Chapter 5: The future relationship
The options available
149.The wide range of options available for enforcement and dispute resolution in relation to the future relationship have been set out at paragraph 33 of this report, and can be summarised as follows: a political system based on a Joint Committee, arbitration or perhaps a Joint Court of some type; the EFTA Court; or the continued jurisdiction of the CJEU in some contexts.
150.Professor Adam Łazowski noted that such issues have often been contentious when the EU has negotiated agreements with third countries:
“The deeper the economic integration between the parties, the more robust homogeneity in law-books and courtrooms is required by the European Union. Methods of securing such homogeneity are traditionally the bones of contention in negotiations between the EU and its neighbouring countries. For instance, it took the EFTA and the EEC countries over five years to design the modi operandi for securing homogeneity in the EEA (including the enforcement and dispute settlement machinery). Most recently this phenomenon has been witnessed in negotiations with Ukraine, Georgia and Moldova.”106
151.In other words, the precise model for dispute resolution depends in large part on the closeness of the partnership. Given the current lack of clarity as to the Government’s preferred arrangements for the future relationship, it is thus somewhat premature to identify appropriate enforcement and dispute resolution provisions. The most suitable option will depend on the type of relationship the UK seeks to agree with the EU. Accordingly, this Chapter highlights certain challenges that have been raised in evidence with us, and suggests a possible way through to a practical solution.
152.It is important to note at the outset that while the UK may be able to exclude the direct jurisdiction of the CJEU after Brexit, it will still be subject to its influence. Professor Valsamis Mitsilegas provided us with some useful examples:
“If there is an EU-UK security treaty and the European arrest warrant continues in some shape or form, and, for example, a European arrest warrant is issued by a British authority to a French authority and will be executed under this agreement, nothing prevents the French judge sending a preliminary reference to the European Court of Justice on the compatibility of this request with EU law …
“Whatever the shape of dispute resolution post Brexit, the Court of Justice will remain relevant… and the substance of the case law will have a direct effect on the relationship between the UK and the EU.”107
153.Professor Mitsilegas provided a second example in the case of access to data after Brexit, noting the well-known case of Schrems,108 in which the CJEU found that the ‘EU-USA safe harbour agreement’ did not provide an adequate level of data protection:
“Take the issue of data protection, which exercises people who work within the security field as well as companies, and the flow of data across the private sector but also between the private and public sectors and the state authorities. After Brexit, for the United Kingdom to ensure that its companies can be part of the data flow system across the European Union, the Commission will have to adopt an adequacy decision, which attests that the United Kingdom’s system is essentially equivalent to the system of the European Union, and EU data protection law also has extraterritorial effect …
“The European Commission’s assessment, which will be a unilateral assessment, will be based on the case law of the Court of Justice. So whether the United Kingdom wants it or not, it will have to comply with the assessment of the European Commission if it wants its companies to have any relationship as regards the flows of personal data.”109
154.There will also be similar difficulties in relation to the autonomy of EU law, discussed in Chapter 3. It is notable that both the European Council’s Guidelines for future relations, published on 23 March 2018, and the European Parliament’s Guidelines on the framework of future EU-UK relations, published on 14 March 2018, refer to this principle and the role of the CJEU.110 Indeed, the Parliament’s Guidelines go further, and assert that a deep and comprehensive free trade area requires “a binding mechanism for convergence with the EU acquis and a binding role for the CJEU in the interpretation of Union law”.111
155.Thus, as Professor Tobler warned us “as soon as there is EU law in [the agreement], the EU will insist on the Court of Justice”. This would leave the UK “in the uncomfortable position of saying, ‘If we really want to get rid of this court, the ultimate consequence is having no EU law element in our future agreements’”.112 The ramifications of such a decision could be profound: many of the areas of current co-operation, for example over police and judicial matters, may come to an end.
Access to justice
156.Several witnesses considered whether, after Brexit, individual litigants and companies would have access to any court or arbitral arrangements that were eventually established to deal with relations between the UK and the EU.
157.Currently, while individuals and businesses only have limited rights to bring direct actions to the CJEU,113 the domestic courts can make preliminary references to the CJEU This procedure, set out in Article 267 TFEU, allows the courts and tribunals of the Member States, in disputes which have been brought before them, to refer questions to the CJEU about the interpretation of European Union law or the validity of a European Union act. The CJEU does not decide the entire dispute itself, but rules on points of interpretation. It is for the national court or tribunal to dispose of the case in accordance with the Court’s decision, which is similarly binding on other national courts or tribunals before which a similar issue is raised.
