Brexit – What Happens Next?

The following is a guest post by Felix Beulke, summer intern at the Global Legal Research Directorate, Law Library of Congress. It follows a blog post by Clare Feikert-Ahalt, FALQs: Brexit Referendum.

On June 23, 2016 the United Kingdom held a referendum on whether to leave or to remain in the European Union (so called “Brexit”). The Leave campaign won by 52% to 48% with a high voter turnout of 71.8%. Both the people in Scotland and Northern Ireland voted to remain by a majority. As the referendum itself does not trigger the exit process, the question arises: What happens next?

The European Union (EU) is a supranational organization based on international legal agreements between all EU Member States, primarily the Treaty on European Union (TEU) and the Treaty on the Functioning of the European Union (TFEU). The TEU includes a formal withdrawal procedure from the EU in Article 50 TEU. The clause was introduced with the Treaty of Lisbon in 2007 and had not been included in prior treaties. It settled the question whether a right to withdraw from the EU existed, which had been highly controversial.

A withdrawal from the EU would demand a termination of the treaties with the UK in accordance with EU law. Furthermore, it would require rewinding the extensive legal and political European integration of the UK that took place since it joined the European Economic Community in 1973. This concerns harmonized law in regard to the internal market, participation in EU institutions as well as other aspects of cooperation. The immediate withdrawal process will also have to at least outline a future relationship with the EU.

Legal Requirements to Exit the EU

The exit procedure is governed by Article 50 TEU which mainly provides procedural requirements. Article 50 (1) TEU gives each Member State the right to leave the Union “in accordance with its own constitutional requirements.” Besides that, no substantive prerequisites are demanded.

A legal discussion is emerging on whether a potential Brexit decision would be in accordance with the UK constitution, if the Prime Minister acted alone under prerogative powers or whether the withdrawal requires an act of Parliament. The law firm Mishcon de Reya is taking pre-emptive legal action against the government seeking assurance that the sovereignty of Parliament will be protected. They argue that “the outcome of the referendum itself is not legally binding and for the current or future prime minister to invoke article 50 without the approval of parliament is unlawful”. The fact that the UK joined the EU in 1973 by act of parliament (the European Communities Act 1972) suggests that a respective withdrawal decision could indeed touch the sovereignty of the Parliament. Some legal scholars even argue that this challenge – although it concerns UK constitutional law – could eventually fall under the jurisdiction of the European Court of Justice, which is responsible for the interpretation of Article 50.

Negotiating a Withdrawal Agreement

According to Article 50 (2), the EU shall negotiate and conclude an agreement with the withdrawing state, setting out the arrangements for its withdrawal and taking account of the framework for its future relationship with the EU. The negotiations of a withdrawal agreement will formally begin once the UK notifies the European Council of its decision. The European Council consists of all heads of government of each Member State and is responsible for defining the general political direction of the EU.

It remains uncertain when the UK will formally invoke Article 50 TEU. British Prime Minister David Cameron, who has since announced his resignation, stated after the referendum he would not immediately invoke the withdrawal clause, but leave the task to his successor. The delay was criticized by EU institutions and other Member States, arguing that the UK has to act on the vote as soon as possible in order to prevent ongoing uncertainty within the EU. The European Council already set up a “Task Force on the UK” led by Didier Seeuws to prepare for the expected negotiation talks with the UK. However, while the EU tries to put political pressure on the UK government, there is no legal obligation under Article 50 to invoke the withdrawal clause after a referendum.

Article 50 (3) TEU stipulates that the EU treaties shall cease to apply to the withdrawing state two years after the notification, thereby implying that the negotiation process will be limited to two years. This is a rather tight time frame given that the subjects are numerous and complex. This period can only be extended by a unanimous decision of all Member States. Political voices in the UK called for preliminary informal talks before the official negotiations to lessen the pressure. The idea was rejected by European Commission President Jean-Claude Juncker, as well as the leaders of Germany, France, and Italy insisting that no Brexit talks of any kind can begin until Britain has formally applied to leave the European Union.

The European Commission will presumably lead one part of the EU negotiations overseen by the European Council and the aforementioned “Task Force on the UK”. According to Article 50, the agreement will be concluded by the European Council, acting by a qualified majority, after obtaining the consent of the European Parliament. One of the challenges will be to unify different interests within the EU. For instance, France’s Prime Minister Manuel Valls stated that a Brexit could be an opportunity for Paris, because the government is working on new initiatives to lure major international firms from London to Paris. While some countries may pursue a close relationship with the UK in the future, others might see opportunities in an advanced separation.

Issues to Resolve

The Brexit negotiations will not have to yield a complete future trade deal with the UK right away, but will rather have to resolve the issues at hand by a set of transitional arrangements to extricate the UK from its EU rights and obligations.

One of these pressing issues is the treatment of EU citizens in the UK and respectively the treatment of British nationals in other EU states. Approximately 1.3 million British ‘expats’ live in other European states and 3 million EU nationals live in the UK. So far, neither the UK nor other EU States have given assurances for these people to keep their status, although there are political voices in the UK and in Germany pushing for providing similar status.

It will also be important to organize future intelligence cooperation and border protection. The UK military and police could withdraw from organizations like Europol, the EU law enforcement agency, and Frontex, the EU agency in charge of border management. This could, for example, endanger the development of the Counter Terrorism Centre at Europol. The head of London’s Metropolitan Police Service already seeks assurances from political officials that the UK police will still have access to European databases.

In addition, monetary issues like British contributions to the EU budget or the reception of EU subsidies need to be resolved. The withdrawal of British civil servants from EU institutions, British members from the European Parliament, and British judges from the European Court will have to be organized. Two influential EU agencies, the European Medicines Agency and the European Banking Authority, will have to move their headquarters to different EU Member States, with some of the states already gearing up for a contest.

Future Relationship

The withdrawal agreements will have to be designed in light of a future relationship with the EU. Since the UK has expressed interest in keeping access to the common market, it could join the European Economic Area (EEA) that unites the EU Member States and the three European Free Trade Association (EFTA) States, Iceland, Liechtenstein, and Norway, into an Internal Market without requiring EU Member State status. However, the EEA Agreement would again require the inclusion of EU legislation in all policy areas of the Single Market. The UK would have to guarantee the four freedoms, which means the free movement of goods, services, persons, and capital. This might come into conflict with the outcome of the referendum itself since the successful Leave campaign called for regaining national sovereignty and curbing immigration.

The UK could also pursue a completely unique relationship with the EU based on bilateral trade agreements similar to the close relationship the EU currently maintains with Switzerland. The country rejected the EEA membership in 1992 and instead developed close ties with the EU through approximately 100 bilateral agreements. Switzerland has access to the Single Market, but also had to agree to implement certain aspects of EU legislation including free movement of persons.

After the EU leaders met for the first time as a 27 member bloc (without the UK) on June 29, European Council President Donald Tusk made clear there would be “no single market a la carte” and that Britain would have to accept the free movement of people, labor, capital, and goods if it wishes to access the Single Market.