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12 Oct 2015

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In this second article, Dr Tobias Lock examines the process for a member state to leave the EU and the effects of withdrawal. He suggests, should the UK leave the EU, some form of EU-UK agreement will likely be reached, although the shape of any deal is very much open to question.

 

Effects of Withdrawal

The effects of withdrawal are that a Member State’s rights and obligations under EU law cease to exist. Article 50(3) TEU makes clear that this only takes place from the date of withdrawal. The UK’s rights and obligations as part of the EU would continue right up until the day it left.

However, on that day, EU law would only cease to have effect in the UK in its relations with the EU. In order to understand this situation, we need once again to distinguish between the domestic perspective and the EU perspective.

From a domestic perspective, EU law would continue to have effect within the UK through all the legislation passed by the UK Parliament designed to implement EU law. The most important piece of legislation in this regard is the European Communities Act 1972 (as amended). As long as, and insomuch as, all this legislation is not repealed, EU law will continue to apply in the UK.

In addition to constitutional statutes such as the European Communities Act and the Scotland Act 1998 (in which Section 29 makes direct reference to EU law), a large amount of other legislation has been influenced by and is (partly or wholly) based on EU law. Examples include the Equality Act 2010, the Working Time Regulations and the Environmental Impact Assessment Regulations.

From a legal point of view, this situation poses an additional challenge. Should this legislation remain on the statute books, a question arises as to its interpretation. As long as the UK is a member of the EU, legislation based on EU law (mainly EU directives) must be interpreted in accordance with it.

From the point of view of EU law, this obligation to interpret in accordance with EU law would cease from the date of withdrawal. Yet there may be cases that arise before the withdrawal date – for example, a working time dispute between an employee and an employer where the material facts occurred before the UK’s EU membership ended.

In these scenarios, it is likely that EU law would continue to apply in the UK as it did before withdrawal. So even after the UK had left the EU, there could be a great number of legal relations still governed by EU law.

As for cases where the material facts occurred after withdrawal but the legislation governing them was originally based on EU law and is still in force (eg the Equality Act), it is unclear how such legislation would be taken. It could still be interpreted in light of EU law or it could be given a ‘new’ and entirely domestic interpretation. This interpretation would be a matter for domestic law and may eventually have to be determined by the courts.

In addition to the position of the UK as a Member State, the legal position of people living in the UK could change fundamentally following an EU exit. We must distinguish here between UK citizens and other EU citizens currently resident in the UK.

As far as UK citizens are concerned, they would probably lose their status as EU citizens. While the concrete ramifications of future relations between the EU and the UK would be subject to negotiations, it is unlikely that the citizens of a non-EU Member State would be accorded EU citizenship. Depending on this future relationship, their rights may differ considerably.

While, for instance, citizens of countries in the European Economic Area (EEA) may reside in another EEA country for up to three months even without being economically active, EU citizens have much greater rights once they have moved. For instance, they enjoy voting rights (active and passive) in municipal and European elections.

As far as EU citizens residing in the UK who do not have British citizenship are concerned, their status may change accordingly. Depending on the details of the withdrawal agreement, they may even become subject to immigration control after withdrawal. The same would be true for UK citizens residing in other EU Member States.

Similar effects would be felt by legal persons based in the UK. The future EU-UK relationship would determine their access to the EU internal market – the free movement of goods, services, capital and the freedom of establishment.

A number of possible future relationships are conceivable. There is no precedent, as no Member State has ever left the EU.

The first option would be for the UK to re-join the European Free Trade Association (EFTA) and join the European Economic Area. This would give natural and legal persons in the UK access to the EU internal market (free movement of goods, services, capital, establishment, workers) and give natural and legal persons from other EEA countries access to the UK’s market (including workers).

From a Scottish perspective, it is worth noting that EEA membership does not include participation in the Common Agricultural and Fisheries Policies.

The second option would be a sui generis arrangement, along the lines of the relationship between the EU and Switzerland. That relationship is currently governed by a number of bilateral agreements, which include the free movement of goods and persons, but not of services. It is important to underline that the EU regards this relationship as cumbersome to maintain, as it lacks an institutional structure. Therefore, it is likely that the EU would be reluctant to agree such an arrangement with the UK. Nevertheless, this option cannot be excluded and need not necessarily follow the Swiss model.

The third option is that no agreement is reached. This is an unlikely scenario and would result in the UK having to rely on general international trade law, such as WTO law, for its trade relations with the EU. Importantly, the EU would be able to levy customs duties on UK products.

The author recently gave written evidence to the Scottish Parliament’s European and External Relations Committee inquiry on EU Reform and the EU Referendum: Implications for Scotland.

This piece by Dr Tobias Lock, co-director of the Edinburgh Europa Institute and lecturer in EU Law at the University of Edinburgh, originally appeared on European Futures.

 

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