17.The Articles relating to governance, scope and implementation of the Withdrawal Agreement will determine how decisions on the Agreement will be implemented and how any disagreements or disputes relating to the Agreement are handled in practice.
18.The Withdrawal Agreement states that any reference to the United Kingdom covers:
(a)the United Kingdom; and, to the extent that EU law applied before the Agreement comes into force:
(c)the Channel Islands and the Isle of Man (the Crown Dependencies).
It also applies to:
(d)the UK’s Sovereign Bases on Cyprus to the “extent necessary” to implement the arrangements set out in the relevant Protocol (see paragraph 19 below); and
(e)the UK’s Overseas Territories where the agreement relates to “special arrangements” for their association with the EU.
19.Annexed to the Agreement are two separate Protocols dealing with the UK’s Sovereign Bases on Cyprus, and with Gibraltar. The Protocol on Cyprus applies, where relevant, EU law to the UK’s Sovereign Bases after the end of the transition period (including: free movement of goods and customs; agriculture, fisheries, veterinary and phytosanitary rules; VAT; data protection; rights of residence; and, border checks on the Sovereign Bases’ sea boundaries, airports and seaports). The Protocol also mandates a “Specialised Committee” tasked with facilitating and discussing its application.
20.In contrast, the Protocol on Gibraltar is limited to separation provisions and relations with the EU 27 during the transition period only. It calls on the UK and Spain to cooperate “closely” on the “effective implementation” of the Agreement on citizens’ rightsand to establish “coordinating” committees to discuss employment and labour conditions, and environmental protection and fishing. It also calls for Spain and the UK to establish a “coordination committee” for discussing police and customs matters. A “Specialised Committee” operating under the UK-EU Joint Committee will be established to facilitate the implementation of the Protocol, to discuss any difficulties raised by the UK or the EU, and to “examine” any reports issues by the “coordination committees”.
21.The Protocol’s Preamble also takes note of the separate Memoranda of Understanding, which will only apply during the transition period and have now been agreed, and the pending Treaty on Taxation, between the UK and Spain.
Following publication of the draft Withdrawal Agreement, the Spanish Government requested a clarification to Article 184, which refers to the negotiations on the future relationship. They asked that it be made clear that the territorial scope should be consistent with the European Council’s March 2017 negotiating guidelines, which granted Spain a veto on the extension to Gibraltar of any EU-UK future agreement. In response, the UK’s Permanent Representative to the EU, Sir Tim Barrow issued a letter to the Council of the European Union on 24 November 2018on the UK’s interpretation to Article 184, stating that there is “no obligation or presumption, on the basis of this provision, for such agreements to have the same territorial scope as the one provided for in Article 3 of the Withdrawal Agreement”, which does cover Gibraltar. The Presidents of the European Commission and the European Council also wrote a letter to Spanish Prime Minister Pedro Sánchez echoing this interpretation.
22.We have repeatedly argued that it is vital that the Withdrawal Agreement and its arrangements for the transition period apply to Gibraltar. We therefore welcome the successful resolution of this issue. We also welcome the application of the Withdrawal Agreement, where necessary, to the other Overseas Territories, and the Crown Dependencies.
23.We note, however, that while the Agreement settles the post-transition status of the UK’s Sovereign Bases on Cyprus, Gibraltar’s long-term relationship with the EU remains subject to negotiation within the wider context of the UK-EU future relationship.
24.The main governance structure that would be established by the Withdrawal Agreement is the Joint Committee. The detailed rules of procedure relating to the Joint Committee (and any specialised committees established under the Withdrawal Agreement, discussed further below) are set out at Annex VIII to the Agreement.
25.The Joint Committee would be the primary forum responsible for the implementation and the application of the Withdrawal Agreement. Annex VIII provides that the Joint Committee would be co-chaired by a member of the European Commission and a representative of the UK Government at ministerial level, but that this role could also be filled by “high level officials designated to act as their alternatives”.
26.Article 164 of the Withdrawal Agreement provides that the Joint Committee would meet at the request of the UK or the EU, and in any event at least once a year. Its meeting schedule would be adopted by mutual consent.
27.The Joint Committee’s decisions and recommendations would also be made by mutual consent and would be binding on the EU and the UK (which would be obliged to implement them). Article 166(2) makes plain that such decisions would have “the same legal effect as this Agreement”.
28.The Joint Committee would have a secretariat made up of “an official of the European Commission and an official of the Government of the United Kingdom”. Meetings of the Joint Committee would be confidential, unless otherwise decided by the co-chairs. Moreover, the EU and UK would each be able to decide (individually) whether to publish the decisions and recommendations adopted by the Joint Committee in their respective official publication journals. While the secretariat would be responsible for minuting meetings of the Joint Committee, these minutes would not be made publicly available, although the co-chairs could opt to make summaries public.
