Background

The European Union (Withdrawal) Bill will repeal the European Communities Act 1972 on the day the UK leaves the European Union. Termed “exit day” in the Bill, it is currently scheduled to take place on Friday 29 March 2019.

The constitutional consequences arising from the Bill are enormous since it ends both the supremacy of EU law in the UK and removes the processes by which EU law becomes part of UK law.

In order to seek to maintain legal certainty however, the Bill provides for the retention of existing EU law after exit day.

Retention of EU law

By section 2(1) of the 1972 Act, directly applicable EU legislation is incorporated in and binding on UK law without Parliament having to pass implementing legislation.

To prevent this legislation ceasing to have effect when we leave the EU, the Bill provides that “direct EU legislation” – which includes any EU decision, regulation, or tertiary legislation – which is operative immediately before exit day will form part of domestic legislation afterwards.

By section 2(2) of the 1972 Act, EU law which is neither directly applicable nor has direct effect (such as an EU Directive) can be given effect in UK law by secondary legislation. Unless expressly saved, secondary legislation expires when the primary legislation under which it is made has been repealed. The Bill therefore provides that such “EU-derived domestic legislation” which has effect in UK law immediately before exit day will continue to have effect in UK law when the 1972 Act is repealed.

EU law not retained – the Charter of Fundamental Rights

While the Bill provides for the continuity of much of EU law in the UK on and after exit day, a notable exception is the Charter of Fundamental Rights.

The Charter brings together in a single document the fundamental rights protected in the EU and when the UK acts within the scope of EU law it must do so compatibly with the Charter. UK primary legislation which conflicts with a directly effective right under the Charter must be set aside if it cannot be read compatibly with it.

The Bill provides that the Charter will not form part of domestic law after exit day; however, this will not affect the retention of any fundamental rights or principles which exist irrespective of the Charter after that day. It also provides that references to the Charter in any case law are to be read as if they were references to any “corresponding retained fundamental rights or principles”. While these are not defined, they are presumably rights and principles set out in retained EU law and other human rights treaties which are applicable in the UK and captured by the Charter.

EU law not retained – the abolition of the rule in Francovich

In Francovich, the Justice of the European Union (“CJEU”) held that in some circumstances states have to pay damages to individuals for the harm they suffer as a result of the state’s breach of its EU obligations. The Bill abolishes this rule. In order perhaps to counter criticism that this amounts to a severe removal of rights, the Explanatory Notes which accompany the Bill state this will not affect “any specific statutory rights to claim damages in respect of breaches of retained EU law (for example, under the Public Contracts Regulations 2015) or the case law which applies to the interpretation of any such provisions”.

UK courts and the CJEU

The Bill explains how the relationship between the CJEU and the UK’s courts will operate after exit day. It provides that EU decisions made after exit day will not bind domestic courts; domestic courts cannot refer cases to the CJEU after that day; and while a domestic court will not be required to have regard to anything done on or after exit day by the EU or CJEU it may do so if it considers it appropriate to do so.

Henry VIII powers

The Bill allows ministers to make regulations “to prevent, remedy or mitigate” any “failure” or “deficiency” in any retained EU law arising from the UK’s withdrawal from the EU. Most strikingly, these regulations “may make any provision that could be made by an Act of Parliament”. Using secondary legislation to amend primary legislation is known as a Henry VIII power and, owing to the limited scrutiny of secondary legislation, its inclusion in the Bill is one of its most controversial aspects.

The power to make regulations is not unconstrained: it is limited by time (expiring after two years) and subject matter. (For instance, the regulations cannot amend, repeal or revoke the Human Rights Act 1998). Despite this, the power is wide-ranging. While regulations will be used to perform a technical purpose (such as correcting EU references that are no longer appropriate) they may also be used to create UK public authorities to do things previously done by EU institutions.

Most regulations will be subject to the less onerous negative resolution procedure and will come into force unless annulled by the House of Commons or House of Lords; however, certain types of legislation will be subject to the draft affirmative procedure. These include instruments which establish a new public authority; transfer an EU legislative function to a UK body; or create or amend the power to legislate.

Where there is “reason for urgency”, a minister will be able to make regulations without a draft being approved by Parliament. Such regulations, however, will cease to have effect after one month unless, during that period, the instrument is approved by a resolution of each House.

Devolution

The devolved legislatures of Northern Ireland, Scotland and Wales cannot currently legislate in a way incompatible with EU law. After exit day, the devolved legislatures will not be able to legislate contrary to retained EU law. So, powers which are now exercised at EU level will initially return to Westminster and while there is provision for powers to be passed to the devolved legislatures, this will be done at the discretion of UK ministers. Moreover, while the Bill grants to the devolved administrations the power to make regulations to deal with deficiencies in retained EU law arising from the Brexit, the regulations may not be made if they are inconsistent with modifications of EU law made by the UK Government.