The Retained EU Law (Revocation and Reform) Act 2023 (REULA) received Royal Assent on 29 June 2023 and will enter into force on 1 January 2024. We wrote about the Bill when it was first published in 2022.
The Government's stated aim when introducing the Bill was to force a review of all retained EU laws that continued to apply in the UK after the end of the Brexit transition period on 31 December 2020. The Bill therefore included a default 'sunset date' of 31 December 2023 by which point all EU-derived subordinate legislation and retained direct EU legislation would be revoked, unless they were specifically saved.
However, in a reversal during the passage of the Bill, REULA as passed no longer contains this automatic sunsetting of all relevant retained EU laws, but instead will only revoke a set and defined number of retained EU laws. Whilst this is a significant watering down compared to the intended framework, REULA otherwise makes some very far-reaching changes in relation to the future interplay between domestic law and retained EU laws (which will be re-named "assimilated laws" to remove any EU connotations).
In particular, from 1 January 2024 when REULA comes into force, the principle of supremacy of EU law (whereby EU law is given priority over domestic law where they conflict) and of other general principles of EU law will be abolished. Coupled with provisions making it easier for the UK courts to depart from retained EU case law, REULA therefore introduces an interpretative decoupling of UK and EU laws, bringing with it the risk of uncertainty in a number of areas. With legislative uncertainty of course comes the risk of increased litigation.
In this article, we summarise the key provisions in REULA, and highlight potential implications in relation to the removal of the interpretative effect of EU law on the UK statute book. We have already seen how this may operate in practice in a recent trade mark case, an area of law largely derived from EU law, where the Judge took the opportunity (in an obiter discussion) to consider the impact of REULA when considering a provision in the UK Trade Marks Act.
Current framework post-Brexit
The current framework for the treatment and interpretation of retained EU law post-Brexit (i.e., post 31 December 2020) is governed by the EU (Withdrawal) Act 2018 (EUWA). The EUWA framework was however only ever seen by the Government as a temporary fix, with retained EU law "established only to maximise continuity following Brexit".
In particular, EUWA provides for a limited continuation of the principle of supremacy of EU law in relation to domestic legislation that was made before 1 January 2021. However, the principle of supremacy of EU law no longer applies in relation to domestic legislation made on or after 1 January 2021.
Overview of REULA
Key provisions introduced by REULA include:
Sunsetting of a limited list of retained EU laws on 31 December 2023
Having published a dashboard (which has recently been updated) containing almost 5,000 distinct sources of retained EU laws that were potentially at risk of automatically expiring on 31 December 2023, REULA now only contains (see section 1 and Schedule 1) a list of 587 pieces of retained EU laws that will be revoked in whole or in part on that date, unless Ministers decide otherwise. Draft regulations have been laid before Parliament in which a number of instruments included in Schedule 1 to REULA for revocation will now be preserved, and further instruments identified to be revoked.
This is a drastically reduced and defined list compared to what businesses had been faced with under the Bill, as the laws listed are typically redundant ones. However, the Government clearly sees the sunset as kickstarting a process of reform and planning for future regulatory changes from EU laws.
Whilst the sunset provision now applies only to a defined list, REULA does also (in section 2) repeal a provision in EUWA which preserved the recognition of certain aspects of EU law in domestic law, including direct effect of relevant EU treaty provisions and the vertical direct effect of EU directives. There is greater scope for uncertainty here, as the relevant aspects of EU law have not been identified. For example, in the field of employment law, recent press reports suggest that the Government will legislate to allow equal pay claimants to continue to rely on Article 157 TFEU, which is currently retained EU legislation, and which allows equal pay claims to be brought in ways not provided for under the Equality Act 2010.
Abolition of supremacy of EU law
The principle of supremacy of EU law requires that, where the domestic law of an EU Member State is found to be inconsistent with EU law, that latter EU law should take priority. As noted above, EUWA retained in effect a limited form of supremacy of EU law in relation to relevant domestic legislation made before 1 January 2021.
From 1 January 2024, however, section 3 of REULA provides that supremacy of EU law over domestic legislation will come to an end, no matter when that domestic legislation was passed, thereby removing the limited form of EU supremacy in place under EUWA. Significantly, this new interpretative regime will only apply in relation to events or acts occurring on or after 1 January 2024, no matter when any proceedings are launched.
