Uncharted Waters: The Legal Implications of a Brexit

By Robbie Gramer

June 27, 2016

BrexitBritain's referendum to exit the European Union sent political and economic shockwaves across Europe. As EU leaders assess the geopolitical implications of the so-called "Brexit," they also enter uncharted legal territory.

No EU member has ever opted to leave the Union, and the exit process, outlined in Article 50 of the EU's Lisbon Treaty, is "vague," according to Billy Davies, associate professor at American University's School of Public Affairs.

The EU and Britain have over four decades of interconnected law to unwind if the Brexit is enacted. "There are a huge number of laws [the UK] will have to re-legislate as it leaves the EU," explains Richard Morningstar, former U.S. ambassador to the EU. This includes tens of thousands of legal acts, court verdicts, and international standards. Consequently, the process of extricating the UK from the EU could take years. England, Scotland, Wales, and Northern Ireland's individual legal relationships with the EU add layers of complexity to this challenge—as all are countries within the UK. But three short-term legal consequences loom the largest as the Brexit's fallout takes shape:

1. Freedom of Movement

The first is the prospect of UK citizens no longer being able to work and live in the EU, according to Fernanda Nicola, professor of law at American University's Washington College of Law and the director of the Program on International Organizations, Law and Diplomacy.

"I think free movement is obviously the biggest [issue]," she says. Two million UK citizens live elsewhere in the EU, and more than 2.2 million EU citizens live in the UK. These workers could have to repatriate as Brexit negotiations develop and freedom of movement becomes uncertain.

2. Financial Services Regulation

As part of the EU's single-market and economic area, the UK relies heavily on EU law over national law for financial services regulation. A Brexit would compel the UK to reenact outdated financial regulations, or even begin from scratch. At the same time, leaving the EU upends the benefits that British financial firms reaped from the EU's financial services "passport," a legal framework that allowed them to operate freely in other EU member states. A UK outside the EU risks undermining London's stature as a global financial hub.

3. Intellectual Property

The UK is heavily reliant on EU laws for intellectual property, in particular with the European patent system that facilitates unitary patents across EU member states. The United Kingdom accounted for more than 600,000 granted European patents in the past decade alone, according to the European Patent Office. A Brexit could leave these patent owners bereft of their registered rights in the EU, and EU patent owners devoid of registered rights in the UK.

The referendum was not legally binding. Until the exit process is formally activated, the UK remains part of the EU. Davies says the UK's outgoing Prime Minister David Cameron "has already indicated that he won't do this before October," if he decides to enact it, which many experts say is likely but not certain.

The EU's other 27 members will ultimately decide the legal terms of the UK's exit. They will work with no precedent and only a vague directive from Article 50, leaving many legal questions uncertain.

"Technically, Britain is not part of the negotiations," explains Morningstar. "The question is how accommodating the EU wants to be with the UK."

Robbie Gramer is a reporter for Foreign Policy. Follow him on Twitter at @RobbieGramer

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