Lawyers advise banks they can sue the EU if it won't grant a Brexit transition period

 
Hayley Kirton
Follow Hayley
Inside The City Of London's New Landmark Skyscraper
Banks have been advised they could try heading to court if they do not get a transition period (Source: Getty)

Top lawyers are advising banks in the UK they might be able to sue the European Union if a transition deal is not offered as part of the Brexit package.

Several across the financial sector have raised concerns they will be faced with a cliff edge situation once the UK divorces itself from the EU, as valuable rights like passporting are snatched away overnight and firms are faced with little time to rearrange their business model so they can continue serving clients.

Now, legal eagles are arguing various laws, including the Vienna Convention on the Law of Treaties, mean institutions are entitled to strike a deal over such rights as they have been "acquired" and therefore cannot be taken away suddenly.

Read more: City firms are preparing for the worst from Brexit, but hoping for the best

"EU law cites a number of different bases for requiring transitional arrangements," the document obtained by Reuters reads. "A failure to do so could possibly create an entitlement for an affected EU firm... to take action against the commission."

Transition periods are proving to be something of a sticking point for the Brexit negotiations, as even key members of UK government have voiced different opinions on how vital such arrangements would be.

Last Monday, chancellor Philip Hammond spoke in favour of transitional periods, telling the Treasury Select Committee that "thoughtful politicians" would see the need for a "longer period to manage the adjustment" of life outside the EU.

Read more: Theresa May says UK could continue to pay into the EU budget

But just two days later, Brexit secretary David Davis told the Exiting the European Union Committee that he would only get behind a transition period if it was to implement already agreed plans "if it's necessary, and only if it's necessary".

Related articles