There are some exceptions to the new framework. Secondary legislation can be introduced specifying that domestic legislation should be read in a way which is compatible with specified pieces of retained direct EU legislation. REULA also gives Ministers and the devolved authorities a power until 23 June 2026 to specify the legislative hierarchy between specific provisions.
The new legal hierarchy framework is also, for example, specifically subject to section 186 of the Data Protection Act 2018 (DPA 2018) which provides, in terms, that any other enactment or rule of law cannot remove or restrict the obligations and rights provided for in Chapter III of the UK GDPR (rights of the data subject), or the equivalent law enforcement and intelligence services provisions, unless such a removal or restriction is provided for under the exemptions in DPA 2018.
Implications of the removal of supremacy of EU law
From 1 January 2024, we can therefore expect to see arguments for different interpretations of many areas of EU-derived domestic legislation. An early example of the issues that might arise has been provided in the obiter discussion by EU law specialist HHJ Tindal in a case concerning the use of trade marks in keyword advertising. This is an issue that has been developed through a series of EU cases which has been applied in the UK courts over several years.
In E-Accounting Solutions v Global Infosys, the parties and Judge in fact agreed that the EUWA framework applied in relation to interpretation of the relevant provisions of the Trade Marks Act 1994 (TMA), which was enacted partly to implement EU Directives. In particular, the Judge focused on the principle of 'indirect effect'. This forms part of the concept of supremacy of EU law and requires relevant domestic legislation to be interpreted consistently with the Directive. Because the relevant TMA provisions had not been amended since 31 December 2020, EU supremacy (and therefore of indirect effect) continued to apply under EUWA, and similarly retained EU case law relating to keyword advertising and the impact on the functions of a trade mark was still binding on the High Court.
However, in case this was wrong, and recognising that we "are now in different times" with "seismic changes to EU-derived domestic legislation on the horizon", the Judge went on to consider REULA. In particular, he thought that this might be a useful exercise in providing some indication, albeit no more than that, for businesses and their advisers as to the legal implications of keyword advertising from 2024.
In summary, whilst supremacy of EU law and indirect effect would no longer be part of our law from 1 January 2021, the Judge stressed that "this [did] not mean that EU law becomes irrelevant". For example, where domestic legislation had been enacted to implement an EU directive, as was the case here, that may be relevant context in the exercise of statutory interpretation on orthodox domestic principles.
In more detail, the Judge's approach was as follows:
- In the 2022 decision of R(PRCBC) v SSHD, Lord Hodge in the Supreme Court had set out in a "relatively short but seminal passage" a restatement of domestic statutory principles. This included an assessment of the secondary role that external aids to interpretation (such as Explanatory Notes to legislation, Law Commission reports etc) can play. External aids may disclose the background to a statute and assist in identifying the mischief it addresses, and also the purposive interpretation of the statutory language. However, external aids may not displace the meanings conveyed by the words of a statute that are, after consideration of the context, clear and unambiguous and which do not produce absurdity.
- HHJ Tindal noted that an EU directive leading to domestic legislation can also be seen as a form of 'external aid' to its interpretation, as confirmed by Lord Hope in the Supreme Court in 2011, Brent LBC v Risk Management Partners.
- Accordingly, where Parliament intended a statutory provision simply to implement an EU directive, the approach in Brent demonstrated how the directive may guide the interpretation of that statutory provision. However, this would only be as an 'external aid'; the statutory words will always be paramount.
- In this case, this required a consideration of the statutory language in section 10 of the TMA, with the EU Recast Trade Marks Directive used as an 'external aid' to that interpretation. But this could not "displace the meanings conveyed by the words of a statute that, after consideration of that context, are clear and unambiguous and which do not produce absurdity. Parliament – and its chosen language – remains sovereign".
- On the facts, the Judge concluded there would be trade mark infringement on a straightforward interpretation of the statutory language of the TMA itself, without needing to resort to 'external aids', or indeed to any prior domestic or European case law. However, he also concluded that the TMA (as amended in 2019) was plainly intended to implement the Recast TM Directive, which was itself intended to have the meaning as that adopted by the CJEU when interpreting the prior TM Directive. This included a 'gloss' that the CJEU had applied that did not appear in the statutory language in the Directive or the TMA, requiring that use of the sign must "adversely affect the functions of the trade mark". In the sense set out in R(PRCBC), the Judge concluded that Parliament could not have intended to render unlawful something which had no adverse impact whatsoever on a trade mark.
