The UK’s Withdrawal from the EU and the UK’s Internal Market Bill

Editor’s Note: This is the first in a series of pieces that will explore the Internal Market Bill and its implications for international law. 

There is a lively debate underway this week in the United Kingdom’s House of Lords over the controversial Internal Market Bill, which was introduced in September. From the moment it was published, it has attracted a high degree of attention, and no little criticism, since it proposes to authorize the U.K. government to renege on international treaty obligations that were entered into with the European Union as recently as January 2020.

The U.K. government has received criticism from a wide range of sources for its approach. The Bill provoked the resignation of the Advocate General, the senior Government lawyer for Scotland, Lord Keen of Elie; as well as the departure of the head of the Government Legal Department, Sir Jonathan Jones QC. To lose two eminent government lawyers (who were defending the rule of law) goes beyond Oscar Wilde’s concept of “carelessness.” Lord Keen found that he was simply unable to sponsor the Bill using a formulation which was acceptable to the government. Lord Neuberger, the former president of the U.K. Supreme Court, told the International Bar Association in a recent conference that the Bill is likely to put the government on a collision course with the U.K. courts.

Background

In November 2019, the U.K. government and the European Union agreed to an international treaty governing, in part, their future relations following Brexit. It has been termed the Withdrawal Agreement (“the WA”). It entered into force on Feb. 1, 2020. It was intended to promote an orderly withdrawal of the U.K. from the EU. It allowed a transitional period enabling the parties to try to agree on the terms of a separate set of arrangements governing their future relations. The Transition Period is due to expire on Dec. 31. But the WA also set out the minimum terms that would apply in default of any agreement on that future relationship. There were therefore “backstop’ provisions.” These covered a wide range of issues, ranging from EU citizens’ rights of free movement, protection of intellectual property, arrangements for goods already in free circulation between the two territories, to ongoing police and judicial cooperation in criminal matters.

A salient success of the EU has been the deep integration of the economies and workforces of disparate Member States. As at 2019, some 1.3 million U.K. nationals were living in other Member States in the EU. In addition, there were around 3.6 million EU born nationals living and working in the U.K., representing about 5.5 percent of the population. The WA makes provisions for the continued recognition of these citizens’ rights of residence, right to work, and right to have their professional qualifications mutually recognized after the end of the Transition Period. The overall tenor is that those persons with “acquired rights” under EU law as applied in the U.K. as of Dec. 31, 2020, should be able to continue to enjoy them. The EU and U.K. agreed under Article 5 of the WA to assist each other “in full mutual respect and good faith” in carrying out the tasks flowing from the Agreement. Each agreed to take all appropriate measures to ensure the fulfillment of obligations arising and to “refrain from any measures which could jeopardize the attainment of the objectives” of the WA.

What to do about Northern Ireland?  

One of the main sticking points between the two parties had been the status of Northern Ireland. There was a strong desire on all sides to avoid a resurrection of a hard border between Ireland and Northern Ireland. As part of the WA, a separate Protocol was agreed, setting the backstop conditions for the treatment of Northern Ireland. Northern Ireland was to be afforded special status by the EU. It would continue to be treated as if it were part of the customs union operated by the EU Member States. But it would also remain territorially part of the United Kingdom and therefore be part of the U.K.’s separate customs territory. This dual status was always likely to give rise to practical difficulties, which the Northern Ireland Protocol (“NIP”) anticipated. The NIP set down certain backstop provisions that would be applied come what may, regardless of whether or not any separate Free Trade Agreement could be reached between the U.K. and the EU during the Transition Period. The NIP required a number of EU laws to be applied by the relevant authorities in Northern Ireland. It also required rules governing government subsidies – called “State aid” under EU law – to be applied in full. The backstop provisions dealing with the movement of goods to and from Northern Ireland and the EU and U.K,, as well as the provisions on State aid, were set out in clear terms in the NIP and accompanying annexes. The only way that the U.K. government could have been ignorant of those provisions was if it had failed to read the treaty it signed.

To avoid a hard border between Northern Ireland and Ireland, the EU essentially agreed with the U.K. that goods could move freely across the Northern Irish border with Ireland without payment of customs duties, but that any movement of goods via Northern Ireland from Great Britain to the EU would be subject to the payment of any applicable duties (and the consequent need to develop controls to secure this). That free movement of goods would also mean that goods manufactured in Northern Ireland would be competing directly (and on a level playing field) with EU goods manufactured in Ireland (and elsewhere). The EU would not be able to impose anti-dumping duties or anti-subsidy countervailing duties on goods manufactured in Northern Ireland, since those measures are only applied where goods cross an external EU border. If the U.K. government, for example, gave a substantial sum of money to support a car manufacturer based in Belfast, that would give that manufacturer a distinct competitive advantage over car manufacturers based in Ireland, France, and Germany. Manufacturers in EU Member States are subject to strict controls on the nature and extent of any government subsidies they might receive. Accordingly, the EU required EU State aid law to be applied in Northern Ireland, as a quid pro quo for allowing Northern Ireland to remain functionally in the EU customs union.

