23 August 2017

The UK Government has today released a paper looking at potential options for “enforcement and dispute resolution” within a UK-EU withdrawal agreement and the new long-term “deep and special partnership” it hopes to negotiate. The role the EU’s Court of Justice (ECJ) might play in any future UK-EU agreement is understandably what most commentators are focused on.

The UK paper does not set out detailed demands but instead explores a series of precedents which it believes should inform future discussions. The UK’s central argument is that:

There is no precedent, and indeed no imperative driven by EU, UK or international law, which demands that enforcement or dispute resolution of future UK-EU agreements falls under the direct jurisdiction of the CJEU.

The paper distinguishes between “enforcement” of any agreement – the day-to-day responsibility of upholding the rights that derive from the any UK-EU deal – which it argues should be a matter solely for UK and EU institutions within their given jurisdictions and “dispute resolution” – a method of resolving disagreements between the UK and the EU about how the deal is being applied – where it sets out a number of different options.

The UK and EU negotiating positions appear to be reconcilable

Many have highlighted the inclusion of the word “direct” to argue that this marks a UK “climb-down” or “U-turn” over ending the jurisdiction of the ECJ. True, this paper presents a more nuanced analysis of the alternative options than Theresa May’s insistence that Brexit will mean “an end to the jurisdiction of the ECJ”, but the paper is clear that EU law will no longer have direct effect in the UK and the “question of domestic implementation of UK-EU agreements will be addressed throughout the UK’s domestic legal order.”

The EU’s broad position on the role of the ECJ was set out in paragraph 17 of its negotiating guidelines:

The withdrawal agreement should include appropriate dispute settlement and enforcement mechanisms regarding the application and interpretation of the withdrawal agreement, as well as duly circumscribed institutional arrangements allowing for the adoption of measures necessary to deal with situations not foreseen in the withdrawal agreement. This should be done bearing in mind the Union’s interest to effectively protect its autonomy and its legal order, including the role of the Court of Justice of the European Union.

All this essentially says is that the EU cannot agree to submit itself to an agreement which contradicts its own legal order as set out in the EU Treaties and enforced by the ECJ. This limits the degree to which the EU can itself be bound by other legal or judicial arrangements.

I.e. neither the UK nor the EU will sign up to something they feel undermines their legal independence but this does not rule out a compromise agreement.

So far, so good: in theory. However, in practice, the EU has so far insisted that, on the particular issue of EU citizens’ rights in the UK post-Brexit, the ECJ must be the ultimate arbiter. The UK is understandably refusing this demand and there are signs that European politicians – such as German Foreign Minister Sigmar Gabriel – have acknowledged this as a case of EU over-reach.

No country is a legal island and there is a trade-off between integration and independence

As others have noted, the UK was never going to operate in a legal vacuum post-Brexit. UK courts will continue to keep tabs on developments in international law and other jurisdictions and the UK has an interest in aligning itself with important international developments in various fields of law. The broad point is that the closer the UK-EU relationship, the deeper, more complex and more restrictive the day-to-day functioning of the arrangements are likely to be.

The EU has previously stated that it wants any deal with the UK to “ensure a level playing field”, on issues such as “tax, social, environmental and regulatory measures and practices”. Would the UK accept such a potentially restrictive package deal and, if so, how would this level playing field be enforced and adjudicated on?

The degree to which the UK might want to align itself with EU law is now a political decision and matter for negotiation. The UK has stated that it wishes to align itself very closely with EU law in the first instance to avoid a “cliff edge” and provide certainty in the short-term but will want the flexibility to diverge in the longer-term. This is consistent with the UK’s preference for and acceptance of a transition that maintains much of the status quo, while long-term arrangements are put in place.

The precedents cited in the UK paper cover different types of relationship with the EU. The European Free Trade Association (EFTA) Court oversees the most complex and deeply integrated agreement between the EU and other states. Other arrangements, such as those included in the EU-Canada (CETA) and EU-Vietnam free trade agreements, instead rely on international arbitration. The EU-Vietnam deal provides for arbitration panels whose composition is decided jointly.

There may be narrow and specific cases – for example UK participation in EU aviation agreements or particular agencies – that require adherence to future ECJ case law for the UK to become a signatory. The UK will need to weigh the value of the agreement against this constraint but, ultimately, the UK will always have the power to remove itself from any arrangement that proves itself unsatisfactory.

Role of dispute settlement mechanism will depend on what’s in any UK-EU agreement

This paper is welcome because it illustrates that the UK Government is engaging seriously and thoughtfully with these issues but it can only tell us so much. Until we know the scope and depth of the proposed UK-EU agreements, it is impossible to know what the implications are for enforcement and dispute settlement.

For disputes over technical issues – for example trade and standards – technocratic working committees might be most appropriate. More sensitive issues – such as policing cooperation – might require a more political and diplomatic resolution. What provisions will there be when an agreement cannot be reached through a formal mechanism? Would this mean suspension of part or all of the UK-EU agreement (as set out in one set of the Swiss-EU arrangements) or merely the right to introduce retaliatory measures (as provided for under the European Economic Area agreement)?

The role of judges and arbitration mechanisms are no doubt an important day-to-day detail of any future UK-EU relationship. However, the context in which they operate will be dictated by the high politics of UK-EU relations, both in determining the long-term UK-EU deal and whether that deal holds when there is a genuine political dispute.