Brexit and business: the Repeal Bill has been published – why does it matter?

“It is one of the most significant pieces of legislation that has ever passed through Parliament and is a major milestone in the process of our withdrawal from the European Union” – David Davis, Secretary of State for the Department for Exiting the European Union, announcing the Repeal Bill

The much-anticipated European Union (Withdrawal) Bill (better known as the Repeal Bill) was published on 13 July 2017, along with explanatory notes. The purpose of the Bill is to incorporate all EU law into UK domestic law as at the date of Brexit.

Why is this important?

The Repeal Bill is the UK government’s principal means of providing certainty as to what the UK statute books will look like at the date of Brexit. Having certainty on this is of critical importance to all players in the UK economy.

The Bill will save and incorporate all EU law in and into UK domestic law as at the date of Brexit. In turn, EU law which has been incorporated into UK domestic law will then be able to be amended or repealed after the date of Brexit by UK legislators.  That will fulfil the government’s stated aim of ‘taking back control’ of UK laws.

What is in the Repeal Bill?

The main features of the Repeal Bill are:

Converting EU law to UK law

The Repeal Bill repeals the European Communities Act 1972 (the ECA) as at “exit day” (a date to be appointed by a government minister, which will be the date that the UK formally leaves the EU). As of that date, no new EU directives, regulations, case law or tertiary legislation will have effect in the UK.  Existing EU law, though, will be preserved in the following way:

• All ‘EU-derived domestic legislation’ that is currently effective in UK law will continue to apply as it currently does;
• All ‘direct EU legislation’ (for example, EU regulations and decisions), so far as operative immediately before exit day, will from then form part of domestic UK law;
• Any “rights, power, liabilities obligations, restrictions, remedies and procedures” which are available in domestic law by virtue of section 2(1) of the ECA on the day before exit day continue in force on and after exit day.

One important point of clarification is that direct EU legislation will only be brought into domestic law if it is both in force and in effect as at exit date.  EU regulations will typically be passed (and referred to as being “in force”) on one date but it may be some time (often up to two years) before they actually take effect.  Any such regulations that have been passed but are not yet in effect as at exit date will not become part of UK law.

Status of the European Court

The Repeal Bill provides that, as at exit day, UK courts will no longer be bound by new decisions of the Court of Justice of the EU, and will no longer be able to refer any matters to the CJEU, for example to address matters of EU law. The latter provision puts the UK potentially at odds with the EU, which as part of its negotiating objectives wants the CJEU to retain jurisdiction to address any issues relating to EU law that also relate to facts that take place before the UK leaves the EU.

In order to preserve the law as it stands on exit day, CJEU decisions issued before exit day will be treated as Supreme Court decisions. This means that they will continue to be binding, except on:

• The Supreme Court; or
• The High Court of Justiciary (the supreme criminal court in Scotland), when acting as a court of appeal.

The Supreme Court or the High Court of Justiciary would still only be able to depart from retained EU case law based on the same test as if departing from previous case law of that court.

Giving powers to make secondary legislation

The parts of the Repeal Bill that are likely to cause controversy are the so-called “Henry VIII” powers that it grants to ministers to amend EU-derived laws by secondary legislation, which entails less parliamentary scrutiny than Acts of Parliament.

The practical point that these powers are intended to address is that not all EU-derived law can simply be imported into domestic law without amendment. Examples given in the Bill are where EU law refers to EU institutions or regimes that will no longer be applicable to the UK, or where the provisions are based on reciprocal arrangements with other EU Member States that may no longer be in place post-Brexit.

Recognising that it would be impossible to provide for all such amendments within one Act, the Repeal Bill confers powers on ministers to pass secondary legislation. The Repeal Bill empowers ministers to pass secondary legislation (which can make any provision that could be made by an Act of Parliament) as the minister considers appropriate “to prevent, remedy or mitigate –

• any failure of retained EU law to operate effectively, or
• any other deficiency in retained EU law”

The Repeal Bill goes on to give a number of examples of why retained EU law may be considered “deficient”, such as where it confers powers on EU institutions that will no longer have functions in relation to the UK. However, these examples are illustrative only, and there is no prescribed test for what would constitute a “failure” or “deficiency” in retained EU law.

The Repeal Bill also gives ministers powers to pass secondary legislation that is needed:

• “to prevent any breach, arising from the withdrawal of the United Kingdom from the EU, of the international obligations of the United Kingdom”; and
• “for the purposes of implementing the [UK/EU] withdrawal agreement if the Minister considers that such provision should be in force on or before exit day.”

The powers granted under the Repeal Bill will only apply for two years from exit day, meaning that government departments are going to be under some pressure to understand and correct any deficiencies, and the opportunity for Parliament to scrutinise any changes may be limited.

Whilst it is undoubtedly necessary for the Repeal Bill to provide for at least some Henry VIII powers, the form, extent and operation of those powers are likely to be subject to significant opposition when the Bill is debated in Parliament.

The extensive use of secondary legislation could also open the door to a fresh wave of Brexit-related legal challenges. Unlike an Act of Parliament, secondary legislation, which is subject to less parliamentary scrutiny, is capable of being challenged by way of judicial review.

Charter of Fundamental Rights

While the Repeal Bill imports a great deal of EU law into domestic effect, it does not give effect to the EU Charter of Fundamental Rights. The Charter of Fundamental Rights applies to national governments of EU Member States, which are bound by the Charter when implementing or applying EU law.

The Repeal Bill seeks to preserve fundamental rights by expressly providing that ministers exercising their Henry VIII powers under the Repeal Bill cannot amend, repeal or remove any part of the Human Rights Act (which is part of domestic law), or any subordinate legislation made under it. Nevertheless, opposition parties have already indicated that they will look to amend the Bill so as to import the Charter of Fundamental Rights into domestic law.

What is ahead for the Bill

Parliament will need to pass some sort of Act that implements the fundamental objectives of the Repeal Bill. The alternative would leave major holes in UK legislation that would cause real difficulty for business, citizens and the government alike.

However, the passage of the Bill is unlikely to be smooth. When it comes to be debated in Parliament, which will not be until the autumn, the opposition parties, and possibly also some backbench Conservative MPs, have indicated that they will look to introduce a number of amendments to the Bill.  Before its publication, the Labour party had already issued a statement, criticising the Bill’s approach to issues such as devolution, the protection of workers’ and consumers’ rights and the use of Henry VIII powers.

What now?

The Repeal Bill is just starting its legislative journey. Nevertheless, its publication is a significant development, and also comes on the same day that the UK Department for Exiting the EU issued three position papers, on: ongoing judicial administrative proceedings; nuclear materials and safeguards; and privileges and immunities.

If you have not already been doing so, now is the time to start planning for Brexit and understanding the issues that will affect you, so that you can prepare your business and also engage with the regulators and government departments that the Repeal Bill is looking to empower, to help to shape the regulatory environment that you operate in.