158.Several witnesses expressed concerns at the possibility that a dispute resolution system, post-Brexit, might exclude all access to judicial remedy for individuals and businesses. Lord Neuberger Abbotsbury told us: “I start with the proposition that if you give people rights but not the ability to enforce them you bring the law into disrepute.”114 On the other hand, Professor Tobler noted that under many treaties founded in public international law dispute resolution is conducted only between states.115
159.Lord Thomas of Cwmgiedd observed:
“When issues emerge that are effectively of an inter-state or constitutional type, it is often highly desirable that an individual, particularly a commercial enterprise, who is seriously affected by it, can go directly to the court … My preliminary view would be that the balance in favour of direct access must be quite high. However, you then have to counter it with the number of cases that might come through direct access. A better mechanism might be a system that mirrored the current one whereby you went to the courts of the parties to the treaty and they referred it to the court. There is something to be said for either.”116
160.Raphael Hogarth noted that if a new state-to-state system were established, and a business were concerned that it was being discriminated against or in some way mistreated by a Government, then it would be obliged to lobby its own Government to bring a complaint. He noted that such a model did not favour smaller businesses, since “as far as government is concerned it is worth kicking up a fuss only when quite a lot of money is at stake”.117 By contrast, he observed that much EU law has direct effect, meaning that citizens and businesses can enforce their rights under EU law before their own domestic courts, or the domestic courts of other EU countries. There is no need to go to the CJEU.118
161.Hugh Mercer QC and Professor Catherine Barnard highlighted the fact that similar concerns arose under investor-state arbitration arrangements, which are sometimes used in bilateral investment treaties to allow investors to bring claims against states for alleged discriminatory practices.119 Professor Barnard noted: “When we think of trade, we often think of big corporations, but one of the successes of European Union law has been to open up the market to small businesses.” Hugh Mercer argued that “the idea of investor-state arbitration for such a company seems a bit unreal”.120
162.There may be no easy answers to this conundrum, but whatever model of dispute resolution is ultimately decided upon, the question of individual access to justice will be of particular importance.
What is the impact of the Government’s red line on the UK’s possible future relationship with the EU?
163.The European Commission’s Chief Negotiator, Michel Barnier, has been very clear that the UK’s refusal to entertain the jurisdiction of the CJEU will have consequences for the type of future relationship that will be possible with the EU. The Commission has published a helpful diagram in the form of a staircase (reproduced at Figure 1), noting the effect of each of the UK Government’s red lines. The Commission’s initial view was that the combination of rejecting the single market, free movement of people, the customs union and the jurisdiction of the CJEU would only leave the option of a free trade agreement in the style of CETA.
Figure 1: Commission’s diagram on possible future relationships
Source: European Commission, ‘Slide presented by Michel Barnier, European Commission Chief Negotiator, to the Heads of State and Government at the European Council (Article 50) on 15 December 2017’: https://ec.europa.eu/commission/publications/slide-presented-michel-barnier-european-commission-chief-negotiator-heads-state-and-government-european-council-article-50-15-december-2017_en [accessed 27 April 2018]
A four-pillar option?
164.Since the publication of the ‘staircase diagram’, Michel Barnier has taken a slightly more nuanced approach, acknowledging that the future relationship will be broader than merely a free trade agreement. In February 2018, he suggested that a future relationship might be predicated on ‘four pillars’, containing multiple agreements:
“To conclude on the future architecture of our relations with the United Kingdom post Brexit, I can envisage four main pillars. The first pillar is a free trade agreement along the lines of the Canada model, with certain specific provisions. The second pillar contains bilateral agreements between the EU and the UK on issues of joint interest, such as aviation … I am thinking of the co-operation networks between our universities and co-operation in the research field.
