Brexit for beginners. A primer.

 

Now that Mrs May has seen off the challenge to her leadership of the Conservative Party, it may prove fruitful for all parties to take stock with where we are with the process of the UK leaving the EU – what some have called ‘Brexit’.

There are two stages in this process. There is the withdrawal from the EU itself and there is the negotiation of a new trade agreement between the UK and the EU. The latter cannot commence until after the UK has exited the EU but the parties can give some indication of their future intent. This is what the framework declaration does. The document that is intended to have legally binding effect is the Withdrawal Agreement which governs the terms on which the UK exits the EU. If there is no agreement, then there is a ‘cliff edge’ Brexit – with all that entails by way of possible shortages of food and medicine, lorry parks in Kent, uncertainty around the rights of UK citizens living and working in EU Member States.

The Withdrawal Agreement provides for an implementation period from exit day to 31.12.2020 during which time the UK will remain subject to all the rules and legislation of the EU but will not be able to participate in EU institutions – so no UK MEPs. In this period the UK and the EU will attempt to negotiate a trade deal. The UK will be free to negotiate trade deals with third party states but will be unable to implement them. The implementation period may be extended provided notice is given before 1 July 2020.

The three salient elements of the withdrawal agreement. (1) Reciprocal guarantees for the rights of UK citizens living and working in EU Member States and for citizens of EU Member States living and working in the UK. (2) Financial settlement of the UK’s accrued obligations as a Member of the UK, such as pensions for EU employees, in the period prior to exit day. This is to be paid as the obligations would have accrued had the UK remained a Member. Further financial payments will be required for the implementation period, including any extension. (3) A backstop in the event that no trade agreement has been reached by the end of the implementation period. This is contained in the Northern Ireland Protocol.

The third element is what is causing all the problems. At the end of the implementation period the UK as a whole would remain in a customs union with the EU and in addition Northern Ireland would be subject to some of the rules of the single market which would necessitate checks being carried out in the EU on certain classes of goods going into Northern Ireland.

The backstop is intended to be temporary and the Protocol states that it is not intended that it should form the basis of a permanent arrangement between the UK and the EU. On entering the backstop the UK would be no longer subject to the EU’s four freedoms, notably free movement of workers. The UK would no longer make payments to the UK other than in respect of its responsibility for accrued liabilities incurred during its period of membership. The UK would be constrained in acting on any trade deals with third party states as it would be prohibited from lowering tariffs below the EU’s common external tariff, and would also be prevented from obtaining a competitive advantage with the EU by lowering environmental standards[1], or labour and social standards[2], below those of the EU.

The backstop could be terminated by joint agreement of the UK and the EU or by reference to the arbitration proceeding established to deal with disputes arising under the agreement. It could not be unilaterally terminated by the UK. Although the technology for this does not currently exist, it is possible that in the future ‘maximum facilitation’ would be available to enable the necessary border checks without the creation of any hard border infrastructure. In this event, the rationale for the backstop would go and it would become possible for it to be terminated by either party either by reference to arbitration under the backstop procedure or by reference to the provisions of the Vienna Convention on the Law of Treaties 1969 that deal with the termination of treaties. It should be noted that the EU is unlikely to want the backstop to last for very long as it may give Northern Ireland, which will remain in the EU single market, an advantage over the Republic of Ireland. See paragraphs 20 and 21 of the Attorney General’s advice to the Prime Minister of 13 November 2019.

The question for any Prime Minister, whether they be Conservative, Labour, Liberal Democrat will be the same. Is there any alternative to the Withdrawal Agreement concluded by Prime Minister May? Absent any such alternative or agreement to the Withdrawal Agreement, the legal position is that there will be an abrupt exit from the EU at 23.00 on 29 March 2019 – with all the attendant chaos of trade disruption, shortages of food and medicines, lorry parks on the M20, chaos as to citizens’ rights.

Let us consider some of these alternatives.

– Norway plus. This cannot be negotiated now but could be on the table in the implementation period. It would require acceptance of freedom of movement of workers and continued financial contributions to the EU,  albeit at a lower level than the UK’s contributions as a member of the EU, and would constrain the UK’s ability to conclude trade deals with third party states. To quote the last words of Kenneth Williams ‘Oh, what’s the bloody point?’ We might as well remain in the EU.

