Brexit - the legal implications

14 February 2017

"Brexit" is the term commonly used to refer to a UK exit from the EU.

The consequences of the UK’s vote to leave the EU will stem from how the UK Government chooses to develop its relationship with the EU following exit. The UK Government has indicated it wishes for a “a high degree of international cooperation” with the EU, but how this will operate in practice will be the subject of negotiation between the UK and the EU in exit talks.

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Mechanisms for withdrawal
  • Little has changed since the referendum. Changes will begin to be seen once the Government actually triggers its exit from the EU.

    Article 50 TEU

    Article 50 of the Treaty on European Union (the TEU) provides the legal basis and procedure for an EU Member State to withdraw from the Union. This route to withdrawal is the only one that complies with international law. Under Article 50, the Member State must provide notice of its intention to withdraw, which triggers the start of a two year period in which the Member State and the EU negotiate the terms of withdrawal, taking account of the framework for (rather than settling the terms of) their future relationship.

    If no agreement on the arrangements for its withdrawal is reached, Brexit will occur once the two year period is over, with no terms in place. The two year period could however be extended if negotiations are incomplete, but only with the unanimous consent of the Council of the EU (and thus all remaining 27 Member States). It is very possible that securing that consent would come at a cost to the UK and involve it making concessions to any State threatening to withhold its consent, although the Prime Minister has made it clear that “no deal for the UK is better than a bad deal for the UK” and that the UK Government would resist any attempts by the EU to impose punitive measures. The two year period will include time at the start when the Commission will seek a negotiating mandate from the Council and time at the end when the Council and Parliament consider the terms of the agreement, so the available period for negotiation is less than two years.

    The Article 50 procedure has never before been used and the provision is somewhat opaque. This puts both the UK and the EU into unchartered waters:

    • In the UK, Parliament is required to decide (as specified in the R v Miller Supreme Court judgment) whether the UK Government may trigger Article 50 and on what terms the UK Government should accept a deal. EU leaders have indicated they will not enter discussions with the UK until Article 50 notice has been given.

    • The Council of the EU is ultimately responsible for concluding the withdrawal agreement with the UK on the basis of a qualified (weighted) majority, having sought the consent of the European Parliament. Although a team has been appointed for negotiations on behalf of the EU, it is not clear at this stage exactly how the procedure would work from an EU perspective, although it is clear that the Council will provide guidance on how the negotiations should be managed.

    It is also not clear whether the UK could revoke the Article 50 notice, once given. Its irrevocability was assumed by both parties in the Miller judgment, but this interpretation is yet to be confirmed by the ECJ or any other EU institution. There is currently an action before the Irish High Court to establish if Article 50 notice is or is not revocable once given. It is expected that the Irish High Court will in turn ask the ECJ to answer the question under the preliminary reference procedure. However, this relies upon a number of factors, including whether the Irish High Court will accept the case and if it does so, whether it will elect to send the question to the ECJ.

Effect and application of EU law in the UK
  • EU law is deeply embedded in the legal landscape in the UK at the moment. More generally, the UK and its laws must comply with the Treaty obligations of the UK under the EU treaties and acknowledge the principle of the supremacy of EU law.

    In order to preserve legal certainty, the UK Government has proposed a bill, currently known as the Great Repeal Bill. The Great Repeal Bill, if enacted, would annul the European Communities Act 1972 (the ECA) on the day the UK formally left the EU. The ECA provides for the incorporation of EU law into English law and section 2(2) enables ministers to put secondary legislation before Parliament in order to implement EU law that is not directly applicable (eg Directives) into national law. Secondary legislation could include orders, rules, byelaws or, confusingly, regulations. The Great Repeal Bill, whilst annulling the ECA will also simultaneously enact all EU law into domestic legislation, so that the first day following exit does not place the UK in a legal vacuum. However, it remains to be seen whether this bill will pass through Parliament.

    Two main types of EU legislation currently shape UK law:

    EU Regulations

    EU Regulations lay down general rules that are binding at EU and at national level. They are “directly applicable”, which means that they do not need to be separately enacted through UK legislation to have effect. Regulations would fall away with once the UK formally exits.

    The Government has specified that the Great Repeal Bill will embed directly applicable EU law into domestic law. However, there are many Regulations which are fundamental to the EU’s economic model e.g. EU Customs Union (established by EU Regulation 952/2013) but the UK Government has not yet made it clear if it will also be adopting these fundamental pieces of legislation.

    EU Directives

    EU Directives are binding in terms of the results to be achieved – but the Member States have flexibility as to how to achieve those results. In the UK, EU legislation is implemented either as standalone legislation or integrated into a broader piece of legislation, and as either primary legislation (Acts of Parliament) or secondary legislation, under the European Communities Act 1972 (the ECA).

    The vast majority of EU Directives are implemented through secondary legislation. Following the UK’s formal exit, each piece of primary legislation implementing an EU Directive remains in force unless or until separately repealed by Parliament. If the Great Repeal Bill is indeed passed, then each piece of secondary legislation implemented under the ECA, unless expressly retained by Parliament, would no longer be in force but would , in theory, immediately be replaced by an equivalent provision in UK law.

Looking ahead
  • The UK will seek to withdraw by making use of the Article 50 procedure, as confirmed by Theresa May and David Davis. However, it is not possible to predict much else, such as what the precise consequences of the withdrawal might be in practice for the UK, until negotiations are complete.

    For our views on the key issues that will arise for businesses when the UK leaves the EU, see our series of Brexit articles on the right.

The UK’s future relationship with the EU
  • The extent to which the UK’s legal landscape will change as a result of Brexit depends on the outcome of negotiations between the UK and the EU. Theresa May has made it clear that the UK will not seek membership of the EEA or Single Market. Instead, she seeks for the UK to negotiate its own position, which is unlikely to match any of the arrangements that already exist for other countries.

    Key elements of the UK Government’s approach to Brexit, including the post-Brexit relationship with the EU have been set out in a Government White Paper. This includes:

    • Ensuring the UK is no longer under the jurisdiction of the Court of Justice of the European Union - This means all domestic legislation, even that which is derived from EU law, will be interpreted by UK courts. The UK is therefore unlikely to agree to any provision in the exit negotiations that require it to be bound by EU law and thus under ECJ jurisdiction.

    • Controlling immigration - The Government plans to restrict the numbers of EU nationals entering the UK. As a consequence, the UK is unlikely to be granted access to many elements of the Single Market or indeed any and the UK government has accepted this outcome. The "freedom of movement" is a key pillar of the EU and access to the Single Market is usually only granted to a country if this pillar (along with the remaining three “freedoms”) is accepted, as in the example of the Swiss-EU bilateral agreement network.

    • Ensuring free trade with European markets - The Government seeks to form “a new strategic partnership with the EU”, with the freest possible trade. It explicitly notes it will not be seeking membership of the Single Market, but wishes to have an arrangement which allow both the EU and UK system to work together (although it may accept elements of the Single Market arrangements). It will also seek a mutually beneficial new customs agreement with the EU (but not remain a member of the Customs Union). The Government is clear that any agreement would be on a fully reciprocal basis.

    However, these are simply principles espoused by the UK Government. The EU naturally has its own priorities and the UK may be forced to make concessions to its stance in order to obtain crucial elements of an agreement. Much depends on the negotiations that take place following Article 50 notice and beyond Britain’s exit of the EU, but what is clear is that the UK is in a unique position in comparison to other countries that have free trade agreements with the EU and therefore the post-Brexit model will be equally unique.

This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.