The Brexit Twilight Zone

More Brexit chaos unfolded last week as the UK Parliament voted (1) for a second time to reject Theresa May’s Brexit deal, (2) to reject a no-deal Brexit and (3) in favor of Brexit delay. Yet these actions seem to have accomplished very little: A third vote on May’s Brexit deal is looming – perhaps as early as Tuesday –a no-deal Brexit is technically still on the table, and whether Brexit gets delayed is now up to the EU. With each attempt to clarify the UK’s Brexit strategy, the same options (deal, no-deal, delay) keep bouncing back to Parliament, as the clock continues to tick to the March 29 deadline. Welcome to the Brexit Twilight Zone.

Brexit Deal Rejected (but perhaps not?): Prior to last Tuesday’s vote on the Brexit deal, May returned from meetings with EU leaders in Strasbourg with guarantees that the Irish backstop would only be temporary.[1] While this prompted a few more Conservative MPs and three Labour MPs to rally in favor of a Brexit deal, the DUP (Northern Ireland’s Democratic Unionist Party) and ERG (pro-Brexit) faction of the Conservative party still voted against the deal in light of the UK attorney-general’s conclusion that Irish backstop risk (i.e. a perpetual customs union with the EU) had been reduced but not eliminated.

Despite two rejections by Parliament, a third vote on a deal is imminent and expected to take place early this week before the EU Summit (scheduled for March 21-22). However, the UK chancellor warned on Sunday that the third vote will only proceed once the government is confident the Brexit deal vote will pass. May still needs an additional 75 votes in favor of a deal, and getting them will require a change of heart by the DUP, ERG, and, potentially, some members of the Labour party. With the deadline getting closer and closer, a vote in favor of the Brexit deal may seem to an increasing number of MPs like the only way out of the current gridlock. But it is not yet apparent if the votes are there.

No Deal Rejected (but only if the EU agrees): Last Wednesday, MPs rejected the official default position that failure to obtain a Brexit deal would result in a no deal Brexit (i.e. the UK leaves the EU on March 29 with no transitional arrangements). While this may seem to have brought welcome clarity to the situation, it only raises more questions. To avoid a no deal Brexit, the EU must agree to grant a delay. Any delay will be dependent on whether the UK Parliament agrees to, or continues to reject, a Brexit deal (i.e. requiring a third vote on the Brexit deal). It is clear that a majority of Parliament opposes a no deal Brexit, but the decision is now the EU’s to make. The practical outcome of this third vote therefore remains an open question.

A Brexit Delay (but only if the EU agrees): Last Thursday, MPs voted in favor of a Brexit delay –  but putting it into effect requires unanimous approval from all 27 EU Member States, and they could decide to attach conditions. This week’s EU Summit should provide clarity on the type of delay to be granted:

Short Delay: The EU is likely to agree to a short delay until June 30 (i.e. just before the newly constituted EU Parliament meets) if the UK Parliament approves a deal. This would enable relevant legislation to be passed in the UK Parliament to officially withdraw from the EU.

Long Delay: The EU could instead agree to a longer delay (one year or more) if Parliament continues to reject the Brexit deal. While this would postpone Brexit, it could ultimately threaten any type of Brexit. In the UK, that might mean a general election, a new prime inister, a new political party in power, or potentially a second referendum. It would also raise the peculiar possibility that the UK could continue to participate in the EU Parliament, because EU parliamentary elections are scheduled for May 2019, with the newly constituted EU Parliament meeting in July 2019.

No Delay: If the EU refuses the UK’s request for delay, a no deal Brexit will occur on March 29. While it is unlikely that the EU will reject an extension given the uncertainties and headaches of a no deal Brexit, it remains a technical possibility.

UK and EU decisions: Having rejected deal and no deal, the time and scope of delay will depend on when May brings back her deal for a “third time lucky” vote, and whether it will take place before the EU Summit.

Until these events occur, it is difficult to predict whether Brexit will happen on March 29 (if no deal), on June 30 (if deal + short delay), after a longer deadline (if no deal + long delay) or even at all (if long delay). It is a curious state of affairs that Brexit – which was heavily motivated by UK voters wanting to reclaim autonomy from the EU – now hinges on decisions that have been punted by the UK to the EU. It’s beginning to look as if Brexit exists in a dimension beyond any we could have imagined.

ENDNOTE

[1] The Irish backstop is a safety net arrangement between the UK and EU to avoid a hard border between the Republic of Ireland and Northern Ireland. The controversy surrounding the backstop arises from the scenario where there is no agreement on trade talks between the UK and EU by the end of the two-year transition period. If so, the UK will essentially remain in the EU customs union until a trade deal has been reached.

This post comes to us from Amy Hutchings, an English solicitor and LL.M. candidate at Columbia Law School. She previously worked as a mergers & acquisitions associate at Slaughter and May in London and as a foreign legal consultant in the M&A group at White & Case in New York.