Introduction

In the January edition of the Delta Report, we discussed the pending Article 50 challenge before the UK Supreme Court (the "Supreme Court") and highlighted some of the issues and uncertainties surrounding Brexit, in particular as to whether the UK government could retain its original Brexit timetable[1]. In this edition of the Delta Report, we look to provide an update on the impact of the Supreme Court ruling, summarise some of the key findings in the judgment and look at the next steps in the form of the UK government's 'Great Repeal Bill'.

Events since 24 January 2017

On 24 January 2017, the Supreme Court delivered one of the most significant constitutional decisions of this generation, dismissing the Secretary of State for Exiting the European Union's appeal against an earlier Divisional Court ruling[2] and ruling by an 8 to 3 majority that Article 50 of the Treaty on European Union[3] ("Article 50") cannot be triggered without an authorising Act of Parliament[4].

Following the ruling, on 13 March 2017, the European Union (Notification of Withdrawal) Bill was passed by both Houses of Parliament[5]. The Bill subsequently received Royal Assent and became an Act of Parliament on 16 March, 2017.

With Parliament's consent duly obtained, on 29 March 2017, the Prime Minister sent a letter to the European Council President, Donald Tusk, formally notifying the European Council of the UK's intention to withdraw from the European Union in accordance with Article 50. The letter also included notification of the UK's intention to withdraw from the European Atomic Energy Community[6]. The Prime Minister explained that the government's wish was to agree the terms of the UK's future partnership with the European Union alongside the terms of its withdrawal; a process that the EU's chief negotiator for Brexit, Michel Barnier, and the European Parliament appear inclined to reject[7].

Following the delivery of formal notice under Article 50, on 30 March 2017, the Department for Exiting the European Union ("DEXEU") released a White Paper, 'Legislating for the United Kingdom's withdrawal from the European Union' (the "White Paper"). The White Paper explains how the UK government will legislate for the conversion of EU law into UK law from the date of exit via a 'Great Repeal Bill', which will be introduced in the next parliamentary session.

On 5 April 2017, the EU Parliament adopted a resolution approving initial negotiating guidelines for the Brexit negotiation. These guidelines looked to ensure that the UK abides by its current budgetary obligations, heeds the jurisdiction of the European Court of Justice (the "ECJ") and supports the common EU trade policy, while it is still a member. This final obligation restricts the UK from striking trade deals with countries bilaterally before it has left the EU[8]. On 29 April 2017, the European Council also published its "Guidelines for Brexit Negotiations" which set out some of the core principles that will govern the negotiations and related procedural steps. The guidelines rejected a key demand of the UK government that "divorce negotiations" on the terms of the exit run in parallel with those surrounding the agreement for a future trade relationship. The European Council is committed to dealing with the former before moving onto the latter, thereby greatly increasing the likelihood that some form of transition period will be necessary ahead of the March 2019 deadline.

Potential further uncertainty surrounding the process was also introduced on 18 April 2017 by an announcement from the Prime Minister that the UK government will seek to dissolve Parliament and hold a snap general election on 8 June 2017. Depending on the results of that election, the negotiating position (and indeed the composition of the UK government) could be dramatically altered.

1. The Supreme Court Judgment

The main issue argued before the Supreme Court was whether a formal notice of withdrawal under Article 50 can lawfully be given by ministers without an authorising Act of Parliament.

In order to address this point, the two issues the Supreme Court considered were:

(i) the extent of ministers' power to effect changes in domestic law through exercise of their prerogative powers at the international level; and

(ii) the relationship between the UK government and Parliament on the one hand and the devolved institutions of Scotland, Wales and Northern Ireland on the other.

