In this post, George Peretz Q.C. of Monckton Chambers discusses the Court of Appeal’s decision in Counsel General for Wales v Secretary of State for Business, Enterprise and Industrial Strategy [2022] EWCA Civ 118 on the Welsh Government’s challenge to the UK Internal Market Act.
On 9 February, the Court of Appeal refused the application of the Counsel General for Wales for permission to apply for declarations as to the effect of the UK Internal Market Act 2020 (“UKIMA”) and on its interpretation in the light of the Government of Wales Act 2006 (“GOWA”) (Counsel General for Wales v Secretary of State for Business, Enterprise and Industrial Strategy [2022] EWCA Civ 118).
The underlying issue is described only briefly in the judgment. To understand it, three points need to be borne in mind.
First, following the Wales Act 2017, the Welsh devolution settlement is a “reserved powers” model: that is to say, the Senedd has full legislative competence except in areas reserved to the UK Parliament, which are listed in Schedule 7A to GOWA. The Senedd has full competence to legislate in areas such as environmental protection and food standards (in the latter case, as an express exception to the reservations for consumer law and product standards covered by EU law up to IP completion day – see sections C6 and C7 of Part 2 of Schedule 7A). But if it purports to legislate for a reserved matter, such “legislation” is “not law”: section 108A(1)).
Second, UKIMA is (by virtue of section 54(2) of UKIMA) a “protected enactment” under Schedule 7B to GOWA: by section 108A(2)(d) GOWA, that has the consequence that any Senedd legislation that “breaches any of the restrictions” in UKIMA is outside competence and hence “not law”.
Third, the effect of UKIMA on the position in Wales is that, in Wales, “relevant requirements” (legislative rules created by the Senedd after the enactment of UKIMA) that fall within the scope of the “mutual recognition” and “non-discrimination” principles) are of “no effect”, or “do not apply” to the sale of goods or supply of services in Wales where those goods or services originate from elsewhere in the United Kingdom (or were imported into those parts of the United Kingdom) and their sale or supply there is lawful (or, in the case of the non-discrimination principle, if the rule directly or indirectly discriminates against non-Welsh origin goods or services). Importantly, the effect of UKIMA is not to make the Welsh legislative rule invalid: rather, the rule ceases to apply, or is of no effect, to the sale or supply of the non-Welsh goods or services (while remaining in force for goods or services originating from Wales or imported into Wales).
The Welsh Government argues that the mutual recognition and non-discrimination principles, if read normally, in effect operate as re-reservations in the areas of food and environmental standards: the effect of UKIMA is that the Senedd cannot legislate effectively in those areas (for example, by banning single-use plastics permitted in England). However, it argues that, as a “constitutional statute”, GOWA – and in particular the list of reserved matters in Schedule 7A – cannot be altered except by an express provision: as a result, the principles in UKIMA should be “read down” so as to preserve the Senedd’s competence in the fields of environmental protection and food standards. The Welsh Government also argued in the High Court (though it did not press the point in the Court of Appeal) that, for the same reasons, the Secretary of State’s power to expand the scope of the non-discrimination principle by secondary legislation (see, for example, UKIMA, section 6(5)) also had to be “read down” to the extent that it “re-reserved” Senedd competence.
At least two interesting points arise out of those arguments.
First, the arguments depend on the claim that the effect of UKIMA is to “re-reserve” competence in areas such as food standards. However, it may be objected that UKIMA does not have that effect at all. The Senedd remains entirely free to (for example) ban the sale in Wales of a single-use plastic or of chlorinated chicken. As noted above, what UKIMA does is merely to disapply that ban in certain cases, namely where the single-use plastic originates in England and is lawfully sold there, or where the chlorinated chicken is imported into England and lawfully sold there: in other cases (for example where the plastic or chicken originate from Wales) UKIMA has no effect on the ban.
The counter-argument to that claim is that the practical effect of UKIMA is to make it impossible for the Senedd to legislate in such a way, given that a ban on single use plastics or chlorinated chicken that applied only to products originating from Wales would be entirely pointless. Support for the idea that it is the practical effect that matters can be obtained from the Supreme Court’s recent judgment in Reference on the UN Convention on the Rights of the Child (Incorporation) (Scotland) Bill [2021] UKSC 42, where at paragraphs 52-53 Lord Reed, giving the judgment of the Court, held that the Bill at issue had the effect of modifying section 28(7) of the Scotland Act 1998, which preserves the power of the UK Parliament to legislate for Scotland. That was because the Bill would enable courts to find that Westminster legislation was incompatible with the UN Convention and so, although the UK Parliament could still enact or maintain such legislation, such a declaration would “plainly affect [the UK] Parliament’s power to make laws for Scotland, since it would impose pressure on Parliament to avoid the opprobrium which such a finding would entail”. Moreover, since public authorities would be unable to act in a way incompatible with the UN Convention, the effect of such a declaration would be that “[p]rovisions enacted by Parliament might consequently be deprived of practical effect. That is sufficient to justify the conclusion that [the Bill clause at issue] would result in a modification of section 28(7) of the Scotland Act.”
That focus on the practical effect of the legislation at issue on Parliament’s power to legislate, rather than on the question of whether as a matter of law Parliament was still able to legislate, would appear to apply equally to any contention that, because UKIMA leaves intact the Senedd’s theoretical power to legislate, its (obvious) practical effect on the Senedd’s ability to do so is irrelevant.
There is, however, a second issue. Even if UKIMA can be read as, in effect, a “re-reservation”, is it right to read UKIMA down so as to minimise or avoid that result? GOWA may (in an obvious sense) be a “constitutional statute”, but the Supreme Court has been careful to say that it must nonetheless “be interpreted like any other statute” (see Re Local Government Byelaws (Wales) Bill [2012] UKSC 53 at §80). There is also no doubt that the UK Parliament has, if it chooses to exercise it, the competence to reduce the area of devolved competence (whether directly or by reducing the practical effect of an exercise of devolved competence). Since UKIMA expressly made provision in relation to devolved competence, by protecting its provisions against modification by the devolved legislatures (section 54(2)) it may be hard as a matter of statutory construction to conclude that the reduction of devolved competence is anything other than intended by the UK Parliament.
None of those issues were, however, explored by the Court of Appeal. Rather, the Court held that those issues could not properly be deal with in the absence of particular Senedd legislation affected by UKIMA, and that it was not appropriate to decide such an important question in the abstract. In doing so, the Court followed the cautious approach adopted by the High Court in R(Yalland) v Secretary of State for Exiting the EU [2017] EWHC 630 (Admin) (in which the present writer acted for the claimants), where the Court declined to grant permission to seek a declaration as to the effect of the EEA Agreement on the then government’s approach to Brexit. Much though constitutional lawyers – and Members of the Senedd seeking clarity over what legislation they can effectively pass – might want clarity, the courts prefer to wait until there is a real issue on the ground before grappling with these questions.
Share this post on social media: