The former Brexit secretary, David Davis, has suggested this week that the UK might not have to pay a “divorce” settlement to Brussels if we leave the EU without a deal.
So can we really cut and run?
Speaking to Radio 4 yesterday, Mr Davis said it was a “false assertion” to claim that Britain is obliged to pay £39 billion when we leave the EU.
He was criticising Theresa May’s withdrawal agreement – which has yet to pass through Parliament – and suggested that it might be possible to get “another deal on the table” that didn’t involve handing billions to Brussels.
Back in September, another alumnus of the Brexit department, Dominic Raab went further, saying Britain would simply refuse to cough up if no agreement is reached.
Where does the claim come from?
Mr Davis cited “the constitutional committee of the House of Lords” to back up his claim.
We assume he’s referring to a March 2017 report by the EU Financial Affairs Lords sub-committee, which concluded “if agreement [between the UK and the EU on withdrawal] is not reached, all EU law—including provisions concerning ongoing financial contributions and machinery for adjudication—will cease to apply, and the UK would be subject to no enforceable obligation to make any financial contribution at all”.
On the surface, it suggests the UK is not legally bound to make any payments if it leaves the EU without a deal.
Are we legally required to pay up?
Professor Iain Begg, Research Fellow at the London School of Economics, describes the House of Lords report as “contentious”. He told FactCheck that the conclusion “was based on an opinion, but when you read the report it’s a lot more nuanced.”
“The logic goes that when you leave an entity you no longer have a financial commitment” he says. But “the contrary view is that we signed a regulation in 2013 that sets the Medium-Term Budgetary Framework that ends in 2020.”
Hang on, “Medium-Term Budgetary Framework”? EU member states commit to fund projects (like infrastructure investment) in seven-year cycles. We are trying to leave the EU before the end of the current one.
The £39 billion divorce bill is the figure Westminster and Brussels have arrived at to cover the outstanding budget contributions we committed to paying in 2013, and which we would have been paying in 2019 and 2020 were we not leaving the EU. There are also some commitments (like pension contributions) that go beyond 2020, which will be settled in the divorce bill.
Professor Begg says that because the UK signed the 2014-2020 Framework, “you could argue we’re bound to that.”
But who’s going to enforce it?
Even if we’re required to pay the divorce bill, who’s going to stop us if we don’t? After all, if there’s no deal, we’ll be completely free of the European courts – right?
Professor Begg again: “This is where the question of jurisdiction comes in.” It doesn’t have to be taken through in a European court, “it could be the International Court in The Hague, which could rule that Britain is required to make the payment”.
Emily Reid, Professor of International Economic Law at Southampton, told FactCheck that “as a matter of international law [she cites the Vienna Convention on the Law of Treaties] whether we leave the EU with or without a deal, the UK bears those liabilities and commitments, and resultant financial obligations, and legally is required to execute them.”
In other words, deal or no deal, the EU could still sue us over the divorce payment if we don’t pay up – and is likely to, given the huge amounts involved.
Are there any other downsides to not paying?
Beyond the strict legal issues, Professor Reid makes a further point about the problems of not paying the bill: “if we did not pay our debts, as it were, following a no-deal Brexit, there would be political consequences when we seek to negotiate trade agreements with new partners.”
She told us: “in my view we would be both legally and morally at fault were we to do so, which would have repercussions in our future dealings with potential partner states.”
So assuming we want a free trade deal – or indeed, any preferential agreement with the EU or other partners – after Brexit, it’s hard to see how we could get away with not paying the divorce bill.
What does the government say?
It’s worth remembering that the only people – thus far – who have suggested we could get out of paying the divorce bill are no longer in government.
In November, the government published a document alongside the withdrawal agreement asserting that Mrs May’s deal “provides for […] arrangements on the financial settlement that represent a fair settlement of the UK’s rights and obligations as a departing Member State, in accordance with its legal commitments and in the spirit of the UK’s continuing partnership with the EU”.
In essence: the government agrees with Professors Begg and Reid that paying the £39 billion is part of its legal obligation to the EU.
But isn’t this just a concession by Mrs May to smooth things along with Brussels? Professor Begg says not: “It’s wrong to describe it as a political obligation – it’s a legal liability. It’s not something to sweeten the deal – it’s part of the withdrawal.”
David Davis and others have suggested the UK could leave the EU without paying the £39 billion “divorce bill” designed to cover our outstanding financial commitments to Brussels.
A House of Lords report from 2017 says that we won’t be bound by EU law after Brexit, and so we could get out of paying the bill. But that report is contentious. Irrespective of our membership of the EU, we are still bound to our financial commitments under international law.
And it’s worth remembering that even beyond the legal issues, reneging on our financial obligations is likely to make any free trade deal with Europe, or other potential partners, politically impossible.