Monday, 25 March 2019

Accountability and Independence of the Governors of National Banks: Any role for the Court of Justice of the European Union?

Dr Marios Costa, Senior Lecturer, City, University of London

The European Union (EU) has long been criticised for administrative inadequacies and for structural deficiencies. There have been a number of reports and commentaries highlighting that the EU suffers from political irregularities. Similarly, alleged corruption, maladministration and money laundering at the national level of governance, as shown below, is of equal concern for the citizenry and the Union alike.

On 26 February 2019, the Court of Justice (Grand Chamber) gave a significant judgment on two joint cases brought by the suspended Governor of the Central Bank of Latvia, Ilmārs Rimšēvičs, and the European Central Bank (ECB) against the Republic of Latvia. Mr Rimšēvičs and the ECB argued that the Latvian Anti-corruption Office has unlawfully prohibited him from carrying out his duties as the Governor of the Central Bank which included participation in the Governing Council of the ECB. Rather unexpectedly, the Court of Justice annulled, for the very first time in the history of EU law, the national act from the Anti-corruption Office which restricted Mr Rimšēvičs from exercising his duties.

This judgment raises broader constitutional ramifications. It is therefore necessary to examine whether the Court has now gone beyond the jurisdiction set out in the Treaty framework. With all due respect, the ruling comes as a big surprise. This commentary examines the appropriateness of the recent judgment and concludes that the Court of Justice has stretched its powers of judicial review unprecedentedly. Yet, it can be set at the outset that the Court’s ruling is exceptional and closely related to the EU’s monetary regime. It remains to be seen whether this rather extraordinary case will mark the beginning of a new judicial trend with extended jurisdiction well beyond the EU legal order. 

Facts of the Case

Mr Rimšēvičs, the Governor of the National Bank of Latvia, was accused of soliciting bribery in the form of a free leisure trip as well as accepting the amount of EUR 750 000 in exchange of exercising influence in favour of a private Latvian Bank. The Latvian Anti-Fraud Office initiated investigations into the serious bribery allegations which resulted to the imprisonment of Mr Rimšēvičs. On 19 October 2018, he was released following a prohibition on performing decision-making, control and monitoring duties within the Central Bank of Latvia.

Mr Rimšēvičs and the ECB challenged the legality of the decision to relieve him from the office before the Luxembourg Court. The Court annulled the decision of the Latvian Anti-corruption Office to the extent that it has prevented the Governor of the Central Bank to exercise his EU (and national) duties.

EU Legal Framework on the Governors’ Accountability

EU law is not silent on the issue of the Governors’ accountability. Article 14(2) of the Statute of the European System of Central Banks (ESCB) and of the ECB, entitled ‘National central banks’, provides:

A Governor may be relieved from office only if he no longer fulfils the conditions required for the performance of his duties or if he has been guilty of serious misconduct. A decision to this effect may be referred to the Court of Justice by the Governor concerned or the Governing Council on grounds of infringement of these Treaties or of any rule of law relating to their application. Such proceedings shall be instituted within two months of the publication of the decision or of its notification to the plaintiff or, in the absence thereof, of the day on which it came to the knowledge of the latter, as the case may be.

Additionally, Article 130 TFEU provides:

When exercising the powers and carrying out the tasks and duties conferred upon them by the Treaties and the Statute of the ESCB and of the ECB, neither the European Central Bank, nor a national central bank, nor any member of their decision-making bodies shall seek or take instructions from Union institutions, bodies, offices or agencies, from any government of a Member State or from any other body. The Union institutions, bodies, offices or agencies and the governments of the Member States undertake to respect this principle and not to seek to influence the members of the decision-making bodies of the European Central Bank or of the national central banks in the performance of their tasks.

Judicial Review of EU Law acts

The Treaty on the Functioning of the European Union (TFEU) provides for two different methods of judicial control designed to ensure the legal exercise of power by EU institutions, offices, bodies and agencies. The relevant provisions are Articles 263, concerning direct actions for annulment, and 267, concerning indirect review via the preliminary reference procedure from the national courts. Overall, the EU system of judicial review reflects the fundamental principles of subsidiarity provided in Articles 4 and 5 TEU. Consequently, the annulment of a national act falls within the exclusive competence of the Member States and the CJEU has jurisdiction to annul a national measure only where there is an explicit power to do so in the Treaties. Rimšēvičs is therefore a unique case as it is relates to the annulment of a national measure by which the Governor of the national bank of Latvia was “relieved from office”. It becomes pressing to examine the appropriateness of the Court’s ruling and to assess whether EU law explicitly empowers the CJEU to annul the national measure adopted against the central banker.

The findings of the Court

The CJEU ruled that it has jurisdiction to annul a national measure so long as it suspends the Governor of the national bank. In doing so, the Court interpreted that “both the literal and the systemic and teleological interpretations of Article 14(2) of the statute entail the action provided for in that Article being classified as an action for annulment” (para 66). The Court went even further to explain that the statute of the ESCB derogated from the usual distribution of judicial review powers between the national court and the EU courts. The justification, according to the Court, was that the “ESCB represents a novel legal construct in EU law which brings together national institutions, namely the national central banks, and an EU institution, namely the ECB, and causes them to cooperate closely with each other, and within which a different structure and a less marked distinction between the EU legal order and national legal orders prevails.” (Para 69).  

Comment and Analysis

In Rimšēvičs the Court clarified the abovementioned provisions as regards independence and accountability of the Governors of the National Banks. Surely, any failure by an individual Governor to meet the standards described in Article 14 (2) ESCB, as set out above, can lead to a significant damage of the public image of the ECB and consequently cause a significant damage to financial stability in the EU. One can understand that the concerns and commitment to high standards exercised by the Latvian Anti-corruption Office are perfectly legitimate.

