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Brexit: the ball is in which court?

22 February 2017

Jurisdictions: United Kingdom
Services: Administrative and Public Law, Government Relations and Policy Advocacy, International Arbitration

By Charles Brasted

Brexit "will bring an end to the jurisdiction of the CJEU in the UK". That is the assertion in the UK Government's Brexit White Paper¸ and it was the promise of the Leave campaign.  But the reality is more complex.  The future relevance of the CJEU for UK law will be a key feature of the negotiations ahead, with implications well beyond the legal profession.

The logical consequence of the UK Government's opposition to freedom of movement (in the face of EU insistence that it is fundamental) was explicit in the White Paper: no on-going UK membership of the Single Market. The significance of the UK Government's position on the CJEU was less explicit, although the signs are there that the Prime Minister and her team are alive to the nuances.

Even assuming an end to UK membership of the Single Market, the role of the CJEU is significant in at least three ways:

• first, the UK Government's intention to incorporate EU law into domestic law (via the Great Repeal Bill) requires a choice as to how the UK courts will treat both past and future judgments of the CJEU when interpreting the very EU laws that have been domesticated;

• secondly, if the UK Government is to agree any form of access to the EU market that is based on regulatory alignment, then it will need to agree how (if at all) CJEU judgments regarding the regulatory rules in question will be addressed in the UK; and

• thirdly, whatever sort of bilateral agreement(s) the UK and EU may enter into to form a new relationship, the terms of each will need to be interpreted and enforced. Will any part of that job fall to the CJEU?

How will UK courts treat pre-Brexit CJEU judgments?

The Government made clear in its White Paper that it will introduce a Great Repeal Bill to "convert the 'acquis' – the body of existing EU law – into domestic law". This, the Government suggests, will provide "business, the public sector and the public with as much [legal] certainty as possible;" and will ensure that "the rights and obligations that already exist in the UK under EU law," continue to exist in the UK post-Brexit.  It is difficult to see how that could be achieved without incorporating as part of it judgments of the CJEU that pre-date Brexit.
 
The White Paper implicitly endorses that view: "In general the Government also believes that the preserved law [i.e. law domesticated by way of the Great Repeal Bill] should continue to be interpreted in the same way as it is at the moment". So, what the CJEU has done, and will do up to the date of Brexit, will live on in the way that the UK courts apply what will become UK law.  We can expect that this will be made explicit in the Great Repeal Bill or other legislation giving effect to Brexit.

This is not merely a matter of legal housekeeping. It is likely to be an important foundation of any trade deal.  In the White Paper, for example, the UK Government asserts that:

[The UK's] position is unprecedented in previous trade negotiations. Unlike other trade negotiations, this is not about bringing two divergent systems together. It is about finding the best way for the benefit of the common systems and frameworks that currently enable UK and EU businesses to trade with and operate in each other's markets to continue."

For that to be true, the UK will need to ensure that the common systems and frameworks with which it starts are indeed the subject of a common understanding: hence, the adoption of the CJEU's past judgments.

How will UK courts treat post-Brexit CJEU judgments?

It is unlikely that UK courts will similarly be required to have regard to post-Brexit CJEU judgments, nor is it necessary for them to do so for the clarity and certainty of UK law. However:

• it is realistic to think that UK courts will in practice continue to take account of relevant CJEU judgments when interpreting domesticated laws, perhaps with the sort of persuasive value accorded to Commonwealth jurisprudence; and

• this question could become of acute political and commercial importance if the terms of a future relationship between the UK and the EU are contingent on continued regulatory alignment based on shared rules. It is not inevitable that on-going regard to CJEU jurisprudence would be required. There are examples of bilateral agreements in which the EU has agreed to arrangements based on the adoption of EU law including CJEU judgments frozen in time at the point of agreement, with future judgments only being adopted or addressed with the consent of the parties. However, in many examples, future CJEU jurisprudence relevant to the subject matter of the agreement has to be reflected in the third country's own law, whether automatically or by incorporation — and the level of market access tends to be commensurate with the degree of legal alignment provided for in the agreement.

Will the CJEU have a judicial role in the future UK-EU relationship?

Aside from the impact of its jurisprudence on the UK courts, the CJEU could continue to have a role in the terms of any future relationship. 

In addition to scrutinising the scope of any free trade agreement entered into by the EU (see, for example, its current scrutiny of the EU-Singapore agreement), the CJEU's on-going role could come in one or two principal forms:

• first, where any arrangement depends on recognition or authorisation decisions to be made by the EU institutions as a matter of EU law, then the way in which those decisions are made and the interpretation of EU law that they apply will ultimately be determined by the CJEU; and

• secondly, any bilateral agreement will require some mechanism for interpreting and policing its terms. There is ample precedent for the EU to agree to forms of dispute resolution (including non-judicial forms) that do not involve the CJEU, something that the UK Government was keen to emphasise in its White Paper. However, in some areas, EU bilateral agreements do incorporate the CJEU into the dispute resolution process and give it binding effect on the parties.

The UK Government has made clear that any dispute resolution provision must "respect UK sovereignty, protect the role of our courts and maximise legal certainty" but it has not as yet ruled out any options.  It may in the coming months have to decide whether a consensual role for the CJEU in interpreting and applying a bilateral agreement crosses its red line.  In her Lancaster House speech, Theresa May was careful to commit to ending the "direct legal authority in our country" of the CJEU.  As the Prime Minister is known to choose her words carefully, it is reasonable to imagine that that phrase may become of considerable importance, signifying the difference between the current automatic effect of CJEU judgments directly into UK law and a more limited role for the CJEU by consent policing the terms of an international agreement.  The ability to navigate such nuances legally and politically could shape the future of the UK-EU relationship.