Part 3 – Are There Gaps in the Union Law During the Brexit Transition Period (Banking and Other Areas)?

    View Authors June 2018

    Articles 121 and 122 of the draft Withdrawal Agreement provide that during the Transition Period, until 31 December 2020, European Union (EU) law shall continue to apply to the UK and shall create rights and obligations for the UK and all UK residents, companies and other entities as if the UK was still a member state of the EU (please refer to Part 1 and Part 2 of this series of articles).

    Article 2 (a) (iii) of the Withdrawal Agreement defines “Union law” to mean, inter alia, “the acts adopted by the institutions, bodies, offices or agencies of the Union”, although there is no firm view on what these words mean.

    The crucial word is “act”. Does “act” only refer to the “Legal Acts of the Union”, which is the heading of Part 6, Title I, Chapter 2, Section 1 of the Treaty on the Functioning of the European Union (TFEU), or is the term “act” contained in Article 2 (a) (iii) of the draft Withdrawal Agreement wider than such “legal acts”?

    Would, for example, interpretative guidelines issued by the bodies, offices and agencies – for example ESMA’s MIFID II Guidelines, EBA’s Guidelines on Internal Governance, EMA’s Scientific Guidelines or ECB’s Guideline relating to the Eurosystem’s monetary policy implementation – be “acts” and a part of the “Union law” that continues to apply in the UK and in respect of the UK during the Transition Period?

    If “act” in Article 2 (a) (iii) of the Withdrawal Agreement only relates to the acts referred to in Article 288 of the TFEU, then only regulations, directives, decisions, recommendations and opinions would be “acts”, but not such guidelines. Accordingly, such guidelines would not be a part of the “Union law” that continues to apply to the UK after 29 March 2019 until 31 December 2020.

    Article 288 of the TFEU only refers to the “institutions” of the EU. Article 13 of the Treaty on European Union (TEU) defines the institutions of the EU to include the European Parliament, the European Council, the Council, the European Commission, the European Court of Justice, the European Central Bank and the Court of Auditors. Article 288 of the TFEU does not refer to agencies, bodies and offices of the EU, such as ESMA, EBA, EMA and EASA.

    In contrast to Article 288 of the TFEU, Article 2 (a) (iii) of the Withdrawal Agreement refers to acts adopted by agencies, bodies and offices of the EU and is much wider than Article 288 TFEU. Accordingly, one should construe Article 2 (a) (iii) of the Withdrawal Agreement to mean that “Union law” does not only mean regulations, directives, decisions, recommendations and opinions adopted by the institutions of the EU, but also any guidelines and other acts adopted by the agencies, bodies and offices of the EU, such as ESMA, EBA, EMA and EASA.