The UK Supreme Court and EU law in the Legal Year 2016–2017 – Part 5

Aidan O’Neill QC

EU Equality Law

EU law continued to be a source and referent in the three equality/non-discrimination law which were decided by the Court this year.  Essop v Home Office[1] concerned the issue of indirect discrimination with the Court holding that there was no need for proof of the reason why the complained of provision put the affected group at a disadvantage, only that there was a causal connection between that provision at issue and the statistical fact of disadvantage.  Lady Hale made the argument for a degree of “spill over” of EU law derived concepts into non-EU law based areas in the interests of consistency of approach to the various strands of equality law, observing:

Much, but by no means all, of the Equality Act 2010 is derived from our obligations under European Union law. Those parts which are so derived must be interpreted consistently with EU law (as it is now called) and it is inconceivable that Parliament intended the same concepts to be interpreted differently in different contexts.[2]

In Walker v Innospec Ltd,[3] after extensive reference to and discussion of CJEU case law relating to equal pay, equality of treatment on grounds of sexual orientation and the presumption against retrospectivity of legislation, the Court granted a declaration that the appellant’s husband was entitled to a spouse’s pension calculated on all the years of his husband’s service with his employer, provided that at the date of the employee’s death the parties remained husband and husband.  The Court also ordered that the provisions of the Equality Act 2010 (which on their face discounted workers’ periods of service before 5 December 2005 – the date on which the Civil Partnership Act 2004 came into force) for the purpose of calculating the pension rights of same sex spouses should be disapplied as incompatible with EU law.

Finally, in the long running case of O’Brien v Ministry of Justice[4] the Court made a reference to the CJEU on a question relating to the pension entitlement of part-time workers because the Court was not agreed on the proper interpretation of the CJEU line of case law on this point.

EU private international law

Clause 6(1) of the Withdrawal Bill, if enacted, will put an end to preliminary references from a UK court or tribunal. It provides as follows:

(1) A court or tribunal—

(a) is not bound by any principles laid down, or any decisions made, on or after exit day by the European Court, and

(b) cannot refer any matter to the European Court on or after exit day.

This ban on references to Luxembourg, if carried through, will effectively mean the end of the UK’s participation in the uniform approach to private international law across the EU which has been the cornerstone of the ‘fifth freedom’ of the EU, namely the free movement of judgments which has been facilitated by such measures as: the recast Brussels I (EU) Regulation 1215/2012 on jurisdiction and recognition and enforcement of judgment in civil and commercial matters; the recast Insolvency Proceedings (EU) Regulation 2015/868; the Brussels II Regulation (EC) No 2201/2003 on jurisdiction and the recognition and enforcement of judgments in matrimonial matters and the matters of parental responsibility; and the Maintenance Obligations Regulation (EC) 4/2009 on jurisdiction, applicable law, recognition and enforcement of decisions and cooperation in matters relating to maintenance obligations.

In AMT Futures Ltd v Marzillier, Dr Meier & Dr Guntner Rechtsanwaltsgesellschaft mbH,[5] the Court applied the provisions of the original Brussels I (EC) Regulation 44/2001 to hold that the English courts had no jurisdiction to consider a claim for damages against a German defendant for wrongfully inducing breach of contract by facilitating the bringing of damages claims in Germany by former clients of the plaintiff, allegedly in breach of the clients’ agreement to submit such disputes to the exclusive jurisdiction of the English courts.  The Court ruled that the relevant CJEU jurisprudence did not allow the grounds of jurisdiction in matters relating to a contract to be elided with those relating to tort.  The inconvenience of separating the contractual and tortious claims was said to be the price of achieving the certainty and good administration across the EU at which the Brussels I Regulation was aimed in relation to court disputes concerning civil and commercial matters.

