Chapter 4: The transition period
Background
124.The Prime Minister outlined what she described as a “phased process of implementation” of Brexit in her Lancaster House speech of 17 January 2017. She accepted that there was a need to avoid a “disruptive cliff edge”, and to “give businesses enough time to plan and prepare for those new arrangements”. She indicated that “for each issue, the time we need to phase-in the new arrangements may differ. Some might be introduced very quickly, some might take longer. And the interim arrangements we rely upon are likely to be a matter of negotiation.”93
125.The European Council acknowledged the potential need for a transition period in its Draft guidelines following the United Kingdom’s notification under Article 50 TEU:
“To the extent necessary and legally possible, the negotiations may also seek to determine transitional arrangements which are in the interest of the Union and, as appropriate, to provide for bridges towards the foreseeable framework for the future relationship. Any such transitional arrangements must be clearly defined, limited in time, and subject to effective enforcement mechanisms.”94
126.As we noted in our report on Brexit: deal or no deal transition serves various purposes. These include: easing uncertainty (to allow businesses and citizens time to prepare); buying time (to allow for discussions of the future relationship); and orderly adaptation.95
127.Negotiations on the transition period began following the conclusion of the December 2017 Joint Report. The first detailed picture of what the transition might look like emerged in February 2018, when the European Commission published its first draft legal text for the Withdrawal Agreement.
Analysis of the draft text
128.The provisions of the draft Withdrawal Agreement relating to transition are Articles 82–87, 91 and 121–126. During the transition, as a general principle, all EU law will apply (Article 122(1)) and produce within the UK “the same legal effects as those which it produces within the Union and its Member States” (Article 122(3)). Transition will be overseen and enforced by the EU’s institutions and agencies, including the CJEU, which are given all the powers they currently enjoy to police and enforce the EU Treaties during transition (Article 126).
129.Article 83(1) would allow new cases to be brought before the CJEU in circumstances where the Commission or a Member State considered that the UK had failed to fulfil an obligation under the Treaties or under Part Four of the Agreement (which relates to the transition period) before the end of the transition period.
130.Article 83(2) would allow the UK courts to continue to make references for preliminary rulings to the CJEU (under Article 267 TFEU) on matters relating to the interpretation of the Treaties or the validity or interpretation of acts of the institutions, bodies, offices or agencies of the Union, where such references relate to facts which occur before the end of the transition period and where the reference is “necessary” for the domestic court to give judgment. Articles 86 and 87 provide for interventions, the right to submit written observations and rights of audience during the transition period.
131.Article 165 provides for the “suspension of benefits during the transition period” in circumstances where the UK has not fulfilled an obligation arising under EU law as found in a judgment rendered under Article 126. In certain circumstances (namely where the functioning of the internal market, the customs union, or the financial stability of Member States would be jeopardised) this provision would allow the EU to “suspend certain benefits deriving for the UK from participation in the internal market”. Such a suspension would have to be “proportionate” and should not exceed three months (although this is renewable).
132.In short, the transitional period can essentially be described as a standstill period during which the UK will, in effect, enjoy continuing EU membership, but shorn, with limited exceptions, of the institutional rights and privileges enjoyed by an EU Member State. This means that the UK would continue to be subject to the jurisdiction of the CJEU for the duration of the transition period, but that it would not have any judges (or an advocate general) at the CJEU.
133.The Government has accepted this situation. In the words of Suella Fernandes MP:
“After 29 March 2019, we will essentially carry on according to the same rules and regulations that we currently have. As both parties agreed last week, that will be strictly time limited to the end of December 2020 … The jurisdiction of the ECJ will essentially continue during the implementation period.”96
She continued: “We are in the process of extricating ourselves and taking a step away from the European Union, but because of the need for a smooth exit that will essentially mean that the ECJ will have the final say on legal matters to do with the UK” during the transition period.97
134.We acknowledge that this will be only a short-term arrangement. The Law Society of England and Wales argued: “In the expectation that the transitional period will be relatively short, it would be too burdensome and time-consuming to establish a separate dispute settlement mechanism solely for the period of transition.”98
135.Nonetheless, it is worth highlighting several issues. The first is that during the transition period the UK would be subject to the continued jurisdiction of the CJEU, but would not have a judge on the Court. This may not appear ideal, although we recognise that, as Sir Konrad Schiemann explained, the tradition at the CJEU “is that you lose your nationality the moment you join the court, which makes no distinction between judges of one nationality and another … The tradition was that you were not there to plug the point of view of your national Government. That was not your job. Your job was to try to decide the law in the light of the general European interest.”99
136.We put two points to the Parliamentary Under-Secretary of State at the Ministry of Justice, Lucy Frazer QC MP: first, that the absence of a UK judge might mean that the UK’s common law tradition would not be well reflected in arguments put before the CJEU; and second, that given the collegiate nature of the court, the absence of a UK judge might mean that there would be no one present to provide informal information about the UK system to the remaining CJEU judges.
