Leaving Luxembourg – The UK’s Position on Enforcement and Dispute-Resolution after Brexit

Today the UK Government has published the latest in its series of Brexit policy papers, this time taking on how the issue of ‘Enforcement and Dispute Resolution’ in UK-EU relations will be resolved. This is all part of an attempt by the Government to get on the front foot in shaping negotiations which thus far have been driven by the well-oiled Brussels negotiating machine. To date, there has been an apparent gulf between the two sides.

In her Lancaster House speech back in January, the Prime Minister Theresa May set out her Government’s approach to Brexit. Echoing one of the key themes of the ‘Vote Leave’ campaign, she stated that: ‘we will take back control over our laws and bring an end to the jurisdiction of the European Court of Justice in Britain’.

Things look somewhat different on the EU side. The European Council guidelines make clear that the EU will seek to protect its interests and its autonomy, including the role of CJEU. The negotiating directives go further particularly in signaling a potential role for the CJEU in the enforcement of the withdrawal agreement itself. It is said that the withdrawal agreement shall include ‘effective enforcement and dispute settlement mechanisms that fully respect the autonomy of the Union and of its legal order, including the role of the Court of Justice of the European Union, in order to guarantee the effective implementation of the commitments under the Agreement.’

To date, it has seemed possible that the differences in approach between the UK and the EU might derail negotiations with both sides locked into their own ideologies. On the UK side, the ideological element is rooted in a belief within government that what matters is to ‘keep faith’ with the referendum decision. Given that taking back control from the Court of Justice was one strand of the Leave campaign, for some – including the Prime Minister – this means an inability to agree anything that will see a post-Brexit role for the CJEU. As the White Paper presented to Parliament in February states: ‘We will take control of our own affairs, as those who voted in their millions to leave the EU demanded we must, and bring an end to the jurisdiction in the UK of the Court of Justice of the European Union’. The EU side may equally have too much ideological skin in the game to allow for compromise solutions to be found. The attachment to the autonomy of the Union legal order and the Court as its institutional safeguard casts the CJEU in the somewhat heroic role of the constitutional guarantor of the rights of citizens. And yet it is the national courts that in the end do much of the judicial heavy lifting. The European Court of Justice has limited powers to give remedies whereas the national courts have access to a wide range of remedial orders.

Only if we are really honest about the appropriate division of responsibilities between the CJEU and the national courts and between the use of judicial and non-judicial dispute resolution mechanisms will negotiations be able to move forward in designing a post-Brexit dispute-resolution and remedial architecture.

Today’s paper from the Government is a very welcome appraisal of the range of possible mechanisms for the enforcement of rights and obligation under any agreements reached between the UK and the EU, and for resolving disputes that may arise under those agreements.

Rightly, the paper recognizes that where such agreements create rights and obligations enforceable by private parties, it shall be for the national courts – the UK courts and the courts of the EU Member States – to provide effective judicial protection. That includes citizens’ rights. It has always been overly simplistic to see the Court of Justice as the guardian of these rights. While its interpretation of what rights EU citizens possess is, of course, a matter entirely within the Court of Justice’s jurisdiction, the practical enforcement of these rights and the remedies needed to protect them has always been for the national courts to provide. The Government is well within its rights to highlight the central role of UK courts in doing the heavy lifting in the protection of rights and enforcement of obligations under any Withdrawal Agreement. Indeed, the UK is keen to deploy the issue of the ‘autonomy’ of legal orders – often a trump card played by the Court of Justice – against the EU in order to demand respect for the autonomy of the legal orders of the UK (recalling, of course, that the UK is multi-jurisdictional itself given the autonomy of Scots Law in particular).

The paper is also right to distinguish the enforcement mechanisms for the correct application of any agreement, from the dispute resolution mechanism for issues arising from the incorrect application of, breach of, or interpretative deviation from, any such agreement. It draws inspiration from the dispute resolution mechanisms under a variety of EU agreements – free trade and association agreements – to highlight the range of political and non-judicial mechanisms that might be deployed. It notes the legal impediment that may arise from EU law itself in creating new judicial organs to interpret and enforce agreements insofar as they might encroach upon the jurisdiction of the Court of Justice. It was precisely because of the objections of the Court of Justice to the establishment of a new court under the EEA agreement (Opinion 1/91) that we ended up with an EFTA Court and the Court of Justice operating parallel jurisdictions in the applications of the EEA Agreement. Indeed, there is much in the paper which clearly draws inspiration from such a ‘twin pillar’ model, including the role of a Joint Committee to mediate between the two pillars in finding solutions to problems that might arise. It is worth recalling that in the EU’s own position paper, the idea of a Joint Committee is floated as a dispute resolution mechanism. Intriguingly, the paper notes that under the EEA Agreement – Article 111(3) – the contracting parties may agree to ask the Court of Justice to give an interpretation of the relevant rules of the agreement where they are identical to provisions of EU law (the parties having already agreed that in situations where the rules are identical the meaning should be the same). That the Court of Justice might be given such a role under any agreement between the UK and the EU leaves open the question of whether this amounts to a backtracking on the commitment to end the jurisdiction of the Court of Justice post-Brexit.

