Accrued EU Law rights take off in the Supreme Court

In this post, Jack Williams of Monckton Chambers explores the recent Supreme Court judgment in Lipton v BA Cityflyer Ltd [2024] UKSC 24 concerning the status of causes of action that accrued in EU law prior to Brexit.

Factual background

Lipton concerns a claim in compensation under Regulation (EC) 261/2004 of 11 February 2004 (the “Regulation”) in respect of a flight that took place in January 2018 i.e. before both Exit Day (defined in section 20(1) of the EU(W)A 2018 as 11 p.m. on 31 January 2020) and IP Completion Day (defined in section 39(1) of the EU(WA)A 2020 at 11 p.m. on 31 December 2020). Airlines have a defence under the Regulation if they can show that the cancellation was the result of “extraordinary circumstances which could not have been avoided even if all reasonable measures had been taken”. The Supreme Court held that a pilot falling ill did not amount to such an “extraordinary circumstance”.

The wider issues

Of wider interest and application, however, is the treatment of causes of action founded on (alleged) breaches of EU law in respect of facts and matters taking place prior to Brexit. In particular:

• did rights in EU law accrue and thus remain valid post Brexit such that a cause of action founded in EU law for facts and matters taking place prior to Brexit remains enforceable in domestic law thereafter? Issue (i).

• which version of the Regulation was the applicable law when considering the case – was it the (EU) version in force at the time of the events, or any amended, domestic version that now formed part of UK law under the EU (Withdrawal) Act 2018 (the “2018 Act”)? Issue (ii).

• by what analytical route did any such cause of action remain – are causes of action (a) part of “retained EU law” (and if so, which category) under the 2018 Act, or (b) preserved in domestic law through operation of the European Communities Act 1972 (the “1972 Act”) and the Interpretation Act 1978 (conveniently labelled as “accrued EU law rights”)? Issue (iii).

The former (option (a)) is referred to by the majority judgments as “the Complete Code analysis” or the ”retained EU law analysis”, whereas the latter (option (b)) is referred to as the “Interpretation Act analysis” or the “non retained EU law analysis”.  See [59] and [175]. I shall use the marginally more neutral labels of the “Retained EU Law Analysis” and the “Accrued EU Law Rights Analysis” respectively. I have explained the Accrued EU Law Rights Analysis in two blog posts (here and here), which are kindly cited in and addressed by each of the judgments in Lipton.

• do the Retained EU Law Analysis and the Accrued EU Law Rights Analysis lead to any different outcomes in respect of: (a) whether UK courts are bound by CJEU Judgments handed down post Brexit; (b) whether UK courts can refer questions to the CJEU; or (c) whether the Supreme Court (and other higher courts) can depart from CJEU case law? Issue (iv).

Key practical takeaways

On issue (iii) above, the majority of the Supreme Court (Lord Sales, Lady Rose, Lady Simler and Lord Burrows) adopts the Retained EU Law Analysis, whereas the minority (Lord Lloyd-Jones) adopts the Accrued EU Law Rights Analysis. It will come as no surprise to anyone who has read either the judgments in Lipton or this blog (see here, here and here) that I prefer the Accrued EU Law Rights Analysis. I shall perhaps return to that on another occasion. But it is nonetheless important to record the key practical takeaways for the busy practitioner, and the significant areas of agreement between the proponents of the two Analyses – particularly on the outcomes reached, regardless of the analytical route of getting there. The remainder of this blog post addresses these points.

Accrued rights remain enforceable

First, on issue (i) above, the Supreme Court confirms that accrued EU law rights generally remain valid and have not, by default, been removed retrospectively by the 2018 Act or any other Brexit-related legislation. See, for instance, [50], [177] and [186(i)]. This buries the idea that there is no such thing as accrued EU law rights and they do not exist in law. The debate (at issue (iii)) is simply by which analytical route this is achieved i.e. by the 2018 Act (on the Retained EU Law Analysis) or the 1972 Act (on the Accrued EU Law Rights Analysis). The key practical point, however, is that subject to limitation or any specific retrospective exclusions (e.g. in respect of Francovich damage claims) any alleged breaches of EU law for facts and matters taking place prior to Brexit can still be enforced in domestic courts even after Brexit. Proponents of both the Retained EU Law Analysis and the Accrued EU Law Rights Analysis agree on that.