The UK initially legislated to give effect to these treaty obligations. The rights and liabilities conferred or imposed by the WA are protected under U.K. domestic law by section 7A of the European Union (Withdrawal) Act 2018 (as inserted by the European Union (Withdrawal Agreement) Act 2020). This provision essentially recognizes that the obligations imposed on the U.K. by the WA will be given full effect in domestic U.K. law, no matter what any other law might say.

Enter the Internal Market Bill

The Internal Market Bill changes all that. The Bill states that it is intended, inter alia, to make provision in connection with the trade and State aid provisions in the NIP. That wording was carefully chosen. It does not say that it intends to give effect to the NIP. Part 5 of the Bill contains the provisions on the NIP. Clauses 44 and 45 of the Bill empower U.K. government ministers to make regulations that disapply customs procedures and State aid rules, which the NIP would otherwise require to be applied in Northern Ireland. Clause 44(5), for example, states that such regulations may allow for rights or obligations otherwise required to be recognized under relevant domestic or international law “not to be recognised, available, enforced, allowed or followed.” In short, ministers may adopt a scheme under these provisions that rides roughshod over the provisions of the NIP.

Clause 45 is even more overt. Clause 45(1) empowers the making of regulations addressing the domestic law treatment of Article 10 of the NIP, which deals with State aid. Under Clause 45(2), those regulations may not only determine issues of interpretation, but also disapply or modify the application of Article 10 itself. Among other things, the regulations to be made by the secretary of state may: (a) direct that State aid is not to be recovered; (b) remove any rights of action of any sort, which any person may otherwise have; (c) abolish rights, powers, liabilities, and entitlements to a remedy, which might otherwise exist under international or domestic law.

Even more extraordinarily, Clause 47 purports to immunize against any form of effective legal challenge the provisions of what will become sections 44 and 45 of the Act, together with any regulations made under sections 44(1) and 45(1). It states that these provisions will have effect notwithstanding any incompatibility with other domestic law or international law. Regulations made by a minister could therefore run contrary to the NIP, the WA, and even override the terms of section 7A of the European Union (Withdrawal) Act 2018, notwithstanding its purported entrenchment by Parliament earlier this year.

An earlier draft of the Bill had purported to exclude the jurisdiction of the U.K. courts from reviewing this legislation. The government has now relented slightly on that, but in practical terms the only basis for legal challenge will be on the ground that the regulations are incompatible with principles found in the European Convention on Human Rights. But the form of remedy that the U.K.’s Human Rights Act 1998 will permit (in the light of the restrictions found in Clause 47) is a declaration of incompatibility. That provides no substantive relief to a party affected by the measure. Its effectiveness is dependent on the U.K. Parliament legislating to remove the offending provisions, which it may choose not to do (as was the case recently with unlawful restrictions on prisoners’ voting).

The upshot of these provisions, if enacted by Parliament, will be that the secretary of state may by delegated legislation nullify a treaty obligation entered into by the U.K. government, seemingly in good faith, as recently as January 2020. Parliament would be giving the secretary of state a free hand to enact irrational regulations, if he wishes to do so. The usual common law constraint on the exercise of a power to make legislation only for a proper and rational purpose would be removed at a stroke. Indeed, regulations could, in principle, be made that have no bearing on trade with Northern Ireland or State aid at all, but where the courts could not rule them ultra vires.

Concerns about the assumption of powers

It has become increasingly fashionable to talk of “Henry VIII powers” when examining the legislative thicket that Brexit has precipitated. But it is worth recalling the limitations which existed on the Statute of Proclamations passed in 1539 under the rule of Henry VIII (Act 31, Henry VIII, c. 8). This statute formally empowered the Crown to legislate by means of proclamations. But it expressly provided that the powers could not be “prejudicial to any person’s inheritance, offices, liberties, goods, chattels, or life.” The exercise of that power was famously found by Coke CJ in The Case of Proclamations (1610) 77 E.R. 1352 to be subject to the control of the common law. In other words, the “Henry VIII” legislation was itself drafted in more limited terms than the powers conferred on the secretary of state through a combination of Clauses 45 and 47 of the proposed Internal Market Bill. And the secretary of state is seeking to keep Coke’s judicial successors firmly out of the picture.

Professor A.V. Dicey, frequently championed by those who resent judicial interference with the legislative function, in Introduction to the Study of the Law of the Constitution, said of the Statute of Proclamations that it marked “the highest point of legal authority ever reached by the Crown, and, probably because of its inconsistency with the whole tenor of English law, was repealed in the reign of Edward the Sixth.” Dicey considered that had it remained in force, “an English king would have become nearly as despotic as a French monarch.” It does not seem this was intended to be a compliment. The wisdom – and constitutionality – of Parliament setting the secretary of state on an even higher pedestal must surely be questioned.

Image: Britain’s Prime Minister Boris Johnson waves as he leaves 10 Downing Street in central London on September 9, 2020, to attend Prime Minister’s Questions (PMQs) at the House of Commons. Photo by BEN STANSALL/AFP via Getty Images

 

About the Author(s)

Kieron Beal

English and Irish qualified barrister, practicing from Blackstone Chambers, London. He works in all areas of commercial and civil law, especially European law, competition law, telecommunications, judicial review and human rights, VAT and other direct and indirect taxes. Follow him on Twitter (@KieronBeal).