Conclusions and recommendations
The transitional arrangement
1.We support the Government in its efforts to seek greater rights of representation on EU committees during the implementation period. (Paragraph 50)
2.More information is needed about the Government’s proposals for the Joint Committee during the transitional arrangement. In particular, we consider that greater detail is required on what unilateral safeguards would be available to the UK if it had to apply new EU law which it considered to be detrimental. The need for such safeguards will become more pressing the longer the actual length of the implementation period. We support the Government’s intention to seek assurances that new legislation would not be fast-tracked to the detriment of the UK during any transition period and ask how this could be contemplated given the repeal of the European Communities Act 1972 in the House of Commons. (Paragraph 51)
3.We ask the Government to demonstrate how the Joint Committee will ensure a high level of transparency and accountability. (Paragraph 52)
4.We also ask the Government to explain how the Joint Committee would deal with the large amounts of tertiary EU legislation which the UK would have to implement during the transition, given that the time between publication and entry into force of such acts is usually only a few months. This should include not only the manner in which these would be dealt with in the Joint Committee under the Withdrawal Agreement, but also how Parliament would be given a meaningful opportunity for scrutiny of these measures when it can no longer rely on the Government’s representatives to vote on these measures in the Comitology system and the Council. (Paragraph 53)
5.The possibility of either an extension or an early termination of the implementation period raises the important question of how such a change would be triggered, including whether either step would require an Act of Parliament in the UK. We ask the Government to explain how legal provision could be made for early termination or extension of the transitional arrangement. (Paragraph 54)
6.We will closely follow the financial provisions of the Withdrawal Agreement with respect to the UK’s obligations—if any—under the next Multiannual Financial Framework. We note that the Chancellor explicitly told us that such “financial implications” above and beyond the estimated £35 to £39 billion cost of the financial settlement agreement with the European Commission last December, are a possibility. (Paragraph 55)
7.We also note that the UK’s exclusion from the EU budget from 1 January 2021 would have knock-on effects on the transitional arrangement more generally, as it presupposes that alternative arrangements are in place by that date on areas of cooperation with the EU that require administrative arrangements and a financial contribution (for example with respect to the UK’s contributions to the administrative costs of the EU agencies, or the UK’s continued participation in EU-funded programmes, like the next Framework Programme for Research or the European Defence Fund). (Paragraph 56)
8.We ask the Government to clarify if it is indeed its intention to have the various agreements necessary to be able to extricate itself from the EU budget in place by the end of 2020, thereby avoiding any interruption to the UK’s ‘standstill’ transition in EU market access terms and its participation in specific EU-funded programmes from January 2021 onwards. (Paragraph 57)
9.We recommend that the Government engage in dialogue with us and our counterparts in the House of Lords on how parliamentary scrutiny of EU legislation may best be achieved during the transition period. (Paragraph 58)
10.Further, we recommend that the Government seek to create a mechanism which amounts to an opt out during the implementation period for any new EU law which requires unanimity amongst the Member States. (Paragraph 59)
11.We note the Secretary of State for Exiting the European Union’s position that to prepare for circumstances in which transition provisions were not to be effective on 30 March 2019 would be the act of a responsible Government, and we urge the Government to act responsibly by continuing actively to prepare border and other arrangements for the possibility of no deal having been reached and adopted by 30 March 2019 and make sure the necessary resources are available to do so. (Paragraph 60)
Dispute resolution after exit
12.The question of whether CJEU jurisdiction is direct or indirect is central to the Government’s position on suitable dispute resolution for the EU-UK Withdrawal and Future Relations agreements. However, little certainty has been provided about this distinction and we ask the Government to clarify. If there is a requirement to refer an issue to the CJEU and its interpretation is binding, there would be little difference in substance between “direct “ and “non-direct” jurisdiction. It would be otherwise if the requirement was limited to taking account of the decisions of the CJEU, the ability to refer a matter to the CJEU was voluntary, or the decision of the CJEU was not binding. (Paragraph 120)
