On 12th September 2017 the UK Parliament passed the EU Withdrawal Bill. This is the first stage in the process of ending the supremacy of EU law in the UK.
The Government is hoping that the Bill will become law in early 2018 although it will only apply to the UK from exit day, whenever that might be.
Previously referred to as the Great Repeal Bill, the EU Withdrawal Bill overturns the European Communities Act 1972, which took the UK into what is now the European Union, and accepted EU Law as UK law.
The way EU law works is that EU regulations apply directly to member states even if no domestic law has been passed. This is different to EU directives that are not directly applicable to member states and for which the UK therefore creates new UK laws to achieve the aims of the directives.
Because EU directives have already been, or, in the case of the Insurance Distribution Directive are on their way to being, enacted as UK Acts of Parliament, these will be unaffected by Brexit, although some changes may be needed. For instance, where they refer to EU citizens they now need to refer to UK citizens.
Regulations would ordinarily apply to the UK directly as a member state without any need for separate UK law to bring them into force. This will now cease to be the case under the terms of the EU Withdrawal Bill. The General Data Protection Regulation is an example of this, although the government has confirmed that this particular regulation will apply to the UK when it comes into force in May next year and is not affected by Brexit.
The European Communities Act was confirmed by the House of Lords as meaning that UK law cannot apply if it conflicts with EU law, and therefore as confirming the supremacy of EU law over UK laws and of the EU Court of Justice (ECJ) over UK courts. This is why the final right of appeal on cases is to the European Court of Justice, rather than the Supreme Court in London.
It is hoped that the Bill will provide continuity and certainty for the UK’s exit from the EU. It means that all the laws that apply to the UK now as a member state of the EU will continue to apply after Brexit takes effect. The Government will however have the right and ability to amend the legislation without reference to the EU after we cease to be members.
It also means that EU law principles will continue to apply to the law that is kept by the Bill, except when modified by UK law. It is hoped that this will provide some clarity to our judges as they interpret the law going forward.
The Bill also ends the supremacy of EU law over UK law and of the ECJ over the UK courts.
A controversial element of the Bill is that it gives the government the power to make secondary legislation, known as Statutory Instruments, which do not require full parliamentary scrutiny, to make the transition from EU to UK law work. The powers granted to the government alone rather than to parliament include the ability to:
- Amend deficiencies in the law
- Establish new institutions to replace EU institutions
- Make sure that any EU law operates effectively.
These are vague and potentially far reaching powers and this was of much concern to the House of Commons. However, with some concessions (these government powers will now cease two years after exit day) the Bill has passed to the committee stage.
The Bill does not shed any light on what the withdrawal from the EU will actually look like, which is still subject to debate between the EU and the UK. Further legislation will be required to confirm our withdrawal from the EU as and when required.
The EU Withdrawal Bill applies across the whole of the UK and therefore amends the devolution laws to prevent the devolved administrations of Northern Ireland, Scotland and Wales from gaining any new powers because of Brexit unless the UK government in Westminster agrees. This will involve difficult negotiations with each of the devolved administrations to establish the terms of this.
The EU Withdrawal Bill deals with the change from a UK legal system that over the past 40 years has been intimately entwined with a EU legal system to one that will now function alone. It is an understandably complex Bill and its passage to law will require considered analysis and scrutiny.
This article was written by Zelda Pitman, legal counsel, Allianz UK.
To get more expert insight about Brexit, and particularly the implications it might have for the insurance industry, read our feature by Allianz chief underwriting officer, Neil Clutterbuck, 'The impact of Brexit on the insurance industry'.