June 28 2016

Brexit: What next for the UK?

Professor Laurent Pech, Jean Monnet Chair of EU Public Law and Head of the Law and Politics Department at Middlesex University, attempts to answer 10 key questions arising from the UK’s decision to vote Leave.

1. Is the referendum result binding?

The short answer is a clear no. The referendum is not legally binding on Parliament as a matter of British constitutional law. In other words, the referendum result was of an advisory nature only. The British Parliament could have decided that the result would be binding, but it purposefully declined to do so when it adopted the EU Referendum Act 2015.

2. Should one expect any immediate legal consequences from last week’s vote to leave the EU?

Legally speaking, the referendum result, in and of itself, leaves the status of the UK as a Member of the EU and the status of EU law in the UK unchanged. As the Referendum is of an advisory nature only (see above), the right of EU citizens to reside and work in the UK, as guaranteed and organised in EU law, remains in effect.

It is, however, true that, theoretically speaking, the British Parliament may decide to adopt legislation in violation of EU law. This would almost certainly lead to retaliatory measures in other EU Member States, and, as such, this scenario is highly unlikely.

3. Could EU citizens currently residing and working in the UK or British nationals residing and working in other EU Member States lose their EU free movement rights?

There is no doubt that EU free movement law will continue to cover UK and EU nationals until such time as a withdrawal agreement is concluded (see below). The most likely outcome of any future withdrawal agreement is that the situation of EU and UK residents from a legal point of view will not change.

It has been argued during the referendum campaign that EU citizens, including UK nationals in other Member States, having exercised their free movement rights cannot be deprived of their ‘acquired rights’ under international law regardless of whether a withdrawal agreement can be negotiated between the UK and the EU-27. However, this claim is legally doubtful, and one should therefore expect a future UK/EU agreement to clarify this matter.

4. How does an existing Member State withdraw from the EU?

The procedure for a Member State’s departure is laid down in Article 50 of the Treaty on European Union. This provision sets out the only lawful procedure for an existing Member State to leave the EU. Article 50 has never been activated before, and so there is no precedent for what may happen.

In order to be activated, the departing Member State must notify the other Member States of its intention to leave the EU. Once this notification has been made, an agreement must be concluded within a two-year time frame. At the expiry of the two-year period, and in the absence of any agreement to extend that period, the departing country will cease to be a Member of the EU for all intents and purposes.  As yet, the UK has not triggered the Article 50 process, and so the two-year period has not begun.

5. When will the UK activate Article 50?

This is by far the most important legal issue to be decided in the short-term. David Cameron initially promised to promptly trigger Article 50 in case of a vote to leave, but he has since indicated during his resignation speech that he will leave this decision to the next Prime Minister. Among EU Institutions and other Member States some, including European Commission chief Jean-Claude Juncker, have expressed the wish for the UK to begin the process immediately. However, legally speaking, the EU cannot force the UK government to activate Article 50.

6. Assuming that Article 50 is activated, could the UK change its mind regarding EU membership?

Article 50 does not explicitly exclude the scenario whereby a Member State would choose to reverse its decision to leave the EU in the course of the withdrawal negotiations. In other words, the ‘divorce’ should only be considered final once the withdrawal agreement enters into force, or once the two-year negotiation period laid down in Article 50 comes to end without any decision to extend this period.

7. Assuming that Article 50 is activated, how long would it take for a withdrawal agreement to be concluded?

Unless the EU-27 agrees to extend the two-year negotiation window laid down in Article 50, the withdrawal agreement must be concluded during this period of time. The withdrawal agreement would most likely need to be complemented with an additional agreement covering the UK’s future relationship with the EU. In other words, the ‘divorce’ agreement will have to be complemented by an agreement governing the UK-EU relationship post ‘divorce’. This latter agreement would most likely take several years to be agreed if previous trade deals are any significant indication.

8. What if no agreement on the UK’s relationship with the EU post ‘divorce’ is concluded?

To simplify, in the event that no agreement is reached to govern the future relationship between the UK and the EU, then the UK would have to trade with the EU on the basis of international rules laid down in the World Trade Organisation agreements. In practical terms, this would likely mean new trade barriers of a fiscal and non-fiscal nature for UK exporting firms. For example, the imposition of import and export duties, or the requirement for products meet certain health and safety standards. The British government could, of course, choose to impose similar barriers on imported goods or services, but this would be at the detriment of UK customers and clients as products and services could become more expensive.

9. Assuming a new agreement on the UK’s relationship with the EU is concluded, what would be its most likely features?

Two main alternative arrangements may be distinguished:

1.  The ‘Norway model’, which would allow the UK to maintain its current access to the EU’s internal market but this would mean continuing to be bound by the body of EU rules relating to the EU’s internal market, including EU free movement rules, continuing to pay into the EU budget, and continuing to be subject to the jurisdiction of a supranational court. It would however be theoretically possible for the UK under this model to derogate from free movement rules on a provisional basis and to refuse to apply particular EU laws, but this could lead to retaliatory measures from other EU countries.
2. The ‘Canada model’, meaning a free trade agreement which would allow the UK not to be bound by, inter alia, EU free movement rules but at the price of a significantly more limited access to the EU’s internal market. This latter model would therefore be considerably more costly for the UK’s economy and, in particular, its financial sector, as UK-based financial institutions would then lose the automatic right to do business elsewhere in the EU.

10. Could the UK end up never leaving the EU?

It is legally speaking possible, to paraphrase the legal commentator David Allan Green, that the Article 50 ‘red button’ will never be pressed. One may for instance envisage a General Election leading to the victory of a pro-Remain party. Alternatively, a majority of the current MPs may also decide that new economic and/or political circumstances warrant a second referendum. It should also be possible for the UK, as noted above, to trigger Article 50 only to change its mind later, as long as it does so before a withdrawal agreement enters into force.

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Tags: Article 50, Boris Johnson, Brexit, Canada, David Cameron, EU, EU Referendum, European Union, Michael Gove, Nigel Farage, Norway, UK