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The Brexit ruling

Joyeeta Banerjee, Rajdeep Banerjee |

The European Union can trace its origin to the European Coal and Steel Community (ECSC) established in 1951 by the Treaty of Paris and signed by six states. Then in 1957 the Treaty of Rome creating the European Economic Community (EEC) was signed. In 1973, United Kingdom became a member of the EEC. The act of accession was based on Royal prerogative and did not require Parliamentary approval. The EEC law became a part of the domestic law of UK in accordance with the European Communities Act, 1972 (ECA) which was passed by Parliament few months before the joining. 

ECA 1972 gave effect to binding obligations and rights arising under the treaties. Section 2(1) of the Act provides "all such rights, powers, liabilities, obligations and restrictions from time to time created or arising by or under the Treaties, and all such remedies and procedures from time to time provided for by or under the Treaties, as in accordance with the Treaties are without further enactment to be given legal effect or used in the UK shall be recognised and available in law, and be enforced, allowed and followed accordingly." Then the Maastricht Treaty established the European Union (EU) in 1993. The Treaty on European Union (TEU) and the Treaty on the Functioning of the European Union (TFEU) along with their attached protocols and declarations are principal foundations of the EU. 

The European Court of Justice (ECJ) is the Apex Court in matters of European Union Law and it interprets EU law and ensures its equal applicability across all EU members. It was established by the Treaty of Rome in 1952 and the Amsterdam Treaty substantially increased its power. The conflict between EU law and domestic law has always been a contentious issue. 

Long back in 1964, the ECJ in Costa v ENEL [1964]ECR585 held that an individual could challenge a national law on the basis of its alleged incompatibility with European Community (EC) law. It declared that law stemming from the treaty, an independent source of law, could not, because of its special and original nature, be overridden by domestic legal provisions without being deprived of its character as community law and without the legal basis of the community itself being called into question. 

Again in Simmenthal [1978]ECR629 the Court held that provisions of national law which are incompatible with the European Union law will have to be set aside.

Factortame cases were very influential in the sense that for the first time the importance of EU law in UK domestic courts was bought to the forefront. The genesis of the dispute was the Merchant Shipping Act, 1988 (MSA) which mandated UK fishing vessels to be 75 per cent UK owned. A company of Spanish fisherman claimed that such a claim breached EU law and hence was invalid. Both the Divisional Court and the House of Lords (HL) held that English law did not contain any rule allowing a preliminary injunction against an act of Parliament even though it contradicted EU law.

Refusing the grant of interim relief, HL referred the question to the ECJ [R v Secretary of State for Transport, ex p. Factortame Ltd (No. 1) [1989] UKHL 1]. The ECJ in Factortame Ltd (No.2) [1990] 2 Lloyd's Rep 351 held that a national court had a duty to grant interim relief to safeguard alleged Community rights of individuals until the decision of the ECJ on the interpretation of Community law is available. 

In light of the ECJ ruling, HL in R v Secretary of State for Transport, ex p. Factortame (Interim Relief Order) [1990] UKHL 7 granted an interim injunction. It also observed that in passing ECA, 1972 any rule of national law could be overridden if found to be in conflict with any directly enforceable rule of community law. The ECJ then in Queen v Secretary of State for Transport, ex parte Factortame Ltd and others. [1991] 2 Lloyd's Rep 648 ruled that nationality requirements in the MSA were discriminatory and contrary to various articles of community law as it was a restriction on the freedom of establishment. 

Back in the UK the Court for a third time referred the matter back to the ECJ for deciding the conditions under which a Member State may incur liability for damage caused to individuals by breaches of Community law attributable to that State. This case was joined with Brasserie du Pecheur SA v Bundesrepublik Deutschland before the ECJ. 

Nine Justices of the ECJ in [1996] QB 404 en banc affirmed the right of reparation (approving the earlier judgment of Francovich v Italian Republic [1991] E.C.R. I-5357). It held that this right existed irrespective of whether the provision of Community law in question had direct effect. Also the principle applied to any case where a State breached Community law, irrespective of which organ of the State was responsible for the breach. Back to the Divisional Court, the Court held that the UK Government did commit a serious breach of community law in passing the provision of MSA and thus Factortame was to be compensated [1997] Eu.L.R. 475. The Court of Appeal [(1998) Eu.L.R.456] as well as the House of Lords [[1999] 4 All ER 906] upheld the order in favour of Factortame and thus these cases solidly founded the supremacy of EU laws over UK Laws.

On the Brexit issue, the UK Parliament passed the European Union Referendum Act in December 2015. A majority voted for leaving the EU. Referendum on EU membership is not legally binding but merely advisory. Thereafter question arose about the mode by which UK could leave the Union. The question before the courts concerned the steps which were required as a matter of UK domestic law before the process of leaving the EU could be initiated. 