29.As well as supervising and facilitating the implementation and application of the agreement, the Joint Committee would oversee certain specialised committees (discussed below); issue an annual report on the functioning of the Agreement; and, in some circumstances, adopt amendments to the Agreement. Notably, Article 164(5)(d) would allow the Joint Committee to adopt decisions amending the Withdrawal Agreement where this was necessary to “address omissions or other deficiencies, or to address situations unforeseen when this Agreement was signed”, provided that such changes did not “amend the essential elements of the Agreement”. This widely drawn power may be somewhat constrained by the fact that decisions have to be made by mutual consent.
30.As well as the main Joint Committee, the Withdrawal Agreement would establish a number of specialised committees. Some are set out in the Agreement. These are the committees on:
31.The Joint Committee may also establish additional specialised committees, “in order to assist the Joint Committee in the performance of its tasks”. The Joint Committee would decide on the tasks of specialised committees and supervise their work. It would also be entitled to change the tasks assigned to specialised committees and “dissolve any of those committees”.
32.Specialised committees will be made up of representatives of the EU and the UK with “appropriate expertise” in the issues under discussion. However, the fact that a specialised committee has been established would not preclude either the UK or the EU taking a matter directly to the Joint Committee.
33.The Joint Committee’s Rules of Procedure described in Annex VIII would also, broadly, apply to the specialised committees (unless the Joint Committee decided otherwise).
34.The Joint Committee structure for governance of the Withdrawal Agreement, agreed in March 2018, ought to allow a collaborative approach to the supervision of the Withdrawal Agreement, as well as the delegation of specific functions, such as citizens’ rights, financial provisions, Northern Ireland/Ireland and Gibraltar, to specialised committees.
35.The Joint Committee will be critical in ensuring the smooth working of the Withdrawal Agreement. It will be a uniquely powerful and influential body. Decisions adopted by the Joint Committee would be binding on the EU and the UK and would have the same legal effect as the Withdrawal Agreement.
36.In particular, during the transition and for a period of four years thereafter, Article 164 of the Withdrawal Agreement provides that the Joint Committee would have power to amend aspects of the Agreement to take account of errors, omissions and deficiencies, and to address unforeseen situations. Even though changes that “amend the essential elements” of the Agreement are excluded, this is a widely drawn power, and is not subject to clear scrutiny procedures or parliamentary oversight.
37.Nor does it appear that the Joint Committee will operate in an open and transparent way. The relevant rules suggest that meetings would be confidential, decisions might not be published, and even summary minutes might not be made publicly available. This is an unsatisfactory state of affairs, given the significant role that the Joint Committee will play.
38.While the international agreement establishing the terms of the UK’s withdrawal from the EU may not be the appropriate place to include provisions relating to the role of the UK Parliament, Members of both Houses may wish to consider the appropriate level of, and structure for, parliamentary oversight of the Joint Committee, and seek undertakings from the Government on this question.
39.Article 4 of the Agreement states that both the Agreement and any EU law applying to the UK under it should have the same effect as in EU Member States. This includes ‘direct effect’ (which allows private parties to invoke their rights under the Withdrawal Agreement before UK courts, as well as in EU Member States). The Government’s Explanatory Note to the Agreement states that Article 4 would also allow the UK court to make available certain remedies (including Francovich damages).
40.Where it is relevant to the Withdrawal Agreement, Article 4(2) would also give EU law what is sometimes referred to as ‘supremacy’ over domestic law. Essentially, under the Agreement, the UK would be required to bring forward legislation to allow domestic courts to disapply any other domestic legislation which is incompatible or inconsistent with the Agreement (and EU law applicable under the Agreement).
41.In the March 2018 draft, the ‘supremacy’ provision only applied to citizens’ rights, but in the current draft it would apply to the entire Withdrawal Agreement. In our report Dispute resolution and enforcement after Brexit we described it as a “novel constitutional provision”, albeit one that had been flagged in the Joint Report of December 2017, which indicated that the provisions on citizens’ rights would “have effect in primary legislation and will prevail over inconsistent or incompatible legislation, unless Parliament repeals this Act in the future”.
42.It is unclear why the scope of this provision has been extended in the latest text of the Agreement, nor is it clear what would happen if the UK Parliament sought to repeal the domestic legislation implementing the Withdrawal Agreement (although if the UK sought to resile from its obligations under the Agreement, this would probably lead to a breach of international law). The means of implementing this provision in domestic law may well be of interest to the Constitution Committee, and to Members of the House more widely.
43.Article 4(4) would require the provisions of the Agreement referring to EU law, or “concepts or provisions thereof”, to be interpreted in conformity with any relevant case-law of the CJEU handed down before the end of the transition period. The UK judicial and administrative authorities would only be required to “have due regard” to case-law of the CJEU handed down after the end of transition.
