Brexit: Banking and Financial Services

Sophie Shaw

On Thursday 10th November, Brick Court hosted the latest in its series of panel discussions on the legal implications of Brexit. The event was moderated by Mark Hapgood QC, who opened by observing that one of the most important issues arising from Brexit is the impact it will have on banking and financial services in the UK. He posed two questions: what degree of risk is posed to the banking and financial services industries by leaving the EU, and what is the best way to mitigate that risk? Continue reading

The Brexit Case – an alternative view from Andrew Henshaw QC

The Divisional Court’s Miller decision has been much praised in some quarters and condemned in others, mostly on grounds that are irrelevant to the legal reasoning involved.  But how compelling is that reasoning?  I respectfully offer an alternative view.

  1. The Crown, ie the Government, prima facie has the common law power to make, unmake, amend and exercise rights under treaties, including such termination rights as treaties may contain.
  2. Treaties take effect in our domestic law only when, and to the extent that, Parliament has legislated to provide for that to happen.
  3. Parliament may decide to legislate to give effect to a treaty in several ways. In particular:
    1. It may enact provisions designed to give effect to the treaty but without referring to the treaty (eg the Evidence (Proceedings in other Jurisdictions) Act 1975, implementing but not mentioning the Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters).
    2. It may expressly set out provisions from the treaty and provide that they shall have effect (eg the Diplomatic Privileges Act 1964 and the Human Rights Act 1998).
    3. It may instead simply refer to the treaty, or even state that treaties may be specified by secondary legislation, and provide that the treaty provisions shall have effect, or a specified effect, in domestic law (eg the Taxation (International and Other Provisions) Act 2010, under which numerous double taxation treaties are given effect, and the European Communities Act 1972 (“ECA”).
  4. It is not at all self-evident that a choice of method C necessarily and of itself implies that Parliament has chosen to strip the Crown of the powers it would otherwise have, on the international plane, to unmake, amend or exercise rights under the treaty in question.
  5. It is true that where method C is used, a change on the international plane may alter the content of domestic rights. But that results simply from Parliament’s own decision to legislate by attaching the domestic law to the coat tails of the treaty. It is no different in principle from any of the other common situations where Parliament chooses to enact a provision whose content or effect depends on the actions of a third party, such as the action of a Minister in making secondary legislation.
  6. Therefore, one cannot conclude that the Crown’s ordinary international powers have been stripped away unless some other, specific provision of the domestic legislation expressly or by necessary implication so provides. It is incorrect to ask, as the Divisional Court did, whether Parliament must be taken to have intended that the Crown should retain its ordinary powers (Judgment § 56). Similarly, the Government’s implied condition argument recorded at Judgment § 93(3) appears to start from the incorrect premise that the ECA prima facie precludes the ordinary exercise of the Crown’s international powers.
  7. The general principle that the Crown lacks the power to “alter the law of the land”, or confer or take away rights, upon which the Divisional Court laid such stress, is of no real assistance. It begs the question of what the rights are. The natural starting point is that by choosing method C to give effect to a treaty, Parliament has chosen to make domestic law track the international law, whatever it may be, as opposed to implicitly stripping away the Crown’s powers at the international level.
  8. It is difficult to find any specific provision in the ECA that fetters the Crown’s international powers either expressly or by necessary implication, applying the appropriately strict test set out in the De Keyser line of cases. On the contrary, the language in section 2(1) giving effect in domestic law to “[a]ll such rights, powers, liabilities, obligations and restrictions from time to time created or arising by or under the Treaties … as in accordance with the Treaties are without further enactment to be given legal effect or used in the United Kingdom(my emphasis) seems at least equally consistent with the view that Parliament has not, sub silentio, taken the radical step of removing the Crown’s ordinary powers in international relations. (Contrast section 6 of the European Parliamentary Elections Act 1978, which while in force expressly prohibited the Crown from ratifying any increase in the powers of the European Parliament without the approval of an Act of Parliament; and sections 2 and 3 of the European Union Act 2011 expressly requiring Parliamentary approval for amendments to the TEU or TFEU.)
  9. Nor does the view that Parliament did intend to limit the Crown’s common law powers follow ineluctably from the notion that the ECA is a “constitutional statute”. The ECA is unusual in providing that it is not subject to implied repeal by later statutes, but like any other statute it can be altered by express language or necessarily implication from a later statute. More relevantly, such special status as the ECA may have does not answer the question of whether it is bound to be interpreted as precluding any alteration of the rights on the international plane which it incorporates by reference, or as precluding the exercise of the express international law right contained in Article 50.
  10. Nor does the answer follow from the fact that the ECA requires legislative intervention, in one form or another, to give effect to new EU treaties as and when they are made (Judgment § 93(8)). Parliament might have provided that any new treaties altering those listed in the ECA would automatically have effect in domestic law, but did not so. As a result, further legislation is required for any new treaties to have effect in domestic law in any dualist system such as ours. That is, as the Divisional Court said, a “practical matter” (Judgment § 41) because without such intervention the UK would immediately be in breach of the international obligations it had assumed. It does not follow, however, that the Crown is constitutionally prohibited from entering into such new treaties without the prior sanction of primary legislation.
  11. It is even harder to find any specific feature of the Act that is consistent with – and consistent only with – the conclusion that the Crown cannot exercise the express right provided by Article 50 to terminate the EU Treaties.

I would therefore venture to suggest that the decision of the Divisional Court is incorrect. This is undoubtedly a difficult area of law, as well as an obviously highly significant case, and the Supreme Court’s decision will be of considerable importance legally as well as for the Brexit process.

These are the author’s personal views and may not reflect those of other members of Brick Court Chambers.

Andrew Henshaw QC

Brexit: FRAND, Pharmaceuticals and Intellectual Property

Sophie Shaw

On Tuesday 1st November, Brick Court hosted the latest in its series of panel discussions on the legal implications of Brexit. The event was moderated by Lord Hoffmann, who opened the evening by observing that IP is likely to be one of the areas of law in the UK that is most affected by Brexit.  Continue reading

Government loses Article 50 judicial review

The Divisional Court has handed down its judgment this morning on the Article 50 judicial review proceedings on which we have been reporting. The judgment is here, a summary here, and hearing transcripts here. The name of the case is R (Gina Miller & Dos Santos) v Secretary of State for Exiting the European Union [2016] EWHC 2768 (Admin). The judges were the Lord Chief Justice (Lord Thomas of Cwmgiedd DJ), the Master of the Rolls (Sir Terence Etherton MR) and Lord Justice Sales.

The Divisional Court has decided that the Government may not use its Executive prerogative powers to give notice of its intention to withdraw the United Kingdom from the European Union under Article 50 of the Treaty on European Union, because this is a matter for Parliament.  Giving notice under Article 50 will inevitably result in the removal of some fundamental rights in EU law enshrined in domestic law by Parliament in the European Communities Act 1972.  The UK constitution does not permit the Executive to alter domestic law by removing those fundamental rights through exercise of its prerogative powers; only Parliament could do so.

The Government has said that it will appeal against the judgment, the Divisional Court issued a certificate permitting the case to “leapfrog” straight to the UK Supreme Court, and the Supreme Court has indicated that it will hear the case over 4 days during the week of 5th December 2016 with a larger than usual panel of judges.