On the 3rd of November, the British High Court ruled that the conservative government would not be able to start the procedures to leave the European Union without consulting parliament.

At this news, the exchange rate between pound and dollar immediately touched its highest peak in nearly a month, passing the threshold of 1.24 and rising to close at 1.25, while the overall impact on the financial markets was positive – despite the tensions of the US presidential election.

Why such a positive reaction from investors? What does this concretely change?

Is Brexit avoidable? The answer to this is a likely “No”, although May’s government could be forced to change its political approach to future negotiations to exit the EU.

What really happened?

In early October, Theresa May announced plans to invoke article 50 of the Lisbon Treaty (TFUE), which regulates the exit procedures from the EU, by March 2017.

The British government had claimed to be able to autonomously invoke Article 50 because of the so-called Royal prerogatives, a set of powers formerly exercised by the monarch of the United Kingdom and now competing to the government. Normally, international treaties fall under the Royal prerogative powers.

A few weeks ago, a group of people led by businesswoman Gina Miller instituted legal action before the High Court arguing that the government alone does not have the authority to start negotiations to leave the Union. The promoters argued that it is unconstitutional to change British law – as would happen in the case of Brexit – without an act of the parliament. Thus, if there will be a bill to be examined by the House of Commons and Lords, the battle could be long and the government could be forced to examine step by step every single condition of the proposal negotiated with Brussels.

Article 50 allows the UK to exit the EU “in accordance with its own constitutional requirements”.

UK constitutional law requires that an Act of Parliament cannot be supplanted by the exercise of a prerogative power. However, it also states that the prerogative powers of the Crown cover international relations and the conclusion of treaties. It is based on this statement that the government claimed it was the Crown’s prerogative power to authorise Brexit. The court endorses the government’s position in this sense, but only with respect to rights and obligations created under international law. Although, whenever rights protected by domestic law are affected, Parliament must be heard. Namely, the court took into consideration the individual rights protected by domestic law and the extent to which they would be affected by EU withdrawal. They distinguished between three different categories of rights; (i) rights that could be replicated under domestic law; (ii) rights enjoyed by UK nationals in other Member States; and (iii) rights that cannot be replicated in UK law and would be lost in the Brexit process, like the right to be elected to the European Parliament and to vote in those elections. Whereas regarding the first two categories the claims of the government that the loss of rights would not be a great deal could seem right – even though the court finds them unrealistic – the last category of rights would be completely lost, as Miller and the claimants wanted to prove. Hence, the case was lost for the government.

The three judges of the High Court of Justice endorsed the legal action: they said that the exit from the EU could also change several domestic laws in the UK, and this cannot be decided solely by the government, but must be approved by parliament.

Therefore, the government had basically three options:

  1. Winning the appeal to the Supreme Court, that is, convincing the judges that a vote in parliament on the activation of Article 50 is not necessary.
  2. Approving the activation of Article 50 in parliament: feasible on paper, more complicated in practice. It is true that the government is conservative – who have pledged to respect the result of the referendum – but the party remains divided between the MPs essentially hostile to Brexit – which then will attempt to delay the process or to change the terms – and those in favour.
  3. Convening new elections to gain a greater majority – it is currently only 15 MPs – and somehow “legitimise” its approach to Brexit.

Theresa May seems to have ruled out the last option, explaining that the British government does not intend to call new elections before 2020, that is, until the natural end of the legislature.

May is seeking to achieve a happy medium between the first two options: the government appealed to the Supreme Court, but not overly dependent on the future judgment will seek to broaden its consensus on Brexit, maybe doing some compromise on its plans for future negotiations with the EU – plans which has so far kept secret.

The Prime Minister intends to respect the path already established by the government and then invoke Article 50 by March. However, the ruling could have provided an opportunity for several parliamentarians to obstruct the process by asking May to reveal more details about her plan for future negotiations. Since the government will be forced to talk about these plans in parliament, it will be easier to make a point about the political battle to be included in the negotiations (i.e. whether or not to try to remain in the European single market, the freedom of movement of British citizens in Europe, and so on).

It seems highly unlikely that MPs would vote against Brexit, since no British MP would dare to ignore the referendum result. Further, it is unlikely that the High Court ruling will have significant long-term effects or that it cannot be overturned by the Supreme Court or by a European Court (a few days before the High Court ruling the Northern Ireland High Court rejected a similar request).

Nevertheless, before the ruling, the British government could have begun negotiations with a large strategic advantage: not having to respond to anyone on how to conduct negotiations, and where to focus efforts. If Theresa May will be forced to reveal her intentions in Parliament – focusing on a “hard” or “soft” Brexit, that is, respectively, a net outflow from the Union or only a partial one– she would lose that advantage. At the same time, MPs favouring a “soft” Brexit could even put together a majority and force the government to compromise and accept some points, including remaining in the single economic market (which means that within the European Union, plus Switzerland and Norway, where one can trade without tariff or customs barriers). It is a solution that does not really appeal to the “Leave” supporters. Namely, to access the single market, Norway and Switzerland had to accept many of the European rules regarding the free movement of people, the kind that supporters of “Leave” do not want.

The judgment represented undoubtedly the first touch of hope for those who still believe that somehow Brexit could be revoked or at least tempered. However, the court’s decision should certainly not be overrated.

What is certain so far is that the decision of the court has not a political focus, it is strictly based on the analysis of constitutional law. The court did not express an opinion on the opportunity to trigger Article 50 TEU – that is not part of its prerogatives. It only examined if, from a constitutional point of view, the Crown – acting through the government – can include the decision to exit the European Union, through Article 50, among its powers.

The Supreme Court of the United Kingdom will consider the appeal of the British government to the verdict of the High Court from 5th to 8th December and the decision of the judges is scheduled for the beginning of 2017. The dates have been indicated by the court of last resort that has so accepted the appeal filed by the government.

By Deborah Civico, Legal writer.

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