Would the Constitution survive a
No-Deal Brexit? The Internal Market Bill
and its legal controversies

3 December 2020

The Internal Market Bill (the “Bill”) has caused a dramatic fallout at home and abroad. It has faced massive defeats in the House of Lords over the month on November. It was the reported reason behind the UK’s most senior legal civil servant announcing his departure from the Government Legal Service. The UK’s five living former Prime Ministers, from both Conservative and Labour parties, have all spoken out in criticism of the Bill and its constitutional implications. The EU has launched a legal action against the UK in respect of the Bill. Across the pond, President-elect Joe Biden warned against any undermining of the Good Friday Agreement by the Bill; House of Representatives Speaker Nancy Pelosi said that if the Bill were to risk the Northern Ireland peace process, this would jeopardise any chance of a UK-US Free Trade Agreement passing the US Congress.
 

Despite the backlash, at the time of writing the Government has said it will proceed in the Commons with the Bill. It intends to make no amendments to the provisions rejected by the House of Lords. In this blog, we outline at a high level the Bill’s key controversies and the resulting fallout, focusing on the UK constitutional law aspects of the Bill.

What is the Bill about?

The Bill paves the way for a no-deal Brexit by providing for the UK’s internal trade rules in the event that this happens. If a deal is struck with the EU, the Bill will not be needed. The Bill provides for the United Kingdom’s internal market after 1 January 2021 - when the post-Brexit transition period ends – by seeking to enable the free movement of goods and services across England, Scotland, Wales and Northern Ireland under the no-deal scenario. Currently the rules and regulations that set minimum standards to allow the free movement of goods and services are set in Brussels. The Bill sets the path for this power to pass to London and the devolved administrations. It provides in order that from 1 January the panoply of rules that underpin trade – from food labelling, to air quality and support for farmers – will be set domestically. Trade can then continue to flow freely across the UK without need for customs checks or other trade controls between the four nations.

The key controversies arising from the current draft of the Bill are set out here, and we explore them in more detail below.

  1. The Bill breaches the EU Withdrawal Agreement and Good Friday Agreement.
  2. The Bill cuts across the current devolution settlement.
  3. The Bill attempts almost totally to block any legal challenges against it by ousting the jurisdiction of the High Court. The ouster clause it mechanises to do so is extraordinarily broad.

The Withdrawal Agreement and Good Friday Agreement

The current draft of the Bill breaches the international agreement concluded between the EU and the UK 12 months ago: the Withdrawal Agreement. The Northern Ireland Protocol (the “Protocol”) is part of the Withdrawal Agreement. Its key driver is to avoid a ‘hard border’ between Northern Ireland and the Republic of Ireland despite the former leaving the EU and the latter remaining in it, in order to preserve the Good Friday Agreement and the delicate peace process intact. To do so, the Withdrawal Agreement provides that goods that flow from Great Britain to Northern Ireland will be checked in the Irish Sea rather than on the border, for compliance with standards to protect the EU’s single market and customs union (since these goods could then easily flow to the Republic). This was a painstakingly negotiated political mechanism, debated ad nauseum by the UK and EU teams. Its predecessor, the backstop, ended Theresa May’s premiership.

Clauses 44 to 47 of the Bill breach the Protocol and Withdrawal Agreement. They do so because:

  1. Clause 44 gives Ministers the power to "disapply or modify" exit procedures, including those set out in the Protocol for goods moving from Northern Ireland to Great Britain. This could theoretically mean that aspects of the careful mechanisms negotiated in order to make such procedures compliant with the letter and spirit of the Good Friday Agreement could be covered in red pen retrospectively, breaching obligations under the Withdrawal Agreement.
  2. Clause 44 of the Bill would allow the Secretary of State to make regulations that disapply or modify the effect of Article 10 of the Protocol; this concerns state aid which was another key area of contention between the EU and UK in negotiations. 
  3. Clauses 44 and 45 of the Bill would also allow the Secretary of State to make regulations on the interpretation of Article 10 regarding state aid, including that it not be interpreted in accordance with EU law. This would be in direct contravention of Article 13(2) of the Protocol which provides that interpretation must be in accordance with EU law.
  4. Clause 47 of the Bill provides that clauses 44 and 45 will have effect “notwithstanding any relevant international or domestic law with which they may be incompatible or inconsistent”. Any secondary legislation made under these clauses is also not to be considered unlawful because of incompatibility or inconsistency with international or domestic law.

