Continuity and compatibility

On Thursday 13 December the UK Supreme Court gave its judgment in the first ever challenge by UK law officers to the competence of a Scottish Parliament Bill.

A panel of seven Supreme Court Justices held unanimously that while the UK Withdrawal from the European Union (Legal Continuity) (Scotland) Bill (the “Continuity Bill”) as a whole is within the Scottish Parliament’s legislative competence, parts of it are not because they seek to modify either the Scotland Act 1998 or the European Union (Withdrawal) Act 2018. The latter was enacted after the Continuity Bill was passed, but before the Supreme Court reached its decision on it.

The effect of the court’s judgment is that the Continuity Bill cannot now receive Royal Assent in its current form. The Scottish Parliament has the option of amending it to bring it within competence, although that would mean making key provisions identical to the equivalent sections of the Withdrawal Act that already give the Scottish Government significant powers to prepare for Brexit.

Background to the case

The Continuity Bill was passed by the Scottish Parliament principally to give the Scottish Government the power to prepare the statute book for Brexit in “devolved” areas (i.e. areas of law for which the Scottish Parliament has responsibility). It was introduced in February 2018 and fast-tracked through the Parliament’s emergency legislation procedures, in anticipation of the UK and Scottish Governments being unable to reach agreement on what, if any, restrictions the Withdrawal Act (then progressing through the UK Parliament) could place on the Scottish Parliament’s ability to legislate in areas that are not reserved to Westminster by the Scotland Act but are currently dealt with at EU level. This includes law and regulation in key areas such as agriculture, fisheries, the environment and public procurement. The overarching EU rules significantly limit the scope for the different parts of the UK to take different approaches in such areas, notwithstanding that they are in principle devolved.

The UK Government’s concern was that those EU laws ensure that UK businesses can trade in all parts of the UK subject to a single set of rules, but if different rules were introduced in different countries post-Brexit that could create barriers to intra-UK trade. The Scottish Government’s position was that UK-wide rules should be agreed, but by consent with no legal restrictions put in place, and that if the Scottish Parliament did not consent to the Withdrawal Act then it should have been amended so it did not apply to any areas within the Scottish Parliament’s competence.

The Continuity Bill was passed in anticipation of, and with a view to helping to achieve, that latter outcome. The plan was that the Scottish Government would use the powers in the Continuity Bill rather than the Withdrawal Act to make regulations preparing the statute book for Brexit, but the Continuity Bill was referred to the Supreme Court before it could receive Royal Assent. The Withdrawal Act was then enacted notwithstanding the Scottish Parliament’s objections to it.

However, in order to understand the Supreme Court’s decision it is important to note that the regulation-making powers in the Continuity Bill were not identical to those in the Withdrawal Act. The Continuity Bill also contains other provisions with no equivalent in the Withdrawal Act, including conferring powers on the Scottish Government to make regulations incorporating changes in EU law directly into Scots law post-Brexit (known as the “keeping pace” power). Section 17 of the Continuity Bill also purported to restrict the ability of UK ministers to make regulations in devolved areas under the Withdrawal Act (or any equivalent UK legislation) without the consent of the Scottish Government, anticipating the Withdrawal Act being passed without consent and attempting to give the Scottish Government control over its operation in devolved areas.

What did the Supreme Court decide?

To some extent the verdict, while reached unanimously by the judges, was something of a split decision as far as the parties are concerned.

The court sided with the Scottish Government on two key legal points that could have significant implications for future disputes over legislative competence.

First, the Supreme Court dismissed the UK Government’s general attack that the Continuity Bill as a whole was outside the Scottish Parliament’s powers because it “relates to” reserved matters (as set out in schedule 5 to the Scotland Act), and in particular to international relations and specifically relations with the EU. The court’s view was that the Continuity Bill did not relate to those relations as it did not purport to affect the power of the UK Government to negotiate a treaty with the EU or the way in which those negotiations are carried out. Rather, the purpose and effect of the Continuity Bill was to deal with the legal consequences of Brexit for Scots law, premised on the bill taking effect at a point when there would be no legal relations with the EU. The court also dismissed a related argument that the Continuity Bill conflicted with constitutional issues including principles of legality and legal certainty, as it undermined a joined-up UK-wide approach to legislating for Brexit by creating a parallel regime to the Withdrawal Act.

Secondly, the Supreme Court held that the Continuity Bill was not incompatible with EU law. A concern to that effect was the basis for the Presiding Officer’s opinion, when the Continuity Bill was introduced, that it was outside competence, for example because it purported to disapply EU law in Scots law. However, the court decided that there was no incompatibility, because the provisions that would be in breach of EU law would not come into effect until the point of Brexit, when EU law would cease to apply.

However, the court sided with the UK Government in striking down specific parts of the Continuity Bill. In particular, it considered that s 17 of the bill, which purported to make UK Government regulations subject to Scottish Government consent, would be inconsistent with the express provision in s 28(7) of the Scotland Act that the UK Parliament retains the ability to legislate in respect of Scotland. The court considered that the effect of s 17 would be to stop the UK Parliament giving UK ministers powers subject only to conditions that the UK Parliament itself wanted to impose. Accordingly, it would in effect be a limitation on the sovereignty of the UK Parliament and so implicitly modify s 28(7). For that reason alone, the Continuity Bill would always have to have been amended before it could be submitted for Royal Assent.

