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News from Members The Brexit Referendum - a British (English / Scots) lawyer's view on what happens next

The Brexit Referendum - a British (English / Scots) lawyer's view on what happens next

by McGregor & Partners July 5, 2016

Following the 51.9% vote for “Leave” against the 48.1% vote to “Remain” in last week's Brexit referendum in the UK and Gibraltar, there seems to be a huge amount of panic (except in Edinburgh), evidenced by the volatility in the financial markets. Much of the comments on what happens next appear to be made without much understanding of the legal basis of the referendum and what it means for the UK's position in the EU. A better understanding of what is now likely to happen also requires a degree of knowledge about previous referenda in the UK and, if I may say it, an assessment of the UK's constitutional law which is not entirely Anglo-centric.

Much has been said about Article 50 of the EU Treaty. Article 50(1) states:

"Any Member State may decide to withdraw from the Union in accordance with its own constitutional requirements."

So, any decision on the UK leaving the EU must be decided in accordance with the constitutional requirements of the UK.

Is the result of the referendum a decision to leave the EU according to the constitutional requirements of the UK? Put simply - no.

Referenda in the UK are rare - the style of government in the UK is that our elected legislators are expected to take the difficult political decisions, and we can then vote for someone else at the next general election if we do not like what they did. There are two types of referenda.

An example of the first type is the Parliamentary Voting System and Constituencies Act 2011, which dealt with a proposal to change the voting system in elections from “first past the post” (i.e. the candidate with the greatest number of votes wins, even if he or she did not get a majority of all the votes cast) to the “alternative voting” system. The Act made detailed provisions for the introduction of the alternative voting system, but made its adoption conditional on a majority being obtained for alternative voting in a referendum. Depending on the result of that referendum, the relevant government minister was required to make an order either implementing the detailed alternative voting provisions, or cancelling them. The result of that referendum was therefore legally binding and triggered a mechanism either to enforce, or to cancel, the detailed legal provisions for an alternative voting system.

Voters were therefore in no doubt as to what would happen, depending on the result of that referendum. The proposal to adopt the alternative voting system was defeated by a vote of 67.90% against and 32.10% in favour.

The recent Brexit referendum is of the second type. The referendum was held under European Union Referendum Act 2015. Unlike the legislation for the alternative voting referendum, this Act of Parliament says nothing about what was to happen in the event of a vote for "Leave" or any mechanism to implement a withdrawal from the EU by the UK. It is therefore not legally binding on the UK's national parliament or on the devolved parliaments or assemblies, or on the UK's national or devolved governments.

In short, the Brexit referendum was nothing more than a national opinion poll organised at the taxpayer's expense.

It is certainly not a decision to withdraw from the EU made in accordance with the UK's constitutional requirements, to use the wording of Article 50 of the EU Treaty.

Comments by supporters of Brexit in the UK, or by officials of the European Commission, or by politicians in other EU states, that the UK must now quickly invoke the withdrawal procedure under Article 50 therefore merely reflect further politicking and have no legal basis.

It should not have been a surprise that there is a substantial body of the electorate in the UK which is unhappy with the EU in its current form, or with the current government in the UK, or with other matters. I will leave it to others to assess which proportions of these particular types of unhappiness contributed to the 51.9% vote to “Leave”. I would however hazard a guess that if similar referenda were to be held in some other countries in the EU, there would be a similar protest vote against the status quo.

So given that the Brexit referendum was not legally binding and does not satisfy the requirements in Article 50 of the EU Treaty, why is there so much market volatility? One answer may be because markets hate uncertainty. Another answer may of course be that some people are using the current situation to speculate in the markets.

What force will the Brexit referendum vote have? In my view, it will be purely political.

Does it express the will of UK citizens? If you are familiar with the concept of a unitary state (as officials in the European Commission and in other EU states presumably are), then it is easy to say that the British people have voted to leave the EU. In my view, such an analysis does not take into account that the UK is not a unitary state (albeit that the UK is the “member state” of the EU).

The UK consists of four countries: England, Wales, Scotland and Northern Ireland (as followers of the Euro 2016 soccer tournament will be aware). Again I will leave others to debate the status of Wales and of Northern Ireland, but Scotland and England have been a united kingdom sharing a common parliament in Westminster only since 1707. We may have a single passport, but the Treaty of Union in 1706 specifically provided, amongst other matters, for the continuance of a separate system of law in Scotland. Following another referendum and the passing of the Scotland Act 1998 by the UK parliament, Scotland has a devolved parliament in Edinburgh.

Why is this important to people in Brussels, Paris, Berlin, London or Bucharest? Because the result of the Brexit referendum in Scotland was 62% for “Remain” and 38% for “Leave”. The current government in Scotland is a minority government run by the Scottish National Party and its leader, the First Minister of Scotland (Nicola Sturgeon), has said that she considers that she has a clear mandate from the electorate in Scotland to keep Scotland in the EU.

In yet another referendum in 2014, the electorate in Scotland decided against seeking independence from the UK, although there was a sizeable vote for independence. Ironically, in that referendum, voters were told that if Scotland voted to leave the UK, an independent Scotland would need to apply for membership of the EU and there was no mention, so far as I noted, of Article 50 being used (see above).

In the present circumstances, the “constitutional requirements” of the UK are far from straightforward, so far as leaving the EU are concerned. It was simple when the UK joined the predecessor of the EU in 1973 since at that time, there was only a single parliament in the UK, i.e. that at Westminster. In the years since 1973, we have created (or re-created) more of them – including the Scottish Parliament mentioned above. There appear to be grounded arguments that any legislation by the UK parliament to withdraw from the EU would require the legislative consent of the Scottish parliament. The First Minister of Scotland has said that she is considering asking the Scottish parliament not to give such consent.

Apart from the political consequences of such a conflict between the UK and the Scottish parliaments, it has been said that the English view is that the UK parliament is sovereign and can pass whatever laws it likes- indeed that appears to have been an argument in the Brexit referendum campaign - and that legally the UK parliament could simply change or over-ride the powers of the Scottish parliament.

However, in the Scottish case of MacCormick -v- Lord Advocate (about whether or not H.M. the Queen should be called “Elizabeth I” or “Elizabeth II” in Scotland: Elizabeth Tudor of England never ruled Scotland), the senior judge in Scotland stated that “the principle of unlimited sovereignty of Parliament is a distinctively English principle and has no counterpart in Scottish constitutional law”. Opinions differ as to whether the Scottish parliament has the legal power to actually block legislation to implement a UK withdrawal from the EU, but this view of constitutional law surely has potential to further complicate the position.

So, legally speaking, my view is that people in Romania and in the rest of the EU should regard the Brexit vote as being:
•an expression of dissatisfaction with the status quo (including as regards the current nature of the EU) by a sizeable part of the electorate in the UK, but which does not trigger the withdrawal of the UK from the EU; and
•the cause of a likely internal constitutional crisis in the UK.

As to whether Article 50 will ever be invoked - and whether the UK (or parts of the UK) will leave the EU this time - these are different matters!


About McGregor & Partners

McGregor & Partners is a boutique commercial law firm working in the Central and South East Europe with offices in Bucharest, Romania (since 1992) and Sofia, Bulgaria (since 2006). The firm is managed by Romanian and Bulgarian experienced lawyers, coordinated by a British lawyer having almost twenty years of living and working in the region. The firm keeps its relationship with the former parent company, the international law office - Stephenson Harwood and also with other international law firms from the City of London and elsewhere.

For more information please, visit: www.mcgregorlegal.eu.

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