Author: William Timmermans (Altius)
Publication date: 23/11/2018
On 14 November 2018, UK and EU negotiators agreed on a draft Agreement on the withdrawal of the UK from the EU and Euratom. The EU and the UK still have to approve the agreement. If the agreement is not approved, then there is a risk that the UK will leave the EU on 29 March 2019 without a deal. We discuss the main features of this draft Withdrawal Agreement.
A. Transition period: 29 March 2019 until 31 December 2020
The draft provides for a transition period (officially called the ‘transition and implementation’ period) until 31 December 2020 (Article 126).
As of 29 March 2019, the UK will no longer be a member state of the EU. Hence, as of that date, there will be no more UK representatives in the EU institutions, bodies, offices and agencies. The UK will no longer be able to submit proposals or initiatives to EU institutions (Art. 128.3). Any participation by UK experts or representatives will be exceptional and on an “invitation only” basis (Art. 128.4).
However, Union law will continue to apply to the UK (with few exceptions) until the end of the transition period. The general legal framework during this phase is as follows:
- Union law will continue to be in full force in the UK (with few exceptions, see Art. 127);
- Union law will have the same legal effects in the UK as in EU Member States (Art. 127.3); hence, it will have direct effect in the UK as in EU Member States under the conditions of Union law;
- The fundamental freedoms enshrined in the EU Treaties will continue to apply to the UK; therefore, all individuals and companies can invoke these freedoms in the UK and have them enforced as if the UK were an EU Member State;
- The UK will be obliged to implement new Union law adopted during the transition period;
- All supervision and enforcement mechanisms of Union law will apply to the UK as if it were a Member State (Art. 131);
- The authority of the Commission and the jurisdiction of the Court of Justice of the EU will apply to the UK as if it were a Member State (Art. 131).
To summarise: during the transition period, the UK will be out of the EU, but Union law will still apply in the UK.
B. Possible extension of the transition period: possibly as of 1 January 2021 until 31 December …
The Joint Committee, set up under the draft Agreement, can decide to extend the transition period before 1 July 2020. There can be only one extension. The draft Agreement does not yet provide for an end date for this extension period.
During this period, the same rules will apply as during the initial transition period, with only a few exceptions (Art. 132).
C. After the transition period: rules for situations with origins prior to the expiry of the transition period
The draft Agreement sets out a detailed set of rules for situations that have their origins before the end of the transition period but that continue to have consequences after that date. It is important to stress that these rules do not apply to situations without any link to the period prior to the expiry of the transition period.
The general legal framework for this period is as follows:
- For this period, Union law will be understood as the Union law applying on the last day of the transition period (Art. 6.1).
- The EU institutions remain competent for administrative procedures initiated before the end of the transition period (Art. 92).
- Regarding aid granted before the end of the transition period, the Commission may initiate state aid procedures against the UK for a period of 4 years after the end of the transition period. The same applies to OLAF for anti-fraud investigations (Art. 93).
- Decisions taken by EU institutions before the end of the transition period (or adopted in pending procedures at that date) addressed to the UK or to natural and legal persons residing or established in the UK, will be binding on and in the UK (Art. 95).
- The UK may intervene in cases brought before the Court of Justice in the same way as any Member State, until the judgments and orders of the Court of Justice in all proceedings and requests for preliminary rulings referred to in Article 86 have become final (Art. 90).
- Lawyers authorised to practice in the UK representing or assisting parties in ongoingproceedings before the Court of Justice of the European Union can continue to represent them (Art. 91).
There are more detailed sections in the draft Agreement on citizens’ rights, goods, intellectual property rights, judicial cooperation in civil and commercial matters, data protection and public procurement.
Citizens’ rights (Art. 9-39)
There are extensive clauses on citizens’ rights in Articles 9 up to 39 of the draft Agreement.
These rights apply mostly to Union citizens residing in the UK at the end of the transition period and who continue to do so thereafter, as well as to UK nationals residing in the EU at the end of the transition period and who continue to do so thereafter. The same applies to frontier works in these situations (Art. 10).
The draft Agreement provides for the residence rights of such persons and their family members under several conditions (Art. 13) and also for a right of exit and entry (Art. 14). Union citizens and UK nationals (and their family members) who have resided legally in the host State in accordance with Union law for a continuous period of 5 years or for the period specified in Article 17 of Directive 2004/38/EC will have the right to reside permanently in the host State (Art. 15).
