Item No. 17

COUNCIL

14 SEPTEMBER 2017

Classification - Public

Purpose - For noting

Decision –To decide whether the Law Society moves in the next period to focus its policy position and influencing work on transitional arrangements.

Item 17 - BREXIT UPDATE AND DISCUSSION

Freedom of Information

The contents of this paper may be shared with the public and the profession.

Remit

Public affairs - Brexit.

Statement of territorial application

This paper applies to England and Wales

Financial, section 51 and resourcing implications

Within existing budgets.

Consultation with Finance

Within existing budgets.

Equality and diversity implications

None.

Consultation

This paper has been prepared for Council.

Director: Robert Khan, director of public affairs

Author: David Greene, Chair of LAPB

Date: 1 September 2017

BREXIT – Update for Council

  1. Law Society priorities for Brexit

The Law Society’s work on Brexit has focused on five key priorities:

  • Continued mutual access for solicitorsto practise law and base themselves in the UK and EU member states, to have rights of audience in EU courts, institutions and the Unified Patent Court (when it opens)and for their clients to have legal professional privilege.
  • Continuedmutual recognition and enforcement of judgments and respect for choice of jurisdiction clauses inthe UK and EU.
  • To maintain collaboration in policing, security and criminal justice.
  • Ensure that legal certainty is maintained throughout the process of withdrawal, including transitional arrangements.
  • Ensure that the Government works effectively with the legal services sector to continue to promote England and Wales as the governing law of contracts, the jurisdiction of choice and London as the preferred seat of arbitration.

These were established through engaging with the Society's policy committees, our Brexit Taskforce and the wider membership, to identify how Brexit could affect their businesses and their clients. Further details on these priorities can be found in the Law Society’sBrexit and the Lawreport which was published in January 2017. Detailed information on these priorities was also submitted to a number of Government departments in December 2016.

  1. Government position paper on civil justice

Over the last year, we have undertaken significant work on Brexit and civil justice co-operation. We held an extensive programme of engagement with ministers, parliamentarians and officials making representations on the priorities for the profession and the justice system, as well as our work as a participant in the Lord Chancellor and Lord Chief Justice's Brexit Law Committee, which we support and for which we provide the secretariat.

All of the Law Society’s major asks on civil justice co-operation were adopted and a significant amount of our messaging was reflected in the Government’s paperon cross border civil judicial cooperation that was published in mid-August. The Government stated that it will seek to maintain as close and comprehensive cross-border civil judicial cooperation as possible, on a reciprocal basis. The paper also contained a clear statement of intention to remain in the Hague Conventions and Lugano Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters. Further the paper commits to the enactment of the Rome I and II instruments on choice of law and applicable law. This is a significant reflection of the Society's intensive work in this area since the referendum.

The Government’sBrexit white paper (published in February 2017)includes the following commitments on civil and criminal justice:

  • 'We recognise that an effective system of civil judicial cooperation will provide certainty and protection for citizens and businesses of a stronger global UK.'
  • 'We will continue to work with the EU to preserve UK and European security, and to fight terrorism and uphold justice across Europe.'

The new Lord Chancellor has said that promoting legal services is a priority for him. Additionally, the formerLord Chancellor acknowledged that the Government will be working with the profession and judiciary‘to maintain our prime position in the world of legal services and dispute resolution.’

We were also pleased to see that the Conservative general election manifesto recognised the importance of legal services as a major export.

  1. Focus on market access and transitional arrangements

With the Government recognising the importance of criminal justice co-operation and the release of its paper on civil justice co-operation, the Law Society’s work will now focus on three main areas:

  • Mutual market access for solicitorsand law firms including rights of audience at EU courts, institutions and the Unified Patent Court and for their clients to have legal professional privilege.
  • Ensuring legal certainty post Brexit particularly by emphasising the need for transitional arrangementsas a way of preserving legal certainty and giving sufficient time for the UK and EU to reach a mutually satisfactory result.
  • Filling in the detail of the Government’s position on civil justice including EU wide reciprocal arrangements in various areas of civil justice.

We will also be seeking to influence the EU (Withdrawal) Bill to ensure that there is sufficient legal certainty when the UK leaves the EU. We will be briefing and working with parliament to improve the Bill.

  1. Transitional arrangements

The Law Society Council should consider whether it should now focus its policy position, in the short term, more intensively on transitional arrangements.

The Law Society could recommend:

  • That the UK seeks to establish a transitional arrangement as close as possible to the current arrangement to allow them sufficient time to negotiate a comprehensive new deal (see potential models below).
  • We note that the main possible models include the extension of the membership and freezing of membership models. These would allow the UK the widest access to the areas of importance identified by the Government – for example, the EEA model does not include criminal justice cooperation. This would also maintain the status quo, which would provide the most legal certainty while the negotiations are on-going.
  • The questions that remain to be settled during 2018 are those relating to the ending of the UK membership: the UK’s involvement in the EU institutional framework, the judicial enforcement and the budgetary contributions during the transitional period.
  • An “implementation period” following the ratification of a new deal to allow businesses and citizens to adapt to the new arrangement.

