European Union: Retained EU Law: 10 Key Questions

The UK's departure from the European Union has not led to all EU-derived law being jettisoned; on the contrary, a significant proportion of it has been kept and the UK now has a new category of "retained EU law". This briefing explains what retained EU law is and why it's important. It also looks at a number of important "separation issues", such as whether you can still claim for a breach of EU law which occurred before the end of the Brexit transition period.

Important: The Retained EU Law (Revocation and Reform) Act 2023 will make significant changes to the treatment of retained EU law, largely with effect from 2024 onwards; see our briefing for more information. This guide describes the position until the end of 2023, at which point we plan to amend it to reflect the new legislation. This guide was first published in February 2022 but has been updated periodically, most recently in August 2023.

1. What is retained EU law and why do we need it?

Having been a member of the EU since 1 January 1973, it's not surprising that EU law has greatly influenced the development of UK law over the past 4 decades. If all of EU law had simply been "jettisoned" on the UK's exit from the EU, this would have left substantial gaps in the UK's legal framework, giving rise to significant uncertainty. It would also potentially have deprived individuals and businesses of important rights derived from EU law which they reasonably expected to continue beyond Brexit. In order to avoid this, the European Union (Withdrawal) Act 2018 created a new concept within UK law known as retained EU law.

Retained EU law

Retained EU law started life as a "snapshot" of all EU law which was in force and applicable in the UK at the end of the Brexit transition period i.e. 11 pm on 31 December 2020 (referred to in the legislation as "IP Completion Day"). This includes all EU-derived UK legislation (such as legislation to implement an EU Directive), all EU Regulations and all directly applicable EU Treaty articles, together with all relevant EU case law, EU Decisions and certain general principles of EU law.

However, following the end of the Brexit transition period, that snapshot was immediately altered by UK legislation (including hundreds of statutory instruments) so as to effectively subtract or amend certain parts of EU law. These were parts which the UK either did not wish to retain at all or needed to be changed to reflect the UK's new status outside the EU. This is explained in more detail below, by reference to different categories of EU law and citing a number of examples relevant to business.

In some areas, particularly those relating to trade with the EU, the end of the Brexit transition period has already resulted in important changes - see for example our guide to the UK-EU Trade and Cooperation Agreement. However, looking more widely, if you were to compare the current picture with the initial "snapshot" as it existed at 11 pm on 31 December 2020, you would find that in many areas they continue to look quite similar - and it is only by looking closely at the detail that any differences are apparent. Of course, as time goes on, more differences are likely to emerge, especially if the UK chooses to diverge significantly from the EU's approach - see further Section 10 below.

Retained EU law database

The Government has set up a searchable database of retained EU law. However, bear in mind that it does not claim to be fully comprehensive and does not link directly to the full text of the relevant law, as modified by UK legislation (where applicable). If you require assistance with identifying retained EU law relevant to your business, see Section 11.

"Sunsetting" and other proposals for change

In September 2022, the Government published a Bill proposing wide-ranging changes, including setting a "sunset" date of 31 December 2023 for the majority of retained EU legislation to expire (unless expressly preserved). See Section 10 for more details.

2. Does any EU law continue to apply in the UK?

The Northern Ireland Protocol of the Withdrawal Agreement provides that certain aspects of EU law continue to apply "to and in the United Kingdom in respect of Northern Ireland". This reflects the unusual status of Northern Ireland, which continues to benefit from free movement of goods with the EU (whereas the rest of the UK does not).

Which EU laws continue to apply as regards Northern Ireland?

The Northern Ireland Protocol lists the provisions of EU law which continue to apply as regards Northern Ireland. They include:

• the EU state aid rules;
• certain EU legislation relevant to goods (notably product standards), customs and VAT; and
• certain EU legislation relating to wholesale electricity markets.

This has significant practical implications for trade in goods between the mainland UK and Northern Ireland; for example, as a general rule, goods from the UK destined for Northern Ireland must meet EU standards, as specified in the Protocol. It also has implications for decisions by the UK Government to award subsidies or other forms of state aid; for example, certain types of aid would arguably need prior approval from the European Commission (if the measure would be likely to have an impact on trade in goods or electricity between Northern Ireland and the EU). For more information, see our briefings on the UK's post-Brexit state aid regime and the Subsidy Control Bill.

