Brexit: the revised Withdrawal Agreement and Political Declaration Contents

Chapter 2: The Withdrawal Agreement

Territorial scope

20.The Withdrawal Agreement states12 that any reference to the United Kingdom covers:

(a)the United Kingdom; and, to the extent that EU law applied before the Agreement comes into force;

(b)Gibraltar; and

(c)the Channel Islands and the Isle of Man (the Crown Dependencies).

It also applies to:

(d)the UK’s Sovereign Bases on Cyprus to the “extent necessary” to implement the arrangements set out in the relevant Protocol and

(e)the UK’s Overseas Territories where the agreement relates to “special arrangements” for their association with the EU.13

21.The territorial scope of the Agreement has not changed in the latest text, and readers are invited to refer to the analysis in paragraphs 18–23 of our December 2018 report, which remains valid.14

Governance

The role of the Joint Committee

22.The main governance body that will be established by the Withdrawal Agreement is the Joint Committee.15 The rules of procedure for the Joint Committee (and any specialised committees established under the Withdrawal Agreement, discussed further below) are set out at Annex VIII to the Agreement.

23.The Joint Committee will be responsible for the implementation and the application of the Withdrawal Agreement. Annex VIII provides that the Joint Committee will be co-chaired by a member of the European Commission and a representative of the UK Government at ministerial level, but that this role can also be filled by “high level officials designated to act as their alternatives”.16 Clause 34 of the European Union (Withdrawal Agreement) Bill would nonetheless require the functions of the UK’s co-chair to be exercised personally by a Government Minister. The Explanatory Notes to the Bill state that “the aim of this provision is to ensure that there is ministerial oversight of the Joint Committee”.17 Furthermore, while Rule 9 of Annex VIII allows the co-chairs of the Joint Committee, in the period between meetings, to adopt decisions “by written procedure”, clause 35 of the Bill precludes a Minister of the Crown from using this procedure. The Explanatory Notes state:

“This ensures that decisions made by the Joint Committee are made by a Minister in person. The purpose of this provision is to ensure there is full ministerial accountability, including to Parliament, for all decisions made in the Joint Committee.”18

24.Article 164 of the Withdrawal Agreement provides that the Joint Committee will meet at the request of the UK or the EU, and in any event at least once a year. Its meeting schedule will be adopted by mutual consent.

25.The Joint Committee’s decisions and recommendations will also be made by mutual consent and will be binding on the EU and the UK (which will be obliged to implement them).19 Article 166(2) makes plain that such decisions will have “the same legal effect as this Agreement”.

26.The Joint Committee will have a secretariat made up of “an official of the European Commission and an official of the Government of the United Kingdom”.20 Meetings of the Joint Committee will be confidential, unless otherwise decided by the co-chairs. Moreover, the EU and UK will each be able to decide (individually) whether to publish the decisions and recommendations adopted by the Joint Committee in their respective official publication journals.21 While the secretariat will be responsible for minuting meetings of the Joint Committee, these minutes will not be made publicly available, although the co-chairs can opt to make summaries public.22

27.The Joint Committee, in the latest iteration of the Agreement, will also have important functions in respect of the revised Protocol on Northern Ireland, which are considered in Chapter 4 of this report.

28.As well as supervising and facilitating the implementation and application of the agreement, the Joint Committee will oversee certain specialised committees (discussed below);23 issue an annual report on the functioning of the Agreement; and, in some circumstances, adopt amendments to the Agreement.24 Notably, Article 164(5)(d) will allow the Joint Committee, until the end of the fourth year following the end of the transition period, to adopt decisions amending the Withdrawal Agreement25 where this is necessary to “address omissions or other deficiencies, or to address situations unforeseen when this Agreement was signed”, and provided that such changes do not “amend the essential elements of the Agreement”. These terms are not defined, so the extent of this widely drawn power remains uncertain, notwithstanding that it may be somewhat constrained by the requirement for decisions to be made by mutual consent.26

29.Neither the Withdrawal Agreement nor the European Union (Withdrawal Agreement) Bill makes provision for parliamentary oversight of the Joint Committee. In our March 2019 report Beyond Brexit: how to win friends and influence people, we expressed concern both over “the lack of transparency in the work of the … Joint Committee”, and over the lack of any provision for the UK Parliament to oversee or influence its work. We urged that “a new mechanism should be adopted” to enable either House to require the Government either to raise concerns in the Joint Committee about specific proposals that could have a detrimental impact upon the UK, or to place an issue on the Joint Committee’s agenda. To facilitate effective scrutiny, we also called for meeting schedules, agendas, decisions and recommendations of the Joint Committee to be made available to Parliament in timely fashion.27

The role of the specialised committees

30.As well as the main Joint Committee, the Withdrawal Agreement will establish a number of specialised committees. Some are set out in the Agreement. These are the committees on:

31.The Joint Committee may also establish additional specialised committees, “in order to assist the Joint Committee in the performance of its tasks”.29 The Joint Committee will decide on the tasks of specialised committees and supervise their work. It will also be entitled to change the tasks assigned to specialised committees and “dissolve any of those committees”.30

32.Specialised committees will be made up of representatives of the EU and the UK with “appropriate expertise” in the issues under discussion.31 However, the fact that a specialised committee has been established will not preclude either the UK or the EU taking a matter directly to the Joint Committee.32

33.The Joint Committee’s Rules of Procedure described in Annex VIII will also, broadly, apply to the specialised committees (unless the Joint Committee decides otherwise).33

34.The Joint Committee structure for governance of the Withdrawal Agreement should allow a collaborative approach to the supervision of the Withdrawal Agreement, as well as the delegation of specific functions, such as citizens’ rights, financial provisions, Ireland/Northern Ireland and Gibraltar, to specialised committees.

35.The Joint Committee also has significant responsibilities in relation to the Protocol on Ireland/Northern Ireland.

36.The Joint Committee will thus be critical in ensuring the smooth working of the Withdrawal Agreement. It will be a uniquely powerful and influential body. Decisions adopted by the Joint Committee will be binding on the EU and the UK and will have the same legal effect as the Withdrawal Agreement.

37.In particular, during the transition period and for four years thereafter, Article 164 of the Withdrawal Agreement provides that the Joint Committee will have power to amend aspects of the Agreement to take account of errors, omissions and deficiencies, and to address unforeseen situations. Even though changes that “amend the essential elements” of the Agreement are excluded, the extent of this widely drawn power is uncertain, and it is not subject to clear scrutiny procedures or parliamentary oversight.

38.Nor does it appear that the Joint Committee will operate in an open and transparent way. The relevant rules suggest that meetings will be confidential, decisions might not be published, and even summary minutes might not be made publicly available. This is an unsatisfactory state of affairs.

39.Against this backdrop, we note the Government’s statement, in the Explanatory Notes to the European Union (Withdrawal Agreement) Bill, that clause 35 of the Bill, prohibiting the use of written procedure, is intended to ensure “full ministerial accountability, including to Parliament”. It is unclear how this accountability will work in practice, and Members may wish to consider whether the Bill should in fact include provision both for appropriate parliamentary oversight of the Joint Committee, and for a proportionate level of transparency.

Implementation and application of the Withdrawal Agreement

40.Article 4 of the Agreement states that both the Agreement and any EU law applying to the UK under it should have the same effect as in EU Member States. This includes ‘direct effect’ (which allows private parties to invoke their rights under the Withdrawal Agreement before UK courts, as well as in EU Member States). The Government’s Explanatory Note to the November 2018 text of the Agreement34 states that Article 4 would also allow the UK court to make available certain remedies (including Francovich damages).35

41.Article 4(2) will also ensure the primacy of EU law, where it has been made applicable under the Agreement.36 Essentially, the UK will be required to allow domestic courts to disapply any other domestic legislation which is incompatible or inconsistent with the Agreement (and EU law applicable under the Agreement).

42.Article 4(4) will require the provisions of the Agreement referring to EU law, or “concepts or provisions thereof”, to be interpreted in conformity with any relevant case-law of the CJEU handed down before the end of the transition period. The UK judicial and administrative authorities will only be required to “have due regard” to case-law of the CJEU handed down after the end of transition.37

43.It is hard to predict the effect of this provision, since many aspects of the Withdrawal Agreement (including some of the rules on citizens’ rights) will not come into force until the end of the transition period. However, Article 4, which provides for direct effect and supremacy, is not limited to the transition period. This means that the EU law principles of direct effect and supremacy will continue to apply to those provisions of the Withdrawal Agreement (and to the provisions of EU law to which the Agreement refers) once the UK has left the EU at the end of the transition period.

44.The European Union (Withdrawal Agreement) Bill contains several relevant clauses. Notably, Clause 5 will introduce new provisions into the European Union (Withdrawal) Act 2018, which will have the effect of giving primacy and direct effect to the relevant provisions of the Withdrawal Agreement and any EU law incorporated by the Withdrawal Agreement. The Constitution Committee has noted that this new provision employs a “formula similar to section 2 of the European Communities Act”, since all rights under the Withdrawal Agreement are “without further enactment to be given legal effect or used in the United Kingdom.”38 It is not clear what would happen if the UK Parliament were subsequently to repeal this provision, although if the UK sought to resile from its obligations under the Agreement, this would probably lead to a breach of international law.

Good faith

45.Article 5 of the Withdrawal Agreement states that the UK and EU will, “in full mutual respect and good faith, assist each other in carrying out tasks which flow from this Agreement”. It imposes an obligation on the parties to “take all appropriate measures, whether general or particular, to ensure fulfilment of the obligations arising from this agreement and shall refrain from any measures which could jeopardise the attainment of the objectives of this Agreement”.