Current position on transitional arrangements

In our Brexit and the Lawpaper, which was approved by the Legal Affairs and Policy Board, it was noted that the Law Society’s position on transitional arrangements was as follows:

It is of paramount importance that an orderly transition to whatever follows on from UK membership of the EU is achieved. Legal certainty is a key point and the likely breadth of changes means that citizens and businesses – and indeed the member states themselves – will need time to familiarise themselves with changes to the system and to adapt.

As such, a sensible lead-in time and timescales throughout the transition period are desirable. This is of benefit to both the UK and the EU.

The Law Society considers that there are three scenarios where there may be a need for transitional arrangements:

  • If at the end of the two year period set out under Article 50 no agreement on the arrangements for the withdrawal of the UK from the EU has been reached, and no extension is granted. At this point the UK will cease to be an EU member state and will become, to all effects, a third country in its relationship with the European Union. This is to ensure that rights and obligations do not simply ‘fall away’.
  • The UK has established the terms of withdrawal but has not established a new relationship with the EU within the two year window given by Article 50.
  • The UK and EU have agreed on withdrawal terms and established their new relationship, but there is a need for a period of time for the UK Government, EU member states, businesses and individuals to adapt to the new legal rights and obligations.

In all of these scenarios transitional arrangements will need to address the following issues:

  • the date at which rights and obligations cease – both in terms of individuals and member states
  • if any rights are to be preserved, the effective date for determining whether certain categories of persons (natural or legal) will continue to benefit
  • what happens in relation to ongoing cases before the CJEU or those before the national courts which have a cross-border element
  • any changes within the institutional structures if there is a phased approach for transitioning to the new relationship.

Potential models for transitional arrangements

International negotiations take a long time and those for a new UK/EU relationship are likely to be particularly complex. It may be that two years is an ambitious timeframe for the details of a new relationship to be finalised. The transitional arrangements could be seen as a ‘place holder’ for negotiations. Potential models for these arrangements are:

  • Retain the majority of rights and obligations of membership – The Law Society notes that retaining membership is unlikely to be politically desirable for either the UK or the EU. However, it may be possible to continue formal membership of the EU beyond the two year period with the UK continuing the rights and obligations it entails. It may also be possible to make alterations to certain obligations to recognise that the UK does not have the same long term objectives. However, there may be problems if the UK and EU were to deviate too far from current EU arrangements, as this may be seen as a new deal which we would need to ratify or could lead to a lack of compliance with WTO obligations. Such an approach could offer advantages in terms of the legal certainty for individuals and businesses, and the continuity of the UK’s wider international relationships – eg WTO membership, the EU’s free trade agreements, conventions such as the Hague Conventions or the Aarhus Convention, US privacy shield etc. However, it would also mean that the UK would be unable to move forward with negotiating new agreements in trade or other areas covered by the EU competences.
  • ‘Freeze’ rights without formal membership – It might also be possible to ‘freeze’ the status quo as to legal rights and obligations. This would mean that the UK’s formal membership of the EU would cease, even though the EU legal framework is otherwise still applied between the EU and the UK. Within such a model there would still be significant questions to address, including what contribution the UK can make to the adoption of new legislation and whether it would be compatible with WTO obligations.
  • Establish a temporary EEA model – The UK would formally leave the EU but retain the key aspects of its trading relationships. This could include continued participation in the internal market membership and perhaps also the customs union. This could still work alongside participation in EU programmes, cooperation in criminal justice and policing, and cooperation in the field of civil justice. Such an agreement may need ratification by all parties. In addition to the EU states and the UK, it is likely that the other EEA states would need to agree to such an agreement. Ratification of transitional arrangements and the effect on timings. In relation to the withdrawal agreement, the voting process is clear – a qualified majority of member states. However, although Article 50 TEU foresees the possibility of negotiating a new relationship, the withdrawal agreement is only to ‘take account’ of such hypothetical new arrangements.
  1. Engagement post General Election 2017

Since the 2017 election, the Law Society has approached ministers and parliamentarians relevant to Brexit. So far the President has met with:

  • Lord Chancellor and Secretary of State for Justice, Rt Hon David Lidington MP
  • Justice Minister, Dominic Raab MP
  • Minister of Trade Policy, Lord Price
  • Shadow Lord Chancellor, Richard Burgon MP
  • Parliamentary Private Secretary to Justice Ministers, Alan Mak MP

Engagement has also been carried out at senior official level. For example,the Chief Executive met with Ministry of Justice Permanent Secretary Richard Heaton on 29 August, where our key Brexit asks were discussed. In July, we also met with Gareth Davies, Director General at the Department for Business, Energy and Industrial Strategy to discuss our key asks on market access for solicitors. We continue to engage with Directors and Deputy Directors with Brexit responsibilities across Government including MoJ, BEIS, DIT, HMT and the Department for Exiting the EU.