44.It is hard to predict the effect of this provision, since many aspects of the Withdrawal Agreement (including some of the new rules on citizens’ rights) will not come into force until the end of the transition period. However, Article 4, which provides for direct effect and supremacy, is not limited to the transition period. This means that the EU law principles of direct effect and supremacy will continue to apply to those provisions of the Withdrawal Agreement (and to the provisions of EU law to which the Agreement refers) once the UK has left the EU at the end of the transition period. Thus the status of EU law in the UK at the end of the transition period is not entirely clear.
45.Article 5 of the Withdrawal Agreement states that the UK and EU will “in full mutual respect and good faith, assist each other in carrying out tasks which flow from this Agreement”. It imposes an obligation on the parties to “take all appropriate measures, whether general or particular, to ensure fulfilment of the obligations arising from this agreement and shall refrain from any measures which could jeopardise the attainment of the objectives of this Agreement”.
46.Should any disputes arise between the parties to the Agreement, they would fall to be determined against the background of this provision. It might become relevant, for example, if a dispute arose as to whether the EU was seeking to retain the UK in the backstop arrangement unilaterally, rather than genuinely seeking to negotiate a future trade arrangement. The Government’s paper The Legal Position on the Withdrawal Agreement notes that “the principle of good faith is a rule of customary international law, as has been recognised by the CJEU and the International Court of Justice”.
47.In its Future Partnership Paper on Enforcement and Dispute Resolution, the Government restated its intention that “in leaving the European Union, we will bring about an end to the direct jurisdiction of the Court of Justice of the European Union”. When she presented the proposed deal to the House of Commons on 15 November 2018, the Prime Minster also emphasised that “the jurisdiction of the European Court of Justice in the United Kingdom will end”.
48.In this context, our report Dispute resolution and enforcement after Brexit identified two linked issues. First, that liabilities and obligations under the Withdrawal Agreement could arise “many years after the UK has left the EU”, and that it would therefore be “problematic to leave the interpretation of the entirety of this agreement to the CJEU, since it is associated with one of the parties to the agreement, and any perception of bias should be avoided”. Secondly, we noted that the Government would need to be mindful of the fact that “the legal autonomy of the EU, as defined by the CJEU, means that only the CJEU can have the final say on the interpretation of EU law”.
49.Under the Withdrawal Agreement, the CJEU would retain its jurisdiction “as provided for in the Treaties” during the transition period. In our earlier report we said that “given that the transitional period will be relatively short, it would be too burdensome and time-consuming to establish a separate dispute resolution mechanism solely for the period of transition”. It is worth noting, however, that if the transition period is extended, there would also be a prolongation of the jurisdiction of the CJEU.
50.The CJEU will continue to have jurisdiction over cases that are pending before it at the end of the transition period (and over certain new enforcement actions brought within four years after the end of transition provided the UK’s violation occurred before then). This ‘longstop’ for when a cause of action arises during the transition period was missing from the March 2018 text.
51.In relation to Part Two of the Withdrawal Agreement (citizens’ rights), UK courts will continue to be able to refer cases to the CJEU for eight years following the end of transition. This provision will require an amendment to Section 6 of the European Union (Withdrawal) Act 2018, which currently precludes the domestic courts from making references to the CJEU. Article 160 of the Withdrawal Agreement also allows for CJEU jurisdiction in respect of certain limited aspects of Part Five of the Agreement, relating to the financial settlement.
52.The provisions dealing with the jurisdiction of the CJEU in the Protocol on Ireland/Northern Ireland are discussed further in Chapter 4 of this report.
53.The March 2018 draft of the Withdrawal Agreement envisaged that intractable disputes relating to the Withdrawal Agreement (which had not been settled within three months) could be submitted to the CJEU by either party, and that any rulings from that court would be binding on the Union and the UK. It also envisaged that the CJEU would have the power to impose a fine, and provided for the possibility of either side imposing sanctions on the other. The Government subsequently told the Committee that it would prefer for disputes to be settled by the Joint Committee, rather than involving the CJEU.
54.Article 170 of the final text of the Withdrawal Agreement sets out a new model for dispute resolution: an arbitration procedure. This could be instituted in circumstances where no mutually agreed solution to a dispute has been reached within three months of a written notice being provided to the Joint Committee (or earlier if agreed by the parties). This process replaces the earlier provisions which provided for CJEU jurisdiction, but it does not displace the role of the CJEU in its entirety.
55.Under the arbitration procedure, the Joint Committee would be required to establish before the end of the transition period a list of 25 persons who were willing to serve on a panel. The UK and the EU would nominate 10 potential (independent expert) panellists themselves. They would also jointly nominate five ‘chair’ panellists. Nominees would have to “possess the qualifications required for appointment to the highest judicial office”, and would need specialist knowledge or experience of Union law and public international law.
