The GRB will repeal the ECA, convert existing EU law which has effect in the UK into UK law, and enable changes to be made by secondary legislation to address issues arising out of the process (such as references to EU institutions). This process will be complicated given the different sources of EU-derived law, including primary and secondary legislation, laws which are directly applicable but not written into UK statute, and CJEU case law and rulings by EU regulatory bodies. A further complicating factor is that the outcome of the EU exit negotiations will be unknown during the period when laws have to be re-drafted to cope with issues like removing references to EU institutions, changing cross-references or even dealing with entirely new regulatory regimes to replace EU ones.
On the face of it, the GRB is likely to provide a new legal basis for delegated legislation passed under the ECA; law which has been given effect by or under other primary legislation will remain in force notwithstanding the repeal of the ECA in the absence of further action. In addition, the GRB will provide a mechanism for incorporating directly effective EU law into UK law. It is expected that directly effective EU law will be given effect as it stands at the time of departure from the EU.
The Committee goes on to note that the government’s intention is that some areas of law such as customs or immigration, be excluded from the scope of the GRB and dealt with by separate primary legislation. Issues like this are likely to be dealt with as a major focus of the exit negotiations and are unlikely to be finalised before exit. This may lead to preparatory legislation being drafted to give delegated powers to the government to adapt the legislation on conclusion of the exit negotiations.
The GRB should also deal with the issue of EU case law and regulator decisions and make clear their status both prior to and after Brexit. The Committee suggests that the GRB provide that the UK courts “may have regard to” the case law of the CJEU in reaching its own judgments which will allow the UK courts to be influenced but not bound by EU law. The Committee also recommends the government give careful consideration to a contingency plan to deal with any rejection of the Brexit deal by either side.
The Committee envisages that the GRB will grant the government significant delegated powers to enable it to amend and repeal, or in the case of secondary legislation, revoke, legislation in order to carry out the conversion process of EU-derived law. The main challenge it identifies is to ensure these powers cannot be used by the government to implement new policies in areas that were formerly within the EU competence.
The Committee suggests the government is allocated delegated powers which are as limited as possible, although given what needs to be achieved, they are still likely to be extensive. It further recommends that a clear distinction be drawn between technical amendments and larger amendments involving policy choices and that the GRB include provisions to ensure that delegated powers be used only in order to adapt the body of EU law to fit the UK domestic legal framework and implement the result of the exit negotiations. It should also include a list of actions which cannot be carried out under the delegated powers and make use of mechanisms such as sunset clauses to limit the powers.
It should also be made clear that the GRB should not be used as a precedent in future debates about constitutional issues. In addition, there also needs to be clarity around how law can be amended both during the process of domestication and after it, with primary legislation to be required where policy choices are involved.
The Committee identifies a particular risk in the way in which secondary legislation is created. Traditionally, it is not always laid before Parliament, is not always subject to a scrutiny procedure and it cannot be amended (it has to be revoked). The House of Commons estimates there are 20,000 EU legislative acts in force in the UK, of which only 5000 EU Regulations are directly applicable. EU law which has been transposed into UK law under secondary legislation underpinned by the ECA, may only require secondary legislation to bring it into UK law, but may involve very significant issues and possibly changes to the previous law. The Committee believes that Parliament faces three challenges with regard to secondary legislation:
- how to deal with the volume of secondary legislation flowing from the GRB;
- how to ensure Parliament can identify for more detailed scrutiny those statutory instruments that determine matters of significant policy interest or principle; and
- how to enable Parliament meaningfully to affect the content of those statutory instruments selected for additional scrutiny.
The Committee therefore recommends that Parliament will need to consider a special process for reviewing secondary legislation created as a result of the GRB. This might involve statutory declarations as to whether any substantive policy changes are included, inclusion in the explanatory text of legislation of the effect of any amendments and why they were necessary, and a recommendation as to the appropriate level of Parliamentary scrutiny, to be reviewed by a dedicated committee which can decide that more sensitive or significant legislation should undergo an enhanced scrutiny process in Parliament.
The Committee also highlights the issue of the involvement of the devolved institutions. Where competence of developed administrations applies, they will need to be consulted on any amendments to EU laws. The UK government should have competency up to the point of Brexit but devolved institutions will then be able to legislate in certain areas previously under the competence of the EC.