On June 23,
2016, the “shot heard round the world” was the British people voting to exit
the European Union (EU), or simply “Brexit”. The United
Kingdom’s (UK) EU Referendum, in which a record 72.2% of the electorate voted, resulted in 48.1% choosing
to “remain” and a surprising 51.9% opting to “leave”. Immediately after the referendum’s
unexpected outcome, a snowball reaction began that affected the UK’s political
landscape and international financial markets.
The political
casualties and financial impacts of the Brexit vote have been monumental and
historic to say the least. As financial markets opened on Friday, June 24, 2016, the Pound Sterling had its worst
trading day since the 1967 devaluation, losing 8% by 18:00 BST. The FTSE 250
index took a 7.2% hit, the worst since the October 1987 crash. The Stoxx Europe
600 index fell by 7%, the steepest one day drop since the Financial Crisis of
2008. British banks also took major hits, as Barclays PLC lost 30% at one point
on the 24th and the Royal Bank of Scotland Group closed the trading day down
18%.
The UK Prime
Minister, David Cameron, who campaigned to remain in the EU, became the first casualty
of the EU Referendum when he announced he would stand-down at the Conservative
Party’s meeting in October 2016. The presumptive replacement, the former Mayor
of London, Boris Johnson, a Member of Parliament (MP), became the second
casualty when fellow Brexit leader, William Gove MP, withdrew his support of Mr.
Johnson before launching his own campaign to become the Party’s leader and Mr. Cameron’s
replacement. Two weeks after the
Brexit vote, a runoff leadership ballot was cast on July 8, 2016, in which Mr. Gove was eliminated. Andrea
Leadsom MP, a finalist, pulled-out
of the Conservative Party leadership battle on July 11, 2016, leaving a clear
path for Home Secretary Theresa May to become Britain’s Prime Ministertwo-days later.
Amongst the political
and financial roller-coaster that ensued, the legal aspects of withdrawing the
UK’s membership from the EU are an unchartered and complicated legal web. For
starters, the EU Referendum was only advisory to Parliament and not binding on
the Government. The UK Constitutional and Public International law legal battles,
which are currently underway, are of great interest to lawyers and scholars since
they have never been applied in practice.
Under the foundational
pillar of the British Constitutional system, the doctrine of “parliamentary
sovereignty” implies that the Parliament of Westminster is the supreme legal
authority of the United Kingdom of Great Britain and Northern Ireland. Contrast
this principle with the United States’ system of government, where a codified constitution
is the highest law and the Supreme Court has the power to judicially review
acts of Congress and the executive. In the UK, courts cannot generally overrule
legislation and no parliament can pass laws binding a future parliament.
Some refer to
the British Constitution as “unwritten,” though this is not entirely accurate.
Parliament has passed laws which, politically speaking, limit the scope of the
doctrine of parliamentary sovereignty. These laws include: the European Community Act 1972, the Acts creating the Scottish
Parliament and Welsh
Assembly, the Human
Rights Act 1998, and the Constitutional Reform Act 2005 that established the UK Supreme Court (on
October 1, 2009), separate from the House
of Lords, to serve as the nation’s highest appellate court. Other acts have received
higher standing in the British constitutional hierarchy too. Fundamentally, the
principle of parliamentary sovereignty remains in place as, at least
theoretically, a future parliament could repeal any of these acts.
Perhaps the
most significant British constitutional development has been the UK’s
participation as a Member State of the European Community (now European Union) since
January 1, 1973. The effect of joining the EU was that the UK had its “Constitution”
subjected, for the first time, to the exercise of powers by and processes of an
entirely non-domestic set of institutions.
EU law, the body
of law developed by the EU and its institutions, is superior to laws of the
whole of Great Britain and Northern Ireland until the UK officially withdraws.
When the UK joined the European Community, some scholars and pundits claimed that
the UK Parliament had given away aspects of its own sovereignty in exchange for
access to the Common Market – a constitutional question that has
remained contentious ever since is whether the United Kingdom can withdraw from
the EU.
The
legal authority for the referendum came from legislation passed by Parliament in December 2015.
University
of Cambridge Law Professor Mark Elliott commented that:
“The legislation that provided for a referendum to be
held said nothing whatsoever about the effect of the outcome of the referendum,
and the result does not place the Government under any legal obligation to
secure Brexit.”
