Brexit Update: Post UK General Election

Leaving Date
The UK is presently due to ‘leave’ the European Union on 31st January 2020, which is the date upon which the UK’s notice of its intention to withdraw from the EU, served under Article 50 of the Treaty on European Union, expires. That notice was originally due to expire on 31st March 2019 but was extended, first, to 31st October 2019, and then to the current date of 31st January 2020. The UK will cease to be an EU member state at that time.

The Conservative Government has pledged that the UK will leave on 31st January 2020 and that this date will not be further extended: its Parliamentary majority means that it is capable of achieving this date.

Withdrawal Agreement
The UK might leave the European Union with or without an agreement in place to address its future relationship with the European Union. Leaving without such an agreement is commonly referred to as a ‘No Deal Brexit’. The UK and the ‘EU27’ (the other 27 EU member states excluding the UK) previously agreed the terms of a ‘withdrawal’ agreement in October 2019 but the UK has not yet ratified that agreement because the previous Conservative Government was unable to command sufficient support for it in Parliament.

The Conservative Government has pledged that the UK will ratify the withdrawal agreement prior to 31st January 2020 so that the UK may leave the EU on 31st January 2020 with a withdrawal agreement in place: its Parliamentary majority means that it is capable of achieving this objective.

Transitional Period
The withdrawal agreement includes a transitional period until 31st December 2020 (which period is capable of extension for up to 2 years, provided this is agreed before 1st July 2020) during which time the UK and the EU27 intend to negotiate the detail of their future relationship and during which time all EU laws will continue to apply in the UK.

Accordingly, at least from a business perspective, it should be ‘business as usual’ during the period from 1st February 2020 until at least 1st January 2021. In short, whilst the UK can be expected to leave the EU on 31st January 2020, commentators have noted that “it may not feel like it” until at least 1st January 2021.

This transition period is intended as a bridge to a future partnership agreement between the UK and the EU, which is intended to be negotiated and concluded after the UK leaves the EU. The withdrawal agreement itself is not intended to define that future partnership: it does contain a number of quite detailed provisions that are intended to apply from the end of the transition period in some specific areas, such as citizens’ rights, but these may or may not be superseded by the provisions of the future partnership agreement.

The withdrawal agreement provides that during the transition period EU law applies in full in the UK. Importantly, that also includes any new EU legislation which is adopted during the transition period. There are just a few very limited exceptions to that principle; the main ones from a business perspective being areas where the UK has existing EU treaty opt-outs such as from the Euro and the Schengen zone.

The withdrawal agreement also provides that, in the UK, during the transition period the normal means of enforcing EU law will still apply. So the UK courts will still apply EU case law; they will still apply the direct effect of EU law where that is relevant – under an EU Regulation for example – and they can still make preliminary references to the European Court of Justice on questions of EU law.

End of the Transitional Period
The Conservative Government has pledged that the UK will achieve a new trading relationship with the EU27 by 31st December 2020 and that the transitional period will end on that date. Its Parliamentary majority means that it is capable of ending the transitional period on 31st December 2020, but does not mean that it can be certain of achieving a new trading relationship by that date because that depends upon the progress of the negotiations with the EU27.

If there is a future partnership agreement in place by that time then its provisions will apply, any provisions in the withdrawal agreement that relate to the time after the transition period and which are not superseded by that future partnership agreement will also apply, and otherwise the EU (Withdrawal) Act 2018 will apply. Any EU law which falls outside of any provisions in the withdrawal agreement will cease to apply in the UK from the end of the transition period.

What the EU (Withdrawal) Act does, in effect, is to take a snapshot of EU law at the point at which it ceases to apply in the UK, which is then copied and pasted into UK domestic law. The aim of this Act is to provide a level of continuity, so that the UK is not left with a legal black hole caused by a significant body of law disappearing overnight from its national legal system. But from that point on, any UK domestic laws passed in the usual way can then amend or replace that retained EU law.

If a new trading relationship has not been achieved by 31st December 2020 and that date has not been extended as permitted under the withdrawal agreement then the UK will still effect what amounts to a ‘No Deal Brexit’ on 31st December 2020. This would be subject to certain provisions in the withdrawal agreement which would apply after that date including certain arrangements in relation to Northern Ireland known as the ‘Northern Ireland Protocol’.