Government Affairs Alert

There was a major flaw in the way many media outlets reported last week on the Government's policy on the jurisdiction of the European Court of Justice (ECJ) after Brexit, contained in its position paper Enforcement and dispute resolution. Attention focussed on whether the use of the word "indirect" with regard to ECJ jurisdiction in that paper indicated a softening of approach to the future role of the ECJ in the UK. In reality, the paper set out no more than a series of policy options. The real issue is the upcoming second reading of the EU Withdrawal Bill, because that Bill states that UK courts are not required to pay any attention to EU case law after Brexit, thereby rendering the debate over direct and indirect ECJ jurisdiction meaningless.

The Government is planning to replicate EU law in national law as a basis for cooperation with the EU during a transitional period. It is planning to do so through the EU Withdrawal Bill. If the EU is to recognise this as a basis for cooperation, which UK business must hope it does, it will want to ensure that the UK applies what are, in its eyes, still EU rules in exactly the same way as the EU Member States. This is not a surprising demand. Uniform application is a component of any international framework of reciprocal rules, for the simple reason that it ensures a level playing field. The EU has made clear that this is a red line in the negotiations - a deal-breaker, in other words.

It has been widely reported that the Government's paper on enforcement demonstrates that it now accepts, at least tacitly, the EU's position on the ECJ. There is good reason to doubt this conclusion. Whether the ECJ has "direct" or "indirect" jurisdiction - both are possible - its judgments will need to be followed by UK courts for as long as the UK seeks to cooperate with the EU on the basis of EU rules, albeit nationalised through the EU Withdrawal Bill. But Dominic Raab, the justice minister, made clear that this is not what the Government plans: the UK will keep "half an eye" on the case law of the European Court, but there will be "divergence" between its case law and that of UK courts, he told the BBC last week.

A more accurate insight into the Government's intentions comes not from a negotiating document but from draft legislation - this is, after all, what the Government plans to become UK law. Clause 6 of the EU Withdrawal Bill makes clear that UK courts will not need to keep even half an eye on the case law of the ECJ; they "need not have regard to anything done on or after exit day by the ECJ, another EU entity or the EU but may do so if it considers it appropriate to do so." This, in legislative terms, is as clear a statement as you can get that UK courts will not have to follow ECJ decisions, whether directly or indirectly, post-Brexit.

The Bill's Second Reading will take place in early September. If it passes this hurdle, it means the Commons has agreed to the principle of the Bill. It then goes to committee stage, where detailed line-by-line examination and discussion of amendments takes place. If clause 6 is not amended, it can be said with certainty that the EU will not agree to a transitional deal which envisages regulatory cooperation on the basis of EU rules. This is the abrupt rupture - a cliff-edge Brexit - that would be so calamitous for UK business.