Challenges to Validity of EU Instruments (EU Exit) Regulations 2019
(Limited Text - Ministerial Extracts only)
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Lord Callanan
That the draft Regulations laid before the House on 12 February be approved.
Relevant document: 18th Report from the Secondary Legislation Scrutiny Committee (Sub-Committee A)
The Minister of State, Department for Exiting the European Union (Lord Callanan) (Con)
My Lords, I am grateful for the opportunity to be here today to discuss the regulations presented before you. These regulations are part of the Government’s wider programme of secondary legislation before exit day to ensure that the UK’s legal system continues to function effectively when we leave the European Union.
The principal aim of these regulations is to ensure the effective continued delivery of justice as we leave the EU. It is clear that in separating our legal systems we must absolutely make sure that those who have sought justice through our domestic courts are not adversely affected by our exit from the EU. These regulations will guarantee that validity challenges originating in our domestic courts before exit will continue to be heard and that claimants can be assured that domestic courts will be able to hear them, independently of the Court of Justice of the European Union. These regulations would take effect when EU law ceases to apply to the United Kingdom. For example, if an implementation period is agreed, they would take effect at the end of the implementation period.
I will take a moment to remind noble Lords of the legal mechanics of validity challenges as they currently stand, before going into the details of what these regulations will change once we leave the EU. The right to challenge whether or not a law was made “validly” by the EU is currently set out in the Treaty on the Functioning of the European Union, referred to as the TFEU. The grounds are set out in Article 263 and they are: lack of competence; infringement of an essential procedural requirement; infringement of the treaties or of any rule of law relating to their application; or misuse of powers. In effect, such challenges are the EU equivalent of judicial review. It is important for noble Lords to be aware that rulings in validity challenges are always given by the CJEU. National domestic courts, both in the UK and other EU member states, do not have the legal jurisdiction to make judgments on these cases.
There are two ways in which cases make their way to the CJEU for judgment. In the first instance, claimants may bring their cases directly before the CJEU. Let me be clear: these regulations do nothing to amend or remove that right for UK nationals who may wish to pursue that route of challenge after our exit. Any UK national who complies with the relevant requirements in the TFEU and who wishes to take a case to the CJEU to challenge a relevant EU law on these grounds will continue to be able to do so after exit. However, post-exit CJEU judgments on validity will not of course apply to the UK.
I would like to highlight that the majority of challenges brought in this manner directly to the CJEU by UK-based claimants are against individual decisions that affect one business or individual, and are not generally against legislation of general effect. My officials have identified alternative domestic mechanisms for challenge post exit in the majority of these cases.
The other way in which validity challenges come before the CJEU is via the national domestic courts. During proceedings, questions of validity may arise, and where and when they do—unless judges consider that the question is so obvious that no reasonable doubt is left—national courts must pass these questions on to the CJEU for judgment. This is done via the preliminary reference mechanism. After judges have sent off for a ruling, the domestic case is put on hold until the CJEU makes its judgment. In legal parlance, the case is stayed or “sisted”—not “sistered” but “sisted”.
Baroness Hayter of Kentish Town (Lab)
My Lords, I also thank the Minister for introducing this. As the noble Lord, Lord Beith, said, it is to correct something in paragraph 1 of Schedule 1 to the 2018 Act—which was perhaps a slightly erroneous judgment made at the time. It affects only a handful of cases, but nevertheless we certainly think that the ability to bring those cases is important.
I have a few questions. One arises from the last point made by the noble Lord, Lord Beith. My assumption is that this is a no-deal SI. Can the Minister confirm that, if we get a deal with a transition period—for the sake of this argument, if we get a deal there is bound to be a transition period—then the CJEU will, once we have amended the 2018 Act in the withdrawal and implementation Bill, have a continuing role in these matters? Can he also confirm that this is a no-deal SI, and that no deal is the only situation in which this SI would have a role?
If we have a deal, will paragraph 2.1 of the Explanatory Memorandum not be a bit misleading? It suggests that there will be no role for the CJEU. In a deal situation, there would be a role for it, not just in the transition but afterwards, because of the provisions concerning EU citizens’ rights. Can the Minister confirm that this SI would not be needed if we have a deal and a transition period? In fact, now that the House of Commons has voted against us leaving without a deal, perhaps the Minister could explain in what circumstances this SI would actually be needed. Is it correct that this SI would not be needed if we have a transition period?
My second question is absolutely not a trick question; it is asked out of my own ignorance. As the Minister explained, the courts will be mandated to inform the relevant Government of a case coming before them. Can the Minister inform the House whether there are any other instances in which any of our courts have an obligation to inform the Government of proceedings that are started before them?
