Brexit and the EU budget Contents

Chapter 4: The UK’s legal obligations

What are the UK’s obligations?

98.The preceding chapter described the elements that might contribute to the EU’s possible financial demands on the UK. But the force of any demand by the EU will depend on whether or not the UK, in the absence of a negotiated deal, is under any obligation to pay. Such an obligation could be political, moral or legal. But, at base, the UK’s legal obligations will represent its starting point for negotiations.

99.In addressing these issues, we have benefited from the academic and political expertise of our witnesses, but particularly from evidence provided by three legal experts: Dr Maria-Luisa Sánchez-Barrueco, Rhodri Thompson QC and Professor Takis Tridimas. Given the differences between them we put their evidence to the Legal Adviser to the European Union Committee, and his opinion is published in full as an appendix to this report. Our assessment of the legal position draws heavily upon his analysis, as well as that of Dr Sánchez-Barrueco.

100.The elements of any bill, as well as being very difficult to calculate, may also engage differing legal considerations. Set against this, possible UK receipts following withdrawal—in particular any claim on the EU’s assets and already-agreed funding commitments—will also be subject to legal interpretation. We have therefore sought to establish, with as much legal certainty as possible, the areas of expenditure where the UK may be legally obliged to pay whatever sum is agreed.

101.Professor Begg and Dr Benedetto set out some of the over-arching considerations. Professor Begg said that it was an “open question as to whether Britain remains liable for the entirety of that Multiannual Financial Framework even if it leaves before the financial framework is complete.” He thought it would be a subject for negotiation.109

102.Dr Benedetto said that it was a question of seeking the correct legal analysis, and noted that the MFF could be amended—by unanimity—to take account of the UK’s withdrawal, in the same way as happened for accessions. He also noted that that MFF was a legal text agreed by the EU institutions. It was not part of the EU’s constitution, and the Treaties had a “higher status than the financial regulation or the MFF.”110

103.Dr Benedetto also suggested that the question was wider than the status of the MFF, in that many areas of expenditure were subject to individual contracts between the EU and a recipient. Professor Begg gave the example of a Horizon 2020-funded research project: “There is a legally binding document that is signed.”111 Dr Benedetto added that there was a separate legal decision taken at the point at which any expenditure programme—for instance Horizon 2020 or cohesion funding—was put into effect:

“There is a legal act passed by the European Union that governs each and every one of these different funds. Among other things, that also guarantees an end point, because all these funds expire at the end of 2020—at least, the commitments for them do; payments will follow later. There is a level of guarantee, not only in the MFF but in the legal spending decisions that are taken for each of the constituent funds.”112

The view from Brussels

104.We asked MEPs in Brussels for their views. Though they responded from a political, rather than a legal, perspective, their evidence serves to illustrate some of the current thinking in Brussels on these legal issues.

General obligations

105.Richard Ashworth MEP argued that the signing ceremony—involving the Council and the European Parliament—associated with the agreement of each MFF sent “a clear message … that that is signing a legal document. The Member States are all signing an agreement of what they will participate in for the next seven years.” He added that the recipients of funding also entered into agreements lasting seven years. The UK would “still be obligated to those universities, farmers and research institutions”—an obligation acknowledged by the Government’s commitment to match EU funding within the UK until 2020.113

106.Mr Ashworth was less certain about the status of payments into the EU budget, describing the matter as “debateable”. He thought refusing to pay might be a breach of contract, but was clear that it would be a “breach of faith”. He argued that payments into the budget would have to be part of the negotiated agreement of the UK’s disengagement.114

107.Ingeborg Grässle MEP argued that, with a “hard Brexit”:

“You can leave the Union without looking behind you. If you do not care about treaties and obligations that you have signed, if it is a brutal exit you can say, ‘Who cares?’, and see how you manage. Everything is possible.”115

She added that it was important not to let “the hardliners win, because we need friendship and a good relationship. All those things are lost by giving up a good relationship afterwards.”116

