The Retained EU Law Act 2023: the revolution is cancelled, but substantive change to UK law post-Brexit continues

The controversial Retained EU Law (Revocation and Reform) Act 2023 has now been enacted, bringing significant changes to the status of "retained EU law" (REUL) and broadly empowering ministers to restate, revoke or replace REUL with only limited Parliamentary scrutiny. Although the government switched its approach, from abolishing much of REUL to sunsetting a far more limited schedule of approximately 600 pieces of REUL, the Act still makes important alterations to the status, content and operation of REUL and contains broad ministerial powers that could be used to achieve post-Brexit deregulation.

A reminder…what is REUL?

When the UK left the European Union, an important policy decision was taken at an early stage: that all law derived from the EU which was already on the UK statute book, all EU law which was directly applicable in the UK, and EU case law, would remain part of UK law after Brexit. This duly happened at 11 pm on 31 December 2020, at the end of the Brexit "transition period".

The result was that UK law remained consistent and coherent after Brexit. The same rules and laws applied on the day after the end of the transition period as on the day before; otherwise, in the words of the government at the time, "significant gaps" would have opened up overnight in the UK statute book, creating confusion for businesses and citizens.

This body of law is broadly called "retained EU law" or REUL (here's a bit more of an explainer). It was always understood that – once REUL had been brought onto, or preserved on, the statute book – it would then be open, as the then-prime minister Theresa May wrote, "for democratically elected representatives in the UK to decide on any changes to that law, after full scrutiny and proper debate".

Why has the Act been controversial?

Until the summer of 2022, there was a broad consensus on this "gradualist" approach of letting current and subsequent governments review, and if thought necessary, amend or remove REUL.

However, the appointment of Jacob Rees-Mogg as Business Secretary in the late summer of 2022 challenged this consensus. His view was that retained EU law lacked democratic legitimacy; that it had not faced "the same levels of Parliamentary scrutiny as domestic legislation and was subject to key compromises made in Brussels"; and that consequently its removal from UK law should both be dramatic and made much easier.

These views were given legislative form by the publication of the Retained EU Law (Revocation and Reform) Bill. The bill originally made provision for profound changes to REUL by means of a sunset clause. This would have seen all EU-derived subordinate legislation (that is, secondary legislation made to implement the UK's EU obligations during its period of membership and the transition period, such as EU directives) and all retained direct EU legislation (that is, EU regulations, EU decisions directed at the UK or EU Member States generally and EU tertiary legislation) automatically repealed or sunset at the end of 2023, unless actively saved. It would have led to a vast amount of legislation being removed from the statute book instantly, at the close of 2023.

The sunset clause drew much criticism, both because of the legislative uncertainty it could have created and because of its associated and remarkable empowerment of the executive to remove and amend existing legislation.

It would have required a great work of legislative review to be carried out in a tight timeframe to identify the legislation to be sunset – as there was (and remains) no authoritative list of legislation affected by the bill. Failure to carry out this review thoroughly could have led to unintended sunsetting and the creation of unexpected legislative holes.

The bill bestowed wide powers on ministers, giving authority for a bonfire of what the bill's progenitors saw as EU legislative vanities. These issues were raised during the course of the bill's passage through Parliament. The House of Lords, mostly unsuccessfully, attempted to amend the bill to, among other things, introduce Parliamentary oversight of this exercise of ministerial powers.

What will be sunset at the end of 2023?

The demise of the Truss administration and the vociferous opposition to the bill in the Lords and in many parts of civil society prompted a government rethink.

In May 2023, Kemi Badenoch, the minister now responsible for the bill, announced that the government was adopting a "new approach" with respect to the sunsetting of REUL to "[provide] certainty for business". The result: the expansive sunset clause was replaced by a detailed sunset schedule (contained at schedule 1 of the Act), which sets out nearly 600 pieces of REUL that will be sunset at the end of 2023. If a piece of legislation is not listed in that schedule, it will not (all other things being equal) be repealed.

The schedule contains almost nothing of interest; the revolution has been cancelled. Indeed, this was picked up in both the Lords and the Commons, noting that the schedule contains "virtually nothing of any importance".

Although the new sunset schedule provides certainty, the government has nevertheless stated that it is "not a limit to our ambition for reform of EU law. We have the power to continue to amend EU laws so that more complex regulation can still be revoked or reformed as we require". Despite this, there are few clear plans or policy statements explaining what future changes might be made, and one senses that the fervour for post-Brexit legislative reform has much diminished, if not disappeared.