Yet the Latvian authorities were asked in a number of instances by the Court to support their serious allegations with evidence. The failure to produce any evidence supporting the suspension of Mr Rimšēvičs from office is remarkable. The lack of evidence against the serious background of alleged bribery and money laundering is related, closely, to the fact that individual Governors need to operate impartially and independently, without influence and pressure from external sources, whether national governments or private individuals. The Court protected the independence of the ECB and its Governing Council and emphasised, rightly, that under EU law any form of pressure cannot be accepted. Overall, the Court highlighted that independence should be protected under any circumstances in order for the Governor and the ECB to adopt and implement their decisions based upon technical and up-to-date scientific expertise. They adopt critical monetary related decisions that will have little or no use if they are subjected and influenced to any pressure.

The Governors must meet the highest possible standards and should perform their duties without any external influence due to their high ranking. In particular, as already explained above, Article 14 (2) ESCB requires Governors to be free from any external influence. This point is vital if the ECB is to stay independent of Member States or individuals. But let’s assume for a while that there was enough evidence that Mr Rimšēvičs obtained pecuniary advantages from the Latvian private bank. Assume further that the Latvian Anti-corruption Office concluded that the Governor needs to be held accountable for infringing his duty to behave with integrity and avoid maladministration. Is the national procedure that relieved him from the office in accordance with EU requirements to respect the rule of law? Or, does it represent an abusive behaviour exercised by the Latvian executive authorities? Relieving the national Governor whose independence is protected under EU law without evidence and without given the opportunity to see and respond to concrete evidence that supports the serious allegations constitutes a manifest violation of the notion of independence which is clearly safeguarded by the ESCB statute. Surely this is not something that can be accepted or justified. Anything that compromises the independence of the national central bankers is illegal under EU law.

Pursuant to the EU Treaties, clearly the Court of Justice has jurisdiction to decide on cases related to the accountability and independence of the ECB. Yet, the interpretation of the Court to extend its power to annul a national decision is surprising, at least. Taking into account the absence of any evidence and also the factual background of the case, one can realise that a number of irregularities by the Latvian authorities took place. The Court has made the right decision in clarifying the set EU law requirements that shield the ECB and the ESCB from any pressure. Additionally, and perhaps most importantly, the judgment provides us with clear boundaries on how to safeguard the independence of the national Governors. Independence has been a key factor in deciding Rimšēvičs, a factor which came with the cost to strike down a national decision by the CJEU in order to safeguard it.

Barnard & Peers: chapter 10, chapter 19
Photo credit: New Europe

Thursday, 21 March 2019

Brexit and Extending EU Membership: The Legal Issues

Professor Steve Peers, University of Essex*

*This blog post was updated following the approval of the official decision extending EU membership

As the Brexit day deadline of March 29th loomed without approval of the proposed withdrawal agreement, the European Council meeting agreed conclusions offering an extension of UK membership of the EU on March 21st. The formal decision on extension was then adopted on March 22nd, after the UK agreed to it. What are the legal issues concerning the extension of EU membership?

EU law issues

The extension decision states that:

In the event that the Withdrawal Agreement is approved by the House of Commons by 29 March 2019 at the latest, the period provided for in Article 50(3) TEU is extended until 22 May 2019.

In the event that the Withdrawal Agreement is not approved by the House of Commons by 29 March 2019 at the latest, the period provided for in Article 50(3) TEU is extended until 12 April 2019. In that event, the United Kingdom will indicate a way forward before 12 April 2019, for consideration by the European Council

If the House of Commons approves the withdrawal agreement next week, there's an extension to 22 May to sort out the details (notably the Act of Parliament necessary to implement the withdrawal agreement). If the agreement is not approved next week, there's a shorter extension to 12 April, and the UK will indicate what it sees as the way forward before this date.

The starting point for legal discussion of this issue is Article 50(3) TEU, which provides, as regards a Member State withdrawing from the EU:

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 referred to in paragraph 2, unless the European Council, in agreement with the Member State concerned, unanimously decides to extend this period. (emphasis added)

Unanimity can still apply despite abstentions (Article 235 TFEU), and the European Council can, if necessary, act by written procedure (see its Rules of Procedure). (In the event, it seems that neither was necessary). It logically follows that the Member State concerned has to agree to the text of the relevant European Council decision, in particular as regards the length of extension - which is what happened in practice. There’s no formal role for the European Parliament or national parliaments, but it's possible that their expressions of opinion had some influence. Article 50(3) is silent on whether or not there can be multiple extensions.

During the extension, the UK has the same rights and responsibilities as it would ordinarily have as a Member State otherwise, including the continuing right to revoke its notification of intention to leave the EU unilaterally (see the CJEU’s Wightman judgment; the general point is confirmed by preamble clause 10). This follows on from two earlier CJEU rulings (discussed here and here), in which the Court confirmed that the UK remained a fully-fledged Member State throughout the main two-year period after notifying its intention to leave the EU. In other words: Membership means Membership. (This rule doesn’t prevent political conditions being attached to the EU’s decision to agree to an extension though, such as those in the decision). Those who claimed that the EU would demand vast sums or abolition of opt outs as a condition of extension of membership were incorrect. 

