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As we have reported previously, the result of the European Union referendum (Brexit) was announced on 24 June 2016 with a vote in favour of the United Kingdom exiting.
We have issued a series of Brexit updates since the date of the referendum. To access such prior alerts, please visit our Brexit page.
UK and EU Brexit divorce agreement
An agreement has been reached in respect of the nature of the UK’s exit from the EU, which will enable future relationship negotiations to begin. A final withdrawal treaty and transition deal will need to be ratified by EU member states and the UK Parliament before the UK leaves the EU in March 2019.
A progress report jointly published by the UK and the European Commission on 8 December 2017 (“the Report”) sets out details in respect of the areas of agreement between the UK and the EU. The Report covers the agreement in principle between the UK and the EU in three main areas: citizens’ rights; the Irish border; and financial settlement.
EU citizens living in the UK, currently estimated to be in the region of three million people, will be allowed to continue living in the UK on the basis that they have exercised free movement rights by the time the UK leaves the EU. This applies to anyone taking up residence before the UK officially leaves the EU in March 2019. Family members including spouses, parents, grandparents, children and grandchildren not residing in the UK, will be entitled to join related UK-based EU citizens after the UK has left the EU. These rights extend to future spouses or partners, even if they are not together at the end of any transitional period following the UK’s exit from the EU.
These rights in respect of EU citizens will apply equally to UK citizens residing in EU member states. However, it should be noted that the EU has not granted UK nationals the right to move from one EU member state to another and retain all the same rights automatically.
The European Court of Justice (“ECJ”) will continue to have a role in governing EU citizens' rights in the UK for eight years after leaving the EU. However, UK courts must pay due regard to the relevant decisions of the ECJ, ensuring that the ECJ remains the “ultimate arbiter” of EU law.
Parliament will bring in new legislation in order to enshrine the citizens' rights contained within the final withdrawal agreement into UK law. However, the Report does note that this legislation could be repealed in the future.
The UK states that it remains committed to protecting Northern Ireland - Southern Ireland cooperation and to its guarantee of avoiding a hard border. The Report states that “[a]ny future arrangements must be compatible with these overarching requirements".
If a deal in respect of the Irish border cannot be agreed, the UK would maintain full regulatory alignment in respect of the EU rules supporting Irish cross-border arrangements.
The Report states that in the absence of agreed solutions, no new regulatory barriers will be allowed between Northern Ireland and the rest of the UK, and that the UK will continue to ensure the same unfettered access for Northern Ireland's businesses to the whole of the United Kingdom internal market.
The Report states that both the UK and the EU have agreed a methodology to determine the financial settlement, although a total figure has not been offered within the Report itself. Recent press reports suggest the total figure is in the region of £35-39bn.
The financial settlement will be paid over four years and the precise figure is unlikely to be known for some time.
The Report also states that the UK will “contribute to, and participate in, the implementation of the Union annual budgets for 2019 and 2020 as if it had remained in the EU (including revenue adjustments)”. The UK will also remain liable for its share of outstanding financial commitments and liabilities until 31 December 2020.
EU leaders are required to give their approval to the deal prior to the commencement of the next phase of negotiations. The president of the European Commission is confident that such approval will be given when EU leaders meet on Thursday 14 December at the EU Council summit. Negotiations can then progress onto (i) a transition deal to cover a period of up to two years following Brexit, and (ii) preliminary discussions about a future trade deal, which the EU says can only be finalised once the UK has left the EU.
In the blur of mega firms, Brown Rudnick stands out as a “global boutique” and has in place a multi-disciplinary, international Brexit Team. We are monitoring and analysing the consequences and considerations for businesses and are ready to advise on the potential legal implications of Brexit. The Brown Rudnick Brexit Team is available to advise on the issues across a broad range of sectors within our areas of expertise.
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