European Law Monitor

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newsHow could the UK deal with the legal implications of Brexit?


What is very clear is that if the UK left the EU, withdrawing from it altogether would leave a huge legislative black hole, which would need to be filled by implementing all existing EU law or at least a significant proportion of it, back into the UK legal system. 

Constitutionally, the UK is a dualist state. In dualist states a treaty or non UK law ratified by the Government does not alter the laws of the UK unless and until it is passed into UK law by an Act of Parliament or some form of delegated legislation, such as a statutory instrument. This is a constitutional requirement: until incorporating legislation is enacted, the national courts have no power to enforce these rights and obligations either on behalf of the Government or a private individual.

Constitutionally, this means that it would not be possible for the UK Parliament to simply pass an Act of Parliament, effectively stating that all of these EU Regulations would carry on applying; that is not a legal option. Instead, all of the EU Regulations that would cease applying to the UK once the European Communities Act was repealed would need to be repatriated back into the UK legal system through either Acts of Parliament or some form of delegated legislation.

On average, the UK passes between 60-100 Acts of Parliament or statutes each year, so repatriating EU law in this way would involve the work of years.  In the meantime, there would be significant legal uncertainty; for example, businesses wouldn’t know what laws were applying and the paths to legal redress in the event of dispute; they would have difficulty enforcing cross border trade debts; and employees wouldn’t know what their rights were.

Given enough time, it would be possible to plug those legislative gaps.  But to get an idea of the amount of time it would probably take, one can look at the amount of time that it takes for a country to join the EU. This involves aligning a country’s laws with EU law, and is a process that can take anywhere between 10-20 years. Pulling out of the EU would involve a reversal of this process, and would in all probability take the same amount of time. Whilst it is true that plenty of other countries trade with the EU, divorce is always messier than new relationships, and leaving the EU would be a particularly messy divorce, legally speaking.

Whilst it would be possible for the UK Government to repatriate these laws using statutory instruments, this is not without its problems.  The UK government passes on average 3000 statutory instruments each year, and the maximum it has passed in recent years is 5000 in 2014. This suggests that the UK Government would perhaps have the capacity to pass an extra 2000 statutory instruments each year, in which case the process would probably still take close to a decade.

Furthermore, statutory instruments are not debated in Parliament and are usually passed without discussion, which means that the UK population could easily end up with even less democratic input into legislation than we currently enjoy. EU Regulations pass through a stringent oversight procedure, being passed ultimately by the elected European Parliament, and the Council, made up of our government ministers. Statutory instruments on the other hand are able to be changed by the Minister named in the parent act, which gives them the power to make changes with very little parliamentary scrutiny.  As it is, statutory instruments have been criticised recently for being anti-democratic and an abuse of power, as seen recently when the UK Government scrapped student grants without debate, using statutory instruments.

Despite all the passionate rhetoric coming out of the Leave campaigns, arguing that Britain should pull out the EU altogether, the reality is that rapid withdrawal from the EU, particularly where the UK pulled out of the EU altogether would result in legislative carnage, which would in all probability lead to economic and social chaos for a sustained period of time. The Leave campaigners have accused the government of scaremongering, but an analysis of the legislative impact of Brexit, and the time that it would take to resolve and repatriate the existing legal framework, strongly supports the government’s view that pulling out the EU altogether would put a bomb under the UK economy.  .

For example, the UK economy is underpinned by the money generated by the City of London. The legal framework that the City operates in includes the following EU Regulations, all of which would cease to apply in the event of Britain pulling out of the EU altogether and repealing the European Communities Act 1972.  These include the technical procedures that take place every time there is a credit transfer or payment is made, the rules that apply to short selling and credit default swaps, the rules relating to transactions in the euro, and the system of oversight that applies to the banks.

How would the City carry on trading, if the rules that underpin the daily financial transactions that the City makes thousands of times each day, suddenly stopped working in a legal sense? Is it awareness of this issue that has led to £65bn leaving the UK in capital flows in March and April? How would any business carry on trading if the legal framework was this uncertain, and what consumer protections would be lost? What would happen to research projects if the Horizon 2020 Regulation and the Erasmus Regulation were repealed in two years’ time when the EU Treaties stop applying and Britain would repeal the European Communities Act? These are serious questions, and the British public should be given serious answers to these questions before the referendum on the 23rd June if they are to make an informed choice.