An excellent sober summing-up of the legal prospects for UK shipping after Brexit from Toby Stephens at HFW, addressing the UK Chamber of Shipping. Possible improvements noted include freedom from state aid regulation allowing us to attract tonnage here; the possibility of freeing P&I Clubs from the stifling effect of Solvency II; the ability to scrap ships other than in places approved by the EU Commission, and freedom from the Ports and Services debacle. But it’s all worth watching. Video here or here.
Category: EU Law
Brexit and the 2001 Bunker Oil Pollution Convention.
Another legislative casualty of the EU referendum will be the UK’s implementation of the 2001 International Convention on Civil Liability for Bunker Oil Pollution Damage (Bunkers Convention). This was done by inserting s.153A into the Merchant Shipping Act 1995, pursuant to The Merchant Shipping (Oil Pollution) (Bunkers Convention) Regulations SI 2006/1244. As this secondary legislation was made pursuant to the Secretary of State’s powers under s.2(2) of the European Communities Act 1972, it will fall away when the Act is repealed at the culmination of the withdrawal process. Section.153A will then cease to have effect.
‘That referendum’. Article 50 and Judicial Review
An application for judicial review has been launched by London Solicitors, Mischcon de Reya, with a preliminary hearing scheduled for 19 July. The claim argues that only parliament can authorise the giving of notice under Article 50.
Further details can be found in this Guardian article.
Article 50 of the Lisbon Treaty provides:
1. Any Member State may decide to withdraw from the Union in accordance with its own constitutional requirements.
2. A Member State which decides to withdraw shall notify the European Council of its intention. In the light of the guidelines provided by the European Council, the Union shall negotiate and conclude an agreement with that State, setting out the arrangements for its withdrawal, taking account of the framework for its future relationship with the Union. That agreement shall be negotiated in accordance with Article 218(3) of the Treaty on the Functioning of the European Union. It shall be concluded on behalf of the Union by the Council, acting by a qualified majority, after obtaining the consent of the European Parliament.
3. The Treaties shall cease to apply to the State in question from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification referred to in paragraph 2, unless the European Council, in agreement with the Member State concerned, unanimously decides to extend this period.
4. For the purposes of paragraphs 2 and 3, the member of the European Council or of the Council representing the withdrawing Member State shall not participate in the discussions of the European Council or Council or in decisions concerning it.
A qualified majority shall be defined in accordance with Article 238(3)(b) of the Treaty on the Functioning of the European Union.
5. If a State which has withdrawn from the Union asks to rejoin, its request shall be subject to the procedure referred to in Article 49.
Plenty to keep constitutional lawyers busy over the summer.
The EU Referendum. Do the Parliaments decide?
The process of leaving the EU will begin with notification of withdrawal under article 50 of the TFEU. Until this is done the UK remains a member of the EU and is under no obligation to give such notice within any time frame, or, indeed, at all. The process will end with the repeal of the European Communities Act 1972 two years after notification under article 50. This process raises a number of constitutional issues.
Is Scotland’s consent required for withdrawal from the UK? It has been suggested that this might be the case by virtue of these provisions in the Scotland Act 1998.
Section 29(2)(d) states that a provision of an Act of the Scottish Parliament is not law in so far as it is incompatible with EU law (similar provisions appear in the legislation setting up the Northern Ireland and Welsh assemblies).
Paragraph 1 of Schedule 4 prevents modification of certain provisions of the European Communities Act 1972.
Section 57(2) states that a member of the Scottish Government has no power to act in a way that is incompatible with EU law.
However, repeal of the European Communities Act 1972 would not involve a devolved matter and the consequence would be that after withdrawal from the EU, Scotland would remain with the restriction that its legislation in devolved matters must continue to be compatible with EU law.
Who triggers article 50?
The referendum has no binding legal force and it would be open to Parliament to decide not to leave the EU, although politically this would be very unlikely. However, is it up to Parliament to decide? The conventional view is that giving notice under art. 50 falls within the Royal Prerogative and would be something for the Prime Minister. A contrary view has been expressed by various constitutional lawyers, such as Lord Pannick writing in The Times on 30 June.
“Article 50 notification commits the UK to withdrawal from the EU, and so is inconsistent with the 1972 act. Withdrawal is the object of the notification, and it is the legal effect. If, at the end of the negotiating period, parliament disagrees with the withdrawal which flows from the notification, there is nothing parliament could then do to prevent our withdrawal from the EU, which would frustrate the 1972 act. Therefore prerogative powers may not now be used.”
