Domestic courts’ new powers to depart from pre-Brexit case law

This blog post, written by David Gregory and Khatija Hafesji of Monckton Chambers, defines the statutory concept of retained EU case law under the European Union (Withdrawal) Act 2018 and identifies the test that certain UK courts may now apply in order to depart from it, namely that applied by the Supreme Court in departing from its own precedents.  The discretion has historically been applied sparingly, principally for reasons of legal certainty.  The same considerations are likely to limit the use of this new power, however possibly not to the same extent.  It is unknown if domestic courts will treat it as inherently undesirable for UK and EU law to diverge.

Key points:

• Under the European Union (Withdrawal) Act 2018, courts will normally be bound by decisions of the CJEU made before 31 December 2020.
• Only the Supreme Court and certain appeal courts will be able to depart from this authority and only by applying the same test the Supreme Court uses to depart from its precedents.
• That test has been sparingly applied since its inception in 1966 as particular weight is given to legal certainty, a factor which will remain a significant consideration in applying that test in this context. 

What is “retained EU law”?

The transition period after the departure of the UK from the EU came to an end at 11 pm on 31 December 2020 (also known as IP Completion Day); however, the UK has chosen to retain a body of EU law. Retained EU law is defined in the European Union (Withdrawal) Act 2018 (“the Act”)as comprising:

• EU-derived domestic legislation (section 2);
• Direct EU legislation (section 3);
• Directly-effective rights which are to continue (section 4);
• Retained domestic and EU case law (section 6); and
• Retained general principles of EU law (section 6).

Each of these headline categories are themselves broken down by the Act into a complex web of further subcategories which are beyond the scope of this blog, save to say that section 5 specifically identifies areas which fall outside the scope of retained EU law, including:

• The EU Charter of Fundamental Rights (subsection 4). This is with the significant exception of any fundamental rights or principles which have an existence independent of the Charter. Such fundamental rights and principles are retained, and any references in case law to those fundamental rights and principles contained in the Charter are to be read as references to the fundamental rights and principles as they exist independent of the Charter (subsection 5).
• The principle of supremacy of EU law does not apply to any enactment or rule of law passed on or after 31 January 2020 (subsection 1), however it does continue to apply, where relevant, to the interpretation, disapplication or quashing of any enactment or rule of law preceding 31 January 2020 (subsection 2).

What is retained case law?

The Act breaks down “retained case law” into two categories. First, there is retained domestic case law which means any principles laid down by, and any decisions of, a court or tribunal in the UK as they have effect immediately before 31 December 2020 and in so far as they relate to retained EU law. Secondly, retained EU case law means any principles articulated by or decisions of the CJEU as they have effect immediately before 31 December 2020 and so far as they relate to retained EU law (section 6(7)).

The rules regarding the status and interpretation of retained case law are set out in section 6 of the Act and the regulations made under subsection 5A of that Act (see the European Union (Withdrawal) Act 2018 (Relevant Court) (Retained EU Case Law) Regulations 2020/1525) (“the Regulations”). These provide that:

• A UK court or tribunal is not bound by any decisions or principles of the CJEU after 31 January 2020, nor can any preliminary references be made to the CJEU after this date (subsection 1).
• However, a court or tribunal may have regard to anything done by either the CJEU, another EU entity, or the EU, after 31 January (subsection 2). This is, however, subject to the fact that any question as to the validity, meaning or effect of any retained EU law is to be decided in accordance with any retained case law and retained general principles of EU law, and having regard to the limits of EU competences immediately before 31 January 2020. The discretion to have regard is therefore relatively weak, in that it cannot be used in a way which undermines the “snapshot” that is retained EU law (subject to the following point).
• Moreover, a court or tribunal is bound by retained EU case law so far as there is post-transition case law (i.e. on or after 1 January 2021) which modifies or applies that retained EU case law and which is binding on that court (regulation 4 of the Regulations). In other words, nothing in the Act or Regulations displaces the ordinary domestic rules of precedent.
• No court or tribunal is bound by any retained domestic case law that it would not otherwise be bound by: the ordinary rules of precedent apply (section 6(4)(c)).

