Brexit Briefing - February 2018

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Jane Lambert

The most significant event last month was the publication by the European Commission of a draft agreement for the withdrawal of the United Kingdom from the European Union and the European Atomic Energy Community on 28 Feb 2018.  It has not yet been presented to the British government as it must first be discussed by the governments of the remaining member states and the Brexit steering group of the European Parliament,  I sketched out its structure and main provisions in The Draft Withdrawal Agreement: Getting Down to Business at Last 3 March 2018.

There has been some grumbling from the British side, particularly over the border between Ireland and Great Britain and no doubt some concessions will be made here and there by both parties but the basic shape and content of the agreement contemplated by art 50 (2) of the Treaty of European Union is unlikely to be very different.  There is not much room for movement on the European side because the Commission's negotiators are bound by the Council's Guidelines of the 29 April 2017.  Moreover, the draft is said to be based on the Joint report from the negotiators of the European Union and the United Kingdom Government on progress during phase 1 of negotiations under Article 50 TEU on the United Kingdom's orderly withdrawal from the European Union (see No Fudge - the Next Stage of Negotiations between the EU and UK 12 Feb 2018).  So if we want a trade deal of any kind with the remaining member states of the European Union we will have to accept something like that draft. The alternative is no deal at all.

The most welcome aspect of the Prime Minister's Mansion House speech of 2 March 2018 were the following hard facts:

1. "Brexit will be no bed of roses: 'We are leaving the single market. Life is going to be different. In certain ways, our access to each other's markets will be less than it is now. How could the EU's structure of rights and obligations be sustained, if the UK - or any country - were allowed to enjoy all the benefits without all of the obligations?
2. 'Even after we have left the jurisdiction of the ECJ, EU law and the decisions of the ECJ will continue to affect us.' Aside from the niggle that the initials 'ECJ' are no longer used as that tribunal is now known as the Court of Justice of the European Union ('CJEU') and has been for many years, I welcome that remark. It will make it easier to reach agreement on the withdrawal treaty and it may just make it possible for the UK to remain a party to the Uniform Patent Court Agreement. On the other hand, she omitted to say that the UK will lose its judge and advocate general on the Court who have hugely influenced its decisions since 1973. 
3. No State Aids or Featherbedding: 'If we want good access to each other's markets, it has to be on fair terms. As with any trade agreement, we must accept the need for binding commitments - for example, we may choose to commit some areas of our regulations like state aid and competition to remaining in step with the EU's.'

There are still folk who think that cake exists for eating and cherries for picking but it does not appear that the Prime Minister is one of them (see Mrs May's Mansion House Speech: Some Home Truths At Last 4 March 2018).

Finally, some crumbs of comfort on the Uniform Patent Court ("UPC"). The first is that the legislative hurdles to British ratification of the UPC Agreement appear to have been cleared.  Secondly, as I noted above, the Prime Minister is prepared to countenance some future role for the CJEU in British affairs after we quite the EU which removes one of the difficulties that I mentioned in my article What if anything can be salvaged from the UPC Agreement? 26 Jan 2018 NIPC Law and my presentation to Queen Mary University London on 12 Feb 2018 (see My Contribution to the Discussion on the Implications of Brexit at Queen Mary University London on Monday 12 Feb 2018 17 Feb 2018). The third crumb is that the constitutional challenge to German ratification of the UPC agreement (Verfassungsbeschwerde gegen das Zustimmungsgesetz zu dem Übereinkommen vom 19. Februar 2013 über ein Einheitliches Patentgericht (EPGÜ)) has been listed for hearing in the German Constitutional Court in Karsruhe before Professor Dr Huber under case number 2 BvR 739/17.  Fourthly, there was nothing unhelpful to the UPC in Title IV of Part 3 of the draft withdrawal agreement which covers intellectual property.

Anyone wishing to discuss this briefing or Brexit in general should call me on +44 (0)20 7404 5252 during normal office hours or send me a message through my contact form.

Mrs May's Mansion House Speech: Some Home Truths At Last

Source Guardian,  Standard YouTube Licence

 Jane Lambert

The Prime Minister's speech at the Mansion House on Friday has received a mixed reception.  According to Toby Helm "most Conservative MPs and peers gave the prime minister a period of grace after Friday’s address."  However, Lord Heseltine dismissed it as "more detail on a set of demands that the European Union had made clear all along it would never agree to" (see Tories’ Brexit unity fades as Heseltine slams May’s speech 2 March 2018 The Guardian).

I hold no brief for the Prime Minister, but I think that is a little unfair.  She did speak some home truths though I fear she may have pulled her punches:

1. Brexit will be no bed of roses:  "We are leaving the single market. Life is going to be different. In certain ways, our access to each other's markets will be less than it is now. How could the EU's structure of rights and obligations be sustained, if the UK - or any country - were allowed to enjoy all the benefits without all of the obligations?"
2. "Even after we have left the jurisdiction of the ECJ, EU law and the decisions of the ECJ will continue to affect us." Aside from the niggle that the initials "ECJ" are no longer used as that tribunal is now known as the Court of Justice of the European Union ("CJEU") and has been for many years, I welcome that remark.  It will make it easier to reach agreement on the withdrawal treaty and it may just make it possible for the UK to remain a party to the Uniform Patent Court Agreement.  On the other hand, she omitted to say that the UK will lose its judge and advocate general on the Court who have hugely influenced its decisions since 1973. 
3. No State Aids or Featherbedding:  "If we want good access to each other's markets, it has to be on fair terms. As with any trade agreement, we must accept the need for binding commitments - for example, we may choose to commit some areas of our regulations like state aid and competition to remaining in step with the EU's."

