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The Court of Appeal has handed down judgment in one of The Lawyer’s Top 20 Cases of 2021.

The case concerned a judicial review of a decision to abolish the abolition of the VAT Retail Export Scheme (“the VAT RES”) in Great Britain and the extra-statutory concession for airside shopping (“the ESC”) in the United Kingdom following the exit of the UK from the EU at 11pm on 31st December 2020.  These schemes provided for VAT-free shopping for visitors to the UK who were resident in a non-EU country and passengers travelling to a non-EU country respectively, according to their rules.

The grounds of challenge included that the Government erred in its analysis of World Trade Organisation (“WTO”) law, in particular in its assessment that the schemes could not be maintained in their existing form because this would contravene Article I:1 of the General Agreement on Tariffs and Trade 1994 and that the Government had failed to collect relevant evidence and therefore to address relevant considerations in relation to the economic harm to business and the wider economy that would result from the decision. 

The Court heard the WTO ground and other grounds as a Divisional Court (hearing the underlying judicial review) and the evidential grounds as the Court of Appeal (hearing an application for permission to appeal against a refusal to grant permission to seek judicial review on these grounds).  Both the judicial review and application for permission to appeal were dismissed.

The Court considered factors relevant to the justiciability of unincorporated treaty provisions in domestic courts and held that the relevant provisions of WTO law were justiciable because they were (i) deeply embedded or grounded into the domestic decision making and (ii) not intrinsically non-justiciable.  The Court also considered the applicable standard of review to a challenge based on error of law in relation to an unincorporated treaty provision and held that the Government’s analysis of the relevant WTO law was not only tenable but also correct. 

The Court also considered that the Government sought and obtained relevant evidence and conducted a proper balancing exercise which could not be impugned by reference to the relevant standard of rationality bearing in mind the Government’s margin of judgment and discretion. 

Naina Patel acted for Her Majesty’s Treasury and the Commissioners for Her Majesty’s Revenue and Customs.

A copy of the judgment can be found here.

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