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After a No-Deal Brexit, Would the UK Remain in the EEA by Default?

After a No-Deal Brexit, Would the UK Remain in the EEA by Default?

Yuliya Kaspiarovich (University of Geneva) and Nicolas Levrat (University of Geneva)

Brexit is a journey on uncharted waters. Diplomats, political scientists, economists and legal scholars have neither precedent nor theoretical framework to appraise and analyse the situation. If art. 50 TEU (Treaty on European Union) makes it legally possible for a State to leave the EU, the rules applicable to the process and the legal consequences are far from detailed and precise.

A lot has been written and said about the legal framework for negotiations and the possible content of an exit agreement, without decisive conclusions being reached. What we know for sure, however, is that if Brexit takes effect without an agreement as described in art. 50 § 2 TEU, it shall be international law that will govern the relationship between the EU and the UK. International Law is composed of general rules (customary law, general principles) and treaties. As regards the later, we would like to discuss here the fate of treaties to which both the UK and the EU are parties.

In that respect, the EU and its member States have been concluding a very novel – and unforeseen by general international law – category of treaties, called in EU-jargon, “mixed agreements”. When the EU decides to enter an international agreement that covers issues beyond its competence – because the EU is based on the principle of conferral of competences from its member states (art. 5 TEU) – both the EU and its member States become signatories and parties to such treaty with any third party (one or several States outside of the EU). One such agreement is the one establishing the European Economic Area (EEA), between the EU and its member states on the one side, and Norway, Iceland and Liechtenstein on the other. UK is currently bound by this treaty both as an EU member State, and as a party in its own right.

What happens to the UK’s participation in such an agreement on the day of Brexit, if this issue is not dealt with in a specific exit agreement? The legal rules applicable to the termination of or the withdrawal from treaties are customary rules of international law, which have been codified by two UN multilateral treaties. According to these rules, Brexit should not alter UK participation in these treaties; in other words, the article 50 procedure only concerns withdrawal from the EU treaties (TEU and TFEU), and no other treaty. As the UK is currently itself a party to the agreement as a sovereign state, its exit from the EU does not terminate its participation in this agreement.

The startling conclusion which may be drawn is, except if otherwise agreed by the parties (not only the EU, but also the third countries involved), that in the case of a no-deal Brexit, the UK would remain a party to the EEA treaty. Not being a member State of the EU anymore, the competences transferred to the EU from 1973 onward would from the moment of Brexit return to the UK (as a sovereign state). The UK’s legal capacity to fulfill all the obligations laid down in that treaty from the 30 March 2019 should not raise any serious problem. Naturally, and this might sound a bit strange in the context of relationship with the EU, it would mean that UK has “switched sides” and instantly become a non-EU State party to the Treaty, alongside Norway, Iceland and Liechtenstein.

Is it Possible that the UK Would Automatically Remain in the EEA?

The situation is so original and new, that general international law does not give a clear-cut answer. We do nevertheless show that no rule of general international law allows the automatic termination of UK participation in this treaty. First, we may discard any issue about succession to the treaty since the UK is already party to the treaty, and will remain a party after Brexit; not as a successor to the EU, but as a party to the original treaty, since 1993.

We are well aware that international law also allows the suspension or the termination of a Treaty in case of a “fundamental change of circumstances”, under the principle lawyers call “clausula rebus sic stantibus”. This principle has been codified by the UN, albeit reluctantly (international law wants to limit the possibilities for a state to invoke reasons for not implementing its international commitments). Application of this principle is subject to restrictive and cumulative criteria that would not necessarily be met by Brexit. As a precedent we may look at Slovakia, which in the nineties didn’t want to implement a Treaty originally signed in 1977 between Czechoslovakia and Hungary, within the framework of COMECON, to build and exploit a major dam on the Danube. The International Court of Justice was called to settle the dispute in 1997. Among other arguments (such as the fact that Czechoslovakia did not exist anymore), Slovakia invoked the end of COMECON and the shift from a planned (communist) economy to a liberal one. According to Slovak authorities, the whole project made sense only under communist economic rules, not in a market based economy. However, the ICJ ruled that even such a momentous shift was not enough to invoke a fundamental change of circumstances. By this standard, Brexit is, from our analysis, unlikely to constitute a serious enough ground for the UK to suspend or terminate its participation in the EEA agreement. And it certainly cannot be invoked by the EU, because if the EU was to admit that the withdrawal of the UK from the EU constitutes, for the EU, a fundamental change of circumstances as regards the EEA, it would mean that any EU member State may raise the same argument as regards the TEU and TFEU.

