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Brexit deal now less likely given EU position on transitional arrangements, says Lougher

Out-Law News | 08 Feb 2018 | 10:47 am | 1 min. read

UK and EU officials are less likely to strike a deal on the terms of the UK's exit from the EU as a result of the position taken by the European Commission on the transitional arrangements that should apply as part of the withdrawal process, a legal expert has said.

In its paper, which follows on from the issue of transition period negotiating guidelines last month, the Commission said that the EU's "institutions, bodies, offices and agencies", in particular the Court of Justice of the EU (CJEU), should retain the ability to exercise their powers under EU law over the UK and UK citizens during any transitional period.

However, it went further to suggest that the UK should be subject to potential EU sanctions during the transitional period where the issue at hand could not be resolved before the CJEU prior to Brexit.

"The Governance and Dispute Settlement Part of the Withdrawal Agreement should provide for a mechanism allowing the Union to suspend certain benefits deriving for the United Kingdom from participation in the internal market where it considers that referring the matter to the Court of Justice of the European Union would not bring in appropriate time the necessary remedies," the position paper (6-page / 482KB PDF) stated.

Guy Lougher of Pinsent Masons, the law firm behind Out-Law.com, said that the UK government is unlikely to be happy with the EU27 retaining powers of that nature, but that the EU27 is unlikely to enter into a transitional agreement that excludes such powers.

"From the EU27's perspective, they will be cognisant of the fact that cases that come before the CJEU can take a number of months before they are heard and years before a final judgment is issued," Lougher said. "Any transitional period looks set to be no longer than two years, which would call into question the ability to enforce EU law against the UK through the CJEU where cases are resolved post-Brexit."

"However, equally the UK government is unlikely to be happy with handing the EU27 unilateral powers to issue sanctions against it without prior scrutiny by the CJEU. While negotiations will continue, the outcome from this position paper is that it will now be more difficult for the UK and EU to reach a deal on the terms of the UK's withdrawal from the trading bloc. A 'no deal' outcome remains a distinct prospect, and businesses need to prepare for that outcome now," he said.