(i) Ministers' power to effect changes in domestic law through exercise of prerogative powers

The Supreme Court explained that a core provision of the Act of Parliament that ratified the UK's accession to the then European Economic Community, the European Communities Act 1972 (the "ECA"), was to put in place a dynamic process by which EU law becomes a source of UK law (and one that takes precedence over all domestic sources of UK law)[9]. Further, withdrawal from EU constitutes a fundamental constitutional change in the UK whereby EU law ceases to be part of the UK's domestic law and the ECJ will no longer be the final court of appeal. The Supreme Court was of the opinion that it would be "inconsistent with long-standing and fundamental principle for such a far-reaching change to the UK constitutional arrangements to be brought about by ministerial decision or ministerial action alone"[10]. Applying these basic concepts of constitutional law, the Supreme Court held that withdrawal "must be effected in the only way that the UK constitution recognises, namely by Parliamentary legislation"[11].

Arguments raised before the Supreme Court

The arguments advanced by Counsel for the government were based on the existence of the long-established 'prerogative powers' of the Crown to enter into and to withdraw from international treaties. Counsel argued that the government was entitled to exercise this prerogative power in relation to the EU Treaties and could therefore serve the Article 50 notice without first obtaining authorisation from Parliament. In the government's view, the ECA did not exclude the ministers' prerogative powers to withdraw from the EU Treaties and did not prevent the government from serving the Article 50 notice. Counsel further submitted that after giving the Article 50 notice, the Great Repeal Bill will be laid before Parliament to repeal the ECA (and convert EU law into domestic law in its legislative capacity).

Counsel for the applicants argued that giving the notice effectively initiates an irreversible course that will lead to several EU laws ceasing to have any effect in the UK, irrespective of whether or not Parliament repeals the ECA. The ECA would therefore become devoid of meaning at that point. The giving of the notice would therefore pre-empt the decision of Parliament on the Great Repeal Bill. The applicants argued that this executive action is equivalent to altering an Act of Parliament without Parliament's approval and thus was not in accordance with UK's constitution.

The Supreme Court rejected the government's arguments and held that it is a fundamental principle of the UK constitution that, unless primary legislation permits it, the prerogative powers do not enable ministers to change statute law or common law[12]. The Supreme Court explained that there is a "vital difference between variations in the UK law resulting from changes in EU law, and variations in UK law resulting from withdrawal from EU Treaties"[13]. The majority held that withdrawing from the European Union (by serving the Article 50 notice) constitutes a significant constitutional change and that "the continued existence of the new source of law created by the 1972 Act and the continued existence of the rights and other legal incidentals which flow therefrom, cannot as a matter of UK law have depended on the fact that to date ministers have refrained from having recourse to the Royal prerogative to eliminate that source". The Supreme Court also noted that an inevitable consequence of withdrawing from the EU is the need to legislate on a vast number of points currently dealt with under EU law and such a burden should not simply be imposed on Parliament by the minister's exercise of prerogative powers and without its authorisation. In short, Parliament is sovereign and only it may remove the rights and source of law bestowed upon citizens of the UK by the ECA.

(ii) The Devolution Issues in relation to the devolved institutions of Scotland, Wales and Northern Ireland on the other

The devolution issues raised before the Supreme Court were not considered in the Divisional Court; they were brought before the Supreme Court by way of references from the High Court of Justice in Northern Ireland (NI), the Court of Appeal in NI[14] and interventions by the Lord Advocate for the Scottish Government and the Counsel General for Wales for the Welsh government. The devolution issue under consideration by the Supreme Court was whether the terms on which powers are statutorily devolved to the administrations of Scotland, Wales and Northern Ireland meant that the consultation or agreement with the devolved legislatures was required before the Article 50 notice could be served.[15]

When dealing with the issue on legislative competence of the devolved legislations, the Supreme Court noted that relations with the EU within the UK are reserved or excepted in the cases of Scotland and Northern Ireland and are not devolved in the case of Wales.[16] Further, although Parliament proceeded with the assumption that UK would be a member of the EU when enacting EU constraints in these devolution Acts, "in imposing the EU constraints and empowering the devolution legislation to observe and implement EU law, the devolution legislation did not go further and require the UK to remain a member of the EU". Accordingly, the Supreme Court stated that section 1 of the NIA did not regulate any changes in the constitutional status of Northern Ireland other than giving the people in Northern Ireland the right to determine whether or not to remain in the UK. Further, the Supreme Court pointed out that section 75 of NIA which imposes certain obligations on a 'public authority' when carrying out its functions in relation to NI, does not apply to the Secretary of the State as the definition of 'public authority' does not include a minister of the Crown[17]. The Supreme Court further noted that the decision to withdraw from the EU is thus not a function carried out by the Secretary of State for NI in relation to NI within the meaning of section 75. Due to these reasons, the Supreme Court held that the devolved legislatures do not have a "parallel legislative competence in relation to withdrawal from the EU".