108.Speaking in the context of continuing contributions to the 2014–2020 MFF, Jens Geier MEP drew a comparison with accession states. When Croatia joined the EU, it was known in advance what the budgetary impact would be, because it had “already been decided at the very moment when everybody said yes to Croatia entering the EU”. There was no precedent for a country such as the UK leaving. Mr Geier had consulted the European Parliament Legal Service, who had told him: “We simply don’t know”.117

109.Mr Geier thought that the Commission would argue that the UK had signed an obligation until 2020, but added that there was no “legally clear answer” to whether or not the UK actually had such an obligation. Article 50 itself was short, and “there are no further regulations behind that.”118 He also touched upon a suggestion by the German Finance Minister, Wolfgang Schäuble, that a new MFF could be negotiated to start following Brexit.119

110.Jonathan Arnott MEP noted that the MFF Regulation made provision for its own amendment in the case of accession or “unforeseen circumstance”, and argued that it was “logically consistent to suppose that, with the withdrawal of a Member State, the MFF may also be revised and that that is an unforeseen circumstance.”120 He believed that Article 50 was paramount in its assertion that that the Treaties ceased to apply at the point of withdrawal, and thought that the MFF “does not present a legal requirement for the UK to continue paying until the end of that period to fulfil those obligations. I suppose it should be seen more as mediumterm financial plan.”121

111.Opinion among MEPs on the inviolability of the UK’s obligations under the current MFF varied, though some argued that the UK had a moral, if not legal, obligation to meet its agreed commitments. However, provisions in the MFF Regulation to allow for its own revision in the event of “unforeseen circumstances” suggest an acknowledgement at EU level that agreement to the figures set out in an MFF is not immovable. This interpretation is strengthened by the apparent suggestion by Mr Wolfgang Schäuble that a new MFF could be negotiated following Brexit.

Pensions

112.Pensions are a different type of liability, in that they relate to rights accrued by individuals (a portion of whom are UK nationals) through service in the European Institutions, to which those individuals have made contributions. Chapter 3 described different options put forward by our witnesses for calculating any UK share of any pension liability, but underlying any such calculation is the argument that the UK has accrued obligations through over 40 years of membership.

113.Richard Ashworth MEP, as we have noted, argued that the UK had in fact over-contributed to EU pensions throughout its membership. The UK would be in a position to say “very clearly this is a legal responsibility of the European institutions. It is not our problem. They were your employees.”122

114.Ingeborg Grässle MEP acknowledged that the pension obligation was an obligation of the EU, but argued that this meant “the Member States, which is why there is no option not to be responsible for that”. She noted that staff paid in to “a fund that does not exist; this money is distributed to the Member States”, and argued that the UK had received “plenty of money from their pension fund”.123 She believed that it would be fair, at a minimum, to return this money and perhaps to contribute for the pension costs of UK officials, though her personal view was that the UK’s real share of the liability was 12.5%.124

Legal obligations arising under Article 50 TEU

115.The views we have described so far are academic or political. We have also sought to establish, as a matter of law, whether the UK will be under any obligation to continue to pay towards the EU budget post-Brexit. Answering this question involves the resolution of possible conflicts within and between UK, EU and international law.

Liabilities

The views of legal experts

116.Professor Tridimas drew a distinction between the overarching MFF and individual annual budgets. While the annual budget contained the obligations of the EU to incur expenditure under specific budget headings, the obligation of the Member States to contribute to EU finances depended on the Own Resources Decision and the MFF.125 While it would be possible for the MFF Regulation to be revised to take account of UK withdrawal, and while even within the ceilings set out by the MFF the EU could agree to adopt smaller annual budgets for 2019 and 2020, he argued that the UK would still be liable under the commitments it made when agreeing the MFF in 2013: “One would need to look at the obligation of the Member States within the cycle of the MFF, not within the cycle of the individual budget.”126 Professor Tridimas also noted that “Member States undertake a concrete obligation to finance the EU within the limits of the financial cycle provided within the Multiannual Financial Framework.”127