A number of provisions of the Bill therefore aim to enable the Government to ignore and supersede the Withdrawal Agreement. This is despite the fact that this was a binding international agreement concluded with the EU entered at the end of last year. The legal community has, generally, reacted with astonishment at this undermining of the rule of law. The European Commission in response has commenced infringement proceedings against the UK; a course of legal action it is able to take when a member state is in breach of, or refusing to implement, EU law. If not withdrawn by the European Commission in the event that a deal is struck, the proceedings could result in adjudication before the European Court of Justice and the levy of financial penalties against the UK.

The Internal Market Bill and the devolution settlement

The Bill provides that many powers will be directly controlled by the Scottish, Welsh and Northern Irish administrations in the event of no-deal – in areas including food labelling, energy efficiency and support for farmers. For this reason the UK government has said that the Bill’s contribution to devolution represents "the biggest transfer of powers in the history of devolution". The devolved administrations generally have not shared that view. Joanna Cherry QC (a Scottish National Party MP) at an International Bar Association event shared her view that the Bill alters the devolution settlements in a way that circumvents the constitutional Devolution Acts. The Centre of Constitutional Change (and others) highlight two key ways in which the devolution settlements with Scotland, Wales and Northern Ireland are cut across by the Bill.

First, the Bill under its drafting will become a ‘protected enactment’. This means that the devolved legislatures will not be able to repeal or modify it. They will not be able to disapply aspects of the Bill to particular sectors or pieces of legislation. But, importantly, the UK Parliament will be able to override aspects of the Bill when legislating for England. The effect of the Bill will therefore be asymmetrical on England and the devolved legislatures. Under EU law the effect on the UK Parliament and the devolved legislatures was symmetrical and the rules were set pursuant to the EU legislative process and judicial interpretation.

Secondly, the Bill will make smaller the territorial scope of devolved legislation. This could make some types of distinctive local regulation ineffective and mean that English regulations setting lower standards than in Scotland, Wales or Northern Ireland are able to trump devolved standards. The current position is that devolved legislation applies to all of the relevant activity within the devolved territory – rules set in Holyrood will apply to all relevant activity in Scotland. Taking the oft-cited example of chlorinated chicken imports, if the UK government did a trade deal with the US allowing this, the current position is that the Scottish government could ban chlorinated chicken in Scottish territory (food safety is a devolved matter). This ban could effectively extend to chicken produced in Scotland and also chicken imported from inside and outside the UK. If the Bill came into force however, such a ban could only apply to goods produced in Scotland, or directly imported into Scotland from outside the UK. It would not apply to goods entering Scotland from other parts of the UK, nor could the Scottish government prevent such products from being sold in Scotland. The ban on chlorinated chicken would be effectively undermined.

Ouster clauses in the Internal Market Bill

An ouster clause is a provision in primary legislation which aims to exclude the review of the courts. Ouster clauses will state that certain provisions, or decisions made in accordance with them, cannot be challenged in the courts. They therefore attempt to make a certain subject matter non-justiciable by placing the matter beyond the courts’ reach.

In crude summary, the courts have shown distaste for ouster clauses. In Anisminic, the Court of Appeal found that the ouster clause in s. 4(4) of the Foreign Compensation Act 1950 did not bar from the court’s review decisions that were tainted by legal error; because unlawful decisions could not be “determinations” in the first place under the Act. In Privacy International, the Supreme Court found that the ouster clause in Regulation of Investigatory Powers Act 2000 (s. 67(8)) – that purports to exclude from challenge any decision of the Investigatory Powers Tribunal – does not prevent a judicial review challenge based on an error of law. The majority in Privacy International also commented (obiter) that there was a strong case for finding that the rule of law requires that it is for the courts to decide whether to uphold clauses that aim to exclude the review of the High Court. This is the case even if the ouster clause laid down by Parliament was drafted with the clear aim of trying to exclude the High Court’s supervision. The key reasons for this are avoiding the unconstitutionality of leaving errors of law unchecked and ensuring that the court – a competent and independent arbiter – can supervise decisions made under statute, to carry out its constitutional function and ensure that Ministers act within the parameters of Parliament’s intention.