The new Prime Minister, whoever they may be, will be faced with the possibility of immediate legal challenge in the event of their deciding to give notification under article 50. This might well incline them to seek authorisation from Parliament.
The EU Referendum. Part Three. Losing our Directives?
Since 2000 the EU has become increasingly active in the maritime sphere as regards safety and the environment. This has led to a series of Directives, set out below, which will cease to have effect under the implementing statutory instruments in the UK on repeal of the European Communities Act 1972.
First off, there is the series of Directives generated under the third maritime safety package, known as ERIKA III, which entered into force on 17th June 2009.
– Directive 2009/21/EC on compliance with flag state requirements
– Directive 2009/15/EC and Regulation (EC) No. 391/2009 on common rules and standards for ship inspections and survey organisations
– Directive 2009/16/EC on port State control
– Directive 2009/17/EC establishing a Community vessel traffic monitoring and information system
– Directive 2009/18/EC establishing the fundamental principles governing the investigation of accidents in the maritime transport sector
– Directive 2009/20/EC on the insurance of shipowners for maritime claims
This gives Member States the power to expel from their ports vessels which do not have a certificate showing liability for maritime claims up to the limits in the 1976 LLMC as amended by the 1996 Protocol.
Erika III also produced a Regulation.
Regulation (EC) No. 392/2009 on the liability of carriers of passengers by sea in the event of accidents. This brought the 2002 Protocol to the Athens Convention into force within the EU in 2012. The UK has ratified the Protocol and on 28 May 2014 brought it into domestic law through a statutory instrument The Merchant Shipping (Convention Relating to the Carriage of Passengers and their Luggage by Sea) Order 2014 deriving from the powers conferred by sections 183(4) and (6) and 184(1) and (3) of the Merchant Shipping Act 1995
Other notable Directives in the maritime sphere are
Directive 2005/35/EC of the European Parliament and of the Council of 7 September 2005 on ship–source pollution and on the introduction of penalties for infringements
This criminalises ship source pollution in cases of ‘serious negligence’ and was the subject of a decision of the ECJ in 2008 in the Intertanko case C-308/06 in which it decided that the legality of the Directive could not be assessed in the light of either MARPOL or UNCLOS.
Directive 2012/33/ on the Sulphur Content of Maritime Fuels.
This came into effect on 1 January 2015 and requires ships sailing in the English Channel, the North Sea and the Baltic Sea (the North European emission control area) to use bunker oil with a maximum 0.1% sulphur or apply alternative methods in order to achieve the same effect.
Directive 2013/30/EU on the safety of offshore oil and gas operations and amending Directive 2004/35/EC
This was the EU response to the ‘Deepwater Horizon’ blowout in 2010. The Directive aims to prevent the occurrence of a ‘Deepwater Horizon’ in offshore installations in the EU but also addresses, in part, the response should such an incident occur, through three provisions. First, art. 38 extends the territorial scope of the Environmental Liability Directive 2004 (the ‘ELD’) from coastal waters to waters within the exclusive economic zone or the continental shelf of Member States, up to 370 km from shore. Second, art.7 requires Member States to ensure that the licensee is financially liable for the prevention and remediation of “environmental damage” – i.e. damage falling within the ELD – caused by offshore oil and gas operations carried out by, or on behalf of, the licensee or the operator. Third, art.4 requires Member States “to require the licensee to maintain sufficient capacity to meet their financial obligations resulting from liabilities for offshore oil and gas operations.” and, when granting or transferring licenses, to take due account of, inter alia, “the applicant’s financial capabilities, including any financial security, to cover liabilities potentially deriving from the offshore oil and gas operations in question including liability for potential economic damages where such liability is provided for by national law”. These provisions came into effect on 19 July 2015.
It is, of course, open for Parliament to provide for the continuation of the statutory instruments implementing these Directives.
The House of Commons Briefing Paper of 30 June suggests (p14):
There might be some over-arching legislation saying, for example, that all UK laws implementing any EU Directive were repealed (perhaps with specified exceptions); or that they would all remain in force (again perhaps with exceptions). If the ECA were repealed, any secondary legislation based on s2(2) ECA would need to be saved from lapsing if it was to continue in force. EU Regulations, which are directly applicable (i.e. they do not need further implementation in the UK to come into force) will cease to have effect if the UK were to repeal the ECA.
There is no reason why EU-based UK law could not remain part of UK law, but the Government would have to make sure it still worked without the UK being in the EU.
The Government would probably come up with a mechanism for allowing changes to be made to secondary legislation (Statutory Instruments) made under the ECA or other ‘parent’ acts. There could also be general amendments, such as replacing references to ‘the Commission’ or ‘Council’ with references to ‘the Secretary of State’.