117.Rhodri Thompson QC noted that the MFF, as a Regulation, was directly applicable in the UK by virtue of section 2 of the European Communities Act 1972. The ORD, which he characterised as a “mini-treaty”, was recognised under sections 1(3) and 2(1) of that Act. He argued that “as a matter of EU law and domestic law, they are, as it stands, binding legislation subject to the interpretation by the CJEU, and, under section 3 of the 1972 Act, what the CJEU says about what that means goes.”128 Mr Thompson therefore thought that there was “at least an argument, both under UK and EU law, that the quantification and analysis of [any] liability would fall to the Court of Justice in the absence of agreement and in the absence of amendment of section 3 of the European Communities Act.”129

118.Mr Thompson added another important consideration: currently, the UK accepts the jurisdiction of the CJEU in the interpretation of EU law, but that could be changed, at least so far as domestic law is concerned, by means of the Great Repeal Bill. He warned, however, that there would be “significant international implications if the UK was not prepared to comply with international obligations”, and that another forum would need to be found to decide the question.130

The Vienna Convention on the Law of Treaties

119.The Vienna Convention, concluded in 1969, sets out the international law pertaining to the interpretation of treaties. 26 of the 28 EU Member States have ratified the Convention,131 but the EU itself has not. Professor Tridimas drew attention to Article 70 of the Convention, which is set out in Box 2.

Box 2: Article 70 of the Vienna Convention

Article 70. Consequences of the termination of a treaty

1.Unless the treaty otherwise provides or the parties otherwise agree, the termination of a treaty under its provisions or in accordance with the present Convention:

(a)Releases the parties from any obligation further to perform the treaty;

(b)Does not affect any right, obligation or legal situation of the parties created through the execution of the treaty prior to its termination.

2.If a State denounces or withdraws from a multilateral treaty, paragraph 1 applies in the relations between that State and each of the other parties to the treaty from the date when such denunciation or withdrawal takes effect.

120.Professor Tridimas argued that the provision in Article 70(1)(b) of the Convention, that the termination of a treaty does not affect any right, obligation or legal situation of the parties created through the execution of the treaty prior to its termination—as would be the case when the UK leaves the EU—meant that obligations undertaken when the UK was still bound by the EU Treaties would not disappear at the moment of Brexit:

“The Vienna Convention on the Law of Treaties provides expressly in Article 70.1(b) that a termination of a treaty does not affect any right, obligation or legal situation of the parties created through the execution of the treaty prior to its termination. Therefore, undertaken obligations under the treaty do not disappear when a contracting party decides to denounce that treaty.”132

121.At the same time, Professor Tridimas noted that the enforcement of any residual obligations could be problematic:

“Once the United Kingdom withdraws, EU law ceases to apply so the United Kingdom is not, strictly speaking, bound by the jurisdiction of the European Court of Justice. That may be a breach of Article 70 of the Vienna Convention, but then the enforcement mechanism would be one of international law. It would no longer be that provided for by European Union law and, being one of international law, it is imperfect.”133

122.Dr Sánchez-Barrueco offered a different interpretation of the UK’s legal position. She noted that Article 50 Treaty on European Union (TEU) did not establish provisional measures to be applied if the two-year period expired with no withdrawal agreement in force, and did not make provision for enforcement:

“I would like to stress two aspects. First, Article 50 does not establish provisional measures to be applied if the two-year period expires with no withdrawal agreement in force. Secondly, Article 50 does not solve the question of enforcement: who will be the competent jurisdiction to adjudicate on post-Brexit matters or conflicts?”134

123.Dr Sánchez-Barrueco argued that there were two post-Brexit scenarios: either there will be an agreement, in which case the provisions of that agreement will apply, or there will be nothing:

“When I say nothing, I mean it. If the Treaties collapse for the UK, the whole legal building—all the legal documents hanging from the Treaties—will collapse. That includes the MFF, the annual budget, the programmes and the individual funding decisions for beneficiaries.”135

124.She argued that there was no legal basis on which to extend the binding force of the Treaties or the legal acts based on them if the parties did not reach explicit agreement on it. Article 50, she argued, was the prevailing provision in the EU Treaties, and took precedence over other provisions that, for instance, gave force to the MFF or established the competence of the CJEU. Article 50 was the lex specialis applicable to withdrawal.136