EU law and intellectual property

Post-Brexit, the UK courts will be free to ignore such Europe-wide consideration if so minded, at the undoubted cost, however, to the civil justice cooperation across Europe of the type currently dealt with by private international law EU Regulations.  Instead, the more likely scenario is that which currently applies in matters concerning patents in Europe.  In its Opinion 1/09,[6] the CJEU effectively vetoed, as incompatible with EU law and more particularly its position as the apex court and final arbiter in the EU on all issues of EU law, the proposals contained in a draft Agreement among the Member State, the EU and non-EU states who were also parties to the European Patents Convention (‘EPC’) and others for the establishment of a European and Community Patents Court.  Thus, in Actavis UK Limited v Eli Lilly and Company,[7] when considering whether or not pharmaceutical products manufactured by the appellants would infringe a European patent owned by the respondent, the Court looked at the approach to infringement in the courts of other EPC states, including the courts of Germany, France, Italy and Spain in order to inform the Court’s own judgment on the facts as the final arbiter on this matter in the UK.

Whereas patents do not fall within the ambit of EU law, trade-marks do.[8]  M v R[9] concerned a prosecution of individuals who were alleged to have been involved in the bulk importation and subsequent sale within the EU of various branded goods manufactured in countries outside the single market, a proportion of which goods, at least, were not counterfeits but had been manufactured with the authorisation of the trade mark proprietor, albeit they had thereafter been disposed of without his authority (so-called grey goods).  It might be said that art 7(1) of the Trademarks Directive provides the authority for trade mark owners to be permitted to prohibit its use in relation to goods which have not been put on the EU single market under that trade mark by the proprietor or with his consent.    Following the analysis of the Grand Chamber CJEU in Åklagaren v Hans Åkerberg Fransson[10] this might be considered a sufficient connection with EU law to have allowed those being prosecuted to rely in argument on provisions of the Charter including: the freedom to conduct a business protected under art 16 of the CFR; the right to own, use, dispose of and bequeath his or her lawfully acquired possessions  protected under art 17(1) of the CFR; the presumption of innocence and right of defence protected by art 48 of the CFR; and the principles of legality and proportionality of criminal offences and penalties protected by art 49 of the CFR.  EU law was, however, the dog that did not bark in this instance.

This is an excerpt from a chapter in Daniel Clarry (ed), The UK Supreme Court Yearbook, Volume 8: 2016-2017 Legal Year (Appellate Press 2017).

[1] [2017] UKSC 27, [2017] 1 WLR 1343.

[2] ibid [19] (emphasis added).

[3] [2017] UKSC 47, [2017] ICR 1077.

[4] [2017] UKSC 46, [2017] ICR 1101.

[5] [2017] UKSC 13, [2017] 2 WLR 853.

[6] [2011] ECR I-1137.

[7] [2017] UKSC 48.

[8] See eg Council Directive (EC) 2008/95 to approximate the laws of Member States relating to trade marks [2008] OJ L299/25 (‘Trademarks Directive’).

[9] [2017] UKSC 58, [2017] 1 WLR 3006.

[10] Case C-617/10 EU:C:2013:105 [2013] 2 CMLR 46 [21].

The UK Supreme Court and EU law in the Legal Year 2016–2017 – Part 4

Aidan O’Neill QC

EU citizenship and free movement of persons

 In R (Agyarko) v Secretary of State for the Home Department,[1] the Court dismissed claims by third-country non-EU nationals who while residing unlawfully in the UK had established family life here by marrying or become partners of British citizens.  Applying CJEU case law, the Court held that there was on the facts no breach of the British citizens’ rights qua EU citizens since the removal of their spouse or partner from the EU would not then force the British citizen to leave the EU.

Sadovska v Secretary of State for the Home Department[2] concerned a Pakistani national who intended to marry a Lithuanian national who had lawfully exercised her free movement rights to move to the UK.  The Secretary of State considered that the parties were seeking to enter into a sham marriage of convenience for the purposes of avoiding immigration restrictions and ordered the removal of both of them from the UK on the basis that the Lithuanian woman had abused her EU law rights of residence and her intended husband had overstayed his limited leave to enter in breach of s 10(1)(a) of the Immigration and Asylum Act 1999, the lawfulness of which decisions were upheld by the First Tier Tribunal. In remitting matters to be reconsidered by the First Tier Tribunal, the Court held that it had not properly applied EU law.  The Court noted that while the non-EU citizen party to an alleged marriage of convenience had no established rights under EU law and, if claiming a ‘durable relationship’ with an EU citizen for the purposes of art 3(2) of the Citizenship Directive 2004/38/EC, had to produce evidence to that effect, there was no such onus placed on the EU national (it being for the national authorities to adduce evidence against the reality of the marriage). Furthermore and in any event, a judgment still had to be made as to whether her removal from the UK, even if she had been party to attempting a sham marriage, was proportionate.