Regarding the exit of any Member from the EU, the Lisbon Treaty in 2009 provided a route. Article 50 of the TEU provides that any member state may decide to withdraw from the Union in accordance with its own constitutional requirements. This provision displaced rules under public international law allowing a state party to denounce or withdraw from a treaty. Also Article 50(2) dictates that the member state must notify the European Council of its intention to leave. This notice cannot be given in qualified or conditional terms and once given it cannot be withdrawn. It is no doubt a sovereign function of the state to leave the EU. Also how the State reaches the decision is left to the national constitutional law. 

The European Union law is not concerned with it.  More specifically the question was whether a formal notice of withdrawal could lawfully be given by the UK government without prior legislation passed in the both houses of Parliament and assented by the queen. Whether the executive can bring about changes in domestic law by exercising the powers at the international level was the main issue before the law courts. 

The Divisional Court of England and Wales in  768 (Admin) ruled against the Secretary of State. The appeal was decided by the House of Lords in R (on the application of Miller and anr.) v Secretary of State for Exiting the European Union [2017] UKSC 5. 

The House of Lords observed that UK does not have a written constitution. But its constitutional arrangements are a combination of statutes, events, conventions and judicial decisions. Initially sovereignty primarily vested in the crown. The Bill of Rights (1688), Act of Settlement (1701), and the Act of Union (1706) were some landmark statutes which along with certain events which curtailed the Royal prerogatives and most of the powers became vested in the three principal organs of the state, legislature (two Houses of Parliament), executive and judiciary. Parliamentary democracy and the rule of law gradually developed and Parliamentary sovereignty became a fundamental principle of the UK constitution. 

As early as in the Case of Proclamations (1610) 12 Co Rep 74, Sir Edward Coke CJ said that the King by his proclamation or other ways cannot change any part of the common law, or statute law, or the customs of the realm. Even the Crown's administrative powers are now exercised by the executive, i.e. by ministers who are answerable to the UK Parliament. Even delegated legislation if not authorised by statute will be invalid even if they have been approved by resolutions of both Houses under the provisions of the relevant enabling Act [R(The Public Law Project) v Lord Chancellor [2016] AC 1531].

As held in Burmah Oil Co (Burma Trading) Ltd v Lord Advocate [1965] AC 75 Royal prerogative is only available for a case not covered by statute. This prerogative is now mostly restricted to declaring war and peace, diplomatic relations and making treaties. Any prerogative power may be curtailed by statute either expressly or by necessary implication (R v Secretary of State for the Home Department, Ex p Fire Brigades Union [1995] 2 AC 513 and AG v De Keyser’s Royal Hotel Ltd [1920] AC 508). Royal prerogative does not enable ministers to change statute law or common law [R(Bancoult) v Secretary of State for Foreign and Commonwealth Affairs (No 2) [2009] AC 453]. Also the power cannot be used to prevent the operation of a statute [Laker Airways Ltd v Department of Trade [1977] QB 643]. 

The power to terminate or withdraw from treaties is a part of the treaty-making prerogative [JH Rayner (Mincing Lane) Ltd v Department of Trade and Industry [1990] 2 AC 418]. Such power is not reviewable even by the courts [Council of Civil Service Unions v Minister for the Civil Service [1985] AC 374]. But the House of Lords in the present case observed that the decision to withdraw from the EU is not merely a decision relating to foreign affairs. 

UK follows a dualist approach which means that international law and domestic law operate in independent spheres. Treaties between sovereign states have effect in international law and are not governed by domestic law [Secretary of State in Council of India v Kamachee Boye Sahaba (1859) 13 Moo PCC 22]. Also treaties are not part of UK law and hence give rise to no legal rights or obligations in domestic law. Thus treaties are not self-executing and not part of English law unless and until they have been incorporated by statute. 

The 1972 Act authorised a dynamic process by which, without further primary legislation, EU law not only became a source of UK law, but actually took precedence over all domestic sources of UK law, including statutes. Thus EU law in EU Treaties and EU legislation passed into UK law. It is the EU institutions which are the relevant source of EU law. 

Dismissing the appeal, the House of Lords taking note of the observations in earlier cases like Blackburn v Attorney General [1971] 1 WLR 1037, Macarthys Ltd v Smith [1981] ICR 785, Pham v Secretary of State for the Home Department [2015] 1 WLR 1591, R (Shindler) v Chancellor of the Duchy of Lancaster [2016] 3 WLR 1196 thus held that as the EU Treaties not only concerned the international relations of UK, they were a source of domestic law and a source of domestic legal rights, the Royal prerogative to make and unmake treaties which operated wholly on the international plane could not be exercised in relation to the EU Treaties, at least in the absence of domestic sanction in appropriate statutory form. Thus prior parliamentary sanction is must before the Government can trigger Article 50.

The writers are Mumbai-based advocates and legal consultants.