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Leaving the EU: impact on case law and legislation

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What would an exit from the EU mean for domestic law?

On 28 May 2015, the day after the Queen’s Speech, the government published its Bill No. 2 of the current Parliament, namely the ‘European Union Referendum Bill’. This provides the mechanisms for holding a referendum at some point before 31 December 2017 (the exact date is to be appointed by the Secretary of State) on the question ‘Should the UK remain a member of the European Union?’ (cl 1(4)). Of course, both the exact terms of this legislation and, more importantly, the outcome of any referendum held under this Bill are currently uncertain. Nevertheless, it is important to consider what would happen if the referendum produced a majority 'no vote' - what would be the impact on UK domestic law? As a matter of EU law, the impact of any such No vote and the desire to leave the EU thereby expressed are set out in art 50 of the Treaty on European Union (TEU). This provides that:

  • once the UK has notified its intention to withdraw from the EU, the EU, acting through the Council, ‘shall negotiate and conclude an agreement’ with the UK ‘taking account of the framework for its future relationship with the Union’ (art 50(2)); and
  • ‘the Treaties shall cease to apply [to the UK] from the date of entry of the withdrawal agreement or, failing that, two years after the notification…unless the European Council, in agreement with the [UK], unanimously decides to extend this period’ (art 50(3))

This makes it clear that, as a matter of EU law which is (and will continue to be), at the very least, binding on the UK as a matter of public international law (pacta sunt servanda) there will be no immediate impact on the UK’s domestic law arising out of a no vote.

As a matter of UK domestic law, of course, the gateway for EU law into domestic law is the European Communities Act 1972 (ECA 1972). As long as that remains unamended and, as a matter of EU law, the Treaties continue to apply to the UK there should also be no immediate change to our domestic law.

As TEU art 50(2) anticipates, of course, the exact changes to, or impact on, UK domestic law, whether in the form of legislation or case law, will depend very heavily on the form and content of any agreed ‘framework for its future relationship with the Union’. As the political indications are that even if there were a ‘No’ vote, it would be desirable to achieve some form of free trade arrangement with the EU:

  • the exact impact on or required changes to UK domestic law are currently highly uncertain and will depend on what agreement as to their future relationship the EU and the UK manage to agree; and
  • if it takes a form similar to the arrangements currently applied in the relationship between the EU and Norway (through European Free Trade Association (EFTA) and the EEA) or Switzerland (through a series of bi-lateral arrangements), the changes to domestic law may well be very limited

What effect would it have on legislation?

On a strict reading of ECA 1972 s 2 which refers to:

‘[a]ll such rights, powers, liabilities, obligations and restrictions from time to time created or arising by or under the Treaties, and all such remedies and procedures from time to time provided for by or under the Treaties, as in accordance with the Treaties are without further enactment to be given legal effect or used in the UK’ (for similar language in relation to the devolved administrations see for example the Scotland Act 1998, s 126(9)) it may, in fact, not be necessary to amend the ECA 1972 at all because, of course, once the Treaties cease to apply as a matter of EU law, there are no more rights, obligation, remedies etc arising under the Treaties (in so far as they concern the UK).

That said, of course, a majority No vote is likely to lead to an amendment or repeal of ECA 1972 and/or any other relevant (constitutional) legislation, such as the devolution statutes, all of which expressly render anything done by a devolved legislature or administration which is incompatible with EU law ultra vires.

In so far as any such amendment or repeal seeks to deny EU law direct effect in UK law prior to the date on which, as a matter of EU law, the Treaties cease to apply to the UK, this would put the UK in breach of its obligations under EU and/or public international law—though it is unclear what legal (as distinct from political) consequences this would have. Depending on the form and content of the future relationship between there UK and the EU, it will also, almost inevitably, be necessary to enact legislation to provide a basis for giving effect to that new relationship.

In how far specific sectoral legislation, which had its origin in EU law, would be or would need to be amended or repealed will again inevitably depend upon:

  • the arrangements for the UK’s future relationship with the Union and the extent to which EU measures continue to apply and have effect in UK law (as they do for example in Norway and, as far as within the scope of the bi-lateral relations, in Switzerland); and
  • how far any amendment or repeal is necessary and/or desirable to give effect to post-withdrawal government policy.

What effect would it have on case law?

It is difficult to see that withdrawal would have any significant impact on the case law of the English courts. After all, the Supreme Court, in its judgment in Pham v Secretary of State for the Home Department [2015] UKSC 19, [2015] All ER (D) 266 (Mar) has already made clear (though obiter) that:

  • it is already now a question of domestic law, to be determined by the UK courts, as to how far the UK, by means of ECA 1972, has granted jurisdiction to the EU in a particular field (para 76); and
  • that, in fact, the concept of ‘proportionality’, traditionally seen as a decisive difference between EU/European Court of Human Rights (ECHR) law and domestic public law, was, in fact, also now available as a matter of the common law irrespective of whether EU law applied.

There is no reason why this should not remain the case after a withdrawal from the EU (irrespective of the form and content of any future relationship).

The only limited impact might be in a situation where there was no free-trade arrangements with the EU and the courts would, therefore, no longer:

  • have to apply or construe EU legislation and/or domestic legislation by reference to any EU obligations; and
  • be able or required to make an order for reference to the Court of Justice of the EU (CJEU).

However, even in an arrangement akin to that enjoyed by Norway, similar obligations as to compatible construction and orders for reference (to the EFTA court) would most likely continue to apply.

How would the government cope with the immediate uncertainty over legislation and case law?

As indicated, it is unclear that there would be any ‘immediate uncertainty’ following a No result in the referendum. The first uncertainty would arise out of the negotiations concerning the future relationship with the EU and that uncertainty is one that will have to managed primarily at a political level to avoid any adverse impact for example on inward investments and the financial services industry in the City of London. Once those negotiations have been concluded, there should be relatively little uncertainty impacting on legal practice as it should be known at that stage what the new relationship between the UK and the EU is and which rules and legislation continue to apply and which do not.

Are there any areas of the law that would be particularly affected?

It is much too early to identify any particular areas of the law which might be affected, even though, of course, from the political statements made so far, it might be suggested that the free movement of workers and services might be most affected. However, depending on the future relationship with the EU there may be little that can be changed about either of these fundamental freedoms. One noteworthy potential aspect of withdrawal from the EU, though, is the consequent withdrawal from the EU Charter of Fundamental Rights, in the context of the government’s stated policy of abolishing the Human Rights Act 1998 (to be the subject of consultation) and (in extremis) possibly withdrawing from the ECHR.

A combination of both these policies taken to their extremes, therefore, risks leaving those in the UK without any external (judicial) safeguards for the protection of their human rights. That said, even in the context of the EEA (if that were the basis of any future relationship between the EU and the UK) or any other association with the EU, the EU is likely to insist on compliance with fundamental human rights and, in the context of the EEA, the EFTA court (like the CJEU) protects ‘fundamental rights guaranteed in the legal order of the EEA Agreement’ (joined cases E-3/13 and E-20/13 Olsen at para 225) on the basis that they constitute ‘general principles of EEA law’ (para 226).

Tim Eicke QC is a barrister at Essex Court Chambers. Interviewed by Janine Isenegger for LexisNexis UK legal news analysis.