Why the Internal Market Bill is both a rule of law and devolution problem

Yielding to a new economic constitution

October 22, 2020
Photo: Victoria Jones/PA Archive/PA Images
Photo: Victoria Jones/PA Archive/PA Images

As widely anticipated, the government’s UK Internal Market Bill received a hostile reception during its Second Reading debate in the House of Lords. Peers attacked the bill for its assault on the rule of law or its capacity to undermine the delicate devolution settlement in the UK. Indeed, criticisms of the bill have tended to fall into one of these two camps. It seems that one is either a guardian of the rule of law—in which case it is the provisions modifying the Withdrawal Agreement that are attacked—or one is a defender of devolution—in which case it is the “market access” principles in the bill that come in for anxious scrutiny.

That there might be a unifying thread to these complaints was revealed from an unlikely source—former Conservative cabinet minister and Brexit enthusiast Peter Lilley. In his intervention in the Lords’ debate, Lilley drew a comparison between the EU’s apparent willingness to act in breach of international law and what the UK Government was proposing to do in the Internal Market Bill. Referring to litigation before the Court of Justice of the EU in Kadi—a case concerning whether the EU is bound to implement a UN Security Council decision to sanction certain individuals alleged to have terrorist links—Lilley quoted from the Opinion of the Advocate General:

“It would be wrong to conclude that, once the Community is bound by a rule of international law, the Community Courts must bow to that rule with complete acquiescence and apply it unconditionally.”

Warming to his theme, Lilley also highlighted examples where the German Constitutional Court had indicated circumstances in which it would not consider itself bound by its international obligations under EU law.

What these examples share is the proposition that there are conditions under which compliance with international law is asked to cede to the fundamental constitutional requirements of a legal order. That was the point in Kadi; could the Court of Justice simply ignore the protection of EU fundamental rights when implementing international law? Similarly, national courts in Germany and elsewhere have sought to safeguard constitutional rights (and more controversially, constitutional identity) when complying with their EU law obligations. All of which led Lilley to pose the central question: “Are there potential conflicts between obligations under the withdrawal treaty and our fundamental constitutional laws?”

Answering such a question is never easy in a country like the United Kingdom that lacks a written constitution. And when the UK Supreme Court claims, as it did in the 2019 prorogation case, that constitutional principles have been breached, some will complain of judicial overreach and a judicialisation of the UK’s political constitution. But assuming that one can still usefully speak of “fundamental constitutional law” in the UK, what might that be in the context of a conflict between domestic law and the Withdrawal Agreement?

One answer is that the bill intends to enshrine in law economic rules—the market access principles of mutual recognition and non-discrimination—to replace and emulate the discipline previously exerted by EU law; a discipline which has often been described by EU lawyers as forming an “economic constitution.” That EU law is derived from the primary law of the treaties, and enjoys supremacy over inconsistent domestic legislation and even over inconsistent rules adopted by European institutions, gives EU economic law this constitutional character. While a UK statute may not have the same character precisely, nonetheless the bill might be said to be a novel type of “constitutional statute,” incorporating an economic rather than a political objective.

What Lilley’s speech highlights, therefore, is that the UK Internal Market Bill is simultaneously a recasting of the domestic economic constitution among the constituent territories of the UK, and an assertion that the Withdrawal Agreement must cede to the demands of this new economic unionism. To see criticisms of the bill as rooted either in rule of law concerns or in anxieties about devolution is to miss this essential connection.

Recognising this connection leads to an important conclusion. Removing Part 5 of the bill and its provisions which contradict international law will avoid the immediate legal conflict. However, this would leave untouched the core issue, namely the consequences of the Westminster Government’s pursuit of a new economic legal order for the whole of the UK. The assertion of the unity of the UK internal market will continue to engender difficulties in reconciling Northern Ireland’s position in both this and the EU’s internal market. Meanwhile both Scotland and Wales will seek to protect their devolved powers against the intrusions of economic unionism.

Which is where Lilley’s analogy breaks down. The situation is not analogous to one in which a settled set of internal constitutional principles is invoked to manage an international legal provocation. Rather the Internal Market Bill is a constitutional irritant with both international and internal ramifications.