UK Government’s future partnership paper on enforcement and dispute resolution mechanisms for UK-EU agreements

Posted in UK and EU legal framework International arbitration Dispute resolution and litigation

The UK Government has published its future partnership paper on post-Brexit options for enforcement and dispute resolution for UK-EU agreements.

The area of greatest interest for many will be the UK’s position on the future role the Court of Justice of the European Union (CJEU) in the UK after Brexit. The UK has repeatedly stated that leaving the EU will bring an end to the jurisdiction of the CJEU in the UK. But there have been indications that the UK accepts that the CJEU will continue to play some role.

Currently, EU law has direct application within the domestic laws of Member States and the CJEU is the ultimate arbiter of EU law within the EU and Member States. When the UK leaves the EU and the European Communities Act 1972 is repealed, that will change.

The UK set out its position regarding the future relationship between UK courts and EU law including EU court decisions in the European Union (Withdrawal) Bill (the “Repeal Bill”). See our post here. In brief, CJEU case law made before Brexit will have equivalent precedent status in UK courts as decisions of the UK Supreme Court. CJEU case law made after Brexit will have no binding precedent value, though UK courts may have regard to this. The net result, is that in the UK there may be a gradual divergence from EU law, including in respect of EU laws implemented into UK domestic law.

In this latest paper, the UK now sets out its position in regards to enforcement and dispute resolution mechanisms for future UK-EU agreements, including the Withdrawal Agreement and any agreements regarding post-Brexit arrangements.

The UK has stressed that leaving the EU means a return to the EU and UK having separate and “autonomous legal orders”: UK-EU agreements that are intended to grant rights or obligations to individuals or organizations operating within the UK will, “where appropriate”, be given effect in UK domestic law by enacting domestic legislation and those rights and obligations will be enforced by the UK courts (with the UK Supreme Court being the ultimate arbiter). Similarly, the UK expects that UK individuals and businesses operating in the EU should be provided with means to enforce their rights within the EU and through the courts of Members States.

The UK has accepted, however, that “a new dispute resolution mechanism” will be needed to resolve disagreements between the UK and EU arising out of UK-EU agreements. It notes that disputes foreseeably might arise in regards to: implementation of agreements; subsequent actions that might be viewed as incompatible with obligations under agreements; or divergence between the way agreements are interpreted by the parties’ respective courts. But the UK’s position is that the CJEU should not have direct jurisdiction over such disputes. It states that there is no precedent and no legal requirement (whether under EU, UK or international law) that these matters should fall under the direct jurisdiction of the CJEU. Rather, such an arrangement would be “incompatible with the principle of having a fair and neutral means of resolving disputes, as well as with the principle of mutual respect for the sovereignty and legal autonomy of the parties to the agreement”.

To support its position, the UK sets out various “precedents”, i.e. examples of existing models and approaches found in agreements entered into by the EU and third countries that do not impose the direct jurisdiction of the CJEU over third countries. The UK has not asserted which of these should be used in UK-EU agreements, leaving that question open to negotiation.

Interestingly, however, a number of the UK’s examples do involve resolving the dispute by reference to CJEU decisions, and one involves a voluntary reference to the CJEU for binding determination.

The UK’s model approaches are as follows:

Joint Committee – equal nomination or participation by both parties at a governmental or diplomatic level. Functions may include dispute resolution, wider supervision and monitoring of the functioning of an agreement, and agreeing measures to deal with circumstances not foreseen by the agreement.

Arbitration – the UK notes the “wide adoption of arbitration panels as the dispute resolution mechanism for international trade disputes, principally through the WTO”. The UK further notes, however, that there are limitations to the matters on which the EU can subject itself to the binding decisions of an arbitration panel: an arbitration panel cannot adjudicate on matters of interpretation of EU law so as to bind the EU and its Member States.

Reporting or monitoring provision – enabling both parties to the agreement, or a body created by the agreement, to evaluate the ways in which domestic legislation or processes are compatible with the agreement or monitor the progress in domestic implementation of the agreement.

Supervision and monitoring provision – enabling the parties to the agreement, or an independent supervisory body established by the agreement, to oversee the proper functioning of the agreement.

Reference to pre-agreement CJEU decisions – both parties agree that terms expressed in language identical in substance to EU law should be interpreted and applied in line with any relevant interpretations of the CJEU which preceded the agreement.

Reference to post-agreement CJEU decisions – both parties agree that, when interpreting terms expressed in language identical in substance to EU law, account is to be taken of post-agreement CJEU decisions. It may incorporate a two-way requirement: i.e. both the case law of the CJEU and the UK courts to be taken into account.

Voluntary reference to CJEU – both parties agree, where concepts of EU law are utilised in the agreement, to seek a binding interpretation of those concepts from the CJEU. The UK stresses that this would not involve one party to the agreement deciding, unilaterally, to seek such a reference.

It is clear that the UK now anticipates and seems to accept that CJEU decisions will play some role in the UK after Brexit. What that role will be and the extent of the CJEU’s influence, however, still remains to be seen.

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