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Leaving the EU budget: Brexit and mutual financial claims

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Abstract

Options for a negotiated financial settlement range among the most contentious issues raised by the withdrawal of the United Kingdom from the European Union. This article critically assesses the legal arguments underlying mutual financial claims. It then examines specific matters arising within the financial chapter of the bilateral negotiations, taking stock of the progress to date.

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Notes

  1. Sanchez-Barrueco/Stephenson [19].

  2. European Council conclusions, 14 December 2017, available at http://data.consilium.europa.eu/doc/document/XT-20011-2017-INIT/en/pdf.

  3. Joint Report from the negotiators of the European Union and the United Kingdom Government on progress during phase 1 of negotiations under Article 50 TEU on the United Kingdom’s orderly withdrawal from the European Union, 8 December 2017, https://ec.europa.eu/commission/sites/beta-political/files/joint_report.pdf.

  4. Haas/Rubio [11], p. 183.

  5. Friel [10], p. 425, Piris [15], p. 130.

  6. Bloomberg Politics, https://www.bloomberg.com/politics/articles/2017-02-07/brexit-bill-just-like-paying-your-round-in-the-pub-eu-tells-may.

  7. Sanchez-Barrueco [18].

  8. John Kerr, quoted by A Gray (2017), ‘Article 50 annotated with comments from its author’, Politico, 28 March 2017 http://www.politico.eu/article/article-50-brexit-europe-annotated-with-comments-from-its-author-lord-kerr-theresa-may/.

  9. Quoting John Kerr, ‘Article 50 Was Designed ‘NEVER to Be Used’—Says the Man who Wrote the EU Divorce Clause’ Sunday Express 23/07/2016, http://www.express.co.uk/news/world/692065/Article-50-NEVER-to-be-used-Europe-Brexit-Italy-Prime-Minister; similarly, Andrew Duff [8], at p. 51 wrote ‘none of us in the Convention ever expected the provision actually to be used—which might explain its relatively sketchy character’. On the negotiations of the clause, see Puntscher/Wessels [16], p. 184.

  10. http://www.unesco.org/education/pdf/UNESCO_E.PDF.

  11. Craig [5].

  12. European Court of Auditors (2016): EU budget: time to reform? A briefing paper on the mid-term review of the Multiannual Financial Framework 2014–2020, p. 37, https://www.eca.europa.eu/Lists/News/NEWS1611_03/Briefing_paper_MFF_2014-2020-en.pdf.

  13. Eeckhout/Frantziou [9], p. 701. Others contest the specific resort to the Vienna Convention to complete Article 50: focusing on the revocability of the notice of withdrawal, see Smismans [21].

  14. Church/Phinnemore [4].

  15. Dörr/Schmalenbach [7], p. 89.

  16. Ibid., p. 93; Kuijper [13]; Sari [20].

  17. European Commission Guidelines.

  18. The International Court of Justice is the general court for ‘treaties and conventions in force’ (Art. 36 ICJ Statute). Regarding contentious proceedings, legal standing is granted to sole states (Art. 34.1 ICJS), thus excluding international organisations. Serbia dodged the lack of legal standing of NATO through separate proceedings against each and every other state party in the Legality of the use of force case, I doubt that the degree of integration in the EU would allow attributing EU acts to member states, even in collective actions. ICJ rulings are binding but show a remarkably low rate of enforcement. Advisory opinions are reserved to certain UN bodies and non-binding. Two rare exceptions regard conflicts between the UN and a state party, and appeals against certain decisions of international administrative tribunals if their statute so establishes. See Bavishi/Barakat [2].

  19. On UK courts’ potential involvement, see generally Peers [14] and Craig [5].

  20. Barker [1].

  21. Darvas [6].

  22. British Prime Minister Theresa May affirmed ‘The UK will honour commitments we have made during the period of our membership’ in her Florence Speech of 22 September 2017 (https://www.gov.uk/government/speeches/pms-florence-speech-a-new-era-of-cooperation-and-partnership-between-the-uk-and-the-eu), only after having stated that ‘[s]ome of the claims made on this issue are exaggerated and unhelpful and we can only resolve this as part of the settlement of all the issues [linked to withdrawal and potentially future bilateral framework]. Still, the Government does not want our partners to fear that they will need to pay more or receive less over the remainder of the current budget plan as a result of our decision to leave.’

  23. Speech by the UK Prime Minister Theresa May, Lancaster House, 17 January 2017, https://www.gov.uk/government/speeches/the-governments-negotiating-objectives-for-exiting-the-eu-pm-speech.

  24. Commission Task Force for the Preparation and Conduct of the Negotiations with the United Kingdom under Article 50 TEU (2017), Essential Principles on Financial Settlement, TF50 (2017) 2/2, https://ec.europa.eu/commission/sites/beta-political/files/essential-principles-financial_settlement_en_2.pdf.

  25. See a comprehensive list of those bodies and funds in Annex 1.

  26. Joint report from the negotiators of the European Union and the United Kingdom Government on progress during phase 1 of negotiations under Article 50 TEU on the United Kingdom’s orderly withdrawal from the European Union, TF50 (2017) 19, https://ec.europa.eu/commission/sites/beta-political/files/joint_report.pdf, pp. 9–13.