Aside from the provisions listed in the Northern Ireland Protocol, EU law ceased to apply in the UK with effect from 11 pm on 31 December 2020. However, as explained in Section 1 above, the concept of retained EU law means that for practical purposes, many aspects of EU law remain relevant in the UK. Strictly speaking though, all of this retained EU law now forms part of UK law (which is now distinct from EU law and may develop in a different way in future).

Save to the limited extent provided for in the Northern Ireland Protocol (see Section 2 above), EU Directives ceased to apply in the UK with effect from 11 pm on 31 December 2020. This in itself did not risk leaving a significant "hole" in UK law because EU Directives have to be implemented through national legislation, which meant that the UK already had measures on its own statute book in all the areas covered by EU Directives. Furthermore, section 2 of the European Union (Withdrawal) Act 2018 expressly preserved all EU-derived domestic legislation (which includes all UK legislation implementing EU Directives). The issue for the UK Government was simply how to make the existing EU-derived domestic legislation fit for life outside the EU. This has been achieved by using statutory instruments to make a large number of mostly technical amendments to existing legislation. Typical changes include:

• Replacing references to the European Commission with UK Ministers or UK regulators; and
• Removing reciprocity e.g. obligations that require EU or EEA persons to be treated in the same way as UK persons.

Treatment of EU Directives: some examples

Some UK legislation derived from EU Directives has been retained with no amendments at all. Examples include:

• the Working Time Regulations 1998, which effectively impose minimum standards on matters including working hours, paid holiday and rest periods; and
• the Commercial Agents (Council Directive) Regulations 1993 which, among other things, give agents the right to claim post-termination payments (designed to compensate them for goodwill built up on behalf of the principal during the period of the agency).

That said, subject to certain constraints (see Section 10 below) the UK is now free to change legislation in these (and many other) areas - although whether it will actually do so remains to be seen.

In other cases, numerous changes were necessary to make the legislation "work" outside the EU. For example, depending on the context, references to EU supervisory institutions in many pieces of financial services legislation derived from EU Directives have been replaced with references to UK bodies such as the Financial Conduct Authority, the Prudential Regulation Authority, the Bank of England or UK Ministers, as appropriate. This has happened, for instance, in the UK legislation that had originally transposed the regimes established by Alternative Investment Fund Managers Directive (AIFMD) and the recast Markets in Financial Instruments Directive (MiFID II). Similarly, provisions allowing for reciprocal recognition of financial services providers authorised by EU and EEA Member States and the concept of "passporting" financial services on a cross-border basis or through the establishment of branches have been removed (to reflect the UK's exit from the EU Single Market).

EU Regulations include legislation such as the EU General Data Protection Regulation or GDPR, which is the key legal instrument governing the treatment of personal data in the EU (see below for more examples). As is the case with EU Directives, EU Regulations ceased to apply in the UK with effect from 11 pm on 31 December 2020, save to the limited extent provided for in the Northern Ireland Protocol (see Section 2 above). However, many EU Regulations have been brought onto the UK statute book and then amended, in much the same way as EU Directives.

In contrast to EU Directives though, EU Regulations apply automatically to all members of the EU as soon as they enter into force, without the need for transposition into national law. As a result, EU Regulations posed a bigger problem for the UK Government than Directives; for example, if the UK had done nothing, EU GDPR would have ceased to apply, leaving a significant hole in the UK's regulatory framework for personal data.

Section 3 of the European Union (Withdrawal) Act 2018 therefore brought the entire text of all relevant EU Regulations onto the UK statute book "as is". It was then a case of amending these new UK legal instruments in a manner similar to UK legislation implementing EU Directives, so as to ensure that they were fit for life outside the EU. The types of changes made are similar to those made in relation to Directives (see Section 3 above). They have largely been brought into effect using statutory instruments made before 11 pm on 31 December 2020, but which did not take effect until after that date.

