Today, the Government published its Brexit negotiating position paper on co-operation on legal dispute settlements, titled “Enforcement and dispute resolution”. The paper can be found here. In the document, the Government attempts to outline its approach to future UK-EU post-Brexit arbitration models. The Government’s paper is in reaction to a position paper by the EU27, which can be found here, and Open Britain’s assessment of that paper can be found here.
Open Britain’s assessment of today’s position paper identifies four main points:
- The Government’s policy, as set out in Theresa May’s Lancaster House speech, is to “take back control of our laws and bring an end to the jurisdiction of the European Court of Justice in Britain”. However, in this paper, the Government point out a number of existing arbitration options where the ECJ still plays an important role, including:
- The EFTA Court
- The Lugano convention
- The implementation mechanism for the Schengen acquis in Norway and Iceland
- The EU-Moldova association agreement
- If the Government accept that indirect jurisdiction of the ECJ will continue, it has to answer the question as to why the UK should be leaving the Single Market. ECJ rulings govern the Single Market, so if the ECJ will continue to have indirect effect in the UK, the Government’s insistence of leaving the Single Market, impacting the UK economy, is illogical.
- The Government openly cites the example of the EFTA Court and the EEA Agreement on many occasions throughout the document, despite the fact that the EEA Agreement governs Single Market rules for non-EU Single Market members, when the Government is looking to take the Government out of the Single Market.
- The Government has failed to spell out in any detail precisely what kind of future arbitration relationship it would like with the EU, and its failure to do so will lead to continued uncertainty for businesses and consumers alike.
Open Britain’s Position:
The Government’s position today could not have been clearer. The European Court of Justice will continue to play a key role in the UK after Brexit, as the Government have outlined a number of potential post-Brexit arbitration options where this is the case, and are pledging to remain part of the Lugano Convention, whose members have to take into account the judgments of the ECJ. The Government need to admit to the British people that its approach of taking the UK out of the Single Market is illogical given that ECJ rulings will still take effect in Britain. This being the case, it is clear that the Government now have now to justify why they are going to damage our economy by leaving the Single Market, given that doing so will not result in the UK “taking back control” of our laws.
“In leaving the European Union, we will bring about an end to the direct jurisdiction of the Court of Justice of the European Union (CJEU). The UK and the EU need therefore to agree on how both the provisions of the Withdrawal Agreement, and our new deep and special partnership, can be monitored and implemented to the satisfaction of both sides, and how any disputes which arise can be resolved.”
“Ending the direct jurisdiction of the CJEU in the UK will not weaken the rights of individuals, nor call into question the UK’s commitment to complying with its obligations under international agreements.”
“Where agreements between the EU and third countries replicate language which is identical in substance to EU law, it may be agreed that those terms should be interpreted and applied in line with any relevant interpretations of the CJEU which preceded the agreement.”
“In the UK, the Repeal Bill will give pre-exit CJEU case law the same binding, or precedent, status in UK courts as decisions of our own Supreme Court to ensure a smooth and orderly exit.”
- While the Government had been insisting on ending the jurisdiction of the European Court of Justice (ECJ) in the UK, this document talks only about ending “direct” effect. This would suggest that the Government accepts that indirect ECJ jurisdiction will continue in the UK.
- The fact that the Government have acknowledged that all current ECJ case law will remain in place in the UK after Brexit completely contradicts the Government’s mantra of taking back control and allowing British courts to be supreme.
- This being the case, serious questions need to be asked as to why the Government is looking to take the UK out of the Single Market when ECJ rulings, which govern the Single Market, will still have effect.
“The UK wants to: maximise certainty for individuals and businesses; ensure that they can effectively enforce their rights in a timely way…”
“As outlined in this paper, the approaches towards enforcement and dispute resolution should: maximise certainty for individuals and businesses; ensure that they can effectively enforce their rights in a timely way…”
“It is in the interests of both the UK and the EU – and of our citizens and businesses – that the rights and obligations agreed between us can be relied upon and enforced in appropriate ways.”
“…The exact means of redress will depend on the nature of the dispute, and the approach taken to disputes of that nature in UK legal systems. However, in each case the mechanism will be effective and meaningful, in accordance with the normal principles of administrative law.”
