United States: BREXIT: Finding The Least Worst Option?

"No deal" safely averted?

On March 28, 2019, at least we can be reasonably confident that the UK does not face a "no deal" Brexit at 11.00pm on March 29th. Reasonably confident, but not absolutely certain. Members of the European Reform Group (ERG) within the Conservative party have raised a legal challenge to the Article 50 extension agreed with the European Council on March 21st.

That challenge has two elements:

  • that the government did not have authority to agree to the particular extension (May 22nd if the Withdrawal Agreement (WA) is approved by the House of Commons before 11.00pm on March 29th or 11.00pm on April 12th if the WA is not approved); and
  • that the legislative instrument produced to amend the definition of "exit day" in the EU (Withdrawal) Act 2018 is ultra vires because it does not replace March 29th with a single date, but instead provides for the two possible dates approved by the European Council.

The government has rejected the challenge, arguing that the European Council decision has legal force and that the UK's exit date was changed as a matter of international law when that decision came into effect on March 22nd. The legislative instrument tabled on March 25th is required only (in the government's view) to remove "confusion" that would flow from a clash between international law and UK domestic law. In any event, on March 27th the House of Commons voted in favor of the change of definition by 441 to 105 votes. It now remains for the House of Lords to vote in favor of the amendment. However, that vote was not listed on the House of Lords order paper for March 28th, and no business was scheduled for the House of Lords on March 29th. Consequently, legal certainty can be achieved only by fitting an emergency vote into the House of Lords schedule before the March 29th deadline, or by taking a relaxed view that any vote carried next week would have retrospective effect. Judged by relative order of magnitude, this is a minor problem.

It is striking, though, that 105 MPs voted, in effect, for a "no deal" Brexit.

No, No, No, No, No, No, No, No

The "indicative votes" procedure invented for March 27th saw MPs presented with eight proposals, ranging from revocation of the UK's Article 50 notice, through customs unions and continued regulatory alignment with the EU, to a full "no deal" Brexit. None of the proposals gained a majority. The proposal for a "permanent and comprehensive UK-wide customs union with the EU" came closest to success, losing by only eight votes. Next came the proposal for a confirmatory public vote on any Brexit deal, which lost by 27 votes.

Advocates of the "indicative vote" procedure insist that it might yet deliver a viable outcome. In the first major vote of March 27th, the government failed in its attempt to block the second day of indicative voting, scheduled for April 1st. In that stage of the procedure, MPs will be faced with fewer proposals and will be asked to place them in order of preference. The residual hope remains that this might lead to an approach that could command even a bare majority.

However, the "indicative vote" procedure on March 27th also saw 160 MPs vote in favor of a "no deal" Brexit on April 12th. It is clear that there remains a core of MPs committed to what many refer to as a "hard" Brexit, but which its advocates prefer to call a "clean" Brexit.

When is a resignation not a resignation?

The "indicative votes" procedure would be unnecessary if the government could secure a vote in favor of the WA. To that end, Prime Minister Theresa May indicated that she would be willing to step down if MPs were to vote in favor of the WA. However, refusal by the Democratic Unionist Party (DUP) to alter its position, together with the significant residual vote in favor of a "no deal" Brexit leaves the government uncertain of its ability to carry a third vote on the WA.

The government must also overcome the Speaker's ruling that a third vote on the WA would be permitted only if the motion could be shown to be substantially different from the one that was defeated on March 13th. While inconvenient for the government, it is arguable that the WA could be brought back for a third vote by moving directly to the primary legislation required to implement the agreement. If that route were followed, then the 2nd reading debate on the primary legislation would, in effect, be the "meaningful vote" on the WA itself. However, while that procedural tactic might bring the WA to a further vote, it would certainly not guarantee success.

While it remains possible that the WA could be brought back for a third vote, the precise timing of the Prime Minister's resignation remains uncertain. Indeed, given that the offer to resign was made conditional on approval of the WA, it is far from clear whether the Prime Minister will seek to remain in office, or will be brought down by some other means.

Business. As usual?

From a business perspective, the immediate risk of a "no deal" Brexit on March 29th has (in practice at least) been averted. However, unless the WA somehow secures approval, there remains a clear risk of a "no deal" outcome on April 12th.

If the WA were to be approved, then the UK's "exit day" would be May 22nd. That would mark the beginning of a transitional period up to December 31, 2020, during which business would be able to continue on much the same basis as before Brexit.

The principal purpose of the transitional period would be to allow time to negotiate the UK's future economic and political relationship with the EU. If no agreement is in place by the end of the transitional period, then the Northern Ireland "backstop" would come into operation, creating a single customs territory covering the EU and the UK. If, by contrast, an agreement could be reached by December 31, 2020 then that would take effect instead of the "backstop".

Uncertainty over the fate of the WA – and over the government's negotiating position – does not end with a third vote on the WA. Having conceded that she will step down at some point, it is highly likely that the Conservative party will move rapidly into a leadership contest, whether overtly or through potential candidates continuing to brief and jostle for position. There is a significant possibility that any replacement leader of the Conservative party would be identified with the party's more strongly pro-Brexit elements. Consequently, even if the WA were to be approved, the possibility of an eventual "hard" Brexit would remain, and might even be increased.

Throughout the Brexit debates, the Scottish National Party (SNP) has held to its view that Scotland voted to remain a member of the EU, and that Brexit would justify a further referendum on Scottish independence. If the outcome of a Conservative party leadership contest were to be a marked shift towards a "hard" Brexit, then the prospect of such a referendum and revocation of the Acts of Union 1707 (or at least of Scotland's 1706 Act) might loom larger.

Back to the public?

The "indicative votes" procedure has not (yet at least) produced a majority in favor of any form of a further referendum. The government has also rejected (in advance of the April 1st debate) the online petition with more than 5.5 million signatures calling for the revocation of the UK's Article 50 notice. For now, at least, the shape and outcome of Brexit remains a matter for the Westminster Parliament.

However, continuing political paralysis has fuelled demands for a general election. If the current Parliament cannot chart a viable course, then a general election might be considered the only way to break the deadlock. While the Conservative party would no doubt wish to hold Theresa May in office until a replacement leader is confirmed, a further vote of no confidence in the government, potentially triggering an early election on the terms set out in the Fixed Term Parliaments Act 2011, cannot be ruled out.

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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