The applicable law is the version in force at the time

Second, on issue (ii) above, the Supreme Court held at [62]-[68] and [186(ii)] that the applicable version of the Regulation was the (EU) version in force at the time of the events, rather than the amended, domestic version of that Regulation as it formed part of retained EU law i.e. as amended by the Air Passenger Rights and Air Travel Organisers’ Licencing (Amendment) (EU Exit) Regulations 2019. As Lord Sales and Lady Rose (with whom Lady Simler agreed) stated at [66]:

^{“In our judgment the Court of Appeal in Lipton fell into error in holding that it was the amended version which governs the Liptons’ claim. This is contrary to a basic principle of the rule of law which Parliament must be taken to respect, according to which it is the law in place at the time the material events occur which applies, rather than some different version introduced at a later date. To analyse the position as the Court of Appeal did would produce strange results and would undermine the important value of finality in litigation. It would mean that the relevant law applicable to two identical cases which occurred on the same date might be different, depending on the time at which the relevant claims were brought and the vicissitudes of listing hearings in the respective courts in which the proceedings were commenced. It might also encourage parties to continue litigation even if the court at first instance had been completely correct in understanding the law which it was its task to apply to the case and had committed no legal error.”}

Proponents of both the Retained EU Law Analysis and the Accrued EU Law Rights Analysis therefore agree that the applicable law is that in force at the time. Indeed, it was the Court of Appeal’s (incorrect) application of the amended, retained EU law version of the Regulation that triggered me to write about the issue, and propose the Accrued EU Law Rights Analysis in the first place: see here.

Practitioners should also note what is said at [68]: to the extent that there is an EU Exit Regulation made under section 8 of the 2018 Act which purports to make retrospective amendments to a cause of action accruing pre-Brexit, the validity and effect of such a provision is seriously open to question. Again, proponents of both the Retained EU Law Analysis and the Accrued EU Law Rights Analysis would agree with that.

Section 4 of the 2018 Act is not a complete answer for all causes of action

Third, on issue (iii) above, although they disagree on much, proponents of the Retained EU Law Analysis and the Accrued EU Law Rights Analysis will agree that not all causes of action for breaches of EU law remain enforceable in domestic law pursuant to section 4 of the 2018 Act (cf the CAT’s judgment in Interchange). Instead, although the majority’s judgments focus on causes of action pursuant to EU Regulations under section 3 of the 2018 Act given the fact pattern in the case, their effect is that accrued causes of action are part of retained EU law / assimilated law pursuant to sections 2, 3 or 4 of the 2018 Act depending on the underlying norm in question (e.g. causes of action in relation to breaches of Treaty rights fall to be recognised and enforced under section 4 of the 2018 Act, but breaches of Regulations fall under section 3). See: [88], [95], [103], [126] and [178].

Although proponents of the Accrued EU Law Rights Analysis disagree with the claim that any causes of action for breach of EU law remain enforceable in domestic law pursuant to any section of the 2018 Act (as opposed to the 1972 Act), at least the analytical dispute has moved on somewhat from previous (flawed) incarnations of the Retained EU Law Analysis.

The key point for practitioners pleading breaches of EU law is that the conduit pipe is not just section 4 (or indeed section 3) of the 2018 Act for all causes of action, but instead the corresponding provision for the underlying norm said to have been breached.

