Brexit Business Brief | It's finally the law

Published on 3rd Jul 2018

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What's happening?

After 272 hours of debate in Parliament, the Withdrawal Bill has finally become law. It is now the European Union (Withdrawal) Act 2018.

The Act repeals the European Communities Act 1972 with effect from the UK's "exit date" from the EU, with "exit date" defined as 29 March 2019.

All EU law existing as at 29 March 2019 will be incorporated onto the UK statute book at 11.00 p.m. on that day. EU law that is already part of UK statute law will be "saved" by the Act, following the repeal of the ECA 1972.

By doing so, the Act creates the fundamental new concept of "retained EU law". How retained EU law works is sure to be a big feature of the working lives of UK lawyers in the years to come. I discuss the Act in a little more detail in "Legal developments" below.

General developments

Settled status scheme

The UK government has announced more details of the "settlement scheme" for EU27 citizens in the UK. There are around three million EU27 citizens currently living in the UK. Here is an excerpt from the announcement:

"To obtain settled status EU citizens will generally need simply to have lived continuously in the UK for five years. This means for example that stay-at-home parents, retired people and students can all be eligible. Those with less than five years’ continuous residence will be granted pre-settled status and be able to apply for settled status once they reach the five-year point.

The new application system will be streamlined and user-friendly and draw on existing government data, to minimise the burden on applicants to provide evidence of their residence. This streamlined process will take applicants through three simple stages: proving their identity, checking they are not a serious criminal, and evidencing their residence in the UK."

The press release is here. The detailed "EU Settlement Scheme: Statement of Intent" document from the Home Office is here. The updated "Status of EU citizens in the UK: what you need to know" UK government resources page is here. Example case studies are here.

The EU-UK negotiations

The EU27 and UK negotiating teams released a statement on the progress they have made since March 2018 in negotiating various "separation issues" (specifically, detail on customs, VAT, Euratom and certificates for goods) in the Withdrawal Agreement.

The Withdrawal Agreement governs the UK's exit and contains the all-important provisions on the proposed transition (implementation) period that would follow the UK's exit in March 2019 and run until the end of 2020. So, if the Withdrawal Agreement is not agreed and ratified, then there will be no transition period.

When will the Agreement be agreed and ratified – and the transition period become a legal certainty? At best, not until early November 2018. Some of the mood music coming out of Brussels and London suggests it may be later than that. Maybe even as late as January 2019.

The UK government published a "Technical note" on its suggested customs backstop. The backstop will apply if a permanent solution to avoiding a "hard border" between Northern Ireland and the Republic of Ireland is not in place by the end of the proposed transition period.

The European Council meeting at the end of last week came and went without any noteworthy Brexit developments.

The UK cabinet's negotiations with itself

The UK cabinet continues its internal debate on its ideal future relationship with the EU. We're promised a detailed White Paper next week.

If the cabinet agrees its position, that should then enable the UK to put its proposal to the EU and for negotiations on the future relationship to start. The Withdrawal Agreement must contain an agreed declaration – of what level of detail it remains to be seen – on the future relationship. So time is tight for that declaration to be agreed and contained within the ratified Withdrawal Agreement.

Sector developments

On 27 June 2018 the Financial Conduct Authority gave more detail on its Brexit preparations, specifically on required legal and technical changes, as did HM Treasury and the Bank of England. The HM Treasury document in particular is well worth reading for all those in the financial services sector.

Senior Knowledge Lawyer Anna Perry discuss these regulatory announcements here.

The European Banking Agency struck a slightly different tone from the UK regulators with an Opinion "to hasten the preparations of financial institutions for Brexit".

TheCityUK published an analysis on the continuity of cross-border financial contracts after Brexit.

The European Commission continued its series of Brexit "preparedness" notices, this time on enforcement of IP rights and on preferential rules of origin.

The UK government published "framework papers" on transport, civil judicial cooperation and company law (accounting and audit) after Brexit.

The Commission and the European Medicines Agency updated its guidance on the marketing of medicinal products.

Here is a useful explainer from the Institute for Government on the 40 or so EU regulatory agencies which the UK is leaving and on the UK's "pitch" for a continuing relationship with some of those agencies.

Legal developments

As I mention above, the European Union (Withdrawal) Act 2018 is now on the UK statute book. For the first time, the time and date of the UK's departure from the EU is set out in UK legislation, even if that time and date can be amended under the Act's provisions.

The Act creates the concept of "retained EU law", incorporating all EU law onto the statute book as at the moment of exit on 29 March 2019.

It is, though, worth saying that if the proposed transition period – by which the UK will effectively stay within the EU legal system until 31 December 2020 – goes ahead, then we assume that "retained EU law" will not be brought onto the UK statute book until midnight on 31 December 2020. There would seem to be no need to do so until that moment, as EU law will continue to apply during the transition period as it does now.

But that remains to be confirmed by the government. And of course, if there is a cliff edge Brexit on 29 March 2019 and the UK leaves with no deal and no transition period, then "retained EU law" will become operative at 11.00 p.m. London time on 29 March 2019.

More Parliamentary action coming soon

The Withdrawal Act is the centrepiece of the masses of UK legislation needed for Brexit. Two other key pieces of legislation, the Customs Bill and the Trade Bill, are reported to be headed back to the House of Commons in July, before the summer recess. We wait to see whether the Tory "remainers" finally make their move to try and keep the UK within the or a Customs Union.

The European Commission published a list of EU legislation needed for Brexit. It is amazingly short at three well-spaced pages.

And finally here's a well-informed piece by J-C Piris, a former legal adviser at the European Council, on the UK's options at the end of June 2018.

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* This article is current as of the date of its publication and does not necessarily reflect the present state of the law or relevant regulation.

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