“Establishing a deep and special partnership with the EU will require a new dispute resolution mechanism to address any disagreements between the UK and the EU on interpretation or application. This is distinct from the question of how rights and obligations agreed will be implemented and enforced in the UK and the EU.”
“It is in the interests of both parties to agree a dispute resolution mechanism. This will ensure a shared understanding of any agreements, both in terms of interpretation and application.”
“…The UK has also made clear that in order to avoid any cliff-edge as we move from our current relationship to our future partnership, people and businesses in both the UK and the EU would benefit from an interim period, where this is necessary for the smooth and orderly implementation of new arrangements.”
- While Open Britain welcomes the fact that the Government has identified that a new dispute resolution mechanism will be needed post-Brexit, the fact that it has made no proposals to this effect is simply not good enough, especially given that this was supposed to be the purpose of this paper.
- While the Government calls for maximising certainty, it is clear that the Government’s lack of any real technical proposals for future solutions as to how to regulate EU-UK disputes post-Brexit will if anything cause serious uncertainty.
- Open Britain welcomes the Government’s desire to seek an interim agreement in the Brexit negotiations. However, the Government has yet to spell out what that agreement would entail and with the clock ticking, the Government need to make some concrete proposals on this fast.
“In CETA, if one party fails to comply with the arbitration panel’s final report on a dispute, the other party is entitled to either suspend obligations or receive compensation.”
“Arbitration models are less common in non-economic areas of agreements – for example, the agreement on extradition between the EU and the US, the EU-Australia Passenger 8 Name Record agreement and the EU-Japan Mutual Legal Assistance agreement do not contain arbitration procedures for the resolution of disputes. The focus of the dispute resolution mechanisms for these agreements is political consultation.”
“There are a number of existing models and approaches which provide the context for the mechanisms for resolving disputes between the UK and the EU. They cover a range of agreements which vary in substance and level of cooperation. These models and approaches carry advantages and disadvantages. For this reason they are presented here purely illustratively, and without any commitment to include any specific aspects in the design of our future partnership. Nonetheless, they set out a number of ways in which the parties to international agreements, including the EU, have obtained assurances that obligations in those agreements will be enforced, that divergence can be avoided where necessary, and that disputes can be resolved. These different models and approaches are not mutually exclusive, and dispute resolution mechanisms can combine a number of these together.”
“One common approach in international agreements is to establish a Joint Committee. These tend to involve nomination or participation in equal number by both parties at a Governmental or diplomatic level. The functions of a Joint Committee need not be restricted to dispute resolution, and can also cover the wider supervision and monitoring of the proper functioning of the agreement, as well as agreeing measures to deal with any circumstances not foreseen by the agreement…Committees comprised of representatives from both parties are frequently established as part of free trade agreements, such as in the EEA agreement and the North American Free Trade Agreement (NAFTA). Such a forum is also commonly found in agreements on justice and security.”
“In addition to Joint Committees, many international agreements, particularly those focused on trade and economic cooperation, feature arbitration models as a stage of dispute resolution. These include a number of free trade agreements to which the EU is a party, such as CETA with Canada and the EU-Vietnam FTA, as well as agreements not involving the EU, such as the New Zealand-South Korea FTA.”
- While the Government outlines various options for arbitration which require political consultation, these kinds of agreements do not reflect the breadth or depth of the agreement which the Government is looking to reach with the EU.
- In this paper, the Government presents seven different potential models for future dispute resolution between the UK and the EU, based on precedents. However, at no point do they clarify which if any of these models they would intend to implement. It seems the Government is unwilling or unable to present a clear vision for its preferred post-Brexit method of dispute resolution.
“In agreements between the EU and third countries, where cooperation is facilitated through replicating language which is identical in substance to EU law, these agreements can specify that account is to be taken of CJEU decisions when interpreting those concepts.”
“In agreements which utilise concepts of EU law, and in which some means of reaching a binding interpretation of those concepts is sought, an approach which has been adopted is a reference for an interpretation to the CJEU. The result of such a reference would be a binding determination of the meaning of substantive EU law.
