The BBC, Presenters and HMRC

The recent decision involving a former BBC Look North presenter raises a question that will be familiar to long-suffering followers of this blog: “who bears responsibility when tax avoidance schemes go wrong?” (Arrivistes may care to read this summary of the many pieces I wrote about footballers. And this, on how the professionals get away with it.)

The legal answer is straightforward.

As I explained here, the drafters of the IR35 regime intended that, if IR35 applied, the tax liability should sit with the engager (here the BBC). That made sense for several reasons: the engager were beneficiaries of the use of personal service companies (they avoided liability to employers’ NICs) and the tax can be collected from the engagers (in practice, very often it can’t be from PSCs).

But the Government of the time gave in to lobbying from engagers. And the result was the unfortunate situation we now see, where historic liabilities are shuffled onto those with the least knowledge and often without the resources to meet them.*

And alongside the legal question there is a moral one: are the presenters really to blame?

Answering that question is altogether more difficult. Some presenters will be financially sophisticated. Some will knowingly have engaged in risky tax behaviour. But a great majority will have relied on their advisers, will have been tacitly encouraged by the attitude of the BBC (‘how could the BBC be involved in tax avoidance?’) or other major broadcasters, and will have been fortified by the many years in which HMRC seemed barely to bother to apply IR35.

Is it really fair that we point the finger only at the presenter? Should the BBC escape moral obloquy? And what of the army of advisers?

Meanwhile, for those presenters who can lay reasonable claim not to be caught by IR35, further difficulties mount up.

HMRC is one actor and can behave strategically. It can choose the cases with the ‘ugliest’ fact patterns – for example, the Look North case mentioned above – and seek to establish the law by reference to those cases. Principles developed in those ‘ugly’ cases will then be applied to better fact patterns.

But the presenters are disparate. They may act in what they perceive to be their own interests rather than the collective interest. They may bear costs personally rather than pooling and sharing them – and so lack the resources to engage the best representatives. And they may not think to put their ‘best’ cases forward: will news presenters hold their cases back so that the easier categories of sports and talk presenters can go first?

These assessment whether IR35 applies involves a delicate balance of complex facts. It is far from straightforward. And it is perfectly possible – indeed it is likely – that these structural imbalances as between the disparate group of presenters, on the one hand, and HMRC, on the other, will cause whole classes of presenter who might otherwise escape liability instead to bear it.

Hard cases, as every lawyer knows, make bad law.

The weight of tax liability, moral responsibility, and the burden of bad law. All could come to fall on presenters.

*For tax liabilities accruing from the start of this tax year, we will revert to the original intention, but only in respect of public sector employers. This biased approach makes little sense. Writing on the day of his announcement, I argued that this step made little sense unless you wanted to tilt the playing field in favour of public sector outsourcers.

**Transparency note. I am professionally active in this field advising both broadcasters and presenters.

This is no time for complacency. The rule of law is under threat.

These are extraordinary times.

We are jettisoning much of the post-war constitutional superstructure. We are losing the Charter of Fundamental Rights. The Prime Minister has signalled her intention to ditch the European Convention on Human Rights. The Government’s EU Withdrawal Bill places broad law making powers directly into the hands of Ministers. The devolution settlements are under explicit threat.  Cabinet Ministers are contemplating the reintroduction of a hard border in Northern Ireland.  The Government routinely ignores in part or in whole motions in Parliament. It acts in breach of constitutional conventions (para 150). “Senior Brexit Tory MPs,” it is reported, are taking legal advice on whether the Executive can ignore the Supremacy of Parliament. The Prime Minister appointed as her official spokesman a man, James Slack, whose ‘Enemies of the People’ front page incited threats against judges.

And the threat these extraordinary times poses can already, I believe, be seen in the operation of the rule of law in our highest court. Let me explain.

The central point in Gina Miller’s case was this:

when Notice is given, the United Kingdom will have embarked on an irreversible course that will lead to much of EU law ceasing to have effect in the United Kingdom, whether or not Parliament repeals the 1972 Act. As Lord Pannick QC put it for Mrs Miller, when ministers give Notice they will be “pulling … the trigger which causes the bullet to be fired, with the consequence that the bullet will hit the target and the Treaties will cease to apply”. In particular, he said, some of the legal rights which the applicants enjoy under EU law will come to an end. This, he submitted, means that the giving of Notice would pre-empt the decision of Parliament on the Great Repeal Bill. It would be tantamount to altering the law by ministerial action, or executive decision, without prior legislation, and that would not be in accordance with our law.

To address that point you would obviously need to consider whether “pulling the trigger” would have as its inevitable consequence the removal of legal rights. And the only court that could answer that question was the Court of Justice in Luxembourg.

But, as we know, the Supreme Court did not ask that question of the Court of Justcie in Luxembourg (despite the fact that it seems to have expected to be asked).

How did it avoid that course? Paragraph 26 gives you your answer:

In these proceedings, it is common ground that notice under article 50(2) (which we shall call “Notice”) cannot be given in qualified or conditional terms and that, once given, it cannot be withdrawn. Especially as it is the Secretary of State’s case that, even if this common ground is mistaken, it would make no difference to the outcome of these proceedings, we are content to proceed on the basis that that is correct, without expressing any view of our own on either point.

Gina Miller wanted to win; she was (then) happy to assert the Notice was irrevocable. For his part, the Secretary of State could not contend that the Notice was revocable because that would suggest, contrary to the Government’s policy, that the Notice might actually be revoked. And so the Supreme Court decided to assume that the Notice was irrevocable “without expressing any view of our own.” And, as we know, it went on to decide that the Government could not give the Notice without the permission of Parliament.

But here’s the thing.

It’s no part of legal reasoning to proceed on the basis of an assumption of the law. It’s logically impermissible. It risks wrong outcomes – with serious consequences. Let me illustrate the point.

I am one of six petitioners before the Inner House of the Court of Session in a claim asking for a reference to the Court of Justice on the question whether Article 50 can be unilaterally revoked. The case is likely to reach the Supreme Court. What happens if the question is referred to the Court of Justice which says the Article 50 notice can be unilaterally revoked?

It follows that the Supreme Court will have decided Gina Miller’s case on the basis of an flawed assumption of the law. But for that flawed assumption (many believe) the Supreme Court would have decided that the consent of Parliament was not needed to serve an Article 50 Notice.

Now, as it happens, Parliament did not, as the price of consenting, tie the Government’s hands to a particular negotiating objective. But it might, for example, have accepted the Lords’ amendment guaranteeing that EU citizens here continue to enjoy EU derived rights. It might have changed the course of Brexit and it might have done so without any proper legal basis. And that fact might have become known when the Court of Justice ruled on revocability. And all of those risks are why it is logically impermissible for a court (and especially a constitutional court) to proceed on an assumption of law.

So why did the Supreme Court take this course? Did it just forget this was impermissible and dangerous?

No. And here we delve into the realm of speculation. But my explanation is this: it was intimidated by the ferocious headlines in the Mail and elsewhere. It was spooked by the failure of the then Lord Chancellor to perform her constitutional duty to defend the judiciary. It felt threatened by Sajid Javid’s warning: “This is an attempt to frustrate the will of the British people and it is unacceptable.” It feared what would happen if it referred the question in circumstances where a referral would delay the Prime Minister’s stated intention to notify Article 50 by the end of March.

Let me put it bluntly. There is, I think, good reason to believe the Supreme Court was intimidated into acting contrary to the rule of law.

These are, indeed, extraordinary times.

And it is not sufficient to say, as many (including the Prime Minister’s former Chief of Staff) do, that “we” – whoever the “we” is in his sentence – can be trusted.

And it is not enough to assume that because things were fine fifty years ago they will be alright now.

We have no domestic written constitution. The extra-national constitutional structures are under explicit threat. There is good reason to think that the operation of the common law – that very British constitutional solution – has already been weakened by the prevailing climate. And, as my opening paragraphs point out, the Executive is running amok.

And this should alarm everyone – wherever they stand on Brexit.

The hearing in the Inner House of the Court of Session

Regrettably, in my opinion, the Lord President of the Inner House of the Court of Session yesterday ruled that it would “not be appropriate” for a party to live tweet a hearing. In the circumstances I am publishing a contemporaneous note – tidied up and cross checked for accuracy against one other contemporaneous note – of yesterday’s hearing.

