Brexit & Conflict of Laws: Part 1

Uncertainty flourishes in post-Brexit Britain. What deal will Britain strike with the rest of the EU? Or, for that matter, will Britain strike a deal with the EU? How will the government manage to negotiate a deal to retain access to the single market and restrict free movement of people? These huge political, social, economic and legal questions encompass many other much narrower questions including how Brexit will affect English law’s approach to the conflict of laws (jurisdiction and applicable law). It is this question which this blog series considers.

Before I turn to the question of how Brexit is likely, in my opinion, to affect the law of jurisdiction and applicable law in England and Wales (considered in Parts 2 and 3 of this series), it is necessary to consider the legal mechanism for implementing Brexit, since this will have an effect on the possible outcomes.

Implementing Brexit

The referendum vote and result was not binding in law; Parliament is sovereign and the European Communities Act 1972 remains in force. Accordingly, until and unless something happens which has legal effect there will be no change to the status quo. Of course, just because the referendum had no legal effect does not mean it had no political effect. To the contrary, the political tsunami caused by the Brexit vote was self-evident. According to the ‘received wisdom’ there is, as a result of the Brexit vote, a political imperative to leave the EU[1].

Two legal requirements must be met in order to deliver the political imperative of leaving the EU. The first is the requirement under domestic law, namely revocation of the European Communities Act 1972. The second is the requirement under EU law, namely invoking article 50 of the Lisbon Treaty, or as I prefer to say, pulling the article 50 trigger. Whilst one takes nothing for granted in the uncertainty of the post-Brexit world, one would expect revocation of the European Communities Act 1972 to be a formality, as the political servants have had their instructions from their masters, the electorate.

Once the article 50 trigger has been pulled, the outcome, so far as EU law is concerned, is known: Britain will exit the Union. However, exiting the EU is not the same as agreeing a new trade deal with the EU and there does appear to be a developing consensus view that Brexit (article 50) negotiations will take place prior to negotiation of a new trade deal – the latter requiring unanimity and ratification by national parliaments as opposed to the weighted majority approval of EU countries (20 countries with 65% of the population) necessary for the article 50 deal to be ratified by the EU.

In fact, some commentators, such as Charles Grant from the Centre for European Reform have argued that Brexit will require no less that 6 international agreements covering (amongst other matters) transitional provisions, a new trade deal between Britain and the EU, an agreement for full membership of the WTO, and agreement on defence and security policy. The point is that, although article 50 may bring about Britain’s exit from the EU, it will probably not set the terms for the new relationship between Britain and EU. In relation to the future of English law on jurisdiction and applicable law, this may mean that an article 50 agreement produces a temporary position which might be subject to change under the terms of a trade agreement reached, possibly years later.

The Article 50 Permutations

Article 50(3) of the Lisbon Treaty states:

The Treaties shall cease to apply to the State in question from the date of entry into force of the withdrawal agreement [between Britain and the other EU Member States] or, failing that, two years after the notification… unless the European Council, in agreement with the Member State concerned, unanimously decides to extend this period.

In other words, once the article 50 trigger is pulled there are three possibilities:

  1. All treaties shall cease to apply to Britain upon Britain and the other EU Member States reaching an agreement prior to two years from the trigger.
  2. All treaties shall cease to apply to Britain upon Britain and the other EU Member States reaching no agreement at 2 years from the trigger.
  3. The treaties will continue to apply to Britain upon Britain and the other EU Member States unanimously reaching an agreement to extend the negotiation period for Britain’s exit from the union.

If scenario a. or b. were to come to fruition, Brexit would be a reality. Scenario c. appears to be a temporary solution to allow the negotiators further time to reach agreement; it is not a mechanism for reversing Brexit. To state the obvious, there is no guarantee of a deal, and I would opine there is a relatively high risk of no deal being struck between Britain and the remaining 27 Member States, even though it is only a weighted majority of EU Member States which is required to ratify the article 50 agreement. Angela Merkel has spoken about Britain’s renegotiation not being a ‘cherry-picking exercise’ and any negotiation with 27 others is bound to be treacherous with a deal likely to reflect the lowest common denominator. However, I am of the opinion that a deal is the most likely outcome as it is in the mutual interest of Britain and the other EU Member States to strike a deal which sets the terms for Brexit, as opposed to setting the terms for the new trading relationship which is likely to be more intractable. If Britain and the EU were to attempt to reach a trade deal at the same time as concluding the terms for Brexit (such as budget contributions, and transitional arrangements for expats and cross-border companies) I would consider it unlikely that any deal would be reached within the 2-year time frame.

[1] The received wisdom is not certain. For example, one plausible alternative is that the Court may find that only Parliament has the authority to invoke article 50 as a result of the actions brought by private individuals challenging the government’s power to rely on the Royal Prerogative to invoke article 50. See: http://www.mishcon.com/news/firm_news/article_50_process_on_brexit_faces_legal_challenge_to_ensure_parliamentary_involvement_07_2016. A plausible, if unlikely, result of such a court ruling might be that a majority in parliament refused to invoke article 50 meaning that, legally, there was no change to the status quo.

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