This post is excerpted from a short paper published today, available here:
Oral argument in the Brexit Case in the Administrative Court last week left an easy case looking a bit difficult. It allowed Lord Pannick QC, for the lead claimant, to reiterate a couple of dozen times in his Reply, unchallenged, the glaringly fallacious syllogism on which he has rested the claim: (1) statutory rights enacted by Parliament cannot be destroyed (removed, defeated, etc.) by executive action without Parliamentary statute [or authorization]; (2) the myriad rights acquired by UK persons under the Treaties given effect in the UK by s. 2(1) ECA 1972 are statutory rights enacted by Parliament; (3) therefore no executive action can be taken to terminate the UK’s adherence to those Treaties without authorization by statute [or other parliamentary authorization].
But rights acquired by virtue of s. 2(1) ECA are not “statutory rights enacted by Parliament”. They are rights under the treaty law we call EU law, as it stands “from time to time”. They are thus subjected to alteration by decisions made in the international realm by EU or EU-related bodies and processes, in which the Crown participates by exercise of its prerogative, for the most part without restraint or pre-authorization by Parliament, let alone by statute. So there are two necessary conditions for the existence, effect and operation of these treaty-based UK rights as rights – yes, “statutory rights” – in UK law. One is that they be rights from time to time created or arising by or under the Treaties. The other is the silent operation of s. 2(1) ECA. The latter necessary condition does not suffice to sustain them as treaty-based UK statutory rights if they cease to be in effect in or under the Treaties, by virtue of something done to or under the Treaties – often something done entirely without pre-authorization, or indeed any authorization, by the UK Parliament.
These treaty-based UK rights for which s. 2(1) ECA is a necessary condition are closely analogous to the treaty-based UK rights acquired under double-tax treaties, treaties given statutory effect in UK law as they have international effect from time to time. The analogy was approached in oral argument for the Government by James Eadie QC and in reply by Lord Pannick, and was left in some obscurity, an obscurity the latter had no incentive to dispel.
What precisely is it? ECA 1972 s. 2(1) gives effect in UK law to “all such rights… from time to time created or arising by or under the Treaties…”. The Taxation (International and Other Provisions) Act [TIOPA] 2010 s. 2 (just like its substantially identical antecedents in 1988, 1970, 1952 and beyond) gives effect “despite anything in any enactment”, to any double tax treaty about which an Order in Council has declared (a) that the treaty makes arrangements for affording relief from double taxation and (b) “that it is expedient that those arrangements should have effect”. The rights created by each of these two Acts are statutory in the broad sense that, in each case s. 2 of the statute is a necessary condition (one of two necessary conditions) for the rights’ legal efficacy in the UK, but they are non-statutory in the precise sense that Parliament has not enacted them, and in many, most or all cases has given them efficacy contingently on their coming into effect and remaining in effect “from time to time” as treaty-based UK rights.
What does this mean? It means that the content of the rights – the treaty-based UK rights – can be changed, and the rights even eliminated (destroyed, to use Lord Pannick’s favoured term) without the slightest intervention by Parliament, let alone a statute. If Russia terminates the UK-Russia double tax agreement, the rights are destroyed. If the UK exercises its same power, under art. 29 of the UK-Russia double tax agreement, to terminate the agreement by 6 months’ notice given “through diplomatic channels”, the treaty is terminated and the arrangements it had made for avoiding double taxation of Russian and UK residents cease to be in effect, both internationally and as a matter of the UK law in and under ss. 2 and 6 of the 2010 Act. The rights that had existed under UK law – rights of great importance to all persons concerned – are destroyed.
Yet no one would or could plausibly suggest that a statute is required to authorize the UK Government to terminate the UK-Russia double tax treaty or any of the other similar treaties (about 140 of them). This all makes obvious the radical ambiguity of steps (1) and (2) in Lord Pannick’s syllogism. Treaty-based rights are statutory in that they depend for their effect in UK law on Parliamentary enactment; but they are not statutory inasmuch as they are not themselves enacted by Parliament and can be terminated (“destroyed”) by termination of treaties in the course of the Crown’s dealings with foreign entities or states. Such termination fully respects the Case of Proclamations, the Bill of Rights prohibition and annulling of executive dispensation from or suspension of statutes, and any other established constitutional principle. Steps (2) and (3) of the syllogism are false.
There is in fact and law a fundamental asymmetry between the introduction of treaty-based rights, powers or obligations into UK law, and the termination of such rights. Introduction can only be by statute. The treaty is a necessary but not a sufficient basis; the other necessary condition is a statute. Termination, on the other hand, can be by executive action terminating the treaty. For the removal of one of the two necessary conditions is of itself sufficient to eliminate the right. The statute is a necessary condition for introduction, but is not sufficient to sustain it when the other (and independent) necessary condition – the treaty – disappears in the course of the UK’s dealings with foreign entities (whether states or treaty-based entities such as the EU). (This all shows, incidentally, that the term “incorporation of a treaty by statute” is ambiguous, in essentially the same way as Lord Pannick’s “statutory rights”.)
Parliament has had sight of the termination provision (escape clause) present in all our double tax treaties, each treaty being scheduled to its country-specific Order in Council, laid in draft before the Commons (as required by s. 5(2) TIOPA) prior to that House’s address to Her Majesty to make the Order and thus bring into effect the international arrangement and the treaty-based UK rights thereby arising. Parliament has taken no steps to restrain or impose conditions on the simple, one-step diplomatic action sufficient to terminate the agreement, notwithstanding the great impact of such action on those “statutory rights”.
