In my previous post (here), I addressed the reasons why international law and EU both arrive at the conclusion that an independent Scotland would not automatically succeed to EU membership. Given that it now seems to be accepted on all sides that membership of the EU would therefore need to be negotiated, much of the previous post can be considered a necessary background to the following discussion. In this post, I consider the correct legal basis in the European Treaties for negotiated EU membership, as well as some of the problems involved in the negotiations, the consequences if they fail, and how such issues might come to be considered by the Court of Justice.
Due to the complexity of the issues and the consequent length of this post, it is only appropriate to summarise my view from the outset. In theory, I consider that either Article 48 or Article 49 of the Treaty on European Union (TEU) could be utilised in order to facilitate EU membership for an independent Scotland. However, both routes involve significant difficulties, and it is likely that an Article 48 process would be the more problematic of the two, and could be blocked. In any case, it appears that the Scottish Government’s proposals for the timetable from a ‘Yes’ vote to independence day are wildly optimistic.
On balance, and contrary to the position in the Scottish Government’s White Paper, it may therefore be the case that Article 49 should be preferred by the Scottish Government, for the reasons I set out below. However, whichever process is used, if the date for independence day is immovable, then the possibility of the requisite membership steps remaining incomplete at that time is a nettle (or a thistle!) that must be grasped. In such a scenario, I envisage that EU law would be given continuity of effect, and that it would be possible or even likely that a case would reach the Court of Justice which would test this point. However, such a position would probably be an interim solution at best, and could still result, in the worst case scenario, in the EU rights and obligations of an independent Scotland, its citizens, and its companies, coming to an end.
The Competing Legal Bases for Negotiated EU Membership
An initial, and one would hope reasonably obvious point to make, is that following a ‘Yes’ vote, Scotland is not immediately an independent state. The referendum will take place this Thursday, 18 September. However, the Scottish Government has proposed that independence day for Scotland will be 24 March 2016, some 18 months later. Therefore, for those 18 months, Scotland remains part of the UK and there is no immediate effect on the EU position (or any other legal position). Once this has been appreciated, the reason why there is an intense debate about the correct Treaty basis for negotiating EU membership becomes clear.
Article 48 TEU provides for the negotiation of general treaty changes between existing member States, and so the Scottish Government proposes that, immediately following a ‘Yes’ vote, the UK should negotiate on Scotland’s behalf with its EU partners to make treaty changes. Examples would include providing for Scottish MEPs, a Scottish Commissioner and the like, as well as adding (assuming the monarchy is retained) “the Kingdom of Scotland” to the list of states to which the European Treaties apply. This represents a claim by the EU legal order for the application of EU law in Scotland (according to the competences set out in the European Treaties). On independence day, the newly independent Scotland would then lodge its instrument of accession with the Government of Italy and would thereby formally accept that claim by the EU legal order and become a full member State. Thus, under the Article 48 process, the type of ‘protection gap’ identified in my previous post, or any other abrogation of EU rights and obligations, does not occur – negotiations are concluded prior to independence, and the only step that falls to be taken after the declaration of independence is to deposit the instrument of accession, which is straightforward.
Article 49 TEU is a superficially much less attractive option, in that it specifically contemplates applications for membership from European states. Thus, the Article 49 TEU process cannot begin until after independence day (as it has typically been analysed, although I challenge that assumption below). Following on from the position set out in my previous post, i.e. that there is no automatic succession to EU membership, Scotland would be outside of the EU, and the assumption that follows from this is that EU law would cease to apply (another point which I challenge below). This is the ‘protection gap’ and abrogation of EU rights and obligations which EU lawyers have suggested would not be countenanced by the EU legal order, and so they argue that Article 49 TEU would not be the correct route to membership.
One other aspect of an Article 49 process is that the Copenhagen criteria apply, part of which makes it a condition of membership that applicant states comply with EU standards across 35 different policy fields (known as chapters). I do not go into the detail of either the Copenhagen criteria or the chapters here, although I refer to them together as ‘formal conditions of membership under Article 49 TEU’ below.