This general rule raises a specific issue relevant to extension of the UK’s EU membership. Would the UK have to hold European Parliament elections, set for May 23-26? (The date is based on the basic law on EP elections, since amended in 2018 on other points).  The answer would obviously be no, if the extension did not go past May 22. Arguably the answer would still be no if the extension went no further than June 30 – as requested by the Prime Minister – because the new European Parliament would only take office after that point. However, this is disputed (see the recent EU room document on extension, Wednesday’s Commission paper, and the contrasting views of Professors Barnard and Weatherill, Professor Spaventa and the UK’s CJEU Advocate-General Eleanor Sharpston). Ultimately the European Council took the view that membership after May 22 does require holding EP elections, and noted that April 12 would be the last date on which the UK could decide to hold them, explaining why these dates appear in the decision (see clause 10 in the preamble).

In the event of extension after June 30, the UK would certainly be in breach of its obligation to hold EP elections, unless a special exception was granted to it. This is because the Treaties refer to election for five-year terms, and a Council decision (see link above) sets out the election dates. Both the Treaties and the basic law on EP elections need unanimous national ratification to amend them. Article 50 does not refer to granting exceptions from EU law, except as regards the departing Member State’s absence from discussions concerning its departure. While new Member States do have temporary exceptions from the obligation to elect MEPs, they are covered by a different legal framework: Article 49 TEU, which deals with accession, expressly allows for “adjustments” to the EU Treaties. As noted above, tonight’s conclusions make no specific mention of the elections issue (it appeared in an earlier draft, but was dropped).

Would the EP (and the new Commission which the EP has a big role in appointing) be acting illegally, if the UK had not elected MEPs in time? The EU courts have answered a similar question before, as regards the Santer Commission which resigned irregularly and was not immediately replaced. In the British Airways judgment, it was held that the Commission’s actions adopted during this period were not illegal.  There was also a brief period when the Commission’s status was uncertain, as the Lisbon Treaty came into force a month after a new Commission (with fewer Commissioners) was due to be appointed in 2009. In practice, the new Commission was appointed after a short delay, with the old Commissioners spending a short extra period in their jobs.

If the UK held EP elections in (say) September, there could be a delay in appointing a new Commission or adopting new EU legislation until then. (A new EP takes a while to have a big role in adopting legislation anyway, since a lot of proposed legislation is wrapped up before the outgoing EP dissolves for elections).  There might, however, be some complication as regards the number of MEPs per Member State (see the relevant European Council decision).

UK legal issues

In order to change ‘exit day’ as far as Westminster legislation is concerned, it’s necessary to adopt secondary legislation – a statutory instrument approved by Parliament – under s 20 of the EU Withdrawal Act. It’s been suggested that a Statutory Instrument could be tabled next week. (The UK doesn’t need to adopt a new law to hold EP elections, since the repeal of the legislation concerned has not been commenced yet). In the event that an extension decision is adopted, but the definition of ‘exit day’ has not changed in the UK, it’s been argued that this does not mean that the UK leaves the EU with no deal, but rather that it stays in the EU with no domestic legal framework to give effect to EU law (although it might be possible to fix this quickly). (Updated March 24th: see also Professor Mark Elliott's post on this issue, and the reply of Brexit minister Lord Callanan).

Apart from the legal issues directly related to the extension, next week is likely to see a number of crucial votes relating to the UK’s imminent and future relationship with the EU. Time will tell what indirect effect they may have on the length and circumstances of the UK’s extended EU membership – and in particular whether the UK government and parliament is able to agree upon a way forward in the event that the withdrawal agreement is not approved.

Barnard & Peers: chapter 27
Photo credit:

Sunday, 17 March 2019

Of extension of UK membership and basic democratic principles: why the UK will need to hold EP elections if its membership of the EU is prolonged beyond the 22nd of May

Professor Eleanor Spaventa, Bocconi University

To say that the political situation is the UK regarding Brexit negotiations is volatile is an underestimation of reality; Mrs May’s tactic of running down the clock might or might not be successful, but it also appears to have backfired, since now there is an unavoidable need to seek an extension to Article 50 TEU. Should the Withdrawal Agreement finally be accepted by the British Parliament this week, the UK will need an extension to the exit day in order to pass all the legislative instruments needed before withdrawal from the EU.

Should the Withdrawal Agreement be rejected, then the UK will need an extension to either prepare for a non-agreed exit, or to decide where its future lies. But once again the political turmoil, and the options available, are constrained by the constitutional framework of the EU. In particular, the issue is whether the UK would have to hold European Parliament elections if its membership of the EU is to continue beyond the 23rd of May. The problem of course is that holding EP elections is symbolically and politically problematic for the Government, and yet, even opting for a shorter extension, the UK might need more time to pass all the required legislation.

The European Commission’s view seems to be that the UK will not be able to seek an extension beyond 23rd May unless it holds EP elections. The Commission’s position is based on a very simple and yet, in the writer’s opinion unchallengeable premise: EU citizens have a Treaty right to vote for the European Parliament and, as long as the UK is a member of the EU, that right is bestowed on its citizens and on EU citizens living in the UK.

Yet, illustrious EU lawyers have argued in this blog and elsewhere that an extension could stretch to the end of June, without compromising the legitimacy of the newly elected European Parliament. The same point was made in a legal opinion to the European Parliament. Yet, to focus simply on the legitimacy of the European Parliament misses the point: democracy is not a mere exercise in institutional balance – if it were so there would be nothing preventing any Member State or the EU to prolong the term of their Parliaments beyond the fixed mandatory term. After all, if one Member State were to be allowed not to hold European Parliament elections because of its own political problems, why not another Member State for its own political problems. So at first sight, the idea that the UK could be a member of the EU and withhold the right of its citizens, and of EU citizens resident in its territory, to vote for the European Parliament elections seems to be an anathema for a polity which is based on the rule of law. And the legal impossibility of such a scenario is backed not only by the Treaties, and the Charter, but also by the obligations bestowed on the UK and all of the other Member States by the European Convention on Human Rights.