What does the Act do?

In brief, the Act provides for the following:

• the repeal of that legislation contained in schedule 1 at the end of 2023, with the power for ministers or devolved authorities to exclude specified legislation by the end of 31 October 2023;
• the repeal of directly effective retained EU rights and obligations at the end of 2023;
• the abolition of the supremacy of REUL in UK law at the end of 2023;
• the abolition of the general principles of EU law in UK law at the end of 2023;
• the conferral of broad powers on ministers to restate, revoke and replace secondary REUL and assimilated law; and
• the facilitation of the future departure from retained case law by domestic courts.

What status does REUL have, and what is 'assimilated law'?

Abolition of supremacy of EU law

For the remainder of 2023, the status of REUL does not change. However, at the end of 2023, the supremacy of REUL in UK law will be abolished.

This means that retained direct REUL will no longer take priority over "domestic law", and domestic law will not have to be read to give effect to retained direct REUL. A new rule of priority will be instituted: direct REUL will, as far as possible, be interpreted to be compatible with domestic law and, where there is conflict, domestic enactments will take priority. (These new provisions are still subject to the body of law implementing – and which continue to implement – the UK's withdrawal from the EU.)

Abolition of general principles of EU law

General principles of EU law will also be abolished at the end of 2023. These general principles currently form part of REUL; there is no definitive list, as they have been developed by the Court of Justice of the EU over time and are used to interpret EU treaties and legislation. Examples include proportionality, legal certainty and respect for fundamental rights.

Sunset of retained EU rights, powers and liabilities

The Act will also repeal directly effective EU rights and obligations at the end of 2023. These are sufficiently clear and precise rights, powers, obligations and liabilities contained in the EU treaties themselves, and in directives that were not successfully implemented. An example is article 18 in the Treaty on the Functioning of the EU, which prohibits discrimination on the grounds of nationality.

The renaming of REUL

To underscore the altered status of EU law, the Act also provides for REUL to be renamed at the end of 2023. So the REUL (which would include primary domestic legislation that is EU-derived) that remains on the UK statute books at the end of 2023 will be known as "assimilated law". Likewise, retained case law will be known as assimilated case law and so on (every appearance of the word "retained" will be replaced by "assimilated"). The ministerial powers contained in the Act also apply to secondary assimilated law.

What broad powers are ministers given?

Ministers are given substantial restatement, revocation and replacement powers by the Act with respect to secondary REUL (and, later, secondary assimilated law). Therefore, EU-derived primary legislation will not be affected by these powers, and nor will any legislation that is not EU-derived.

Powers to restate

Ministers are able to restate secondary REUL until the end of 2023 and, from the end of 2023 until 23 June 2026, they are also able to restate secondary assimilated law.

The whole or part of such legislation can be restated, but these powers are limited by the Act and can be used only to resolve ambiguities, remove doubts or anomalies or to facilitate the clarity or accessibility of the law. Ministerial restatements can use words or concepts that are different to those in the law being restated, giving ministers substantial discretion over the contents of restated legislation.

A restatement cannot include a blanket restatement of the principle of supremacy of EU law, general principles of EU law or the old test for courts to depart from retained case law. However, an equivalent effect of these principles may be produced.

Any restatement is not considered REUL and nor would it become assimilated law, and therefore restatements are not subject to the other ministerial powers of revocation or replacement.

Powers to revoke or replace

These powers allow ministers to revoke or replace secondary REUL until the end of 2023 and, from the end of 2023 until 23 June 2026, secondary assimilated law.

Such legislation can be revoked without replacement, revoked and replaced with something achieving the same or similar objectives, or even revoked and alternative provision made. These are wide powers which will give the executive broad discretion to revoke or replace secondary REUL (or secondary assimilated law), including the ability to make policy changes through revocation and replacement.

Any provision made through these powers must not increase the overall regulatory burden in a particular subject area. So it follows, the provision could be deregulatory. Ministers will also be able to make consequential amendments to other enactments to accommodate any replacement provision, including to the Act itself.

The Act also sets out a fast-track for making any regulations under these powers, which means that these powers can, in reality, be exercised with little or no Parliamentary scrutiny. These powers are controversial due to the substantial discretion they afford ministers, and they attracted much debate during the Act's passage through Parliament - but nonetheless remained in the Act unamended.