Issues Common to Both Processes
There are three important considerations which apply regardless of the process eventually adopted. Each of those considerations relates to ratification.
The first is that all of the existing member States must ratify a treaty introducing amendments under Article 48 TEU, or ratify an accession treaty under Article 49 TEU. This gives any member state the power of veto. Due to Spain’s difficulties with Catalonia, the risk of a Spanish veto (supposedly in order to demonstrate that EU membership for a future independent Catalonia would be in grave doubt) has often been discussed. However, it may be that this risk has been over-exaggerated. If Catalonia declared independence without the consent of Spain, then it would be highly unlikely to achieve recognition by EU member states as an independent state. The EU legal order would view Catalonia as remaining a part of Spain, and would continue to expect that Spain would fulfil its EU obligations and respect EU rights there. That is a wholly different scenario from Scotland and the UK’s consent based process, which the Spanish Government could highlight by insisting on a carefully drafted preamble to any amending treaty and making clear public pronouncements to that effect.
The second is that even if member States have not actually used their vetos in the past, they may use the threat of a veto as leverage in negotiations if it is in the national interest to do so. Thus, when Croatia sought to join the EU as the 28th member state, neighbouring Slovenia refused to move forward with ratification until certain disputed issues between the countries which related back to the dissolution of the SFRY had been resolved. This means that there is certainly room for delay in either amendment process as part of a political strategy by other member states, although the chances of a delay occurring for this reason are impossible to predict.
The third is that whichever method is used to ensure the necessary amendments to the European Treaties, that method ultimately involves an independent Scotland formally acceding to them by depositing an instrument of ratification. In her evidence to the Scottish European and External Relations Committee (the ‘Committee’) (see the Report here), the Deputy First Minister stated:
“If you are talking about traditional accession to the European Union—which I argue is not the position that Scotland would be in—to the best of my knowledge the ratification process has never been difficult or controversial. It has never been blocked by a member state and it has never occasioned a referendum in a member state, so I do not consider that that would be required for Scotland even if we were in a traditional accession situation, which we are not because of the situation that we have laid down through article 48.”
As a historical point, that is correct. However, looking forward, it may not be. By way of example, I understand that in response to the Lisbon Treaty (which foreshadowed the membership of Croatia), the French Constitution was amended to add a new Article 88-5 (taken from the English text version here):
“Any Government Bill authorizing the ratification of a treaty pertaining to the accession of a state to the European Union shall be submitted to referendum by the President of the Republic.
Notwithstanding the foregoing, by passing a motion adopted in identical terms in each House by a three-fifths majority, Parliament may authorize the passing of the Bill according to the procedure provided for in paragraph three of article 89.”
I am unaware of whether there are similar provisions contained in other national constitutions, but it seems that even a treaty amending the European Treaties using Article 48 TEU is at least arguably one ‘pertaining to the accession of a state to the European Union’ (and Article 49 amendments certainly would be). Therefore, by virtue of the French Constitution, there is at least the possibility of one referendum which might have to be held as part of the accession process, which could occasion significant and yet further delay.
Which is the Correct Legal Basis?
The Article 48 TEU approach has been advocated by a number of leading EU lawyers, including Professor Douglas-Scott in her working paper and a number of others in their evidence to the Committee – not least Sir David Edward, the former British judge on the Court of Justice. On the other hand, a number of those giving evidence (with equally impressive qualifications) thought that the use of Article 48 TEU would be inappropriate and that Article 49 TEU would have to be used. Overall, no consensus emerged before the Committee.