The law on EP elections as it stands

Article 14(3) of the TEU provides that members of the European Parliament shall be elected for a term of five years by direct universal suffrage, whereas Article 20 (2)(b) TFEU provides that every citizen of the EU shall have a right to vote and stand for elections in the State where they reside under the same conditions as nationals. The Court of Justice, in its ruling in Delvigne (discussed here), clarified that the franchise for European Parliament elections is a matter falling within the scope of EU law, even in relation to own citizens. For this reason, the Charter of Fundamental Rights applies; the Court found that the deprivation of the right to vote of a own citizen is a limitation of the right conferred in Article 39(2) Charter; as such it must be justified under the conditions provided for in Article 52 Charter. The limitation to the right to vote must therefore be provided by law (which in the case of the UK would require a new Act since at present the UK simply has not made any provision for the EP elections), must be justified in relation to a public interest recognized by the Union, be necessary for the attainment of that interest and be proportionate. The disenfranchisement of an entire nation would fail to meet these requirements: it would be difficult to identify a public interest pursued by such disenfranchisement (unless one believes that protecting the Conservative Party from self-implosion can be qualified as a public interest), nor would disenfranchisement be proportionate or necessary to ensure withdrawal.

Furthermore, rights conferred by the Charter cannot fall below those provided for in the ECHR: the European Court of Human Rights has clarified in Matthews that Article 3 of Protocol 1 of the ECHR, the right to free elections, applies in relation to the European Parliament. Member States are then obliged, under the Convention, to guarantee the franchise for it, as well as respect basic democratic principles. For this reason, the UK was in violation of its ECHR obligations for disenfranchising citizens in Gibraltar who did not (at the time) have a right to vote for the European Parliament.

If the UK seeks an extension it will remain a Member State of the EU, and as such bound by the Treaties and the Charter. The UK is also bound by the ECHR in this matter, both as a Member of the EU and as a Member of the Council of Europe. It therefore seems that it would not be able, under both EU and ECHR law, to disenfranchise its own citizens.

Barnard and Weatherill, as well as AG Sharpston, suggest that the democratic issue could be overcome by prolonging the mandate of the current British MEPs – yet, such a suggestion is not only contrary to the Treaty but also inimical to the very basics of democratic principles (it is dictators that usually resort to these systems). Their suggestion that, since those MEPs have been democratically elected in 2014, they can continue to represent British citizens past the life of this European Parliament, without seeking a new mandate is far from being persuasive, not only because there is no such possibility in the Treaties, but also given that the passive electorate has changed in the past five years and that prolonging MEPs would entail the disefranchisement of those who have come to voting age in the past 5 years. And even if it were legally possible under EU law to provide such a transitory arrangement, through a derogation from the Treaty provisions as suggested by AG Sharpston, such a transitional arrangement would still breach Article 3 of Protocol 1 of the ECHR.

In as much as we might want to avoid Brexit chaos, the end cannot justify the means in this case; disenfranchisement is illegal and infringes the founding principles upon which the EU is founded (democracy, rule of law and protection of fundamental rights). Furthermore, following the ruling in Wightman (discussed here), the UK can at any point withdraw its notice under Article 50. As clearly stated by the Court, up until that point in which the Withdrawal agreement enters into force or the UK has exited by virtue of the passing of time, the UK is and remains a full member of the EU (also during the extension) – and its citizens therefore are subject to all its rules and derive all the rights stemming from the Treaties.

To allow the UK to remain a member of the EU without participating to the European Parliament elections would not only be illegal, it would be very dangerous (not least in these political times): Brexit is bad enough as it is – it cannot be allowed to destroy the very values upon which the EU is founded and which it already struggles to protect.

Barnard & Peers: chapter 3, chapter 27
Photo credit: Evening Standard

Thursday, 14 March 2019

Extension and elections: We need to talk about Article 50

Professors Catherine Barnard and Steve Weatherill, Universities of Cambridge and Oxford respectively

Its 261-word text is now infamous. It is brief, at times laconic, and leaves many things unsaid or uncertain. So, what does - and doesn’t - Article 50 permit?

Let’s start with the easy stuff.  Article 50(3) says that the two-year period can be extended by the European Council acting by unanimity (all 27 EU heads of state or government do not have to agree, it means only that none must disagree; abstentions do not block unanimity). Subject to the intended purpose and length, it is thought that the EU would say yes to an extension. Importantly, the UK would still be a Member State during this extended period.

An extension might give the UK more time to convert the Withdrawal Agreement into a statute, the Withdrawal Agreement Bill (WAB). This assumes, of course, that the Commons has approved Theresa May’s ‘deal’, comprising the Withdrawal Agreement and the Political Declaration on the future relationship. So far it has been rejected twice (MV1 and 2); it may still get through on its third or fourth iteration.

If Parliament rejected Mrs May’s deal, an extension would provide time to prepare the primary legislation and the remaining 600 or so Statutory Instruments needed on the statute book for a no-deal Brexit. It might too offer space for a General Election and/or referendum, although the political obstacles are high. The EU may be more likely to offer an extension in the latter scenario.

There are several alternative scenarios for how long an extension may last:

- To the end of May, just before the European Parliament elections, to allow enough time to get the WAB through
- To the end of June, just before the new European Parliament sits, again to get the key legislation through (this is the basis of the government’s motion of 14 March 2019), or to the start of September when the European Parliament starts to make some key decisions
- To the end of the year, to ensure that the legislation is passed in the UK
- To the end of 2020, which is the end of the EU’s current budgetary period (and which also coincides with the planned end date of the transition period under the Withdrawal Agreement)
- To the end of 2022, by when the shape of a trade deal for the future might have become clear, so the UK could move from existing membership to the new arrangements, possibly via a further period of transition. This would avoid the need for the Northern Ireland backstop since the UK would remain a Member State, although its fate after 2022 would depend on the terms of the deal struck (if any). The UK would remain a full member of the EU institutions and so avoid the ‘vassal state’ status envisaged by the arrangements for transition if the Withdrawal Agreement comes into force.

