U.K. Government Loses Brexit Lawsuit Over Article 50 Vote

  • Pound surges to a three-week high in wake of court decision
  • Supreme Court schedules appeal between Dec. 5 and Dec. 8

The Hard Brexit Possibility in a Parliamentary Vote

The U.K. must hold a vote in Parliament before starting the two-year countdown to Brexit, a panel of London judges decided, setting up a constitutional confrontation at the country’s Supreme Court next month.

Triggering the departure from the European Union would “inevitably” change domestic law without Parliament’s approval, Judge John Thomas said Thursday, delivering a decision that is a setback for Prime Minister Theresa May’s plan to unilaterally start the process by the end of March by invoking Article 50 of the Lisbon Treaty.

Gina Miller reads a statement outside the High Court in London on Nov. 3.

Photographer: Simon Dawson/Bloomberg

The ruling sent immediate shockwaves through London’s financial and political enclaves. The pound -- the worst-performing major currency in 2016 -- rose to a three-week high against the dollar and lawmakers on both sides of the debate grappled over whether the decision would force May to alter her plans. The government said it can still press ahead with the March timetable even if it loses an appeal.

“Politically speaking, this is a difficult moment for the government,” said Nikos Skoutaris, a lecturer in EU law at the University of East Anglia. “It is a strong reminder, however, that the government should respect the constitutional rules during the Brexit process. At the end of the day, Brexit would lead to a fundamental change in the British constitutional order.”

The government said it will appeal, and the Supreme Court has already set aside time for a hearing between Dec. 5 to Dec. 8. A court spokesman said it is likely all 11 judges would participate in the review for the first time in the tribunal’s seven-year history.

Round One

"This is just round one,” said Simon Gleeson, co-chair of public policy at law firm Clifford Chance in London. “Whether this tussle continues solely in the courts or also Parliament, in the form of a bill, it will continue to extend uncertainty and make planning and investment tougher for businesses."

The pound extended gains after the decision was announced. It rose 0.6 percent versus the dollar as of 10:17 a.m. in London and continued its gains in the wake of the Bank of England’s statement that it no longer expects to cut interest rates this year. Bank shares, including Royal Bank of Scotland Group Plc and Barclays Plc, also jumped.

Both sides of the Brexit debate were quick to react. U.K. Independence Party interim leader Nigel Farage said he was worried “every attempt will be made to block or delay the triggering of Article 50.” Opposition Labour leader Jeremy Corbyn said while he respects the decision of the British people, the “ruling underlines the need for the government to bring its negotiating terms to parliament without delay.”

The judges, however, tried to keep their analysis as far away from politics as possible and focused on constitutional legal issues dating back to the 17th century.

“This court does not question the importance of the referendum as a political event, the significance of which will have to be assessed and taken into account elsewhere," Judge Thomas, the Lord chief justice of England and Wales, said in the ruling.

Who’s Who in the London Lawsuit Challenging Brexit

The London legal challenge, brought by Gina Miller, who runs an investment startup, and Deir Dos Santos, a hairdresser, sought a court ruling that it would be illegal for the government to invoke Article 50 without first consulting Parliament.

“We’ve been able to be part of this debate and bring some sobriety as we go forward,” Miller said outside court. “I hope that they make the wise decision of not appealing and pressing forward to debate in Parliament.”

Parliamentary Sovereignty

The court said that the non-binding nature of the June 23 referendum made it a poor vehicle to impose sweeping changes on domestic law without a further vote of lawmakers.

The "basic constitutional principles of parliamentary sovereignty" in the U.K. lead to a "conclusion that a referendum on any topic can only be advisory as the result of a vote" unless the language is very clear, the judges said. "No such language is used in the 2015 Referendum Act."

Last month in Belfast, Justice Paul Maguire rejected a pair of challenges to the Brexit process, ruling that it was beyond the power of the court to interfere in how the government triggers Article 50. He dismissed claims related to lawmakers’ votes and the Good Friday Peace accord in Ireland.

Lawyers described the London ruling as a “landmark” in British judicial history.

"The court has quite rightly not been swayed by the politics,” said Rob Aird, a partner at law firm Ashurst in London. “But this is only a staging post and one of many milestones in the Brexit process - it seems inevitable that the Government will appeal today’s ruling to the Supreme Court, reopening the constitutional debate.”

— With assistance by Marianna Duarte De Aragao, and Jeremy Hodges

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