How will we know what REUL is being revoked and reformed?

In the summer of 2022, the government released the first iteration of its REUL Dashboard, which began to catalogue the legislation that it had identified to be REUL. This has been further updated, and future updates are promised during the course of 2023. Indeed, the Act now provides for its continued updating.

During the course of the Lords' review of the bill, an amendment was incorporated into the Act, which imposes a reporting obligation on the Secretary of State. The Secretary of State must report on the period between enactment and 23 December 2023 and every six month period until 23 June 2026. This means that within 30 days of the end of these periods, the Secretary of State must:

• update the REUL dashboard and provide a summary of the data contained in the dashboard;
• set out the progress that has been made in revoking and reforming REUL; and
• set out the government's plans to revoke and reform REUL in subsequent reporting periods, which must include a list of legislation that the government intends to revoke or reform.

If the Secretary of State fails to meet these reporting requirements then they must explain why in a written statement that must be laid before Parliament. Despite these reporting obligations, it remains to be seen how much detail of future reform plans will be reported. So far, no statement or indication of the government's reform agenda has been given.

Interpretation of case law: what can the courts do?

The Act stipulates that the Court of Appeal and the Supreme Court will not be bound by any retained EU case law, except where domestic case law has modified or applied the retained EU case law and that domestic case law is binding on the court.

If the Court of Appeal or Supreme Court wishes to depart from retained EU case law, it must, among other things, consider the extent to which the retained EU case law restricts the proper development of domestic law. This potentially gives the courts broad authority to depart from retained EU case law.

The Act goes further by broadening those courts' authority to depart from retained EU case law to encompass domestic case law that has been influenced by retained EU case law. The Court of Appeal or Supreme Court will be able to depart from domestic case law influenced by retained EU case law where they consider it right to do so. They would have to consider, among other things, the extent to which this domestic case law was influenced by retained EU case law, and the extent to which this domestic case law restricts the proper development of domestic law. This gives the courts potentially broad scope to depart from decades of established UK case law that has been influenced by retained EU case law, which could prompt re-litigation of previously established principles.

Although the Court of Appeal and Supreme Court will be able to depart from retained EU case law, lower courts will still be bound by it. The Act does, however, allow lower courts to make referrals of points of law on retained case law to a higher court if the points are of general public importance.

The provisions of the Act that empower the courts in this do not come into force until a commencement date is set by a commencement regulation. This date has not yet been set. The Act also allows ministers or devolved administrations to reverse the new rule of legal priority for specified pieces of legislation until 23 June 2026 and it is therefore possible that this new role of the courts might not come into force until after that date.

Osborne Clarke comment

The change from a sweeping approach to sunsetting REUL at the end of 2023 to a detailed sunset schedule provides certainty for businesses. This has greatly reduced the immediate impact of the Act. However, controversy and uncertainty have been running themes surrounding the bill since it was introduced to Parliament and this has not ended with enactment.

Use of powers

It is not yet clear what approach the government will take to using its powers of restatement, revocation and reform. Will it adopt a broad and general approach to deregulation, or will the powers be used more sparingly in specifically targeted areas? Will its approach be tempered by political realities, such as an upcoming general election? And how detailed will any reports made under the reporting obligations of the Act actually be?

In some areas post-Brexit consultations are already underway. For example, in the intellectual property context, the UK Intellectual Property Office is conducting a review of design law post-Brexit and, in the employment context, there is an ongoing consultation on proposed reforms to the Working Time Regulations and Transfer of Undertakings (Protection of Employment) Regulations. It is unclear how the new ministerial powers in the Act might play into any proposed legal changes here and elsewhere.

The role of the courts

It is also unclear what role the courts might take with respect to legal interpretation and how far, if at all, they might wish to depart from retained case law and affected domestic case law.

This means there is uncertainty as to whether what were thought to be settled legal issues may now be re-litigated. And it remains to be seen when the provisions facilitating the courts' departure from retained case law will actually come into force.

The removal of the 'special features' of EU law

With the abolition of supremacy of EU law and general principles of EU law, and the sunset of retained EU rights and obligations, the Act may be introducing another source of interpretive confusion, even if, as the useful Explanatory Notes to the Act imply, once REUL becomes "assimilated law", there is a logic in removing the "special EU law features" that attached to it.

Although one chapter of REUL has been closed with the Act's enactment, the saga of Brexit and the UK legislative system continues.