46.Should any disputes arise between the parties to the Agreement, they will fall to be determined against the background of this provision. The Government’s December 2018 paper The Legal Position on the Withdrawal Agreement39 notes that “the principle of good faith is a rule of customary international law, as has been recognised by the CJEU and the International Court of Justice”.40

The role of the Court of Justice of the European Union

47.In its 2017 Future Partnership Paper on Enforcement and Dispute Resolution, the Government stated its intention that “in leaving the European Union, we will bring about an end to the direct jurisdiction of the Court of Justice of the European Union”.41 This has remained Government policy, and the recent Conservative Party manifesto contained a renewed commitment to “end the role of the European Court of Justice”.42

48.Under the Withdrawal Agreement, the CJEU will retain its jurisdiction “as provided for in the Treaties” during the transition period.43 In our 2018 report Dispute resolution and enforcement after Brexit we concluded that “given that the transitional period will be relatively short, it would be too burdensome and time-consuming to establish a separate dispute resolution mechanism solely for the period of transition”.44

49.The CJEU will also continue to have jurisdiction over cases that are pending before it at the end of the transition period (and over certain new enforcement actions brought within four years after the end of transition provided the UK’s violation occurred before then).45

50.In relation to Part Two of the Withdrawal Agreement (citizens’ rights), UK courts will continue to be able to refer cases to the CJEU for eight years following the end of transition.46 This is addressed in clause 26 of the EU (Withdrawal Agreement) Bill. Article 160 of the Withdrawal Agreement also allows for CJEU jurisdiction in respect of certain limited aspects of Part Five of the Agreement, relating to the financial settlement.47

51.The provisions dealing with the jurisdiction of the CJEU in the Protocol on Ireland/Northern Ireland are discussed further in Chapter 4.

The proposed arbitration model

52.Article 170 of the Agreement sets out an arbitration procedure, which can be instituted in circumstances where no mutually agreed solution to a dispute has been reached within three months of a written notice being provided to the Joint Committee (or earlier if agreed by the parties). This procedure, which has not been changed in the latest text of the Withdrawal Agreement, is considered in paragraphs 53–66 of our December 2018 report.48 It preserves a limited, but nonetheless important role for the CJEU, in that Article 174 provides that where a dispute raises a question of interpretation of EU law, including of a provision of EU law referred to in the Withdrawal Agreement, or a question of whether the UK has complied with its obligations under Article 89(2),49 the arbitration panel should “request the Court of Justice of the European Union to give a ruling on the question”. Any such ruling will be binding on the arbitration panel. This is similar to the current procedure by which domestic courts can refer questions of EU law to the CJEU,50 and suggests that the CJEU may retain a significant role.51

53.In our 2018 report Dispute resolution and enforcement after Brexit we noted a number of disadvantages to arbitration, as compared to a court-based process, including the fact that it is usually conducted in private; decisions do not create clear, binding precedent; and, that individual litigants (including companies) would not have access to any arbitral arrangements, but would instead have to lobby governments.52 Article 180 of the Withdrawal Agreement seeks to deal with one of these concerns, by providing that the Union and the UK should “make the arbitration panel rulings and decisions publicly available in their entirety”.53 There is a proviso that this is “subject to the protection of confidential information”, and that “in no case dissenting opinions of an arbitration panel shall be published”.54 Part IX of the Procedural Rules55 also states that the parties can agree for hearings to be closed to the public. In such cases, the rule provides that the parties shall “maintain the confidentiality of the hearings of the arbitration panel”.

54.The arbitration model may also have some relevance to the dispute settlement provisions included in any future relationship, which are discussed in Chapter 5. These suggest that the CJEU could have a limited but continuing role in relation to questions of EU law arising in EU-UK disputes, even after its obligations under the Withdrawal Agreement fall away.

Conclusions

55.The provisions relating to dispute resolution in the Withdrawal Agreement retain a limited role for the CJEU.

56.The arbitration mechanism, with input from the CJEU only in circumstances where questions of Union law arise, moves toward the Government’s goal of ending the direct jurisdiction of the CJEU, while still respecting the autonomy of the European Union’s legal order and the role of the CJEU.

57.We welcome the fact that the Agreement provides a longstop, or limitation period, for any claims that arise before, or during, the transition period. This will give parties involved in legal disputes greater certainty as to the legal regime which will apply to their case.

Citizens’ rights

58.The rights of EU citizens in the UK and UK nationals in the EU were one of the first issues that this Committee addressed after the referendum. They were explored in detail in our December 2016 report on Brexit: acquired rights,56 and have been regularly revisited by our Justice Sub-Committee.57 In June 2019 the Office for National Statistics estimated that there were 3.6 million individuals in the UK who were born elsewhere in the EU.58 It is estimated that over a million UK nationals live in other EU states.59 Despite appeals from across the political spectrum, and our own clear recommendations,60 questions still remain over the rights of these individuals.

