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UK Lawmakers Reject Following ECJ Case Law After Brexit

by Jason Gorringe, Tax-News.com, London

16 November 2017


Lawmakers in the UK have voted against a proposed amendment to Brexit legislation that would replace a clause seen as "ambiguous" for a clear message that UK courts should temporarily follow rulings from the European Court of Justice after Brexit.

The UK Prime Minister Theresa May has made clear that one of the Government's main priorities in leaving the European Union is for the interpretation of law to no longer be provided by judges in Luxembourg but instead by courts in the UK.

The European Union (Withdrawal) Bill includes provisions to end the "direct" jurisdiction of the European Court of Justice. These provisions were subject to a parliamentary debate on November 15.

The UK Government has released guidance on the content of the Bill and in particular its provisions on the future role of the European Court of Justice's rulings in the UK in a report titled The European Union (Withdrawal) Bill: Supremacy and the Court of Justice, released on November 7.

It notes concern from legal professionals and from the President of the UK's Supreme Court about the wording of Clause 6(2) in particular, on how UK courts should treat rulings provided by the ECJ after Brexit.

According to the government report, Clause 6(1)(a) provides that domestic courts are not bound to follow judgments of the ECJ handed down after exit day. However, it does not prevent domestic courts from treating them as "persuasive authority," as they may currently treat judgments given by courts in other jurisdictions.

Clause 6(2) expressly permits a domestic court to refer to a post-exit ECJ judgment "if it considers it appropriate to do so," without defining a test for appropriateness.

The report notes the numerous concerns that have been raised about this provision, stating: "Sir Stephen Laws, Former First Parliamentary Counsel, described clause 6(2) as 'unhelpfully vague,' as it gives no indication of what might be considered 'appropriate.' Laws adds that 'that silence would be better than the creation, as in clause 6(2), of a new, but imprecise, statutory test of appropriateness.'"

"The Bar Council has argued that 6(2) would not be effective, as it reflects neither the 'UK courts approach to rulings on foreign law by courts of competent jurisdiction' nor their approach to judgments of the ECJ. The Bar Council suggested that the subsection should be deleted and replaced with a provision which instructs domestic courts 'may take account of but is not bound by' the ECJ's post-exit case law," the report noted.

The Institute for Government, meanwhile, has argued that ambiguity on this point "would risk leaving judges stranded on the front line of a fierce political battle."

Lord Neuberger, the President of the Supreme Court, likewise has warned that such broad discretion will leave judges in the UK open to political attack.

Other notable provisions in Clause 6 of the Bill currently include:

  • Clause 6(3), which provides that ECJ judgments given before exit day will be binding on most domestic courts when interpreting retained EU law;
  • Clause 6(3)(b), which instructs the courts to have regard to the limits of EU competences when interpreting retained EU law; and
  • Clause 6(4), which exempts the Supreme Court from the duty to follow existing EU case law, and in certain cases the High Court of Justiciary in Edinburgh. They have been instructed to treat prior EU case law as though it were there own case law.

The UK will continue to follow prior EU case law after Brexit, since it provides jurisprudence through which UK law is interpreted. However, the document notes Parliament could enact legislation to expressly repeal retained EU case law.

During a November 14 parliamentary debate on the matter, Stuart McDonald of the Scottish National Party (SNP) argued in favor of following future ECJ case law for a period after Brexit, stating that: "In the first months and years after exit, few cases in the ECJ will concern new EU rules that have nothing to do with the UK. Most will continue to relate to rules that existed before exit and that will in fact have been incorporated into the UK statute book by this Bill. In essence, such decisions by the ECJ are about how the law always was and should have been applied, including immediately prior to exit."

On November 15, UK lawmakers only narrowly decided to vote down a proposed amendment to Clause 6(2), put forward by the SNP in Amendment 137, that stipulated that: "when interpreting retained EU law after exit day a court or tribunal shall pay due regard to any relevant decision of the European court."

TAGS: court | compliance | tax | value added tax (VAT) | tax compliance | law | corporation tax | Luxembourg | United Kingdom | professionals | legislation | tax planning | transfer pricing | European Union (EU) | Europe | Other

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