UK: The UK Supreme Court's Article 50 Judgment

Last Updated: 28 April 2017
Article by Clare Calnan and Ole Henrik Wille

On 24 January 2017 the Supreme Court delivered its much anticipated judgment on whether the Government of the United Kingdom can trigger the Brexit process without Parliamentary approval. What are the consequences of the decision and does it have any impact for commercial parties?

Background

In October 2016 an application was made to the English High Court to determine whether the Government's plan to issue a EU withdrawal notice under Article 50 of the Treaty on European Union without prior authorisation from Parliament was lawful. At the time many thought that this was an ambitious attempt by anti-Brexit campaigners to derail the exit process. In the event it has resulted in the delivery of one of the most important judgements on constitutional law, and one that may have far reaching ramifications on the process by which the United Kingdom finally departs from the European Union.

The High Court decided in favour of the application and held that the Government required Parliament's approval prior to giving the notice under Article 50. The Government appealed to the Supreme Court and for the first time the case was heard by all eleven members of the Supreme Court over four days in December 2016.

The main issue before the Supreme Court did not relate to whether or not the UK should or could leave the European Union – the British people took that decision in the June 2016 EU referendum – but rather the process by which that departure could be initiated.

Article 50 is the formal mechanism which an EU member must trigger if it wishes to leave the EU. The Article states that "a member state can decide to withdraw from the EU in accordance with its own constitutional principles". The Government's position was that, in light of the outcome of the referendum in which the British people voted to leave, it alone could make the decision as to when to trigger Article 50 and no further approval was required from Parliament. The opposing argument was that only Parliament had the power to change the constitution. In simple terms, the argument that was put to the Supreme Court was that as Parliamentary approval was required to give effect to the change in the constitution that occurred when United Kingdom joining the EU in 1972, its approval was also required to serve the Article 50 notice to leave the EU in 2017.

The Supreme Court Judgement

The Supreme Court's judgement was delivered on 24 January 2017. It decided, by a majority of 8 to 3, that the withdrawal of the United Kingdom from the EU did constitute a major change to the constitutional arrangements and as such that "it would be inconsistent with long-standing and fundamental principles for such a far-reaching change to the UK constitutional arrangements to be brought about by Government decision alone".

The starting point was that since withdrawal from the EU would result in a change in the domestic law and effectively remove or limit rights created by EU law, parliamentary approval was required to initiate any change.

Impact on the Brexit process

Following the Supreme Court's judgment the main question that was asked was "Will this change anything"? At one level the answer to that question is not very much. The case was never about whether the United Kingdom could reverse the referendum decision to leave the EU but rather about it was concerned with how the process should begin. It was perhaps also about answering the question as to in whose hands the power of constitutional change lies.

To obtain the necessary approval from Parliament the Government must now place a bill before both Houses of Parliament to authorise them to give notice under Article 50. This process has already begun and the Government has now issued a draft Act of Parliament authorising the Government to trigger Article 50. The bill, which is only 137 words long, will be subject to scrutiny by both Houses of Parliament and there will several debates before voting takes place.

If the bill is not passed then the Government will have no authority to give notice under Article 50. Although the failure of the bill to pass through Parliament is a theoretical possibility it is most unlikely that this will happen.

Opponents to the Government's plans may look to amend the bill – the Labour Party has already tabled seven amendments, most of which relate to ensuring Government accountability in the negotiation process – but most commentators expect the Bill to pass into law quite quickly and without substantial amendment. Any amendments that are proposed are constrained by the fact that- Members of Parliament share a common goal of wishing to ensure that the UK achieves the best possible Brexit deal. Tying the Government's hands too tight will not assist in- securing this objective.

Thus even though not much may change in the short term, the Supreme Court's decision could have longer term implications. The Government has been served with a powerful reminder of Parliament's sovereign power and it will need to pay heed to this during the negotiation process by seeking the approval of Parliament to the Brexit terms once they have been negotiated.

Whilst this may have the effect of lengthening the process it will also enable the views of Parliament to be heard and may thus influence the terms that are finally agreed.

Timeline

The Government has repeatedly stated that the Article 50 notice will be given by the end of March 2017, and that the Supreme Court ruling will not change the Brexit timeline. Whether that timeline is met remains to be seen. The Government is currently looking to complete the House of Commons approval process by mid-February and, following approval by the House of Lords, formally pass the bill as an Act of Parliament in mid-March.

Should the Government face obstacles in approving the bill, it could result in the service of the Article 50 notice being delayed meaning that formal withdrawal negotiations with the EU will have to be postponed. The UK's final exit from the EU, currently planned for the spring of 2019, may as a consequence also be delayed.

Consequences for businesses and commercial parties

Any delay in triggering the Brexit procedure will undoubtedly extend the current period of uncertainty for businesses and commercial parties both inside and outside the United Kingdom. Apart from the pressure on sterling, the most significant effect of the United Kingdom's decision to leave the EU has been the postponement of long term investment decisions. Uncertainty looks set to continue but the Government has been forced to provide more information about its Brexit plans and the opportunity has now been given for those plans to be debated in Parliament. This in turn may provide businesses and commercial parties with much greater clarity as to the form which Brexit will take and so enable them to reassess and adjust their post-Brexit contingency plans.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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