Last-minute U-turn on scope for UK courts to diverge from EU case law
The new Government has decided against bringing in reforms designed to give UK courts more opportunities to diverge from EU case law. The Retained EU Law (Revocation and Reform) Act was due to come into force on 1 October but was shelved in mid September. This means that the position remains as follows:
- Since 2021, only the Supreme Court, the Court of Appeal and certain other courts at the same level as the latter have been able to depart from retained EU case law (i.e. pre-2021 judgments of the CJEU and domestic courts relating to retained EU law);
- The test for doing so remains "where it appears right to do so". This is the same test that those courts already apply when deciding whether to depart from their own prior decisions.
Why the rethink?
The Government has confirmed that the decision not to introduce this reform is part of the Government's policy on rebooting the relationship with the EU. The modified test for divergence under the proposed reforms, which were due to come into effect on 1 October 2024, would have required the UK courts to have regard to:
- the fact that decisions of a foreign court are not (unless otherwise provided) binding;
- any changes of circumstances which are relevant to the retained EU case law; and
- the extent to which the retained EU case law restricts the proper development of domestic law.
This could have been seen as an encouragement to UK courts to lean in favour of divergence, thus moving away from the European legal framework in their decisions. Alongside this change - and perhaps more importantly in practice - the changes would have created additional opportunities for courts to consider diverging from EU law, as explained in the textbox below.
Impact of not going ahead with procedural reforms
The reforms would have allowed lower courts to make references to, for example, the Court of Appeal or Supreme Court (as appropriate) asking them to consider departing from retained EU case law – whereas the current position is that such issues can only be considered if the parties are permitted to appeal from a judgment of a lower court (which would normally need to be on other grounds, rather than the considering whether to diverge from EU law). As well as creating numerous additional opportunities for divergence to be considered, this could have encouraged parties to seek references on points of EU law primarily as a tactic to increase delays and costs in litigation, especially if the threshold for a reference had been set at a relatively low level.
For more on retained EU law generally, see our detailed guide: Retained EU law: 10 key questions (which has been fully updated to take account of the REUL Act). For a reminder of all the changes made by the REUL Act (most of which took effect from 1 January 2024), see: Retained EU law: what's changed and why does it still matter?
Beyond Brexit
For more on navigating the post-Brexit legal framework and business environment, including what's changed on retained EU law and why it still matters, visit our Beyond Brexit Hub.
EU imports: more changes to timetable for introduction of border controls
According to media reports, as a part of the Brexit re-set, the UK Government is also considering a further delay to the introduction of post-Brexit border controls on imports of certain agri-food products from the EU. These products had been expected to face physical checks from 30 April 2024 but were granted an easement until January 2025. The Government is understood to be looking at extending the easement until July 2025, but, at the time of writing, this had not been confirmed.
Although the changes will relate primarily to the agri-food sector, they may result in transport delays for all types of EU imports around the time that they are introduced. As such, these dates are potentially relevant to any business that relies on imports from the EU.
Despite the delay on border controls on agri-food products, businesses should also note that from 31 October 2024, all goods imported from the EU will need to be accompanied by safety and security declarations (as is already the case for goods imported from outside the EU). Again, this deadline may cause a degree of disruption to supply chains. For more background, see Importing EU goods into the UK: what's changing?
Regulatory reform
Take a look at our Regulatory reform portal to check for the latest updates on changes to regulation across all areas on which we advise.
Labour's re-set with the EU: what do we know so far?
As noted above, the new UK Labour Government has sought to use opportunities such as the European Political Community summit in July to lay the foundations for a "re-set" of the UK's post-Brexit relationship with the EU. Many businesses will be hoping that this leads to improvements in the trading relationship, especially as the Trade and Co-operation Agreement with the EU (TCA) is widely regarded as sub-optimal for the UK in a number of areas.
Some commentators have highlighted the obstacles facing the UK in negotiating changes to the TCA. Whilst they are right to point these out and to warn against taking change for granted, our view is that there should be scope to deliver modest improvements to the existing framework. Although these are unlikely to have a game-changing impact, they can be expected to alleviate some of the trade frictions which followed the UK's exit from the EU Single Market and Customs Union. Businesses will need to be patient though, as change is unlikely to be speedy, particularly in the light of the following:
- At the time of writing, proposed members of the new European
Commission had only just been announced. A mandate to negotiate
changes with the UK is unlikely to be forthcoming until the new
College of Commissioners is in place.
- Following several years of fairly complex relations with the
UK, the EU will want to see more evidence that the new Government
is genuinely committed to improving the relationship and is taking
concrete steps to implement agreements such as the Windsor
Framework for Northern Ireland. Whilst this should not present an
insurmountable obstacle, it will require investment of time and
effort by UK Ministers.
- The UK Government itself may not be entirely unhappy with having to wait before it can open formal discussions with the EU regarding trade. Whereas UK exporters have felt the impact of Brexit since January 2021, delays to UK border controls (see section 2 above) mean that EU exporters to the UK are only just starting to experience the same difficulties as their UK counterparts. The longer it takes to open formal negotiations, the more time there is for EU businesses to complain to their own representatives about the adverse impact of Brexit – which may help to encourage the EU to the negotiating table and strengthen its willingness to get a deal for the benefit of its own exporters.
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