Challenges to the validity of retained EU law

This post, written by Jack Williams of Monckton Chambers, analyses the rules concerning challenges to the validity of Retained EU Law, as set out in Schedule 1 of the EU (Withdrawal) Act 2018 and the Challenges to Validity of EU Instruments (EU Exit) Regulations (SI 2019/673) (as recently amended by the Challenges to Validity of EU Instruments (Amendment) (EU Exit) Regulations 2020 (SI 2020/1503).

In this post, I explore the prohibition in Schedule 1 to the EU (Withdrawal) Act 2018 that there is no right in domestic law after the transition period to challenge any retained EU law on the basis that, prior to the end of the transition period, an EU instrument was invalid. First, I conclude that, on account of the use and definition of the phrase “EU instrument”, this prohibition is more limited than it first appears. Second, I discuss the possible implications of this in practice for those wishing to challenge the validity of retained EU law after the transition period on the basis that retained direct EU legislation was invalid. Finally, I set out other exceptions to the general prohibition in Schedule 1.

The rule: limitation of challenges to retained EU law

Schedule 1 to the EU (Withdrawal) Act 2018 (“the 2018 Act”) is given effect by section 5(6) of the 2018 Act. Paragraph 1(1) of that Schedule (as amended by the EU (Withdrawal Agreement) Act 2020 (“the 2020 Act”)) states:

“There is no right in domestic law on or after IP completion day to challenge any retained EU law on the basis that, immediately before IP completion day, an EU instrument was invalid.”

“IP completion day” is defined as 11 p.m. on 31 December 2020: section 39 of the 2020 Act, which is cross-referred to in section 1A(6) of the 2018 Act. (“IP” stands for Implementation Period, a synonym for the transition period.)

The term “retained EU law” is the subject of another blog post, but in short is defined by section 6(7) of the 2018 Act as “anything which, on or after IP completion day, continues to be, or forms part of, domestic law by virtue of section 2, 3, 4 or subsection (3) or (6) above (as that body of law is added to or otherwise modified by or under this Act or by other domestic law from time to time)”. Sections 2, 3, 4 and 6 can together be referred to as the conduit pipes for retained EU law (which, it must be remembered is, in fact, domestic law).

The rule, if read quickly and without care, could be taken to mean that – subject to exceptions discussed below – all retained EU law cannot be challenged on the basis that, immediately before the end of the transition period, its EU law equivalent (the fons et origo for its incorporation via the conduit pipes of the 2018 Act), was, in fact, unlawful (as a matter of EU law).

But the devil is in the detail. Paragraph 1 of Schedule 1 does not stop after the term “retained EU law”. The sentence states that there is no right to challenge retained EU law on the basis that, prior to the end of the transition period, an EU instrument was invalid.

What is “an EU instrument”?

“EU instrument” is defined in paragraph 22 of Schedule 8 to the 2018 Act (amending the Interpretation Act 1978) as: “any instrument issued by an EU institution other than any retained direct EU legislation” (my emphasis).

This raises the question: what is “retained direct EU legislation”?

Section 20 of the 2018 Act (as it will apply from 1 January 2021) states that ““retained direct EU legislation” means any direct EU legislation which forms part of domestic law by virtue of section 3 (as modified by or under this Act or by other domestic law from time to time, and including any instruments made under it on or after””.

Section 3(2) of the 2018 Act (as it will apply from 1 January 2021) defines “direct EU legislation”, in part, as follows:

“(a)   any EU regulation, EU decision or EU tertiary legislation, as it has effect in EU law immediately before IP completion day and so far as—

(ai)  it is applicable to and in the United Kingdom by virtue of Part 4 of the withdrawal agreement,

(bi)  it neither has effect nor is to have effect by virtue of section 7A or 7B,

(i)  it is not an exempt EU instrument (for which see section 20(1) and Schedule 6 ) and,

(iii)  its effect is not reproduced in an enactment to which section 2(1) applies…”

This section is made difficult by the myriad cross-references. The parts that I have removed refer to the Annex and Protocol of the EEA agreement. The only important point for present purposes is that at least some EU regulations, decisions and tertiary legislation and some parts of the EEA agreement fall within the definition of “direct EU legislation”, which, in turn, forms part of retained EU law via section 3(1) of the 2018 Act: “Direct EU legislation, so far as operative immediately before IP completion day, forms part of domestic law on and after IP completion day”.

What is the impact of this?