The effect of section 6 of the Act is to give retained EU case law a formal precedential status within the UK legal order, a status which CJEU case law had not previously enjoyed in Luxembourg.  Whilst the CJEU’s findings of law constituted binding authority for the UK (in accordance with section 3 of the European Communities Act 1972), the CJEU has never been bound by its own case law.  As Advocate General Trstenjak explained in C-331/05 P Internationaler Hilfsfonds eV v Commission [2007] 3 CMLR 31:

“The binding authority of precedent is not an inherent feature of the Union’s judicial system. Although, in the interest of legal certainty and the uniform interpretation of Community law, the Community Courts endeavour in principle to give a coherent interpretation to the law, the general structure of both the Community legal order and the judicial system means that the Community Courts are not bound by their previous decisions.”

The reasons for this are twofold: first, the original member states of the European Community had civil law systems which do not apply a formal doctrine of stare decisis;second, were it otherwise, a decision (even if ultimately considered incorrect) could only be altered by amending the Treaties.

It is of significance that this new precedential status is afforded to decisions of both the General Court and the Court of Justice: section 6 of the Act refers to “European Court” which is in turn defined in Schedule 1 of the Interpretation Act 1978 as the CJEU. Article 19 of the TEU (Treaty of the European Union) defines the CJEU as comprising the General Court, Court of Justice and specialised courts.  This interpretation is echoed in the Explanatory Note to the Act. That judgments of the General Court are being granted precedential status is especially striking as the General Court is not a Court of final instance and its decisions are subject to appeal within the EU legal order.

The power to depart from retained EU case law

The power to depart from retained EU case law is set out in section 6 of the Act as supplemented by the Regulations. Taken together, these provide that certain appellate courts across England, Scotland and Northern Ireland may depart from retained EU case law. In England, these courts include the Supreme Court and the Court of Appeal (and the Court Martial Appeal Court).  Scottish and Northern Irish appellate courts are also identified. By contrast, section 6(4)(c) provides that retained domestic case law is only binding to the extent it would be under the ordinary domestic rules of precedent.

In accordance with section 6(5), in deciding whether to depart from retained EU case law, those courts empowered to do so must apply the same test that the Supreme Court would apply in deciding whether to depart from its own case law (regulation 5). It is important to note that there is no neat formulation of the ‘test’ which the Supreme Court applies when departing from its earlier decisions; that it has the power to do so, and the considerations which it takes into account when deciding whether to do so, are set out in the 1966 Practice Statement [1996] 3 All ER 77.

How may domestic courts be expected to apply their discretion?

On 26 July 1966, Lord Gardiner announced in the House of Lords the Law Lords’ intention to depart from a previous decision “when it appears right to do so” (Practice Statement).  Lord Gardiner immediately qualified that the House would: “bear in mind the danger of disturbing retrospectively the basis on which contracts, settlements of property and fiscal arrangements have been entered into and also the especial need for certainty as to the criminal law.”

The discretion has been used on occasion in particular where there is a fundamental change in circumstances or experience has shown that a previous decision has resulted in serious injustice: see Rees v Darlington Memorial Hospital NHS Trust [2004] 1 A.C. 309 at paragraph 31.  For example it was famously used in R v Shivpuri 1987 AC 1 to overrule Anderton v Ryan [1985] A.C. 560 in relation to the law on attempted crimes where the earlier decision hollowed out the effect of the Criminal Attempts Act 1981.  More recently in FII Group Litigation [2020] UKSC 47, the Supreme Court departed from Deutsche Morgan Grenfell Group Plc v Inland Revenue Commissioners [2007] 1 A.C. 558 finding that the House of Lord’s previous ruling on the Limitation Act 1980 defeated the purpose of limitation and created legal paradox.

However, in general the Supreme Court has applied the doctrine sparingly. This is for three principal reasons:

• To promote legal certainty.  Far and away the most important consideration is that the reversal of established case law undermines an individual’s ability to regulate his or her affairs in accordance with their understanding of the law. As Lord Reid emphasised in R v Knuller (Publishing, Printing and Promotions) Ltd [1973] AC 435, the Practice Statement “does not mean that whenever we think that a previous decision was wrong we should reverse it. In the general interest of certainty in the law we must be sure that there is some very good reason before we so act.”  He accordingly refused to overturn the decision in Shaw v Director of Public Prosecutions [1962] AC 220 which recognised an offence of conspiracy to corrupt public morals. This was in spite of the fact that he himself had been in the minority in Shaw and made plain his continued disagreement with the decision.
• Out of deference to previous judicial decision makers a related consideration is that, where a matter has already been decided, the Supreme Court will accord serious weight to that judicial process, bearing in mind that ultimately there may be no single correct answer.  Lord Wilberforce in Fitzleet Estates Ltd. v Cherry (Inspector of Taxes) [1975] 1 WLR 1345 explained that “doubtful issues have to be resolved and the law knows no better way of resolving them than by the considered majority opinion of the ultimate tribunal. It requires much more than doubts as to the correctness of such opinion to justify departing from it.”
• Because it is more appropriate for Parliament to intervene. A further consideration is that it is preferable for changes to established law to be executed by Parliament.  Lord Morris in Knuller gave weight to the fact that Parliament had not intervened to overrule the House of Lord’s previous decision in Shaw.

