On 12 August 2020, the Financial Markets Law Committee (FMLC) published its response to the Ministry of Justice consultation on whether to extend the power under section 26(1) of the European Union (Withdrawal Agreement) Act 2020 (2020 Withdrawal Act).

Section 26(1) of the 2020 Withdrawal Act empowers HM Government to designate additional courts and tribunals (over and above the UK Supreme Court and the High Court of Justiciary) as having the ability to depart from retained EU case law. The Ministry of Justice consultation covers whether this power should be extended to other UK courts and tribunals and, if so, which test should be applied and the factors that should be considered in any decision by a court or tribunal to depart from retained EU case law.

In its response the FMLC urges the Government not to extend the ability to diverge from retained EU case law. With regards the test to be applied in the course of any consideration about departing from retained EU law, the FMLC has previously urged the Government to consider offering principles to the judiciary by which it can evaluate consistently whether consideration should be given to post-Brexit European Court of Justice (CJEU) judgments. If the ability to depart from retained EU case law is extended to the lower courts, the FMLC would recommend that a stricter test is imposed to that which is applied by the Supreme Court currently.

The FMLC also reflects in its response on an example of a case in which the interpretation of key EU regulatory concepts by the CJEU has had the ability to significantly affect the financial markets. The example is the definition of “derivative” (and, correlatively, the definition of “spot”, since “spot” contracts are not “derivative” contracts) under the regulatory regime for markets in financial instruments.