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Article 50 - What next?

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16 May 2017

How Brexit will work. What triggering Article 50 means and how involved Parliament will be in shaping our future relationship with Europe?

Transcript

David Lowe: Kieran you're a Principal Associate in our Regulatory Team and you've been following the regulatory and constitutional issues of Brexit, we're now on the cusp of history. What happens next?

Kieran Laird: Well there are a range of things that happen next. The first thing is that we will go into a period of negotiations with the rest of the EU and there's a couple of interesting points around that – what are we going to be negotiating? How much is it going to cost us? And what then happens whenever we bring the terms of the negotiated agreement back to the UK.

David: Okay so just take that first bit about what are we negotiating? Isn't it quite simple we just negotiate a withdrawal, an exit arrangement?

Kieran: You would think that and you would hope that's the case but as in many cases unfortunately it's not. The one thing that we know for certain is that we are going to negotiate this withdrawal agreement and that will cover pension rights, acquired rights of EU citizens living here, UK citizens living abroad and property rights. What's a little more hazy is what we are going to negotiate beyond that. Article 50 says that we need to negotiate the withdrawal agreement bearing in mind the framework of whatever relationship we have going forward. So we need to have some idea of how we are going to trade with the EU after we leave.  However our Government, the UK Government, wants to negotiate that free trade agreement, those terms of our future relationship, in parallel with the withdrawal agreement. But we have seen specifically Michel Barnier for example, a chief negotiator for the EU, saying that the EU is just not going to talk about that with us yet. They want to stick with the withdrawal agreement at the moment, talk a little bit about transition and leave the free trade agreement until later on until after we leave.

David: And what about the cost, because there's lots of stuff, the €57 billion bill that we have to pay. What's all that about and are we going to have to pay that?

Kieran: Well as I said, the withdrawal agreement will wrap in our financial commitments that we have made during the course of our membership of the EU. We've paid into the budget and we are quite a large chunk of the EU budget. We have made commitments that last up until 2020. So from the EU's perspective their thinking to themselves, well if these guys leave we have bit of a hole in our finances. They have made financial commitments that we are relying on. So they will be very keen for us to honour those financial commitments whether it comes in the form of a bill for €57 billion or whether we sit down and agree principles of liability going forward we just don't know yet. However you say will we have to pay it at all, I mean that's a really interesting question. A House of Lords sub-committee came out and said that we might not have to pay it and that's in a situation where we left without any withdrawal agreement at all, so in that case the EU treaties would just cease to apply to us and there would actually be no enforceable obligation that would lead us to have to pay at all.

David: Sounds a great idea, I don't want to pay €57 billion but I guess if we were to do that we wouldn't be very popular with our neighbours on anything going forward.

Kieran: No I mean you can see how that kind of thing is quite attractive to certain really hard Brexiteers in the Government and on the backbenches, but let's be realistic here, no matter what the legal position is we are politically going to pay our bills because we want to trade with these people going forward.

David: Ok so we do some form of deal, none of us know what the deal is, but we do some form of deal. Does it have to come back to the UK Parliament?

Kieran: Well it doesn't have to. Whenever the bill was going through Parliament that was going to authorise the government to trigger Article 50, if you remember back we had a bit of a spat in the Supreme Court about how that was all going to work. Whenever the bill was going through Parliament to authorise the Government to trigger Article 50 the Lords tacked on an amendment that would have required the Government to give both Houses of Parliament a vote on the terms of both the withdrawal agreement, the free trade agreement going forward and if the decision was made to leave without any agreement. However, that amendment didn't make it through the House of Commons. So what we're left with is simply an undertaking from the Government that it will bring the withdrawal agreement, the free trade agreement before Parliament, it won't bring forward any decision to leave without an agreement.

David: Right and that undertaking, that's not a legally binding commitment then?

Kieran: That's a promise from the Government that MP's seem to believe the Government will honour and to be honest it will be quite politically difficult for the Government not to honour, but no it's not a binding legal commitment.

David: And if our Parliament rejects what the Government comes back with then … what happens then?

Kieran: The first thing we would do would be try and go back and re-negotiate better terms but there's a question of how well that's going to work. If we remember back to what happened in Greece when they were negotiating their bailout agreement in 2015 they put the terms of the bailout to their people in a referendum. The people said no thank you, you know please go back and get us something better and the Greek Government tried that, but the EU weren't willing to renegotiate and they ended up signing into law the bailout package that their people had voted against.

David: So Kieran I now understand where we're going with the European process, but what about this Great Repeal Bill, what does that mean?

Kieran: Well the idea of the Great Repeal Bill is to pretty much give certainty to businesses going forward. The idea is to make sure that the first thing after Brexit our domestic legal landscape doesn't change dramatically and that's because a large chunk of the law that currently applies to businesses in the UK comes from the EU. If we simply leave without making any provision there would be a massive black hole in our domestic landscape. What the Great Repeal Bill does is to take all of the EU law that currently applies in the UK and to enshrine it within our domestic legal landscape. The Government will then go forward over the coming years to amend, to repeal and to see what it wants to retain of that corpus of EU law.

David: So if you're a business, what can you do about that Great Repeal Bill? Should you be doing anything?

Kieran: There's two messages here for businesses. The first is that there is some certainty as to what will happen on day one after Brexit. The domestic legal landscape will look pretty much the same. You might have differently named regulators here in the UK doing what previously EU regulators had done before but they will do these things pretty much using the same principles, so there's not going to be a massive sea change. But where there is a change there's opportunity and so given that we are going to go through these laws and amend and repeal some of them, businesses should be getting together in their sector groups and their industry groups and thinking about what they might like to see retained and what they might like to see changed and then bringing those proposals forward to Government.

David: Right so there's an opportunity for business here, if they focus on it, to bring together their peers and their sectors and their trade associations they might well be able to achieve change that is of benefit for business.

Kieran: Absolutely David I mean one of the things that we've got to realise here is the scale of the undertaking the Government are going to have. So for example I think there's an estimate of there being about 20,000 legislative acts currently in force at EU level, 5,000 of which are directly applicable EU regulations. It is going to take the Government an awful long time to go through those and there's a question over whether or not it's resourced to do that. So if businesses of sector groups are able to go to the Government and say listen we have spotted this issue or we have this concern, but also here's how we think you should address it and come with solutions to the problem they identify, because the Government doesn't have an awful lot of time to identify all of these problems itself I think it will be quite open to listen to that.

David: And so that's a key role in-house lawyers can play is helping identify those regulatory issues and the possible solutions.

Kieran: Well absolutely I mean we know certainly that some of the clients we have are beginning to comb through with their policy colleagues asking what European laws currently apply, where they might like to see those retained or changed and beginning to pull together some of those proposals to put to Government.

David: Thank you Kieran.

Kieran: Thank you.


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