How then might these considerations be applied by the Supreme Court and other relevant courts?  Plainly the objective of legal certainty will be no less significant in relation to retained EU case law as to Supreme Court precedents.  Parties will have relied in their dealings on their understanding of EU law which, although not applying a formal doctrine of precedent, has nonetheless developed in a markedly consistent and reliable fashion.  Courts can be expected to be reluctant to make significant departures especially from established and entrenched case law.  To do so would undermine legal certainty, particularly in the immediate future where practitioners and judges face the considerable task of familiarising themselves with a large volume of new legislation.

Further, domestic courts can be expected to continue to give significant weight to the views of the judiciary of Luxembourg which, after all, will remain the centre of expertise in European jurisprudence.  As the late Sir John Laws observed at the Bar European Group conference in Reykjavik in 2015, the English common law had long been, and ever would be, nurtured by the learning of its European neighbours.  However, it remains to be seen whether the courts attach less weight to decisions of the General Court than they do to those of the Court of Justice and therefore find themselves departing more readily from General Court decisions.

Perhaps, however, less weight will be given to inferences about whether or not Parliament has chosen to intervene since, until 1 January 2021, it has not been possible for Parliament to depart from binding judgments of the CJEU.  Whilst there will be some areas where the courts will say that it is more appropriate for Parliament to intervene if the UK is to depart from retained EU case law, there will be less of a case to argue (at least at first) that the fact Parliament has not done so represents an endorsement of the status quo. 

One question that remains unclear is what weight – if any – courts will give to a desire that UK law should develop consistently with European law.  Before now this consideration has been central to the requirement that EU law be interpreted and applied consistently across Member States.  This enabled and ensured the fundamental freedoms (goods, services, persons and capital) and promoted economic integration.  The more EU and UK law diverge the less economically integrated the UK will become (with consequent barriers to trade and economic inefficiencies).  To what extent UK courts can or should take the desirability of maintaining such harmonisation into account remains to be seen.

In considering this, courts will need to be mindful of wider international legal obligations.  In that context, it is notable that legislation had, in anticipation of a no-deal scenario, already started deliberately moving away from a situation which privileged UK-EU relations.  For example, the Freedom of Establishment and Free Movement of Services (EU Exit) Regulations 2019 removed from the scope of retained EU law the rights of freedom of establishment and free movement of Services accorded to EU citizens under the TFEU (Treaty on the Functioning of the European Union).  These regulations were introduced to ensure that the UK is “compliant with its World Trade Organisation (WTO) obligations, including the General Agreement on Trade in Services”.  In other words, there was a concern that the continued recognition of these rights would show unlawful favouritism to EU members over other WTO members.  Such concerns may now be lessened as a result of the EU-UK free trade agreement, settled on 24 December 2020.  However, this nonetheless emphasises the difficult considerations which may arise when considering whether it is ‘right’ to depart from EU precedents.

The Government has taken the deliberate step, by the Regulations, of extending the power to depart from retained EU case law from the Supreme Court to inter alia the Court of Appeal. As stated in its response to the consultation regarding the extension of the power (carried out pursuant to section 6(5A) of the Act), the rationale for the extension was to “help achieve our aim of enabling retained EU case law to evolve more quickly than otherwise might have been achieved” and to ease the burden on the Supreme Court. Certainly, extending the power to a wider range of courts will provide greater opportunities to exercise the power to depart from retained EU case law; however, with that opportunity comes the scope to re-litigate established issues. We consider it unlikely that the Regulations will ease the burdens on the Supreme Court, on the contrary we consider that both the Court of Appeal and the Supreme Court are, at least initially, likely to see a high number of appeals concerning the exercise of the power to depart from retained EU law.

This blog post first appeared as an article in the February issue of Butterworths Journal of International Banking and Financial Law.

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