SUMMAR ROLL HEARING

WIGHTMAN AND OTHERS, PETITIONERS

21st February 2018 10.50am

Aidan O’Neill Qc (for Pet’ners)
7th petitioner not part of the reclaiming motion. Not taking part due to expenses – particularly because of finding in OH.
More than 10 authorities listed. More than usually permitted. No time to reach a joint number of ten. Apologies to court for that. 1 authority was titled Coulson but was in fact another. That has now been replaced. What has been replaced in an unreported version of the decision. It has in fact been reported.
Timing – set down for 2 hours. Propose to speak for 1 hour to set out case respondent has 40 minutes, leaving 20 minutes for any response.
LP – authorities now confined to 16. Lodged note of argument which has got 50 authorities or so. What exactly is expected of us re these authorities.
Aidan – not planning to go to those authorities. The ones court needs to go to are in the bundle. Others are for vouching propositions of law. Understanding is that practice note speaks of authorities to be used at the hearing.
LP – practice note intends note of argument would not be a written submission. Intended to me note of argument in broad terms. Intention is that the note of argument should confine itself to the authorities mentioned in the practice note. Court has limited time and should be able to get grips with it by the time of the hearing.
Aidan – not taking court to all of the authorities. I have set out the relevant passages. Had to be prepared in 6 days.
Now move to set out stall. Adopt note of argument first off and then highlight certain issues from it. (11am)
No time bar issues.
2.1 – 2.7 deals with test of satisfying the court of real prospects of success. Meant to filter out unmeritorious claims. Different threshold from previous under first orders. It is a low test and is for the court to be able to ensure fanciful or hopeless cases do not make it to full hearing.
Permission should be granted if there is doubt in the judicial mind. LO in this case was mindful of low hurdle but we say he did not correctly apply the test.
Particular errors: 12-14 of decision “hypothetical and academic” is incorrect. Para 2.8 of note of argument. He mischaracterised the factual background.
Parliament rather than government is sovereign in this matter. Article 50 notification must be withdrawn if Parliament so orders.
Cannot be said that Parliament has no wish to withdraw. Can be said that there are going to be votes on the deal. Parliamentarians will have opportunity to vote. They will take place prior to the conclusion of the agreement and prior to Exit Day per the current bill.
Not a hypothetical issue. The votes are a certainty. It is laid down in law. It is neither academic b/c clear from affidavits that issue of unilateral withdrawal will inform the votes of those parliamentarians.
This petition comes not out of idle curiosity but there is a real question of law of immediate impact. It is of profound constitutional importance, nationally and internationally.
LO seemed to think hypothetical and academic was the end of the matter. The Resp now concede that public interest petitions are comptent, just not in this instances. They did not take that position during submissions.
If that position were the law, Miller would never had made it into court. Notification of Art 50 on basis of royal prerogative had not happened – it had only been proposed. Courts considered that it was appropriate to hear the case and pronounce a declaration. On LO’s reasoning, Miller shouldn’t have been granted permission. That is unsustainable and in fact there is jurisdiction within supervisory jurisdiction for the court to pronounce declarators and to provide guidance to the parliamentarians on decisions coming before them. Precedents in Scotland and in England where court has given clear rulings to be adopted is lawful.
The votes int he Scottish, European and UK Parliaments will occur. Petitioners here need to know, in order to exercise their votes properly, what alternatives are open legally to the UK and EU should they take the view that the withdrawal agreement is not acceptable.
What is being said by Resp is that there are only 2 options. Deal or no deal. Take and approve the deal or the UK leaves the EU without any deal – cliff edge with no transition period.
We say that there is a third option. This is denied by the respondent. The third option is to withdraw and remain part of the EU. This is set out in the affidavits lodged in the appendix.
Without knowing before they cast their votes what the options are as a matter of law, they cannot properly carry out their duties as elected representatives. Petition raises issues of reality and of practical concern. Set out in Law Hospital – proposed conduct with no contradictor (no dispute) but court exercised declaratory judgment to give guidance. This is not an ivory tower debate among academics. They need the ruling now – if not know, when? It would be too late if after the vote. It cannot be the case that there is no ripe time. It is by that reckoning never right for judicial review. Petitioners need to know now whether they are right on the three options rather than the two which government represents as being available. Democratic norms and the rule of law. Regard to UNISON case where SC struck down fees on employment tribunals in which Lord Reed spoke about rule of law (quote from case).
There are 3 actors within the constitution. Courts have responsibilities constitutionally to ensure that executive stays within the boundaries of the law and give guidance to parliamentarians about exercising that power lawfully.
Miller is a precedent for the type of order we seek. Right to die – Airdale and Lord Browne Wilkinson’s “clear ruling”. The court should exercise the same kind of jurisdiction to provide declaration to parliamentarians who need to know whether the course they propose would be lawful as a matter of EU law. We seek this court’s reference to CJEU as the only authority able to give a final and authoritative ruling on this matter. It is a matter of controversy which can only be resolved by the European Court of Justice. Academic opinion is stongly in our favour, although there exists some for the opposition. It is a matter of controversy.
In Airdale, Lord Mustil had some concerns but vote was ultimately unanimous in granting answers to set of hypothetical questions. Law Hospital before this court dealt with civil courts pronouncing on criminal matters – court granted declarator. Nobody liable civilly at the time. Was proposed conduct lawful. They are parallel as to what is sought in this petition.
Academic means that the issue would not directly affect rights and obligations of the parties. Ref to McNaughton dicta.
Just what is a live practical question not always easy to determine. Each case must be decided on its merits as to the reality and immediacy of the issues raised. Court must look at whether there is issue of reality concern and practical utility. Cases in Scotland and elsewhere where the judge has issued declaratory remedies in similar circumstances. Set out in the note of argument.
Most relevant and clear example of this court – Napier v Scottish Ministers (slopping out). Matter was taken to IH even though individual case had settled and money awarded by the court had been paid over and undertaking was given that the monies would not be recoverable notwithstanding the outcome of the reclaiming motion. IH hearing was purely academic.
Para 4 distinguishes between private right declarators and those in the public interest permitted in the likelihood of future disputes. Good reason in the public interest.
Here there is a dispute. Even if court says Resps are not willing to act as contradictor, not a bar to supervisory jurisdiction where in public interest. We most certainly are in that area here.
In Napier declarator was pronounced re burden of proof to be applied in future cases.
It is therefore clear that court has jurisdiction to entertain questions even of academic nature. If it is in the public interest so to do and it raises issues of reality, concern and practical utility. That is what we say should have been applied by LO. When applied by this court, we pass them and – bearing in mind low threshold – this matter should be granted permission.
2.25 – does court REQUIRE to adjudicate. It is a question of whether it is an appropriate exercise of jurisdiction to do so. Rusbridger – Lord Steyn said not making a statement cannot be sufficient. (Quote from case). If resps will not contradict, court may appoint a contradictor as amicus curiae.
This application does require to go forward to substantive hearing. There will be a vote in the autumn. Legal issue is of evident public concern. Does not affect only the petitioners but affects all parliamentarians in the UK. Risk of being found liable has been exercising a deterring effect on a number of parliamentarians coming forward and taking part. This court will nonetheless be giving guidance to those parliamentarians. It is not premature and it is not too late. Not taking the action now means that there is a risk of CJEU not having the time to make the necessary ruling.
We understand that there is an expedited process. 4-6 months seems to be the turnaround time. (Gauweiler and Pringle) I sya this in contrast with the normal time of two years. In the foot and mouth case, there was 10 weeks between application and decision. 4-6 months for grand chamber ruling is actually fast by CJEU standards.
There is an important public interest. If matter left, not going to be in time. Clock is ticking. Exit Day is 11pm on 29th March – if no vote by that point, cliff edge reached.
Would CJEU refuse to hear it? We say no. We set out why in the note of argument. Court not happy to hear academic disputes. That does not apply here. It is not a manufactured dispute as was the case in Foglia.
CJEU would not be asked to give an advisory judgment. It would bind this court as a matter of EU law.
There is clearly a genuine dispute here unlike Foglia. Resp doesn’t admit the Petitioners’ legal arguments. If they are not admitting them, they are denying them.
Government says 2 options, we say 3. There is clearly a dispute. Even if there is a 3rd option, they say they won’t act on it. The Government is not sovereign. It must act on what Parliament decides.
It is clear that CJEU willing to give judgments in such circumstances. Only refuses to hear extraordinarily.
None of the provisos apply in this case. Something not having been acted upon in national law is not a bar (Gauweiler) and repeated in American Express. Court only unusually refuses to hear a case and there is a presumption of relevance. Court presumes good faith of national courts. If this court says it is necessary, CJEU will accept that.
Bosman case was purely declaratory. Was to do with free movement provisions not yet applying to the applicant. Court heard the case and gave a judgment on it.
HANSARD – LO accepted Resp’s contention that using hansard breached privilege. Toussain is the authority dealing with that. Privy Council case – quotes from report and Art 9 not intended to protect executive from the courts. It is not possible to hamper challenges by ring-fencing them by only saying them inside Parliament. That would be an attempt to circumvent supervisory jurisdiction. It is entirely permissible to refer to statements as evidence of what was said. What is not acceptable is for executive to say “they didn’t really mean that”. That is questioning what was said in the house. (quote from Toussain). If there is any breach of Article 9 – it is by the Resp by seeking to question what was said.
We do not rely on the statements to explain rationale, we rely on them for what they say and what they say is wrong. If they adopt a position inconsistent with what was said – they are saying one thing before parliament and another before the courts and that is unconstitutional. Pepper v Hart was designed expressly to protect against that.
They do not say that the minister did not say it. They say that other statements should be looked at – they speak to government position. We look at them for what they say as to whether Art 50 is revocable.
Even if no dispute or Resp feels unable to argue it, court can appoint an amicus.
Timebar matters taken as stated in the note of argument. We challenge revocability, we do not challenge the notice itself.
Sufficient interest – admitted until 11.15 yesterday. No idea why the admission has been removed. No basis to challenge it on Walton grounds.
Government has been required by Parliament that a vote will be held. Parliament will by statute approve or not approve the deal before Exit Day. Government has not committed itself – it has been committed by Parliament. It is to be done before Exit Day.
Vote will cover withdrawal agreement – 2 options available – not for the Government to say what Parliament will do. What they are saying is that 3rd option is not available.
This is not a vacuum issue. It is a real deal and a real issue. The issue is can that be stopped?
Para 16 they imply that the Government is sovereign and not Parliament. It is not the Givernment that is leaving the EU, but the UK. They seek to deny the availability of 3rd option.
Paras 20-26 duty of candour case is mentioned by the Resp. We do not accept their position. The duty of candour is a subsidiary issue. It is not a stand alone issue. It would be expensive and pointless and the petitioners would not be proceeding.
We move that permission be granted on all issues or that permission be refused. Respo just wants permission to be granted so that they are reviewed only on the basis that they refuse to say what they will do.
Invite court to accede to motion.