59.There was broad agreement between the UK and the EU on the parameters of the deal on citizens’ rights as part of the Joint Report, published in December 2017. These commitments were transposed into a text which was agreed at negotiator level upon the publication of the March 2018 draft of the Withdrawal Agreement. The November 2018 version of the legal text was little changed, and has been reproduced in its entirety in the most recent text. However, not all of the issues have been resolved in the way sought by stakeholders.

60.In particular, there is no agreement on a lifelong right of return (where family or work obligations mean that an individual has to leave the country for five years and does not benefit from settled status). In addition, the UK Government has decided not to issue new residence documents for settled status free of charge.61 Nor has provision been made for EU citizens resident in the UK to retain their voting rights in elections for the European Parliament. This includes Irish citizens resident in Northern Ireland, notwithstanding the prospect that substantial elements of EU law will continue to apply in Northern Ireland.62 For their part, the EU and its Member States have not agreed to onward movement for UK citizens from one Member State to another within the EU.

Pre-Agreement implementation: the EU Settlement Scheme

61.In March 2019, following private and public test phases, the Government opened the EU Settlement Scheme (EUSS). The scheme was intended to implement the UK’s obligations under the Withdrawal Agreement, but also to be applicable in the event of a ‘no deal’ Brexit. The EUSS has broadly been established in line with the provisions set out in the Withdrawal Agreement but has more favourable conditions than stipulated in some areas (for example, while the Government had originally intended to charge a fee for registration, this has since been waived).

62.The scheme grants eligible applicants either ‘settled’ or ‘pre-settled’ status. Settled status is also known as indefinite leave to remain under the EU Settlement Scheme, while pre-settled status is also known as five years’ limited leave to remain. Applicants will be granted status depending on how long they have been living in the UK when the application is made. Both the EU Justice Sub-Committee and the House of Commons Home Affairs Committee have taken evidence on the roll-out of the scheme by the Home Office. While both Committees have expressed concerns,63 by 30 November 2019 approaching 2.6 million EU, EEA and Swiss nationals had applied under the scheme and over 2.2 million applications had been ‘concluded’. Of these 59% received settled status, 41% received pre-settled status, and 0.7% received “another outcome”. As of 30 November 2019, the Home Office indicated that only five applications had been refused on suitability grounds.64

Analysis of the citizens’ rights provisions

63.Part Two of the Withdrawal Agreement,65 which is unchanged in the latest text, protects EU citizens who are residing in the UK and UK nationals who were residing in one of the 27 EU Member States at the end of the transition period, provided that such residence is in accordance with the Free Movement Directive (the EU law relating to free movement).66 Free movement itself will end at the conclusion of the transition period, unless (contrary to the Government’s stated intention) the UK and EU sign a separate treaty extending it.

64.EU citizens and UK nationals arriving in a host state during the transition period will enjoy the same rights and obligations under the Withdrawal Agreement as those who arrived before exit day.

65.For those who fall within the scope of the citizens’ rights provisions, the substantive conditions of residence will remain the same as under current EU law on free movement. Where the host state opts for a mandatory registration system, decisions for granting the new residence status under the Withdrawal Agreement will be made based on objective criteria (i.e. no discretion), and on the basis of exactly the same conditions as are set out in the Free Movement Directive. Articles 6 and 7 of that Directive confer a right of residence for up to five years on those who work or have sufficient financial resources and sickness insurance, and Articles 16, 17 and 18 of that Directive confer a right of permanent residence on those who have resided legally for five years.

66.Citizens will meet these conditions if they are:

67.In addition, those who would otherwise be protected by the Withdrawal Agreement, but who have not yet acquired permanent residence rights—if they have not lived in the host state for at least five years—will continue to be entitled to reside in the host state and acquire permanent residence rights even after Brexit. In the UK, as we have noted, such individuals (over 40% of total applicants) are being granted a domestic residence right of pre-settled status, entitling them to reside in the UK for a further five-year period in order to qualify for settled status. A person with pre-settled status is entitled to spend up to two years consecutively outside the UK without losing that status. But they will nonetheless have to demonstrate continuous residence to qualify for settled status.67

68.Individuals covered by the Agreement can be joined by close family members (spouses, civil and unmarried partners, dependent children and grandchildren, and dependent parents and grandparents) at any point in the future, as long as the relationship existed on the last day of transition and still exists when the person wishes to come to the UK.

