Goodbye To EU Law?

 The Retained EU Law (Revocation and Reform) Act 2023 (“REUL Act“)and the Financial Services and Markets Act 2023 (“FSMA 2023 “)received the royal assent yesterday.

These two pieces of legislation mark a step forward in the efforts to remove EU derived law from the UK Statute Book, except where required to comply with international obligations (for example, under the Northern Ireland Protocol to the Withdrawal Act or the Trade and Cooperation Agreement with the EU.)

The REUL Act 

The European Union (Withdrawal) Act 2018 (as amended) (“Withdrawal Act“) had already limited the application of EU law in the UK. After the end of the Brexit implementation period, at the end of 2020, only categories of law known as “retained EU law” survived.  These consisted of:

• UK Subsidiary legislation implementing EU obligations placed on Member States as part of the law in the UK jurisdictions, with suitable amendments and repeals to reflect that the UK was no longer a Member State but still needed law to deal with the rights and obligations of its citizens in the areas covered by these laws;
• Directly effective EU law, eg EU Regulations at that time applying directly in the UK, again with suitable amendments and repeals made on the same basis;
• Other rights, powers, liabilities, obligations, restrictions, remedies and procedures recognised and available under domestic law (usually by reason of s 2(1) of the European Communities Act 1972 (“ECA 1972″), subject to some limitations set out in the Withdrawal Act itself.

The Withdrawal Act provided for the removal of retained EU law over time according to processes set out in the Act and also set the relationship between decisions of the Court of Justice of the European Union (“CJEU“) and those of the UK Courts.

The REUL has overridden the scheme for repeal and replacement of retained EU law set out in the Withdrawal Act with effect from the end of 2023, and provided a new scheme, with the intention of accelerating the replacement of this body of law by purely domestic legislation.  It also changes the relationship between EU case law and decisions of the UK courts.

In its initial form the legislation proposed the sweeping abolition of all retained EU law with effect from the end of 2023, save to the extent that particular legislation was specifically saved, but this proved impractical, given the extent of retained EU law in so many important areas: at the time the UK left the EU as much as a third of UK law was derived from EU law. In its final form, the REUL provides for absolute revocation of some 600 measures, most of which are of minor importance to the UK.  The main changes therefore are those that affect how the remaining EU derived legislation will be replaced over future years:

1. All retained EU law remaining in force after 31^st December 2023 will be renamed “assimilated law”;  the Government dashboard lists each item of retained EU law and will give details of expected replacement or amendment, so that interested parties can identify the timetable for change and its likely course.  This will now include changes to rights etc currently in the third category of retained EU law (see above);
2. There will be a new process available until the end of 2026 for repeal or restatement of assimilated law by purely domestic law using the relatively simple process of statutory instruments (“SIs“) proposed by Government Ministers, although it is always possible to use primary legislation for this task (eg in the Procurement Bill currently before Parliament).  The proposed process was heavily criticised during the legislation’s passage through Parliament as not allowing sufficient parliamentary scrutiny or providing a flexible process if amendment was needed during the passage of an SI.  After considerable passing to and fro between Lords and Commons of amendments to address this concern, the Act was eventually passed in the form originally proposed by Government.
3. Except where an international obligation requires the UK to give primacy to EU law, domestic law will have primacy over EU law. The Act contains provisions aimed at encouraging the higher courts to depart more readily from CJEU rulings pre-dating the end of the implementation period, and (as before) domestic courts are not bound by CJEU rulings after that date.  Of course, domestic courts remain free to have regard to EU law as a foreign law and, if a court is convinced by a CJEU interpretation of the words of what will become an “assimilated law”, it can be expected that they will take a decision consistent with that CJEU interpretation.  While it is not clear whether the changes will actually result in much divergence in practice, it adds to legal uncertainty.  English courts, especially at a higher level, have a reputation for dealing well with difficult interpretational issues and it is to be hoped that common sense will prevail.  Meantime reliance on the precedent value of existing decisions on this body of law, both by domestic courts and the CJEU, are put in doubt until such time as higher domestic courts take new decisions in the field, a process which may be facilitated where a lower court identifies an “incompatibility”.

FSMA 2023

FSMA 2023 is a major piece of legislation affecting various aspects of financial services legislation in the UK and providing greater powers to Regulators in the interpretation and administration of this body of law.

One important thing which FSMA 2023 does is to provide a separate process for the repeal or replacement of the retained EU law listed in Schedule 1 to FSMA 2023.  The Act provides for the repeal of all this legislation, but the Treasury, by control of the implementation process in relation to each piece of retained EU law, can control when that repeal takes place and also has powers introduce replacement legislation to take effect immediately upon repeal.  Where repeal occurs after the end of 2023, other provisions of the REUL Act, including those changing the name of retained EU law to assimilated law, and affecting the precedent value of decisions relating to EU law, both domestic and CJEU, will affect these laws.

For further information, please contact:

Dorothy Livingston Herbert Smith Freehills

dorothy.livingston@hsf.com