“The third pillar is that of co-operation on justice and home affairs … There is a lot of room for cooperation in this third pillar when it comes to the exchange of information, operational cooperation with Europol, judicial co-operation in the field of criminal law and mutual judicial co-operation. Your country is not part of the Schengen area. You will not want to recognise free movement of persons after withdrawal. Therefore, there are limits on what can be achieved, but we will have to continue working on the issues. The fourth pillar is [a] future partnership for security and defence, the stability of our relations and the future of our foreign policy.”121
165.This proposal has also been turned into a diagram, which we reproduce at Figure 2:
Figure 2: Possible framework for the future partnership proposed by the European Commission
Source: European Commission, April 2018
166.This broader understanding of the future relationship may provide room for compromise on both sides. Professor Barnard discussed with us the question of potential ‘carve outs’ for specific issues such as the European Arrest Warrant (for which see Box 1), European Aviation Area and “other areas that are dependent on the operation of the Court of Justice as a final arbiter”.122 For example, many of the witnesses who gave evidence to us took the view that the UK could not benefit from mechanisms, such as the European Arrest Warrant, without recognising the jurisdiction of the CJEU in some way.123
Box 1: The European Arrest Warrant
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The EAW was adopted by the EU to facilitate the extradition of individuals between Member States. The Government has previously recognised the importance of the EAW, and the then Home Secretary, Rt Hon Amber Rudd MP, has called it an “effective tool”, noting that it is a priority for the Government “to ensure that we remain part of the arrangement”. The UK issues over 200 EAW requests annually. The EAW has brought high-profile criminals back to the UK, such as the fugitive, Hussain Osman, who sought to carry out a terrorist attack in London in July 2005 and then fled to Italy. It is far from clear that the EU will accede to the UK’s continued access to the EAW post-Brexit. Most of the witnesses who appeared before us concluded that it would be impossible to use the mechanism without recognising the jurisdiction of the CJEU. |
Source: European Union Committee, Brexit: judicial oversight of the European Arrest Warrant (6th Report, Session 2017–19, HL Paper 16)
167.The Prime Minister seemed to hint at such ‘carve outs’ in two recent speeches in Munich and at the Mansion House. In the first speech, delivered on 17 February 2018, she addressed some of the issues that the UK might wish to see in a treaty on security and justice co-operation. She acknowledged the benefits of the European Arrest Warrant and the European Investigation Order, and said that the UK, “when participating in EU agencies” would “respect the remit of the European Court of Justice”.124
168.The speech at Mansion House, delivered on 2 March 2018, focused on the future economic relationship. The Prime Minister reiterated the point she made in Munich, indicating that “if we agree that the UK should continue to participate in an EU agency the UK would have to respect the remit of the ECJ in that regard”. Yet despite these apparent concessions, she continued:
“In the future, the EU treaties and hence EU law will no longer apply in the UK. The agreement we reach must therefore respect the sovereignty of both the UK and the EU’s legal orders. That means the jurisdiction of the ECJ in the UK must end. It also means that the ultimate arbiter of disputes about our future partnership cannot be the court of either party.”125
169.It is not yet clear whether the EU will accede to this somewhat ‘in and out’ model in respect of its agencies. It has previously described such an approach as “cherry-picking”. But what is clear is that the four-pillar model proposed by Michel Barnier at least opens up the possibility of a differentiated approach to enforcement and dispute resolution.
170.An alternative to the four-pillar model may be an association agreement with the European Union. Guy Verhofstadt MEP, the European Parliament’s Brexit co-ordination told the EU Select Committee:
“An association agreement is a bespoke partnership that can be very close or very broad, that can cover only trade or economics or can cover all fields. How you do it depends essentially on the two parties discussing it.”126
171.Notwithstanding the position of the European Parliament, we heard concern from Robert McDougall that association agreements “generally have in common the objective of extending the requirements of the EU internal market to the non-EU parties, treating the later essentially as rule-takers”. 127 Such association agreements are often an intermediate step for countries on a path to EU accession—although we do note that Article 217 TFEU, which provides the legal base for EU association agreements, does not prescribe the circumstances, and thus would not preclude either the possibility of a range of agreements, such as those outlined in Michel Barnier’s four-pillar model, being grouped under the general heading of an association agreement.
172.We asked Suella Fernandes MP about Michel Barnier’s four pillar option. She said that it was “very interesting and helpful” and “very comprehensive”. Nonetheless, she stated that “it is not the Government’s official reflection of how we would see the relationship panning out. It is not our position”.128
173.The Minister did not expand on what the Prime Minister meant by respecting the remit of the CJEU when participating in EU agencies. Indeed, the Government’s position was undeveloped:
“We are on the brink of commencing the negotiations on these particular issues. Some agencies have been referenced—the aviation and medicines agencies. Those are agencies with which we have extensive dependency, you could say, and co-operation. They may well be agencies that we want to maintain our membership of … The Prime Minister referenced three specific sectors—chemicals, medicines and aviation—and their associate agencies. We would respect the remit of the ECJ in those instances.”129
174.Whatever the merits of Michel Barnier’s four-pillar model, or the European Parliament’s proposed association agreement, the Government has yet to espouse either model. Nevertheless, it is reasonable to assume that the future relationship will cover a number of different areas, such as trade, internal security, or data protection, and that it will be closer in some areas than others. This could present benefits, for instance in that there would be no need to adopt a ‘one-size-fits-all’ approach to enforcement and dispute resolution; it could also present difficulties, as Hugh Mercer QC pointed out. He said that “multiplying the number of bodies multiplies the risk of people taking [legal] points … whether it is desirable to have separate bodies for different aspects is another question. As lawyers, we all think of the jurisdictional and demarcation disputes that can arise. My instinctive reaction is that perfection is the enemy of the good.”130
175.Questions may also arise in respect of areas falling within more than one treaty (for example data sharing and data protection). Moreover, even in the free trade element of the agreement there may be complexities—differing levels of harmonisation, equivalence and autonomy. Raphael Hogarth suggested that that this could introduce “yet another layer of complexity for business in that it needs to say, ‘Which basket is this regulation in? Which dispute resolution system underpins the interpretation of this basket?’”131
Conclusions
176.In relation to the future relationship, the approach to enforcement and dispute resolution will depend on the level of co-operation that the Government wishes to have with the European Union after Brexit. If the Government settles for a simple free trade agreement, then any disputes could be dealt with via arbitration. However, this would not be appropriate for many other areas of UK-EU cooperation, including the important sphere of judicial and security cooperation.