69.The Withdrawal Agreement provides for EU rules on social security coordination to apply to the beneficiaries of the citizens’ part of the Withdrawal Agreement. Such persons will maintain their rights to healthcare, pensions and other social security benefits.68

70.There are also specific provisions covering workers (including frontier workers),69 and the continuing recognition of professional qualifications of individuals who have taken up residence in a host state before the end of the transition period.70

71.The right to reside permanently in the host state can only be lost through an absence of more than five years, unless it is restricted due to a person’s conduct.71

72.The citizens’ rights provisions have proved contentious due, in part, to concerns that they might exclude individuals who do not qualify under the Free Movement Directive (for example, people who are not economically active and are not in possession of comprehensive sickness insurance). Although the Government has indicated that it will not apply these rules strictly to individuals who apply for settled status, until individuals are granted such settled status they will remain, at least in principle, at risk of removal. Given the very low rates of refusal under EUSS thus far, it is unclear whether this is a serious concern. On the other hand, it is possible that some vulnerable applicants may not have made an application under the scheme at all. Some 40% of grants made so far to applicants for settled status have been for pre-settled status, and it is unclear whether this too is a significant issue. We also note that serious concerns have been expressed that individuals who are granted settled status are not given any physical form of proof which may cause difficulties for them as well for employers, banks and landlords.72

73.Article 18(1)(p) will allow a host state to conduct systematic checks on criminality and security prior to issuing a residence document. Applicants can be required to declare past criminal convictions “in accordance with the law of the State of conviction at the time of the application”.

74.Although applicants will have access to judicial and administrative redress if their applications for residence status are refused for any reason, under Article 20(4) the host state will be entitled to remove applicants who submit “fraudulent” or “abusive” applications prior to the final judgment in any appeal. Thus in effect appeals in such circumstances will not suspend the removal of the applicant.

Supervision and enforcement of the agreement on citizens’ rights

75.The implementation and application of citizens’ rights in the EU will be monitored in the EU by the European Commission, acting in conformity with the EU Treaties. In the UK, this role will be fulfilled by an “independent authority”. This authority, which will be established under provisions contained in the EU (Withdrawal Agreement) Bill,73 is to be granted “powers equivalent to those of the European Commission”, to receive and investigate complaints from Union citizens and their family members, to conduct inquiries on its own initiative, and to bring legal actions before UK courts concerning alleged breaches by the administrative authorities of the UK of their obligations under Part Two of the Withdrawal Agreement.74

76.The Commission and the UK authority should each report annually to the specialised committee on citizens’ rights, and the Joint Committee will assess, no earlier than eight years after the end of the transition period, the functioning of the independent authority. Following this assessment, the Joint Committee could decide to allow the UK to abolish the authority.

77.In its Fact Sheet on the Withdrawal Agreement, the European Commission notes:

“The text of the Withdrawal Agreement on citizens’ rights is very precise, so that it can be relied upon directly by EU citizens in British courts, and by UK nationals in the courts of the Member States. Any national law provisions that are not consistent with the provisions of the Withdrawal Agreement will have to be disapplied.”75

78.Moreover, as noted at paragraph 50, above, UK courts will continue to be able to refer cases to the CJEU for preliminary rulings over the interpretation of Part Two of the agreement for eight years following the end of transition.

What is not included in the citizens’ rights provisions

79.The European Parliament, among others, has called for the citizens’ rights provisions to ensure that any documents securing residence rights should be issued free of charge; that EU citizens granted settled status in the UK should enjoy a lifelong right of return; and that UK nationals in the EU should be entitled to move freely between Member States (‘onward free movement’).76 These efforts have been unsuccessful. Under Article 18 of the Withdrawal Agreement charges for documents will be permissible, provided that they do not exceed those imposed on nationals of the host state for the issuance of similar documents (as noted above, such charges have been waived in the UK). Although the House of Commons Exiting the European Union Committee has proposed linking onward free movement rights for UK citizens to a right of unlimited return for EU citizens in the UK,77 the Withdrawal Agreement addresses neither issue.78 In the event, any discussion of onward free movement rights will now have to form part of the negotiations on future relations.

Conclusions

80.One of the Government’s primary aims in negotiating Brexit has been a desire to end free movement of people. A necessary consequence has been that the citizens’ rights guaranteed under the Withdrawal Agreement fall short in some respects of those enjoyed during the UK’s EU membership. Most notably, for UK citizens in the EU, onward free movement rights are not guaranteed. EU nationals applying to remain in the UK under the EU Settled Status Scheme face automatic criminal records checks.

81.Nonetheless, the agreement on citizens’ rights is fairly comprehensive and will allow individuals and families to continue with their lives and careers with a minimum of disruption. We therefore broadly welcome the citizens’ rights provisions. At the same time, given that over 40 percent of applicants thus far have been granted ‘pre-settled status’, we emphasise that the Government will face a continuing challenge in ensuring a smooth transition to settled status.