125.Dr Sánchez-Barrueco acknowledged that there was a conflict between Article 50 TEU, which provided that the CJEU’s jurisdiction should cease to apply to the UK, and Article 344 Treaty on the Functioning of the European Union (TFEU), whereby Member States agreed to solve their disputes through the Court of Justice and not by other means. She argued that preference should be given to Article 50:

“Because the purpose of the Treaty on European Union, in which Article 50 is enshrined, is to organise the relationship between sovereign states so as to create the international organisation, but the purpose of the Treaty on the Functioning of the European Union, in which Article 344 is enshrined, is of a more administrative nature—to organise the internal functioning of the European Union as an international organisation.”137

126.On the applicability of the Vienna Convention, Dr Sánchez-Barrueco noted that the EU, as an international organisation, was not and could never be a party to the Vienna Convention, even though most Member States were. The CJEU had resorted to the Convention in order to adjudicate on matters regarding the external relations of the Union, but this did not mean that the Vienna Convention bound the EU.138

127.She also highlighted the importance of Article 5 of the Vienna Convention, which states that it applies to the constitutive treaties establishing international organisations “without prejudice to any relevant” provision contained in them. Article 50 was a relevant provision and therefore prevailed over other provisions of a more general scope contained in the Vienna Convention.139

Box 3: Article 5 of the Vienna Convention

Article 5. Treaties constituting international organizations and treaties adopted within an international organization

The present Convention applies to any treaty which is the constituent instrument of an international organization and to any treaty adopted within an international organization without prejudice to any relevant rules of the organization.

128.In subsequent written evidence, Professor Tridimas and Mr Thompson challenged Dr Sánchez-Barrueco’s interpretation. They argued that Article 50 was not the lex specialis, as it did not contradict the provisions of the EU budget, but instead said nothing at all about finances. Article 50, they argued, “does not dictate any specific solution. It does not necessarily mean that, once the treaties cease to apply, the UK no longer has any obligation to make further contributions to the EU.”140 It was possible that, at the moment of withdrawal, the UK’s budgetary liabilities would be “crystallised rather than eliminated.”141 It would thus be necessary to determine the matter through EU or international law: the CJEU would be the relevant authority, although, once the UK withdrew, it would not be bound by its interpretation. They drew attention to paragraph 2.3 of the Government’s White Paper, which stated that the UK would “of course continue to honour our international commitments and follow international law,”142 but without specifying whether the Government would recognise the CJEU as a court of competent jurisdiction for the interpretation of EU law in general, and Article 50 and the budgetary provisions of the Treaties in particular.143

129.Professor Tridimas and Mr Thompson also did not agree that that the Vienna Convention was irrelevant to the interpretation of Article 50 TEU:

“The fact that Article 50 provides for a process of withdrawal and the possibility of the conclusion of a withdrawal agreement does not mean that, in the absence of such an agreement, withdrawal will necessarily have retroactive effect or that all existing obligations will cease with immediate effect. If anything, given that the EU treaties envisage a far more intense form of integration than other international agreements, the limitation on retroactive or immediate effect of termination, provided for by Article 70(1)(b) should apply a fortiori to the EU Treaties.”144

130.As a consequence, they considered that the CJEU would take account of Article 70(1)(b) of the Vienna Convention “as a guide to the proper interpretation of EU law.”145

131.Mr Thompson and Professor Tridimas concluded that the UK would not necessarily be bound to make contributions after withdrawal, but that:

“In the absence of agreement, it would be necessary to determine, on the basis of the principle of good faith which is an overarching principle of interpretation, whether specific obligations that Member States undertook under EU law for a set period of years will continue to be binding after withdrawal, if nothing is said about them in the withdrawal agreement.”146

132.They also thought that any difference of opinion between themselves and Dr Sánchez-Barrueco on how the UK’s outstanding budgetary commitments could be enforced was “less than … might have been thought”.147 In particular, they agreed with Dr Sánchez-Barrueco that:

“In the event that the EU considered that the UK had ongoing obligations to make budgetary contributions after withdrawal, it is not easy to see in which forum it could enforce those obligations … In any event, it would be difficult for the EU to seek judicial enforcement of any UK obligations post withdrawal, on the assumptions that nothing had been agreed on the issue during the negotiations, and the position under UK domestic law had been amended to remove any obligation to follow the rulings of the ECJ on disputed issues of EU law.”148

The Committee’s assessment

133.We have carefully weighed up the different views of our legal expert witnesses and the opinion of the Legal Adviser to the European Union Committee. Our assessment of the UK’s legal obligations under the EU budget and related financial instruments, in the event that the UK withdraws from the EU without a withdrawal agreement, is as follows:

134.It is also highly unlikely that national law in the UK would allow for the enforcement of UK’s financial obligations under EU law. The Supreme Court in Miller152 has made clear that once the UK withdraws from the EU, EU law will cease to be a source of domestic law. The Government’s White Paper has also clarified that the Great Repeal Bill will repeal the European Communities Act 1972, which currently gives EU law supremacy over inconsistent national law, with effect from the date of withdrawal. In addition, the Great Repeal Bill, in its final form, is likely to reflect the outcome of the negotiations, including the UK Government’s view on whether it is legally bound to continue paying into the EU.

Conclusions

135.On the basis of the legal opinions we have considered we conclude that, as a matter of EU law, Article 50 TEU allows the UK to leave the EU without being liable for outstanding financial obligations under the EU budget and related financial instruments, unless a withdrawal agreement is concluded which resolves this issue.

136.Individual EU Member States may seek to bring a case against the UK for the payments of outstanding liabilities under principles of public international law, but international law is slow to litigate and hard to enforce. In addition, it is questionable whether an international court or tribunal could have jurisdiction.

137.However, the political and economic consequences of the UK leaving the EU without responding to claims under the EU budget are likely to be profound. If the UK wants a preferential trading relationship with EU, including a transitional arrangement, the EU partners may well demand a financial contribution post-Brexit.

Assets and receipts

Assets

138.One might expect that the legal position of assets would mirror that of liabilities: if the UK accepts liability for ongoing contributions then it can expect to receive a share of the EU’s assets, and vice versa. The legal arguments are, however, more complex.

139.Professor Tridimas, who argued that the UK would face financial liabilities following Brexit, also argued that it would not have a claim on the EU’s assets. The EU, he said, had a distinct legal personality, separate from that of the Member States collectively: “It has its own assets and its own liabilities. I do not think it is the case that when a Member State leaves the EU, it can take back its share of those assets. I cannot see any legal basis for that.”153 While he acknowledged that one might follow the logic that “If you take assets, you also need to take liabilities”, he argued that, in legal terms, “It is not possible to think that way. The EU has its own personality. Under the Treaty it enjoys diplomatic immunity in each of the Member States and the whole system of EU finances is based on own resources.”154

140.Dr Sánchez-Barrueco thought that the situation would depend on whether the state were a founding Member State or an acceding Member State:

“When the UK joined the European Union, no additional contribution was requested from the UK to cover a share of the assets already owned by the European Union.155 I would apply a similar solution to withdrawing from the Union. The Union is an international organisation, not a company. No state can claim a share of the assets when withdrawing.”156

Conclusion

141.The EU has a distinct legal personality, and we conclude that the UK will not be in a position, legally, to claim a share of the EU’s assets upon withdrawal, unless provisions to this effect are included in a withdrawal agreement.

Receipts

142.Funding from the EU flows to the UK each year, through, inter alia, structural funds, CAP payments, and research grants. Any discussion of whether the UK has continuing liabilities toward the EU budget raises the related question of whether receipts could continue, and under what circumstances. The Chancellor’s commitment to match most EU funding until 2020 suggests that the Government is contemplating the cessation of funding from the EU post-Brexit.

143.Certain funding programmes, such as Horizon 2020, involve already agreed payment schedules that stretch beyond the expected date of Brexit. This is a separate issue from continued participation in EU programmes (for which the UK could expect to pay, and receive funding, according to any agreement made on the future relationship with the EU).

