The majority of British citizens voted on 23 June 2016 to have the United Kingdom (consisting of Great Britain – England, Wales and Scotland - as well as Northern Ireland) exit the EU.  Prior to a valid exit, however, the United Kingdom initially remains a full member of the European Union with all rights and duties, including existing veto rights in the case of decisions which must be made unanimously. 

Declaration of the intent to exit

When the exit takes effect and how the procedure for an exit is structured is regulated in . Article 50 of the EU Treaty in the Lisbon version.  Initially, the unilateral termination must be declared to the European Council, i.e. to the heads of state and heads of government of the other 27 EU Member States, the President of the European Council and the President of the European Commission.  This notification, which is initially only a declaration of intent, is the start to negotiations about (at least) one international treaty.  No specific deadline is given for the notification.  Prime Minister Theresa May, however, has already confirmed that she will trigger Article 50 EU Treaty before the end of March 2017. 

The exit takes effect either as soon as the other EU Member States and the United Kingdom have mutually agreed on an exit date, or if no agreement is reached, the United Kingdom would automatically exit the EU two years after the exit declaration unless the United Kingdom and the other Member States mutually agree to extend the deadline.

Exit process

The negotiation process about the modalities of the exit begins with the European Council – without the participation of the United Kingdom – establishing guidelines for the negotiation.  Based on these guidelines, the Commission presents recommendations to the Council, the representatives of the Member States.  The Council must subsequently resolve about the negotiation mandate in a consensus, again without the United Kingdom, and agree on a leader for the negotiations, probably either the Commission or the President of the European Council.  Pursuant to Article 50 EU Treaty, a treaty then negotiated with the United Kingdom requires the consent of the European Parliament (veto right) and must also be adopted by a qualified majority of the remaining EU Member States.  How long the negotiations will last is currently not yet foreseeable.  It is certain that the negotiations will have a similar degree of complexity to the process for a new member to join the EU. 

According to Article 50 EU Treaty, the exit treaty is not supposed to regulate just the details of the exit, but also to “take into account the framework for the future relationships” between the exiting state and the Union.  Negotiations, therefore, will most likely not just take place about the conditions for the exit (with transitional provisions), but also about a change to the EU Treaty (to the extent the Treaty refers to the United Kingdom) and about the future relationship after the exit.  The language in Article 50 EU Treaty supports there being a single treaty, but also multiple treaties are conceivable.

Possible requirements for consent

The question of how many treaties will be concluded with which content will probably have effects on which requirements of consent for the treaty(ies) exist under the national laws of the EU Member States.  Article 50 EU Treaty does not address this question.  As soon as a treaty also regulates questions for which the EU does not have any own, exclusive jurisdiction, a so-called “mixed agreement” would be involved.  In such a situation, the treaty requires the ratification by the individual Member States under general rules.  In almost all Member States, this requires a parliamentary approval process; the respective constitutions define the prerequisites for the process.  In almost half of the Member States, even referenda about the consent to the treaties would be generally possible: Bulgaria, Denmark, France, Greece, Ireland, Croatia, Lithuania, The Netherlands, Austria, Poland, Rumania, Slovakia and Hungary.  The United Kingdom could also hold a further referendum about the result of the negotiations.

Models for exiting 

There are various conceivable models for exit negotiations, and they are already being discussed.  The negotiation of various bilateral treaties with the EU (“Swiss model”), the membership of the United Kingdom in the European Economic Area (the “Norway model”), the conclusion of a customs union such as with Turkey (or a type of a “privileged partnership”) or the conclusion of a free trade agreement (“Canada model”) are conceivable.  In the event that there is no agreement, the United Kingdom would fall back on its membership in the World Trade Organization (WTO) without access to the EU internal market.  It is theoretically conceivable, although not very probable, that the United Kingdom would decide to remain a member of the EU during the negotiations. 

The conclusion of a free trade agreement or a new form of cooperation such as a “privileged partnership” would probably be the most attractive situation from the point of view of the United Kingdom.  However, representatives of the EU have announced that the benefits, for example, of a free trade agreement would not be obtained “without paying anything”. Both Switzerland, with which more than 120 bilateral treaties have been concluded (services such as financial services, for example, are excluded), as well as Norway had to assume to a great extent the rules of the EU in exchange for access to the internal market and must contribute to the EU budget without having a full voting right.  This does not support the realization of the “Swiss model” or the “Norway model”.

Outlook 

It is possible that the negotiations about the future treaty relationships between the United Kingdom and the remaining EU Member States will last many years. Since in case the negotiations are not concluded within two years after the exit has been formally declared and the United Kingdom and the other EU Member States do not mutually  agree to extend this deadline, the EU law which is directly applicable (i. e., in general, the treaty provisions and the EU Directives) will no longer apply with respect to the United Kingdom, the latter has to enact appropriate national provisions (which will be difficult to realize within two years) or it has to decide to continue to apply, at least temporarily, in particular the EU Directives partially or in whole in order to avoid gaps in the UK legislation. However, the UK government has already announced that it plans to repeal the 1972 European Communities Act, the law that binds EU law to the British statute book, and new legislation to transpose EU legislation into British law, in its entirety (“Great Repeal Bill”).  That law will only come into force on the day Britain leaves the EU.  The situation could be made even more complicated by negotiations about members leaving the United Kingdom, especially an exit by Scotland that has already been discussed.  The first main directions for the further process and the timing will probably be set in the coming weeks and months.

Marian Niestedt, Attorney at Law
Hamburg