On June 24, the result of “Brexit” — the United Kingdom’s referendum on its European Union (EU) membership — was announced, with a majority of voters deciding that the UK should leave the EU. Once the government notifies the European Council that the UK has decided to leave the EU, the two-year period for the negotiation for exit under Article 50 of the Treaty of the European Union can begin.
The current plan is for the government to proceed with the formal exit process under Article 50 following David Cameron’s departure from office in October. If this timescale remains unchallenged by the EU, the UK will then have two years in which to negotiate the terms of its exit from the EU. In the absence of a deal, the time limit can be extended, but only with the unanimous agreement of the 27 remaining EU member states. At the same time, the UK will be seeking to negotiate its trading relationships, both with member states and with the rest of the international community.
In terms of legislation, the status quo should apply until the UK has formally left the EU. During the Article 50 process, and in accordance with the European Communities Act 1972 (ECA 1972), EU regulations with direct effect will have to be followed, new EU directives will need to be transposed into UK law (provided the time limit fits with the exit timetable), and the UK courts will continue to have regard to the decisions of the EU courts and European Commission practice until the formal exit has taken place.
The Brexit Bureaucratic Wave
Behind the scenes, civil servants and their advisers will have their work cut out as they begin the process of assessing how to manage the unpicking of the statute book. This will not be a straightforward process, since not all EU Directives have been implemented under Section 2(2) of the ECA 1972; many have been implemented by a patchwork of primary and secondary legislation and other rules.
So there will need to be a wholesale review of UK legislation and, on top of that, there will be a steep learning curve on how to develop policy for new legislation that has traditionally been made in Brussels. Experts think that this process is likely to take a considerable time and may result in practice in a significant amount of “lifting and shifting” of the existing rules into domestic legislation for expediency’s sake, particularly as the exercise to repeal the least popular elements of EU-derived provisions will be a painstaking process.
So there will need to be a wholesale review of UK legislation and, on top of that, there will be a steep learning curve on how to develop policy for new legislation that has traditionally been made in Brussels.
There will be implications for a range of legal areas. Very broadly, those areas most heavily subject to EU regulation include financial services, capital markets, employment, data protection, energy regulation, construction and environmental law. Less affected will be private client and family law (other than in the case of cross-border disputes), property, tax (with the obvious exception of VAT), pensions (other than cross-border schemes) and civil litigation and criminal law.
Contract law (except in the area of consumer rights), tort and trust law are legal principles that are developed and maintained by English courts, and so are broadly unaffected by EU law. However, there are potentially complex implications for the conflict of law rules and the conduct of disputes for cross-border contracts. The Companies Act 2006 and the competition legislation both derive at least in part from, and run in parallel with, EU legislation, but, unless there is a political will to “deregulate” certain aspects, they are unlikely to change significantly.