5The role of the CJEU during the implementation period
Background
128.Once the UK has formally left the EU (likely to be on 29 March 2019) it will be subject to the transition provisions of the Withdrawal Agreement (at present envisaged by the EU to last until 31 December 2020). During this period, the UK will be subject to the overwhelming majority of substantive EU law and obligations (without participation in the institutions setting these) as if it were a Member State. A period of transition of around two years was first requested by the Prime Minister in her Florence Speech.119
The EU’s position
129.The EU Council Negotiating Directives of 29 January 2018120 concerning the transition period emphasise:
- The need for “effective enforcement mechanisms”;121
- The continued direct effect and primacy of EU law;122
- The continued application of “existing Union regulatory, budgetary, supervisory, judiciary and enforcement instruments and structures to apply, including the competence of the Court of Justice of the European Union”.
- As the UK will no longer participate in the EU institutions, there will be no UK judge in the CJEU.
130.This has been reflected in the legal text drafted by the Commission in its position paper of 7 February 2018.123 This was a unilateral legal text which is not binding upon the United Kingdom and furthermore is inconsistent with the consequences of the triggering of Article 50. Furthermore, in parts it refers to the United Kingdom as a third country and in parts it refers to the United Kingdom as a Member State, which eviscerates the basis of the legal text.
131.Governance during the transition period is addressed in Articles 126 and 165 of the EU’s proposed legal text for the Withdrawal Agreement of 28 February. It comprises:
- A continuation of the existing means of supervision and enforcement, including the oversight of the Commission and the direct jurisdiction of the CJEU;124
- An unclear reference to extending those existing supervision and enforcement mechanisms to “the interpretation and application of the Agreement”;125
- The power for the EU to unilaterally suspend certain “benefits” of internal market participation of the UK if the UK does not comply with a CJEU judgment126 or any interim order127during the transition period, if:
- this would put at risk the functioning of the internal market, customs union or financial stability of the EU or its Member States;
- it would be proportionate to the breach, does not exceed three months (without renewal) and 20 days grace has been given to the UK to remedy the breach.128
132.The last of these points represents a softening of the Commission’s original text of 7 February.
133.It also appears that there is some lack of clarity in the Commission’s latest legal text of 28 February. Whilst Article 126 has the effect of extending the jurisdiction of the CJEU to the interpretation and application of the Withdrawal Agreement during the transition period, Articles 157 to 159 (which are in force during this period) set up a Joint Committee responsible for any issue relating to the implementing and application of the Agreement and can adopt (by mutual consent) decisions binding the Union. This would appear to give an option for the diplomatic solution to a dispute which is binding but which is achieved without reference to the CJEU.
The European Parliament’s position
134.The European Parliament has been clear that a transition period can only be envisaged under the “full jurisdiction” of the CJEU and based on “existing European Union… judiciary and enforcement instruments and structures”.129
The UK’s position
135.In her Florence speech,130 the Prime Minister put forward a transition period saying: “The framework for this strictly time-limited period, which can be agreed under Article 50, would be the existing structure of EU rules and regulations”. She added “But because I don’t believe that either the EU or the British people will want the UK to stay longer in the existing structures than is necessary, we could also agree to bring forward aspects of that future framework such as new dispute resolution mechanisms more quickly if this can be done smoothly”.
136.On 9 October 2017 to the House of Commons, the Prime Minister said in her statement on “UK Plans for Leaving the EU” in response to a question:
We will have to negotiate what will operate during the implementation period. Yes, that may mean that we start off with the ECJ still governing the rules we are part of for that period, but we are also clear that we can bring forward discussions and agreements on issues such as a dispute resolution mechanism. If we can bring that forward at an earlier stage, we would wish to do so.131
137.As we have discussed in chapter 2, the Government is relying on the proposal for a joint EU-UK Committee to provide a safeguard mechanism for the UK. The UK response to the European Commission’s draft legal text132 for the transition period indicates that:
The UK agrees with the EU that a Joint Committee should be established to supervise the Withdrawal Agreement. The Joint Committee should have specific functions in relation to the implementation period, including resolving any issues which might arise concerning the proper functioning of the Agreement, having regard to the duty of mutual good faith which should apply between the UK and the EU, for example, in relation to acts of Union law adopted during the implementation period. Arrangements will need to protect the rights and interests of both parties. The UK has proposed text here as this did not form part of the Commission’s text.133
138.The Secretary of State for Exiting the EU told the Exiting the EU Committee134 that the UK accepts that it will be subject to the jurisdiction of the CJEU during the transition period. However, in a BBC interview in November 2017135 he also suggested that CJEU’s role could be phased out before the end of the transition on 31 December 2020: “We’ll start under the regulations as they are now, and then ideally, we’ll end up with a circumstance where we have another arbitration mechanism, a dispute resolution mechanism”.
139.This was a point also made by the Prime Minister in her Florence speech136 and repeated by the Parliamentary Under-Secretary of State for Exiting the EU (Robin Walker) when he gave evidence to us on 22 February:
The Prime Minister has been clear that when we enter the implementation period it will be under the same rules and regulations. The European Court will continue to have its role for that time-limited period. But if we can bring forward dispute resolution mechanisms—we absolutely have the ambition to agree dispute resolutions mechanisms as part of the future relationship between the UK and the EU—we would like to do so.”137
Our conclusions
140.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.
141.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.
142.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.
119 The Prime Minister’s Florence speech: “A new era of cooperation and partnership between the UK and the EU”, 22 September 2017
120 ANNEX to the COUNCIL DECISION supplementing the Council Decision of 22 May 2017 authorising the opening of the negotiations with the United Kingdom of Great Britain and Northern Ireland for an agreement setting out the arrangements for its withdrawal from the European Union: Supplementary directives for the negotiation of an agreement with the United Kingdom of Great Britain and Northern Ireland setting out the arrangements for its withdrawal from the European Union, 29 January 2018
121 Ibid, Paragraph 11
122 Ibid, Paragraph 14
123 European Commission Draft Withdrawal Agreement on the withdrawal of the UK from the EU and the European Atomic Energy Community, 28 February 2018
124 Article 126, first para
125 Article 126, second para
126 Article 126 of the Agreement and Article 258 TFEU
127 Article 129 of the Agreement and Article 279 TFEU
128 Article 165
129 Resolution of 3 October 2017, paragraph 3
130 The Prime Minister’s Florence speech: “A new era of cooperation and partnership between the UK and the EU”, 22 September 2017
132 HM Government (DEXEU), Policy Paper “ Draft Text For Discussion: Implementation Period”, 21 February 2018
133 Ibid, paragraph 4, page 1
135 Interview given by the Brexit Secretary to Laura Kuenssberg, BBC’s political editor, 16 November 2017
136 The Prime Minister’s Florence speech: “A new era of cooperation and partnership between the UK and the EU”, 22 September 2017
Published: 20 March 2018