Retained EU Regulations: GDPR as a case study

In the case of the GDPR, the full text of the Regulation (including its recitals) was "brought across" onto the UK statute book. A number of provisions were then repealed, such as those providing for cooperation with other EU regulators and those relating to decisions of the EU Data Protection Board (since the UK would not be subject to those obligations after leaving the EU). Other provisions were amended, for example to make clear that the UK version of the Regulation only applies in the UK, not the EU and to remove references to other EU legislation. However, so far as UK businesses are concerned, these changes will make little difference because the UK has not changed the substance of the rules on how personal data should be treated (although there are proposals to reform the existing regime).

Treatment of EU Regulations: further examples

Examples of other EU Regulations which have been brought across onto the UK statute book and amended in a similar way to the GDPR include:

• financial services legislation such as the Markets in Financial Instruments Regulation (MiFIR) (part of the MiFID II regime referred to above), the AIFMD Regulation (setting out so-called Level 2 measures for the purposes of the AIFMD regime referred to in Section 3 above) and a domesticated version of the European Market Infrastructure Regulation (EMIR). In addition, to support those and various other financial services measures, a raft of EU Regulations setting out detailed "technical standards" have also been incorporated into UK rules with, in some cases, amendments made by UK supervisors such as the Financial Conduct Authority, the Prudential Regulation Authority and Bank of England under powers delegated to them by HM Treasury.
• environmental legislation such as the Ozone Depleting Substances Regulation and the Persistent Organic Pollutants Regulation (POPR); both are adjusted to reference UK government bodies as regulators in place of the European Commission, and the UK version of the POPR further reflects the end of the UK's formal relationship with the European Chemicals Agency and participation in its associated fora.

However, some retained EU Regulations were repealed in full with effect from 11 pm on 31 December 2020. Examples include:

• EU Regulations relating to membership of Euratom (from which the UK has withdrawn); and
• EU Regulations relating to the procedures to be followed by the European Commission when enforcing EU competition law (which no longer applies in the UK - for more detail on post-Brexit competition law, see this briefing).

The vast majority of EU Treaty Articles have not been retained by the UK in any form, but there are two exceptions to this. First, the state aid rules of the EU Treaty continue to apply in respect of Northern Ireland (see Section 2 above). Secondly, where an EU Treaty Article created rights that individuals and businesses could rely on directly in courts, section 4 of the European Union (Withdrawal) Act 2018 preserves those rights. One example is the right contained in Article 157 relating to equal pay for equal work between men and women, which continues to be available in UK law.

Disapplication of "saved" Treaty-derived rights

However, not all directly applicable EU Treaty rights continue to be available in this way and many have effectively been disapplied. One example is Article 101 prohibiting anti-competitive agreements. Since the UK already had its own national competition law in the form of the Competition Act 1998, the UK Government took the view that rights in that area were already adequately protected by existing UK law. It has therefore legislated so that the rights protected by Article 101 cease to be available in domestic law from 11 pm on 31 December 2020 (although it remains possible to sue for breaches of Article 101 that took place before then, subject of course to any relevant limitation periods - see Section 9 below). Similarly, rights relating to free movement of services (based on Articles 56 and 57) have also been disapplied with effect from the end of 2020, reflecting the UK's decision to leave the EU Single Market.

It should not therefore be assumed that all directly applicable Treaty rights continue to be available in UK law. Whilst there is an indicative list of directly applicable EU Treaty Articles (see pages 24-25 of this document), the UK Government has not (so far as we are aware) produced a definitive list of Treaty-derived rights which have been retained and can still be relied upon going forward. Searches of the Government's database of retained EU law suggest that other directly applicable nights which may continue to be available include aspects of Articles 110, 111 and 113 in relation to VAT and aspects of Article 21(1) in relation to social security. However, the database only provides limited information and we have been unable to use it to extract a comprehensive list of Treaty-derived rights which remain part of retained EU law.