Paragraph 10.7 of the Explanatory Memorandum recognises that we could find ourselves in the position—this point which has just been touched on—where some former EU legislation which has subsequently been ruled invalid by the CJEU remains on the UK statute book after we have left. Can the Minister outline how either his department or a successor department would monitor future CJEU rulings after Brexit to keep abreast of any such rulings which might be relevant to the UK statute book?
Finally, there is the important issue of compensation, which was only slightly touched on by the noble Lord, Lord Beith. The 2018 EU withdrawal act makes it clear that, after exit day, there is no right to damages under the current Francovich rules, except during a two-year grace period for cases that relate to events that occurred before exit day. Under the regulations being considered today, should our domestic courts find that any of our retained law is invalid under the sort of terms outlined, would there be a similar right to damages for two years similar to those allowed under the 2018 Act? That covers cases in which the event started before exit day, but even for cases which are pending on exit day—I think there are three at the moment—if it were found that those laws were invalid, would a Francovich-type compensation be available?
Lord Callanan
I thank the noble Baroness, Lady Hayter, and the noble Lord, Lord Beith, for their contributions, and I pay particular tribute to the noble Lord, Lord Beith, and the noble Baroness, Lady Taylor, who is not in her place at the moment, for the interest that they have taken in this important matter. We are extremely grateful for their contributions and for their engagement with officials—I know that the noble Lord has taken a close interest in this and I thank him for that.
As I set out in my opening statement, these regulations aim to ensure the effective delivery of justice as we leave the European Union. The regulations will do this by giving domestic judges a temporary jurisdiction to rule on validity challenges to EU laws in domestic courts after exit for cases that have begun before exit.
I will now deal with the questions. The noble Lord, Lord Beith, made some extremely valid points on what might happen if, after exit, the CJEU rules that EU legislation was invalidly made. Would this invalid legislation remain on the UK statute book? As he acknowledged, the short answer to his question is yes. Decisions made by the CJEU will not affect retained EU law. Even if the CJEU makes a decision to void regulation after exit day, as he pointed out, that law would remain on the UK statute book as retained EU law. This is because the EU withdrawal Act takes a snapshot of EU law as it stands on exit day. All law on the UK statute book at that point in time will be valid, as a result of it being made law under the EU withdrawal Act. After exit, it will be for Parliament to decide if and how to diverge from EU law.
I take the noble Lord’s point that, although unlikely, this may result in a law being declared void in European Union countries but not declared void in the UK. It is just a matter of policy disagreement. We would prefer that, after exit day, the Court of Justice of the EU is not given the power to strike down what will in effect be UK law at that point. However, I am sure that if such a circumstance arose, Parliament would want to take a look at the case, see if similar provisions should be made in the UK and see if the law should be changed or deleted.
In response to the noble Baroness, Lady Hayter, I can confirm that, in the unlikely event of this happening, we will of course closely monitor all pending cases that come back to Parliament with potential changes to any retained EU law. Building on that response, the rulings of the CJEU will not be binding on the UK. It would be for Parliament to decide whether to seek changes to mirror CJEU judgments.
The noble Baroness also asked about damages. Damages are already determined by UK courts. Nothing in this SI changes that scenario.
To answer both the noble Lord, Lord Beith, and the noble Baroness, Lady Hayter, the SI will be required in both a deal and a no-deal scenario. Therefore, if we agree a deal and pass a withdrawal Act, the effect of the SI will be delayed until the end of the implementation period.
The noble Baroness, Lady Hayter, also asked a good question about whether there are other instances where the courts must notify the Government of cases that are before them. The courts must issue a notice to UK Ministers and Ministers from the devolved Administrations in cases where it plans on making a declaration of invalidity. This is similar to the requirement under Section 5 of the Human Rights Act, when domestic courts issue declarations of incompatibility under that Act.
Without these regulations, no court in the UK would have the requisite jurisdiction to consider the validity of an EU instrument. Domestic courts would therefore find themselves at an impasse where a ruling on validity is simply not available, either domestically or from the CJEU. This would in turn prevent the effective delivery of justice. These regulations are intended to avoid such a clearly undesirable scenario. As I said in my introduction, my department has worked closely with the Ministry of Justice to make sure that the regulations are workable. The judges and Her Majesty’s Courts & Tribunals Service are well aware of these changes.
As I also said, these regulations provide that a Minister of the Crown, a Scottish Minister or a Welsh Minister or a Northern Ireland department may become a party to any cases concerning validity at any point. There are no impediments for the devolved Administrations to do so; they need only give written notice to the court. Again, this is in recognition of the fact that they may have an interest in the outcome of the case.
Although the number of validity challenges will be extremely small, it is none the less vital, as the noble Lord, Lord Beith, pointed out, that we ensure that justice can still be delivered in the few cases in which these regulations might apply.