144.The legal status of any receipts expected after Brexit may differ between schemes. Rhodri Thompson QC said:

“If you are a Welsh sheep farmer then you may have rights to certain types of subsidy, and the question will be whether that subsidy regime continues and whether you can make a claim either against the UK authorities or possibly directly against the EU under that subsidy scheme. That is going to be case-specific to that scheme, and likewise for things that are made centrally to the universities or local authorities. Each will have their own particular incidence and will not necessary follow the same pattern as either the MFF or the budget.”157

145.Mr Thompson added that, because the EU has full legal personality, any contracts it has entered into will remain binding. This contrasts with the status of more public benefits, which may or may not be agreed in the future, and which would be an area for negotiation: “If the UK says, ‘We are not paying you a penny,’ that may well have implications for any future funding from the EU.”158

146.Professor Tridimas argued that any obligations the EU had entered into with companies, individuals or institutions had to be honoured:

“If I am a recipient, I would not necessarily care where the EU finds the money from … it really is an issue of contractual rights or property rights. One would need to look at the finance scheme and examine and determine exactly what the EU obligations are to this effect.”159

147.If such contractual rights existed, there would need to be a forum for ruling on disputes. Professor Tridimas thought that this would be the CJEU, in so far as the finance scheme was governed by European Union law.160 Mr Thompson added that the current mechanism for referring matters to the CJEU, via the domestic courts, would change following Brexit. He thought that an aggrieved party would have to bring a direct action against the relevant EU institution at the CJEU. If, on the other hand, someone were to make a claim against a UK institution, this might need to be decided by the UK courts, “without guidance from the Court of Justice on a tricky point of EU law”.161

148.Dr Sánchez-Barrueco noted that UK nationals would not lose legal standing before the CJEU: any individual can introduce proceedings if an EU act has been addressed to that individual and is of direct and individual concern to them. However, she noted that the UK would not be in a position to defend the interests of its citizens as a whole. Although she acknowledged that contracts between the EU institutions and beneficiaries did not allow for a suspension of payments if the recipient ceased to be a citizen of a Member State, she was sceptical that the court would enforce such rights:

“Imagine a British beneficiary of EU funds, be it a natural person, a university or a town council, who faces a Commission decision to interrupt grant payments. The court will have to adjudicate on it, but not necessarily to sustain it, because the whole legal building will have collapsed, failing an agreement.”162

She reiterated the point later: “There is no legal obligation on the Union to continue funding projects, because the whole building has collapsed. That is my legal view.”163

Conclusions

149.The legal rights of UK-based persons to continue to receive EU funding post-Brexit are uncertain, and the Government, in undertaking to meet outstanding obligations (such as CAP payments) from domestic funds, implies that it does not expect the EU to meet them.

150.Where individuals have entered into contracts with EU institutions, their legal rights will depend on the precise contractual terms. While such contracts could in principle be enforced before the CJEU, the process would be made more difficult by the UK’s withdrawal, and the outcome would be uncertain.

Pensions

151.As discussed in Chapter 3, a case may be made that the UK has a particular obligation to fund pension liabilities accrued during its membership of the EU, especially in respect of UK nationals.

152.Rhodri Thompson QC, however, argued that the nationality of an employee or pensioner was irrelevant: “The employees are employees of the EU and the liability is that of the EU.”164 He thought that the EU’s starting position would be that the UK would have a liability in relation to the capital sum of accrued pension liabilities, calculated according to its proportionate share of the total sum, rather than by reference to UK employees. He did not think that responsibility for the pensions of UK nationals would be passed to the UK in the absence of a specific deal. He added: “In default of agreement, no doubt this would potentially be an area of litigation where the same issues about the role of the Court of Justice will come in.”165

153.Professor Tridimas noted that pension expenditure was part of the EU budget, and highlighted the principle of universality, namely that contributions made by Member States were not hypothecated for any particular expenditure: “There is no correlation between the contribution that Germany makes, for example, and the pensions that the German [EU] civil servants receive.”166 However, Article 83 of the EU Staff Regulations expressly stated that benefits paid out of the pension scheme were to be charged to the EU budget, and that the Member States were to guarantee them jointly. He concluded that the UK would “remain liable for any pension benefits that will have been accrued at the point it decides to leave the EU.”167

