Constitutional Law Group November 24, 2017 Europe, European Union

Armin Cuyvers: Two Legal Tools to Avoid Hard Brexit: Delayed Exit and Decreasing Membership under Article 50 TEU

Faced with a cliff, jumping is generally considered one of the least pleasant solutions. Yet we are racing towards the edge of the Brexit cliff. Miracles excluded, the UK and EU will not be able to finalize the necessary Brexit agreements in time. Effectively, there is less than a year left, and we have not even moved beyond the Brexit bill. As an extension of the two-year term seems politically impossible in the UK, we seem left with one unlikely and one disastrous possible outcome.

The unlikely outcome is that at some point the UK decides to remain a full member, for example after a second referendum or a revolt in Parliament. Legally, in my analysis, the UK could successfully revoke its Article 50 notification. Ultimately, both the UK Supreme Court and the Court of Justice of the EU (CJEU) would accept a revocation, and the UK would remain an EU Member. Politically, however, this seems unlikely, not to mention the political dog house the UK would find itself in within the EU. Serving divorce papers rarely improves the relationship, no matter how heartfelt their revocation.

The likely but disastrous outcome would be a so-called hard Brexit: an exit without any agreement between the EU and the UK. In a legal second, the UK would go from full membership to virtually no legal relation with the EU at all. Legally, the UK would be less connected to the EU than Burundi. Planes, trains and trucks would grind to a halt and supply chains with them. A hard border would arise in Northern Ireland, anti-terrorism cooperation would stop, and in the financial sector alone at least 35.000 jobs would disappear overnight, with tens of thousands to follow. As a conservative estimate, the UK would loose 2.4% of GDP, or 63 billion dollars per year. Political bluster aside, the chaos and damage of a hard Brexit would be inconceivable, for all parties involved. Nevertheless, this is the default option that time is slowly pushing us towards.

Yet I believe two legal tools may jointly help to avoid a hard Brexit: delayed exit and decreasing membership. Jointly, these legal solutions allow a controlled, phased exit by providing a legal set of steps down the Brexit cliff. Such a phased exit, or phexit to add to the growing stable of exit terms, would buy the necessary time and avoid the impossible task of designing a completely new interim regime from scratch, and having it ratified by all national and regional parliaments, within the next year.

First the delayed exit. Article 50 TEU, which governs the withdrawal process, explicitly prescribes a hard Brexit unless a withdrawal agreement enters into force before the two-year period expires. Article 50, however, does not require that this withdrawal agreement leads to the immediate exit of the withdrawing Member State. Consequently, I believe Article 50 allows an agreement with a delayed exit: an exit which only takes place several years after the withdrawal agreement entered into force.

For example, imagine a withdrawal agreement that enters into force on 29 March 2019, but which determines that the UK will no longer be an EU member per 29 March 2021 at the latest. Because the agreement enters into force before the two-year deadline expires, no unilateral exit occurs and a hard Brexit is avoided. The two years until the actual exit can subsequently be used to finalize the different agreements required for an orderly Brexit. At the same time, a firm date will have been set for the UK’s exit, which may be further entrenched in UK legislation. If no agreement has been reached on a new EU-UK relationship post-exit by this time, a hard Brexit still follows. Contrary to an extension under Article 50(3) TEU, a delayed exit therefore allows the UK government to deliver on its Brexit promise. Brexit will mean Brexit, only at a later stage. Delayed exit therefore avoids a cliff edge without requiring the UK to surrender its commitment to Brexit. Similar to an extension, however, the UK would remain within the EU, including the internal market and the customs union. Consequently, no separate transitional agreement is necessary to bridge the period between entry into force of the withdrawal agreement and a future agreement on the new relation between the EU and the UK.

A delayed exit may therefore solve the problem of transition, but the very solution of continued membership obviously also creates a new problem: the UK would remain a Member State, with rights and obligations. This may cause a Groundhog-like emotion in some Brexiteers: no matter what you do, you wake up an EU member state. In other words, could continued membership ever be politically acceptable in the UK? Here the second legal construct of decreasing membership may offer a solution.