  27. ‘Theresa May’s £39bn Brexit divorce bill to be investigated by auditors to establish if it is ’reasonable”, The Independent, 10 January 2018.

  28. Council Decision of 21 April 1970 on the Replacement of Financial Contributions from Member States by the Communities’ own Resources (70/243 ECSC, EEC, Euratom) [1970] OJ L 94/19.

  29. E.g., Jean-Luc Dehaene and Ivailo Kalfin advocated ‘an in-depth reform of the financing of the EU budget that should return to a system of genuine, clear, simple and fair own resources.’ in European Parliament (2014), ‘Draft Report on negotiations on the MFF 2014–2020: lessons to be learned and the way forward’ http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//NONSGML+COMPARL+PE-527.841+01+DOC+PDF+V0//EN&language=EN, p. 5.

  30. The Barroso Commission attempted at transforming the 2006 IIA including the 2007–2013 MFF into a regulation (COM (2010) 72 of 3.3.2010) in the framework of the so-called ‘Lisbon Package’, to no avail. The Council refused to get involved in trialogues on the package and proposed instead its own draft Regulation. The European Parliament felt that its prerogatives were harmed and did not consent (TA/2011/326/P7 of 6.7.2011). The Juncker Commission eventually withdrew the proposal in the framework of initiatives to simplify legislation [2015] OJ C 80/17.

  31. Council Regulation No 1311/2013 of 2 December 2013 laying down the multiannual financial framework for the years 2014–2020 [2013] OJ L 347/884.

  32. Council Decision of 26 May 2014 on the system of own resources of the European Union [2014] OJ L 168 of 26 May 2014.

  33. Case 93/85 Commission v. United Kingdom [1986] ECR 4011, EU:C:1986:499.

  34. The European Defence Agency launches projects for defence cooperation open to states following a logic of fair return: Member States will contribute to an extent close to the extent to which their own defence contractors benefit from intelligence sharing. Sanchez-Barrueco [17].

  35. Article 29(2) of the Accession Treaty with Croatia [2012] OJ L 112/6.

  36. Ibid., Arts. 30, 31 and 32, respectively; Commission (2011) ‘Information on the Results of the EU Accession Negotiations with Croatia, Compiled by the DG Enlargement’ https://ec.europa.eu/neighbourhood-enlargement/sites/near/files/pdf/hp/results_of_th_eu_accession_negotiations_with_croatia.pdf, p. 26.

  37. Ibid., p. 11.

  38. Ibid., p. 18. Under the principle of automatic decommitment, sums committed to a programme must be claimed by the end of the second year following the adoption of the programme, otherwise, unpaid money ceases to be available to that programme.

  39. Annual report of the Court of Auditors on the implementation of the budget concerning the financial year 2016, together with the institutions’ replies [2017] OJ C 322/1, see Chapter 2.

  40. Barker [1], p. 7.

  41. Hofmann [12].

  42. European Commission (2017), Statistical Bulletin for Commission on 1 July 2017, Officials, temporary agents and Contract agents by first nationality and grade; available at http://ec.europa.eu/civil_service/docs/europa_sp2_bs_nat_x_grade_en.pdf.

  43. Hofmann, [12], p. 10.

  44. A former staff union representative holds that the PSEO is a notional fund in which the contribution rate maintains the equilibrium, see Letter of Malcolm Colling to the Editor, Financial Times, 17 May 2017, https://www.ft.com/content/aaa610ac-3722-11e7-bce4-9023f8c0fd2e.

  45. Barker [1], p. 7.

  46. ECA, supra fn. 40.

  47. BOND [3], p. 11.

  48. Ibid., at 14.

  49. See Protocol 5 in the Consolidated version of the Treaty on the European Union [2016] OJ C 202/251.

  50. EIB, 2016 Financial Report, http://www.eib.org/attachments/general/reports/fr2016en.pdf.

  51. Commission Decision of 6 November 2002 establishing the Office for infrastructure and logistics in Brussels [2003] OJ L 183/35.

  52. Ibid., Art. 3(1)(a).

  53. Court of Justice of the European Union, 2015 Annual Management Report, p. 106, http://curia.europa.eu/jcms/upload/docs/application/pdf/2016-06/rapport_gestion_2015_en_version_web.pdf.

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  1. Deusto School of Law, Avenida de las Universidades 24, 48007, Bilbao, Spain

    Maria-Luisa Sánchez-Barrueco

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  1. Maria-Luisa Sánchez-Barrueco
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Correspondence to Maria-Luisa Sánchez-Barrueco.

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Senior Lecturer in EU Law at the University of Deusto. I am grateful to Jan Inghelram, Gabriele Cipriani, José Ramón Canedo, and attendees at the ‘Brexit: Legal Consequences for the EU’ ERA event (Brussels, 27–29 September 2017) for insightful comments on earlier versions, but all the oversights remain my own.

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Sánchez-Barrueco, ML. Leaving the EU budget: Brexit and mutual financial claims. ERA Forum 18, 453–468 (2018). https://doi.org/10.1007/s12027-018-0503-x

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