The financial settlement

82.The provisions relating to the financial settlement were agreed at negotiator level as early as March 2018. The relevant provisions are found at Part Five of the Agreement, between Articles 133–157.

83.The UK Government originally estimated that the settlement—which includes the UK’s continuing contributions to the EU Budget during the transition period—would have a net cost of around £35–39 billion, while the Office of Budget Responsibility put the figure at £37.8 billion. But continuing UK contributions to the EU budget during the repeated extensions to the Article 50 period have been offset by a significant reduction in the cost of the post-exit financial settlement: the Office for Budgetary Responsibility (OBR) estimates that the extension to 31 January 2020 could reduce the settlement to around £29.8 billion. The cost of the settlement is also subject to other uncertainties: for example, it will be calculated and paid in euros, and the sterling figure is thus exposed to changes in exchange rates.79

84.Thus, as the European Commission Fact Sheet sets out, “The agreement is not about the amount of the UK’s financial obligation, but about the methodology for calculating it.”80 Our recent report Brexit: the financial settlement provides a more detailed analysis of the methodology for calculating the UK’s financial obligations, which will become legally binding in international law when the Withdrawal Agreement is concluded by the UK and the EU.81 We do not rehearse this analysis at length in this report.

85.Under the Agreement the UK will, among other things:

86.As set out in Figure 1, the Office for Budget Responsibility estimated in March 2019 that while the bulk of the payments under the settlement would be made by the mid-2020s, some elements of the settlement would still be payable until 2064.

Figure 1: Estimated path of settlement payments

Bar chart showing the estimated yearly payment as part of the settlement up to 2064

Source: OBR, Economic and fiscal outlook: March 2019, CP50, March 2019, Supplementary fiscal table 4.16: https://obr.uk/efo/economic-fiscal-outlook-march-2019/ [accessed 3 January 2020]. The OBR’s projections were drawn up on the assumption that exit day would fall on 29 March 2019; in the event the extension of the UK’s EU membership has meant that the UK continued to make contributions as a Member State throughout 2019 and up to 31 January 2020.

Conclusions

87.The provisions on the financial settlement in Part Five of the Withdrawal Agreement set out not the amount of the UK’s financial obligation, but the agreed methodology for calculating it. The precise amounts paid will be contingent upon future events, including fluctuations in exchange rates. Moreover, with each extension to the Article 50 period the UK has made further payments as a Member State, which will be offset against the payments due under the terms of the financial settlement.

88.Much of the sum payable relates to UK contributions to the 2020 EU budget, which will coincide with the transition period, during which the UK will continue to be subject to EU law and be part of the EU Single Market.

89.The payment of these sums does not depend upon a successful outcome to negotiations on future UK-EU relations. Once the UK and the EU conclude the agreement under Article 50 TEU, the UK’s financial commitments will crystallise as legal obligations in international law, irrespective of the outcome of the future relationship negotiations.

Other provisions

90.Part Three of the Withdrawal Agreement broadly covers what are referred to as ‘separation issues’. These issues are not considered in detail in this report, but the list below gives an impression of the broad range of matters that are covered in Articles 40–125.

91.The Government’s Explanatory Memorandum makes clear that these provisions “aim to provide legal certainty”, providing the technical basis for the winding down of ongoing processes and arrangements “to ensure an orderly withdrawal”.83


13 Anguilla; Bermuda; British Antarctic Territory; British Indian Ocean Territory; British Virgin Islands; Cayman Islands; Falkland Islands; Montserrat; Pitcairn; Saint Helena; Ascension and Tristan da Cunha; South Georgia and South Sandwich Islands; and Turks and Caicos Islands.

14 European Union Committee, Brexit: the Withdrawal Agreement and Political Declaration (24th Report, Session 2017–19, HL Paper 245), paras 18–23

15 Withdrawal Agreement (19 October 2019), Article 164

16 Withdrawal Agreement (19 October 2019), Annex VIII, Rule 1

19 Withdrawal Agreement (19 October 2019), Article 166

20 Withdrawal Agreement (19 October 2019), Annex VIII, Rule 2

21 Withdrawal Agreement (19 October 2019), Annex VIII, Rule 10

22 Withdrawal Agreement (19 October 2019), Annex VIII, Rule 8(5)

24 Withdrawal Agreement (19 October 2019), Article 164(4)(f) and Article 164(5)(d)

25 Save in relation to Parts One (the Common Provisions, including definitions, scope etc.), Part Four (the Transition) and Part Six (the Institutional and Final Provisions) of the Withdrawal Agreement (19 October 2019).