The recognition, before the end of the transition period, of professional qualifications of Union citizens or UK nationals (and their family members), by their host State or their State of work will maintain its effects in the respective State (Art. 27). The rules on the social security systems are set out in Articles 30 up to 36 of the draft Agreement.
The persons covered by this Part of the draft Agreement will enjoy a lifelong protection of the rights provided for in the draft Agreement, unless they cease to meet the conditions set out therein (Art. 39).
Goods (Art. 40-46)
The rules for goods are set out in Articles 40 to 46 of the draft Agreement. In essence, any good that was lawfully placed on the market in the Union or the UK before the end of the transition period may be made further available on the market of the Union or of the UK and circulate between these two markets until it reaches its end-user.
There are specific provisions for ongoing customs procedures (Articles 47-50) and ongoing VAT and excise duty matters (Articles 51-53).
Intellectual property (Art. 54-61)
The section on IP rights is one of the most elaborate sections in the draft Agreement. The aim of this section is clear: the continuity of the protection of existing IP rights after the end of the transition period. Therefore, IP rights existing on the last day of the transition period under Union law must be given the same level of protection after such date under UK law.
The holder of any of the following intellectual property rights that have been registered or granted before the end of the transition period will, without any re-examination, become the holder of a comparable registered and enforceable intellectual property right in the United Kingdom under the law of the United Kingdom (Art. 54.1). There is also a continued protection of a geographical indication, designation of origin or traditional speciality guaranteed within Union law (Art. 54.2).
The registration, grant or protection pursuant to the Agreement shall be carried out free of charge by the relevant entities in the UK (Art. 55.1).
There is also a continued protection of international registrations designating the Union (Art. 56), of unregistered Community designs (Art. 57) and of databases (Art. 58).
IP rights which were exhausted both in the EU and in the UK before the end of the transition period shall remain exhausted both in the EU and in the UK (Art. 61).
Judicial cooperation in civil and commercial matters (Art. 66-69)
The most important rules are the following:
Regulation (EC) No 593/2008 on the law applicable to contractual obligations (Rome I) will apply in the UK in respect of contracts concluded before the end of the transition period (Art. 66).
Regulation (EC) No 864/2007 on the law applicable to non-contractual obligations (Rome II) will apply in the UK in respect of events giving rise to damage, if such events occurred before the end of the transition period (Art. 66).
For legal proceedings instituted in the UK before the end of the transition period, several Union law provisions on jurisdiction will apply (Art. 67.1).
Regulation (EU) No 1215/2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters will apply to the recognition and enforcement of judgments given in legal proceedings instituted before the end of the transition period, and to authentic instruments formally drawn up or registered and court settlements approved or concluded before the end of the transition period (Art. 67.2)
Data protection (Art. 70-74)
Union law on the protection of personal data will apply in the UK in respect of the processing of data subjects’ personal data outside the UK for personal data (a) processed under Union law in the UK before the end of the transition period or (b) processed in the UK after the end of the transition period on the basis of this Agreement (with some exceptions; see Art. 71).
The Union law rules on confidential treatment, restriction of use, storage limitation and requirement to erase data and information will apply to data and information obtained by UK authorities before the end of the transition period; or on the basis of this Agreement (Art. 72).
Public procurement (Art. 75-78)
Public procurement procedures launched before the end of the transition period will continue to be governed by EU procurement rules (Art. 76). These procedures will also be subject to the EU remedies directives (Art. 77).
D. Other important points in the draft Agreement
Legal and natural persons will be able to rely directly on the provisions of the draft Agreement if these provisions meet the conditions for direct effect under Union law (Art. 4.1).
The draft Agreement provides for a Joint Committee to implement and apply the Agreement (Art. 164). Its decisions will be binding on the EU and the UK and they will have the same legal effect as the Agreement (Art. 166.2).
If a dispute arises between the Union and the UK on the Agreement, then they will enter into consultation in the Joint Committee (Art. 169). If no mutually agreed solution is found within three months, then the EU and the UK may request the establishment of an arbitration panel (Art. 170). If within the arbitration proceedings, a question of interpretation of Union law arises, the arbitration panel must submit the question to the Court of Justice, and the ruling of the Court will be binding on the arbitration panel (Art. 174).
E. Future relationship between the UK and the EU
The draft Agreement does not cover the future relationship between the UK and the EU. It only contains a provision that the EU and the UK will use their best efforts to negotiate these agreements “expeditiously” (Art. 184). To the extent possible, these agreements should apply as from the end of the transition period (Art. 184).
The general outline of this future relationship is set out in the draft political declaration agreed upon by negotiators of the UK and the EU on 22 November 2018.