“Sad process, surrealistic times but at least a more realistic announcement on #Brexit”
Donald Tusk, European Council President
“We’re not leaving Europe, we’re disentangling ourselves from the treaties of the
EU. We can remain powerfully committed to Europe with a new European partnership...
whilst also going forward with an identity as Global Britain.” Boris Johnson, Foreign Secretary
“We welcome the level of detail provided in the PM’s speech and her commitment to providing
certainty wherever possible. We now know that we will be leaving the single market, and while
there will be firms who regret this, they will at least be able to plan on that basis.”
Allie Renison, Institute of Directors, Head of Trade and Europe Policy
Spring is not yet upon us and yet the seeds sown
in 2016 are already bursting forth with life. (Even
if no-one quite knows what the fruit will look
like or how it will taste.) In the United States, a
certain Donald J. Trump has assumed residency
in the White House. In the United Kingdom, after
much frenetic work behind the scenes, and
much furious debate in the Supreme Court, the
judges have had their say and the wheels of
Government are now cranking into gear. In the
first of our Brexit Essentials briefings of 2017,
we cover the key events of the past few weeks,
including the Supreme Court's Miller judgment
today and Theresa May’s pivotal speech last week,
and attempt to anticipate the coming months
and years.
Miller judgment
“[Withdrawal] will constitute as significant a constitutional change as that which occurred when
EU law was first incorporated... by the 1972 Act. ... We cannot accept that a major change to
UK constitutional arrangements can be achieved by ministers alone; ... the bullet will have left
the gun before Parliament has accorded the necessary leave for the trigger to be pulled.”
Lord Neuberger, President of the Supreme Court
In an upholding of Parliamentary sovereignty, and
by a majority of 8-3, the Supreme Court today
ruled as follows:
• The withdrawal of the UK from the EU,
together with the consequent removal of
existing domestic rights of UK residents,
constitutes a fundamental change in UK
domestic law.
• The only way recognised by the UK constitution
to effect such a change in law is by way of
Parliamentary legislation.
• As such, the Government cannot trigger the
Article 50 Notice, so commencing the process of
taking the UK out of the EU, without legislation
from Parliament authorising it to do so.
The Government has confirmed that it will accept
this ruling and will table an Article 50 Brexit Bill
within days. Opponents may look to amend the Bill,
but their ability to do so is likely to be constrained,
at least to some extent. Substantive amendments
regarding, for example, single market access
are likely to be ruled out of order as subjective
and potentially binding the Government’s hand
in the negotiations. Any amendments seen to
be frustrating the will of the people risk being
politically toxic. For those reasons, most proposed
amendments will probably focus on process,
transparency and a meaningful final vote, rather
than seeking to dictate the terms of exit.
When surreal becomes real: Brexit begins 2
The Supreme Court also unanimously concluded
that the UK Government does not need to obtain
the approval from the devolved governments
of Scotland, Wales and Northern Ireland to pass
the Article 50 legislation. This is unlikely to
deter the devolved governments from seeking
significant influence over the process and the
eventual outcome.
May’s speech
“She proceeded with remarkable skill. Almost unnoticed, she accustomed the British to a total farewell
of Brussels. Whether this is sufficient to lead the country into the uncertain post-Brexit era without
social upheavals and without political setbacks will be assessed later.”
German newspaper, Allgemeine Zeitung
Theresa May has been consistently clear that she will not divulge any information that she regards as likely
to hamper Britain’s negotiating strategy. As a result, her speech was very much principles-based. It did,
however, present a 12-point plan (see below) and articulated the following clear concepts:
• Britain will leave the single market. It was
made clear that the Government’s “red
lines” of (1) controlling immigration and
(2) rejecting the jurisdiction of the ECJ are
incompatible with remaining within the single
market, and that partial membership of the
EU or “cherry picking” was not in Britain’s
interest. The Government will instead look to
retain the greatest possible access to the single
market through its own negotiated free trade
agreement, with Britain re-establishing itself
globally, rather than as a member of the EU.
• Britain will establish its own trade tariffs.
Whilst this might mean a reduced form of
membership of the customs union, rather
than leaving the union entirely, the base
line outlined in May’s speech is that Britain
wants to be free to establish its own tariff
schedules with the World Trade Organisation,
incompatible with full customs union
membership.
• No “cliff edge” for financial sector. Whilst
Britain would not generally look to establish
a lengthy period of transitional arrangements,
May stressed that it would look to negotiate a
phased implementation of its Brexit strategy,
giving the financial services sector in particular
a period to prepare for inevitable changes to
the regulatory landscape. A “special deal” for
the City remains an option, though the status
of the City’s key issues (such as passporting,
access to market infrastructure (e.g. clearing)
and the applicability of EU regulations more
generally) remains uncertain at this stage.
So Theresa May has articulated a clear high-level vision for Brexit. Of course, as she is acutely aware,
that vision will be challenged at home and abroad, by, amongst others, political opponents in the UK,
special interest groups, the “EU27” (who are “united and ready to negotiate”), the potentially harsh
reality of trade negotiations with the US and others, and, if and when a deal with the EU is agreed, by
Parliamentary scrutiny. Quite how the Government’s vision will evolve (if at all) in the face of these
challenges remains uncertain.