Similarly, Parliament had sight of art. 50 of the Treaty on European Union when by statute (s 2 European Union (Amendment) Act 2008) it added the Lisbon Treaty to the list of Treaties in s. 1 ECA 1972. In adding that Treaty it made various important exceptions and also made provisions about the use of UK executive powers in the conduct of EU affairs. But it did not except or make any other provisions about art. 50, either then or in the European Union Act 2011 which extended the restrictions imposed by Parliament in 2008 on UK ministerial actions capable of extending or altering EU treaty-based UK rights overriding common law and statutory rights of the kind that are genuinely the result of Parliamentary enactment. Parliament ratified art. 50, the new escape clause for unilaterally terminating the effect of the Treaties in a Member State.
How was this left in obscurity in court last week? After all, some of the main points made above, about double tax agreements, had been stated briefly in paras. 36-37 of the Government’s Skeleton. But when asked about the relevance of the double tax treaties, counsel said nothing about either the close parallel between s. 2 ECA and s. 2 TIOPA, or the termination provisions in double tax agreements. Instead he talked about Parliament’s (more properly, the lower House’s) involvement in renewal or replacement of renegotiated tax treaties. The true relevance of the double tax treaties to the subject of this litigation thus disappeared from view. It was not brought back into the picture, whether by judicial questioning then nor by Lord Pannick in reply. He was doubtless grateful for the consequent non-appearance of the illuminating analogy – an analogy that had only to appear in focus for his step (1) to collapse, and with it his entire syllogism. He had in any case the delicate task, at that moment, of treating the approval of a draft Order in Council by one House as equivalent to a statute (so as to sustain his doubly extravagant claim that only a statute suffices to introduce “statutory rights” and only a statute suffices to destroy them). The Court did not disturb him in his legerdemain at this point. The entire discussion of double tax treaties between him and Sales LJ at 3: 78-80 is focused on the conditions for their ratification and for the changes in UK primary legislation and rights consequent on a treaty’s being given effect. A treaty’s termination without replacement – the entire analogy with Brexit – remained (it seems) entirely unmentioned!
In sum: Lord Pannick’s first premise, his grand constitutional principle, is falsified, in its ambiguous over-breadth, by the absurdity of maintaining that the UK cannot simply terminate a double tax agreement by executive action under the treaty’s termination provision, independently of any parliamentary action let alone a statute. The symmetry between creation and termination of treaty-based UK rights, assumed by Lord Pannick and asserted by Helen Mountfield QC for some interested parties, is falsified by the simple fact that, just as Parliament need have no role in the making of the treaties without which it cannot act to create treaty-based UK rights, so it need have no role in the unmaking of treaties whose unmaking, without more, pro tanto terminates such rights.
But what if the Government decided to terminate not just one or a few double-tax agreements, but all of them? Would that require pre-approval by a statute? No constitutional principle requires it.
What about Lord Pannick’s fall-back, “Parliamentary pre-approval [short of a statute]”? He interpreted that, as we have seen, to include approval by one House of an Order in Council. On this sub-statutory spectrum of sufficient and allegedly necessary approval why not include a dedicated Act of Parliament for staging under Parliamentary supervision a national referendum on the question “Should the UK remain party to or terminate its existing double tax agreements?”, ministers’ Second Reading speeches assuring both Houses that the intent was to let the people, and not Parliament, decide the fate of all existing double tax agreements (and incidentally securing at each stage of the Bill majorities of over 5 to 1, with never a suggestion by anyone that Parliamentary pre-approval of the terminations would be required after the referendum’s approval of such termination)? Inviting a court to draw a line on this spectrum is inviting it not to apply but to invent constitutional principle.
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In considering the significance of Parliament’s decision not to include art. 50 notifications within the scope of its imposition (in 2008 and 2011) of Parliamentary preconditions to executive action capable of affecting treaty-based UK rights, – preconditions of a kind that goes back at least as far as s. 6 European Parliamentary Elections Act 1978) – it is worth considering some of the import of art. 50 as a whole.
Art. 50 obviously provides a mechanism for the dissolution of the entire EU, or for the withdrawal from it of any number of member states. All that is required is a set of perhaps coordinated or more or less coincident notifications under art. 50(2), followed as promptly as desired by a corresponding set of withdrawal agreements each given qualified majority approval by the European Council under art. 50(2) and taking immediate effect under art. 50(3). The UK could (within a few weeks of the start of such a dissolution) be left as the only member of the EU, all without the slightest Parliamentary involvement, and with or without UK Government approval in the Council of any of these agreements. It is absurd to suggest that the UK Government would need statutory approval to make an art. 50(2) notification to and agreement with the rump European Council of which our Prime Minister was now the only voting member – so as to terminate the UK’s relationship with the EU and with it our obligation to pay in perpetuity the salaries of that Council’s two non-voting members (not to mention all the other running costs of the EU) and to terminate – destroy – the “constitutional” EU-based “statutory rights” of UK persons under s. 2(1) ECA.
That scenario merely dramatizes the fact that the making and unmaking of treaties – and of the rights that can if Parliament so enacts be derived from such treaties – is foreign affairs, a field in which decisions of great moment can and often should be made without requiring, under our constitution, any Parliamentary pre-authorization or advance approval by legislation. (And the scenario is scarcely more make-believe than the assumption on which the present litigation is curiously proceeding, that a notification under art. 50(2) is irrevocable.)
John Finnis FBA is Professor Emeritus of Law & Legal Philosophy at the University of Oxford and Biolchini Family Professor of Law in the University of Notre Dame. He was Rhodes Reader in the Laws of the British Commonwealth and the United States in the University of Oxford from 1972 to 1989 and then Professor of Law & Legal Philosophy there until 2010. He is a Fellow of the British Academy in the Law and Philosophy sections, an Honorary Fellow of University College, Oxford and a member of Gray’s Inn.