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The Road to Brexit – The UK's legislative preparations

​With just over six months to go until the UK leaves the EU, the UK Government’s preparations for both a ‘hard’ Brexit and a Brexit that commences with a transitional period continue in earnest.

‘Hard’ Brexit preparations

Once the EU (Withdrawal) Act 2018 (EUWA) received Royal Assent, UK Government departments like HM Treasury began engaging with industry and technical specialists on the draft secondary legislation required to ensure there is a functioning statute book on 30 March 2019. In the financial services area, seventy statutory instruments are expected with some being the subject of confidential review whereas others have simply been laid without consultation. All seventy are expected to be laid before the end of this year. To the extent the Article 50 withdrawal agreement is ratified, these instruments will be withdrawn from the statute book and the form and structure of subsequent secondary legislation will only emerge once a future trade relationship is agreed between the UK and EU 27.

In addition to the legislative advancements, the UK Government has published a number of ‘no deal’ notices similar to those published by the European Commission six months ago. These notices are intended to set out information to allow businesses and citizens to understand what they would need to do in a ‘no deal’ scenario, so they can make informed plans and reparations.

Preparations for ratifying the Article 50 withdrawal agreement

Whilst preparations for a ‘no deal’ scenario have been ramping up, the UK Government has also been focusing on ensuring that the possibility of concluding and ratifying the Article 50 withdrawal agreement and proposed transitional arrangements is still alive. Following publication of the White Paper, which sets out the detailed elements of the ‘Chequers deal’ (our detailed bulletin can be found here), the UK Government published its White Paper (the EUWAB White Paper) on the EU (Withdrawal Agreement) Bill (the Bill) – formerly known as the Withdrawal Agreement and Implementation Bill. This will legislate for the major elements of the Article 50 withdrawal agreement that is reached with the EU, including issues such as the agreement on citizens’ rights, the financial settlement and the details of a time limited implementation period.

The precise details of the Bill will be subject to the on going negotiations with the EU but the EUWAB White Paper confirms that the Bill will:
− be the primary means by which the rights of EU citizens will be implemented and protected under UK law;
− amend some parts of the EUWA to ensure that the UK statute book functions correctly during the time limited implementation period; and
− create a financial authority to manage the specific payments to be made under the financial settlement, with appropriate Parliamentary oversight.

Although timing for agreeing the Article 50 withdrawal agreement appears to have slipped, the EU negotiator, Michel Barnier, now has November in sight. It is understood that the agreement would then go before the UK Parliament very quickly – possibly within 10 days. Our bulletin on the EUWA looks at the process required for approving any deal that is struck.

What UK legislative changes are required if a transitional period is ratified?

The EUWA will repeal the European Communities Act 1972 (ECA) as of 29 March 2019, thereby removing the mechanism by which EU law has effect and supremacy in UK law. It will be necessary, however, to ensure that EU law continues to apply in the UK during the transitional period. The EUWAB White Paper states that this will be achieved by way of transitional provision, in which the Bill will amend the EUWA so that the effect of the ECA is saved for the time limited transitional period. Exit day, as defined in the EUWA, will remain 29 March 2019. The UK Government believes that this approach will provide legal certainty to businesses and individuals during the transitional period by ensuring that there is continuity in the effect that EU law has in the UK during this time. The Bill will make provision to end this saving of the effect of the ECA on 31 December 2020.

The Bill will also modify the parts of the ECA whose effect is saved to reflect the fact that the UK has left the EU, and that the UK’s relationship with EU law during this period is determined by the UK’s commitments in the Article 50 withdrawal agreement, rather than as a Member State. The Bill will take a selective approach to saving the effect of the ECA; the UK Government will not, for example, seek to save the effect of section 2(3) of the ECA, which provides the authority for the UK Government to make payments to the EU.

Domestic legislation implementing EU law in the UK will need to be amended, however, to reflect the fact the UK is no longer a Member State during the transitional period. For example, throughout the statute book there are references to the obligations on “Member States”. During the transitional period, these references will need to be read as “Member States and the UK.” The Bill will make sure that such EU related terminology in existing legislation can continue to operate effectively on the UK statute book.

How is the Bill intended to interact with the EUWA?

None of the Bill’s proposed amendments to the EUWA is intended to change the purpose of the Act. All of the Bill’s proposed amendments to the EUWA are technical changes to ensure that this vital piece of legislation can operate in the way that Parliament intended at the end of the transitional period.

The Bill will amend the correcting powers in the EUWA to allow them to correct deficiencies arising from withdrawal and the end of the transitional period. These powers are currently sunsetted to two years after exit day (29 March 2021). The powers will therefore be available to the UK Government during the transitional period, allowing secondary legislation to be made during this time to correct deficiencies. The existing sunset would, however, provide ministers with only three months to correct any deficiencies in retained EU law that became apparent after that conversion of EU law has taken place. This would include any changes required to EU legislation which were only introduced shortly before the end of the transitional period. Whilst the UK Government would hope to make any corrections before the end of the transitional period, it is possible that some deficiencies will only become apparent after the conversion of EU law has taken place. The Bill will therefore amend the sunset on the correcting power at section 8 of the EUWA so that the power expires on 31 December 2022.

Further information

This article is part of the Allen & Overy Legal & Regulatory Risk Note, a quarterly publication.  For more information please contact Karen Birch – karen.birch@allenovery.com, or tel +44 20 3088 3710.

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Oonagh Harrison
Oonagh Harrison
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United Kingdom
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