The Article 49 TEU approach has also received the approval of outgoing President of the Commission Barroso, outgoing Vice President of the Commission Reding, and it might be inferred that such a view is shared by outgoing President of the Council Van Rompuy based on his comments concerning Catalonia. It appears that the Commission’s position was recently confirmed as remaining the same. However, as Douglas-Scott points out in her working paper, a different opinion was voiced by Hugh Maclean (a former Commission official) and Graham Avery (an honorary Director General of the Commission) in their evidence before the Committee. All such statements have no direct legal impact (although the Commission would be able to intervene to argue for a particular outcome before the Court of Justice, if a relevant case ever reached it), but nevertheless, if a particular view is thought representative of the Commission’s position, it could create a clear steer for the views of Member States as to the correct legal basis.
Before the Committee, there was not much in the way of legal argument against using Article 48 – rather, opposition mainly took the form of a general feeling that Article 49 was designed with accession in mind. This general feeling was given a legal articulation by, amongst others, Jean-Claude Piris (a former legal counsel to the European Council), who suggested that Article 49 had to be used due to EU law’s lex specialis approach, under which a more precise legal basis is to be preferred over a more general one. However, that argument is unpersuasive for three reasons.
Firstly, Article 48 can be used to make any treaty amendment, which could include amending Article 49 to add the text “this Article shall not apply where the applicant state was, immediately prior to independence, a part of an existing member State”. That provision could be included if necessary as part of the Scottish amendments, although really, the fact that it could be done demonstrates that Article 48 is a legally acceptable way of conducting the accession process if the member States so decide.
Secondly, as all participants in the debate have acknowledged, the Scottish situation is unprecedented and is not expressly addressed by the European Treaties. An argument that says “Well this is an accession, and Article 49 is about accession” is all very well and good, but the equal and opposite argument is “Well this is an accession from a country which has been within the EU legal order for many years, and Article 49 is about accession of countries that have never been within the EU legal order”. The lex specialis argument assumes what it seeks to prove.
Finally, given the nuanced relationship between international law and EU law set out in my previous post, international law might again prove to be of some assistance here. Article 31 of the Vienna Convention on the Law of Treaties 1969 sets out the general rules on treaty interpretation and receives near universal recognition as being a statement of customary international law. Article 31(3) provides that, in addition to making reference to context in matters of treaty interpretation, there shall be taken into account:
“(a) Any subsequent agreement between the parties regarding the interpretation of the treaty or the application of its provisions;
(b) Any subsequent practice in the application of the treaty which establishes the agreement of the parties regarding its interpretation”
Applying this approach, if the member States were agreed in proceeding towards making treaty amendments on the basis of Article 48, then, as a matter of EU law (influenced by international law), Article 48 should be regarded as a permissible legal basis for accession negotiations in the Scottish case.
In theory, therefore, I consider that it would be legally possible to use either Article 48 or Article 49 TEU.
Practical Difficulties and Pragmatic Considerations concerning Article 48 TEU
However, there are a number of problems which suggest that Article 48 TEU might be a less desirable route to membership than envisaged by the Scottish Government.
Firstly, in his evidence to the Committee, the Secretary of State for Scotland stated that:
“The difficulty with insisting on an article 48 procedure if member states do not unanimously agree that it is appropriate is that it would be open to legal challenge.”
As I set out in the previous section, I do not consider that a legal challenge would necessarily have any merit, although it could be a potential delaying factor. In fact, the real point that should have been made here is the possibility of a veto on technical grounds if the existing member States do not agree that Article 48 TEU is the correct legal basis. If, (as I speculated above), the Commission position preferring Article 49 TEU influences member State attitudes, the need for unanimity means that if a single member State calls for an Article 49 process, an Article 48 proposal would be left dead in the water.
The second point again concerns the timescale for negotiations using Article 48 TEU. Even though the formal conditions of membership under Article 49 would not automatically apply, it is likely that a modified version of those conditions would be imposed. As Professor Armstrong put it in his evidence to the Committee (albeit concerning Article 49):
“An independent Scotland would be assuming new domestic policy responsibilities – after all, that is part of the case for independence – in areas within the scope of application of the treaties. It is, therefore, appropriate that other EU Member States and institutions have the opportunity to assess how an independent Scotland would, institutionally and politically, exercise its domestic competences in their European context, including those competences which were hitherto reserved to Westminster.”
