Impact of Retained EU Law (Revocation and Reform) Act 2023

The Retained EU Law (Revocation and Reform) Act 2023 (Commencement No. 1) Regulations 2023 ("2023 Commencement Regulations") which bring into force key provisions of the Retained EU Law (Revocation and Reform) Act 2023 Act ("2023 Act") with effect from 1 January 2024 continue the slow process of separating the UK's legal systems from the European Union following Brexit.

The 2023 Act changes the name and status of retained EU law - which becomes "assimilated law" - and removes the special EU features that applied. It takes away the principle of supremacy of EU law, which previously applied to retained EU law, and removes the practice of applying EU principles to interpret EU-derived legislation on our domestic statute books. Legislation on the UK statute book will now be interpreted and applied without reference to these features. 

Retained direct EU legislation is effectively downgraded by permitting it to be amended by secondary legislation. There will also be less time for parliamentary scrutiny given the scale of the legislative changes arising from the UK's departure from the EU.

The 2023 Act will also give wider powers to UK courts to depart from EU-retained case law. NB We are still awaiting commencement regulations to bring into force s.6 of the 2023 Act (role of the courts) which sets out the mechanism for domestic appeal courts to depart from retained EU case law so it is unclear exactly when these will come into force

The removal of the principle of supremacy of EU law in the UK and the introduction of wider powers for the UK government  to depart from retained EU legislation creates some legal uncertainty and opens the door to significant changes in the medium to long term.

The extent of any future changes will depend, in part, upon the approach taken by the UK courts and tribunals, and the outcome of the next General Election in the UK, which is widely predicted to produce a Labour government this Autumn.

We anticipate more litigation to challenge and test the interpretation of existing laws and the prospect of further change and amendments over time; together these impact legal certainty.

Overview

From 1 January 2024, the body of domestic law derived originally from the EU known as "retained EU law", by virtue of the European Union (Withdrawal) Act 2018, will now be known as "assimilated law" as a result of the 2023 Act.

This marks a significant move towards the domestication of EU-derived legislation into the UK's legal framework. 

The effect of the 2018 Act was broadly to embed the principle of supremacy of retained EU law over earlier legislation, but not over legislation passed from 2021 onwards.  

The 2023 Act goes further:

• it revokes a significant amount of retained EU law at the end of 2023 ("sunset provisions"),
• it re-labels what remains as "assimilated law" and changes its status, and
• it creates new powers in relation to assimilated law so domestic courts can depart from retained case law (although note that these provisions are not in force yet). 

The intention is to remove the application of principles of EU law as an aid to interpretation, to stop the supremacy of EU-derived law and to repeal directly effective EU rights (which are not assimilated into UK law) with effect from 1 January 2024.

However, rights accrued before that date will be subject to the old retained principles under the 2018 Act, so we are entering a period of greater legal uncertainty and unpredictability with differing regimes of legal interpretation applying in parallel.

The Explanatory Notes to the 2023 Act and the Explanatory Memorandum to the 2023 Commencement Regulations provide some clarity on the government's policy intentions and proposed effect of the changes.

Sunset provisions

The 2023 Act revokes certain pieces of EU-derived subordinate legislation and retained direct EU legislation.

The government had initially planned to repeal a significant amount of EU legislation contained in UK secondary legislation with effect from 31 December 2023 (known as "sunsetting") save for where it was expressly retained. But this approach was abandoned in May 2023.

Instead, Schedule 1 to the 2023 Act lists specific legislation to be repealed on 31 December 2023.

Assimilated law

The remaining body of retained EU law is re-categorised as "assimilated law" with an associated change to its status and interpretation under UK law, as explained in more detail below. Broadly, retained EU law is to be known as assimilated law, retained case law becomes assimilated case law, retained EU case law becomes assimilated EU case law etc from 1 January 2024, but there are various consequential amendments set out in Schedule 2 to the 2023 Commencement Regulations.

Principle of supremacy of EU law

From 1 January 2024, the principle of the supremacy of EU law no longer applies in accordance with section 3 of the 2023 Act (abolition of supremacy of EU law). There will no longer be a presumption that EU law takes precedence over conflicting domestic legislation.

This broadly means that any provision of assimilated law must, insofar as possible, be interpreted in a way which is compatible with domestic laws. NB This is a complex area and there are exceptions; for example, UK legislation implementing EU directives is not technically retained direct EU legislation, so the UK courts could still give it precedence over other domestic laws. For more detailed advice, please do get in touch.

General Principles of EU law also removed

The 2023 Act also removes some "general principles" of EU law from domestic law with effect from 1 January 2024 (Section 4 Abolition of general principles of EU law), for example the "Marleasing principle" (which required courts and tribunals to interpret national law in line with the wording and purpose of any relevant EU Directive, if domestic law was inconsistent).

It is important to note that there is no definitive list of these general principles which will lead to considerable uncertainty as to what is in scope. General principles of EU law are described in Section 6(7) of the 2018 Act as the "general principles of EU law, as they have effect in EU law...". These have been developed over time by the Court of Justice of the European Union ("CJEU") and it is open to interpretation whether a particular concept is, for these purposes, a "general principle".

Mechanism for UK courts to depart from EU case law

We are still awaiting commencement regulations to bring in the provisions in the 2023 Act which set out the role of the courts (Section 6).   

The 2023 Act sets out a new mechanism and processes to give UK higher courts (including the Court of Appeal and various appeal courts, in addition to the Supreme Court) ways to depart from assimilated law.

It will be interesting to see what weight, if any, UK courts give to CJEU decisions made after 31 December 2020 relating to assimilated law. If recent decisions are ignored altogether, the UK legal regime may start to diverge significantly from the social protections in the EU which could have implications for the EU-UK Trade and Co-operation Agreement in which the UK committed to maintain a level-playing field in relation to social protections, and other fields.

Transitional provisions

The provisions outlined above in the 2023 Act will not apply in relation to anything occurring before 1 January 2024. We understand that the relevant date for the purposes of determining the application of directly effective rights or principles of EU supremacy and the application of the general principles of interpretation will be the date of the relevant facts and not the date of the court or tribunal's decision.

Notwithstanding the general position set out above, there are a number of areas where the government has or will introduce specific legislation which departs to some extent from this position. For example, the Finance Bill 2024 contains specific provisions in relation to the continued interpretation of VAT and excise duties which retains the principle of supremacy and general principles of EU law. For further details, see our Insights article REULA and VAT and excise law. Similarly, specific legislation has been introduced in relation to employment law to retain general principles of EU law and principles established through European case law (see the Equality Act 2010 (Amendment) Regulations 2023 and the Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023).