No, Brexit isn’t dead. But an eagerly anticipated ruling by the U.K.’s High Court on Thursday makes the process of leaving the European Union a lot more complicated and could, under certain circumstances, eventually derail the whole process.
The British pound GBPUSD, +0.3210% roared higher in the wake of the ruling, after slumping to multidecade lows in the wake of the June 23 referendum that saw U.K. voters back leaving the European Union by a narrow margin. In a nutshell, the High Court sided with anti-Brexit litigants who argued that the British government must get parliamentary approval before it begins the process that will lead to its withdrawal from the union.
Here are 5 things you need to know about the ruling:
What happens next?
U.K. Prime Minister Theresa May’s government said it will appeal the ruling to the Supreme Court, the nation’s highest judicial body. The appeal is widely expected to be heard in early December, around Dec. 7 or 8, though the government has a month to submit the paperwork to the court.
A quick turnaround is needed so that in the event the court sides with the government, May could still meet her March timetable for triggering Article 50, which formally notifies Brussels of the U.K..’s intention to leave the EU.
What if the Supreme Court reverses the ruling?
The Supreme Court could side with the government, effectively ruling that the referendum provided all the authority needed to proceed. If so, then May is free to stick with her timetable, meaning the formal Brexit process will likely get underway before winter is over.
It also means that the U.K. would be likely to negotiate a “hard Brexit” agreement in which the U.K. leaves the single market and, most likely, the customs union, said Mujtaba Rahman, London-based managing director at risk consulting firm Eurasia Group, in a note.
What if the Supreme Court upholds the ruling?
If the Supreme Court upholds Thursday’s decision, then lawmakers will need to draw up legislation to invoke Article 50, Brexit Secretary David Davis said, according to media reports.
Davis’s comments dashed hopes that the government would simply need a nod of approval from Parliament in the form of a motion, a simpler procedure. “That’s not available,” he said, according to The Guardian.
If an Act of Parliament is required, things could get hairy, Rahman said. That would likely require the House of Commons and the House of Lords to each undertake three readings of any legislation, as well as take other steps. There would be the prospect of a series of amendments from pro-EU members of both Houses, who will undoubtedly argue they have a right to influence the exit negotiations rather than just the process for triggering them, Rahman said.
Could Parliament block Brexit?
At this point, it appears more likely that Brexit would be delayed rather than denied. A sizable number of pro-EU members of parliament have indicated they would vote in favor of triggering Article 50, in keeping with voters’ wishes as expressed in the referendum, noted James Knightley, senior economist at ING Bank.
But the House of Lords, where May’s Conservative party doesn’t hold a majority, could offer the biggest obstacle.
What if Parliament says no?
If May looks likely to lose key votes in either House on her negotiating mandate, she might be tempted to call an early general election, said Rahman, who sees around a 20% chance of such a move.
The British prime minister would undoubtedly present the election as an opportunity for voters to prevent lawmakers from overturning the result of the Brexit referendum. Pro-EU forces might see the election as a chance to capitalize on any remorse and effectively reverse the result of the popular vote.