In addition, for the UK to represent the interests of Scotland in any negotiations (which it or another member State would need to initiate if Article 48 were to be used), it would need to have a clear idea of the demands and concessions which could be made based on Scotland’s position post-independence. As Patrick Layden QC forcefully pointed out in his evidence to the Committee, this would require the UK-Scotland relationship to be at least largely settled in advance of EU negotiations. In his evidence, the Secretary of State for Scotland commented, I think with some degree of justification, that:
“many things about an independent Scotland’s constitution would be unclear. Absolutely central to any negotiation on Scotland as a potential EU member is what currency she would use and whether she would have a central bank. Those matters would need to be established first, before anything could be considered with regard to an application.”
Settling those questions would themselves involve delay, even before negotiations were opened at EU level, which, particularly concerning the continuation opt-outs currently enjoyed by the UK will likely be a controversial and hard fought process.
Further, in a previous post on this blog, Dr Vidmar outlined the potentially confusing effect of a Scottish referendum and an UK-EU referendum, with the Scottish voter left uncertain whether a vote for or against independence would be more likely to result in that voter maintaining ties to the EU. However, the dual referendum issue becomes even more acute when considering negotiations under Article 48 – a point which was only briefly touched on before the Committee.
In reality, this ‘broader change’ point is likely to prove to be the most major downside to the use of Article 48, as the goal of the repatriation of powers to the UK is likely to be attractive to whichever party ends up in government. Prime Minister Cameron (or any successor) will only have limited opportunities to negotiate a new relationship with the EU (and even fewer if he wins the General Election and has to deliver a referendum in 2017). Although a ‘Yes’ vote would be disastrous for the Unionists, it would have the silver lining that treaty changes will be required, (apart from Scottish entry negotiations), in order to adjust the rUKs obligations and position within the EU. Given that President Hollande of France had previously stated that treaty amendments were “not a priority”, there is unlikely to be a second opportunity before 2017 to table reform proposals. A further added complication is that Chancellor Merkel of Germany may also be seeking treaty changes which in fact pass powers towards rather than away from Brussels (here and here). All of this creates something of a ‘perfect storm’ of competing priorities which will engender considerable disagreement and further delay.
The third point concerns the timescale for ratification. I understand that as matter of Irish constitutional law, where any amendments contained in a new EU Treaty are considered to go beyond the “essential scope or objectives” of the existing European Treaties, the decision in Crotty v An Taoiseach (1987) requires the Republic of Ireland to hold a referendum. Whilst I am not qualified to comment on the application of that dictum, or political decisions which might be taken to hold a referendum in order to avoid any constitutional challenge, one can clearly envisage that the more proposals which find their way into the Article 48 TEU treaty amendments, the greater the risk that an Irish referendum would need to be successfully held before Scottish membership could be confirmed. If other member States have similar constitutional provisions or jurisprudence, perhaps introduced post-Lisbon, then this simply compounds the problem.
A Preference for Article 49 TEU?
Three points, which are the mirror image of those set out above, favour using Article 49. Firstly, it would avoid any legal challenge (however hopeless) or any use of the veto for procedural reasons. Secondly, it would focus attention on amendments which are required in the case of Scotland and only Scotland, which would improve the chances of and the speed of agreement. Thirdly, and in relation to that, it would remove the potential for an Irish referendum which would further cause further delay.