The effect of the use of “EU instrument” in Schedule 1 therefore means that there is a carve out in paragraph 1 of Schedule 1 to the 2018 Act for “retained direct EU legislation” (as defined above in section 3 of the 2018 Act). The prohibition to challenging retained EU law in paragraph 1 of Schedule 1 does not, it seems, apply if the basis of the challenge is that any direct EU legislation was invalid.

Putting that in its positive form, it would appear that one can, at least in principle, challenge retained EU law after the transition period on the basis that, immediately before the end of the transition period, retained direct EU legislation was invalid.

That may, or may not, be a small category of retained EU law for which a validity challenge may remain, but it does mean that the broad and quick reading of paragraph of Schedule 1 (and indeed paragraph 208 of the explanatory notes) risks misleading some readers. Not all EU regulations, decisions and tertiary legislation are covered by the concept of “EU instrument”. The fact that Parliament specifically excluded retained direct EU legislation from the prohibition on challenges to retained EU law may be taken to mean that Parliament intended that such challenges (i.e. to retained EU law on the basis that certain EU regulations, decisions or tertiary legislation, as they have effect in EU law immediately before IP completion day, were invalid) could continue after the transition period.

How might this work in practice?

This is not easy. In order to help see the issues at least (which is, one hopes, sufficient for a blog post) I think it is worth considering two scenarios.

Scenario 1: Let us, first, imagine that the CJEU (either the GC or the ECJ) has declared, in a judgment on or after 1 January 2021, that an EU law, which also falls within the definition of direct EU legislation (e.g. a Regulation), is invalid as a matter of EU law. As a result of section 6(1)(a) of the 2018 Act, this is a judgment post-dating IP completion day and so the UK court is not bound by this judgment. But a UK applicant nonetheless wishes to go to (a UK) court to challenge the (domestic) retained EU law on the basis that its validity depends upon a piece of retained direct EU legislation, which has subsequently been found to be invalid by the CJEU. Can this be done? This depends on at least some combination of the following questions:

• Is there a requirement that the retained direct EU legislation was “invalid immediately before the end of the transition period”, and, if so, is that the effect of the CJEU’s judgment? This depends on whether, as a matter of EU law, it is deemed to have been void ab initio, or only from the date of the CJEU’s judgment.

• Despite not being bound by the CJEU case pursuant to section 6(1)(a) per se, is the UK court nevertheless bound to find that there was, in fact, no retained EU law (specifically direct EU legislation), in the first place, because the (now) invalid EU law never flowed down the conduit pipes in the 2018 Act? This depends on the meaning of “any EU regulation, EU decision or EU tertiary legislation, as it has effect in EU law immediately before IP completion day” (emphasis added) in section 3(1) of the 2018 Act, and depends on the same or similar enquiry as in the previous question, namely what the effect of the CJEU’s ruling is.

• Assuming there is any retained EU law capable of being challenged in the first place and assuming that a relevant EU law was invalid immediately before the end of the transition period, will the UK court “have regard to anything done on or after IP completion day by the European Court” pursuant to section 6(2) of the 2018 Act in order to assist its decision? Indeed, is the UK court bound to have such regard to the CJEU’s decision (rather than the “may” in section 6(2))? This depends on the meaning of section 6(3)(b) of the 2018 that, “[a]ny question as to the validity, meaning or effect of any retained EU law is to be decided … having regard … to the limits, immediately before IP completion day, of EU competences”. How does that relate to section 6(1)(a)?

• Does the outcome or interpretation of the relevant provisions fit with the legislative intention and make normative sense? This depends on whether the UK legislature intended to ossify all EU laws (specifically including those giving rise to retained direct EU legislation) despite their being ruled invalid subsequently (post-transition) by the CJEU, or whether the carve out in the definition of “EU instruments” was intentional, because – despite the purported red line of  the CJEU having no automatic effects for the UK after the transition – the legislature saw sense in the validity of certain domestic law (retained direct EU legislation) being contingent upon the validity of the international source. But why only retained direct EU legislation?

• Retained direct principal EU legislation (a species of retained direct EU legislation) is “treated as primary legislation” for the purposes of the Human Rights Act 1998 only (paragraph 30 of Schedule 8). But is there any other provision of the 2018 Act (as stands once the 2020 Act’s amendments take place) that would give retained direct EU legislation (or any species thereof) status such that the Court could not declare it invalid, even despite its carve out from paragraph 1 of Schedule 1?

Scenario 2: Let us, instead, imagine that there has been no judgment from the CJEU (after the transition period) invalidating any EU law that falls within the definition of direct EU legislation. But a UK applicant nonetheless wishes to challenge the retained EU law on the same basis, namely that paragraph 1 of Schedule 1 does not apply because they seek to argue that underlying retained direct EU legislation is invalid. Can this be done?