137.In response the Minister argued that the common law would not “fade away from every country other than our own”. She gave a counter-example:
“Outside Europe, for example, we are establishing courts in Dubai and in Qatar that are drawing on our common-law system, and we can still influence international law through a number of other means.”100
However, these courts are limited exclusively to commercial matters.
138.As for informal co-operation between the judges, the Minster acknowledged that if that “is a role that a British judge plays and there is no British judge there, of course that is a consequence that will ensue”.101
139.The acceptance of the jurisdiction of the CJEU during the transition would also require either the amendment of Clause 6 of the European Union Withdrawal Bill, to provide for continued references to the CJEU, or for some special provision to be made in the proposed Withdrawal and Implementation Bill.
140.With regard to the continuing application of EU law, Dr Tobias Lock argued that it was “not clear whether the UK’s courts will accept the primacy and direct effect of the transitional arrangement as laid down in the withdrawal agreement in the same manner as they did with the European Communities Act 1972”.102
141.It follows that clear domestic legislation would be needed, in effect to replicate the provisions of the 1972 Act which ensure the primacy and direct effect of EU law, albeit for a time limited period. In November 2017 Lord Hope of Craighead reminded us that the EU (Withdrawal) Bill
“was drafted before the Government were prepared to recognise that there would be a transitional period at all. It runs right through the whole Bill that there was to be an absolute clean break on exit day. We are going to find that there will have to be changes in the Bill to reflect that. I would have thought that something will have to be done about Clause 6(1)(b), for example.”103
142.We agree. It is unfortunate, given that the Government has now agreed this point in negotiations with the EU, that it has not yet brought forward an amendment to Clause 6 to deal with this problem.
143.There also remain concerns about whether the transitional period might need to be extended further, for instance if arrangements for the future relationship have not been agreed by the end of December 2020. This possibility has been ruled out by both the Government and the European Commission, and we have previously expressed doubts about its legality under EU law.104
144.That said, the Government and the EU 27 still have to negotiate a potentially complex ‘mixed agreement’ in a very short timeframe. This will prove challenging. Were a short term transitional arrangement to be succeeded by a longer-term implementation period then the UK might, in principle, be subject to the continued jurisdiction of the CJEU for many years (as well as being subject to future legislative proposals in which it had not had a hand in drafting).
145.Some technical issues will also arise. Notably, the current draft Withdrawal Agreement text does not appear to provide for any longstop or limitation period for cases being commenced in the CJEU where a cause of action arises during the transition period. To ensure legal certainty, it seems likely that the Government will want to provide for some end date for the commencement of such claims.105
Conclusions
146.The UK will continue to be bound by the jurisdiction of the CJEU during transition. We accept that, given that the transitional period will be relatively short, it would be too burdensome and time-consuming to establish a separate dispute settlement mechanism solely for the period of transition.
147.It is important that this continued jurisdiction of the CJEU should only be for a reasonable, time limited, period: we urge the Government to ensure that there is a longstop for any claims that arise during the transition, so that cases relating to acts occurring during transition cannot be brought indefinitely.
148.The Minister seemed unconcerned at the loss of UK judges from the CJEU during the transition, and did not address the consequences that could arise as a result.
93 The Rt Hon Theresa May MP, Prime Minister, Speech on ‘The government’s negotiating objectives for exiting the EU’ 17 January 2018: https://www.gov.uk/government/speeches/the-governments-negotiating-objectives-for-exiting-the-eu-pm-speech [accessed 18 April 2018]
94 European Council, European Council (Art.50) guidelines for Brexit negotiations, (29 April 2017): http://www.consilium.europa.eu/en/press/press-releases/2017/04/29/euco-brexit-guidelines/ [accessed 20 April 2018]
95 European Union Committee, Brexit: deal or no deal, (7th Report, Session 2017–19, HL Paper 46) para 62
101 Ibid.
104 European Union Committee, Brexit: deal or no deal, (7th Report, Session 2017–19, HL Paper 46), para 131
105 We note that, at the time of writing, the Government had tabled an amendment to the EU (Withdrawal) Bill to allow for a longstop provision in domestic law. Additionally, it should be made clear to individuals and businesses with cases in the pipeline whether (and for how long) a reference can be made to the CJEU after the end of the transition period.