Government to implement proposals to allow Court of Appeal to depart from CJEU case law

The stated aim of doing this would be to “allow for appropriate and timely development of retained EU law”. In other words, the proposals are intended to increase the pace at which UK law can diverge from EU law. However, this may come at the cost of uncertainty and likely increased litigation over issues that were previously thought settled.

The Government has decided against further extending the power to depart from CJEU case law to lower courts (such as the High Court).

Retained EU law

EU law will cease to apply in the UK after the end of the Transition Period (defined as “IP Completion Day”.) To provide continuity, however, most EU legislation will be “copied and pasted” into the UK statute book (albeit with sometimes significant amendments and carve-outs most of which can be enacted by secondary legislation subject to limited parliamentary scrutiny) so as to create an entirely new form of domestic UK law, known as “retained EU law”.

The EU (Withdrawal) Act 2018 (EUWA 2018) provides for retained EU law to continue to be interpreted in line with “retained case law”, which includes relevant decisions of the CJEU handed down before the end of the Transition Period (known as “retained EU case law”). UK courts may “have regard” to CJEU decisions handed down after the expiry of the Transition Period but will not be bound by them. Importantly EUWA 2018 provides that the principle of supremacy of EU law will continue to apply to “the interpretation disapplication or quashing of any enactment or rule of law” made before IP Completion Day but not to any enactment made on or after that date. Therefore the legal effect of domestic acts made before IP Completion Day will still be judged against compatibility with retained EU Law, but this will not apply to acts passed after the end of the Transition Period.

The Supreme Court’s power to depart from retained EU case law

Section 6 EUWA 2018, as originally enacted, provided that only the Supreme Court¹ would be able to depart from CJEU decisions and that other UK courts would be bound by CJEU decisions made before IP Completion Day in the same way that they would be bound by decisions of the Supreme Court.

In deciding whether to depart from CJEU decisions, the Supreme Court will apply the same test that it uses when considering whether to depart from its own previous case law, namely “whether it appears right to do so”. This test is a broad and flexible one, although in practice the Supreme Court has tended to use the power to depart from its own previous decisions sparingly.

Extending the power to depart from retained EU case law

However, section 26(1) EU (Withdrawal Agreement) Act 2020 (EUWAA 2020) amended EUWA 2018 to give ministers the power to pass regulations to designate additional courts or tribunals with the power to depart from retained EU case law and to identify the circumstances in which they should do so. On 2 July 2020, the Government launched a consultation on how that power should be exercised, with a view to implementing regulations before 31 December 2020 when the Transition Period ends and the power to make regulations under section 26(1) EUWAA 2020 expires.

In its consultation paper, the Government presented the following two options:

1. to extend the power to depart from CJEU case law to the Court of Appeal of England and Wales and its closest equivalents in other UK jurisdictions; or
2. to extend the power, in addition to the Court of Appeal and equivalent courts, to the High Court of Justice of England and Wales and its closest equivalents in the other UK jurisdictions.

The consultation paper also proposed that, when considering whether to depart from CJEU case law, the relevant court should apply the same test as the Supreme Court, namely “whether it appears right to do so”.

The consultation paper noted that in addition to retained EU case law, there is also be an existing body of domestic judgments (known as “retained domestic case law”), in which UK courts have considered the meaning and effect of EU law and have applied relevant decisions of the CJEU. The consultation paper did not express a view on how retained domestic case law should be treated and asked for views on this point.

The results of the consultation

The Government received 75 responses to the consultation paper. Of those, 27% agreed that the power to depart from retained EU case law should be extended to other courts and tribunals beyond the UK Supreme Court; whereas 56% of respondents were not in favour of this proposal. (The remaining respondents either did not comment on this point or were unclear.)

The main reason given for opposing the proposals was that they would cause uncertainty, which would in turn lead to:

• the re-litigation of well-established legal principles;
• a divergence in legal approaches across the UK on similar issues; and
• an incoherent legal framework with adverse impacts in key areas such as tax, employment, environment and equalities.

Concern was expressed that this uncertainty would have a negative impact on the UK’s standing as an international centre for dispute resolution. Many of the respondents who opposed the proposals also thought that any departures from retained EU case law would be best achieved by Parliament passing legislation, rather than by relying on the courts.