Current debates assume EU membership is binary: you are either fully in or fully out. Brexit may require a more quantum-inspired approach. Without going as far as Schrodinger-membership, decreasing membership entails increasingly lighter stages of membership until exit. Based on the special status of the UK as a withdrawing state, decreasing membership would see the rights and obligations of the UK gradually decline until its actual departure. Hence, rights and obligations would increasingly fall away as the UK gets closer to its exit. This transforms membership itself into a transitional regime, and would flip the negotiations on withdrawal on their head. Instead of negotiating about what rights and obligations the UK will acquire under a new status, the question becomes what rights and obligations will be gradually removed, whilst the UK remains a member of the EU.

Instead of requiring a separate transition agreement setting out an interim status for the UK, therefore, an agreement on declining membership could form part of the delayed withdrawal agreement itself. As decreasing membership forms part of the withdrawal process and takes place within EU law, I would argue that Article 50 TEU provides a sufficient legal basis for such decreasing membership. Declining membership would therefore remove the need for a separate interim agreement altogether, and with it the need for a separate ratification by all national and regional parliament of a mixed interim agreement. Ideally, furthermore, the withdrawal agreement would set out the full schedule of decreasing rights and obligations, up to the moment of exit, although some issues may be reserved for later agreement if they cannot be solved in time. At the same time, the withdrawal agreement setting out the decreasing membership does not have to agree on the final status of the UK after the delayed exit kick in. After all, the purpose of decreasing membership is solely to provide time and a stable interim regime for an agreement on the new relation to be properly negotiated, not to determine that new relationship itself.

To make decreased membership acceptable for the UK, some opt-outs and concessions could be given to the UK as soon as the withdrawal agreement enters into force. Such concessions could, for instance, build on the opt-outs already given to Cameron before the referendum and concern limits on free movement, access to welfare and a certain reduction in the UK contribution to the EU. Other, more far reaching reductions in rights and obligations could follow according to a schedule to be negotiated, leading up to the eventual exit and new relationship between the EU and the UK.

For the EU, decreasing membership should be at least as acceptable, if not more so, than a transitional agreement which grants certain membership-like rights to the UK. After all, decreasing membership retains the link between membership and rights. Any rights granted to the UK during transition will still be based on the UK’s membership, reaffirming the key importance and value of membership, and disallowing the UK to have its EU pie without paying the membership price for it. Moreover, decreasing membership is inherently limited in time and fully premised on a firm and binding commitment to exit. If no agreement is reached on the new EU-UK relation, which may look very different from decreased membership, hard Brexit still follows. Decreasing membership, therefore, does not mean that the UK will retain membership-like rights after exit, or that the UK could choose to linger in a ‘membership-light’ model. In addition, there is no risk that other Member States may claim a ‘membership-light’ status based on the UK example, as this status is only available after they commit to exit by notification and signing a delayed withdrawal agreement.

A gradually decreasing membership would therefore allow the UK government to honor several of its Brexit promises domestically without requiring a hard Brexit. For the EU, it could prevent cherry picking and ensure the entire transition takes place squarely within the realm of EU law. In addition, it would take away the need to design a completely new interim status for the UK from scratch, or to fall back on completely unsuitable existing arrangements such as the EEA or EFTA. Instead, the EU and UK would only have to agree on what rights and obligations to gradually strip away. This would remain a major challenge, there can be no illusions there, but one less herculean than designing and ratifying a new interim regime that is acceptable for both parties. In addition, a system of decreasing membership, following to a fixed schedule, would also offer much more legal certainty to businesses and citizens. As an interim period in which the UK retains certain rights and obligations is foreseen anyway, a model of decreased membership may therefore be the best, if of course not perfect, solution available.