David Johnston QC (for Resp)
Invite to refuse reclaiming motion and refuse permission to proceed. Adopt note of argument and spend time most usefully addressing petitioners’ note of argument and submissions.
Agree that permission is not a high bar. LO noted that and he was correct to do so. This application falls far short of overcoming that hurdle.
Hypothetical/ Academic
LO was right to conclude that there is no live issue in dispute. This is set out in the pleadings and note of argument. Art 50 notification will not be withdrawn. The question of whether it COULD be withdrawn does not arise. The court is being asked to rule on something that nobody is proposing to do. The authorities relied upon deal with something that has been done or was proposed. Here this court is asked to review something that nobody is proposing.
Lord DY – When you say ‘nobody’, what about Parliament deciding? It is soverreign.
David J – nothing suggests Parliament intends to withdraw the notice. Nothing suggests Parliament is seeking to withdraw the notification. It is an issue that quite simply does not arise. See paras 12-14 of the LO’s decision.
Lord DY – But MPs may change their mind.
David J – on the material before this court, there is nothing to suggest that Parliament has the intention to seek withdrawal of the notification.
Miller case – para 2.10 of petitioners’ note – no distinction to be drawn was the suggestion. I submit that there is a clear distinction. Gov has proposed to make the article 50 notice without seeking the authority of Parliament to do so. Here court is being asked to rule on something that nobody has proposed.
Law Hospital/ Airdale/ Bland – para 2.19 of note of argument – there is a course that is proposed.
Pages 309 and 319 of the Airedale report – willing to make declaration about something which is proposed.
The authorities used by Petitioner do not provide precedent for court to determine something which is not proposed by anyone. Where the issue is simply a speculation, there is no issue for review by this court.
Napier case – Resp accepts that cases which engage public interest allow greater latitude for cases to proceed but still need to be good and substantial reasons for that course to be allowed. This case is quoted at length. Key para is quoted on page 9 of petitioners’ note at [7]. This is a clear case of importance and one can see why the court would take that view. Many such cases to which the ruling applies are brought before the court. Judges need to know what the appropriate standard of proof is. The step was taken when the proceedings in that case were at the appellate stage. Here we are asking – should proceedings be allowed to begin at all. No presumption on that matter should be made.
Jurisdiction of CJEU
Numerous cases show that the court is unwilling to give a preliminary ruling where the matter is hypothetical. Corollary is that there requires to be an objective requirement for resolution of a dispute.
2 cases referred to in note of argument – Foglia (13 of bundle) at para 18 and Czech case (17 of bundle) paras 17 and 29. They stand as authority for the proposition that I have given.
Only other point is to look at various cases dealt with by CJEU. Just look at quotes in note of argument. Gauweiler (page 15 of NOA). Key point I make is para 27 – might be useful to have regard to para 1 of that judgment. (READ OUT) It concerns technical features of sovereign bond market. There is nothing hypothetical about the matter at hand. That is quite different from what we have here.
Next case (2.45 of NOA) American Express case. If one looks at first 4 lines of para 33 that says all that is required to be said.
Belgian football case – case brought for preparatory purposes only. His right was seriously threatened by nationality clauses which had been adopted. Court deferred to national court as a matter of Belgian law. Issue is infringement of a right which is proposed to be restricted.
There is no reason for this court to be persuaded by those cases that the CJEU is open to hypothetical advances.
Parliamentary Privilege
Pet’ners’ argument is that their references to Hansard are legitimate because they seek to do no more than refer to historical fact. That is not an accurate characterisation of what is sought here. Here the Gov’s stated policy is that the notification will not be withdrawn. There is no reason for recourse to Hansard to establish that. Only reason to resort to it is to extract material from it on which they seek to construct a Government position about the lawfulness of withdrawal. It is inadmissible on the authorities.
First of them – Coulson criminal appeal (4 in bundle). Appeal court in which Lord Menzies sat. Para 11 onwards discusses parliamentary privilege. All I take is the crisp summation at para 20 – last 2 sentences of it.
Lord DY – how does that square with Pepper v Hart?
David J – Pepper v Hart is an exception to a well established rule. It is important to see it in that context. It was not a unanimous decision.
Lord DY – but it has been assiduously followed since nonetheless.
David J – I also refer to Toussain case. I use it to show the court that we are dealing with something particular and special and it is not an invitation to courts generally to look at parliamentary proceedings. It is helpful to look at Paragraph 4 on 2828 – on 5th Dec … (READ OUT)
The key point on the facts is that it was a specific statement made about the property of an individual, made during parliamentary proceedings. That explains the decision of the board of the Privy Council. That is the only reason they allowed reliance on Hansard. He was allowed to rely on it because, without doing so, he could not challenge the government’s interference with his property. Privy Council is saying that relevant legislation should be read down as to be compatible. They do so to allow explanation of executive action. Neither of those things applies in the present petition. The case does not advance the petitioners’ argument in the manner sought.
Otherwise, adopt NOA.
Time bar
Nothing to add beyond para 19 of NOA. If the question is “can article 50 notification be withdrawn”, that question is one that arises when the notification is made. Can’t be raised before then but that question is then live when notification made. By that standard, it is clearly out of time.
Sufficient Interest Point
This is not directed at the qualities of individual petitioners. If court accepts Resp’s position that the matters are hypothetical, nobody has an interest to proceed. It is not intended as a specific challenge to the petitioners.

Aidan O’Neill QC reply
Hansard
Coulson does not refer to Toussaint. It was criminal proceedings – not the situation we have here.
1999 joint parliamentary report – produced in appendix. Paras 43-55 of that report are useful. It is relied upon in Toussaint. It sets out correct constitutional position.
This petition concerns a standard judicial review of a statement which is a misdirection in law.
Nothing said by David J counters that.
Gauweiler and Bosman
Attempted to distinguish these. We say in terms that their statements from November reveal a statement in law and we challenge it unequivocally. There is a decision at issue, the vires of which is being challenge.
Napier
Assertion made that there is difference between supervisory jurisdiction at appellate stage and at permission stage. Made without any authority. Napier was made with the express authority of the IH. It is an example of permission being given on purely academic matter. Airedale and Law Hospital in any case are not appellate. There was no active dispute.
David J asserted that this case is about something that nobody is proposing. We understand from him that Government would rather not do it. Its claim that the notice will not be withdrawn is not a complete statement.
Parliamentarians require the information about whether the option is available. 6th petitioner notes this in the affidavit.
Oliver Letwin quote handed up to the bench. Quote from Letwin read out to the court.
It is clear that the proposal is in terms and it is in reference to the vote which will be held under and in terms of clause 9(1) of EU withdrawal bill. Not simply speculation as set out by David J.
NOA sets out position re further procedure. 6.1 of NOA
Final point on expenses from 6.3 – 6.7. It is a live issue in this case. LO awarded expenses notwithstanding that this is a public interest case. Is not normal for expenses to be awarded.
We say that the chilling effect that this has caused and is causing is inappropriate in a public interest petition such as this. Proper approach as set out by Lord Reed is that in exercise of its common law discretion, court should overturn the decision of the LO on expenses and should award expenses against resp for first hearing but thereafter appropriate course is that none due to or by for procedure from here on.
LP – why is that being raised now? If you are unsuccessful here, there will be no further procedure. It would be for the LO if remitted to him to make determination on expenses.
Aidan – it would be open to the court to retain the substantive hearing.
LP – I am not sure that is the case.
Aidan – nothing to add.
LP – avizandum

* * * *

Decision of the District Court in Amsterdam

[Before the District Court in Amsterdam we argued that UK citizens were entitled to keep their EU citizenship rights after Brexit.

