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Brexit Uncertainties
Publication date: 2016-07-19

Brexit Uncertainties and How to Remove Them

(Making Article 50 of the Treaty of Lisbon Work)

Although the majority of the British citizens had decided to leave the European Union, this decision has created uncertainties which are already beginning to have harmful economic and political effects, and the sooner these uncertainties are removed the better for all the parties concerned.

The two areas of uncertainty are (1) the date and time at which the UK will cease to be a member of the European Union and (2) what are the practical effects of this cessation on individuals and corporate entities affected by this cessation.

The United Kingdom of Great Britain and Northern Ireland is a constitutional monarchy, and no UK law takes legal effect until it receives Royal Assent (official approval by the Monarch).

So, while the Parliament proposes “bills” to introduce new (or amend existing) laws, these bills do not become “acts” (enforcible laws) until they receive “royal assent”.

The difference between parliamentary bills and referendums is that bills are voted for by members of parliament, but referendums are voted for directly by the people. And just as parliamentary bills, to acquire legal force from a specific date and time, the results of a referendum would need royal assent.

Such royal approval would resolve the first uncertainty, but it cannot be given until the second uncertainty is resolved.

But before this second uncertainty is resolved it needs to be clearly understood, because at present there is a lack of clarity in that area.

What happens after UK leaves the EU is not certain and cannot be certain, as any future is. This general uncertainty about the “post‐Brexit” future was part of the pre‐referendum speculations.

Now the decision has been made, and any further speculations about the “post‐Brexit” future, should not affect the legal process of leaving the EU.

The uncertainty related to the UK leaving the EU, relevant to the legal process of cessation of the UK membership is limited to the effects this step will have on the current legal status of persons (individuals and collective entities) governed by the EU Treaties which are currently in effect, and which will be terminated, or varied once UK leaves the EU. And this leads us to Article 50 of the Treaty of Lisbon, which was intended to lay down the rules of procedure for EU members leaving the EU, which is analyzed below:

Article 50 of the Treaty of Lisbon (analysis)
1Any Member State may decide to withdraw from the Union in accordance with its own constitutional requirements.The decision to withdraw is totally up to the Member State. The EU has no control over that decision.In the case of the UK the “decision” is the “Brexit” Referendum confirmed by a royal approval to give it legal force.
2A Member State which decides to withdraw shall notify the European Council of its intention. In the light of the guidelines provided by the European Council, the Union shall negotiate and conclude an agreement with that State, setting out the arrangements for its withdrawal, taking account of the framework for its future relationship with the Union. That agreement shall be negotiated in accordance with Article 218(3) of the Treaty on the Functioning of the European Union. It shall be concluded on behalf of the Union by the Council, acting by a qualified majority, after obtaining the consent of the European Parliament.This paragraph makes the withdrawal of a Member State conditional not only on notification of the EC of the intention to withdraw and finalizing any ongoing relationships arising out of the membership of the EU, but on a negotiated “agreement with that State, setting out the arrangements for its withdrawal, taking account of the framework for its future relationship with the Union”.

The conclusion of this agreement depends on a “qualified majority [of the EC], after obtaining the consent of the European Parliament”.
The purpose of the procedure appears to be the reaching of an agreement between the withdrawing State and the EU on a post‐withdrawal relationship between the parties.

Uncertainties of (1) the length of time and (2) of the outcome of the negotiations about future relationships make both (1) the time of the cessation of the membership and (2) the position of the affected persons uncertain.

But should the withdrawal be conditional on future relationships at all?

The only reasonable condition on the cessation of membership is the need to provide a reasonable transitional time, during which the persons who started transactions prior to the time of the cessation would be able to continue with these transactions under the “pre‐Brexit” laws and make alternative arrangements to comply with the “post‐brexit” laws once the transitional period is over.
3The Treaties shall cease to apply to the State in question from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification referred to in paragraph 2, unless the European Council, in agreement with the Member State concerned, unanimously decides to extend this period.The date of the cessation of the EU membership is the date of the entry into force of the withdrawal agreement, which is uncertain.

There is a possibility of the State and the EU not reaching any agreements within the 2 years period.

There is also a possibility of the “negotiations period” exceeding 2 years by an unpredictable amount of time and still failing to reach an agreement at the end of it.
The withdrawing State will spend an unpredictable period of time in a legal limbo of being neither a full member of the EU, nor a state free from EU membership with a possibility that, in case no agreements are reached, no party will get any benefit from this wasted period and the purpose of the procedure (an agreement on a post‐withdrawal relationship between the parties) will not be achieved.
4For the purposes of paragraphs 2 and 3, the member of the European Council or of the Council representing the withdrawing Member State shall not participate in the discussions of the European Council or Council or in decisions concerning it.

A qualified majority shall be defined in accordance with Article 238(3)(b) of the Treaty on the Functioning of the European Union.
The withdrawing State has no direct influence on the discussions or decisions of the EC or the EP over the procedures set out in paragraphs 2 and 3.The withdrawing State effectively loses EU membership rights at the time of the “notification”, but does not free itself from the restrictions of the membership until the parties come to an agreement, or fail to agree after 2 years or more.
5If a State which has withdrawn from the Union asks to rejoin, its request shall be subject to the procedure referred to in Article 49.This paragraph has no relevance to the withdrawal process. 

As it can be seen from the text of Article 50 (above), dependence of the exit procedure on an agreement on post‐Brexit relationships between the parties makes both (1) the time of the cessation of the membership and (2) the position of the affected persons uncertain.

So, how to use Article 50 of the Treaty of Lisbon while reducing the uncertainties involved in the cessation of membership of the UK to the minimum?

Those responsible for what some call today the “Brexit Deal” should reduce this “deal” to the following:

The parties will agree:
  1. All transactions governed by the EU laws which had started before the Cessation of Membership Date (CoMD) will continue to be governed by the EU laws (active up to CoMD) for 2 years from the CoMD, unless terminated by mutual agreement between the parties, or by natural expiration of these transactions (expiration of contracts, deaths, bankruptcy, etc), before that date.

  2. All transactions started after the CoMD will be governed in the UK by the UK laws, and in the EU by the EU laws.

Because of its general nature and simplicity (lack of details), the above agreement can be effected within a matter of weeks (or even days), on completion of which the Brexit Referendum will be given Royal Assent, which will set the Cessation of Membership Date (YYYY–MM–DD HH:MM:SS UTC).

And this will be the end of Brexit and of the Brexit uncertainties. And Brexit will become history.

Once Brexit has been completed as described above, the UK Government will need to provide the legal and administrative framework for the areas currently governed by the EU laws.

And, of course, they can make as many “deals” as they need with the EU and any other countries.

But all these post‐Brexit laws and deals will not be Brexit, but life after Brexit.

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