The UK Human Rights Blog has stated the content of the Bill includes “the Mother of all Ouster Clauses”: the general ouster clause of clause 47. Clause 47’s general attempt to oust the review of the High Court is extraordinarily broad. It aims to oust the court’s jurisdiction except in relation to judicial review cases. It further aims to deem what is done pursuant to clauses 44, 45 and 47 entirely lawful in all circumstances, disregarding any “relevant international or domestic law with which they may be incompatible or inconsistent”.  This seeks to give legal permission for provisions of the Bill to breach the Withdrawal Agreement (as above), reducing concerns in the first instance that this will be challenged in the courts.

The ouster clauses do not stop there: there are a further nine specific and detailed ouster clauses in the Bill. These include clause 47(2)(a), which provides that it would be lawful to breach the European Convention on Human Rights under provisions of the Bill. Clause 47(3) says that for the purposes of the Human Rights Act 1998, a regulation under these provisions is to be treated as if it were primary legislation, in order that secondary legislation made under the bill is not quashed for falling foul of human rights rules. A further example is clause 47(2)(b) which states that rights under the Withdrawal Agreement are no longer effective insofar as they are incompatible or inconsistent with the clauses 44, 45 or 47 (or regulations made under these provisions).

Comment

The Bill may not be needed - if a trade deal with the EU is agreed by January 1 the above issues become academic. However time is running out for a deal to be struck. Even if a deal is reached, and the Bill is relegated to posturing as part of the deal brokering process, arguably damage has already been done from the lens of trust in government. Any one of the above issues, considered on its own, is significant cause for concern from a constitutional perspective. Taken together, and against the Government’s history of legislating for Brexit, they call into serious question the Government’s basic regard for constitutionalism.

The Government’s Law Officers have defended the rule of law-based concerns with the Bill partly on the basis that there is some precedent for UK legislation breaching obligations under international treaties. However, Elliott has highlighted that the fact that the Bill is drafted with the clear and specific intent of breaching the Withdrawal Agreement is a significant distinguishing feature from a rule of law perspective. Furthermore, that there is some precedent for the UK breaching its international treaty obligations is no justification for further wrongdoing. The Bill’s merit as a political tactic appears to be yet to materialise, given the hostility outlined above from the EU and US which is complicating trade negotiations.

The devolution row around the Bill comes at a time when relations between Westminster and the devolved administrations are at their most tense in living memory. In keeping with the Government’s history on legislating for Brexit the Bill was passed in tension with the Sewel Convention; that Westminster will not normally legislate on devolved matters without the respective consents of the devolved administrations. The failure to secure consent could well lead to issues further down the line. The Bill could conflict with the Scottish Government's desire to “keep pace” with EU law which it is currently aiming to effect through the UK Withdrawal from the European Union (Continuity) (Scotland) Bill. That bill would empower the Scottish Government to use secondary legislation to keep Scottish law aligned with EU law post-transition in devolved matters. However the Bill would complicate imposing certain regulations in Scotland if the rest of the UK did not follow suit.

That leaves us with the ouster clauses and particularly the general ouster clause of clause 47. Following Anisminic and Privacy International, it would be open to the court to thwart any attempts to exclude the review of the High Court where the clauses appear to purport to do so, for example by finding that unlawful regulations made under clauses 44, 45 and 47 were not “made under” these clauses at all because of their illegality, and accordingly the court may review them contrary to the clause’s wording. This would be a difficult position for the court to take given the Government’s increasing momentum towards a constitutional stand-off with the courts, seen most recently by the Independent Review of Administrative Law (which we have blogged about here). It would feed into the narrative of the courts circumventing the will of Parliament and the executive.

All things considered, the Bill foments a significant constitutional storm, meaning that a no-deal scenario could well stretch our unwritten constitution to its furthest parameters.

Further information

Read our Brexit blog for the latest commentary, news and updates. If you would rather speak or meet with one of our expert Brexit lawyers please contact the team.

 

About the author

Nick De Mulder is an Associate in our Public Law team.  Nick has assisted on a high-value Human Rights Act claim and on claims for judicial review of immigration authorities, a government agency and local authorities. He has assisted a charity and companies on GDPR and Data Protection Act compliance and on responding to Subject Access Requests. He has also assisted a defendant, and various witnesses, in preparing for and attending criminal trials.

 

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