The devolved legislatures would have to deal with EU legislation they have transposed into Scottish, Welsh or Northern Irish laws. It would also be necessary to amend the relevant parts of the devolution legislation, which might require a Legislative Consent Motion under the Sewel Convention.
Shipping Law and ‘that referendum’. Part Two. Regulations.
With the repeal of the European Communities Act 1972, EU Regulations will cease to be part of UK law. There are three important Regulations of concern to shipping practitioners.
- The Brussels Recast Judgment Regulation 1215/2012
- The Rome I Regulation on choice of law for contracts
- The Rome II Regulation on choice of law i in non contractual matters.
If these are not re-implemented into domestic law, then this we are back to the common law as regards jurisdiction. When suing a defendant domiciled in the UK it would once again become possible to seek to stay proceedings on grounds of forum non conveniens.
As regards choice of law, we would be back to the Contracts (Applicable Law) Act 1990 whose provisions are quite similar to those in Rome I. For tort it would be back to the Private International Law (Miscellaneous Provisions Act) 1995 whose provisions contain significant differences from Rome II.
If losing the three Regulations is regarded as non conveniens then Parliament needs to re-enact them into domestic law. Rome I and Rome II could be re-enacted without the need for any action from the remaining 27 EU Member States, although Parliament may choose to amend parts of the Regulations. Possible candidates for amendment of Rome II would be:(a) clarification that it does not apply to torts on the High Seas and; (b) providing that the applicable law where limitation proceedings are brought before the courts of the UK is that of the UK. Some thought would have to be given as to whether the ECJ should be treated as having any authority as regards interpretation of the domestic legislation which re-enacts the two Regulations.
With the Brussels Recast Judgment Regulation the position is more complex if it is thought to be desirable to maintain a common jurisdiction framework with the remaining EU Member States. They would need to amend the Regulation to include the UK, perhaps with a simple definition clause ‘Member state includes the United Kingdom’ and similar amendment, mutatis mutandis, with references to a ‘non-Member State’. The UK would also have to agree to the authority of the ECJ as regards the domestic legislation reimplementing the Regulation.
An alternative would be for the UK to ratify the 2007 Lugano Convention which tracks the provisions of the 2001 Brussels Regulation (the ‘unrecast’ version). However, this would require the UK first to become a member of the European Free Trade Associaton, or to obtain the agreement of all the Contracting Parties, the European Community and Denmark, Iceland, Norway and Switzerland.
The UK could also ratify the Hague Convention on Choice of Court Agreements 2005 (Hague Convention), which came into force as between the Member States and Mexico on 1 October 2015 ( for intra EU matters the Recast Regulation prevails). The Convention deals with exclusive jurisdiction clauses in favour of a Contracting State and for recognising and enforcing judgments within Contracting States in respect of contracts with such clauses.
In our next blog I shall address some of the shipping related Directives that will cease to have effect following repeal of the European Communities Act 1972.
UK Referendum Result. Implications for shipping law?
As a result of the vote to leave the EU, the UK will cease to be a member of the EU probably around November 2018 after the new prime minister has invoked article 50 and Parliament has repealed the European Communities Act 1972. How will this affect shipping law?
Substantively, not a great deal. English dry shipping is based on common law, and a few key statutes, such as COGSA 1992, and the implementation of international carriage conventions through domestic legislation – such as COGSA 1971 with the Hague-Visby Rules. Nothing European here, so no change.
With wet shipping, the CLC and the Fund are part of our national law through domestic law implementing international conventions. Similarly, the Wreck Removal Convention, the Salvage Convention, and the 1976 Limitation Convention. Again, nothing European here, so plus ca change.
However, procedurally, we are very much affected by European legislation – and this is something we shall return to in a later post. As a starting point, bear in mind the two sources of EU legislation.
- Directives which are implemented by and Act of Parliament. On our leaving the EU it will be up to Parliament to decide whether to repeal or amend the implementing legislation.
- Directives which are implemented as statutory instruments pursuant to s.2 of the European Communities Act 1972. These will cease to be a part of national law once the European Communities Act 1972 has been repealed. If we want to keep them we need to enact them as part of our domestic law.
- Regulations which have direct effect. These will cease to be a part of national law once the European Communities Act 1972 has been repealed. If we want to keep Regulations we need to enact them as part of our domestic law.
Brexit Day (or Independence Day)
This will have implications for countless matters. We might as well begin with commercial law generally: see the useful suite of articles from top firm Bird & Bird and the equally informative introduction to the problems of Brexit by HFW .