Court rules Brexit will need UK parliamentary vote

By Kit Chellel and Thomas Penny

Bloomberg

U.K. Prime Minister Theresa May pledged to stick to her Brexit timetable after a court ruled that she needs Parliament’s permission to begin negotiations.

The government immediately said it will appeal the decision, adding that it believes the legal process will allow Britain’s exit from the European Union by mid-2019. The prime minister’s spokeswoman, Helen Bower, said plans to invoke Article 50 of the Lisbon Treaty by the end of March remained unchanged.

“The British people made a decision in the referendum and it’s the job of the government to get on with delivering the decision of the British people,” Bower told reporters in London on Thursday. “Parliament will have a role to voice its views through debates.”

The pound — the worst-performing major currency of 2016 — rose to a three week high against the dollar on the ruling even as lawmakers said it didn’t call into question the decision to quit the EU.

It still injects further uncertainty into an already opaque process and may require May to dilute her plans to win the backing of lawmakers. Opposition members of Parliament said they would use any vote to press for greater insight into what the government is seeking than it has given so far.

“It may force the government to reveal more details about their plans for the nature and characteristics of the Brexit deal they are seeking in order to secure higher levels of support amongst MPs when it comes to the Article 50 vote in parliament,” said Sam Hill, an economist at RBC Capital Markets in London.

The next staging post will be Dec. 5 to Dec. 8 when the Supreme Court will hear the appeal. A spokesman said it’s likely all 11 judges will participate for the first time in the tribunal’s seven-year history.

“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 climbed against all of its major peers and was up 1.2 percent as of 1:39 p.m. in London. The FTSE 100 Index of shares dropped 0.4 percent, reversing an earlier advance.

May has repeatedly said “Brexit means Brexit,” yet declined to provide much information on her plan, citing concern doing so would put her at a disadvantage when she does engage with her EU counterparts. She has though signaled a focus on controlling immigration rather than ensuring continued membership of the single market.

That so-called Hard Brexit approach and refusal to reveal many details have drawn criticism from opposition parties as well as some within her own Conservative Party. They will now hope to use any parliamentary debate to get more insight and soften her plan.

“This ruling underlines the need for the government to bring its negotiating terms to parliament without delay,” said main opposition Labour Party leader Jeremy Corbyn, adding that he “respects” the referendum result. Tim Farron, leader of the pro-EU Liberal Democrat party, said the British people “voted for a departure but not for a destination.”

By contrast, pro-Brexit campaigners worried that lawmakers will try to reverse the referendum result by blocking the use of Article 50.

“If this is so, they have no idea of the level of public anger they will provoke,” said interim U.K. Independence Party leader Nigel Farage.

Regardless of the litigation, analysts still expect Parliament would invoke Article 50 given refusal to do so would run against the referendum. Data from the University of East Anglia show that 61 percent of the 650 parliamentary constituencies supported a split, a bigger share than the 51.9 percent of votes in June.

“I would not assume that the pound stays up from here or that we’re not leaving the EU,” Stephanie Flanders of JPMorgan Asset Management told Bloomberg Television.

There remains some doubt over whether May’s officials are correct in saying she could secure parliamentary support in time to begin talks with the EU in the first quarter, since it remains unclear how much say over Article 50 lawmakers will ultimately be allowed.

“The key question will be what form that role takes: a simple parliamentary motion or actual legislation,” said Mujtaba Rahman, an analyst at the Eurasia Group.

Legislation would require both the House of Commons and the unelected House of Lords undertaking three debates, delivering a report and discussing amendments likely aimed at influencing May, he said, adding that could tempt May to seek an early general election to endorse her goals.

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.

The three judges said that the non-binding nature of the 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.”