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Brexit: A Legal Perspective

 4 min read / 

The UK is set to hold a referendum on its membership in the EU before 2017, with the Conservative Party having tabled the European Union Referendum Bill 2015-16 in May 2015 to enable the referendum. Talk of an exit from the EU is not a new phenomenon, having arisen since the UK joined the European Economic Community (EEC) in 1972. Moreover, when held, the referendum on its EU membership would be the UK’s second, the first being held in 1975, with 67% of voters in support of its membership. Those in favour of a Brexit have argued that the UK would consequently be better able to control its economic and trade policies and would no longer be subject to the red tape imposed by the EU. However, one should also consider the potential legal implications the Brexit might have on the UK and how these ramifications might end up inflicting a irrecoverable damage on the UK’s economy.

UK has long subscribed to the concept of parliamentary sovereignty – an idea that parliament is ultimate source of law and cannot be overruled. There are several key tenets to this concept as advocated by legal theorist A.V. Dicey – firstly, parliament can rule on matters concerning anything and secondly, an Act of parliament cannot be questioned in court, as it is the supreme lawmaker. However, it is submitted that the UK’s membership in the EEC and the consequent European Communities Act of 1972 (ECA) posed a strong threat to the concept of parliamentary sovereignty. In effect, the ECA incorporated EU law into the domestic laws of the UK and required parliament to take them into consideration whenever it legislated new acts. In fact, in the renowned case of Factortame (No.2), a group of Spanish fishermen brought a case against the UK government for breach of EU law by requiring a 75% British stake in their companies, the European Court of Justice (ECJ) held that national laws must be disapplied if they were in contravention with EU laws.

It is therefore submitted that EU laws are influential and provide for leading decisions in the UK courts. A Brexit would potentially cause much confusion to the judiciary and economy in general. Previously, ECJ decisions were binding on UK courts and a slew of cases have been built on the EU’s legal foundation. Moreover, difficult decisions regarding certain points of law, such as the one discussed earlier in the Factortame case, could be referred to the ECJ for clarification. However, a Brexit would necessarily mean that UK courts have to decipher important and conflicting decisions on their own, mainly which would probably arise because its membership in and subsequent exit from the EU. While seemingly unrelated to the financial markets, this could potentially inject unnecessary instability in the terms of the laws that would subsequently be determined. The structure of the EU is as such to ensure that member states can carry out commerce without worrying about arbitrary laws that might hinder trade.

In addition, pre-existing legislation that came consequent to the ECA would be repealed following a Brexit. They could only be reinstated by legislating yet another new act, one which would cost additional time and effort to be wasted. In the alternative, it would cause confusion to the financial markets. Business confidence would take a hit because they would no longer be able to rely on standardised laws with confidence, knowing that they are implemented across the entire EU trade bloc.

But not all hope is lost. There are still several options available for the UK to somewhat maintain its financial position in Europe. The UK could potentially choose either to stay part of the European Economic Area like Norway and Iceland or be a signatory to the European Free Trade Association like Switzerland. These could potentially mitigate the economic damage that a Brexit might cause.

In summary, this is a simplistic expansion on the possible legal implications a Brexit might bring about. Nevertheless, it is fair to suggest that an exit from the bloc would probably bring about greater uncertainty as regards the laws surrounding commerce. This does not bode well for business and consumer confidence for those in the UK. It is time for UK voters to think and vote wisely.

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