What follows is a professional translation of the Decision of the District Court in to referring that question to the Court of Justice of the European Union.

To enable that question to be argued before the Court of Justice we are crowdfunding for our legal costs here. Please support this litigation with a donation and by sharing a link. It may be our best chance for you and your children to live and work throughout the EU. https://www.crowdjustice.com/case/eu-citizenship/%5D.

In the name of the King

Ruling

DISTRICT COURT OF AMSTERDAM

Private law division, civil law presiding judge

Case number/session number: C/13/640244/KG ZA 17-1327 FB/AA

Ruling in interlocutory proceedings of 7 February 2018

In the case of

  1. DEBRA JOY WILLIAMS,

residing in The Hague,

  1. VICTORIA LOUISE HAMPTON,

residing in Amsterdam,

  1. STEPHEN STANLEY HUYTON,

residing in Muiden,

  1. NICHOLAS NUGENT,

residing in Amsterdam,

  1. MICHAEL ANDREW WATERS,

residing in Voorschoten,

  1. the foundation

BREXPATS – HEAR OUR VOICE,

Registered in Amsterdam,

  1. the association

COMMERCIAL ANGLO DUTCH SOCIETY,

registered in Voorschoten,

plaintiffs,

legal representatives Mr. Chr. A. Alberdingk Thijm and Mr. E.H. Janssen of Amsterdam

versus

  1. THE STATE OF THE NETHERLANDS

Registered in The Hague,

  1. the legal entity governed by public law

THE MUNICIPALITY OF AMSTERDAM,

registered in Amsterdam

Defendants,

Legal representatives Mr. E.H. Pijnacker Hordijk and Mr. G.A. Dictus of The Hague

 

The plaintiffs shall be referred to hereinafter respectively as plaintiffs 1 to 5, Brexpats and CADS. They shall be designated jointly as plaintiffs. The defendants shall be referred to hereinafter as the State and the Municipality, and also designated as defendants.

C/13/640244/KG ZA 17-1327                                                                                                                                 2

7 February 2018

 

  1. The proceedings

At the hearing of 17 January 2018, the plaintiffs submitted and claimed in accordance with the summons, a copy of which is attached to this ruling. The defendants submitted their defence, with conclusions relating to the claims submitted by Brexpats and CADS for declaration of inadmissibility and relating and relating to plaintiffs 1 to 5 for the rejection of the requested provisions.

Both parties submitted exhibits and pleading notes to the proceedings.

Plaintiffs 1, 2, 4 and 5 attended the hearing in person. The plaintiffs in section 1 appeared jointly on behalf of Brexpats and plaintiff 5 jointly on behalf of CADS. The plaintiffs were represented by Mr. Chr. A. Alberdingk Thijm, Mr. E.H. Janssen of Amsterdam and Mr. S.C. van Velze.

  1. de Gans and H. van Eijken attended on behalf of the Satate. M. van Genugten attended on behalf of the Municipality. The defendants were jointly represented by Mr. E.H. Pijnacker Hordijk and Mr. G.A. Dictus.

 

  1. The Facts

 

2.1.     On 23 June 2016, during the so-called Brexit referendum, the British population voted by a small majority for the United Kingdom to leave the European Union (hereinafter: EU). On 29 March 2017, the United Kingdom, in accordance with article 50, paragraph 2 of the Treaty on European Union (hereinafter: TEU), notified the European Council of its intention to leave the EU.

 

2.2.     In accordance with article 50, paragraph 2 in association with article 218 of the Treaty on the Functioning of the European Union (hereinafter: TFEU), the European Council and the United Kingdom commenced negotiations on the conditions for the withdrawal of the United Kingdom from the EU on 19 June 2017. At this point in time, no comprehensive agreement has been reached between the negotiating parties. A progress report was however presented on 8 December 2017 whereby the first phase of the negotiations has been concluded. It is evident from that report that the negotiating parties have formulated a common principle concerning, amongst other things, the rights of British subjects residing in other EU member states, however subject to the condition that “nothing is agreed until everything is agreed”.

 

2.3.     According to the progress report, at the time the United Kingdom leaves the EU, the principle of reciprocity must be accepted regarding the protection of the rights of British subjects currently residing in other EU states on the one hand and the subjects of other EU states currently residing in the United Kingdom on the other hand. This protection must also extend to their family members, as defined in Directive 2004/38/EC of the European Parliament and the Council of 29 April 2004 concerning the right of free movement and residence on the territory of member states for the citizens of the Union and their family members (hereinafter: EU Citizenship Directive). The scope of the protection is described as follows in paragraphs 12, 13 and 14 of the progress report:

  1. Irrespective of their nationality, the following categories of family members who were not residing in the host State on the specified date will be entitled to join a Union citizen or UK national right holder after the specified date for the life time of the right holder, on the same conditions as under current Union law:
  2. all family members as referred to in Article 2 of Directive 2004 38 EC, provided they were related to the right holder on the specified date and they continue to be so related at the point they wish to join the right holder; and

 

 

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  1. children born, or legally adopted, after the specified date, whether inside or outside the host State, where:
  2. the child is born to. or legally adopted by, parents who are both protected by the Withdrawal Agreement or where one parent is protected by the Withdrawal Agreement and the other is a national of the host State; or
  3. the child is born to, or legally adopted by a parent who is protected by the Withdrawal Agreement and who has sole or joint custody of the child under the applicable family law of an EU27 Member State or the UK and without prejudging the normal operation of that law, in particular as regards the best interests of the child;
  4. The UK and EU27 Member States will facilitate entry and residence of partners in a durable relationship (Article 3(2)(b) of Directive 2004 38EC) after the UK’s withdrawal in accordance with national legislation if the partners did not reside in the host state on the specified date, the relationship existed and was durable on the specified date and continues to exist at the point they wish to join the right holder;
  5. The right to be joined by family members not covered by paragraphs 12 and 13 after the specified date will be subject to national law (…).

Paragraph 15 states in conclusion that cross-border workers will also be covered by the scope of the protection of the withdrawal agreement.

2.4.     Plaintiffs 1 to 5 are subjects of the United Kingdom. They are all residents of the Netherlands.

Brexpats is a foundation in Dutch law established on 13 September 2017. According to an extract from the Commercial Register which relates to it, the aim of Brexpats is to promote the interests of all citizens of the European Union of British nationality whose rights or interests will be affected by Brexit. At the time of the foundation of Brexpats and at the time of the issuing of the injunction, the plaintiff in section 1 was, according to the extract from the Commercial Register, the chairman, secretary and treasurer of its board and the advisory board consisted of one person, namely B.R. Robinson.                             CADS is an Amsterdam network association of business owners with the aim of promoting English-Dutch trade relations. The board of CADS consists of the plaintiff in section 5 and four others. CADS has approximately a hundred members. These originate from the U.K., other countries of the Commonwealth and the Netherlands.

 

  1. The dispute

 

3.1.     The plaintiffs claim – in summary – the following:

Primary

I         in the event that EU citizenship is retained following Brexit:

  1. that the State and the Municipality respects, protects and guarantees the rights arising from EU citizenship of plaintiffs 1 to 5, their spouse and children and other British citizens remaining in the Netherlands;

 

 

 

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  1. that the State and the Municipality refrain from any measures which lead to the situation in which the rights arising from EU citizenship of plaintiffs 1 to 5, their spouses and children and other British citizens remaining in the Netherlands are infringed, specifically that the State and Municipality do not agree to or implement, a withdrawal agreement or any other agreement in which the aforementioned rights cannot be guaranteed;

II                  in the event that the withdrawal of the United Kingdom leads to the citizens of the United Kingdom losing EU citizenship and the rights associated with it:

  1. to order that the State does not restrict the rights arising from the EU citizenship of plaintiffs 1 to 5, their spouses and children and other British citizens remaining in the Netherlands, without an individual assessment of the proportionality principle first being carried out;
  2. in particular in respect of plaintiff 2, to prohibit the State from insisting that plaintiff 2 must relinquish her British nationality;
  • to order the Municipality to respect the individual assessment referred to in section (i) and, insofar as it is bound, to implement it;
  1. to order the Municipality to insist to the State that multiple nationality be facilitated for a person who applies for Dutch nationality, within a term of two weeks following the issue of this ruling;

subsidiary

III       to order the State and the Municipality to take such measures which the Presiding Judge considers to be judicially appropriate, in line with the above, to ensure that the rights associated with EU citizenship of British people remaining in the Netherlands are respected, protected and guaranteed;

primary and subsidiary

IV       to order the defendants to pay the costs of the proceedings, plus subsequent costs.

