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High Court finds EU Settlement Scheme breaches the Withdrawal Agreement
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The Brexit fall out continues with the High Court finding in the case of Independent Monitoring Authority v Secretary of State for the Home Department  EWHC 3274 (Admin) that the EU settlement scheme is unlawful. The scheme was set up by the British government to transition the lawful basis of residence for EU citizens from EU law to domestic UK law. The court found that the scheme breaches the Withdrawal Agreement between the UK and the EU because it fails properly to protect the rights of EU citizens.
In short, the court ruled that the terms of the Withdrawal Agreement mean that EU citizens issued with a form of temporary status called pre-settled status should not become unlawfully resident if they do not make a second, subsequent application for permanent status.
The judgment is being appealed by the Home Office so this is not necessarily the final word on the matter. If the outcome remains the same after appeals, though, it suggests either that the negotiators for the British government did a poor job of agreeing the draft Withdrawal Agreement. Or that the Home Office fundamentally misunderstood the agreement that had been negotiated.
What is the EU Settlement Scheme?
With the UK government choosing a variety of Brexit that terminated the residence rights of EU citizens living in the United Kingdom, a new immigration status had to be issued to them all otherwise they would have become illegally resident. All six million or so of them. One option was to pass a law declaring that they were legally resident, referred to as a ‘declaratory scheme’. The drawback with this approach is that those on whom status is automatically by law bestowed will not always possess documentary proof of that status. The UK government decided instead to require all EU citizens to apply for a new status, referred to as a ‘constitutive scheme’. This would be achieved through the EU Settlement Scheme. The drawback with this approach is that not everyone applies; some are left unlawfully resident.
Where an EU citizen had lived in the UK for five years or more and could prove it, the idea was that they would be issued with permanent settled status straight away. The technical legal name for this status is the same as for all other immigrants: indefinite leave to remain. Where the EU citizen had been living in the UK for less than five years, they would be issued with temporary “pre settled status” for a period of five years. The technical legal name for this status reveals the problem with it: limited leave to remain. According to the scheme, an EU citizen issued with pre-settled status would need to apply before their limited leave ended, otherwise they would become illegally resident.
So far, 2,677,190 people have been issued with pre-settled status. A certain percentage of them will not make the required second application. Even a small percentage of that many people is a lot of actual people. They may forget, they may think it doesn’t matter, they may not understand, they might be incapacitated at the time or whatever. People don’t always do things the government thinks they should.
What was the case about?
The judicial review concerned EU citizens with pre-settled status and what happens to them if they do not lodge an in-time application with the Home Office for further leave to remain before their pre-settled status expires.
The Independent Monitoring Authority was set up under the terms of the Withdrawal Agreement with a duty to investigate alleged breaches of the rights of EU citizens after Brexit (Article 159).
The Independent Monitoring Authority argued in this case that, contrary to how UK immigration law normally operates, pre-settled status holders do not lose all their rights simply for failing to make a further application before the status expired. Additionally, there is no requirement on pre-settled status holders to apply for settled status as they should, according to the Withdrawal Agreement, acquire the right of permanent residence automatically when the conditions are fulfilled.
The hearing took place before Upper Tribunal President Mr. Justice Lane who summarised the very real problems faced by pre-settled status holders whose leave expires without a further application:
As the claimant points out, the consequence under the 1971 Act of limited leave coming to an end, without being followed by further leave, is extremely serious. The person concerned becomes an overstayer, who from that point is in the United Kingdom unlawfully. A person who knowingly remains beyond the time limited by the leave commits a criminal offence: section 24 of the 1971 Act. There is no legal ability to work or claim certain benefits. 
The EU Commission intervened, exercising the right provided by Article 162 of the Withdrawal Agreement to express views on the implementation and application of that agreement. The3million campaign organisation were permitted to make written submissions intervening in support of the Independent Monitoring Authority and EU Commission’s position.
The court was called on to answer two questions.
Firstly, does the Withdrawal Agreement permit the Home Office to take away the residence (and other rights), of pre-settled status holders who fail to make a further application for settled status (or in limited situations for further pre-settled status)? This could be considered the legal consequences question.
