On 24 January 2017, the UK Supreme Court held by a majority of eight to three that an Act of Parliament is required before the UK Government can give notice under Article 50 of the Treaty of European Union to leave the EU. The UK Government will, therefore, have to secure Parliamentary approval before it begins the Brexit process.
The key issues resulting from the majority and the general conclusions are set out in our general briefing on the Supreme Court Judgment on Article 50 published earlier this month.
Clarity on the legal effects of Brexit?
In addition to the important finding that the devolved legislatures do not have a veto right over the Westminster Parliament, which could have led to significant delay, the majority's statement confirming the impact of Brexit on the law is probably the most relevant when considering the ongoing impact.
Upon the United Kingdom's withdrawal from the European Union:
- EU law will cease to be a source of domestic law for the future (even if the Great Repeal Bill provides that some legal rules derived from it should remain in force or continue to apply to accrued rights and liabilities);
- decisions of the Court of Justice will (again depending on the precise terms of the Great Repeal Bill) be of no more than persuasive authority;
- there will be no further references to that court from UK courts;
- even those legal rules derived from EU law and transposed into UK law by domestic legislation will have a different status; and
- legal rules will no longer be paramount, but will be open to domestic repeal or amendment in ways that may be inconsistent with EU law.
Impact in light of transitional provisions?
The need for an Act of Parliament may lead to some delay in the overall timetable for exit. In light of the growing focus on transitional arrangements (mentioned by the Prime Minister and on which the Treasury Committee is consulting), the effects of Brexit set out above may, in any event, be postponed lessening ultimately the effect of a delay in triggering Article 50.
Any light on the final arrangements?
The main issue for clients remains the ultimate arrangements between the UK and the EU and the special provision, if any, for financial institutions and funds in the UK seeking access to the EU and EU financial institutions and funds seeking access to the UK.
This is also an issue in considering the effectiveness of any transitional arrangements, on which the Treasury Committee is consulting: until the industry has clarity on what it is transitioning to, it will be difficult to comment definitively on the transitional arrangements.
The Supreme Court judgment does not address this issue.