177.If the Government wishes to pursue a “deep and special partnership”, which involves participation in EU agencies and mechanisms such as the European Arrest Warrant then, as the Prime Minister has recognised, it will have to “respect the remit” of the CJEU in those areas. If it does not do this, the UK will lose access to EU agencies upon which it relies, including those responsible for the regulation of aviation, medicines and chemicals.
178.It is clear to us that whatever formal structure is adopted for the future UK-EU relationship, it is likely to be composite in nature: there will be different levels of integration in different areas. It follows that there will be no ‘one-size-fits-all’ mechanism for enforcement and dispute resolution. This could mean that the UK would only be obliged to accept the jurisdiction of the CJEU in specific and limited areas, for instance those involving direct co-operation with EU agencies, or within the field of justice and home affairs.
179.We urge the Government to be much clearer, by being more detailed, about its approach to these issues. If the Prime Minister wishes to make such an offer to the EU 27 this should be done with precision and clarity, by means of a draft text that can be properly scrutinised by all sides.
180.We recommend further that the enforcement and dispute resolution system established under the future relationship should be accessible to citizens and businesses, either directly or via a reference system from the domestic courts. The interests of citizens and businesses would be prejudiced if the future dispute resolution system between the UK and the EU 27 were to be entirely at-state-to-state level.
107 Q 31.He highlighted the case of Petruhhin (Case C-182/15, 6 September 2016), which concerned an extradition request from Russia. This was referred to CJEU, which interpreted the issue in accordance with EU law and determined that surrender would be contrary to EU law. See: http://curia.europa.eu/juris/liste.jsf?language=en&num=C-182/15
108 Case C-362/14, 6 October 2015, [2016] QB 527: http://curia.europa.eu/juris/liste.jsf?num=C-362/14
110 European Parliament, Guidelines on the framework of future EU-UK relations, (14 March 2018), para 39: http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT+TA+P8-TA-2018–0069+0+DOC+XML+V0//EN&language=EN [accessed 23 April 2018] and European Council, European Council (Art. 50) guidelines on the framework for the future EU-UK relationship, (23 March 2018), para 15: http://www.consilium.europa.eu/en/press/press-releases/2018/03/23/european-council-art-50-guidelines-on-the-framework-for-the-future-eu-uk-relationship-23-march-2018/ [accessed 23 April 2018]
111 European Parliament, Guidelines on the framework for future EU-UK relations, (14 March 2018), para 12: http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT+TA+P8-TA-2018–0069+0+DOC+XML+V0//EN&language=EN [accessed 23 April 2018]
113 Article 263, Treaty on the Functioning of the European Union imposes strict standing conditions on natural or legal persons who wish to challenge a potentially unlawful EU act.
116 Ibid.
117 Ibid.
118 Ibid.
121 Oral evidence taken before the European Union Committee, 21 February 2018, (Session 2017–19), Q 2
124 The Rt Hon Theresa May MP, Prime Minister ‘Speech at Munich Security Conference’, 17 February 2018: https://www.gov.uk/government/speeches/pm-speech-at-munich-security-conference-17-february-2018 [accessed 18 April 2018]
125. The Rt Hon Theresa May MP, Prime Minister Speech on ‘Our future economic partnership with the European Union’, 2 March 2018: https://www.gov.uk/government/speeches/pm-speech-on-our-future-economic-partnership-with-the-european-union [accessed 18 April 2018]
126 Oral evidence taken before the European Union Committee, 20 February 2018 (Session 2017–19), Q 9. See European Parliament, Guidelines on the framework of future EU-UK relations, (14 March 2018), para 39: http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT+TA+P8-TA-2018–0069+0+DOC+XML+V0//EN&language=EN [accessed 23 April 2018] and European Council, European Council (Art. 50) guidelines on the framework for the future EU-UK relationship, (23 March 2018), para 5: http://www.consilium.europa.eu/en/press/press-releases/2018/03/23/european-council-art-50-guidelines-on-the-framework-for-the-future-eu-uk-relationship-23-march-2018/ [accessed 23 April 2018]