Secondly, is the acquisition of permanent residence by temporary residence holders dependent on a second application, or does permanent residence occur automatically when a person’s situation meets the relevant conditions? This could be considered the second application question.
The legal consequences question
The Independent Monitoring Authority, supported by the EU Commission, argued that the Withdrawal Agreement only requires one application for residence status for host states who have opted for constitutive application processes.
They argued that the citizens’ rights part of the Withdrawal Agreement does not explicitly or implicitly state that those who are granted a non-permanent resident status must make a second application for permanent resident status, with the risk of losing all their rights if they do not.
The only provision under which a person who has been acknowledged as a beneficiary of the agreement can only lose their resident status is Article 13(4):
The host State may not impose any limitations or conditions for obtaining, retaining or losing residence rights on the persons referred to in paragraphs 1, 2 and 3, other than those provided for in this Title. There shall be no discretion in applying the limitations and conditions provided for in this Title, other than in favour of the person concerned. [emphasis added]
For example, Article 20 allows for residence rights to be restricted where conduct is sufficiently serious (i.e. a deportation decision is made against a Withdrawal Agreement beneficiary). This is in line with Article 13(4) given Article 20 appears “in this Title”. As the Withdrawal Agreement does not say a person who fails to apply change their temporary resident status to a permanent resident status loses all their rights, any system or law that results in that outcome is not permitted by the Withdrawal Agreement.
The court noted that it is fine to adopt a constitutive scheme to deliver residence rights. However
Neither the United Kingdom nor a Member State can employ a constitutive scheme which fails to do this.
This really was the end of the matter with respect of the first question. The court held that a person with residence rights under the Withdrawal Agreement retained those rights for life as long as they continued to meet the relevant conditions; conditions which did not include making a subsequent application.
The second application question
Having found that someone cannot lose their residence rights just because their pre-settled status expires, the court turned to the question of how permanent residence under the Withdrawal Agreement is acquired. The issue was whether a person with pre-settled status is required to make a second application for permanent residence.
The EU Commission’s position was that Article 18(1) residence status is termed as a singular rather than a plural and therefore, there is “only one residence status under the [Withdrawal Agreement], that of [Withdrawal Agreement] beneficiary, to which all the rights in Title II are attached”.
To put it another way, there is only one form or class of “beneficiary” of the Withdrawal Agreement and all such beneficiaries benefit from the same rights; it was impermissible for the Home Office to create two classes of beneficiary, each with different rights.
The Home Office contended the reference to residence status means either temporal or permanent status and that the Withdrawal Agreement does not permit declaratory rights gain to those in EU free movement law to be imported where a host state had elected for a constitutive process of granting residence status. Reference in the Withdrawal Agreement to the “right to acquire” permanent residence should be interpreted as meaning the “right” to acquire following an application for permanent residence.
The Home Office pointed to constitutive schemes in EU member states, arguing this demonstrates other jurisdictions require temporary residence holders to apply for permanent residence. The EU Commission responded that references to requiring replacement residence documents after certain periods (e.g. 5 or 10 years), is for the purpose of ensuring photographic ID was replaced as people age, and has nothing to do with rights expiring or requiring an application to have the right of permanent residence granted.
Addressing the possibility that the Withdrawal Agreement could allow for a constitutive followed by declaratory rights – in effect hybrid scheme – the court states:
If the drafters of the [Withdrawal Agreement] have, in fact, created a constitutive scheme that is, at this point, hybrid in nature, then that is the scheme which the United Kingdom and the Member States must operate, even though some of them might have preferred something else. 
The court observed that persons with pre-settled status would probably want to apply for settled status, as this would be absolute proof of their right of permanent residence. For example, settled status makes life far easier when accessing benefits. Mr. Justice Lane said that he could “see no reason why the defendant should not continue to encourage those who have been granted pre-settled status to apply for indefinite leave to remain.”