At a rhetorical level is it striking that there are multiple references to excluding the UK from the “direct” jurisdiction of the Court of Justice. This might entail two rather different things. At a domestic level, it could mean that while UK courts will lose powers to refer issues of interpretation to the ECJ, UK courts will continue to have regard to, or take account of, judgments of the Court of Justice but without being bound by them or obliged to follow them. This sort of consistency or “homogeneity” principle is part of the structure of the EU’s relationship with the EFTA states through the EEA agreement. The EFTA states are not under the jurisdiction of the Court of Justice (direct or otherwise), but instead fall under the jurisdiction of the EFTA court. Nonetheless, the homogeneity principle seeks to secure compliance with the same rules as between the EU and EFTA states. Similarly, national courts can follow principles of consistent interpretation. Clause 6 of the European Union (Withdrawal) Bill permits UK courts to interpret “retained EU law” in accordance with any retained case law. This retained case law includes EU case law, meaning “any principles laid down by, and any decisions of, the European Court, as they have effect in EU law immediately before exit day “ So even in advance of the negotiations with the EU, the Government seems ready to allow ECJ case law as it exists prior to the UK’s departure to have a direct influence on UK law, but without the Court having direct jurisdiction (something which clauses 6(1) and (2) of the Bill seek to exclude).

The other sense in which “direct” jurisdiction may be excluded is to give this an entirely formal meaning in the sense that once the UK withdraws from the treaties that confer jurisdiction on the Court of Justice, by necessity, those treaties will not themselves directly create a continuing jurisdiction for the Court over the UK. That would not prevent, however, new treaties or agreements between the UK and the EU from creating such a jurisdiction. So in much the same way that other aspects of Brexit will seek to keep things the same through the adoption of mirror or shadow legal provisions, it is not implausible that new legal frameworks agreed between the UK and the EU could create a role for the ECJ. To return to the example of Article 111(3) of the EEA Agreement, the limited jurisdiction of the Court of Justice arises under the EEA Agreement and not the EU treaties and only where the contracting parties agree to refer the question of interpretation to that Court. This may seem like drawing fine legal distinctions but they do create wiggle room for the government in keeping faith with its promise to end the jurisdiction of the Court while also allowing it some room for manoeuvre in the negotiations.

Today’s paper also highlights the role that might be played by arbitration under any future trade deal and by systems for monitoring and reporting to determine whether there is continuing compliance. Overall its strategy is to say to the EU that there is more than one way to skin the dispute-resolution cat.

The focal point for this paper is clearly upon the withdrawal agreement and any future trade agreement with the EU. In reality, there will be a range of legal instruments producing rights and obligations applicable in a post-Brexit world. These include: (1) the current treaties, the rules made under them, and the principles applicable to them; (2) the withdrawal agreement(s); (3) measures taken by the UK to implement the withdrawal agreement(s), as well as instruments to preserve and convert EU law within domestic law; (4) any agreement on transitional arrangements; and, (5) a future ‘deep and special’ partnership agreement between the UK and the EU. There are different things that the parties to any dispute might need or want. These include: (1) an authoritative interpretation of relevant law; (2) a means of seeking to challenge the validity of a legal instrument; (3) mechanisms for managing and resolving disputes; (4) remedies for the enforcement of duties and the protection of rights; and (5) reciprocal means of enforcement of judgments rendered by courts, including those of the national courts of the UK and the EU27. And there are different potential plaintiffs and defendants in any future disputes. These include: (1) the United Kingdom; (2) the 27 Member States; (3) the EU, its institutions, agencies and bodies; (4) UK citizens and companies; (5) citizens and companies from the EU27; and (6) other countries, their citizens and companies.

It should be abundantly clear that to reduce the debate down to a proxy referendum on the jurisdiction of the CJEU – Yes or No – is to fail to take seriously the keyword: ‘jurisdiction’. What negotiators needs to get right is the relative jurisdictions of EU and national courts, as well as the relative division of roles between judicial and non-judicial institutions. It is to be hoped that today’s constructive paper is a sign that the UK is willing to get out of its ideological silo and to focus on what sort of dispute resolution mechanism is needed for what type of problem. One can only hope that the same will be true on the EU side.