If a short extension is chosen, say three months, can Article 50(3) be used to extend the Article 50 period again, and again? We believe the answer is yes, for the simple reason that Article 50 does not prohibit it. Nor did the Court of Justice, in its Wightman decision, hint at any objection to serial extensions.

The UK would need to ask the European Council for an extension, and the member states would need to act unanimously to agree it (again abstentions do not block unanimity: Art 235 TFEU). Most likely, in order to provide a sense of political authority, this could be agreed at the next European Council summit on 21 March. Can the European Council lay down conditions on the extension? Article 50 is silent on the point. Our view is that Article 50 should be read flexibly to allow for the possibility to include particular ad hoc adjustments needed to ensure that extension is feasible. This would leave space for the political process, which seems likely to require some commitments by the UK about what it wants to achieve during the period of extension.

In domestic law, Section 20(1) of the EU(Withdrawal) Act 2018 provides that exit day is 29 March 2019. Section 20(4) allows that date to be changed by regulations. As the government’s explanatory notes acknowledge: “A change in the date is possible under Article 50(3) of the TEU. Regulations made under subsection (4) would be subject to the affirmative procedure.” Using this procedure will not be straightforward for Westminster politicians. However, if/when MPs support a motion to extend the Article 50 period, it would be difficult for Parliament then not to provide the means, most obviously by approving an order changing the designated exit day.

Elections for the European Parliament will take place at the end of May. A European Council Decision (2018/937) recognises the possibility that the UK will still be a Member State and makes provision for British MEPs accordingly. So what would happen if the UK is still a Member State because Article 50 has been extended? UK nationals, and EU nationals living here who have a Treaty-based right to vote in EP elections, should surely still be represented, not least because the EU is based on the rule of law, which includes respect for democracy. (See also the summary of the European Parliament’s legal service opinion, in the Annex).

The terms of an extension could include a commitment by the UK to hold elections in May. While this looks possible on paper, the politics at Westminster are potentially toxic. UK legislation would be needed for elections to be held: Section 4 of the European Parliamentary Elections Act 2002 - due to be repealed by Schedule 9 of the EU(Withdrawal) Act 2018, but that part of Schedule 9 is not yet in force - would require an Order, approved by both Houses to appoint the day for those elections. There may need to be other orders, such as designation of returning officers etc. The UK will have to act quickly – by some time in April – since other Member States which have received the UK seat allocations will need to adapt their processes.

Deferring the elections until the way ahead is clearer would suit the UK, but the EU needs a properly constituted European Parliament in place to operate on a secure constitutional basis. Outright refusal by the UK to hold elections would not mean that the Parliament’s actions were robbed of validity, for that would be to grant a state acting in breach of the Treaties a power to paralyse the workings of the EU.

Could the EU itself agree to extend the UK’s status as a Member State without the need to hold EP elections here in May? The Treaties direct that the Parliament’s members ‘shall be elected for a term of five years by direct universal suffrage in a free and secret ballot’ (Art 14(3) TEU; also Art 223 TFEU).  Could the European Council could agree to British MEPs continuing to sit without the need for election in May?  In our view, this would not contradict Article 14(3) TEU: those MEPs have, after all, been elected for a term of five years by direct universal suffrage in a free and secret ballot – just not in May 2019, but rather in 2014.

This, we suggest, could be agreed within the context of the negotiations. Article 50 has, after all, already been read flexibly and creatively to deal with matters not strictly solely concerned with the issues connected with withdrawal – witness the Irish backstop, which is clearly directed at the future post-withdrawal.

In similarly creative vein, an extension of the mandate of the existing British MEPs could be agreed in the context of negotiating the extension which is explicitly foreseen by Article 50(3). This would avoid the need for elections even where the UK, as a result of an agreed extension to Article 50, remains a member of the EU after June 2019. This idea would certainly increase the available political options. At present, the EU does not accept this premise but others are beginning to suggest something along similar lines – including the British Advocate General Eleanor Sharpston.

It remains possible for the UK to unilaterally withdraw (or revoke) the notification made pursuant to Article 50. An Act of Parliament would repeal the EU (Notification of Withdrawal) Act 2017, and the EU must be duly notified. The Wightman decision of the ECJ makes clear that the UK can do this independently and unilaterally, without the agreement of the EU, provided the notification is unequivocal and unconditional. Mrs May has consistently said she will not do it. But the law allows it, and it is still available as a parliamentary option.

Barnard & Peers: chapter 27
Photo credit: WWF EU

Summary of European Parliament legal service opinion on Brexit and EP elections
(on file with blog editor Steve Peers)

In September 2017 (before the European Council adopted its decision on allocation of EP seats) the EP legal service gave its opinion on two questions: (a) could the European Council adopt a decision on allocation of EP seats not including the UK, if the UK was still a Member State when the decision was adopted? and (b) if the UK has not left before the EP elections, can the EP meet without the UK seats?

On point (a), the legal service said that the European Council could allocate seats to 27 Member States only, given that the UK was due to leave on 29 March 2019. However, it could also take account of the scenario if the UK was still a Member State, due to extension of membership, for instance. In practice, this is what the European Council did, on a proposal from the European Parliament (which also needed to consent to the decision).

On point (b), the legal service says that as long as the UK is a member of the EU when the elections to the European Parliament are held, the UK must hold EP elections. However, in the event that the UK failed to meet its obligations, the EP could still meet validly.