One of the Home Office arguments was that the EU Commission had at the time of the negotiations and subsequently understood the Home Office’s plan that pre-settled status holders would have to apply for settled status. The court noted that this could be considered supportive of the Home Office position. However, the court was charged with interpreting the provisions of the Withdrawal Agreement using Article 31 of the Vienna Convention and this meant that the court cannot import requirements into the Withdrawal Agreement where they do not exist, such as the compulsion to make a second application for permanent residence. As such:
If the defendant were right about what is contained in the new residence status, in the case of a person granted pre-settled status because they have not yet achieved the right of permanent residence, then the WA has failed to explain how that person is to apply for the right of permanent residence; and how the application is to be handled by the State concerned. That would be a remarkable omission. 
Therefore, a pre-settled status holder automatically acquires permanent residence when the conditions of Article 15 of the Withdrawal Agreement are met. There is nothing in the Withdrawal Agreement that requires the pre-settled status holder to apply to be granted permanent residence.
Finding in favour of the Independent Monitoring Authority on both counts Mr. Justice Lane held that
the claimant is entitled to a declaration that the defendant’s interpretation of the Withdrawal Agreement, the EEA EFTA Agreement and the Swiss Citizens Rights Agreement is wrong in law and that the EUSS is accordingly unlawful.
The parties were invited agree an order to give effect to the judgment. However, Home Office Minister Lord Murray immediately signalled the intention to appeal the judgment. Given the very significant issues and numbers of potentially affected persons, it seems very likely this will not be the end of the matter.
If it stands, the judgment leaves the EU Settlement Scheme in a potential mess. The mess is resolvable, though.
The scheme was supposed to lead to all EU citizens metaphorically holding immigration documents or being illegally resident. The potential resolution lies in the use of the word metaphorical, here. EU citizens, much to their chagrin, are not issued with actual documents as proof of their status. Their details are merely entered onto a Home Office database and marked as holding a certain form of status. The scheme will still have achieved its object of getting EU citizens to come forward and make themselves known to the Home Office. All the Home Office has to do is change the database entries to permanent residence from temporary residence. New documents do not even have to be issued because no documents were issued in the first place.
As a secondary issue, the scheme was designed to lead to temporary or permanent status. This outcome is very much undermined by the judgment. But it was always questionable why the Home Office wanted some EU citizens to have only temporary status. It just seems unnecessarily complicated, both for the Home Office and for the individuals concerned. The Home Office has made work for itself in having to process millions of applications to upgrade from temporary to permanent status. And individuals have the added inconvenience of having to make that upgrade application, which would be automatically granted in almost all cases. The judgment might be regarded as saving the Home Office from itself.
The other complication is that the EU Settlement Scheme is actually in some ways more generous to EU citizens than was required by the Withdrawal Agreement. Although not much more generous than was required, though, since it was established that the UK government had been wrongly denying EU law residence rights to students and self-employed people. This means some EU citizens who are not actually protected by the Withdrawal Agreement will have been issued with pre-settled status. This new judgment does not mean that these EU citizens should automatically acquire permanent residence rights.
Additionally, the EU Settlement Scheme includes some categories who have no connection to the Withdrawal Agreement at all, such as family members of Qualifying British Citizens (what we know as Surinder Singh cases), and Zambrano carers; they too will have received pre-settled status but cannot rely on the judgment.
This new judgment does not mean everyone with pre-settled status does not need to apply for settled status and should automatically acquire permanent residence rights. It only applies to those who are Withdrawal Agreement beneficiaries. Practically speaking, this means that should the Home Office be forced to change the operation of the EU Settlement Scheme to ensure Withdrawal Agreement beneficiaries do not lose their resident status if their pre-settled status expires without further application, they would not be required to take the same approach to pre-settled status holders not covered by the Withdrawal Agreement. They might adopt the same approach for this group, but this would be a choice not a legal compulsion. Put another way, Surinder Singh beneficiaries and Zambrano carers could still be forced to make second applications for settled status and would risk losing their residence rights if their pre-settled status expires and they fail to apply. Undoubtedly this makes the situation far more complicated and so those with pre-settled status who qualify for settled status should be encouraged to make a free upgrade application.
In the meantime, no-one with pre-settled status should find their status coming to an end until August 2023, five years after the scheme first launched. We’ll have to see what happens with the appeals and with the Home Office response to know what those with pre-settled status need to do next, if anything.