Notwithstanding the fact that the majority of respondents were opposed to extending the power, the Government preferred the views of the minority. In particular, the Government was persuaded by the following arguments made in favour of extending the power to the Court of Appeal and other appellate courts²:

• the UK’s departure from the EU has changed the context in which retained EU law should be considered. “Retained EU law should not be tied to an interpretation from the Court of Justice of the European Union that is arguably no longer appropriate in the UK.”
• it would take too long for cases about retained EU case law to reach and be decided by the Supreme Court. According to the Government, this could result “in “fossilisation” of our law, and the risk that our law does not evolve to reflect the UK’s changed status following its departure from the EU.”
• the Supreme Court would benefit from the relevant issues having been considered and refined by a lower court.
• if the Supreme Court were to be the only court with the power to depart from retained EU case law, this would place pressure on the resources of that court and “if the power were not extended to additional courts, the UK Supreme Court could become a bottleneck to the timely resolution of such cases due to an increase in demand.”

The Government also took the view that those who were opposed to extending the power were opposed to the principle of courts being able to depart from retained EU case law at all. The Government’s response to this was that this issue was not up for consultation, given that Parliament had already decided that an ability to depart from retained EU should exist when it passed EUWA 2018 and EUWAA 2020.

On other issues, the Government’s views were aligned with the majority of the respondents to the consultation. In particular, the Government and the majority of respondents agreed that:

• the power to depart from retained EU case law should not be extended to lower courts (such as the High Court).
• when deciding whether to depart from retained EU case law, the Court of Appeal should apply the same test as the Supreme Court (namely “whether it appears right to do so”). The legislation should not identify any criteria to be considered when a court is applying this test.
• the Court of Appeal will be bound by its own previous decisions to depart from retained EU case law, as well as those of the Supreme Court.
• normal rules of precedent will apply when retained domestic case law is being considered by the court. In other words, courts will be bound by previous decisions of UK courts on the meaning and effect of EU law, insofar as it forms part of retained EU law, to the same extent as on other issues.

Next steps

On 15 October 2020, the Government laid The European Union (Withdrawal) Act 2018 (Relevant Court) (Retained EU Case Law) Regulations 2020 (the Regulations) before Parliament. If, as seems likely, the Regulations are approved by both Houses of Parliament, they will come into effect at the end of the Transition Period.

In summary, the combined effect of the Regulations and EUWA 2018 will be that both the Court of Appeal and the Supreme Court will be able to depart from retained EU case law “when it appears right to do so”. Normal rules of precedent will apply to retained domestic case law.

One slightly incongruous outcome is that where, before IP Completion Day, the Court of Appeal (or the Supreme Court) has followed a decision of the CJEU, that domestic judgment will be part of retained domestic case law and will be binding on the Court of Appeal - with the result that the Court of Appeal will not be able to depart from the original CJEU decision. In that situation a party seeking a departure from retained case law will need to take the point to the Supreme Court.

Comment

As explained above, one of the objections raised by those opposed to extending the power to depart from retained EU case law was that this could lead to an increase in litigation. In its response to the consultation, the Government recognised that this is a possible outcome. Indeed, retained EU case law will only develop in the way envisaged by the Government if disputes are brought before the courts. However, the Government clearly takes the view that an increase in litigation and a degree of uncertainty are preferable to UK courts continuing to be bound by CJEU decisions after EU law has ceased to apply and a “fossilisation” of UK law.

The difficulty for litigants will be in predicting how the appellate courts will apply the test of whether it “appears right” to depart from retained EU case law. Lord Wilson recently considered the test in Peninsula Securities Ltd v Dunnes Stores (Bangor) Ltd (Northern Ireland) [2020] UKSC 36. He made it clear that the Supreme Court will only depart from its own earlier decisions “rarely and sparingly³” and “with a high degree of caution” because a “sudden change in the law is likely to destabilise it”. This suggests that successful challenges to retained EU case law will be rare. However, this situation is an entirely new one and it is not clear how UK judges will use this new power in the context of retained EU law. Parties seeking a departure from retained EU case law are likely to point to the Government’s statements that Brexit has fundamentally changed the context in which retained EU law should be considered and to argue that the courts should act with less restraint. Greater clarity will only emerge with the passing of time and the emergence of a body of case law on this point.

¹ And High Court of Justiciary, which is the final criminal court of appeal in Scotland when there is no route of appeal to the UK Supreme Court.

² The Court of Appeal of Northern Ireland; the High Court of Justiciary in Scotland when sitting as a court of appeal in relation to a compatibility issue or a devolution issue; the Inner House of the Court of Session; the Lands Valuation Appeal Court; the Registration Appeal Court; the Court Martial Appeal Court and the court for hearing appeals under section 57(1)(b) of the Representation of the People Act 1983.

³ Quoting Lord Bingham of Cornhill in Horton v Sadler [2007] 1 AC 307