While
the Government is not legally obligated to trigger an exit from the EU, the
political reality is that the electorate is expecting the Cabinet to respect
the will of the populace and perform according to the outcome of the referendum.
Prior to
the vote, Dr. Alan Renwick of University College London’s (UCL) Constitutional Unit wrote:
“In purely legal terms, a referendum vote to leave
places no obligation on the Prime Minister to invoke Article 50 [TEU]. Indeed,
it places no obligation on him to do anything: the referendum is, formally,
advisory only. In practice, of course, he will have to respect the result. But does that mean invoking Article 50?”
The legal
point that is currently being debated is whether the Prime Minister has the
prerogative to act on the vote’s result without Parliament taking any prior action.
University of Glasgow’s Regius Professor of Law, James Chalmers, has expressed the view that this was a matter of dispute:
“There may be litigation seeking a declaration that an
Act of Parliament is required. My expectation is that there will be an Act of
Parliament, because there is no clear gain in proceeding without one.”
“While the legislation is not binding on the Government,
nor does the legislation say Parliament has a role in the making of Article 50
[TEU]. It is for the Prime Minister to decide when to invoke Article 50 and the
extent to which he or she wishes to involve Parliament.”
On June
29, 2016, an Informal meeting of the 27 heads of
state or government (UK excluded) of the EU Member
States indicated the European Council is expecting Article 50 TEU (Treaty of
Lisbon) to be the legal basis for withdrawal and that official notice to
withdraw must come from the UK Government. Since the Prime Minister is the head
of the UK Government, it will be for Mr. Cameron’s replacement to send an
Article 50 notice to the EC in Brussels.
Under
the Treaty of Lisbon 2007 (which consolidated and amended the Treaty on European Union (TEU) and the Treaty on the Functioning of the
European Union (TFEU)), which came into force December 2009,
there are two possible routes for a Member State to leave the EU. The logical route is to proceed under Article
50 TEU, as it is the treaty provision which governs what happens when a Member
State decides to withdraw from the Union; the alternative, unlikely method is
under Article 48 TEU, which governs the process for amending of the treaties of
the EU.
Article
48 TEU, governs the rules for its revision and amendment. Implementing Brexit via Article 48 TEU
would be to revise the Union’s membership list to exclude the United Kingdom as
a Member State from the EU treaties. In theory, this option sounds easy, but
would be challenging from both a procedural and political aspect, as two layers
of veto powers are involved. Under Article 48 TEU, there must first be
unanimous agreement among all Member States to trigger it. Thus, each Member
State would have a veto power. The second layer of veto power occurs when each
national government must ratify, according to the Member State’s method for
amending its own national constitution, the revisions to the TEU.
Under Article
50 TEU, once an EU Member State has decided to withdraw from the EU, the Member
State “shall notify,” in other words, legally communicate that intent to the
European Council, thus triggering a two-year negotiations period. The negotiation
period exists to ensure the conclusion of a withdrawal agreement concerning trade
provisions, EU treaty arrangements, etc. The EU Council is granted the
authority to conclude such withdrawal agreement on behalf of the Union by a qualified
majority of Member States (after obtaining consent from the EU Parliament). The
UK exit date would be either the date of the withdrawal agreement or two years
from the date of, “notification of decision”.
If after
two years no agreement is reached, the UK, under Article 50(3) TEU, would simply
cease to be an EU Member State without any transitional provisions or trade
deals. A negotiated withdrawal is adventitious for achieving transitional and
post-exit trade, tax, and citizenship arrangements. The prospect of negotiating
an agreement is one of the UK’s, the EU’s, and individual Member States’
strongest bargaining chips in the Article 50 process. However, an automatic
withdrawal, two years after commencement of Article 50, does not necessarily
mean non-use of the power to negotiate a withdrawal agreement is a horrible
outcome. The UK and EU would be free to make treaties post-withdrawal in the
same way that the EU can make treaties with other non-Member States.
A
“decision,” for the purposes of Article 50(1) TEU, must be in accordance with
the given Member State’s own constitutional requirements. This means a
“decision” is made either by the exercise of the prerogative powers (i.e. Prime
Minister acting on behalf of the Crown) or through a piece of primary
legislation (i.e. Parliament acting in its sovereign role). The EU Referendum
vote was merely advisory, and to comply with the “constitutional” element in
Article 50, either the prerogative power or the parliamentary powers, depending
on the point of view, must be used to formally “notify” the European Council in
order to trigger Article 50(3) TEU’s two year clock.
