Thursday, 24 August 2017

Governments Brexit Dispute Resolution paper - something for everyone

The Governments latest Brexit paper "Enforcement and dispute resolution - A FUTURE PARTNERSHIP PAPER" has been published (23rd August 2017) and seems to contain something for everyone.

The first point I would make is that paper discusses the need for enforcement and dispute resolution with respect to both the withdrawl agreement and the future partnership (paras 13 & 65) - we are not just talking about transitional arrangements.

Much of the speculation around the paper has centred on the role of the Court of Justice of the European Union (CJEU) and the EFTA Court as a possible model or alternative.

Role of CJEU

The paper is crystal clear that that  leaving the EU will bring an end to the direct jurisdiction of the Court of Justice of the European Union (CJEU) (paras 1,6). Rights and obligations arising from UK-EU agreements will be enforced in the UK by UK courts - and enforced in the EU by EU courts.  (para 22).

It is also made clear that the CJEU cannot be the arbitrator for resolving disputes over UK-EU agreements (paras 29, 67).

However, the paper suggests CJEU rulings may still be relevant. For those provisions in UK-EU agreement that "replicate language which is identical in substance to EU law", it may be agreed that:
  • terms should be interpreted in line with relevant pre-existing CJEU rulings. (para 43);
  • on-going co-operation should take account of relevant future CJEU rulings  (para 46);
  • disputes on interpretation can be referred to the CJEU (para 55) if all parties agree (para 58).
Despite couching statements in cautious language, it is clear that the Government accepts CJEU rulings will have a continued role to play. Indeed the Government confirms that the Repeal Bill will give pre-existing CJEU rulings the same status as UK Supreme Court rulings (para 45).

It is highly likely that the UK-EU agreements will include language / concepts borrowed from EU law, for example citizens rights may be described in terms of existing EU law. It is perfectly reasonable that those terms are only fully understood in the context of CJEU case law in force at the time of the agreement. It is also clear that future CJEU changes to the meaning of EU citizens rights cannot be deemed to have been part of the understanding at the time of the agreement. This can be seen as a "static" arrangement.

What is more intriguing is the the prospect of future CJEU rulings having application.  The paper suggests this would apply where both parties agree that divergence in interpretation should be avoided - citing an example of continued close co-operation with EU agencies. This can be seen as a "dynamic" arrangement.

EFTA Court

Despite all the media noise , the paper only refers to the EFTA Court twice:
  • The EFTA Court (formed in 1993) enforces and interprets EU laws (or more accurately, the relevant subset of EU laws applicable to the EEA agreement) within the EFTA EEA states (para 21).
  • Article 105 of the EEA agreement requires constant review of CJEU and the EFTA Court case law in order to identify and address any divergence (para 48).
The paper also notes that the EU will not not allow itself to be bound by any external arbitration panel, including the EFTA Court, on interpretation of EU law (paras 19,38). It is interesting to see how jealously the EU guards the primacy and sovereignty of it's own institutions ! 

The paper cites EFTA Court as one of numerous examples of dispute resolution and is clear that no commitment has been made to any of these examples - in fact the solution may combine a number of these elements (para 30). Other examples cited include:
  • Joint Committees (as per EEA agreement, NAFTA)
  • Arbitration models in Free Trade Agreements (CETA, EU-Vietnam, Moldova/Ukraine Association Agreements, New Zealand-South Korea)
  • WTO’s dispute settlement system
So what is the Government proposing?

The paper is notable in lacking firm commitments to anything much, aside from the commitment to ending direct jurisdiction of the CJEU. 

This allows people to read into the paper what they want to see. Arch-Remainer Ian Dunt, commented that the paper was "good stuff" but also seems convinced that this paper opens the way for using the EFTA Court and EFTA EEA membership.

For myself, I still think a 3-judge arbitration panel (as used in CETA & Association agreements) is a more likely solution than use of the EFTA Court.

What is substantial for me is the discussion of how future CJEU rulings may be "taken into account" where the UK and the EU wish to avoid divergence in interpretation. Of course "avoiding divergence" is just another way of saying "harmonisation". This seems a very strong hint that in a number of cases/sectors the UK Government intends to continue harmonising with EU law and CJEU rulings - along the lines of EFTA EEA harmonisation.

I can see there will be a need for this in the first instance for sectors like aviation, where harmonisation of EU aviation safety law is a pre-requisite for continued participation in ECAA (European Common Aviation Area) / Open Skies. This could suffice for transition while a permanent solution is agreed and implemented. I've seen other areas suggested as requiring harmonisation, including medicines regulation, data protection, Europol, Euratom etc. 

While it seems unlikely that Ian Dunt will get his wish to see the UK harmonise all Single Market laws, some harmonisation will continue past March 2019. The unanswered question is just what limits in scope and duration will apply to continued harmonisation. This is where we must hold the Government to close scrutiny.


  1. 'What is more intriguing is the the prospect of future CJEU rulings having application. The paper suggests this would apply where both parties agree that divergence in interpretation should be avoided - citing an example of continued close co-operation with EU agencies. This can be seen as a "dynamic" arrangement.'

    This is I fear Whitehall's latest attempt to change everything to make sure everything stays the same.

  2. That is the major concern about the paper. I've seen Remain supporting legal types suggesting they've won the argument and UK will remain heavily enmeshed in EU legal order. Having pondered this, I think they are wrong, but I am also fully aware that we must keep a wary eye on Government regarding this point.