The European Union (Withdrawal) Bill and transitional arrangements for cases pending before the Court of Justice of the European Union (CJEU)

The government intends to sever links with the CJEU and not allow the CJEU any future powers over the UK legal system, institutions or regulatory bodies. 

A transitional role for the CJEU post March 2019

But it now looks as if cases that have been referred to the CJEU but on which a decision has not been reached, or where the case has not been heard, will be allowed to be decided by the CJEU. 

On 13 July 2017 the UK government published a position paper Ongoing Union judicial and administrative proceedings which covers how the UK disentangles itself from the CJEU. It also deals with cases that have been referred from the UK courts for decision by the CJEU. 

It states in the position paper that:

“The UK recognises that beyond a certain point in proceedings, where considerable time and resources have been invested in CJEU proceedings, it may well be right that such cases continue to a CJEU decision.”

The influence of the CJEU on UK domestic tax law

The CJEU, and before it the ECJ, has had a profound impact on the UK domestic tax system by hearing a host of cases to determine whether the UK domestic tax system complied with the EU treaties and, most notably, the freedom of establishment and  free movement of capital.

Amongst many famous cases the ECJ, as it then was, decided in December 2005 that UK law was deficient because it did not provide the necessary means for M&S to obtain relief when it closed its subsidiaries in three European countries for the trading losses that had been incurred by those subsidiaries. UK law was subsequently amended although not quite in as helpful a way as some of us had expected.

What we might call the tax glory days of the CJEU are behind us and there are many fewer tax cases referred to the CJEU than was the case in the past. But there will be a few cases pending before the CJEU,  in March 2019, and their determination will be important for those taxpayers who are going to be affected by the decisions.

Once we leave the European Union it will no longer be necessary, or possible, to refer cases to the CJEU to determine how, for instance, the EU treaty freedoms impinge on UK tax law and whether UK law is compliant with those freedoms.

The cut-off date for referring cases to the CJEU is likely to be  29 March 2019 when we leave the EU, assuming that all goes to plan and this happens at the end of the two year Article 50 process/period. That two year period began on 29 March 2017, the date of the letter Prime Minister May wrote to the Head of the EU Council of Ministers, Donald Tusk announcing the UK’s intention to leave the EU.

The new draft law to repatriate all the EU related provisions which impact on UK law

What had hitherto been referred to as the Great Repeal Bill has become the  European Union (Withdrawal) Bill which was published on 13 July 2017. 

It is also apparently to be referred to as a the Repeal Bill and the government has published Guidance for businesses. Readers who are used to Finance Bills being more than 600 pages, and this year more than 700 pages, will be surprised that the Repeal Bill is only 66 pages long but as the guidance makes clear quite a lot of the necessary provisions are going to be in secondary legislation: that process is, in itself, going to be hugely controversial in parliament. 

In section 6(1) of the Bill there is a provision to the effect that no court or tribunal is bound by any principle laid down by or any decision made on or after exit day, which we are assuming will be 29 March 2019.

But there will be transitional arrangements as discussed above. So cases that have been referred to the CJEU by the UK courts, prior to exit day, to determine what the UK law should be in order to comply with the EU treaty freedoms, are likely to be heard by the CJEU even if that is after March 2019. The judgment will then be applied in the UK.

  • One specific issue I am waiting to seen dealt with is that of European legal principles which have appeared in the UK by a sort of osmosis, such as "abus de droit", which figured so significantly in the Halifax VAT avoidance case. Will this and similar principles remain within the UK to be used as and when required? I presume so as the final decision was that of a UK Court which at the time of decision was the highest court and which after the change and brexit  remains so! Plus ca change!