Two arguments have typically been used to suggest that Article 49 is inapposite, as previously alluded to. The first is that the process can only begin after independence day, rather than after the referendum result. I think this suggestion is incorrect – as Professor Weiler points out, Scotland could negotiate after the vote, jump through the relevant constitutional hoops and presumably demonstrate compliance with the formal criteria for membership. This would then leave only the formal step of accession to be completed. Nevertheless, I think that Professor Weiler is likely to be wrong if he is suggesting that only the Scottish accession would need to be completed after independence day – I consider that as a matter of national law, it is unlikely to be constitutionally acceptable to ratify a ‘treaty’ with Scotland before it is formally an independent state. However, given my argument that an Article 48 process will not be complete by the proposed independence day, it may be that ratification in either case would still be ongoing after that date. If that is right, and there remain necessary membership steps outstanding under either process, then there is no reason to prefer Article 48. The second argument against using Article 49 is that it creates a protection gap and results in the abrogation of EU rights and obligations. However, as I hope to have demonstrated up to this point, unless the date for independence is moved, it likely that that will be the prima facie position regardless of the choice of treaty basis for negotiating Scottish membership.
Avoiding Protection Gaps and the abrogation of EU rights and obligations
I say prima facie position because I consider that there is sufficient material within EU law to conclude that, for an interim period, no protection gap would result and EU rights and obligations would not be abrogated. The argument is extremely simple. In my previous post, I drew attention to Article 50 TEU, which provides that where a member State decides to leave the EU, if negotiations fail, the European Treaties cease to apply after two years. It seems to me that if EU law requires a minimum period of two years ‘disengagement’ during which EU law continues to apply where there is a direct choice to leave the EU, there is an extremely strong argument that it also does so where, in the absence of completed negotiations, there is an indirect choice would otherwise result in leaving the EU.
This interpretation, which could be said to be an interpretation of Article 50 TEU in combination with Article 52 TEU (the provision setting out the states party to the European Treaties), could be established in two ways. The easiest would be to employ the Article 31(3) VCLT method set out above, and have all the member States agree that this is what Articles 50 and 52 TEU are to mean. This has the advantage that ‘agreement’ does not need to be demonstrated by treaty, thus avoiding the need for ratification. The other way would be for the Court of Justice so to rule, using a combination of an Article 50 and 52 TEU interpretation argument and an extension of the ‘sincere co-operation’ argument suggested by Sir David Edward.
How would the issue reach the Court of Justice?
It is possible that a case could reach the Court of Justice from Scotland after independence day. The Scottish Government has put out for consultation a draft Scottish Independence Bill. Notably, section 35 of the Bill is a continuity clause, such that until a constitution is promulgated, Scotland will continue to apply UK law in force as of independence day. This will include the European Communities Act 1972. Therefore, it is possible that Scots courts would be obliged to send a reference for a preliminary ruling (just as UK Courts currently are under certain circumstances) to the Court of Justice, and it would then be for the Court of Justice to rule on its jurisdiction.
However, more likely would be a case brought in another member State. One example might be if a company in another member State makes a taxable supply to a company in Scotland, but receives VAT treatment as if it had made a taxable supply to a company in a non-EU state. Any subsequent Court challenge (on the basis of the arguments for some kind of continuity already canvassed in these posts) would likely result in a reference to the Court of Justice.
In summary, an independent Scotland would not automatically be a member of the EU. Hard negotiation lies ahead in the event of independence, both with the rUK and with the EU member states. The process will be difficult and may involve more than one referendum. Quite simply, the timescale proposed by the Scottish Government is unrealistic. The easiest way to avoid the problem of protection gaps and the abrogation of EU rights and obligations is to postpone independence day to an as yet undetermined date in the future. However, if that is politically impossible, then I consider that EU law does not come to an end with a declaration of independence, either in Scotland or for Scots and Scottish companies within the EU. This would leave an interim period of two years, (unless further agreement for interim application of EU law were agreed), within which to conclude negotiations. In the worst case scenario, Scotland, its citizens and its companies could still find themselves outside of the EU at some time in the future. Whether that risk, as well as that involved in the hard bargaining along the way, are too great, is a question for the individual voter. Scotland will not simply be cast adrift from the EU legal order on independence day – however, seamless transition into EU membership, it is not.