The plaintiffs state that in their opinion, the assessment of these claims focuses on the interpretation article 20 of the TFEU. In consideration of this case, they have submitted prejudicial questions to the European Union Court of Justice (hereinafter: CJEU).

3.2.     The State of the Netherlands et al have submitted a defence.

3.3.     The statements by the parties will be examined, where relevant, in further detail.

  1. The admissibility of Brexpats and CADs

4.1.     The State and the Municipality contend that the Brexpats foundation and the CADS association must be declared inadmissible in the claims submitted by them. The basis of their claim is that Brexpats and CADS do not fulfil the conditions laid down in article 3:305a of the Dutch Civil Code for the submission of a collective claim.

 

 

 

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Admissibility of Brexpats

4.2.     Regarding Brexpats, the State and the Municipality argue that the interests of persons on behalf of whom the claim has been submitted are not sufficiently guaranteed. They refer to the fact that Brexpats does not comply with the Claimcode (nor even with its own articles of association) as the functions of chairman, secretary and treasurer are one and the same person, i.e. plaintiff no.1. Insufficient guarantees therefore exist that plaintiff 1 will not allow her own interests to prevail over the interests of the persons on behalf of whom Brexpats has submitted the claims.

4.3.     In the assessment of defence of inadmissibility, the following is of interest. As it is disputed that a foundation as defined in article 3:305a of the Dutch Civil Code complies with condition that the interests of persons on behalf of whom the foundation has been established are insufficiently protected, the extent to which the parties concerned can benefit from the collective action in the event that the claim is awarded must be determined, and to what extent it may be relied upon that the claiming organisation possesses sufficient knowledge and expertise to carry out the proceedings. According to parliamentary history, it is also important what other activities the organisation has undertaken to apply itself to the interests of the disadvantaged parties, or whether the organisation has apparently been able to achieve its own objectives in the past, the number of disadvantaged parties affiliated to it or a member of the organisation, and the response to the question of to what extent the disadvantaged parties actually support the collective action. Whether the claiming organisation complies with the principles laid down in the Claimcode may also be significant. In the case of an ad hoc established foundation, whether it was established by existing organisations who have successfully represented the interests of those involved in the past may also be important (Parliamentary Papers II, 2011-2012, 33 126. No. 3 pp.12-13).

4.4.     In the light of this, the inadmissibility defence is successful in relation to Brexpats. In the assessment of the admissibility of a legal claim submitted by a foundation established on the basis of article 3:305a of the Dutch Civil Code, whether it is evident, or sufficiently credible, that it (seriously) promotes the interests of those on behalf of whom it has been established, must be examined. Although the Claimcode and the benchmarks contained within it is not decisive in this respect, it is evident from the legislative history of article 3:305a of the Dutch Civil Code that legislator wishes to attribute certain weight to it (as a soft law). In the case of Brexpats, all of its board functions are united in one person and the advisory board is also composed solely of one person. The balanced composition of the board required by the Claimcode, which according to this code can be guaranteed in principle by the appointment of 3 board members, is therefore also inadequately guaranteed. The State and the Municipality have correctly argued that as a result, there is a risk that Brexpats has been established to solely or principally promote the interests of plaintiff 1. Even if the factual situation were to deviate from that which is evident from the Commercial Register in the meantime, it does not change the above situation, as the State and the Municipality must rely on the information published in that register and it is up to Brexpats to update the publication of its relevant details as and when necessary. It is also even less evident that Brexpats has sufficient support among its group of interested parties it says it represents, namely the British subjects currently staying or residing in another EU country.

The claims submitted by Brexpats cannot therefore be admissible.

Admissibility of CADS

4.5.     In relation to CADS, the State and the Municipality argue that it has not fulfilled its obligation to furnish facts, in the sense that it has not adequately explained how and why it complies with the conditions laid down in article 3:305a of the Dutch Civil Code. Insofar as that may not be the case, the defendants also argue that CADS has not fulfilled the condition of article 3:305a, section 2, of the Dutch Civil Code, that it must have adequately attempted to achieve the claim by the means of consultation. The defendants state that CADS only approached them with a request to provide cooperation to a prejudicial reference to the CJEU and not with the subject of the current claim.

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4.6.     This defence is rejected. CADS has adequately demonstrated by the means of the evidence it has submitted that it complies with the conditions laid down in article 3:305a of the Dutch Civil Code. It is evident from its website that its objective is to promote commercial and cultural relations between the Netherlands and the United Kingdom, it has been in existence since 1972 and was therefore not founded solely for the purpose of these proceedings and its membership and composition adequately represent the group of interested parties on behalf of whom it has submitted its current claims.

4.7.     The fact that CADS has requested that the State and the Municipality to support it in its wish to submit prejudicial questions to the CJEU, does not mean that the condition laid down in section 4.5 has not been fulfilled. CADS still adopts the position that the submission of such prejudicial questions is necessary for the assessment of the jointly submitted claims. Partly in view of the essential cross-border nature of the current dispute and the (legal) position adopted by the State and the Municipality, central to which is that at this point in time they see no legal grounds or reason to offer the plaintiffs protection against the (threatened) harm to their rights they allege is embedded, any discussion under those circumstances is meaningless.

4.8.     The claims jointly submitted on behalf of CADS can therefore be declared admissible.

  1. The assessment

5.1.     The plaintiffs put forward three grounds for their claims, namely i) the doctrine of acquired rights, ii) the EU citizenship of article 20 of the TFEU and iii) article 8 of the ECHR.

5.2.     The State and the Municipality have put forward the most far-reaching defence that the proceedings constitute an undesirable breach of the political negotiation process on Brexit and that the plaintiffs have set up a notional dispute which is exclusively intended to get the case put forward to the CJEU. These defences will now be examined.

Political question?

5.3.     The first defence relates to the doctrine of the political question and concerns the distribution of tasks between the court and management and/or politics. In this doctrine, in answering the question of whether the court is authorised to rule on a dispute submitted to it, whether this concerns a subject that is constitutionally within the jurisdiction of another state power authority or sufficiently clear and objective criteria can be assigned   to enable the dispute to be assessed in court, and/or a legal ruling would thwart the possibility for another competent state power to form a political opinion on the subject, is decisive.

5.4.     In general, the assessment that a dispute is not suitable for assessment by the court is not made swiftly. The simple fact that proceedings are surrounded by political sensitivity, is insufficient in this context.

5.5.     This is even more exceptional in the Dutch constitution. It contains a carefully calculated balance of power between the legislative, implementing and legal powers and there is no clear separation of competences. The mutual relationship between the organs of the trias politica [separation of powers] can in the Netherlands (to a certain extent) be typified as a model based on partnership, whilst respecting each individual specific responsibility. Inherent to the task of the civil courts is the provision of legal protection at an individual level, if necessary against other state powers. This is not necessarily different in cases which also have a political dimension.

 

 

 

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5.6.     The current dispute concerns the question of whether citizens of the UK residing in the Netherlands will lose their fundamental freedoms – derived from the UK’s membership of the EU – due to the single fact that the UK is leaving the EU. In this hearing, that question is tailored to their fundamental right to remain, to reside and to work in another EU member state and to be able to move freely throughout the countries of the EU.Plaintiffs 1 to 5, together with the interested parties represented by CADS, have made use of their fundamental freedom to reside and work in another EU member state. They have specifically stated that they not only fear that those rights and freedoms will be harmed in the event of a Brexit, but that they are already suffering harm from the uncertainty of their legal position in that case. This (threat of) harm has partly arisen because the progress report – cited previously in sections 2.2 and 2.3 – states that the negotiating states are currently operating on the assumption that the existing rights and freedoms of British people residing in other EU countries will cease to exist if the negotiating parties do not agree otherwise.