Tuesday, 12 March 2019

The second vote against the withdrawal agreement: what next?

Professor Steve Peers, University of Essex


The second attempt to approve the withdrawal agreement has been defeated again in the House of Commons. What were the main legal issues in this second attempt – and what is the way forward, if any?


MPs were asked to vote on five documents:

a)      The Withdrawal Agreement, as agreed in November, which has not been changed (see my overview of the agreement here)
b)      The non-binding Political Declaration on the future relationship with the EU, which has not been changed (see my detailed annotation of the declaration here)
c)      A new Instrument relating to the Withdrawal Agreement, which claims to be legally binding; it is based on a previous exchange of letters
d)      A new, non-binding Joint Statement supplementing the Political Declaration; and
e)      A unilateral declaration by the UK on the issues.

Assessing the new texts in ascending order of importance, the Joint Statement on the Political Declaration is mainly about the timing of future talks, an issue which was addressed in the Political Declaration already in some detail. It is useful that the Commission commits to proposing provisional application of future post-Brexit EU/UK treaties, to speed up their application pending national ratification if needed, but not really surprising as this is common EU practice.

There’s a potentially important point on the future UK legal framework:

5. Fourth, and in the context of open and fair competition, the Union notes the United Kingdom’s intention to ensure that its social and employment standards and its environmental standards do not regress from those in place at the end of the transition period, and to provide its Parliament the opportunity to consider future changes in Union law in these areas.

However, a unilateral intention is not an international law guarantee, and the possibility to consider future EU legislation is a weak level of commitment. It also leaves out the impact of future CJEU case law. On this issue – and on the prospect of a future customs union – the UK government might obtain some Labour party support for the withdrawal agreement if it went further. However, going further on the prospect of a future customs union would split the Conservative party.

In any event, the political declaration, on top of its non-binding status, is vague or non-committal about a number of key aspects of the future relationship. It could be revised along the lines of my suggested amendments in my annotation, to provide for firmer and more precise commitments.

The unilateral UK government statement is not unusual as such, since there are often unilateral declarations attached to treaties. It might have some value as regards interpreting the treaty, as the Attorney-General’s advice points out. But in any event, on a close reading it does not assert very much substantively.

The first paragraph is an expression of intention about quickly starting talks on the future relationship. This matches the commitments in the political declaration on the future partnership. The second paragraph simply reiterates the withdrawal agreement text that the Northern Ireland backstop is not intended to be permanent. In this context, the third paragraph states the UK’s view that if the EU acts in bad faith when negotiating a replacement for the backstop, the UK could bring a claim under the dispute settlement provisions of the withdrawal agreement that could lead to the disapplication of the backstop. In any event, the UK will avoid a hard border and comply with its obligations under the Good Friday Agreement.

This claim simply reiterates the UK’s capacity to ask the arbitrators under the withdrawal agreement to rule on the alleged bad faith by the EU, and to exercise the remedy of disapplication of parts of the treaty that would potentially be allowed under the agreement in the event that it won its case (and assuming that the arbitrators did not find, upon request by the EU, that such a response by the UK was disproportionate). This claim does not alter the legal position however: the UK was always able to make such a claim under the withdrawal agreement, and the unilateral declaration does not mean that the arbitrators would be obliged to agree with the UK that bad faith existed or that the disapplication of the backstop was proportionate.

Finally, as for the joint instrument, it is legally binding based on the parties’ express agreement to this effect.  Indeed, as the text points out, under Article 31 of the Vienna Convention on the Law of Treaties the parties can agree additional texts supplementing a treaty, which are influential when interpreting that treaty. There’s a recent example of such a practice as regards the similar joint instrument agreed between the EU and Canada, which is already referred to by an Advocate-General of the CJEU.

But the issue is the substance of the joint instrument. Part A simply spells out some details of the mechanics of the negotiations aimed to replace the backstop. It adds, similarly to the UK unilateral declaration, that it would be in bad faith to act to attempt to keep the backstop applicable indefinitely. The dispute settlement process could be invoked in such a case, with the possibility of unilateral suspension of part of the agreement in the event of a breach.

Part B sets out safeguards for Northern Ireland.  The withdrawal agreement does not alter the Good Friday Agreement, including the role of the devolved Northern Ireland government. It clarifies that not all new EU measures will be added automatically to the Protocol. Finally, Part C notes that the future relationship between the UK and the EU need not have the same territorial scope as the withdrawal agreement.

The instrument therefore confirms the interpretation of certain potentially arguable aspects of the withdrawal agreement, in particular whether the claim of bad faith regarding negotiation of future treaties is justiciable before the agreement’s dispute settlement system. However, as the Attorney-General and others have noted (see Michael Dougan on this blog, and David Anderson and others), this does not amount to a unilateral right to exit the backstop by the UK, as some would wish to see. As a result, the vote was lost.

What next?

The Commons is due to vote on a no deal outcome and on a request for an extension. Some believe that an election or another referendum is possible (both would require an extension of UK membership; the latter would entail an extension of membership long enough to require UK participation in the European Parliament elections in late May, according to the Commission President). An election would not necessarily provide a decisive result.

It’s impossible to predict developments, but several key points should be emphasised. First of all, Remainers should keep in mind that a vote against the withdrawal agreement is not a ‘vote to stop Brexit’. Only revocation of the notification of withdrawal would do that. If there is insufficient support for revocation by the Prime Minister/Parliament or to hold another referendum, then Brexit will take place. Indeed, in that scenario a vote against the withdrawal agreement is actually a vote for no deal.

Secondly, a vote against no deal does not stop a no deal outcome happening. It’s politically relevant, but legally irrelevant. No deal is the default outcome. It will happen unless a withdrawal agreement is approved or the notification is revoked.

