Consequences of a Negotiated Departure for the Scope of Brexit Negotiations

Elio Gaarthuis

The United Kingdom is scheduled to leave the European Union on March 29th. This date is the consequence of Article 50 of the Consolidated Version of the Treaty on European Union  (Treaty on European Union), which establishes that the date in which a state shall cease to be a member of the European Union is either the date of entry into force of a withdrawal agreement negotiated by the European Council and the withdrawing member, or, lacking such an agreement, two years after notification by the state of its intention to withdraw.[I] In other words, European Union law sets an outer temporal limit to a negotiated departure.

[i]Consolidated Version of the Treaty on European Union art. 50, Oct. 26, 2012, 2012 O.J. (C 326) 13 [hereinafter Treaty on European Union].

In the past two years, the two sides have been negotiating just that. The result is the Agreement on the Withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community (Withdrawal Agreement),[ii]which establishes, broadly:

  • that European Union citizens and United Kingdom citizens may reside in the other’s territory;[iii]
  • a transition period during which European Union law would continue to apply to the United Kingdom although the latter would have ceased to be a part of the former;[iv]
  • the creation of a single customs territory between the European Union and the United Kingdom in the even that no further agreement on trade relations is reached prior to the expiration of the transition period;[v]
  • that any disputes about the interpretation of the Withdrawal Agreement may be referred to binding arbitration.[vi]

But to enter into force, the Withdrawal Agreement needs to be ratified by both the European Union and the United Kingdom. Failure to ratify the Withdrawal Agreement would still result in the United Kingdom leaving the European Union on March 29th due to the automatic nature of the mechanism created by Article 50. In such case, one of two outcomes is likely. While there technically is a third scenario that temporarily extends membership of the European Union through a request for an extension unanimously approved by the European Council,[vii]this option would merely delay the earlier two scenarios.

First, the United Kingdom could permanently remain in the European Union. In a recent preliminary reference, the European Union’s highest court established that the United Kingdom has the option of deciding to do so unilaterally, on grounds that departure cannot be forced on a member state who does not wish to leave.[viii]Nevertheless, such a decision must be “unequivocal and unconditional,” suggesting that it may not be used tactically to obtain a negotiating advantage.[ix]In brief, the United Kingdom could decide to remain in the European Union only if it truly intended to remain.

Second, agreements alternative to the Withdrawal Agreement could be concluded. Indeed, the underlying need for the provisions of the Withdrawal Agreement remains, suggesting that alternative agreements equivalent to the portions of the Withdrawal Agreement on which political agreement can be reached could be negotiated. Taken together, such agreements could result in a substantial replication of the Withdrawal Agreement.

It should however be noted that the Withdrawal Agreement is in large part an attempt at facilitating a further negotiation, that of the mechanics of the relation between the United Kingdom and the European Union, by ensuring that European Union law would continue to apply while such negotiations take place. Failure to agree on an equivalent to the Withdrawal Agreement’s transitional period would mean that consequences arising out of the cessation of application of European Union law to the United Kingdom would become immediately relevant without negotiations on such issues having happened. Put differently, the lack of a transitional period would immediately expand the scope of negotiations to all issues arising out of the end of the application of European Union law.

This is possibly best illustrated through an example. European Union law currently allows investment firms authorized to operate in one European Union member state to freely provide such services in another member state.[x]During a transitional period, this would continue to be the case, and an alternative of such a provision could potentially be negotiated before the end of the transitional period. On the contrary, the lack of a transitional period would make it immediately necessary to negotiate a replacement.

In the coming weeks or months, depending on whether an extension of European Union membership is agreed upon, clarity will be made on which of these options the United Kingdom will choose. Ratification of the Withdrawal Agreement would result in two years of intense negotiations on the mechanics of future United Kingdom relations with the European Union. Failure to do so and failure to agree on a transitional period would result in the necessity to have such negotiations immediately.

Elio Gaarthuis is an LL.M. at Harvard Law School and a Senior Editor of the Harvard Business Law Review

[i]Consolidated Version of the Treaty on European Union art. 50, Oct. 26, 2012, 2012 O.J. (C 326) 13 [hereinafter Treaty on European Union].

[ii]Agreement on the Withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community, Feb. 19, 2019, 2019 O.J. (C 66 I) 1 [hereinafter Withdrawal Agreement].

[iii]Id. at art. 13.

[iv]Id. at art. 127.

[v]Protocol on Ireland/Northern Ireland art. 6, Feb. 19, 2019, 2019 O.J. (C 66 I) 85.

[vi]Withdrawal Agreement, supranote 2, art. 170.

[vii]SeeTreaty on European Union, supranote 1, art. 50(2).

[viii]SeeCase C‑621/18, Wightman & Others v. Sec’y of State for Exiting the European Union, 2018 EUR-Lex CELEX LEXIS 999 (Dec. 10, 2018).

[ix]Id. at ¶ 74.

[x]European Parliament and CouncilDirective 2014/65, art. 34, 2014 O.J. (L 173) 349.