When interpreting EU law, it is important to have regard to general principles of EU law, such as proportionality (see below for more examples). Post-Brexit, whilst the UK could in theory have instructed its courts not to have regard to any of these principles, this would have given rise to difficulties similar to those described Section 6 above on EU case law.

Section 6 of the European Union (Withdrawal) Act 2018 therefore provides that, when considering retained EU law, UK courts are bound by these principles so far as they had effect in EU law immediately before 11 pm on 31 December 2020 (but not as developed further by the CJEU after that date).

Examples of general principles of EU law

• Proportionality - the principle that a measure should not go beyond what is appropriate and necessary to achieve its objective
• Non-retroactivity - the principle that laws should not normally be applied retrospectively e.g. so as to make something that happened in the past (and was legal at the time) illegal
• Equivalence - the principle that claims based on EU law should not be treated less favourably than claims based on national law
• Effectiveness - the principle that it should not be unduly difficult to enforce a claim based on EU law (e.g. because national rules make it unduly difficult to obtain a meaningful remedy for the breach, such as damages)

Limitations on the retention of general principles of EU law

The retention of general principles of EU law is primarily intended as a tool to aid interpretation; indeed, Schedule 1, paragraph 3 of the European Union (Withdrawal) Act 2018 provides that they cannot be relied upon to bring a claim in their own right after the end of 2020 (save as regards claims relating to matters before that date - see Section 9 below). The same provision also states that no court can disapply or quash any measure or action based on incompatibility with retained general principles of EU law. However, a number of commentators have suggested that the UK courts may well find ways around these apparent obstacles, particularly where they consider that there has been a clear breach of an important general principle which merits a remedy.

Similarly, although the Charter of Fundamental Rights is excluded from retained EU law, this will not necessarily prevent the UK courts having regard to such rights in future. In particular, the UK remains a signatory to the European Convention on Human Rights, which is effectively incorporated into UK law via the Human Rights Act 1998. In addition, it appears that retained EU case law (see Section 6 above) which refers to Charter rights would still be binding on the UK courts.

What has happened to the principle of supremacy of EU law?

The principle that EU law takes precedence over national law has only been retained in qualified form. Section 5(2) of the European Union (Withdrawal) Act 2018 provides that it continues to apply where a conflict arises between pre-2021 domestic legislation and retained EU law (in other words, for the time being, retained EU law continues to take precedence over pre-2021 domestic legislation covering the same area). However, UK legislation passed after 2020 which is inconsistent with EU retained law will take precedence over the latter. The UK Government has indicated that it may revisit this (possibly with a view to removing the principle of supremacy altogether). For more detail, see Section 10 below.

Proposals for change

In September 2022, the Government published a Bill proposing significant changes, including the removal of the above principles from UK law, even where they are only used as an aid to interpretation. For more detail, see Section 10.

8. What has happened to EU Decisions - and why are these important?

EU Decisions are a form of EU legislation which may be less familiar to many businesses (as compared with say, EU Directives), but they play a significant role in some areas - and so the question of their post-Brexit status is not purely academic. EU Decisions have limited rather than general application and for this reason are always addressed to specific entities (which may be some or all EU Member States or specific legal or natural persons). Examples of their use include:

• Regulatory detail: EU Decisions are also sometimes used to set out technical detail relating to particular regulatory frameworks. For example, various EU Decisions have been issued under the EU regulatory framework for air quality setting out guidance on how it should be applied, or for pollution control, specifying the standards to be met by installations. In these cases, the EU Decisions were addressed to the Member States.
• Enforcement of EU law: EU institutions such as the European Commission issue EU Decisions when clearing mergers under the EU Merger Regulation or imposing fines for breach of EU competition law. In these cases, the EU Decisions are usually addressed to (and binding on) particular businesses.

Why was it important to preserve EU Decisions?

If existing EU Decisions had simply ceased to apply in the UK after Brexit, this would have risked leaving "holes" in certain regulatory frameworks. As regards EU Decisions relating to enforcement of EU law, there could have been a variety of consequences, depending on the context. For example, commitments given to the European Commission by UK businesses in order to secure clearance under the EU Merger Regulation or in response to antitrust investigations could have ceased to be enforceable in the UK. This in turn could have put the UK in breach of Article 95 of the Withdrawal Agreement, which provides that EU Decisions addressed to the UK or to persons residing or established in the UK and adopted before the end of the Brexit transition period are binding on and in the UK.