5.7.     The consequent harm which currently exists consists of the fact that all of the plaintiffs (also including the interested parties bundled together under the representation by CADS), must, in organising their lives, take serious account of the fact that the State here will urge British people residing here following Brexit (once again: unless the negotiating parties do not agree otherwise) to leave its territories, without individual assessment, as third country nationals. This genuine threat means that, in view of the seriousness of this situation, they must already make the decision now to become a Dutch citizen. That potential nationalisation may have consequences for the retention of their British nationality and therefore for the possibilities for them to visit their home country and to maintain sustainable contacts with the family members there. Moreover, there are considerable costs associated with the acquisition of Dutch nationality. Furthermore, decisions must now already be taken concerning the legal position of partners residing in Amsterdam/The Netherlands, of whom one is a British subject and the other is a national of a third country. In addition, parents who themselves are British nationals, but have children who were born in the Netherlands, are now faced with difficult choices (more of which in section 5.24). Yet another plaintiff is now experiencing uncertainty as to whether he will be able to (continue to) do his job or profession as in order to do so it is essential that he be able to (continue to) travel freely throughout the countries of the EU.

5.8.     The plaintiffs are seeking protection from the civil courts against these threats and partially against the infringement of their fundamental rights which in their opinion already exists at this point in time. The granting of such protection is a uniquely legal task. It is part of the existence of a democratic legal state that, at an individual level, those who belong to a social or political minority are entitled in law to a certain degree of protection against the will of the majority.

5.9.     Against this background is the circumstance that the expiry or retention of these rights is also currently the subject of a political negotiation process (see above in sections 2.2. and 2.3). This not however a good reason not to rule on the claims submitted by the plaintiffs. The current defence is therefore rejected.

Notional dispute?

5.10.   The second defence involves the fact that this is a hypothetical or notional dispute, which is only designed to obtain a reference to the CJEU. This defence fails on the grounds stated above in sections 5.6 to 5.8. There is no question of a hypothetical or notional dispute. The plaintiffs have credibly demonstrated that the case relates in part to a very real threat and in part to exiting infringements of their fundamental rights and freedoms at an individual level. As already deliberated above in section 4.7, central to the (legal) position adopted by the State and the Municipality, is that at this point in time they see no legal grounds or reason to offer the plaintiffs protection against the (threatened) harm to their rights.

The Vienna convention on the law of treaties and article 20 of the TFEU

 

 

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5.11.   We now come to the assessment of the claims and the ground(s) on which they are based. These grounds lie in the core of the acquired rights and freedoms which the plaintiffs derive from their EU citizenship as defined in article 20 of the TFEU. Insofar as this is relevant to the current dispute, it concerns the right to the free movement of people and the right to continue to freely remain, reside and work in other EU member states. Article 20, paragraph 1 of the TFEU, grants these rights to citizens of the Union, that is to say, anyone who has the nationality of a member state, as is currently the case with the United Kingdom. The plaintiffs have actually exercised those rights and freedoms.

5.12.   The consequences of the termination of international treaties is covered in general by the 1969 Vienna Convention on the Law of Treaties (Treaty Series 1985/79, hereinafter referred to as the Vienna Treaty Convention). Amongst other things, this treaty contains clauses on the establishment, interpretation, fulfilment and termination of treaties. If matters progress to the termination of a treaty, article 70 of the Vienna Treaty Convention stipulates the legal consequences of such a termination. The parties are then released from the obligation to continue to implement the treaty, but that termination does not affect any obligation whatsoever or any legal position whatsoever of the parties which arose due to (the implementation of) the treaty prior to its termination.

5.13.   The Vienna Treaty Convention deals with the legal consequences which a treaty creates between states. The TEU and the TFEU vary from this to the extent that they not only create rights and obligations between states, they also create rights and obligations for the citizens of the Union. In contrast to other bilateral and multilateral treaties, the TEU and the TFEU create an individual, autonomous legal order, which is separate from national legal order and for the purpose of which the member states of the EU have limited their sovereignty (ECJ 5 February 1963, C-26/62, Jur. 1963, p.3, ECLI:EU:C:1963:1 (Van Gend & Loos)). The Vienna Treaty Convention however offers no definitive indication of the consequences of termination of the TEU and the TFEU. Correspondingly, the TEU gives its own rule for the procedure to be followed in the event that a member state notifies its wish to leave the EU.                                                                                                  It therefore follows on from the above that the question of the legal position of citizens of the UK residing in another member state, thereby having made use of their rights and freedoms derived from article 20 of the TFEU, following the withdrawal of the UK from the EU, must be answered on the basis of EU law itself.

5.14.   Article 20 of the TFEU awards EU citizens the right to free movement and residence in other member states. The construction of this provision implies a link between the citizenship of a member state and EU citizenship. As a consequence, the acquisition of EU citizenship, with its associated rights and freedoms, is reserved for subjects of the member states of the EU. In this light, it is defensible that, as a downside of this, the loss of the status of a citizen of an EU member state leads to the loss of EU citizenship. In view of the following however, this conclusion is not necessarily compelling.

Acquired rights                                                                                                                              5.15.  The CJEU has already repeatedly ruled on the doctrine of acquired rights. Its jurisprudence can be summarised as follows. In principle, acquired rights cannot be withdrawn by subsequent decisions. This follows on specifically from the general legal principles which form the basis of EU law, such as the principle of legal certainty and the principle of protection of legitimate expectations. However, as the required legal basis was lacking at the time of the granting of those rights, seen objectively, the withdrawal of those rights may be implemented (ECJ 12 July 1957, C-3-7/56, Jur. 1957, p.87; ECJ 22 March 1961, C-42 and 49/59, Jur. 1961, p.103, para 10; ECJ 26 April 2005, C-376/02, Jur. 2005, p. 1-3445, para. 32).

5.16.   In the above it is noted that the CJEU is very reserved in answering the question of whether an acquired right exists as defined above. Rights holders may still not rely on the fact that a particular situation is not liable to change and that they therefore possess an acquired, inalienable right. The answer to the question of whether rights from which EU citizens derive claims and which they actually exercise may be infringed and if so, to what extent (in brief), depends upon what legitimate expectations those citizens may foster in relation to (the continued existence of) those rights. The degree of predictability of the infringement of those rights plays a major role in this.

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The less probable it is that the right will be infringed, the interest (of the protection of rights) of the individual citizen in the event of continuity of his claim, gains greater weight compared to the general interest, even if that serves to infringe the right. And assuming that the infringement is justified, the effect of the new decree still only extends to future situations in such cases. (Please refer to CJEU 19 July 2012, C-522/10, ECLI:EU:C:2012:475 (Albert Reichel); ECJ 5 October 1994, C-133, 300 and 362/93, Jur. 1994, p-1-04863; ECJ 27 September 1979, C-230/78, Jur. 1979, p.2749.)

5.17.   From an abstract point of view, the possibility of a member state to withdraw from the EU, as specifically regulated in article 50 of the TEU, however unlikely it might have initially appeared that use would ever be made of that possibility, means that subjects of an EU member state (and therefore those of the UK) would have had to take account of the fact that the member state of which they possess nationality, may leave the EU.        From a definitive point of view, in recent years the plaintiffs would have had to increasingly take account of the – initially unlikely – realisation of that possibility as former Prime Minister Cameron had announced years earlier that a referendum on the UK’s membership was to be held in 2016.

5.18.   However, the above does not automatically mean that plaintiffs could also foresee that this could lead to the loss of, among other things, their right to live and work in other EU member states. Before the UK expressed its wish, no other Member State had made use of the possibility of withdrawing from the EU under Article 50 TEU. Only when this wish was made known, at least after the outcome of the referendum had become known, could the claimants take into account the possibility that their rights and freedoms as nationals of an EU Member State as referred to in Article 20 TFEU, as the result of that exit, would be lost. That moment is only a short time ago. In these circumstances, it cannot be ruled out that the rights and freedoms that UK citizens living in another EU country derived from Article 20 TFEU should be regarded as acquired rights in the sense referred to above in 5.15 and 5.16.

Broad interpretation of EU citizenship and rights deriving therefrom
5.19.   The CJEU has broadly interpreted both EU citizenship and the resulting rights. While Article 20 TFEU states that citizenship of the Union comes alongside national citizenship, the CJEU has ruled that citizenship of the Union should be the primary status of nationals of the EU Member States and that, on that basis, subject to explicit legal exceptions, are entitled to equal treatment in law. (See ECJ 20 September 2001, C-184/99, ECLI: EU: C: 2001: 458 (Grzelczyk), ECJ 11 July 2002, C-224/98, ECLI: EU: C: 2002: 432 (D’Hoop), CJEU 22 December 2010, C-208/09, ECLI: EU: C: 2010: 806 (Wittgenstein), CJEU 12 May 2011, C-391/09, ECLI: EU: C: 2011: 291 (Runevič Vardyn and Wardyn)).