Abolition of general principles of EU law
In addition to abolition of supremacy of EU law, REULA also ends the influence of general principles of EU law on the interpretation of domestic legislation: EU general principles such as proportionality, protection of fundamental rights, and the principle of equal treatment will no longer be available as an aid to interpretation of EU treaties and EU legislation. Instead, standard domestic principles of interpretation, including rules of interpretation set out in REULA will apply.
Individuals will also no longer be able to rely upon general principles of EU law directly.
Interpretation and effect of retained EU case law
EUWA also put in place various provisions relating to interpretation of retained EU case law, i.e., existing case law of the CJEU made on or before 31 December 2020. Such retained EU case law, under EUWA, is binding on the UK courts, though it may be departed from by the Court of Appeal or the Supreme Court.
REULA amends these provisions to give the UK courts greater freedom to develop case law away from retained EU law after 1 January 2024. It facilitates this in a number of ways:
- The higher courts will apply a new test when considering whether to depart from retained EU case law, to include a consideration of the following non-exhaustive factors:
- The fact that decisions of a foreign court are not usually binding
- Any changes of circumstances which are relevant to the retained EU case law
- The extent to which the retained EU case law restricts the proper development of domestic law
The Government indicates that these factors reflect some of those considered by the Court of Appeal in the TuneIn case when it decided not to depart from retained EU case law relating to an issue concerning copyright infringement, upon which the CJEU had issued a series of decisions (though the factors in REULA do not seem to correspond entirely with the factors relied upon by the Court of Appeal in that case).
- There will also be a new test for the higher courts when deciding whether to depart from their own retained domestic case law. In addition to the second and third factors listed above, this includes the extent to which the retained domestic case law is determined or influenced by retained EU case law from which the court has departed or would depart.
- REULA establishes a new reference procedure enabling a lower court or tribunal which is bound by retained case law to refer a point of law of general public importance to a higher court to decide. Further, the Attorney General and other Law Officers in the UK/devolved administrations will have the power to intervene in and refer cases to the higher courts, so that those courts can consider whether to exercise their new (wider) discretion to depart from retained EU case law. The higher court will have the discretion to refuse a reference from a lower court, but not one that is made by a Law Officer.
- A court is required to make an 'incompatibility order' if it finds that a provision of retained direct EU legislation is incompatible with any domestic enactment (or vice versa).
It remains to be seen whether the courts will show greater appetite to depart from retained EU case law, and also pre-Brexit domestic case law, without feeling themselves "unduly constrained by the continuing influence of previous EU case law" as the Government has considered to be the case. The courts have not shown themselves to be too keen to do so, at least to date, but REULA provides them with greater scope to depart and therefore opens up the possibility of greater divergence in a number of areas.
Changes to retained EU law
REULA also contains provisions providing new statutory powers to revoke or amend retained EU laws more easily. It facilitates the amendment of retained direct EU legislation, treating it as equivalent (i.e., downgrading it) to domestic secondary legislation for the purposes of amendment.
It also establishes a range of delegated powers giving Ministers and devolved authorities wide powers to restate, revoke or replace provisions of secondary retained EU law. Whilst these do not apply to primary legislation itself, some provisions in such legislation may be in scope, where they have been amended by subordinate legislation.
In the trade mark case discussed above, HHJ Tindal noted that REULA will not make EU law irrelevant, but stressed that the approach to be applied was one that was "a very long way indeed from 'EU Law Supremacy' and 'Indirect Effect'".
In the case itself, the effect of statutory interpretation on a domestic basis rather than under the principle of EU law's supremacy would not have made a difference to the outcome. However, after REULA, the detachment of UK and EU law, and potential deviation between the two, will rapidly become more significant. As for where this might leave a business thinking about using a competitor's mark as a keyword (as just one example), the Judge noted that it is "rather a legal minefield" and that it would be wise for such a business to seek advice, "especially in these legally as well as commercially uncertain times, as our legal system begins in earnest to detach from the EU".