The Supreme Court also noted that constitutional conventions such as the 'Sewel Convention'[18] play a fundamental role in the operation of UK's constitution and act as a "political restriction" on the actions of UK Parliament[19]. However, it pointed out that the courts cannot enforce these political conventions[20] and past attempts to enforce such conventions have failed[21]. The Supreme Court further held that Article 9 of the Bill of Rights, which provides that "proceedings in Parliament ought not to be impeached or questioned in any court or place out of Parliament", provides a further reason why the courts cannot adjudicate on the operation of this convention.[22] For these reasons, the Supreme Court held that the Sewel Convention does not give rise to a legally enforceable obligation and falls outside the constitutional remit of the courts.

The Supreme Court concluded by stating that although the Devolution Acts were passed by Parliament on the assumption that the UK would be a member of the EU, they do not require the UK to remain a member[23]. The devolved legislatures thus do not have a right of veto over the UK's decision to withdraw from the EU[24].

2. The Great Repeal Bill

In the White Paper, the government stated its intention to provide certainty for businesses and individuals and allow for a fair and open trading environment following Brexit. An important part of the government's plan to deliver a smooth and orderly Brexit is the introduction of the 'Great Repeal Bill'.

The aim of the Bill is to end the supremacy of EU law in Britain, maximise certainty for business, workers, investors and consumers across the UK after Brexit and ensure accountability for the powers contained in the Bill. The government in the White Paper, noted that the influence of European legislation will continue; for instance, the past rulings of the ECJ will continue to bind the UK by giving them the same status as rulings by the Supreme Court. However, the government's intention post Brexit is for new ECJ rulings[25] to no longer form part of UK law. Existing legal rights and obligations in the UK shall continue to be the same where possible following Brexit, unless domestic law is changed by way of separate legislation.

In order to achieve the above aims of the government, the Bill will do three main things:

(1) repeal the ECA and return powers to UK institutions;

(2) convert EU law (as it stands at the moment of exit) into UK law before leaving the EU; and

(3) create powers to make secondary legislation to enable corrections to be made to the laws that would otherwise no longer be appropriate once the UK leaves the EU and enable domestic law to reflect the content of any withdrawal agreement under Article 50 (so called "Henry VIII powers")[26].

The White Paper acknowledges that there will be gaps where some areas of converted law will be unable to operate in their entirety because the UK will no longer be an EU member. This is a particular issue where EU law is based on reciprocal arrangements with all EU member states treating certain situations in the same way. If the UK fails to secure such reciprocal arrangements as part of the new relationship with the EU, such laws will become unworkable in the UK.[27]

The Great Repeal Bill will also provide a power to correct the statute book, where necessary to rectify problems occurring as a consequence of leaving the EU. This will be done using the secondary legislation via Henry VIII powers. Primary legislation can provide a framework within which Government can propose secondary legislation or parliamentary approval. This power is granted by and subject to Parliament's control. The secondary legislation will be used only for the purpose of correcting the deficiencies in preserved EU-derived law. For instance, EU financial services regulation would be converted into UK law via the 'Great Repeal Bill'. References in that legislation to EU bodies and (for example) any references to peculiarities of other EU Member States would be amended via secondary legislation. Any amendments to the EU regulations and implementation of new policies in areas that formerly lay within the EU's competence will be carried out through primary legislation.[28]

Parliament will also be empowered to review all statutory instruments created under these delegated powers with different levels of scrutiny. Time limits will also be placed on these delegated powers since they do not need to exist in perpetuity. The Government intends to have most of the corrections made before the UK leaves the EU in order that the powers do not have to subsist for long following the UK's departure.[29]