New CJEU judgments post Brexit are not binding and preliminary references are not possible

Fourth, on issues (iv)(a)-(b) above the Supreme Court has confirmed that a proper reading of section 6 of the 2018 Act means that:

• UK courts are generally not bound by CJEU Judgments handed down after Brexit, including in respect of accrued EU law rights cases for facts and matters taking place prior to Brexit, or retained EU law cases for post-Brexit cases (or indeed assimilated law cases post 1 January 2024). See [107]-[115]. Despite much confusion and assertion to the contrary by some (and although arguments can be made either way) this is not, in fact, necessarily a point of distinction between proponents of the Retained EU Law Analysis or Accrued EU Law Rights Analysis. As I have explained before and Lord Lloyd-Jones carefully addresses at [228]-[233], there is no automatic or necessary reason why the application and enforcement of accrued EU law rights pursuant to the continuing operation of section 2 of the ECA and sections 1A and 1B of the EU(W)A means that new, post-IP completion day CJEU case law must remain binding in connection with it. Section 6(1)-(2) of the 2018 Act are clear on their face. The heading to section 6 does not undermine that.

• UK courts cannot refer questions to the CJEU, including in respect of accrued EU law rights cases for facts and matters taking place prior to Brexit, or retained EU law cases for post-Brexit cases (or indeed assimilated law cases post 1 January 2024). See [111], [131] and [190(i)]. Again, there is no difference between proponents of the Retained EU Law Analysis or Accrued EU Law Rights Analysis here. Section 6(1)(b) of the 2018 Act is clear on its face and there is, in any event, no basis in EU or international law for references to the CJEU save insofar as provided by section 7A of the 2018 Act and the UK-EU Withdrawal Agreement.

UK higher courts can depart from CJEU case law (even that handed down prior to Brexit)

Fifth, in respect of issue (iv)(c) above, however, there is a division between the proponents of the Retained EU Law Analysis and the Accrued EU Law Rights Analysis. Indeed, it may be the only substantive consequence, in practice, of adopting one Analysis over the other.

The majority of the Supreme Court, adopting the Retained EU Law Analysis, holds that the Supreme Court and other higher courts (e.g. the Court of Appeal) can depart from retained EU case law (i.e. judgments of the CJEU that were handed down prior to Brexit) even in cases concerning accrued EU law rights (i.e. causes of action concerning pre Brexit events). See: [132(d)] and [190(iii)]. By contrast, under the (rejected) Accrued EU Law Rights Analysis, the power to depart from retained EU cases conferred by section 6(4) of the 2018 Act only applies in cases where the cause of action relates to breaches of retained EU law / assimilated law for facts and matters taking place since Brexit (not situations of accrued EU law rights, properly so called). See Lord Lloyd-Jones at [234]-[243].

The core disagreement concerning the analytical route

That then leaves the key dispute at issue (iii) (as defined above) regarding whether the Retained EU Law Analysis or the Accrued EU Law Rights Analysis is the right one for arriving at these (largely agreed) conclusions. I am going to resist, at least on this occasion, providing a complete response to the majority’s analysis. Although I disagree with the reasoning, it deserves a far more thorough treatment than I can give it in this (already long) blog post, and it is largely of academic interest only given the points made above.

Suffice it to say, however, that this may be a flight for another day (terrible pun intended), given that: (i) the judgments are expressly obiter (see: [82] and [193]); (ii) relevant matters on section 6 were not fully argued (see [228]); and (iii) there is a powerful dissent by Lord Lloyd-Jones (and I think rebuttals exist for the points made in the majority judgments). It will be interesting to observe whether these points are taken in the ongoing Interchange proceedings before the Court of Appeal, or whether the strong wind of four Justices of the Supreme Court is enough of an extraordinary circumstance to cancel that particular flight.

_{Disclaimer: for the avoidance of doubt, I have not been at any point instructed by any party in the Lipton proceedings, and have not been paid by any client to produce the above blog post (or indeed any other). I am also not instructed in the appeal proceedings in the Interchange proceedings. The above (like all my posts) represents my own views in my personal capacity, and does not necessarily represent the view of any client or any other member of chambers.}

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