Summary of conclusions and recommendations
Background
1.There is ‘no one-size-fits-all’ solution to dispute resolution after Brexit. Each of the proposed options we have considered has its own pros and cons. None of them provides a complete solution. (Paragraph 55)
2.Given the Government’s red line of withdrawing from the CJEU, either a new court covering essentially the same areas as the CJEU, or multiple dispute resolution procedures, will be needed post-Brexit. Neither option has been costed. Not only may different arrangements be needed to deal with the Withdrawal Agreement, the transitional period, and the future relationship with the EU, but it may also be that future trade arrangements are dealt with differently to any agreement on co-operation on, for example, justice and security matters. (Paragraph 56)
3.The EFTA court was presented as a potential off-the-shelf solution to the problem of dispute resolution. ‘Full docking’ with the Court is a limited solution. It is essentially an economic court and its jurisdiction does not extend to justice and home affairs issues, including EU co-operation on civil and family law matters and criminal law, such as the European Arrest Warrant. There would also be practical challenges in upscaling the EFTA Court to deal with the number of cases from the UK. (Paragraph 57)
4.Unless the Government eventually choses to join the European Economic Area, we do not consider that ‘full docking’ with the EFTA Court would resolve all the enforcement and dispute resolution issues that will arise post-Brexit. (Paragraph 58)
The Withdrawal Agreement
5.Given that Article 50 TEU provides explicitly that the Treaties shall cease to apply to the UK on exit, there is a legitimate argument that disputes arising under the Withdrawal Agreement, if they cannot be resolved politically by the Joint Committee, should be referred to a neutral court, or for arbitration. We share the Government’s concern that the interpretation of the Withdrawal Agreement should not be left to the CJEU, which is a Court associated with one of the parties to the Agreement. Whether or not the CJEU is objectively neutral, even a mere perception of bias should be avoided. (Paragraph 119)
6.However, the Government and Parliament will need to be mindful that the legal autonomy of the Union, as defined by the CJEU in past cases, demands that only the CJEU have the final say on the interpretation of EU law. Moreover, the final Withdrawal Agreement may be referred to the CJEU to determine whether it is compatible with the Treaties. From past precedent, innovative solutions can prove problematic and could well be deemed incompatible with EU law. (Paragraph 120)
7.We are unconvinced by the Government’s suggestion that all disputes relating to the Withdrawal Agreement can simply be settled politically by the Joint Committee. It is possible that intractable disputes may arise under the Withdrawal Agreement. These should not be left as potentially insoluble for reasons of short-term expediency: the Government and the EU will have to reach a sensible and pragmatic compromise on this question. (Paragraph 121)
8.As we have previously noted, time is now very short: over the next few months the UK and the EU must finalise the remaining articles of the Withdrawal Agreement. If the Government and the EU do not bring forward pragmatic proposals, it will be too late. The risk is that the Commission will shape the terms of the negotiations, or there will be no Withdrawal Agreement. (Paragraph 122)
9.If the Government does wish to avail itself of the suggested option of docking with the EFTA court, simply for the purpose of settling disputes arising from the Withdrawal Agreement, it will have to commence negotiations with both the EU 27 and the EEA/EFTA states as a matter of urgency. (Paragraph 123)
The transition period
10.The UK will continue to be bound by the jurisdiction of the CJEU during transition. We accept that, given that the transitional period will be relatively short, it would be too burdensome and time-consuming to establish a separate dispute settlement mechanism solely for the period of transition. (Paragraph 146)
11.It is important that this continued jurisdiction of the CJEU should only be for a reasonable, time limited, period: we urge the Government to ensure that there is a longstop for any claims that arise during the transition, so that cases relating to acts occurring during transition cannot be brought indefinitely. (Paragraph 147)
12.The Minister seemed unconcerned at the loss of UK judges from the CJEU during the transition, and did not address the consequences that could arise as a result. (Paragraph 148)
The future relationship
13.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. (Paragraph 176)
14.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. (Paragraph 177)
15.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. (Paragraph 178)
16.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. (Paragraph 179)
17.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. (Paragraph 180)
The impact of Brexit on the legal landscape
18.We recognise the substantial positive influence that UK lawyers and judges have played in the evolution of EU law. After Brexit, the ability of the UK to affect the development of case-law in the EU is likely to be diminished significantly. Given the importance of the jurisdiction of the CJEU internationally, this may have a negative impact on the international standing of the UK’s common law system. (Paragraph 188)
19.We took evidence on the issue of mutual recognition of judgments and civil justice cooperation as part of this inquiry, since the Government’s response to our report Brexit: justice for families, individuals and businesses? highlighted limited progress. We have grave concerns about these issues, and we will revisit them shortly. (Paragraph 190)
20.The Government asserts that ending the direct jurisdiction of the CJEU will not weaken the rights of individuals. The evidence received in this inquiry demonstrates that the ability to request a preliminary reference from the CJEU, combined with the direct effect and supremacy of EU law, has sometimes acted as a check on Government action. This check will be lost as a result of Brexit, and so the rights of individuals will be weakened. (Paragraph 199)