The UK voted to leave the EU on 23 June 2016. While this decision had immediate economic, political and social impacts, the legal implications will be more gradual and, as yet, there have been no immediate changes to EU or UK law.
The UK Government intends to serve notice on the European Council under Article 50 of the Treaty on European Union before the end of March 2017. On 3 November 2016, the High Court of England and Wales ruled that the UK Government does not have the power to serve that notice without a Parliamentary vote in favour of doing so and, on 24 January, the Supreme Court upheld that decision. A draft bill authorising Theresa May to serve the Article 50 notice was published on 26 January and passed the first vote in the House of Commons on 1 February by 498 votes to 114. It is expected that the bill will complete its journey through the Houses of Parliament in early March.
Service of the Article 50 notice will trigger the start of a two year negotiation period between the UK and the EU. Theresa May had previously stated that details of the UK Government’s negotiation strategy and of areas in which it might be prepared to compromise with the EU would not be disclosed publically (as to do so would not be in the UK’s national interest). However, she confirmed certain points in a speech on 17 January which focused on the 12 key principles underpinning the UK Government’s approach to the Brexit process, and further detail on those principles was provided in the White Paper published by the UK Government on 2 February:
- ‘Hard’ Brexit: the UK Government intends to exit the single market (in particular in light of its desire to impose certain controls on immigration) and negotiate a comprehensive free trade agreement with the EU, and individual free trade agreements with other non-EU countries. As this option does not involve EEA membership, it will result in the loss of the financial services passport. The UK Government also intends to exit the current customs union arrangements, but wants to negotiate tariff-free trade with Europe and build its future international trade relationships based on its membership of the World Trade Organisation. Theresa May has also emphasised that maintaining the Common Travel Area between the UK and Ireland is of key importance.
- Phased approach: Article 50 provides for a two year negotiation period which can be extended if the European Council unanimously agrees to do so. Theresa May has signalled the UK Government’s intention to agree on the terms of the UK’s future relationship with the EU within that two year period (i.e. by the end of March 2019), and its hope for a subsequent phased implementation process across various key areas, with a view to avoiding a ‘cliff-edge’ effective date for Brexit.
- Laws: the UK Government intends to present a ‘Great Repeal Bill’ to Parliament to set out how it intends to convert the existing body of EU law that applies in the UK into UK law, with a view to maximising certainty as to what laws will apply when Brexit takes effect. A White Paper on that bill will be published in advance.
Arthur Cox has been closely monitoring developments on Brexit and we have been advising, and will continue to advise, our clients in Ireland, the UK and further afield on the potential legal implications for their businesses of the UK leaving the EU. The key areas in which we believe that principal changes will take place are:
- Banking and financial regulation
- Consumer law issues – sale of goods and supply of services
- Competition law
- Employment law
- Procurement law
- Data privacy
- Intellectual property
- Energy and natural resources.
We are also mindful of the implications of Brexit for Northern Ireland and free movement of goods and people across the border. Together with our colleagues in our Belfast office, we have an all-island perspective on these issues. In an Annex to the White Paper, Theresa May further emphasized the UK Government’s commitment to the Belfast Agreement, and to the maintenance of the Common Travel Area and “free and frictionless trade” across the border.
For more information, see our Briefing on the January 2017 Supreme Court decision, our November 2016 Brexit Update and November 2016 Briefing on the High Court ruling on Article 50.
We will be issuing further briefings as further developments occur.
If you have any questions on Brexit, please contact your usual Arthur Cox contact or any member of our Brexit Team.