–  Stay in the European Economic Area. We might argue that the UK remains a party to the European Economic Area Agreement on leaving the EU, but under article 126 this will have no effect. This provides: “The Agreement shall apply to the territories to which the Treaty establishing the European Economic Community is applied and under the conditions laid down in that Treaty, and to the territories of Iceland, the Principality of Liechtenstein and the Kingdom of Norway.” The Agreement would not apply in the territory of the UK. Furthermore, without a customs agreement there would still be the problem of the border in the Northern Ireland between the UK, a non-member state, and the Republic of Ireland, a member state.

– Revocation of the notice of withdrawal under article 50. The UK could stay in the EU either permanently or temporarily to buy time to renegotiate, although the latter option would seem to be ruled out by the caveat in the AG’s opinion that such withdrawal of the notice of withdrawal should not be ‘abusive’.

– Suspend the article 50 notice to allow more time for negotiation. Fine, if every other EU Member State agrees.

– Renegotiate the withdrawal agreement. The EU Member States have indicated that this will not happen. The most that seems likely is an insertion into the Framework Declaration of an intention to continue negotiating a trade agreement when the UK enters the backstop.  Maybe some encouraging words about maximum facilitation when it comes into existence. However, who knows, Prime Minister May, might be able to pull a unicorn out of the hat –  or Prime Minister Corbyn? This is what the Prime Minister has come back with today after her meeting with the EU>

“The EU made clear:

  • that it is their firm determination to work speedily on a future relationship or alternative arrangements which ensure no hard border by 31 December 2020 so that the backstop will not need to be triggered.
  • If the backstop was ever triggered, it would apply only temporarily and the EU would use its best endeavours to negotiate and conclude expeditiously a subsequent agreement that would replace the backstop.
  • That the EU stands ready to embark on preparations so that negotiations on the future partnership can start as soon as possible.

As formal conclusions, these commitments have legal status and therefore should be welcomed.”

– Run a second referendum. This would require agreement on the questions to be asked (three or two?) and on the voting system to be used (first past the post or single transferable vote or alternative vote?). Time is tight, as the old song goes, so an extension to article 50 would be required, but not too long otherwise there is the problem of the scheduled elections to the European Parliament on 23 May 2019.

 

Parliament has to act. If it fails to do so, we have the ‘Thelma and Louise’ Brexit of crashing out without an agreement with the EU, as surely as the sun will rise on 30 March 2019.

 

[1] Ireland /Northern Ireland Protocol. Annex Four. Article 2.

[2]  Ireland /Northern Ireland Protocol. Annex Four. Article 4.

‘That referendum’. Article 50 and Judicial Review

An application for judicial review has been launched by London Solicitors, Mischcon de Reya, with a preliminary hearing scheduled for 19 July. The claim argues that only parliament can authorise the giving of notice under Article 50.

Further details can be found in this Guardian article.

Article 50 of the Lisbon Treaty provides:

1. Any Member State may decide to withdraw from the Union in accordance with its own constitutional requirements.

2. A Member State which decides to withdraw shall notify the European Council of its intention. In the light of the guidelines provided by the European Council, the Union shall negotiate and conclude an agreement with that State, setting out the arrangements for its withdrawal, taking account of the framework for its future relationship with the Union. That agreement shall be negotiated in accordance with Article 218(3) of the Treaty on the Functioning of the European Union. It shall be concluded on behalf of the Union by the Council, acting by a qualified majority, after obtaining the consent of the European Parliament.

3. The Treaties shall cease to apply to the State in question from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification referred to in paragraph 2, unless the European Council, in agreement with the Member State concerned, unanimously decides to extend this period.

4. For the purposes of paragraphs 2 and 3, the member of the European Council or of the Council representing the withdrawing Member State shall not participate in the discussions of the European Council or Council or in decisions concerning it.

A qualified majority shall be defined in accordance with Article 238(3)(b) of the Treaty on the Functioning of the European Union.

5. If a State which has withdrawn from the Union asks to rejoin, its request shall be subject to the procedure referred to in Article 49.

