VALLETTA (Reuters) - If Britain secures a transitional deal with the European Union to help businesses and citizens adjust to life outside the bloc it will have to submit to control by EU courts, the Maltese prime minister said on Thursday.
Joseph Muscat, whose country is a traditional British ally and currently chairs EU councils, said London should probably seek a transition deal, notably for its financial services sector, to phase in over several years its exit from the EU's single market once Britain leaves the Union, probably in 2019.
But, he warned, the EU would only offer that if Britain accepted that the rules in any transitional period continued to be enforced by EU courts -- a provision that Prime Minister Theresa May might find hard to square with the demands of many in her Conservative Party to "take back control" from Brussels.
"It's not a transition period where British institutions take over," Muscat told a news conference.
"But it's a transition period in which, say, the European Court of Justice is still in charge of dishing out judgements."
May says leaving the jurisdiction of the ECJ, the supreme court enforcing EU law, is a key element of what Brexit should involve, following Britons' vote to leave the Union last year.
Britain is entitled to name one judge to the 28-strong ECJ bench and one of 11 senior law officers, the advocates general. Upon Brexit, London would in principle lose its rights to a voice.
May has said she will launch a two-year countdown to exit by March. She has given little detail on what she will ask for from the EU, but British ministers have said that some transitional arrangements could be useful to bridge a gap between Britain formally leaving the EU and negotiating a new relationship.
EU officials say they will consider some transitional pact. But they warn that this is not guaranteed.
Muscat reaffirmed his view that the 27 other states were solidly united in ensuring Britain did not end up with a better position in terms of European trade after Brexit than it does now, to avoid an example that could unravel the EU.
His finance minister warned Britain against assuming too great a leverage over its neighbours, after the governor of the Bank of England said on Wednesday that Brexit posed a greater risk to EU financial stability than to Britain's.
"Both the UK and the EU will suffer, but the point is who is going to blink first? It will be the UK," Edward Scicluna told reporters.
The EU would lose in the medium term from the damage done to Europe's prime financial centre, London, he said. But the immediate impact on Britain was greater as businesses switch investments to the continent, he argued.
"We don't want to humiliate the UK," Scicluna said. "We know it's a divorce, we want it to be an amicable one. But circumstances are not showing that it can go in that direction."
Editing by Mark Trevelyan