Brexit Bulletins | July 19, 2016

Brexit – A guide to what happens next

On 23 June 2016 the UK voted in a referendum to leave the European Union. While non-binding, the new government has said that the Brexit vote will be given effect.

The immediate response in the UK to the referendum result was political chaos and an implosion of effective government and opposition. However, after the earthquake, a new government was quickly formed under Prime Minster Theresa May and a quieter period lies ahead while parliament and the country starts the process of understanding what has taken place, what has stood firm and what needs to be done to rebuild relationships within a re-constructed European settlement.

How the situation will play out is a matter of politics more than law. The EU treaties set out a mechanism (known as Article 50 of the Treaty of the European Union (also known as The Lisbon Treaty) whereby a Member State can indicate its intention to leave and, following that, there must be a negotiation of exit arrangements and the terms of a future relationship (see further below).  It is for the British government to invoke this article and, until that is done and exit arrangements are finalised, the UK remains a full member of the EU with all concomitant rights and obligations and subject to the jurisdiction of the Court of Justice of the European Union. The European Communities Act 1972, which gives domestic legal effect to the UK’s membership of the EU, including giving EU law precedence over UK law in the UK courts, remains in force. Significantly, the UK will have to continue to implement in full all EU law with no ability to cherry pick.

Article 50 of The Lisbon Treaty

Article 50 provides that “Any Member State may decide to withdraw from the Union in accordance with its own constitutional requirements.”

In theory the outcome of the referendum does not bind the government. Having regard to the political climate, however, the resignation announcement on 24 June of David Cameron as Prime Minister and the statements of the incoming Prime Minister, it seems clear that the UK will serve notice to leave the EU. Mr Cameron said:

The will of the British people is an instruction that must be delivered“.

Article 50 requires a departing Member State to serve notice on the European Council of its intention to exit the Union and then the Union shall negotiate a withdrawal agreement with the departing Member State (the “Withdrawal Agreement”) and a new relationship.

Assuming the UK government does then serve notice on the European Council, the treaties of the European Union will cease to be applicable to the UK from the date of the Withdrawal Agreement or, failing that, within two years of the notification unless we and the Council both agree to extend this period.

What is likely to be covered by the Withdrawal Agreement?

The scope of the Withdrawal Agreement can be as broad or as narrow as the negotiators choose.  Some argue that it should be narrow and cover the mechanics of withdrawal and any transition period only, leaving the terms of our future relationship with the EU to be the subject of a separate agreement.  Others argue that the Withdrawal Agreement could be much broader because of the words “taking account of the framework for [our] future relationship with the Union”.  There are different possible models for the UK’s future relationship with the EU (please see ‘Possible post-Brexit models for engaging with the EU). However, should the UK seek to re-join the EU, it would be subject to the same conditions as any other applicant country and, notably, would have lost its hard-negotiated carve outs from matters such as monetary union.

Note that, whatever the terms of the Withdrawal Agreement, it will have to be compatible with the EU Treaties so it will be subject to adjudication by the European Court of Justice.

The UK government in its report “The process from withdrawing from the European Union” looked at the key issues that would need to be addressed by the withdrawal agreement and the list of issues includes the following:

(i)         unspent EU funds due to UK regions and farmers;

(ii)         cross-border security arrangements, including access to EU databases;

(iii)        co-operation on foreign policy, including sanctions;

(iv)        transfer of regulatory responsibilities;

(v)        arrangements for contracts drawn up in accordance with EU law;

(vi)        access to EU agencies that play a role in UK domestic law, such as the European Medicines Agency;

(vii)       arrangements for the closure of EU agencies headquartered in the UK;

(viii)      departure from the Single European Sky arrangement;

(ix)        access for UK citizens to the European Health Insurance Card (or not);

(x)        the rights of UK fishermen to fish in traditional non-UK waters, including those in the North Sea;

(xi)        continued access to the EU’s single energy and aviation markets; and

(xii)       the status of the UK’s environmental commitments made as party to various UN environmental conventions and currently implemented through EU legislation.

