Challenging the EU Referendum Act

The last few months have undoubtedly been turbulent, with the release of the Chilcot inquiry, the political turmoil within the two major political parties, and the vote for the UK to leave the EU.

One could not avoid the controversy over the vote, particularly the demographic of the voters as an analytical mechanism for the outcome,
and the sad absence of 28 per cent of the eligible electorate. However, there was also a category
of people keen to vote in the referendum who created their own legal controversy.

The EU Referendum Act 2015 contained a provision adopting rules that excluded from
the referendum UK citizens who had moved abroad and last registered to vote 15 years ago. The claimants, Mr Shindler and Ms MacLennan, sought to challenge that provision on the basis that such restriction constituted an unjustified restriction on their EU law rights of free movement.

Deterrent effect

Owing to the rapidly impending referendum,
the Divisional Court, comprising Lord Justice Lloyd Jones and Mr Justice Blake, handed down judgment on 20 April 2016. The application
was dismissed.

While the UK retained the sovereign right to determine for itself whether to remain a member of the EU, the matter was still capable of engaging EU law. However, by reference to the unchallenged decision of R (on the application of Preston) v Wandsworth LBC [2012] EWCA Civ 1378, it was considered that the 15-year rule which had operated in relation to parliamentary elections would not deter British citizens from exercising their treaty rights of free movement.

The Divisional Court considered that the claimants' case was weaker, when arguing potential disenfranchisement by being prevented from voting, than the situation in Preston (which disputed the 15-year rule in the context of not being able to participate in the five-yearly elections).

Moreover, in considering whether a measure is likely to have deterrent effect on the exercise of rights of free movement, the court has to take a realistic view of the likelihood of the deterrent effect, considering the particular facts in each case. The possibility of a deterrent effect which
is remote or speculative is not sufficient to find
an infringement of the rights of freedom of movement.

Connected but separately considered, the Divisional Court reiterated that 'it was unrealistic to suggest that the possibility of being denied
the right to vote 15 years down the line would in practice deter anyone from leaving the UK to live in another member state'. However, ultimately, even if section 2 of the Act did constitute a restriction on free movement, the court considered it was justified as it required a connection to the UK to be a necessary prerequisite to vote in the election.

The claimants appealed onwards, and with expediency the Court of Appeal returned its judgment on 20 May 2016 dismissing the claimants' appeal. The Court of Appeal did not consider that section 2 came within the remit
of EU law, and as such the claimants could not surmount the first hurdle. Differing from the Divisional Court, it was not considered that Preston was a compelling and binding precedent.
It could be distinguished because the now widely spoken of article 50 of the Treaty on European Union (TEU) expressly conferred a right on member states to withdraw from the EU by way
of their own constitutional process, rendering the issue a purely domestic one. However, beyond that question the Court of Appeal for the most part concurred with the Divisional Court's assessment of what may properly be considered a deterrent effect on the exercise of free movement.

But that did not stop the claimants, who approached the Supreme Court with their dilemma. At an oral hearing, Lady Hale, giving
the decision of the court, refused permission
to appeal. Without commenting specifically
on whether EU law was engaged by the EU Referendum Act 2015, and though taking the time to express sympathy for the claimants,
the Supreme Court concluded that it was not arguable for the reasons given by the Divisional Court and the Court of Appeal.

This no doubt was a disappointing blow for those who benefited from the rights enjoyed
as a result of remaining a part of the EU. It may particularly be considered the case when the debate about the EU membership was premised on both sides on how the country envisaged
the long-term future. There is a tension in not allowing British citizens whose long-term future was vested in the EU to participate when, by comparison, non-British Commonwealth citizens, who may or may not have been planning a long-term future in the UK or EU, were sufficiently engaged to vote.

Equally, Lord Justice Elias's comments in his separate judgment highlight the question of whether it was likely that there was an intention to give primacy to EU law, i.e. free movement,
in a referendum on the matter of whether the
UK should continue in its membership of the institution that created those rules.

Article 50 trigger

That does not bring us to the end of the referendum as a focal point for the courts.
The well-publicised judicial review launched
by a group of businesses represented by Mishcon de Reya is anticipated to thrash out further discussion about the appropriate mechanism
and method for triggering article 50 TEU to commence the UK's withdrawal from the EU.

Public function

Moving away from the EU referendum, but tangentially connected by a sector commonly suggested to be adversely affected by the Leave vote - the financial markets - and represented by article 50 challengers Mischon De Reya, KPMG successfully defended a judicial review brought by Holmcroft Properties in relation to its role in
an independent review to oversee the interest rate hedging product redress scheme.

The scheme, set up in consultation with
the Financial Conduct Authority (FCA) by
Barclays Bank for its own customers, provided compensation designed to bring redress for customers following the mis-selling of certain interest rate hedging products by Barclays and other banks.

KPMG had been appointed as the reviewer entrusted with the task of providing reports to
the FCA and ensuring that such a review would be independent. However, KPMG and Barclays Bank entered into a contract which allowed the latter
to prevent offers of settlement save where they had been approved as being fair and reasonable.
The offer made to Holmcroft was contended by it to be inadequate because it did not compensate for the consequential losses. The application for judicial review proceeded on the basis that the decision on compensation was unfairly reached.

KPMG argued that the case was not amenable to judicial review because it was not exercising
a public function. The Divisional Court did not automatically consider that KPMG was not exercising public functions purely because it was a commercial arrangement with an underpinning contract; judicial review may continue to be applicable depending on the function being exercised.

However, in this case there were not the complete hallmarks of a public law element.
While the scheme was put in place to assist the FCA in its function as a regulator, the scheme
was a voluntary one, and as such KPMG's role
was not imposed by powers invested by the FCA.

Amenability to judicial review was not the resultant effect if a private body voluntarily carried out functions to assist a public body
which might itself be subject to public law principles if it operated comparably. Though
the challenge was not ultimately successful,
the boundaries of where public and private
law meet are still being stamped out. As we go forward, a lot may become increasingly uncertain, including the administration of our social needs by public or private bodies. Though organisation may change, at least the door is always open for contextual analysis of the exercise of functions that may be public.

Saara Idelbi is a barrister practising from 7 Bedford Row @7BedfordRow www.7br.co.uk

Copyright & permissions