“This approach can apply in respect of both judicial and political dispute resolution models. For example, Article 403 of the EU Moldova Association Agreement requires that an arbitration panel established to resolve disputes shall, where the dispute concerns interpretation of EU law, refer the question to the CJEU and be bound by its interpretation.“
“In the case of the Moldova Association Agreement, the responsibility to make a reference rests with the arbitration panel, while in the case of the EEA it is a matter to be decided jointly by the contracting parties. These examples do not involve one party to the agreement deciding, unilaterally, to seek a binding interpretation of the agreement from the CJEU.”
“Similarly, Article 9(1) of the agreement between the EU and Iceland and Norway extending the Schengen acquis to those countries requires the parties to keep under constant review the evolving case law of the CJEU and the courts of Iceland and Norway.”
“A further example is Protocol 2 of the Lugano Convention which requires that the courts of the contracting States should ‘pay due account to the principles laid down by any relevant decision delivered by courts of the other Contracting States concerning provisions of this Convention’.”
- It seems bizarre that the Government openly reference agreements which are in place where third parties mirror the rulings of the ECJ, including the Schengen agreement, the EU-Moldova Association agreements, as well as the Lugano Convention. Indeed, the Lugano Convention states that courts from contracting parties to the Convention should take into consideration judgements made by the European Court of Justice.
- From the Government’s own paper, whether the final method of dispute resolution ends up being a Joint Committee, an Arbitration model, an EEA or EFTA-type model, or any of the other models proposed in the position paper, the reality is clear: the ECJ will continue to have a significant influence within the UK.
- This begs the question: if the Government’s reason for withdrawing from the Single Market is to avoid ECJ rules, but it admits itself that ECJ rules will continue to have significant influence within the UK even outside of the Single Market, why then is the Government still determined to damage our economy by pulling out of the Single Market?
“Even where agreements refer to terms or concepts in EU law, those agreements can be enforced or interpreted outside the EU by means other than the CJEU. This can be through political bodies, or through judicial or quasi-judicial bodies. For example, under the European Economic Area (EEA) Agreement, the European Free Trade Area (EFTA) Court can interpret and enforce the agreement, which includes terms and concepts of EU law, in the EFTA States that are within the EEA. The EFTA Court does not bind the EU or its institutions, and so the model is compatible with EU law.”
“The EEA Agreement provides that where an unresolved dispute concerns the interpretation of provisions of that Agreement which are identical in substance to corresponding EU rules, the contracting parties may agree to request the CJEU to give a ruling on the interpretation of the relevant rules.”
“The EEA Agreement, for example, requires that any provisions of the Agreement which are identical to rules of, or acts done under, the EU Treaties, should be implemented and applied in conformity with CJEU decisions prior to the date of signature of the Agreement. This is without prejudice to treatment of CJEU case law arising after the date of signature, which is discussed below.”
“Article 105 of the EEA Agreement requires that the parties will seek ‘as uniform an interpretation as possible’ of the provisions of the Agreement, and requires that the case law of both the CJEU and the EFTA Court be kept under constant review. Responsibility for addressing any divergence in approach between the CJEU and the EFTA Court falls to the EEA Joint Committee. The EFTA States which are members of the EEA have given further effect to this by providing, in Article 3 of the Surveillance and Court Agreement, that the EFTA Court should ‘pay due account’ to relevant CJEU decisions that arise after the signature of the EEA agreement.”
“Within the EU, the European Commission provides the supervisory function to ensure that Member States are complying with the terms of an EU international agreement. In some cases, EU agreements provide for the creation of a corresponding independent supervisory authority which performs a similar, albeit modified, role for the other party. For example, the EEA Agreement provides for the creation of the EFTA Surveillance Authority. The Surveillance Authority is responsible for ensuring fulfilment of obligations under the EEA agreement by the EFTA States.”
- The Government’s position paper makes frequent reference to the agreements that operate within the European Economic Area (EEA). However, members of the EEA are by definition members of the Single Market. The Government has repeatedly stated its intention to withdraw the UK from the Single Market, so it has to now answer the question as to why it is providing options which it cannot, legally, be contemplating following.
The Government cites the EFTA Court as a precedent. However, as the Government itself admits, the EFTA Court must ‘pay due account’ to relevant ECJ decisions, and in practice it simply follows the overwhelming majority of ECJ decisions. This clearly does not conform with the Government’s pledge to end the jurisdiction of the ECJ in the UK.