This is an excerpt from a chapter in Daniel Clarry (ed), The UK Supreme Court Yearbook, Volume 8: 2016-2017 Legal Year (Appellate Press 2017).

[1] [2017] UKSC 11, [2017] 1 WLR 823.

[2] [2017] UKSC 54, [2017] 1 WLR 2926.

The UK Supreme Court and EU law in the Legal Year 2016–2017 – Part 3

Aidan O’Neill QC

Francovich damages and San Giorgio recovery of EU incompatible levies

EU law allows for the possibility of damages being claimed against Member States where three conditions are met:

  • the rule of EU law infringed must be intended to confer rights on individuals;
  • the breach must be sufficiently serious; and
  • there must be a direct causal link between the breach of the obligation resting on the state and the damage sustained by the injured parties, with the onus of establishing such a nexus resting on the party claiming damages.[1]

Such claims are known as Francovich damages.[2]  They were said by Lord Mance in Sempra Metals Ltd v Inland Revenue Commissioners[3] to be ‘analogous to a claim for, breach of statutory duty, in other words a tortious claim.’[4]  In Spencer v Secretary of State for Work and Pensions,[5] Carnwath LJ (as he then was) noted:

Liability under the Francovich principle does not fit naturally into a conventional domestic legal analysis.   It is a principle of Community law, concerned with the effectiveness of the integration of European legal rights with domestic remedies. It is not surprising that it has been hard to find a convincing analogy in the English law cases.[6]

In Energy Solutions EU Ltd v Nuclear Decommissioning Authority[7] the Court overruled the decision of the Court of Appeal which had held that the Francovich conditions set-out minimum conditions for a finding of liability, and that it remained open to the Member States to be more liberal in their approach to these criteria.  Lord Mance, giving the unanimous judgment of the Court, disagreed and noted as follows:

Where the Court of Appeal in the present case went in my opinion clearly wrong was in its assumption that any claim for damages under the [Public Contracts Regulations 2006 (SI 2006/5)] was no more than a private law claim for breach of a domestically-based statutory duty, and for that reason subject to ordinary English law rules which include no requirement that a breach must be shown to be “sufficiently serious” before damages are awarded. The Court of Appeal appears to have assumed that the categorisation in domestic law of a claim based on EU law as being for breach of statutory duty freed it automatically from any conditions which would otherwise apply under EU law. That this is not so is clear if one takes the simple case of a domestic claim against the State for failure correctly to transpose EU law. Such a claim is subject to the Francovich and Brasserie du Pêcheur principles and conditions.[8]

Paragraph 4 of sch 1 to the Withdrawal Bill abolishes any continuing right to claim Francovich damages post-Brexit in stating: ‘There is no right in domestic law on or after exit day to damages in accordance with the rule in Francovich.’ But the CJEU has long held that, distinct from Francovich damages claims, EU law confers on undertakings or individuals a right to repayment of charges levied contrary to EU law.[9]  This is known as a San Giorgio right.[10]  In the case of monies wrongly paid to HMRC as Value Added Tax (‘VAT’) by a VAT registered business, Parliament has provided a statutory mechanism for its recovery from the Revenue.[11]  This has a four-year limitation period.[12]  Separately from this the common law, under the influence of EU law, has developed a general right and new causes of action for repayment of monies unlawfully levied or otherwise paid in error of law.  These have a six-year limitation period.[13] In Commissioners for HM Revenue and Customs v Investment Trust Companies (in liq),[14] the Court held that where a statutory scheme was available in principle to the taxpayer for the recovery from HMRC of monies which had been overstated and overpaid as VAT, this would bar recourse by the consumers (who ultimately bore the burden of paying VAT on the services provided by the accountable taxpayer) to any general common law causes of action directly against HMRC whether for the recovery of tax unlawfully levied or for the restitution of sums paid under a mistake of law.  Where the taxpayer is not insolvent, the consumer has no direct right of action against HMRC for recovery of these monies and can only seek reimbursement from the taxpayer of the monies which the taxpayer is entitled to recover from the revenue under the statutory scheme.  This was held by the Court to be compatible with EU principles of effectiveness and equivalence such as to be acte clair and require no reference to the CJEU.[15]  By contrast, in Comrs for HM Revenue and Customs v Volkswagen Financial Services (UK),[16] the Court has made a preliminary reference to the CJEU on the issue of the proper apportionment of general business overheads in relation to the provision by Volkswagen Financial Services (UK) of hire-purchase finance for the sale of vehicles manufactured by the Volkswagen group. Continue reading