5.20.   Once lawfully acquired, EU citizenship is an independent source of rights and obligations that cannot be simply reduced or affected by national government action (see AG Maduro’s conclusion of 30 September 2009 in case C-135/08 (Rottman), under 23 and the recent judgment of the CJEU 14 November 2017, C-165/16, ECLI: EU: C: 2017: 862 (Toufik Lounes)). In the former procedure, the CJEU considered, with regard to the withdrawal of the nationality of a citizen of an EU Member State, that an assessment of the principle of proportionality should take place. Whether the proportionality test must always be carried out individually or can also take place in abstracto, as the basis for a statutory regulation, is the subject of a Dutch question currently pending before the CJEU (ABRvS 19 April 2017, ECLI: NL: RVS: 2017: 1098).

5.21.   It is admitted that the cited case law of the CJEU relates to national measures that brought the loss of nationality of a Member State and thereby EU citizenship. Thus, that case-law does not automatically apply to the present case, in which a Member State intends to leave the EU, as a result of which all citizens of that Member State, including those who voted against that intention, are threatened with losing the status of EU citizen. Nevertheless, it is arguable that that case-law, and the principles on which it is based, applies in the same way to the present question, or at least influences the answer to that question.

 

 

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Protection of the minority against the majority
5.22.   The notification referred to in 2.1 above and the negotiations mentioned in 2.2 have taken place as a result of the wish of the majority of those who participated in the Brexit referendum referred to in 2.1. That is in itself entirely in accordance with the way in which a democratic constitutional state functions. But as considered in 5.8 above, the essence of a democratic constitutional state is that the rights and interests of minorities are protected as much as possible. The same applies to the functioning of the EU as a whole which forms a democratic community of (member) states governed by the rule of law.

Solidarity between EU citizens and between them and the Member States
5.23.   In view of the case law mentioned above in 5.19, the EU citizenship acquired through the operation of Article 20 TFEU – a new, transnational form of citizenship – aims to unite the (citizens of the) EU Member States and increase their mutual solidarity. Taking into account what has been considered above in 5.21, it can then be argued that this solidarity means that (the citizens of) other EU Member States cannot leave the claimants who, against their will are threatened with losing fundamental rights and freedoms that are derived from that EU, should not be left out in the cold.

Complications in the case of young children who are EU citizens
5.24.   In the above it should be borne in mind that the status of EU citizen not only affects the fundamental rights of the relevant EU citizens, but is also important in some circumstances for the right of residence of third-country nationals, provided that is a dependency relationship between the EU citizen and the third-country national and the non-granting of a right of residence to the third-country national would effectively lead to the EU citizen not enjoying effective enjoyment of the rights conferred on him by Article 20 paragraph 2 of the TFEU. According to the CJEU, in any event, that is the case if a third-country national – as in the opinion of the UK after Brexit, if the negotiating parties do not agree otherwise – is denied the right to reside in the Member State in which are his/her young children who are EU citizens. The consequence of a refusal to grant a right of residence to a third-country national would then actually lead to the obligation that EU minor citizens would also be forced to leave the EU (CJEU 8 March 2011, C-34/09, ECLI).: EU: C: 2011: 124 (Ruiz Zambrano) and CJEU 10 May 2017, C-133/15, ECLI: EU: C: 2017: 354 (Chavez-Vilchez)). In addition, it should be noted that, where the dependency relationship does not force the acceptance of a derived right of residence, it cannot be claimed on the basis of the importance that the unity of the family must be preserved as much as possible, the CJEU has repeatedly ruled (see CJEU 15 November 2011, C-256/11, ECLI: EU: C: 2011: 734 (Dereci), CJEU 6 December 2012, C-356 and 357/11, ECLI: EU: C: 2012: 776 (O e.a.) and CJEU May 8, 2013, C-87/12, ECLI: EU: C: 2013: 291 (Ymeraga)).

Result
5.25.   What has been considered above in 5.15-5.24 entails that there is reason to doubt the correctness of the interpretation of Article 20 TFEU that the loss of the status of citizen of an EU Member State leads to loss of EU citizenship as well (see for this in 5.14). The answer to the question which explanation is the right one is essential for the assessment of these claims.

Intention to submit prejudicial questions

5.26.   On these grounds, prejudicial questions will be submitted to the CJEU. The plaintiffs have submitted a long list of very detailed questions. They will not be examined in further detail. Some of the questions are not relevant to the assessment of the current dispute. Furthermore, that detail may hamper the CJEU in approaching the current question (which in essence affects all the citizens of the UK living in another EU country at the time of Brexit) in the most meaningful way.

5.27.   Against this background, the intention exists to submit the following questions to the CJEU:

  1. Does the withdrawal of the United Kingdom from the EU automatically lead to the loss of the EU citizenship of British nationals and thus to the elimination of the rights and freedoms deriving

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from EU citizenship, if and in so far as the negotiations between the European Council and the United Kingdom are not otherwise agreed?

  1. If the answer to the first question is in the negative, should conditions or restrictions be imposed on the maintenance of the rights and freedoms to be derived from EU citizenship?

5.28.   The parties are granted the opportunity of a period of one week to express an opinion on these proposed prejudicial questions. The parties are not granted the opportunity to comment in any other way on this ruling or the intention to submit prejudicial questions.

 

The ruling

The presiding judge

Grants the parties the opportunity to respond to the proposed prejudicial questions outlined in section 5.27. above in writing by 14 February at the latest;

observes any further ruling.

This ruling is issued by Mr. F.B. Bakels, presiding judge, assisted by Mr. A.G.F. Ancery as clerk of the court, and has been declared publicly on 7 February 2018.

 

Issued by S. Sterrenburg

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A summary – in English – of the decision of the District Court in Amsterdam.

5.18. However, the above does not automatically mean that plaintiffs could also foresee that this could lead to the loss of, among other things, their right to live and work in other EU member states. Before the UK expressed its wish, no other Member State had made use of the possibility of withdrawing from the EU under Article 50 TEU. Only when this wish was made known, at least after the outcome of the referendum had become known, could the claimants take into account the possibility that their rights and freedoms as nationals of an EU Member State as referred to in Article 20 TFEU, as a the result of that exit, would be lost. That moment is only a short time ago. In these circumstances, it can not be ruled out that the rights and freedoms that UK citizens living in another EU country derived from Article 20 TFEU should be regarded as acquired rights in the sense referred to above in 5.15 and 5.16.

Broad interpretation of EU citizenship and rights deriving therefrom
5.19. The CJEU has broadly interpreted both EU citizenship and the resulting rights. While Article 20 TFEU states that citizenship of the Union comes alongside national citizenship, the CJEU has ruled that citizenship of the Union should be the primary status of nationals of the EU Member States and that, on that basis, subject to explicit legal exceptions, are entitled to equal treatment in law. (See ECJ 20 September 2001, C-184/99, ECLI: EU: C: 2001: 458 (Grzelczyk), ECJ 11 July 2002, C-224/98, ECLI: EU: C: 2002: 432 (D’Hoop ), CJEU 22 December 2010, C-208/09, ECLI: EU: C: 2010: 806 (Wittgenstein), CJEU 12 May 2011, C-391/09, ECLI: EU: C: 2011: 291 (Runevič Vardyn and Wardyn)).

5.20. Once lawfully acquired, EU citizenship is an independent source of rights and obligations that can not be simply reduced or affected by national government action (see AG Maduro’s conclusion of 30 September 2009 in case C-135/08 (Rottman), under 23 and the recent judgment of the CJEU 14 November 2017, C-165/16, ECLI: EU: C: 2017: 862 (Toufik Lounes)). In the former procedure, the CJEU considered, with regard to the withdrawal of the nationality of a citizen of an EU Member State, that an assessment of the principle of proportionality should take place. Whether the proportionality test must always be carried out individually or can also take place in abstracto, as the basis for a statutory regulation, is the subject of a Dutch question currently pending before the CJEU (ABRvS 19 April 2017, ECLI: NL: RVS : 2017: 1098).

5.21. It is admitted that the cited case law of the CJEU relates to national measures that brought the loss of nationality of a Member State and thereby EU citizenship. Thus, that case-law does not automatically apply to the present case, in which a Member State intends to leave the EU, as a result of which all citizens of that Member State, including those who voted against that intention, are threatened with losing the status of EU citizen. Nevertheless, it is arguable that that case-law, and the principles on which it is based, applies in the same way to the present question, or at least influences the answer to that question.

Protection of the minority against the majority
5.22. The notification referred to in 2.1 above and the negotiations mentioned in 2.2 have taken place as a result of the wish of the majority of those who participated in the Brexit referendum referred to in 2.1. That is in itself entirely in accordance with the way in which a democratic constitutional state functions. But as considered in 5.8 above, the essence of a democratic constitutional state is that the rights and interests of minorities are protected as much as possible. The same applies to the functioning of the EU as a whole which forms a democratic community of (member) states governed by the rule of law.

