Brexit - the legal implications

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 automatically two years later on 29 March 2019.The UK Prime Minister has said that the default position, in the event no agreement is reached, would be that the UK would leave the EU on World Trade Organisation terms. The two year period can 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). 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 well under 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. However, the EU has already indicated that it will not consider negotiation of a post-exit arrangement, without finalizing negotiations on the terms of the UK’s withdrawal first.

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. On 31 March 2017, the EU Council published its draft guidelines for the Article 50 negotiations. These guidelines set out the overall positions and principles that the EU will pursue throughout the negotiations. They provide for a "phased approach giving priority to an orderly withdrawal" with discussions on the ‘framework for the future relationship’ being part of the second phase of negotiations and a free trade agreement only being finalised and concluded once the UK is no longer a member state. The guidelines have to be adopted at a meeting of the European Council (EU 27), which is scheduled for 29 April 2017.

It is not clear whether the UK could revoke the Article 50 notice, once given. Its irrevocability was assumed by both parties in the Miller litigation, but this interpretation is yet to be confirmed by the Court of Justice of the European Union (CJEU) 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 CJEU 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 CJEU.

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.

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 will fall away with once the UK formally exits unless substituted.

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 exit, each piece of primary legislation implementing an EU Directive remains in force unless or until separately repealed by Parliament, but there will be no obligations to follow any subsequent amendments to the EU directives. Whilst other (secondary) legislation will only remain in force until the repeal of the ECA, unless expressly retained by the UK Parliament or substituted.

The Great Repeal Bill

In order to preserve legal certainty, the UK Government has said that it will propose a Great Repeal Bill in the next parliamentary session and on 30 March 2017 published a White Paper on that bill. This Bill will repeal the ECA on the day the UK formally leaves the EU, will simultaneously convert all EU law into domestic legislation, so that the first day following exit does not place the UK in a legal vacuum and will create powers to make secondary legislation to allow corrections to be made to laws, where necessary, to rectify problems which arise as a consequence of leaving the EU. Access the Great Repeal Bill White Paper here and our analysis of the Great Repeal Bill White Paper can be found here.

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. The UK Prime Minister, Theresa May, has made it clear that the UK will not seek membership of the EEA or Single Market. The UK Government instead seeks to negotiate a bespoke Free Trade Agreement between the UK and the EU. 

The letter to President Tusk sets out the UK’s proposed principles for the discussions which are: to engage with one another constructively and respectfully, in a spirit of cooperation; always put citizens first, work towards securing a comprehensive agreement, work together to minimise disruption and give as much certainty as possible, pay attention to the UK’s unique relationship with the Republic of Ireland and the importance of the peace process in Northern Ireland, begin technical talks on detailed policy areas as soon as possible, but prioritise the biggest challenges and continue to work together to advance and protect shared European values.

The letter also states that the UK’s objectives for its future partnership with the EU remain those set out in Theresa May‘s speech of 17 January 2017 and the Government White Paper of 02 February 2017.

Objectives in the February White Paper include:

• Ensuring the UK is no longer under the jurisdiction of the CJEU - This means all domestic legislation, even that which is derived from EU law, will be interpreted by UK courts.
• Controlling immigration - The Government plans to restrict the numbers of EU nationals entering the UK
• 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).
• 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 will now take place, 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.

It is not possible to predict 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 left.