The UK Supreme Court and EU law in the Legal Year 2016–2017 – Part 2

Aidan O’Neill QC

EU law and the UK constitution before the UKSC

 On 23 June 2016, a referendum was held in the UK and Gibraltar on the question, ‘should the United Kingdom remain a member of the EU or leave the EU?’ The franchise for this referendum was contained in the European Union Referendum Act 2015.  Those permitted a vote in the referendum by Parliament were British citizens, Irish citizens and citizens of Commonwealth countries who were lawfully resident in either the UK or in Gibraltar at the time of the referendum, and British citizens who had last been resident in the UK or Gibraltar up to 15 years previously.  The more than 3 million citizens of EU Member States (other than Ireland, Cyprus and Malta) then lawfully resident in the UK were excluded from the franchise.  This ‘Brexit electorate’ amounted to some 46,500,001 people, including around one million citizens of Commonwealth non-EU countries. On a turnout of 72.2% of those eligible to vote, some 17,410,742 votes (51.9% of those voting, 37.4% of the total eligible ‘Brexit electorate’) were cast for the UK to leave the EU, while 16,141,241 (48.1% of those voting, 34.7% of the total eligible ‘Brexit electorate’) voted for the UK to remain a Member State of the EU.  No provision of the 2015 Act had stated that the result of the Brexit referendum would be considered to bind either the UK Government or the UK Parliament.  On the morning immediately after the referendum result, the then UK Prime Minister, David Cameron, announced that he considered that the Brexit referendum result constituted an instruction from the electorate for the UK to leave the EU and for him to resign as Prime Minister. On 2 October 2016, his replacement as Prime Minister, Theresa May, announced that the UK Government would commence the formal process of leaving the EU provided for by art 50(1) of the Treaty on European Union (‘TEU’) before the end of March 2017.  Article 50(1) TEU provides that: ‘Any Member State may decide to withdraw from the Union in accordance with its own constitutional requirements.[1]

Once it was decided by the UK Government, in the light of the Brexit referendum result, to pull the UK out of the EU, it became necessary (ironically, as a matter of EU law) to identify just what were the ‘constitutional requirements’ imposed by the ‘United Kingdom constitution’ as necessary to initiate the art 50 TEU withdrawal procedures.  The position of the UK government appeared to be that the decision to withdraw the UK had been made by ‘the people’ in the referendum and that it needed no further authority from Parliament to act on that decision, but could instead simply rely upon the foreign affairs prerogative to withdraw the UK from the relevant international Treaties. The Court, by an 8–3 majority (Lord Reed, Lord Carnwath and Lord Hughes dissenting), disagreed.  In a single, though apparently multi-authored, opinion the majority (Lord Neuberger, Lady Hale, Lord Mance, Lord Kerr, Lord Clarke, Lord Wilson, Lord Sumption and Lord Hodge) ruled:

The essential point is that, if, as we consider, what would otherwise be a prerogative act would result in a change in domestic law, the act can only lawfully be carried out with the sanction of primary legislation enacted by the Queen in Parliament.[2]

In its account of the constitutional position of the UK within the EU the Court’s majority, in a first for a UK court, unequivocally endorsed the claim, oft-pressed by the Court of Justice of the European Union (‘CJEU’), that:

the founding treaties of the European Union, unlike ordinary international treaties, established a new legal order, possessing its own institutions, for the benefit of which the States have limited their sovereign rights, in ever wider fields, and the subjects of which comprise not only Member States but also their nationals.[3]