To avoid the potential adverse consequences outlined above, section 3 of the European Union (Withdrawal) Act 2018 brought all relevant EU Decisions in existence as at 11 pm on 31 December 2020 onto the UK statute book, thus effectively preserving their validity in UK law. In cases where the relevant EU Decision formed part of a regulatory framework, it may then have been amended by statutory instrument to reflect the UK's departure from the EU (in a similar manner to EU Directives and EU Regulations).

Finally, some EU Decisions continue to apply as regards Northern Ireland as a result of the Northern Ireland Protocol of the Withdrawal Agreement (see Section 2 above).

In the case of Article 101 (as pointed out in Section 5 above), a statutory instrument provides that the right ceases to be available in UK law - which might initially suggest that there is a "contrary intention" to the general principle set out in section 16 of the Interpretation Act 1978. However, other provisions of the same statutory instrument go on to make it clear that you can still bring claims for breaches of Article 101 that took place before the end of the transition period (see Part 6 of Schedule 4 to the Competition (Amendment etc) (EU Exit) Regulations 2019, as amended). That said, there may well be cases where it is less clear and greater reliance would need to be placed on section 16 of the Interpretation Act 1978.

This is also a complex and potentially confusing area, where the caselaw is not entirely consistent - see below under under the heading "Pre-2021 claims generally: a word of warning".

Pre-2021 Francovich claims: a 2 year time limit

If your pre-2021 claim for failure to comply with EU law is against the state rather than against another business, that would normally involve so-called Francovich damages. Although not all that common in practice (and often difficult to establish), examples of Francovich claims relevant to business include:

• claims against a public body for breach of the EU state aid rules; or
• claims against the UK Government for failure to implement an EU Directive properly before the end of the transition period.

The general position under the European Union (Withdrawal) Act 2018 is that the right to bring Francovich claims is completely removed under UK law - but there are a number of exceptions. In particular, where the alleged breach took place before 11 pm on 31 December 2020, it remains possible to bring a claim but the legislation imposes a 2 year time limit. In practice, this means the claim must be brought before the end of December 2022, which - depending when the claim arose - may significantly curtail the normal limitation period.

Pre-2021 claims based on general principles of EU law: a 3 year time limit

As explained in Section 7 above, the general position is that it is no longer possible to bring claims based solely on breach of general principles of EU law. That said, it remains possible to bring such claims where the alleged breach took place before 11 pm on 31 December 2020 - but this is subject to a 3 year time limit (together with a number of other detailed conditions). In practice, this means the claim must be brought before the end of December 2023, which may (again) significantly curtail the normal limitation period.

Pre-2021 claims: are UK courts bound by post-2020 CJEU case law?

As explained in Section 6 above, the general position as regards CJEU case law is that CJEU judgments made after 11 pm on 31 December 2020 are not binding on the UK courts. However, it has been suggested that, when considering claims for breaches of EU law which occurred before 2021, CJEU case law after the end of 2020 may still be binding on the UK courts. The rationale for this is that section 6 of the European Union (Withdrawal) Act 2018, which sets out the extent to which UK courts should have regard to CJEU rulings, only applies when the courts are interpreting retained EU law - because the latter is essentially a creature of UK law. It does not (arguably) apply to claims based on EU law which arose before the end of the Brexit transition, when EU law still applied in the UK. For more detail, see paragraph 46 of this judgment, where the judge suggests that a CJEU case from 2021 could be binding on the UK courts as regards claims based on EU law before the end of the Brexit transition (but as this was only a summary judgment application, the judge's remarks should not be taken as conclusive on this point).

