Directives under the Withdrawal Act: what does “of a kind” mean?

This post, written by Jack Williams of Monckton Chambers, explores the position of EU Directives after the transition period under section 4 of the European Union (Withdrawal) Act 2018 (“the 2018 Act”).

Section 4(1) of the 2018 Act will, once in force, retain as part of domestic law after the transition period any rights, powers, liabilities, obligations, restrictions, remedies and procedures, which were recognised and available by virtue of section 2(1) of the European Communities Act 1972 prior to the end of the transition period. By itself, this would include the right to rely on directly effective rights arising under EU Directives.

That effect of section 4(1) of the 2018 Act is, however, immediately disapplied for Directives by section 4(2)(b):

“Sub-section (1) does not apply to any rights, powers, liabilities, obligations, restrictions, remedies or procedures so far as they … (b) arise under an EU directive (including as applied by the EEA agreement …”

The starting position for Directives, therefore, is that they are not “retained EU law” under the 2018 Act, and directly effective rights arising under them are excluded from transposition after the transition period. (This is subject to a minor caveat in paragraph 38 of Schedule 8 of the 2018 Act for domestic cases begun before the end of the transition period, but decided after the transition period, where the domestic Court decides that an EU Directive does have direct effect e.g. where it has not been transposed adequately.)

The logic of this starting position is that Directives have (supposedly) already been given effect in UK law through domestic implementing laws – most frequently secondary legislation under section 2(2) of the European Communities Act 1972 – which, in turn, have already been preserved in domestic law after the transition period pursuant to section 2 of the 2018 Act. Retaining Directives themselves would thus be duplicative.

Importantly, however, section 4(2)(b) of the 2018 Act does not end with the quotation above. It continues:

“…and are not of a kind recognised by the European Court or any court or tribunal in the United Kingdom in a case decided before [the end of the transition period] (whether or not as an essential part of the decision in the case).”

The starting position, as articulated above, is thus significantly modified. The net effect is that Directive provisions which are “of a kind” recognised by the CJEU or a domestic court before the end of the transition period will still flow down the section 4(1) conduit pipe into domestic law (as “retained EU law”) after the transition period.

The question becomes: what does “of a kind” mean?

In order to answer this, it is worth quoting extensively paragraphs 97 and 98 of the Explanatory Notes to the 2018 Act (emphasis added):

“97. … the section excludes directly effective rights arising under an EU directive (including as extended to the EEA by the EEA agreement). The CJEU has however held that in certain circumstances, when a member state has not properly implemented a directive, that directive can confer rights on individuals that the national courts must protect. Where rights arising under directly effective provisions of directives have been recognised by a UK or EU court or tribunal before exit day, rights of that kind will be retained in domestic law.

98. The reference in subsection (2)(b) to rights ‘of a kind’ is intended to ensure that rights are retained if they are of a similar kind to those so recognised. So rights arising under a particular directive that have been recognised by a court before exit day as having direct effect, could be relied upon by other individuals who are not parties to that case, in circumstances which the directive is intended to address. Rights arising from any directly effective provisions of directives that have not been recognised prior to exit day (to the extent these might exist) will not be converted by this section (subject to the transitional etc provision in Schedule 8, Paragraph 38).”

It is difficult to reconcile the first and last sentences of paragraph 98 (as emphasised above). To my mind, it reveals the ambiguity of the “of a kind” wording in section 4(2)(b) of the 2018. It can have one of two interpretations. Either:

(1) any Directive provision “of a kind” which would fulfil the well-known conditions for direct effect (sufficiently clear, precise and intended to confer rights of individuals etc.) would be retained, whether that particular Directive provision has or has not been held to be directly effective prior to the end of the transition period. That appears to be what the first sentence (“of a similar kind to those so recognised”) of paragraph 98 suggests.

or

(2) only a particular Directive provision which is “of a kind” that has been held expressly by a Court prior to the end of the transition period to be directly effective would be retained. This is what the last sentence of paragraph 98 suggests.

The distinction between the two interpretations of the phrase “of a kind” might be categorised as a difference between a “conceptual” definition (the first interpretation: is this a Directive provision the sort of one which has been recognised by courts prior to the end of the transition i.e. is it sufficiently clear and precise etc.?), and an “empirical” definition (the second interpretation: is this a Directive provision which falls within a category of Directive provisions which have, as a matter of fact, actually been recognised by the courts prior to the end of the transition period as having direct effect?).

It appears that the drafter of the Explanatory Notes at least has this second, empirical interpretation in mind – the last sentence of paragraph 98 could not be clearer. If that is right, however, it would result in some odd consequences.

First, where a provision of a Directive so obviously meets the requirements of the direct effect test, it is unlikely to have been litigated. That means that there will not be a finding for that Directive provision by a court prior to the end of transition period. There is no sustainable rationale, in my view, for that provision not being retained, such that it can be relied upon directly if not properly implemented in domestic law. The lack of a case is one of (mis)fortune, rather than reason.

Second, Directives which the UK has transposed inadequately will be incapable of giving rise to directly effective rights unless there is a precise case on point. That would be so even though, had the UK properly fulfilled its EU obligations at the time it was Member State, the right would have been implemented and would continue to form part of domestic law pursuant to section 2 of the 2018 Act. The UK would essentially be benefitting from its own unlawful act.

Third, the second interpretation also effectively ‘reads out’ the phrase “of a kind”; the effect of section 4(2)(b) would, I think, be the same as the second interpretation contends for with or without the phrase remaining. But it must mean something. I cannot do better than the words of the first sentence of paragraph 98: “The reference in subsection (2)(b) to rights ‘of a kind’ is intended to ensure that rights are retained if they are of a similar kind to those so recognised” (emphasis added). That would avoid the previous two consequences.

It will be interesting to see how the courts will interpret this provision in due course if faced with a Directive provision which (i) meets the directly effective test; (ii) has not been subject to a court ruling; and (iii) the UK has transposed inadequately or inaccurately prior to the end of the transition period. Can anyone think of any good examples?