26 Withdrawal Agreement (19 October 2019), Article 166(3)

27 European Union Committee, Beyond Brexit: how to win friends and influence people (35th Report, Session 2017–19, HL Paper 322), paras 122–125

28 Withdrawal Agreement (19 October 2019), Article 165

29 Withdrawal Agreement (19 October 2019), Article 164(5)(b)

30 Withdrawal Agreement (19 October 2019), Article 164(5)(c)

31 Withdrawal Agreement (19 October 2019), Article 165(3)

32 Withdrawal Agreement (19 October 2019), Article 165(4)

33 Withdrawal Agreement (19 October 2019), Annex VIII, Rule 13

34 HM Government, Explainer for the agreement on the Withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union (14 November 2018): https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/756376/14_November_Explainer_for_the_agreement_on_the_withdrawal_of_the_United_Kingdom_of_Great_Britain_and_Northern_Ireland_from_the_European_Union___1_.pdf [accessed 18 December 2019]

35 Francovich v Italy (1991) C-6/90 was a decision of the CJEU which established that EU Member States could be liable to pay compensation to individuals who suffered a loss by reason of that Member State’s failure to transpose an EU directive into national law. This principle is sometimes known as the principle of state liability.

36 For the principle of the primacy of EU law see for instance C-6/64, Costa v. ENEL [1964] ECR 585;C-106/77, Simmenthal [1978] ECR 629; C-106/89 Marleasing [1991] ECR I-7321 and R (Factortame Ltd) v Sec. of State for Transport (No 2) [1991] 1 AC 603.

37 A duty to have “due regard” could be expected to mean that the domestic courts would be under an obligation to take the case-law of the CJEU into account. It is not the same as an obligation to follow the case-law on every occasion. However, when such words are used, it would usually require good reasons to depart from applying it.

38 Constitution Committee, European Union (Withdrawal Agreement) Bill: interim report (2nd Report, Session 2017–19, HL Paper 21), para 36

39 HM Government, EU Exit: Legal position on the Withdrawal Agreement, Cm 9747, December 2018: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/761153/EU_Exit_-_Legal_position_on_the_Withdrawal_Agreement.pdf [accessed 18 December 2019]

40 See for instance Opel Austria Gmbh v Austria, T-115/94, EU:T:1997:3 (para 90); Portugal v Council, C-149/96, EU:C:1999:574 (para 41); Nuclear Test cases (Australia v France), Judgment of 20 December 1994, ICJ Reports 1974, p. 253 (para 46)

41 HM Government, Enforcement and dispute resolution: a future partnership paper (2017) para 1: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/639609/Enforcement_and_dispute_resolution.pdf [accessed 3 December 2019]

42 Conservative Party, Conservative and Unionist Party Manifesto 2019, p 5: https://assets-global.website-files.com/5da42e2cae7ebd3f8bde353c/5dda924905da587992a064ba_Conservative%202019%20Manifesto.pdf [accessed 20 December 2019]

43 Withdrawal Agreement (19 October 2019), Article 131

44 European Union Committee, Dispute resolution and enforcement after Brexit (15th Report, Session 2017–19, HL Paper 130), para 146

45 Withdrawal Agreement (19 October 2019), Articles 86 and 87

46 Withdrawal Agreement (19 October 2019), Article 158

47 The specific provisions relate only to Articles 136 and 138(1) and (2) of the Withdrawal Agreement (19 October 2019). These are respectively, the provisions applicable after 31 December 2020 relating to the applicable law concerning the EU’s “own resources”; and the EU law applicable after 31 December 2020 relating to the UK’s participation in the implementation of the Union’s programmes and activities committed under the 2014–2020 MFF.

48 European Union Committee, Brexit: the Withdrawal Agreement and Political Declaration (24th Report, Session 2017–19, HL Paper 245)

49 Withdrawal Agreement (19 October 2019), Article 89(2) relates to judgments and orders of the CJEU handed down before the end of the transition period

51 Public Law for Everyone, The Brexit Withdrawal Agreement: Taking back “control of our laws”? (23 November 2018): https://publiclawforeveryone.com/2018/11/23/the-brexit-withdrawal-agreement-taking-back-control-of-our-laws/ [accessed 18 December 2019]

52 European Union Committee, Dispute resolution and enforcement after Brexit (15th Report, Session 2017–19, HL Paper 130), paras 110, 156–162

53 Withdrawal Agreement (18 December 2019), Article 180(2)

55 Withdrawal Agreement (18 December 2019), Annex IX

56 European Union Committee, Brexit: acquired rights (10th Report, 2016–17, HL Paper 82)

58 Office for National Statistics, Population of the UK by country of birth and nationality: July 2018 to June 2019: https://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/internationalmigration/datasets/populationoftheunitedkingdombycountryofbirthandnationality [accessed 18 December 2019]

59 Full Fact, ‘Brits abroad: how many people from the UK live in other EU countries?’ (1 February 2018): https://fullfact.org/europe/how-many-uk-citizens-live-other-eu-countries/ [accessed 18 December 2019]