154.Professor Tridimas raised a further question, regarding the status of UK nationals who remained as employees of the EU institutions following Brexit: “The question is whether that creates an ongoing obligation on the part of the United Kingdom to contribute towards the pensions of EU civil servants beyond the MFF period.” This was an open question, but he argued that it “would not be unreasonable to suggest that some kind of obligation subsists.”168

155.Dr Sánchez-Barrueco thought that the pension rights of UK nationals should be made the object of a specific agreement, and was concerned that the Member State guarantee standing behind the staff fund complicated matters: it was “very likely that the remaining states will refuse to cover this part of the expenditure.”169

156.She considered the legal status of Member States as guarantors of the staff fund to be secondary to other matters. In a situation where the EU budget was not able to cover the staff fund, Member States would be requested to step in, creating a liability for those Member States, but she thought the matter was better left to political negotiation.170

157.Dr Sánchez-Barrueco also ruled out any connection between the size of the UK contribution to the pensions liability and the number of UK nationals working for the EU institutions. She noted that Croatia, upon accession, was not granted a reduction in its contributions “based on the fact that there are not enough civil servants of that nationality or that they have not reached the stage of entitlement to specific allowances or pension rights”. Nor did Member State contributions rise over the years to meet increased pension liabilities. The only precedent in international law was the dissolution of the League of Nations in 1946, where the members agreed to take on the costs of the staff pension fund—but this precedent was imperfect, as the EU was not being dissolved.171

158.In written evidence, Professor Tridimas and Mr Thompson suggested that:

“So far as any final liability that the UK may be argued to have in respect of its share of the pensions liability of the EU as at the date of withdrawal, that gives rise to the same issues as those set out above—Article 50 does not determine the question so it would have to be resolved, in the absence of agreement, by reference to the specific provisions of the EU Treaties and the general principles of EU law, as interpreted by the ECJ.”172

Conclusions

159.Pension liabilities affect the rights accrued by individuals (including many UK nationals) through service with the EU institutions. Nevertheless, since the pension scheme is run entirely through the EU’s annual budgets, the same legal principles apply in respect of any UK liability as apply in respect of the EU budget generally. The political and economic consequences of the UK’s not responding to claims under the EU budget, noted above, apply also to pensions.

160.We also note that no special arrangement has been made for countries on accession, to reflect the fact that their nationals have little or no pension entitlement: pensions are liabilities of the EU, not individual Member States, and the nationality of pensioners is, as a matter of law, irrelevant.


114 Ibid.

116 Ibid.

121 Ibid.

124 Ibid.

126 Ibid.

127 Ibid

131 France and Romania have not ratified the Convention.

135 Ibid.

136 Ibid.

137 Ibid.

139 Ibid.

140 Supplementary written evidence from Professor Takis Tridimas and Rhodri Thompson QC (EUB001)

141 Ibid.

142 HM Government, The United Kingdom’s exit from and new partnership with the European Union, Cm 9417, (February 2017), p 13: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/589191/The_United_Kingdoms_exit_from_and_partnership_with_the_EU_Web.pdf [accessed 27 February 2017]

143 Supplementary written evidence from Professor Takis Tridimas and Rhodri Thompson QC (EUB001)

144 Ibid.

145 Ibid.

146 Supplementary written evidence from Professor Takis Tridimas and Rhodri Thompson QC (EUB001)

147 Ibid.

148 Ibid.

150 Article 50(3), Treaty on European Union, OJ C202 (consolidated version of 7 June 2016)

151 Article 50(2), Treaty on European Union, OJ C202 (consolidated version of 7 June 2016)

154 Ibid.

155 Although it should be noted that the UK did make initial contributions to the reserves of the European Investment Bank and the European Coal and Steel Community.

159 Ibid.

160 Ibid.

161 Ibid.

165 Ibid.

166 Ibid.

168 Ibid.

170 Ibid.

171 Ibid.

172 Supplementary written evidence from Professor Takis Tridimas and Rhodri Thompson QC (EUB001)




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