Solidarity between EU citizens and between them and the Member States
5.23. In view of the case law mentioned above in 5.19, the EU citizenship acquired through the operation of Article 20 TFEU – a new, transnational form of citizenship – aims to unite the (citizens of the) EU Member States and increase their mutual solidarity. Taking into account what has been considered above in 5.21, it can then be argued that this solidarity means that (the citizens of) other EU Member States cannot leave the claimants who, against their will are threatened with losing fundamental rights and freedoms that are derived from that EU, should not be left out in the cold.

Complications in the case of young children who are EU citizens
5.24. In the above it should be borne in mind that the status of EU citizen not only affects the fundamental rights of the relevant EU citizens, but is also important in some circumstances for the right of residence of third-country nationals, provided that is a dependency relationship between the EU citizen and the third-country national and the non-granting of a right of residence to the third-country national would effectively lead to the EU citizen not enjoying effective enjoyment of the rights conferred on him by Article 20 paragraph 2 of the TFEU. According to the CJEU, in any event, that is the case if a third-country national – as in the opinion of the UK after Brexit, if the negotiating parties do not agree otherwise – is denied the right to reside in the Member State in which are his/her young children who are EU citizens. The consequence of a refusal to grant a right of residence to a third-country national would then actually lead to the obligation that EU minor citizens would also be forced to leave the EU (CJEU 8 March 2011, C-34/09, ECLI). : EU: C: 2011: 124 (Ruiz Zambrano) and CJEU 10 May 2017, C-133/15, ECLI: EU: C: 2017: 354 (Chavez-Vilchez)). In addition, it should be noted that, where the dependency relationship does not force the acceptance of a derived right of residence, it can not be claimed on the basis of the importance that the unity of the family must be preserved as much as possible, the CJEU has repeatedly ruled (see CJEU 15 November 2011, C-256/11, ECLI: EU: C: 2011: 734 (Dereci), CJEU 6 December 2012, C-356 and 357/11, ECLI: EU: C: 2012: 776 (O ea) and CJEU May 8, 2013, C-87/12, ECLI: EU: C: 2013: 291 (Ymeraga)).

Result
5.25. What has been considered above in 5.15-5.24 entails that there is reason to doubt the correctness of the interpretation of Article 20 TFEU that the loss of the status of citizen of an EU Member State leads to loss of EU citizenship as well (see for this in 5.14). The answer to the question which explanation is the right one is essential for the assessment of these claims.

Questions referred
1. Does the withdrawal of the United Kingdom from the EU automatically lead to the loss of the EU citizenship of British nationals and thus to the elimination of the rights and freedoms deriving from EU citizenship, if and in so far as the negotiations between the European Council and the United Kingdom are not otherwise agreed?

2. If the answer to the first question is in the negative, should conditions or restrictions be imposed on the maintenance of the rights and freedoms to be derived from EU citizenship?

[This short unofficial summary has been prepared by Bureau Brandeis, the law firm acting for the Claimants]

Why we need to know about Article 50

There is no doubt there is a political route to revocability: if the other 27 agree, we can remain. But to improve the bargaining position of the UK, to ensure we retain the opt-outs and rebates that we presently enjoy, and to place the decision entirely in the hands of the UK’s Parliament and – if it chooses – its people we must seek to establish a legal route to revocability. We must seek to secure a right for Parliament to withdraw the Article 50 notice – if it chooses.

The permission decision of the Court of Session will be handed down on Tuesday at 9.30am. I was warned before the hearing – once the judge was known – that we were likely to have a bumpy ride and so it proved. But we have a right to appeal to the Inner House and, should we need it, there is an appeal to the Supreme Court.

I believe we are right and the question should be referred. There are a number of reasons why I say this. But the main argument is this.

You cannot sensibly pretend that Parliament is not considering whether to revoke the Article 50 notice. The only amendment to the Repeal Bill that passed in the Commons opened the door to exactly that possibility. But don’t accept my characterisation: it’s exactly how (for example) Sir Oliver Letwin (speaking against it) put it. So did others.

In those circumstances it is vital that the UK Parliament knows whether it possesses that power. Indeed, it is vital that the EU27 knows whether Parliament possesses that power. And both need to know before the question whether to exercise it arises. If Parliament doesn’t know then – should Parliament come to exercise the power – there will be chaos for the UK and the r27. There will be a period of many months in which we and they may not know whether the UK is inside or outside the EU. So it is not practical and it is not sensible to wait and see. When decisions of this magnitude are being contemplated the rules must be known in advance.

And there is no good argument to the contrary. None at all.

Stripped of legal niceties, all the Government can say is, ‘we do not plan to revoke’. But (see that Oliver Letwin quote again) it is not for Government to decide. It is for Parliament to decide. (And, of course, both Governments and their positions can change.)

That is why I think it is important that we know the answer. And if, as I expect, Lord Doherty in the Court of Session disagrees and refuses to refer the matter to the CJEU it will be my advice to the seven petitioners that we should appeal to the Inner House of the Court of Session and, if necessary, the Supreme Court. (We have a right to appeal to the Inner House; we would need permission for a further appeal to the Supreme Court).

To do this we will need further funds.

As matters stand (in this case as in many others that I and the Good Law Project am and have been involved with) I am personally indemnifying the petitioners against the risk of costs falling upon them. I have no money other than what I have earned in a relatively short career at the Bar. That is a difficult financial burden to sustain in one piece of litigation; it is impossible across many.

So, if we lose on Tuesday, I will launch a further fundraising on Crowdjustice to protect us against adverse costs. You will have the opportunity to decide.

In the meantime, you can see our claim here.

You can see the Government’s answers here.

You can see the affidavit of Joanna Cherry QC here.

And you can see the affidavit of Andy Wightman here.

And you can see the speaking note of Aidan O’Neill QC here.

 

Don’t be too hard on US multinational: Treasury to HMRC

The link below is to an extract from a covertly recorded 70 minute conversation between Guy Westhead, a senior member of HMRC’s team dealing with VAT policy, and a Mr Richard Allen that took place in late 2015.

At the time of the conversation, Guy Westhead was a senior HMRC officer. During the conversation he described himself as being one level below the Director of Indirect Tax at HMRC. Below is a photo, taken several months after the covertly recorded conversation, of him sitting behind the then Financial Secretary to the Treasury, David Gauke. Mr Gauke was, at the time, appearing in a debate before the Backbench Business Committee on VAT Evasion and Internet Retailers.

Guy Westhead

Richard Allen is an individual who has lobbied HMRC for better enforcement of VAT law. The unusual circumstances in which Mr Allen came to have and record that conversation are set out in this document: Signed Statement. The Appendices mentioned in that Statement are the photo shown above (Appendix Two) and the handwritten letter and private email posted at the bottom of this blog post.

The whole recording is remarkable. It was recorded covertly and so I have not published it in its entirety. However, there seems to me to be a compelling public interest in the publication of the extract linked to above because it contains this exchange:

RA: What worries me is that ministers have some kind of agenda to basically not annoy Amazon. If Amazon does something illegal Amazon has to be punished in my view.  In America they tried things like “that’s it we are not building a warehouse in your State” and all this sort of stuff…

GW: I’ve heard of that. I’ve heard from the Treasury; the Treasury didn’t want us to be too hard on Amazon. But I think that was a brackets “yet” close brackets.

In the past, writing posts like this, I have looked at the evidence in the public domain concerned how HMRC behaves towards multinationals and I have concluded that it does not make sense.

Something, I have said, is impeding HMRC’s inclination to apply the law against large US tech companies (in that post, Uber). As I put it:

I can see no good reason why HMRC should adopt this stance. None at all. It is inexplicable to me – unless HMRC’s conduct is motivated by factors otherwise than collecting the tax demanded by the law. I do not know what those factors might be. But this smells very bad.

Elsewhere, I speculated:

Both that blog post and that tweet were written before I had met Mr Allen or was aware of this exchange. However my speculations now seem well founded. This exchange is direct evidence from a senior HMRC official, speaking in his field.

The issue, for me at least, is not what did or did not happen to Amazon. The issue is that the powerful and highly politicised Treasury thought it appropriate to seek to influence how HMRC exercised its statutory functions to cause it to go easy on one large and powerful US tech company (here, one accused of facilitating tax evasion).

And if one why not others?

 

[I wrote to Guy Westhead on Friday to give him an opportunity to respond and received no reply].

Appendix One

HandwrittenLetter

Appendix Three

Appendix Three