Thirdly, an extension delays a no deal outcome, but is not a resolution in itself. The same basic choices between no deal, a withdrawal agreement and revocation will still exist, but at a later date.

Barring a spectacular U-turn by the EU, in my view the most obvious landing zone for a package which the Commons might support is set out above: a future customs union with additional workers’ rights protections, set out slightly more precisely as the outcome in the political declaration. This is only achievable on the basis of Remainers accepting that Brexit is going to happen in the absence of support to overturn it, along with either the Conservative party splitting or a Labour government following an election. Whether any of these outcomes is plausible remains to be seen.

Barnard & Peers: chapter 27
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Briefing paper: Legal Analysis of the Strasbourg Deal of March 11 2019

Professor Michael Dougan, University of Liverpool, 12 March 2019

Summary: The legal form of the “Instrument relating to the Withdrawal Agreement” and / or the “Joint Statement supplementing the Political Declaration” is of little importance.  The real question is whether the new measures make any meaningful changes to the withdrawal package which was politically endorsed in November 2018 and now awaits approval in the Commons. 

The Instrument largely restates existing provisions of the Withdrawal Agreement without making any appreciable additions or changes.  In particular: the “backstop” is still capable of being activated and of remaining operational on a potentially indefinite basis, unless and until the EU and UK agree to its amendment, replacement or removal.  There is still no legally binding or enforceable time limit on the “backstop”.  There is still no mechanism by which the UK is entitled unilaterally to terminate the “backstop”.  The idea mooted in the Instrument, that the UK could suspend operation of the “backstop” in retaliation for the EU being found in breach of its duty to negotiate in good faith / use best endeavours, is not new.  In the real world, such a prospect should be considered almost entirely theoretical, if not altogether fanciful. 

The Joint Statement seeks to flesh out the Political Declaration, which is itself neither legally binding nor legally enforceable.  The new provisions are almost entirely about the more detailed process for launching and conducting the future EU-UK negotiations.  They offer no meaningful guarantees about the timescales or indeed outcomes of those negotiations.

As for the Prime Minister’s suggestion of a Unilateral Declaration reserving the UK’s ability to disapply the “backstop” in certain circumstances, apparently regardless of its obligations under the Withdrawal Agreement: it seems remarkable for the Government openly to threaten to breach an international treaty even before it has been approved and ratified.  In reality, one might again argue that such a threat rings rather hollow, particularly given the potential adverse implications for Northern Ireland.  But it still sits ill with the aspirations and reputation of “Global Britain” for the Government to adopt such a cavalier attitude towards respect for and compliance with international law.   


The Prime Minister’s statement in Strasbourg on 11 March 2019 focuses largely on relatively superficial issues about the legal form of the “Instrument relating to the Withdrawal Agreement” and / or the “Joint Statement supplementing the Political Declaration”; rather than on the more important question of their legal substance, i.e. their actual impact upon the terms of the existing withdrawal package and their capacity for effective legal enforcement by the parties. 

In reality, the legal form of these documents is not especially significant.  They can be described in various ways as “having legal force” or having “binding character” etc.  But that is of little consequence, if the substantive content of the documents adds / changes nothing to / of what exists already in the withdrawal package; of if they contain promises / obligations which are incapable of effective legal enforcement between the EU and the UK. 

The real question is therefore: do the Instrument and / or Joint Statement make any meaningful changes to the withdrawal package which was politically endorsed in November 2018 and now awaits approval from the House of Commons?

The Withdrawal Agreement: Potential Impact of the Instrument

Much of the text of the Instrument simply recalls / reiterates the existing provisions of the Withdrawal Agreement (as supplemented by subsequent documents such as the UK Government Commitments to Northern Ireland and its Integral Place in the United Kingdom (9 January 2019) and the Exchange of Letters between the UK Prime Minister and the Presidents of the European Council and the European Commission (14 January 2019)).  Only the following points are worth further comment.

In paragraphs A.5-A.11, the Parties set out more details about how to pursue their common aspiration to replace the existing “backstop” with alternative arrangements as soon as possible, e.g. as regards the establishment of indicative timescales, the exploration of technological solutions, periodic review of progress etc.  However, those more detailed provisions in no way alter the underlying obligations contained in the withdrawal package in general and the “backstop” provisions in particular.  Moreover, due to their essentially aspirational nature, those more detailed provisions are incapable of effective legal enforcement so as to alter the substantive terms of the existing “backstop”: a mere promise to try to negotiate so as successfully to deliver a vague, uncertain and contingent future outcome is not capable of being enforced so as to compel either party actually to deliver that vague, uncertain and contingent outcome in the future.

In short: under the Withdrawal Agreement, even taking into account the contents of the Instrument, the backstop is still capable of being activated and of remaining operational on a potentially indefinite basis, subject to mutual agreement between the parties for its amendment, replacement or removal.  There is no legally binding or enforceable time limit.  There is no mechanism by which the UK is entitled unilaterally to terminate the backstop.

The Instrument effectively acknowledges that underlying reality, in its discussion of compliance with / enforcement of the parties’ commitments to seek to replace the existing “backstop” with alternative arrangements. 

In paragraph A.4, the Parties give an illustrative example of behaviour that should be considered a breach of the obligation to act in good faith / use best endeavours: a systematic refusal to take into consideration adverse proposals or interests.  That illustrative example is rather far-fetched: international actors generally do not behave overtly in such extreme ways.  In the real world, it would be very difficult to prove a breach of the obligation to act in good faith / use best endeavours on any such basis: “taking X into consideration” is a relatively low threshold to satisfy, especially since it does not require the relevant party to alter its subsequent views, preferences, decisions or behaviours in any appreciable manner.  In any case, paragraph A.4 remains merely an illustrative example and does not in any way change the substance of the relevant provisions of the withdrawal package.