In my legal analysis, decreasing membership is possible under EU law. In part this is precisely because of the special status of the UK as a withdrawing state under Article 50. The moment the withdrawal agreement enters into force, the UK is in an objectively different position than other Member States. This objectively different position, together with recognition of the right to leave under Article 50 TEU, would allow far reaching deviations from the acquis, including deviations from foundational principles as equal treatment, loyal cooperation or direct effect and supremacy in all fields covered by or possibly affecting the functioning of EU law.

The possibility of decreasing membership is further supported by the mirror position of acceding or recently acceded states. During the process of accession, and even after full accession, all kinds of rights and obligations do no apply, including equal treatment. The clearest case in point is the position of Bulgaria and Romania after accession. Even though both had become full Member States, temporary limits were imposed on free movement of persons. In the context of accession, therefore, direct discrimination based on nationality was temporarily allowed. A fortiori, it must be assumed that even more far reaching deviations from the acquis are allowed in the context of withdrawal, at least once a withdrawal agreement has entered into force. After all, unlike accession, Brexit is not building up to full membership, but rather to an end of membership. This also means that any special status granted to the UK during its withdrawal cannot be granted to other Member States that have not already signed a withdrawal agreement.

As a leaving member, therefore, the UK could be granted a gradually decreasing membership status that would allow it increasing freedom, even from several core principles of EU law, without necessitating a premature exit and all the risks and costs this would entail. Such an approach, moreover, might also facilitate agreement on some current stumbling blocks. The Northern-Irish border, for example, might not have to be reinstated during the transition, nor would a parallel internal market regime or customs arrangement have to be invented. Continued payment of the UK’s financial obligations under the current MFF would no longer be a ‘fine’ for leaving, and the total sum of the ‘Brexit bill’ could subsequently be reduced. The current rights of UK citizens in the EU and other EU citizens in the UK could be easily respected, as they would remain EU citizens, whereas any limits would apply as per entry into force of the delayed withdrawal agreement.

Decreasing membership would, however, not offer a full solution for the disagreement over CJEU jurisdiction. The autonomy under EU law, as inter alia defined by the CJEU in Opinion 2/13, would still require that the CJEU retains jurisdiction during the period of the UK’s decreasing membership. At the same time, the UK already seems to have accepted the inevitability of some form of CJEU jurisdiction during a transition period. In addition, declining membership might actually be the best option the UK might have to at least exclude CJEU jurisdiction in certain specific areas. Such an exclusion, if limited, may be an acceptable deviation from the core principle of autonomy in the context of withdrawal.

In addition, institutional challenges will arise. It can be defended that, as a withdrawing member, the UK loses its commissioner yet retains its judges in the CJEU, its participation in most European Council and Council meetings and its member of the Court of auditors. The representation in the European Parliament may require a more creative phasing mechanism. On the one hand, the continued EU citizenship of UK citizens would require a certain form of representation in the European Parliament. On the other hand, the unique status of a withdrawing state and the reality of a popular vote in favour of Brexit could justify decreasing representation here as well.

Clearly the suggestions above raise at least as many questions as they answer, and much more work is needed to fully flesh out the legal constructs of delayed exit and decreasing membership. In addition, the vitriolic politics of Brexit will make any kind of agreement extremely hard, and pose a major challenge to any acceptance of prolonged membership, even in a time-limited and decreasing form, on both the UK and the EU side. Amidst the complexity and chaos of Brexit, however, no perfect solutions exist. Yet when the alternative is a hard Brexit, delayed exit and decreasing membership may just provide the legal leeway to let reason and responsibility prevail, and avoid a self-inflicted and inexcusable failure of historical proportions. Why jump of a cliff when there may be a legal set of steps down allowing a much more civilized descent?