Plenty to keep constitutional lawyers busy over the summer.

The EU Referendum. Do the Parliaments decide?

The process of leaving the EU will begin with notification of withdrawal under article 50 of the TFEU. Until this is done the UK remains a member of the EU and is under no obligation to give such notice within any time frame, or, indeed, at all. The process will end with the repeal of the European Communities Act 1972 two years after notification under article 50. This process raises a number of constitutional issues.

Is Scotland’s consent required for withdrawal from the UK? It has been suggested that this might be the case by virtue of these provisions in the Scotland Act 1998.

Section 29(2)(d)  states that a provision of an Act of the Scottish Parliament is not law in so far as it is incompatible with EU law (similar provisions appear in the legislation setting up the Northern Ireland and Welsh assemblies).

Paragraph 1 of Schedule 4 prevents modification of certain provisions of the European Communities Act 1972.

Section 57(2) states that a member of the Scottish Government has no power to act in a way that is incompatible with EU law.

However, repeal of the European Communities Act 1972 would not involve a devolved matter and the consequence would be that after withdrawal from the EU, Scotland would remain with the restriction that its legislation in devolved matters must continue to be compatible with EU law.

Who triggers article 50?

The referendum has no binding legal force and it would be open to Parliament to decide not to leave the EU, although politically this would be very unlikely. However, is it up to Parliament to decide? The conventional view is that giving notice under art. 50 falls within the Royal Prerogative and would be something for the Prime Minister. A contrary view has been expressed by various constitutional lawyers, such as Lord Pannick writing in The Times on 30 June.

“Article 50 notification commits the UK to withdrawal from the EU, and so is inconsistent with the 1972 act. Withdrawal is the object of the notification, and it is the legal effect. If, at the end of the negotiating period, parliament disagrees with the withdrawal which flows from the notification, there is nothing parliament could then do to prevent our withdrawal from the EU, which would frustrate the 1972 act. Therefore prerogative powers may not now be used.”

The new Prime Minister, whoever they may be, will be faced with the possibility of immediate legal challenge in the event of their deciding to give notification under article 50. This might well incline them to seek authorisation from Parliament.

Interesting times.

The EU Referendum. Part Three. Losing our Directives?

 Since 2000 the EU has become increasingly active in the maritime sphere as regards safety and the environment. This has led to a series of Directives, set out below, which will cease to have effect under the implementing statutory instruments in the UK on repeal of the European Communities Act 1972.

First off, there is the series of Directives generated under the third maritime safety package, known as ERIKA III, which entered into force on 17th June 2009.

–  Directive 2009/21/EC on compliance with flag state requirements

– Directive 2009/15/EC and Regulation (EC) No. 391/2009 on common rules and standards for ship inspections and survey organisations

–  Directive 2009/16/EC on port State control

– Directive 2009/17/EC establishing a Community vessel traffic monitoring and information system

– Directive 2009/18/EC establishing the fundamental principles governing the investigation of accidents in the maritime transport sector

– Directive 2009/20/EC on the insurance of shipowners for maritime claims

This gives Member States the power to expel from their ports vessels which do not have a certificate showing liability for maritime claims up to the limits in the 1976 LLMC as amended by the 1996 Protocol.

Erika III also produced a Regulation.

Regulation (EC) No. 392/2009 on the liability of carriers of passengers by sea in the event of accidents. This brought the 2002 Protocol to the Athens Convention into force within the EU in 2012. The UK has ratified the Protocol and on 28 May 2014 brought it into domestic law through a statutory instrument The Merchant Shipping (Convention Relating to the Carriage of Passengers and their Luggage by Sea) Order 2014 deriving from the powers conferred by sections 183(4) and (6) and 184(1) and (3) of the Merchant Shipping Act 1995

 Other notable Directives in the maritime sphere are

Directive 2005/35/EC of the European Parliament and of the Council of 7 September 2005 on shipsource pollution and on the introduction of penalties for infringements

This criminalises ship source pollution in cases of ‘serious negligence’ and was the subject of a decision of the ECJ in 2008 in the Intertanko case C-308/06 in which it decided that the legality of the Directive could not be assessed in the light of either MARPOL or UNCLOS.