This is in some senses easier than Scenario 1, but in other senses harder. It is easier because it is clear that the UK court cannot refer the matter to the CJEU (section 6(1)(b) of the 2018 Act) and there is no complication of being bound by or implementing a CJEU decision. But it also harder precisely because there is no CJEU decision in place. Will the UK court nevertheless be bound to consider (in the sense of having jurisdiction over) whether the fons et origo of the retained direct EU legislation is invalid (presumably on questions of EU law)and/or whether something is “retained EU law” in the first place (which may inevitably collapse back into similar underlying questions)? Does it make sense for UK courts to be opining, essentially, on the validity of EU law, and potentially – by implication – holding that the EU law is invalid (only insofar as it applies or is transformed into domestic law via the conduit pipes in the 2018 Act), even though the EU law, in the EU legal order, still remains valid? Domestic courts have never been able to find EU law invalid, of course – does the Act indirectly affect that vis-à-vis retained direct EU legislation? (As addressed below, these are the consequences of the domestic Regulations, as defined below, for EU instruments.)

Exceptions to the rule

It is worth taking stock, as this blog post is becoming article-length. The rule in paragraph 1 of Schedule 1 to the 2018 Act is that “[t]here is no right in domestic law on or after IP completion day to challenge any retained EU law on the basis that, immediately before IP completion day, an EU instrument was invalid.”

This rule is subject to exceptions.

The first exception is the one that I have addressed above, namely that it appears from the definition of “EU instruments” that one can, at least in principle, challenge retained EU law after the transition period on the basis that, immediately before the end of the transition period, retained direct EU legislation was invalid. This is not so much an exception to a rule, but an in-built limitation to the prohibition.

The second exception is that paragraph 2 of Schedule 1 states that the prohibition “does not apply” so far as the CJEU has decided before IP completion day that “the instrument” is invalid. Presumably “the instrument” refers to the “EU instrument”. (This explains why my examples above are couched in terms CJEU decisions after the transition period – challenges can be brought if the CJEU has already ruled an EU instrument to be invalid prior to IP completion day.)

The third exception is the one set out in paragraph 39 of Schedule 8 to the 2018 Act: “Paragraphs 1 to 4 of Schedule 1 do not apply in relation to any conduct which occurred before [IP completion day] which gives rise to any criminal liability.”

The fourth exception is that envisaged by paragraph 1(2) of Schedule 1, namely that “the challenge is of a kind described by, or provided for, in regulations made by a Minister of the Crown”. These regulations have subsequently been produced in the form of the Challenges to Validity of EU Instruments (EU Exit) Regulations (SI 2019/673) (as recently amended by the Challenges to Validity of EU Instruments (Amendment) (EU Exit) Regulations 2020 (SI 2020/1503) (“the domestic Regulations”).

The domestic Regulations state that:

“3.—(1) Paragraph 1(1) of Schedule 1 to European Union (Withdrawal) Act 2018 does not apply in relation to a challenge to retained EU law where— (a) the challenge is on the basis that, immediately before IP completion day, an EU instrument was invalid on any of the grounds set out in the second paragraph of Article 263 TFEU as it has effect immediately before exit day; and (b) the challenge relates to proceedings begun, but not finally decided, in a court or tribunal in the United Kingdom before IP completion day.”

The mentioned grounds for invalidity of an EU instrument in Article 263 TFEU include: lack of competence (e.g. the EU did not have the legal power to act in that area); infringement of an essential procedural requirement; infringement of the Treaties or of any rule of law relating to their application; and misuse of powers.

The domestic Regulations make it clear that it does not matter whether the domestic court has made a preliminary reference to the CJEU or not. These provisions will give UK courts the ability to provide rulings on validity both in pending cases and any domestic cases begun before the end of the transition period. Where a domestic court has already lodged a validity challenge with the CJEU, it will no longer have to wait for the CJEU’s judgment. UK courts will be given the jurisdiction, in these cases, to make a ruling on validity. In such circumstances where the domestic court finds an EU instrument invalid, “it may declare it void” (regulation 4). As explained above, this represents a sea change and could lead to some interesting divergences between the UK and EU. There is, however, only a few days left of the working term to take advantage of these provisions in the domestic Regulations.

I am grateful to Andrew Macnab (of Monckton Chambers) and Robert Craig (of the University of Bristol) for reviewing a draft of this blog post. Any errors remain my own.

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