When surreal becomes real: Brexit begins 3
What next?
With these concepts now laid down by the
Government, and the certainty of a Parliamentary
vote on the final Brexit deal, the next step for the
Government is to table the Article 50 Brexit Bill and,
assuming Parliamentary approval (the likelihood
of which is bolstered by the overwhelming (if
non-binding) vote of the House of Commons in
December 2016), to serve the Article 50 Notice.
There remain possible impediments, both to the
overall process and to the delivery of the Article
50 Notice. More legal challenges may appear on
the horizon, but at the moment the following two
cases are expected in the courts.
• The Article 127 case: The pro single market
think tank British Influence is leading a fresh
legal challenge in the High Court regarding
the UK’s membership of the EEA (by which
the UK has access to the single market). The
key argument in this case (refuted by the
Government, which contends that the UK’s
departure from the EU will automatically
result in an exit from the EEA) is that the
UK’s membership of the EU is separate from
its membership of the EEA and, as such, that
Article 127 of the EEA membership agreement
must be triggered separately from Article 50,
and with Parliamentary assent. This case is
expected to be heard in the High Court in early
February 2017.
• A Brexit exit strategy?: Another potential legal
challenge waiting in the wings is being pursued
by Jocelyn Maugham QC, whose strategy is to
initiate a claim in the Irish courts concerning
the UK’s (mis-)treatment by other EU members
since the referendum in June 2016, with the
ultimate goal being a referral to the ECJ. The
key question that Maugham then looks to
discuss is whether Article 50 can be revoked
once it has been triggered, with the aim of
giving Parliament an exit strategy if the public
mood were to be reversed. Legal proceedings
are expected to commence in late January or
February 2017.
1. Certainty – to be provided whenever possible throughout the process
2. Control of Britain’s laws – i.e. no more ECJ jurisdiction
3. Union within the UK – work with the devolved governments and not establish
new barriers
4. Irish land-border – maintain Common Travel Area with the Republic of Ireland
5. Control of immigration – “red line” for the UK, which precludes remaining
within the single market
6. Rights for EU nationals in Britain, and British nationals in the EU – as early
as possible, and must be reciprocated
7. Protect workers’ rights – build on the values created by European legislation
8. Bold and ambitious free trade agreement – retain greatest possible access to
single market whilst retaining independence of negotiation
9. Britain to be a global trading nation – with an open mind as to how to
achieve a customs agreement with the EU
10. Britain to be a focus for science and innovation – continued collaboration
with EU partners
11. Co-operation in the fight against crime and terrorism – close co-operation is
intended post-Brexit
12. Smooth, orderly Brexit – phased implementation to avoid the “cliff edge”
May’s 12 point Brexit plan
January 2017
OSM0009759_V02
© Slaughter and May 2017
This material is for general information only and is not intended to provide legal advice.
For further information, please speak to your usual Slaughter and May contact.
May has made her timetable for exit clear and, in
particular, has stressed that it will not be affected
by a failed deal with the EU – no deal is better
than a bad deal. The expectation is therefore
that, come what may, Britain will cease to be a
member of the EU by March 2019. This timetable
will inevitably come under considerable pressure
from many sources. Below shows the Government’s
indicative timetable for certain key actions and
events, alongside certain other considerations
which could have an impact. But Brexit is now
gathering inexorable pace; time will tell if the
winter of our populist discontent is made glorious
summer in Europe and beyond.
Timing Action / Event Other considerations
Pre-March 2017 • A50 Brexit Bill: draft, submit to both
Houses of Parliament, deal with
amendments
• Trade discussions (formal
negotiations not possible while
Britain remains a member of the EU)
• Opponents/pressure groups may seek
to amend Brexit Bill to reflect specific
demands (e.g. for single market access)
• Involvement of UK’s devolved
governments in the Brexit Bill to be
determined
• Current court cases (re. Article 127 and
Article 50 – see above)
• Possible additional legal challenges
to efficacy and/or content of A50
Brexit Bill?
• Banks and other relevant regulated
entities may prepare contingencies e.g.
setting up EU subsidiaries; obtaining
licences; relocating employees
March 2017 • Parliamentary approval of A50
Brexit Bill
• Serve A50 Notice
• Commence negotiations with EU
• Commence / continue trade
discussions with others
• May be further legal challenges following
service of the A50 Notice
• Capacity constraints – what can be run
in parallel?
Autumn 2018 • Agree free trade agreement (FTA)
with EU (practical deadline so as
to enable deal to be effective by
March 2019)
• Likely to be “mixed” agreement – will
need approval by all Member States (and
relevant regions)
March 2019 • Parliamentary approval of FTA /
terms of Brexit
• FTA becomes effective
• Phased implementation for
financial services and other relevant
sectors begins?
• Formal negotiation of other trade
deals commences
• Approval by European Parliament and
Member States / regions to have been
obtained
• Possible implementation of further
contingency planning for banks a
