Brexit, what happens if Parliament passes the new deal?
It was hard to miss the news last month of a new deal agreed between the UK and EU. This article explores the legal ramifications of adopting this deal as law. Before delving into the conundrum itself, it is probably best to give a background on the terminology frequently used when discussing Brexit. Specifically, there are three legal documents whose legal status will have an enormous impact on post-Brexit UK Law. The first is the European Union (Withdrawal) Act 2018 (EUWA). This Act of Parliament received royal assent in June 2018 and is currently the governing law on the UK's position post-Brexit. Second, is the new Withdrawal Agreement (New WA). This is the agreement reached on 17th October 2019 by Prime Minister Johnson and the EU. Finally, there is the European Union (Withdrawal Agreement) Bill, more commonly referred to as The Withdrawal Agreement Bill (WAB). This Bill was first presented to Parliament on 19th October 2019 (Super Saturday). The New WA itself does not become binding until it is ratified. Pursuant to the EUWA, the UK cant do this without the House of Commons passing a motion known as a meaningful vote. The EU process of ratification is discussed in our article The Withdrawal Agreement Is It Legal?. Importantly, the New WA is not legally binding under domestic law and must, therefore, be given effect through an Act of Parliament, hence the introduction of the WAB into the House of Commons. On Super Saturday, MPs opted to withhold approval of the New WA through a meaningful vote until the means for transposing it into domestic law had been agreed. What this means practically is the New WA cannot become binding unless the WAB is first passed. If passed, the WAB will also amend the EUWA. The passing of the WAB would amend existing provisions in the EUWA and introduce a buffer period known interchangeably as the transition period or implementation period. This is the period between exit day and 31st December 2020. The latter date is frequently referred to as IP completion day. It is envisioned that during this period, a more permanent agreement with the EU will be reached and passed. This transition period may be extended once for up to 1 or 2 years but only if it is agreed by 1st July 2020. Unlike the current situation, once the UK has left the EU, the ability to bilaterally agree on an extension beyond and/or after this deadline will not be an option.
The Transition Period
Under the EUWA, EU law after exit day only has effect in so far as it has been transposed into UK Law. In contrast, the WAB introduces two provisions which effectively delay this. Under these two sections, both EU Law which applies directly or has direct effect, as well as EU, derived law continue to apply as if the UK was still a member of the EU. Similarly, rules regarding the relationship with the CJEU are postponed to the end of the transition period. It, therefore, appears that the elements of EU law excluded by EUWA will continue to have effect in the UK until at least 31st December 2020. The introduction of a transition period has broadened more than just the types of laws which will apply in the short-term. It has also expanded the potential scope of the laws to be retained. This is because any new law (for example a European Commission Decision) made after exit day will still apply to the UK, as long as it is made or passed before the IP completion day.
The Law After the Transition Period
Save for changing the date to which the rules applies to, the original provisions in the EUWA remain largely unchanged. This said a new section has been introduced which appears to reduce the scope of the exceptions to the retained law by recognising rights and remedies created or arising under the New WA. The explanatory notes published with the WAB provides an insight into what specific rights and remedies are likely to be covered by this, namely:
The ability to rely directly on the New WA to bring claims before UK courts;
The supremacy of the New WA over any inconsistent domestic laws;
The use of the EU method of interpretation and principles when examining references contained in New WA to EU law and its concepts.
The introduction of another new provision confirms that the when determining the validity, meaning or effect of the New WA, and by default, the rights and remedies created therein, EU rules of interpretation and EU general principles apply. This niche group of laws, therefore, grant those relying on or interpreting it much broader scope than the general retained laws. In contrast, all other retained laws will be subject to the much stricter UK rules of interpretation. In practical terms what this means for litigation is, if a party wishes to challenge the application of domestic law and can establish a relevant right which has been breached, the scope for arguing that the domestic law has been misapplied will be significantly wider. It also offers the opportunity to have the relevant law declared inconsistent, thereby preventing its application to the matter at hand.
As is evident from the variety of possible avenues the UK may still follow, much is still yet to be decided and agreed. With the pending election in December, it is also largely impossible to predict which route we shall be driven towards. The New WA does not, therefore, bring the clarity and conclusion some may hope it would achieve.
The Price of Property
Helen McGhee looks at the present state of UK tax rules that must be considered when owning and disposing of UK property.
Inheritance tax problems in Finance Bill 2020
The rules on excluded property trusts are due to change with effect from royal assent. These changes are complex, and the new rules can have an unexpected and retroactive effect. Emma Chamberlain explores these rules to determine whether it may be necessary to exclude the settlor going forward as a beneficiary.
Trust Registration Service- 5MLD update
HMRC’s Trusts and Registration Service (TRS) was born back in 2017 as part of the implementation of 4MLD. 5MLD has mandated notable amendments to the operation of the TRS that clients and practitioners should not overlook. We have created a Q&A to help to navigate the new upcoming compliance obligations.
DAC6 – delayed but be alert!
Helen McGhee discusses the announcement by the European Commission, proposing to delay disclosure deadlines imposed by DAC6 by three months.