The reason Mrs May had to say these things is that there has been a lot of wishful thinking about Brexit. Some have argued that the shock of the departure of its third largest member state would rip the EU apart. That could happen but there are no signs of its happening yet.  It is equally possible that the remaining member states could integrate more quickly and become stronger and more influential than ever. Another bit of wishful thinking is that German car manufacturers, Italian white goods makers and French farmers will force their governments to make concessions were we ever to play hardball. I have never understood that argument because we are not going to start making those goods in Britain or sourcing those goods from elsewhere. Tariffs might dent demand for EU goods and services but it won't destroy it and the business communities in those countries know it.  The fact is that the UK is not negotiating from a position of strength and will on many issues have to take what the remaining member states have to offer or leave it.

Finally, the Institute for Government has produced an excellent, tabulated analysis of the PM's speech with "Area" in come column, "What the Prime Minister said" in another and "What this means" in the third (see The Prime Minister's Mansion House Brexit speech 2 March 2018 The Guardian).  I was about to do my own analysis along similar lines but this is so much better.

Anyone wishing to discuss this article or Brexit in general should call me on +44 (0)20 7404 5252 during office hours or send me a message through my contact form.

The Draft Withdrawal Agreement: Getting Down to Business at Last

Jane Lambert

The draft withdrawal agreement that the European Commission published on 28 Feb 2018 has to be welcomed. As every lawyer (if not every business person) knows, there comes a time in every negotiation when the provisions that appear to have been agreed must be committed to writing. Then and only then can potential deal breaking issues be identified and perhaps addressed. The sooner that is done the greater the chance of a successful outcome.

The thing that struck me most about the draft agreement is its length: 168 articles plus protocols on Ireland and Cyprus each with its own annexes compressed into 118 pages. I am surprised by how much has been agreed or is capable of agreement. Obviously there are a few hot issues such as those in the Protocol on Ireland that could scupper everything but there is so much more that has been, or can easily be, agreed.

The main body of the draft is divided into the following Parts:

• Part 1 - Common Provisions
• Part 2 - Citizens' Rights
• Part 3 - Separation Provisions
• Part 4 - Transition
• Part 5 - Financial Provisions
• Part 8 - Institutional and Final Provisions.

Part 1 consists of 7 articles the most important of which is art 1:

"This Agreement sets out the arrangements for the withdrawal of the United Kingdom of Great Britain and Northern Ireland ('United Kingdom') from the European Union ('Union') and from the European Atomic Energy Community ('Euratom')."

There follow definitions and interpretive provisions.

Arts 8 to 35 constitute Part 2 which are divided into 4 Titles. The first contains general provisions such as definitions and basic principles such as continuation of residence and non-discrimination. Title II divides into 3 chapters on rights related to residence, workers and the self-employed and recognition of professional qualifications respectively. Title III is on social security and Title IV contains final provisions.

The bulk of the draft treaty (arts 36 to 120) is in Part 3 which is also divided into Titles some of which are further subdivided into Chapters.  Title I is on goods placed on  the market. Title II on customs procedures, Title III on VAT and other duties, Title IV on intellectual property, Title V on police and judicial cooperation in criminal matters, Title VI on judicial cooperation in civil and commercial matters, Title VII on data protections, Title VIII on public procurement and similar issues, Title IX on Euratom and related issues, Title X on EU administrative and judicial procedures, Title XI on administrative cooperation, Title XII on privileges and  immunities and Title XIII on other issues relating to the EU. Interestingly, the provisions of Title IV on intellectual property are silent on the Unified Patent Court and unitary patent. They cover the conversion of EU trade marks, registered Community designs and Community plant varieties into the corresponding British rights and the adaptation of provisions on supplementary protection certificates and the exhaustion of rights.

Part 4 contains 5 articles (arts 121 - 126) on the transition period.

Part 5 (arts 127 to 150) is divided into 7 Chapters covering currency (Chapter 1), the UK's contribution to the budget up to 2020 (Chapter 2), the European Central Bank (Chapter 3), the European Investment Bank (Chapter 4), European Development Fund (Chapter 5), Refugees in Turkey (Chapter 6) and Common Defence and Security (Chapter 7).

Part 6 spells out the continued jurisdiction of the Court of Justice of the European Union in the implementation period and beyond and the establishment at art 157 (1) of a joint committee to supervise and implement the agreement and resolve disputes.

This instrument is, of course, only a draft and it is likely to be changed over time but it sets out the likely framework of the withdrawal agreement contemplated by art 50 (2) of the Treaty on European Union as well as the transition or implementation period between 29 March 2019 and 31 Dec 2020. Should anyone wish to discuss this draft, he or she should contact me during office hours on +44 (0)20 7404 5252 or send me a message through my contact form.