Directive 2012/33/ on the Sulphur Content of Maritime Fuels.

This came into effect on 1 January 2015 and requires ships sailing in the English Channel, the North Sea and the Baltic Sea (the North European emission control area) to use bunker oil with a maximum 0.1% sulphur or apply alternative methods in order to achieve the same effect.

Directive 2013/30/EU on the safety of offshore oil and gas operations and amending Directive 2004/35/EC

This was the EU response to the ‘Deepwater Horizon’ blowout in 2010. The Directive aims to prevent the occurrence of a ‘Deepwater Horizon’ in offshore installations in the EU but also addresses, in part, the response should such an incident occur, through three provisions. First, art. 38 extends the territorial scope of the Environmental Liability Directive 2004 (the ‘ELD’) from coastal waters to waters within the exclusive economic zone or the continental shelf of Member States, up to 370 km from shore. Second, art.7 requires Member States to ensure that the licensee is financially liable for the prevention and remediation of “environmental damage” – i.e. damage falling within the ELD – caused by offshore oil and gas operations carried out by, or on behalf of, the licensee or the operator. Third, art.4 requires Member States “to require the licensee to maintain sufficient capacity to meet their financial obligations resulting from liabilities for offshore oil and gas operations.” and, when granting or transferring licenses, to take due account of, inter alia, “the applicant’s financial capabilities, including any financial security, to cover liabilities potentially deriving from the offshore oil and gas operations in question including liability for potential economic damages where such liability is provided for by national law”. These provisions came into effect on 19 July 2015.

It is, of course, open for Parliament to provide for the continuation of the statutory instruments implementing these Directives.

The House of Commons Briefing Paper of 30 June suggests (p14):

There might be some over-arching legislation saying, for example, that all UK laws implementing any EU Directive were repealed (perhaps with specified exceptions); or that they would all remain in force (again perhaps with exceptions). If the ECA were repealed, any secondary legislation based on s2(2) ECA would need to be saved from lapsing if it was to continue in force. EU Regulations, which are directly applicable (i.e. they do not need further implementation in the UK to come into force) will cease to have effect if the UK were to repeal the ECA.

There is no reason why EU-based UK law could not remain part of UK law, but the Government would have to make sure it still worked without the UK being in the EU.

The Government would probably come up with a mechanism for allowing changes to be made to secondary legislation (Statutory Instruments) made under the ECA or other ‘parent’ acts. There could also be general amendments, such as replacing references to ‘the Commission’ or ‘Council’ with references to ‘the Secretary of State’.

The devolved legislatures would have to deal with EU legislation they have transposed into Scottish, Welsh or Northern Irish laws. It would also be necessary to amend the relevant parts of the devolution legislation, which might require a Legislative Consent Motion under the Sewel Convention.

UK Referendum Result. Implications for shipping law?

As a result of the vote to leave the EU,  the UK will cease to be a member of the EU probably around November 2018 after the new prime minister has invoked article 50 and Parliament has repealed the European Communities Act 1972. How will this affect shipping law?

Substantively, not a great deal. English dry shipping is based on common law, and a few key statutes, such as COGSA 1992, and the implementation of international carriage conventions through domestic legislation – such as COGSA 1971 with the Hague-Visby Rules. Nothing European here, so no change.

With  wet shipping, the CLC and the Fund are part of our national law through domestic law implementing international conventions. Similarly,  the Wreck Removal Convention, the Salvage Convention, and the 1976 Limitation Convention. Again, nothing European here, so plus ca change.

However, procedurally,  we are very much affected by European legislation – and this is something we shall return to in a later post. As a starting point, bear in mind the two sources of EU legislation.

  • Directives which are implemented by and Act of Parliament. On our leaving the EU it will be up to Parliament to decide whether to repeal or amend the implementing legislation.
  • Directives which are implemented as statutory instruments pursuant to s.2 of the European Communities Act 1972. These will cease to be a part of national law once the European Communities Act 1972 has been repealed. If we want to keep them we need to enact them as part of our domestic law.
  • Regulations which have direct effect. These will cease to be a part of national law once the European Communities Act 1972 has been repealed. If we want to keep Regulations we need to enact them as part of our domestic law.