Perhaps surprisingly, given the concerns expressed on behalf of the EEA nationals who are currently in the UK and the UK nationals who are currently in the EU/EEA, their fate is not on this list. Clearly, “freedom of movement” is seen as a matter that has to be dealt with as part of any future relationship agreement. This would accord with the latest statements of our new Foreign Secretary, Mr Hammond who has made it clear that the rights of EU nationals who are in the UK is tied to the rights of UK nationals who are currently in the EU.

Ratification of the Withdrawal Agreement

By the EU?

It is for the Council of the EU (excluding the UK) to adopt the Withdrawal Agreement having obtained the consent of the European Parliament acting by simple majority only.  The European Parliament would, therefore, have a right of veto over the Withdrawal Agreement, but not over withdrawal itself – see below.

The Council, excluding the UK, would act by an enhanced majority under article 238(3)(b) of the Lisbon Treaty.  This requires 72% of Council members, i.e. 20 of the remaining 27 Member States, representing at least 65% of the total population of those states to vote in favour.

By the UK?

It is likely that the Withdrawal Agreement will be treated – more so if it contains (significant) provisions that govern our ongoing relationship with the EU – as a treaty and so will be laid before Parliament, with a Government Explanatory Memorandum, for 21 sitting days to be debated before it could be ratified – in accordance with Part 2 of the Constitutional Reform and Governance Act 2010.

Effect on UK law

The process of unravelling EU law from domestic law will be complicated. Repeal of the European Communities Act 1972 in itself would be insufficient.

In particular, subject to the nature of the terms agreed for the UK’s exit, it seems unlikely that all EU law will be sought to be repealed. Much of it will be retained. In that event constitutional difficulties might arise. It is questionable, for example, whether a single ‘Henry VIII’ clause (allowing primary and secondary legislation to be amended or repealed by statutory instrument) will be constitutionally acceptable given the wide areas that EU law cuts across and the limited Parliamentary scrutiny that subordinate legislation allows. In any event, until repeal, all EU law which forms part of UK law will remain in force. A blanket repeal would leave UK law effectively riddled by woodworm with inadequate rules in many important areas. Accordingly, Westminster will have its work cut out to put in place workable substitute arrangements.

There will also be some difficulty in identifying the continuing status of EU law. Questions of interpretation will be likely to arise and have to be legislated for or else decided by the courts as to the precedent value of European court case law and its status in areas where a particular area of EU law was sought to be preserved in a domestic context. Furthermore, one must expect that in some areas the UK courts will still have to follow the decisions of the ECJ and the EFTA Court, in the same way as the Norwegian courts must.

Linked issues of law arise in respect of the devolved governments and legislatures. The devolution Acts are phrased differently but each of them appear to contain EU law that has been devolved. It is therefore possible that Scotland, Wales and Northern Ireland will retain EU laws which concern devolved issues which England will not.

Continued access to the single market

The fundamental issue which will determine the ultimate direction of travel will be the issue of access to the European single market. Many commentators in Britain have suggested that being out of the EU will allow the UK new flexibility.

However, other Member States and economic theorists have been very clear that any access to the single markets can only be on the basis of continued adherence to the four fundamental freedoms upon which it has been built. The logic remains undeniable: a single market can only operate if all enjoy the same rights, obligations and access.

Freedom of movement

So far as EU citizenship is concerned, this is a status that is dependent on national citizenship but it confers rights different from and additional to those that derive from national citizenship. The right to free movement within the territory of the EU is the most significant in practice.

The EU citizenship right to free movement is incorporated into UK law by the European Communities Act 1972 and is transposed by domestic secondary legislation. EU citizenship rights in the EU treaties are directly effective; they do not require domestic legislation for effect.

The EU citizenship of British nationals will have no independent existence following Brexit but the same may not automatically be said of their EU citizenship rights. The legal position of the body of persons that are currently termed EU citizens who seek to rely on EU citizenship rights following Brexit will depend on: (i) the nature of the legal situation that replaces EU membership; and (ii) whether the individual in question is a UK citizen in the EU or an EU citizen in the UK.

What is clear is that the UK’s withdrawal will inform UK politics and vice versa for some time. The terms of our exit from the EU will also define the impact of withdrawal on the movement of people, goods, capital and services across the EU. Until that process is complete, nobody knows what a post- EU UK is going to look like.

For further information please contact David Golten, Edward Craft or Richard Isham.