Beyond s 17, the Supreme Court also struck out a swathe of other provisions in the Continuity Bill, including the Scottish Government’s power to amend EU law to operate effectively after Brexit, an attempt to keep the EU’s Charter of Fundamental Rights as part of Scots law and an obligation on courts to have regard to post-Brexit decisions of the European Court of Justice and actions of the EU. These were struck down on the basis that they were inconsistent with the equivalent provisions in the Withdrawal Act. They were therefore modifications of the Withdrawal Act, and so unlawful because schedule 4 to the Scotland Act makes the Withdrawal Act a protected enactment which the Scottish Parliament is prohibited from modifying.

This was the case even though that restriction in schedule 4 was only added to the Scotland Act by the Withdrawal Act itself. This happened at the point that Act received Royal Assent, which postdated the passing of the Continuity Bill. The court decided that, when considering a reference, it had to determine whether the bill would be within the Scottish Parliament’s powers at the time of its decision, rather than at the time the bill was passed. To have decided otherwise would have raised difficult questions about whether the Continuity Bill or the 2018 Act should take priority.

What are the practical implications of the judgment?

The immediate political controversy relating to the judgment was the issue of whether it was appropriate for the Withdrawal Act to be made a protected enactment after the Continuity Bill was passed, but before the reference was decided. On the one hand, the Withdrawal Act had provided for itself to be added to the list of protected enactments at the point it was introduced to Parliament in 2017, so the UK Government can argue that that intention had always been clear. On the other hand, the Withdrawal Act was amended after the Continuity Bill was passed to ensure schedule 4 would be amended immediately upon Royal Assent, rather than at a time to be specified in an order, which the Scottish Government has described as changing the rules halfway through the game. The political argument on that point may run for some time yet.

From a legal perspective, however, because the Continuity Bill has not been held to be entirely outside competence, the Scottish Parliament could “fix” the points the court identified as problematic and pass it again. Section 36(4) of the Scotland Act provides that, in such circumstances, there must be an opportunity for the bill to be reconsidered by the Parliament. In the first instance it would be open to the Scottish Government to abandon the bill entirely, in which case nothing further would happen, but this seems unlikely. The alternative is that the Government minister in charge of the bill proposes that the Parliament resolves to reconsider the bill, and the Parliament can decide whether or not to do that. If it resolves to reconsider then amendments can be made to the bill for the purpose of resolving the issues identified by the Supreme Court, and so bring the bill within competence. Alternatively, the Scottish Parliament could simply vote the bill down, in which case it would be abandoned. The Scottish Government has said it will be consulting the other parties on how matters should proceed.

The difficulty with amending the bill is that it can only be fixed to be within competence if the offending provisions were amended so as to copy exactly the existing equivalent provisions in the Withdrawal Act. Such amended provisions would therefore not add anything new to the statute book from a legal perspective, but politically the Parliament may feel that it should be done on a point of principle. In any event, the Parliament may take the view that the provisions not struck down by the Supreme Court (such as the “keeping pace” power) should be enacted, and that the Continuity Bill should therefore be made compatible and passed again.

If the Continuity Bill is amended and approved, the law officers will then have a further four week period to decide whether to refer it to the Supreme Court again on a competence question. The Presiding Officer cannot submit a bill for Royal Assent during that “standstill” period, per ss 32 and 33 of the Scotland Act, unless all the law officers say they will not make a reference. Given the time that has already passed in relation to the Continuity Bill, and as long as there are no controversial amendments made, it may well be that the law officers would provide that waiver to allow the bill to be enacted. Otherwise, the bill would receive Royal Assent and become law shortly after the four week standstill period expired.

That timing issue may be particularly relevant, as the dispute over the Continuity Bill has meant that the Scottish Government has not yet published any orders that would prepare the statute book in devolved areas for Brexit. This is in stark contrast to the UK Government, which has already produced hundreds of orders under the Withdrawal Act. If the Scottish Government is intent on not using its existing powers under the Withdrawal Act, the additional time it would take to get the Continuity Bill enacted would add more delay and further compress the time available to get the necessary orders made (if necessary) in advance of Brexit on 29 March 2019. The Scottish Government says it has been working on these orders behind the scenes, so hopefully it will be the case that, once it is clear which Act they are to be made under, the process of making them can get underway swiftly. However, MSPs and other stakeholders will still have reduced time in which to consider and understand the orders, and to plan for their implementation. They will therefore be looking for clarity sooner rather than later on how the Scottish Government intends to proceed.

In terms of future challenges, the reasoning underpinning the incompatibility of the Continuity Bill with EU law – that the Scottish Parliament can, essentially, pass laws that would be outside its competence as long as they will not come into force until and unless the Scottish Parliament gains a power to make them – may be relied on in future cases: for example, if the Scottish Parliament were to legislate in respect of a reserved matter in anticipation of the issue being devolved at some point in the future. However, there would be a question as to whether this “prospective competence” concept would be available in respect of reserved matters, where the question is not one of “incompatibility” but of whether legislation “relates to” a reserved matter, and legislation relating to a reserved matter would have that status at the point it is made regardless of when it came into effect. But that is a constitutional battle for another time.