Armin Cuyvers, Leiden Law School

(Suggested citation: A. Cuyvers, ‘Two Legal Tools to Avoid Hard Brexit: Delayed Exit and Decreasing Membership under Article 50 TEU’, U.K. Const. L. Blog (24th Nov. 2017) (available at https://ukconstitutionallaw.org/))

9Comments

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1

Andrew David Thorburn on November 24, 2017 at 11:36 am
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In control theory what happens to the control signal when the output suffers a massive disturbance? In any event more energy has to be put into the control. My assumption (from experience) is that more law will just become a creature of discretion. Is that a constitutional question?
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Jonathan Haydn-Williams on November 24, 2017 at 12:57 pm
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‘Decreasing membership’ is an excellent idea. Perhaps ‘diminishing membership’ would be an even better term. Politically, Brexiteers would need to be seen to voice objections, but many of them must be getting worried that, in the event of a ‘hard Brexit’, their assurances that all will be well could be put to the test and not pass it.

However, the idea does not fit with the EU’s current position that the divorce bill must be agreed before any other talks take place: if there were to be a gradual, ‘stepped’ divorce, there would also need to be ‘stepped’ divorce payments. In other words, negotiation of the terms of withdrawal would need to take account of the future relationship between the UK and the EU, which is exactly what Article 50 states and which the EU’s current position ignores and indeed breaches.

It astonishes me that the UK is not pointing out the EU’s breach of Article 50, but it is perhaps difficult to do so when David Davis, to the surprise of most, agreed the EU’s two stage negotiating process at the first session of the talks.
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Roger Thrush on November 24, 2017 at 6:54 pm
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What are you talking about? So many wrong presumptions!
a) No one is going to reverse the decision of the UK to exit the mendacious short-sighted EU.
b) It is not a cliff edge, it is a crossroads, we will be taking a different better direction.
c) Leaving without an agreement will not be disastrous, in fact it will be the most advantageous outcome for the UK.
d) Nothing is going to change overnight, no planes etc are going to stop, just total bunkum. Silly. We are not moving to Mars. Seriously, please don’t panic, that won’t happen.
e) It is an absolute political non-starter to think the UK can still be a member on 30/3/19. Some phasing of the changes may be possible but we will not be members by then. Phasing will only be possible if the EU changes its attitude, maybe in about 9 months time they will realise it is the UK that has really been playing for time and indulged in brinksmanship. It’s the only explanation for May sucking up the disrespectful undiplomatic behaviour of our friends. But if not no deal is NOT a disaster.
f) What is making the change of direction potentially sudden or sharp is the EU attitude, which for these ideas to stand a chance would need that attitude to change, so I don’t think the ideas will fly, sorry. Don’t forget it’s not a cliff, it’s a crossroads, we are simply changing direction, something the EU seems to have increasing difficulty with itself. As a separate sovereign country our new flexibility will be awesome.
4

Paul W on December 8, 2017 at 10:46 am
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The author states:
“Article 50 TEU…explicitly prescribes a hard Brexit unless a withdrawal agreement enters into force before the two-year period expires.” and
“Article 50, however, does not require that this withdrawal agreement leads to the immediate exit of the withdrawing Member State.”

Is this analysis correct? I would suggest that Article 50 does not explicitly prescribe that the withdrawal agreement enters into force before the two-year deadline but does require an immediate exit upon the entry into force of the agreement.

First, the two-year deadline.
Article 50(3) states:
“The Treaties shall cease to apply to the State in question from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification”

Thus the sentence is looking at the date when the EU treaties cease to apply to the departing state. There are two alternatives given:
(a) the date of entry into force of the withdrawal agreement;
(b) two years after the notification.

Date (b) applies if date (a) does not apply. At the two-year date you look to see if there is a withdrawal agreement: if there is, then whatever date is stated in it as being the date it enters into force – which could be any agreed date before or after the two-year date – applies. If there is not an agreement (‘failing that’), then date (b), the two-year date, applies. The phrase ‘failing that’ refers to the withdrawal agreement being in existence, not to the withdrawal date having already occurred.

The draftsman’s schema would be that it is up to the parties to decide when the withdrawal agreement should enter into force (which may be before or after the two years). Only if they haven’t agreed a withdrawal agreement within two years, does the two-year deadline trigger.

