November 19, 2018
1. Negotiators for the European Union and the United Kingdom have agreed a 585-page draft withdrawal agreement (the “Withdrawal Agreement”). A copy of the Withdrawal Agreement can be found here.
2. The draft Withdrawal Agreement sets out how and when the UK will leave the EU and will be legally binding. A separate, non-binding draft declaration (available here) sets out the aspirations for the future trading relationship between the UK and EU (this draft declaration is still being negotiated, with the UK and EU expected to agree a final draft this week).
3. This long-awaited “divorce deal” has been agreed by the UK Government’s senior ministers (the Cabinet) but it now needs to be approved by MPs in the UK House of Commons and by the 27 other EU member states and the European Parliament.
4. An EU summit is currently due to be held on 25 November 2018, where EU 27 leaders are expected to sign off on the Withdrawal Agreement and the future relationship declaration.
5. Following the EU meeting the deal will be put to the House of Commons in the UK Parliament for a “meaningful vote”. It is not yet clear what the motion will be nor what amendments will be permitted. But, for all practical purposes, it is a critical vote to approve the deal.
6. The House of Commons vote is expected around 7 December 2018 and at present it looks unlikely that the vote will be passed. That could change if amendments are agreed to the Withdrawal Agreement or future relationship declaration.
7. If the House of Commons votes the deal down, the Government will have up to 21 days to put forward a new plan. Any new agreement would need to be agreed with the EU.
8. Two of the key issues relate to (i) the circumstances in which the UK can withdraw from the transition arrangements and whether it can do so without an EU veto and (ii) whether Northern Ireland will have a different regulatory regime to the rest of the UK, creating a border down the Irish Sea. “Backstop” arrangements are in place to prevent that happening but there is a lack of consensus over whether those arrangements are good enough. The political debate in the UK is focused on whether improvements can be made to the provisions relating to these two issues in particular. The EU position is that no changes of substance will be allowed but “some tweaking” of the language in the political declaration may be possible. Some of the EU 27 countries are also thought to be considering comments.
9. The UK Cabinet backed the divorce deal. However, two cabinet ministers and two junior ministers subsequently resigned, including the Brexit secretary Dominic Raab. New cabinet appointments have been made, including one Brexit supporter and one Remain supporter.
10. A number of leading backbench Conservative Party MPs have called for the Prime Minister to stand down, and are seeking to move for a vote of no confidence in her leadership of the Conservative Party. A challenge is triggered if 15% of Conservative MPs (48 in total) write letters to the Party’s Chief Whip demanding a confidence vote. As of today, at least 24 MPs have publicly confirmed they have submitted letters. If a confidence vote is called, then it is passed if a simple majority of Conservative MPs vote in favour. It is not clear that this will happen and, if Theresa May wins, the rules then prevent another vote of confidence for twelve months. If she lost, there would be a separate process to elect a new leader but Theresa May, or a caretaker, would remain as Prime Minister until a new leader was elected.
Content of Withdrawal Agreement
11. The UK is due to leave the EU at 11 pm on Friday 29 March 2019 (midnight CET on 30 March 2019). The Withdrawal Agreement sets out the terms of the UK’s departure from the EU:
12. Some UK business leaders and senior City figures have backed the deal as a significant breakthrough in Brexit negotiations. If Brexit is to happen, many businesses will be pleased that the Withdrawal Agreement offers at least a foundation for moving forward. Other commentators are critical of the “half-way house” set out in the Withdrawal Agreement and doubt whether Theresa May’s strategy can hold. EU negotiations typically go right to the wire but the political state in the UK remains volatile while this plays out and there can be no certainty of outcome.
This client alert was prepared by London partners Nicholas Aleksander, Patrick Doris and Charlie Geffen and of counsel Anne MacPherson.
We have a working group in London (led by Nicholas Aleksander, Patrick Doris, Charlie Geffen, Ali Nikpay and Selina Sagayam) addressing Brexit related issues. Please feel free to contact any member of the working group or any of the other lawyers mentioned below.
© 2018 Gibson, Dunn & Crutcher LLP
Attorney Advertising: The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.