Consultation on ability of courts to depart from EU law after Brexit

Current legal position

The “implementation period” during which the UK must continue to comply with EU law ends on 31 December 2020, but that doesn’t mean EU law simply then “goes away”. Under the EU (Withdrawal Agreement) Act 2018, all “retained EU law” is converted into UK law to allow for continuity and legal certainty. This effectively takes a snapshot of EU law as at 31 December - both statute and case law - and ensures it continues to apply in the UK. Divergence from EU law is, however, permitted from this point onwards. Where case law is concerned, the question arises as to how and when the courts can do this?

Under the 2018 Act, courts and tribunals are not bound by any new decisions made by the European Court of Justice (ECJ) after the end of this year, although they can “have regard to” such decisions “so far as it is relevant to any matter before the court or tribunal”. In other words, if you’re having a spat about working time or data protection or similar and the ECJ issues a decision in 2021 which may be relevant to it, you can invite the court or tribunal to have regard to it - but they don’t have to follow it.

The 2018 Act goes further, by providing that the Supreme Court (SC) is not bound by any retained EU case law but can depart from it by applying “the same test as it would apply in deciding whether to depart from its own case law”. That means whenever the SC considers it right to do so - a very broad discretion. 

This was where things stood until January 2020 when, emboldened by its landslide election victory, the Johnson government passed the EU (Withdrawal Agreement) Act 2020. This amended the 2018 Act, holding out the promise of the UK moving further and faster away from EU law. It does so by creating the power to issue regulations allowing for lower courts and tribunals not to be bound by any retained EU case law either. 

What does the new consultation say?

The government’s consultation, Departure from retained EU case law by UK courts and tribunals, looks at how this power should be used. Open for six weeks, it seeks views on: the use of the government’s power to designate additional courts or tribunals that can depart from retained EU case law; how to specify the circumstances in which they may do so; the test they must apply; and which considerations should be considered relevant. The deadline for responses to the consultation is 13 August 2021.

The consultation document says that the government has identified two policy options which it considers “are capable of giving effect to the policy aims of enabling more courts to depart from retained case law, while at the same time maintaining legal certainty”. The first option is to extend the power just to the Court of Appeal (CA) and its equivalents in Scotland and Northern Ireland. The second option is to extend it also to the High Court (HC) and its Scottish and Northern Irish equivalents. The document says that both alternatives “would provide greater scope for the interpretation of case law to evolve to recognise the UK’s changing status” and that, if only the SC retains this power, cases may take longer to consider and the law will become “fossilised”. 

The consultation does not propose to extend the power to lesser bodies, such as the Employment Tribunal (ET), because “if every court and tribunal can depart from retained EU case law, the uncertainty created could be significant”. Views are welcomed, however, on whether other courts and tribunals should be within the scope, particularly for option 2. In the employment context, the Employment Appeal Tribunal (EAT) is the equivalent of the HC and so an obvious candidate if the government goes down this route.

Regarding the circumstances in which a relevant court or tribunal is not to be bound by retained EU case law, the consultation document leaves much to be decided. It recognises the risk of “re-litigating” areas covered by retained EU law such as “paid leave entitlement”, suggesting that courts will not be bound to the extent that retained EU case law is unmodified by the SC. The government is said to be “considering the extent to which [the court or tribunal] should be permitted to depart from retained domestic case law which relates to retained EU case law in circumstances in which they would not otherwise be able to”. This might cover, for instance, a domestic judgment given before 31 December 2020 applying an ECJ ruling. Views are sought on whether such courts and tribunals should be permitted to depart from judgments of courts superior to them, and in what circumstances. 

As regards the test to be applied for departing from retained EU case law, the consultation proposes that other courts and tribunals should use the same test as the SC - that is, when it appears right to do so. This is on the basis that it would promote consistency and minimise the risk of divergence across the UK, although this approach is questionable as it would involve a very broad discretion.

The government goes on to say that it is not minded to specify any considerations to be taken into account when deciding whether to depart from retained EU case law. Instead, flexibility should allow for “the fluid nature of factors which may be relevant in any given case, and the changing nature of public policy considerations over time”. 

What are the implications?

The government is right to be alive to the likelihood that restricting the power to depart from retained EU case law to the SC may mean that few ECJ cases get overturned by a judicial route, with the associated risk of EU jurisprudence becoming “fossilised”. Very few cases make it that far, with SC appeals limited to issues of public importance, and the costs involved are substantial. 

Nonetheless, the proposal to extend the power to the CA, and possibly the HC and other bodies, is not without its problems. It would let them depart from retained EU case law whenever they felt it “right” to do so, without any written test or set of principles to serve as a guide. It seems inevitable that judges would be led into politically sensitive areas, with uncertain results.

Irrespective of where the bar is set, there is clear scope for increased numbers of appeals and “re-litigation” of currently settled points of law. A claimant who dislikes the outcome of any decision where a judge has followed retained EU case law may feel strongly incentivised to pursue an appeal to a higher court comprising a panel of judges with the power to depart from it. 

It also seems inevitable that there will be much “exploratory” or “opportunistic” pleading of points relating to departure from EU case law in litigation. Even if powers are restricted to the SC and CA, cases may start out with this appeal point hanging over them. In addition, much remains uncertain about the precedent value UK cases will have when based on EU case law, and when lower courts might be able to depart from higher UK judgments on this basis. Inevitably, the more bodies there are with powers to depart from EU law on a broad, discretionary basis, the greater the issues there will be with legal certainty and predictability.

In the employment law context, the ECJ’s case law on holiday pay has been truly game-changing. Its decisions effectively outlawing “rolled-up” holiday pay have been the source of much frustration, and a departure from them may be popular. Cases saying that holiday pay must include regular commission and overtime are much more contentious, however, and whether it would be “right” to overturn them is an inherently political question. The same is perhaps true of the ECJ’s judgment requiring employers to maintain meticulous records of their employees’ working time. 

Intellectual property is another area ripe with issues that could be subject to “departure from retained EU case-law” by the UK courts. One example is the extent to which UK copyright law offers protection for product designs. The UK’s copyright legislation was designed to restrict such protection, with works needing to fall into relatively narrow categories of work (e.g. “artistic craftsmanship”) and fulfil high hurdles (e.g. case-law requiring both craftmanship and aesthetic appeal). Protection for product designs in the UK has traditionally been left largely to the separate regimes specifically for designs.

Recent ECJ decisions have called such approaches by EU member states’ national laws into question. The ECJ has said that the only test required for a product design to benefit from copyright protection is the same originality test that applies to all copyright works – namely, relevant creativity on the part of the author. No additional requirement, such as one of aesthetic appeal, can be imposed by a member state’s law. Interestingly, there is a CA case on copyright protection for a fabric design which raises precisely these issues and is currently listed to be heard by 31 March 2021 (Response Clothing Ltd v Edinburgh Woollen Mill Ltd). This could provide an early test for the forthcoming new rules, if the power to depart from retained EU law is extended.