60 European Union Committee, Brexit: acquired rights (10th Report, Session 2016–17, HL Paper 82), para 47

61 See for instance British in Europe, Letter to Theresa May (21 November 2018): https://britishineurope.org/wp-content/uploads/2018/11/PM-letter-21.11.18-FINAL-No-sigs-.pdf [accessed 18 December 2019] and The3million, ‘Newsletter’ (November 2018): https://mailchi.mp/the3million/newsletter104-740353 [accessed 18 December 2019]

62 See also para 164.

63 See for instance: Home Affairs Committee, EU Settlement Scheme (Fifteenth Report, Session 2017–19, HC 1945) and the letter from the Chair of the EU Justice Sub-Committee to the Home Secretary on the EU Settlement Scheme (27 February 2019): https://www.parliament.uk/documents/lords-committees/eu-justice-subcommittee/CWM/HKtoSJ-SettledStatus-260219.pdf [accessed 18 December 2019]

64 Home Office, EU Settlement Scheme Statistics, November 2019: Experimental Statistics (17 December 2019): https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/852619/eu-settlement-scheme-statistics-november-2019.pdf [accessed 18 December 2019]. All percentages are rounded.

66 Directive 2004/38/EC of the European Parliament and of the Council of 29 April 2004 on the right of citizens of the Union and their family members to move and reside freely within the territory of the Member States , O J L 158 (30 April 2004), pp 77–123

67 See HM Government, ‘Settled and pre-settled status for EU citizens and their families’: https://www.gov.uk/settled-status-eu-citizens-families/what-settled-and-presettled-status-means [accessed 18 December 2019]

68 Withdrawal Agreement (19 December 2019), Articles 30–36. Article 33 is a new provision, which would extend the Articles on social security co-operation to Norway, Iceland, Liechtenstein and Switzerland, provided that each of those countries entered into a corresponding agreement with the UK and the EU. The ‘explainer’ published by the UK Government notes that agreements on citizens’ rights and a small number of separation issues are also being negotiated by the UK with Norway, Iceland Switzerland and Liechtenstein (see: Explainer for the agreement on the Withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union).

69 Withdrawal Agreement (19 October 2019), Articles 24, 25, and 26 (a frontier worker lives in one EU member state and works in another, returning home daily or weekly).

70 Withdrawal Agreement (19 October 2019), Articles 27, 28 and 29

71 Withdrawal Agreement (19 October 2019), Article 20 sets out restrictions of the rights of residence which may be imposed due to conduct.

72 Letter dated 27 February 2019 from Baroness Kennedy of The Shaws, Chair of EU Justice Sub-Committee, to Rt Hon Sajid Javid MP, Home Secretary: https://www.parliament.uk/documents/lords-committees/eu-justice-subcommittee/CWM/HKtoSJ-SettledStatus-260219.pdf [accessed 9 January 2020]

73 European Union (Withdrawal Agreement) Bill, clause 15 and Schedule 2 [Bill 1 (2019–20)]

74 Withdrawal Agreement (19 October 2019), Article 159

75 European Commission, ‘Brexit Negotiations: What is in the Withdrawal Agreement’ (14 November 2018): http://europa.eu/rapid/press-release_MEMO-18-6422_en.htm [accessed 18 December 2019]

76 See European Parliament resolution on the framework of the future EU-UK relationship (2018/2573(RSP)) (14 March 2018): http://www.epgencms.europarl.europa.eu/cmsdata/upload/e9270809–8891-4d5d-bea4-1a764178e282/European_Parliament_resolution_on_the_framework_of_the_future_EU-UK_relationship_14_March.pdf [accessed 18 December 2019]

77 See for instance House of Commons Exiting the European Union Committee, The progress of the UK’s negotiations on EU withdrawal: the rights of UK and EU citizens (Eighth Report, Session 2017–19, HC 1439), paras 6–13

78 For commentary on this issue see for instance The3million, ‘Newsletter’ (November 2018): https://mailchi.mp/the3million/newsletter104-740353 [accessed 18 December 2019]

80 European Commission, ‘Brexit Negotiations: What is in the Withdrawal Agreement’ (14 November 2018): http://europa.eu/rapid/press-release_MEMO-18-6422_en.htm [accessed 18 December 2019]

81 European Union Committee, Brexit: the financial settlement (2nd Report, Session 2019, HL Paper 7)

82 The scheduled end of the transition period, 31 December 2020, coincides with the end of the current (2014–2020) EU Multiannual Financial Framework, under which the UK’s contributions have already been calculated.

83 HM Government, Explainer for the agreement on the Withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union (14 November 2018) p.13: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/756376/14_November_Explainer_for_the_agreement_on_the_withdrawal_of_the_United_Kingdom_of_Great_Britain_and_Northern_Ireland_from_the_European_Union___1_.pdf [accessed 18 December 2019]




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