13.We agree with the Prime Minister when she recognised as a “hard fact” in her Mansion House speech the potential for ongoing influence of the Court of Justice on the UK, irrespective of the choice of dispute resolution mechanisms after UK exit from the EU. But we welcome, in particular, her emphasis throughout the speech on the need to respect the sovereign legal orders of both the EU and UK by having an “independent arbitration mechanism” as part of a future relations agreement. (Paragraph 121)
14.We also consider that the example of Switzerland in its governance negotiations with the EU leads to the apparent conclusion that it will be difficult for the UK to remain wholly unaffected by judgements of the CJEU in its relations with the EU after exit. However, the Swiss example is based on a completely different constitutional relationship with the EU and furthermore does not take account of the repeal of section 3 of the European Communities Act 1972. (Paragraph 122)
15.This is in part due to the principle of legal autonomy imposed by the CJEU upon the EU.(Paragraph 123)
16.The Prime Minister said in her Munich and Mansion House speeches that the UK would “respect the remit” of the CJEU in respect of any future participation in agencies. We ask the Government to clarify what this means and whether it still thinks the example of the Swiss association agreement in relation to EASA holds good in the light of recent developments in EU-Switzerland governance negotiations. (Paragraph 124)
17.Future EU-UK cooperation on aspects of the “Area of Freedom, Security and Justice” based on the principles of mutual trust and recognition will be difficult to divorce from the jurisdiction of the CJEU. However, we note the example of the EU Iceland and Norway Agreement on Surrender (equivalent to the European Arrest Warrant) which involves a diplomatic solution to disputes. (Paragraph 125)
18.The progress of negotiations to date and the logic of close ongoing relations between the UK and the EU indicate that there is little prospect of a dispute resolution mechanism that is anything less than binding arbitration. (Paragraph 126)
19.The European Parliament holds some key cards in the process of putting both a Withdrawal and Future Relations agreement in place. It could either withhold its consent or request an Opinion from the CJEU on those agreements compatibility with EU law. Bearing that in mind, we ask the Government to set out its analysis of the model for future relations dispute resolution outlined in the EP resolution approved on 14 March. (Paragraph 127)
The role of the CJEU during the transition period
20.Some argue, but we think wrongly, that compulsory and exclusive CJEU jurisdiction during the implementation period might be justified in respect of the continuation of existing EU legislation, as the Government has itself recognised. But we question whether it should extend to any other parts of the Withdrawal Agreement. In this regard, we ask the Government to clarify what the practical effect might be of the proposed stipulation in Article 126 of the Commission’s draft legal text of 28 February 2018 that it should also extend to the interpretation and application of other provisions of the Withdrawal Agreement. (Paragraph 140)
21.Far from incorporating a safeguard mechanism to protect UK interests as referred to by the Secretary of State for Exiting the European Union in his Teesport speech, the EU has proposed mechanisms to sanction the UK if it does not follow the rulings of the CJEU during the implementation period. These include suspending the benefits of participation in the internal market. We ask the Government whether it is confident that agreement can be reached on this aspect of the proposed transitional arrangements. (Paragraph 141)
22.We note that the Prime Minister and Brexit Secretary have both expressed the hope that during the implementation period the exclusive jurisdiction of the CJEU might be phased out and a dispute resolution mechanism reflective of future EU-UK relations phased in. We believe they are right.(Paragraph 142)
UK domestic legislation
23.As we have already indicated in correspondence with the Prime Minister, we do not consider that the UK domestic courts should be given a power after the UK’s exit from the EU to disapply pre-exit primary legislation. This was a requirement of the UK’s membership of the EU. To allow such a power to persist after the withdrawal of the United Kingdom from the EU would be inconsistent with the doctrine of Parliamentary sovereignty and therefore constitutionally improper. (Paragraph 159)
24.The continuation of this power is even more questionable in the light of the uncertainty as to its scope in the Withdrawal Bill as currently drafted. Our concerns have not been alleviated by the Prime Minister’s response and we look forward to the further response from the Government on this issue. (Paragraph 160)
25.We ask for an explanation from the Secretary of State for Exiting the EU as to how it is proposed to entrench in UK law the citizens’ rights provisions of the Withdrawal Agreement and his assessment of how robust that will be if challenged. (Paragraph 161)
26.We ask the Government to set out its legislative plans for reapplying CJEU jurisdiction during the transition period. In this respect, there appears to be no need for both clause 9 of the current European Union (Withdrawal) Bill and likely provisions of the forthcoming Withdrawal and Implementation Bill, and we ask the Government to explain its approach to these two provisions. (Paragraph 162)
Published: 20 March 2018