When Parliament returns, the President will be meeting with:

  • Chair of the Justice Select Committee, Bob Neill MP
  • Chair of the Treasury Select Committee, Nicky Morgan MP
  • Chair of the International Trade Select Committee, Angus MacNeill MP
  • Parliamentary Private Secretary to the Lord Chancellor, Lucy Frazer MP
  • Shadow Secretary of State for Exiting the EU, Keir Starmer MP.
  1. Future work

Following the General Election, the Law Society has written to new or reappointed Ministers in a number of departments to seek meetings to discuss our priorities for Brexit. Some of these meetings have already taken place (as noted in section 4). We will continue to engage with civil servants in the relevant departments as the negotiations continue and to feed into their policy development through the Brexit Law Committee and the Professional and Business Services Council (PBSC) mutual market access working group.

We have also sent congratulatory letters and meeting requests to solicitor MPs. Of note, nine new solicitor MPs entered Parliament whilst five solicitors either stood down or lost their seats. We have also approached a number of non-solicitor MPs interested in Brexit. We will also be holding a dinner for solicitor MPs in Parliament in September and will be attending Party Conferences to discuss our priorities.

Following the election of Chairs of new parliamentary committees in July, we have written to those relevant to Brexit (Exiting the EU Select Committee, Justice Select Committee and a number of Lords Committees). We will also write to members of these committees once they are fully announced in September. We will engage with Parliament as the bills relevant to Brexit pass through the two Houses of Parliament, particularly the European Union (Withdrawal) Bill.

We will continue to engage with the CCBE, EU institutions and meet bilaterally with European bars and law societies. We will also BE undertaking one to one engagement with all firms who have a European office in the next three months.

We will be launching phase 2 of our Global Legal Centre campaign on 28 September, including videos of lawyers from across the globe speaking about the benefits of English and Welsh law and England and Wales as a jurisdiction of choice.

Annex A – Law Society Brexit activity since June 2016

Wider engagement

The Law Society has engaged with a number of influential stakeholders to discuss the legal sector priorities for the EU negotiations. These stakeholders include:

  • Ministers –Prior to the Election wealso met with the justice ministers, the Home Secretary, Secretary of State for Exiting the EU, and the Attorney General. We have attended roundtables representing the sector with an international trade minister, ministers from the Department for Exiting the EU, the Departments for Business, Energy and Industrial Strategy, and the Lord Chancellor. We have also met with the Number 10 policy lead on justice.
  • Civil servants –The Law Society met with the Permanent Secretary at the Ministry of Justice, Richard Heaton, and has regular meetings with Directors and Deputy Directors responsible for Brexit within his Department. We also met with the Director General leading on Brexit at the Department for Business, Energy and Industrial Strategy and have regular meetings with members of his team. We have had regular meetings with Deputy Directors at the Department for Exiting the EU as well as a number of policy advisors. The Brexit Taskforce roundtables were also attended by civil servants from the: Ministry of Justice; Department for Business, Energy and Industrial Strategy; Department for Exiting the EU; HM Treasury; Intellectual Property Office.
  • Mayor of London’s office –Immediate Past President Robert Bourns secured a position on the Mayor of London’s Brexit Advisory Group. We have been engaging with the Mayor of London’s office, having held meetings with the Deputy Mayor for Business and a number of officials.
  • EU institutions – The UK Law Societies’ Brussels Office have been engaging with officials from the EU Commission, the UK Permanent Representation and the European Parliament. The Immediate Past President also visited Brussels on 20 and 21 June to discuss our priorities.
  • The judiciary –The Immediate Past President met with the outgoing Lord Chief Justice and outgoing President of the Supreme Court to discuss Brexit. We have also been working with the Chancellor of the High Court and other senior members of the judiciary through the Brexit Law Committee. The President has met with the incoming President of the Supreme Court and we have approached the incoming Lord Chief Justice to meet.
  • Bars’ and law societies’ leaders –We are talking with European bar representatives on a bilateral basis, and via the Council of European Bars and Law Societies on an ongoing basis to discuss the implications of Brexit and communicate our priorities for the negotiations.

Representation in government groups

As well as our regular meetings with officials the Law Society has been playing a key role in a number of Government industry/sector groups:

  • Brexit Law Committee – The Brexit Law Committee was set up by the former Lord Chancellor and Lord Chief Justice to bring together a group of senior practitioners to identify and provide solutions for legal issues on Brexit. The Law Society provides the Secretariat, and the chair is Robert Elliott, former Senior Partner at Linklaters. The Group has submitted papers to the Government on the European Court of Justice and how to retain civil justice co-operation. They are drafting a paper on competition law and will be focusing on intellectual property law at their next meeting.
  • Professional Business Services Council’s (PBSC) Mutual Market Access Group – The Law Society is a member of the Council and has been working with Freshfields Bruckhaus Deringer, who chair the Mutual Market Access group to put together a paper on market access for professional and business services in light of Brexit. A separate paper on legal services was produced and a summary of this will be circulated to committees shortly. Through the group, the Law Society met with Lord Prior, BEIS Minister for Professional Services and the Director General at BEIS. The Chair of the group is Edward Braham, Senior Partner at Freshfields Bruckhaus Deringer.

Working with Parliament