In paragraph A.12, the Parties give another illustrative example of behaviour that should be considered a breach of the obligation to act in good faith / use best endeavours: to act with the objective of applying the “backstop” indefinitely.  Again, in the real world, it would surely be very difficult to prove a breach of the obligation to act in good faith / use best endeavours on any such basis: it would be relatively easy and convincing for one party to argue that the “backstop” must remain in place for the foreseeable future, not because that is the party’s “objective” per se, but rather because that is the party’s reasonable assessment of the viability of proposals for alternative arrangements that could credibly replace the “backstop”.  In any case, paragraph A.12 also remains merely an illustrative example and does not in any way effect the substance of the relevant provisions of the withdrawal package.

Under paragraph A.14, the Parties recall that – in the event that a dispute arises over compliance with the duty to act in good faith / use best endeavours and that such a dispute eventually leads to an arbitration panel finding of persistent default – the withdrawal agreement ultimately allows for the aggrieved party to adopt temporary remedies, which may remain in place until compliance with the duty to act in good faith / use best endeavours is restored.  Such temporary remedies could include suspension of obligations arising under the “backstop”. 

On one level, paragraph A.14 is (once again) merely a restatement of what was already obvious from the terms of the existing withdrawal package.  On another level, however, paragraph A.14 paints a scenario that can only be described as either deeply unconvincing or deeply worrying.  If the UK were to suspend the “backstop” in such circumstances, i.e. without any adequate alternative arrangements already in place, it could lead directly to the erection of a customs and regulatory frontier between Northern Ireland and the Republic of Ireland.  Besides its obvious economic, social and political difficulties, such a course of action would also be in direct contradiction of the UK’s longstanding promise (e.g. as contained in the Joint Report from December 2017) to prevent the emergence of a “hard border” under any circumstances.  In any event, a UK proposal to suspend operation of the “backstop” in such circumstances would have to be proportionate as well as temporary: given the nebulous character of the duty to act in good faith / use best endeavours, and the relative ease with which a party should be able to demonstrate that it had returned to full compliance with that duty, paragraph A.14 really does seem to contain a rather empty threat.

The Political Declaration: Potential Impact of the Joint Statement

Much of the text of the Joint Statement simply recalls / reiterates the existing provisions of the Political Declaration (as supplemented by subsequent documents such as the UK Government Commitments to Northern Ireland and its Integral Place in the United Kingdom (9 January 2019) and the Exchange of Letters between the UK Prime Minister and the Presidents of the European Council and the European Commission (14 January 2019)).

By and large, the text merely describes in more detail how the Parties plan to pursue their common aspiration for negotiating a new future relationship, e.g. as regards the establishment of thematic priorities and indicative timescales, the pursuit of parallel negotiating strands, the relationship with more specific negotiations aimed at replacing the existing “backstop” etc. 

Of course, neither the Political Declaration nor the Joint Statement are legally enforceable texts.  But in any case, the additional provisions contained in the Joint Statement are almost entirely about the process of conducting future negotiations.  They do not and could not offer any guarantees about the outcomes of those negotiations: whether any agreement on the future relationship will be reached at all, whether such agreement might be concluded within any particular timescale, whether the agreement would be approved and ratified by the competent institutions on each side, let alone the substantive content of any final agreement on the future relationship. 

The only provision which touches upon the substance of the principles intended to govern negotiations for the future relationship is paragraph 5: the EU notes the UK’s intention to ensure that the latter’s social, employment and environmental standards do not regress from those in place at the end of the transitional period and to provide Parliament with the opportunity to consider future changes in Union law in these areas.  Even setting aside the limited significance / value of those commitments as a matter of domestic UK constitutional law, paragraph 5 is almost entirely inconsequential as regards its substantive relevance to the legal status or enforceable content of the existing withdrawal package.

A suggested “Unilateral Declaration” by the UK

The Prime Minister’s statement in Strasbourg provides that the UK will make a Unilateral Declaration that, if the “backstop” comes into use and discussions on the future relationship break down, so that there is no prospect of subsequent agreement, the UK takes the position that there would be nothing to prevent the UK instigating measures that would ultimately disapply the “backstop”. 

On one level, that statement is entirely banal: of course, if the UK were determined to adopt internal legal measures to disapply the “backstop”, there is nothing that any external actor could do to prevent the UK’s domestic institutions from so acting.  The EU could have recourse to whatever avenues and remedies are available under international law, e.g. dispute settlement under the Withdrawal Agreement – but the EU cannot “prevent” the UK from acting however the UK pleases within the UK’s own internal constitutional sphere.

On another level, however, the Prime Minister’s statement is quite remarkable: the UK is openly and blatantly threatening to breach its clear obligations under a legally binding international agreement, even before that agreement has been finally approved and ratified.  In reality, one might again argue that this threat rings rather hollow: if the UK were unilaterally to disapply the “backstop” in such circumstances, without any adequate alternative arrangements already in place, it could once more lead directly to the erection of a customs and regulatory frontier between Northern Ireland and the Republic of Ireland.  Even if the UK were unconcerned about the international legal repercussions under the Withdrawal Agreement or indeed the Joint Report, the UK would still have to manage the inevitable economic, social and political problems such a course of action would entail for Northern Ireland and no doubt beyond. 

In any event, it sits rather ill with the ambition and reputation of “Global Britain” for the Government to adopt such a proudly cavalier attitude towards respect for and compliance with international law.    

Barnard & Peers: chapter 27
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