It might be argued that ‘entry into force’ means the date when the agreement is signed. If it meant this, then the two-year date in (b) above would indeed be a deadline for exiting. But there is no reason to suppose this was the drafting intention. An agreement of this sort would not ‘enter into force’ upon signing. It would be chaotic and impractical to have treaties falling away instantly upon signature of a withdrawal agreement. The phrase ‘entry into force’ means the date when the agreement’s substantive provisions, i.e. the withdrawal, enter into force, as specified within the agreement. (The British Government evidently considers it means this, as they seek to specify the exact hour and date of 11pm London time, 29th March 2019 as the date of Brexit. They could agree a different date, which could be later.)

Secondly, contra the author, Article 50 does expressly require that upon the withdrawal agreement entering into force, the treaties cease to apply. Thus, there is an immediate exit, but this exit happens only on the date when the agreement enters into force and this date may be after the two-year deadline. Thus a staged withdrawal, as proposed by the author, does not seem possible under Article 50 but a deferred withdrawal is. It could amount to much the same thing.

In practical terms, as the author makes clear, this issue is important. For instance, leaving politics aside, it would make far more practical sense for Brexit to occur at the end of the multiannual financing period (end of 2020) rather than midway through it. Politically, any delay would be unacceptable to Brexiteers.
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The legal catch-22 of a CETA-Brexit: either too little or too much to avoid a pretty hard Brexit - Regulating for Globalization on December 14, 2017 at 1:56 pm
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[…] key problems in concluding these agreements is time. Save for an extremely unlikely extension or a delayed withdrawal, both the withdrawal agreement and the transitional agreement must be in place before 29 March 2019 […]
6

Jacq on January 3, 2018 at 10:20 pm
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Decreasing membership is an interesting concept, but I feel unsupported by EU Case Law. In Case 6/64, the CJEU/ECJ ruled that the limitation of national sovereignty was permanent where powers had been transferred to the EU, then known as the EEC.

The ECJ has also ruled that the goals of the treaties are binding and these are basically the ongoing integration of economies and political systems. To try to push powers back (except through the clean break of withdrawal) would be going against the goals. The EU has recently suggested that the UK take its baggage of the acquis outside for a transitional period; this would legally allow the UK in time to comply with some but not all EU rules, depending on the future relationship.

The New Alliance site has some good quotes on these concepts and others like ‘competence’,
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  Paul W on January 6, 2018 at 11:31 am
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  It is perhaps worth recalling the text of the February 2016 settlement between the UK and the EU regarding ever closer union. (Decision of the heads of state or government, meeting within the European Council)
  
  “References in the Treaties and their preambles to the process of creating an ever closer union …. are not an equivalent to the objective of political integration.
  
  “The references to an ever closer union among the peoples of Europe do not offer a basis for extending the scope of any provision of the Treaties or of EU secondary legislation. They should not be used either to support an extensive interpretation of the competences of the Union or of the powers of its institutions as set out in the Treaties.”
  
  Whether this is how the ECJ would see it was doubted at the time.
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    Jacq on January 8, 2018 at 5:25 pm
    
    It’s a good point about the ECJ. Had the referendum result gone the other way, the ECJ could have struck down the agreement; it has struck down other European Council agreements on technicalities.
    
    David Cameron would probably not have worried too much as he would have got his desired result. And integration would have carried on stepwise through the considerable existing powers conferred on the EU.
    
    Where a Treaty has had gaps in powers, the EU has usually been resourceful in finding a means around it. For instance, the EU passed the Working Time legislation as a health and safety measure as the employment aegis was subject to veto. The Data Retention Directive, also fondly known as the snooper’s charter, was laundered as a Single Market measure not as justice and home affairs.
    
    It s interesting to note that the EU also considers it can act in areas of ‘competence’ that are supposedly the province of member states.
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Protecting the EU from a Kill Switch: Why EU Law Does Not Require EP Elections in the UK | Verfassungsblog on March 29, 2019 at 8:22 am
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[…] same as joining, and there are important differences between Articles 49 and 50 TEU. Yet it is fair to assume that at least the same level of flexibility should be available in the treatment of a Member State […]