Assuming
a “decision,” for Article 50 TEU purposes is to be made by Parliament, a few
scenarios might playout:
(a) Scottish National Party (SNP), Labour, and a few Conservatives could
lead a revolt and refuse to take action; or
(b) The same could vote down any measure upholding the results of the EU
Referendum.
In Addition,
Parliament might also pass a bill which would restrict the exercise of the
prerogative power by the Prime Minister, thus preventing him or her from acting
on the results of the EU Referendum. If the next Prime Minister, who will take
office in October 2016, decides that both the ‘decision to withdraw’ and
‘notice to the European Council of the decision’ are prerogative powers, then
there may occur a scenario in which ‘statute beats prerogative’.
Alternatively,
UK Constitutional Law Association fellows Nick Barber, Tom Hickman, and Jeff
King argue any prerogative power that would otherwise be available to the
Government in order to make an Article 50 TEU withdrawal decision is displaced
by the European Communities Act of 1972. The argument is based on the holding in the Fire Brigades Union case, in which Lord Browne-Wilkinson said, “‘It would be most
surprising if prerogative powers could be validly exercised by the Executive so
as to frustrate the will of Parliament expressed in the statute.” The
difficulty of challenging the prerogative in this way is that the EC Act of 1972
does not confer any particular rights on anyone. The Act does, however, show
Parliament’s will to give effect to the UK’s obligations under EU treaty law
within the country. Since foreign relations are usually perceived as a part of
the prerogative powers, triggering Article 50 TEU may be both the exercise of a
common prerogative authority through the usage of a treaty provision and going against the implied will of
Parliament through nullifying its 1972 Act. This question will further be
debated as the Michcon de Reya law firm seeks a definitive answer.
On July
3, 2016, solicitors at Michcon de Reya, acting on behalf of an anonymous group of clients, contacted
government lawyers to seek assurances that Article 50 will not be triggered
without an act of Parliament. The solicitors at the law firm, who are not advocates, retained
the services of renowned constitutional advocates who were bestowed the
distinguished title of Queen’s Counsel (QC), The Lord David Pannick QC of Blackstone
Chambers and Rhodri Thompson QC of Matrix Chambers, as barristers who have
standing to appear in court for Michcon de Reya’s clients. The Lord Pannick QC sits
on the Constitution Committee in the UK House of Lords.
After
the Brexit vote, the Petitions Committee, which is made up of 11 backbench
Members of Parliament, received an e-petition with over 4 million signatures asking the Government for
a 2nd EU Referendum. Under a convention of Parliament, any e-petition with over 100,000 signatures
will be debated in the House of Commons. This petition is scheduled for debate
on September 5, 2016. However, the Government responded
by saying:
“The Prime Minister and Government have been clear that this was a once
in a generation vote and, as the Prime Minister has said, the decision must be
respected. We must now prepare for the process to exit the EU and the
Government is committed to ensuring the best possible outcome for the British
people in the negotiations.”
Even though the majority of the
British electorate may have voted in favor of exiting from the EU, the UK will
continue to remain a Member State until
key constitutional questions are resolved in order to begin the withdrawal process.
The first order of
business is deciding if a decision has been made which meets the UK’s
Constitutional process. The New
Government has intimated it will honor the outcome of the Referendum and withdraw
from the Union using Article 50 TEU. The New Prime Minister, Ms. May, has indicated
how the withdrawal process should take place, but this is only one opinion, and
more importantly, just the beginning of the process. It is quite clear, that
even if the New Government were to not follow the advice of the electorate, the
financial and political damage is already irrecoverable. The world has already
reacted to Brexit, as though the vote’s outcome were contractually binding. The
snowball effect in terms of political shifting and financial and business turbulence
will continue for the next several years. The legal issues of how national
constitutional law interacts with international treaty law will test unprecedented
waters. The legal debate on how to leave, and then, how to unravel a union that
has existed since 1973, will be a daunting challenge to say the least. It is speculated Brexit will prompt changes
in formal rules and conventions within the EU and will serve as a case study to
other nations contemplating what would happen if they were to follow the UK.
The legal path of leaving the EU is a watershed moment in the history of UK Constitutional
and Public International law.
