Commercial Surrogacy
Commercial surrogacy has never been a criminal offence in England and Wales.  It is lawful for intended parents to pay a commercial fee to a surrogate.  However The Surrogacy Arrangements Act 1985 imposes several restrictions which have the aim of preventing the development of a commercial surrogacy industry in the UK.
It is a criminal offence in the UK for any person on a commercial basis to do the following (The Surrogacy Arrangements Act 1985 s.2(1)):
(a)       initiate or take part in any negotiations with a view to the making of the surrogacy arrangement;
(b)       offer or agree to negotiate the making of a surrogacy arrangement; or
(c)        compile any information with a view to its use in making, negotiating the making of, surrogacy arrangements.
Section 3(1) of the Surrogacy Arrangements Act 1985 prohibits the advertising for, or a willingness to be, a surrogate.  
The Surrogacy Arrangements Act 1985 s.1A provides that no surrogacy arrangement is enforceable.  If a surrogate were to change her mind, the intended parents would need to commence  proceedings under the Children Act 1989 for a Residence Order or Contact Order.  It may be necessary for the intended parents to apply for leave of the court to make the application because neither of them may be recognised as the child’s parent (see below).  Even if the intended parents succeeded in their application for a residence order, they would not be able to remove the parental rights from the surrogate.
In CW v NT and another [2011] EWHC 33 , for example, the court decided that a Residence Order should not be granted to the commissioning parents since the child had lived with the surrogate mother for several months and had clearly developed a bond with her. This was despite the fact that the surrogate mother had been dishonest. It must be stressed however that each case will turn on its own merits. In Re P (Surrogacy: Residence) [2008] 1 FLR 177, for example, the surrogate mother falsely informed the father that she had miscarried. Although the child had spent around 18 months with the surrogate mother, a Residence Order was awarded to the commissioning parents.  
Legal parentage
Where a child is born as a result of surrogacy the Human Fertilisation and Embryology Act 2008 (“HFEA 2008”) is engaged to determine who the legal parents of that child are. HFEA 2008 s.33 provides that the woman who carried the child is to be treated as the mother.  This is the case regardless of whether there is  any genetic link between the surrogate and the child.  If the surrogate is married then her husband will be treated as the legal father of the child (HFEA 2008 s.35) and if the surrogate is in a civil partnership her civil partner will be recognised as the child’s second legal parent (HFEA s.42)
Under English law, a child can only have two legal parents.  Thus, it will only be the case that an intended father will be recognised as the legal father would be if the surrogate was unmarried. The biological father would then have the same legal standing as any unmarried father under English law (i.e. he would not necessarily have parental responsibility).
If the child was born in England and the child’s birth was registered in England, it would be possible for the intended father to be registered as the child’s father on the birth certificate. He would need to do so by jointly registering the birth of the child with the surrogate mother. Since December 2003 unmarried fathers have been able to obtain parental responsibility this way.  If the child is born overseas and the intended father is registered on the birth certificate in the jurisdiction where the child was born, he will not be recognised as having parental responsibility under English law.
Parental Order
The Human Fertilisation and Embryology Act 1990 first introduced the concept of a parental order. The Parental Order is an order that is available uniquely to children born as a result of surrogacy and has the effect of removing the parental rights of the surrogate (and her spouse) and vesting legal parentage in the intended parents.
The criteria for a Parental Order are now set out in the HFEA 2008 s.54.  Essentially the requirements are:
1.     the child was born to a surrogate and was conceived by artificial insemination;
2.     the gametes of at least one of the applicants must have been used in the creation of the embryo;
3.      the applicants must be either married, in a civil partnership, or in an “enduring family relationship” (i.e. part of a couple);
4.     the application for a Parental Order must be made within six months of the child’s birth;
5.     the child must be living with the applicants at the time the application is made and the making of the order;
6.     at least one of the applicants must be domiciled in the United Kingdom;
7.     that time of making the order the applicants must both be over the age of 18;
8.     the surrogate mother must have consented to the making of a Parental Order.  The consent must be given freely, unconditionally and with a full understanding of what is involved;
9.     the court must be satisfied that no money or other benefit (other than reasonable expenses) has been given or received by either of the applicants for all in consideration of the making of the order, any agreement of the surrogate to making of this order, the handing over of the child the applicants or the making of arrangements with a view to making this order unless authorised by the court.  This is what is known as the commerciality test. Where payments are made to surrogates, egg donors or surrogacy agencies which do not relate to expenses reasonably incurred, the Court must scrutinise these payments before making a Parental Order.
10.   The court is paramount consideration is the welfare of the child. Any public policy considerations that are considered when the court is examining the commercial aspects of the surrogacy arrangement must be considered in light of the welfare of the child.  Case law is clear that only a grave abuse of public policy will prevent the court from making a Parental Order where it would otherwise be in the interests of the child for the duration of the child’s life for a Parental Order to be made.
Surrogacy law in England sits on a middle ground. Individuals are free to enter into surrogacy arrangements and have a legal mechanism to recognise the parental rights, but it is clear from the statutes that Parliament’s intention has always been to prevent the development of a commercial surrogacy “industry” in the United Kingdom.  This unique area of family law is an evolving area of the law, and the number of reported cases since the HFEA 2008 came into force in April 2010 continues to rise. Important developments in English law will be updated on this site.
Summary prepared by Anne-Marie Hutchinson OBE, Colin Rogerson and Richard Kwan of Dawson Cornwell Solicitors. 
This is intended to be a brief summary of the law and should not be relied upon in place of specific legal advice.