Today, Reed Smith is hosting a client roundtable in London, “Identifying and Mitigating Risk in a Changing Global Economy,” for life sciences clients.  In light of that, we thought it would be a good idea to have a blogpost that’s relevant to what’s hot in the UK.  Well, there’s nothing hotter on that side of the Pond right now than the increasingly shambollixed up approach to Brexit.  One thing we were wondering about, over here, is whether a crash out Brexit would at least get rid of, in the UK anyway, a couple of extremely unfavorable decisions from the European Court of Justice that we’d blogged about earlier.  We didn’t know, so we asked Simon Greer, a Reed Smith lawyer in our London office if he knew the answer.  He did, and below is his response.  As always our guest posters deserve all of the credit (and any blame) for their posts.

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The timing and implications of Brexit in the UK are currently one of life’s great unknowns. The latest position is that Theresa May’s latest proposed Brexit deal will be voted on by MPs in Parliament by 12 March 2019. However, the Prime Minister has also indicated that if her latest deal is rejected, MPs will be offered two separate votes shortly thereafter:

  1. Whether or not MPs would support a ‘no-deal’ Brexit, meaning that the UK would only leave without a deal on 29 March 2019 if there was consent from the House of Commons for a ‘no-deal’ Brexit; and
  2. If the prospect of a ‘no-deal’ Brexit on 29 March 2019 is rejected by MPs, they will then be given a vote by 14 March 2019 as to whether the UK should request an extension to the 2 year Article 50 process, thereby delaying the UK’s withdrawal to a date beyond 29 March 2019 (the length of such a delay is, as yet, unknown).

In the pharmaceutical industry, the impact of a potential ‘no-deal’ Brexit on 29 March 2019 on the precedential value of the decisions of the Court of Justice of the European Union (“CJEU”), will be of significant interest. This is because the CJEU’s recent decisions in the pharmaceutical sector have had a significant impact on the law in the UK, adverse to pharmaceutical companies, two examples of which we have discussed in previous blog posts:

Causation or No Causation, That Is the Question.

Bad News from Europe for Makers of Life-Saving Medical Devices

So, would a ‘no-deal’ Brexit effectively re-set the clock and eliminate the consequences of CJEU’s decisions in the UK made prior to Brexit?  The answer, unfortunately, is: no, so a ‘no deal’ Brexit would not even have this silver lining.

Whilst Theresa May on 17 January 2017 stated that: “we will take back control of our laws and bring an end to the jurisdiction of the European Court of Justice in Britain. Leaving the European Union will mean that our laws will be made in Westminster, Edinburgh, Cardiff and Belfast.  And those laws will be interpreted by judges not in Luxembourg but in courts across this country.  Because we will not have truly left the European Union if we are not in control of our own laws”, that rhetoric was hollow.  Her comments were in fact forward looking only, rather than applying to adverse CJEU decisions made prior to Brexit.

This is clear from the provisions of the EU (Withdrawal) Act 2018 (“the Act”).

In terms of CJEU decisions made after Brexit, the courts of the UK will no longer be bound by them but they will still be permitted to have regard to [Ed. Note – that’s British English for ‘follow’] them, if they are relevant to an issue that is before them. Sections 6(1) and (2) of the EU (Withdrawal) Act 2018 provide:

6 Interpretation of retained EU law

(1) A court or tribunal—

(a) is not bound by any principles laid down, or any decisions made, on or after exit day by the European Court, and

(b) cannot refer any matter to the European Court on or after exit day.

(2) Subject to this and subsections (3) to (6), a court or tribunal may have regard to anything done on or after exit day by the European Court, another EU entity or the EU so far as it is relevant to any matter before the court or tribunal.

As for CJEU decisions made before Brexit, these will form part of what is described as ‘retained’ EU law under the Act. The treatment of retained EU law after Brexit in the UK is explained in sections 6(3) to (6) of the Act (set out below). In short, whilst the Supreme Court in the UK and Scotland’s High Court of Justiciary (the supreme criminal court in Scotland) are not bound by any decisions of the CJEU made prior to Brexit, all other courts in the UK will be bound by CJEU decisions made prior to Brexit:

(3) Any question as to the validity, meaning or effect of any retained EU law is to be decided, so far as that law is unmodified on or after exit day and so far as they are relevant to it—

(a) in accordance with any retained case law and any retained general principles of EU law, and

(b) having regard (among other things) to the limits, immediately before exit day, of EU competences.

(4) But—

(a) the Supreme Court is not bound by any retained EU case law,

(b) the High Court of Justiciary is not bound by any retained EU case law when—

(i) sitting as a court of appeal otherwise than in relation to a compatibility issue (within the meaning given by section 288ZA(2) of the Criminal Procedure (Scotland) Act 1995) or a devolution issue (within the meaning given by paragraph 1 of Schedule 6 to the Scotland Act 1998), or

(ii) sitting on a reference under section 123(1) of the Criminal Procedure (Scotland) Act 1995, and

(c) no court or tribunal is bound by any retained domestic case law that it would not otherwise be bound by.

(5) In deciding whether to depart from any retained EU case law, the Supreme Court or the High Court of Justiciary must apply the same test as it would apply in deciding whether to depart from its own case law.

(6) Subsection (3) does not prevent the validity, meaning or effect of any retained EU law which has been modified on or after exit day from being decided as provided for in that subsection if doing so is consistent with the intention of the modifications.

In summary, pharmaceutical companies need to be mindful of the fact that existing CJEU decisions made prior to Brexit, even if it is a ‘no-deal’ Brexit, will be binding on courts in the UK, unless those decisions come before the Supreme Court and are overruled by a new, post-Brexit decision of the Supreme Court, which would then take primacy in the UK over the prior CJEU decision.