Without developing here all the possible legal debates about the consequences of Brexit on the UK’s participation in the EEA (we have done so in a much longer academic article under review by a scientific journal), we are quite confident that the UK will, if no new legal rule is accepted by the concerned parties, remain party to the agreement. Does that mean that it can just “switch sides” and keep all the benefits of free access to the single market as a third country (which is the precise purpose of EEA). While we have not found any legal rule that prevents the UK from remaining a party to this agreement, neither have we found any saying that it can switch sides in this manner. When legal scholars are short of rules, they search for the practice of concerned actors. Did anyone already switch sides as regards the EEA? And if so, how did they do it, and how did the EU and all the States parties to this agreement react?

It is instructive to look at the experience of EEA states which subsequently joined the EU. The EEA agreement was signed by Austria, Finland and Sweden (among others) as non-EU member states on 2 May 1992. On the 1st of January 1995, these three states became members of the EU. Two legal options would have been possible for them as regards the EEA. Either these new EU member States should have been required to ratify the EEA agreement again as EU member States (following Art. 128 TEU), or the accession agreement of these three countries to the EU should have laid down a specific legal rule settling their situation as regards this agreement. There were, however, no such rules in the 1994 accession agreements of each of these countries. In practice, as was confirmed to us by a senior legal adviser of the Austrian Ministry of Foreign Affairs, Austria just switched sides. And despite some provisions of the EEA being incorrectly worded, it was only in 2004, with the adhesion to the EU of ten new member States and their subsequent accession to the EEA, that the wording of the EEA was amended to properly reflect the fact that Austria, Finland and Sweden had switched sides almost ten years earlier.

It thus means that there is a practice, that has been accepted by at least 15 EU member States and the EU institutions (starting with the Commission), allowing States to switch sides in the EEA, even in the absence of an explicit provision and without formal modification of the Treaty. So our conclusion is that without any specific new legal provision concerning the UK legal situation regarding this agreement, the UK will remain bound by this agreement in its relationship with the EU and with the EFTA countries that are parties to this agreement.

Is This a Viable Brexit Solution?

To be clear, this is definitely not the position we advocate. We are deeply convinced that a negotiated agreement should be the preferred solution, allowing both parties – the EU on the one side, the UK on the other – to design a relevant legal framework according to their respective preferences and needs (whatever they are… positions not always being very clear, especially on the UK’s side). What it means however, is that the EU negotiators (Michel Barnier and his team) are not in the position they imagine as regards the degree of pressure they can put on the UK government to accept any exit treaty as described in Art. 50 § 2 TEU. A Brexit without agreement would not mean the UK would be left out in the cold with only WTO law to regulate its trade relationship with the EU. UK would remain under the regime of EEA, which is not so far from the status quo. Once again, we do not believe this can be a long-term solution – and it would probably be a legal nightmare to implement such solution. However, the proper consideration of this option would provide some leeway for the UK negotiators in their discussions with the EU.

Yuliya Kaspiarovich is Research Assistant and PhD Candidate at the Global Studies Institute (GSI), University of Geneva.

Nicolas Levrat is Professor at the Faculty of Law and at the Global Studies Institute (GSI), Director of the Department of International Law, University of Geneva.

Nicolas Levrat will participate in the DCU Brexit Institute event on Brexit and International Development Cooperation in Dublin on 11 October 2018. More information here.

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