Pre-2021 claims generally: a word of warning

The approach we have outlined above assumes, broadly, that disputes based on pre-2021 facts will normally be resolved by reference to EU law as it was at the time (since EU law was applicable in the UK up to the end of the Brexit transition period) - whereas disputes arising after the end of the Brexit transition period will be resolved by reference to retained EU law. However, not all the caselaw in this area adopts this approach. In particular, the Court of Appeal in a case called Lipton v BA City Flyer, approached a dispute relating to pre-2021 facts on the basis that it should be resolved by reference to retained EU law. By contrast, other cases have taken an approach more consistent with the position set out in the Interpretation Act outlined above.

More generally, although the basic principle under the Interpretation Act 1978 appears reasonably straightforward, it is not always easy to apply in practice and in any event, there will usually be a need to consider whether Brexit-related legislation alters the position - as highlighted by the various examples above. In some areas, there may be additional complications - for example, in relation to competition law claims based on pre-2021 conduct, so-called "follow-on" damages claims (which rely on EU Decisions) can only be brought if the European Commission initiated the investigation leading to the relevant EU Decision before 11 pm on 31 December 2020. It will also be important to consider limitation periods very carefully.

Having left the EU, the UK is in principle free to change retained EU law as it wishes. However, there are a number of limitations on its freedom of action, including:

• Legal constraints: the UK is constrained to some extent by its commitments in various international agreements. For example, in relation to public procurement - an area the UK Government has highlighted as a leading candidate for reform in the wake of Brexit - the UK is somewhat constrained by both the WTO Government Procurement Agreement and various additional commitments made in the UK-EU Trade and Cooperation Agreement (TCA). The TCA also contains level playing field commitments in relation to areas such as tax, employment, social standards and the environment. For more information see our business-friendly guide to the TCA.
• Logistical constraints: perhaps more importantly, the sheer volume of retained EU law, competing demands on Parliamentary time and the likely need for consultation on substantive changes mean that very rapid divergence from the EU's approach is unlikely to be straightforward, particularly if the Government wish to minimise uncertainty and ensure that any reformed legislation is "fit for purpose", across a wide range of areas.
• Economic constraints: in some sectors, divergence from the EU's approach may bring additional costs for business. This is already apparent in some areas (see, for example, this discussion of chemicals regulation) and unless the benefits clearly outweigh the costs, UK businesses may be resistant to further divergence.

Potential areas of divergence

All that said, in some areas the UK Government is already making progress with plans to take advantage of its newly regained regulatory sovereignty. For example, in the context of financial services regulation specifically, the Government is currently undertaking a fundamental review of the UK regulatory framework; this will likely result in many legislative provisions being replaced by rulebook requirements set by the UK regulators, meaning that, in time, significant amounts of retained EU law relating to financial services will be repealed.

The Government is also looking to reform the UK's data protection regime, in part with a view to reducing "red tape". However, this is another area where divergence could increase red tape for businesses which exchange personal data with the EU; in particular, if the EU were to withdraw its adequacy decision in respect of the UK, additional steps would need to be taken in relation to the transfer of personal data from the EEA to the UK (see this briefing).

Changes to retained EU law from 2024

At the end of June 2023, the Retained EU Law (Revocation and Reform) Act 2023 received Royal Assent. This legislation will make significant changes to the position described in this guide, largely with effect from 2024. Among other things, it will:

• revoke several hundred EU-derived measures;
• change the way that EU-derived legislation is interpreted and applied, potentially creating uncertainty;
• give the government additional powers to change retained EU legislation on a fast-track basis;
• make it somewhat easier for UK courts to depart from retained EU caselaw; and
• introduce new terminology e.g. retained EU law is to be known as "assimilated law" from 2024

For more detail, see our briefing: The Retained EU Law Act: cliff edge removed, but cloud of uncertainty remains. However, until the end of 2023, the position as regards retained EU law is expected to remain as set out in this guide.

11. How we can help

Retained EU law is now a feature of the UK legal landscape and is likely to remain important for some time to come. As explained above, it is not always straightforward and further issues may emerge over time as the UK diverges from the EU in some areas. We can help you navigate those complexities to achieve your commercial objectives, with advice which is always tailored, practical and jargon-free.