The Miller majority accepted that the essential characteristics of the EU’s ‘new legal order’ were its primacy over the laws of the Member States and the possibility of it having direct effect both in relation to individuals as well as ‘emanations’ of the Member States.  Accordingly, the majority was able to hold that:

  • ‘where EU law applies in the United Kingdom, it is the EU institutions which are the relevant source of that law. […] it is unrealistic to deny that, so long as [the European Communities Act 1972] remains in force, the EU Treaties, EU legislation and the interpretations placed on these instruments by the Court of Justice are direct sources of UK law’;[4]
  • and that ‘although the 1972 Act gives effect to EU law, it is not itself the originating source of that law’;[5]
  • concluding, therefore, that ‘[t]he 1972 Act effectively operates as a partial transfer of law-making powers, or an assignment of legislative competences, by Parliament to the EU law-making institutions (so long as Parliament wills it), rather than a statutory delegation of the power to make ancillary Regulations’.[6]

Continue reading

The UK Supreme Court and EU law in the Legal Year 2016–2017 – Part 1

Aidan O’Neill QC

In his 1867 poem ‘Dover Beach’,[1] the Victorian poet and critic Matthew Arnold marked and lamented the loss of the (religious) certainties that, for him, had underpinned the cultural and intellectual life of the England in which he had been brought up.  As he wrote:

The sea of faith was once, too, at the full,

And round earth’s shore lay like the folds of a bright girdle furled.

But now I only hear its melancholy, long, withdrawing roar,

Retreating, to the breath of the night-wind, down the vast edges drear

And naked shingles of the world.

One hundred and fifty years on, ‘the melancholy, long, withdrawing roar’ now heard in the land is the ebbing tide of EU law, as it retreats from our estuaries, firths and rivers.  The provisions of the European Union (Withdrawal) Bill (`Withdrawal Bill’) (which at the time of writing was before Parliament)  will, if enacted as introduced, dam it from our shores, because Parliament will thereby have decreed that the Treaty is no longer to be part of our law.

There is already some evidence of declining reliance upon EU law by the UK Supreme Court (‘the Court’).  The 2016–2017 legal year marks the first full year since the Brexit referendum result.  In this post referendum year, EU law was referred to, and played a part in the decision, in just 14 of the 71 cases decided by the Court.  At just under 20% of its total cases, this marks a drop from the 25% of cases from the Court which we noted in the previous 2015–2016 legal year to contain an EU law element.[2]

Judgments handed down by the Court during the 2016–2017 legal year underline the extent to which EU law permeates the law in the UK.  There have been judgments in the following areas of practice: UK constitutional law; fundamental rights to access to the court and effective remedy; EU citizenship rights and free movement of persons; Francovich damages and San Giorgio recovery of EU incompatible levies; equality law; private international law; and intellectual property law.

Despite the Brexit processes, the Court continues to comply with its obligations under art 4(3) of the TEU by exercising its powers under art 267 of the Treaty on the Functioning of the European Union to make preliminary references to the CJEU on issues of EU law which the Court consider necessary for its determination.  Politically however, the Brexit process appears to have moved on little, if at all, in the period since the June 2016 referendum result and the UK Government’s wishes as regards the UK’s future relationship with Europe remain wholly unclear.  Matthew Arnold concludes his poem, Dover Beach, with the lines that the tide’s ebb has left us:

here as on a darkling plain, swept with confused alarms of struggle and flight, where ignorant armies clash by night.

His words continue to resonate.

This is an excerpt from a chapter in Daniel Clarry (ed), The UK Supreme Court Yearbook, Volume 8: 2016-2017 Legal Year (Appellate Press 2017).

[1] Matthew Arnold, ‘Dover Beach’ (Poetry Foundation) accessed 20 October 2017.

[2] Aidan O’Neill QC and Aidan Wills, ‘European Dimensions’ in Daniel Clarry (ed), The UK Supreme Court Yearbook, Volume 7: 2015–2016 Legal Year (rev edn, Appellate Press 2017) 336, 336.