56.If a dispute were not resolved in the Joint Committee and an arbitration panel were established, it would comprise five members (including the chair); the EU and the UK would nominate two panellists each from the agreed list and would have to agree on the chair. The panel would usually be expected to issue a binding decision within twelve months. Further rules of procedure relating to the arbitration process are contained in Annex IX to the Withdrawal Agreement.
57.If either party failed to comply with a ruling of the arbitration panel, then after the reasonable period of time has expired, the other party may request the arbitration panel to impose a lump sum or penalty payment as a temporary remedy to enforce compliance. If the party in breach fails to pay, or if that party has still not complied with the original panel decision after a further six months, the other party may then suspend obligations either arising from the Withdrawal Agreement (other than Part Two on citizens’ rights) or parts of “any other agreement between the Union and the United Kingdom under the conditions set out in that agreement”.
58.Although Article 175 makes clear that arbitration panel rulings would be “binding on the Union and the United Kingdom” and that both parties should “take any measures necessary to comply in good faith” with the ruling, the procedure retains a limited, but nonetheless important role for the CJEU.
59.Article 174 provides that where a dispute raises a question of interpretation of EU law, including of a provision of EU law referred to in the Withdrawal Agreement, or a question of whether the UK has complied with its obligations under Article 89(2), the arbitration panel should “request the Court of Justice of the European Union to give a ruling on the question”. Any such ruling would be binding on the arbitration panel. This is similar to the current procedure by which domestic courts can refer questions of EU law to the CJEU.
60.While Article 174 does not provide for the direct jurisdiction of the CJEU over disputes between the UK and the EU, its precise effect is already contested. It appears that the CJEU may retain an important and potentially decisive role. Moreover, depending on the nature of the CJEU’s response to a question about the interpretation of EU law, it may or may not come close to determining the dispute. However, such a provision may be necessary to guarantee the legal autonomy of the EU.
61.It is worth recalling that there is a precedent for an arbitration clause of this kind in the Moldova, Ukraine and Georgia Association Agreements, which make provision for an arbitration panel which can then make references to the CJEU. A similar model is also under discussion with Switzerland.
62.In our report Dispute resolution and enforcement after Brexit we noted a number of disadvantages to arbitration, as compared to a court-based process, including the fact that it is usually conducted in private; decisions do not create clear, binding precedent; and, that individual litigants (including companies) would not have access to any arbitral arrangements, but would instead have to lobby governments. There is also a risk that the referral mechanism for the CJEU to determine questions of EU law, discussed above, may mean that the CJEU gives a judgment on the point of substance in any dispute and that its decision may be determinative. Professor Carl Baudenbacher, the former President of the EFTA Court, has argued that:
“A solution based on the model of the Ukraine Agreement would have a substantially detrimental impact on legal certainty. The arbitration procedure itself would take time and would be in addition to the processing time of cases before the ECJ.”
63.Article 180 of the Withdrawal Agreement seeks to deal with one of these concerns, by providing that the Union and the UK should “make the arbitration panel rulings and decisions publicly available in their entirety”. There is a proviso that this is “subject to the protection of confidential information”, and that “in no case dissenting opinions of an arbitration panel shall be published”. Part IX of the Procedural Rules also states that the parties can agree for hearings to be closed to the public. In such cases, the rule provides that the parties shall “maintain the confidentiality of the hearings of the arbitration panel”.
64.On the broader question of access to justice, it is clear from Article 4 of the Withdrawal Agreement that the UK’s domestic courts (to which individual litigants have access) will continue to be able to have regard to the judgments of the CJEU in interpreting the Withdrawal Agreement, even after the end of the transition period. More generally the carve-out for cases involving citizens’ rights, under Article 158 of the Agreement, means that a domestic court or tribunal could continue to make references to the CJEU for eight years after the end of the transition period.
65.It is not evident that there are any other straightforward options other than arbitration. The option of ‘docking’ with the EFTA Court as an off-the-shelf solution to the problem of dispute resolution, which was considered in some detail in our report Dispute resolution and enforcement after Brexit, has been consistently rejected by the Government, even for adjudicating disputes over the Withdrawal Agreement.
66.Finally, it appears that this arbitration model may eventually form part of the governance mechanism for the future relationship. The Political Declaration notes that the parties will “base arrangements for dispute settlement and enforcement on those provided for in the Withdrawal Agreement”. This is explored further in Chapter 5. This would mean that the CJEU would have a limited, but continuing, role in relation to questions of EU law that arose in disputes with the UK, even after its obligations under the Withdrawal Agreement fell away.
67.The provisions relating to dispute resolution in the Withdrawal Agreement retain a limited role for the CJEU. This role is, however, attenuated when compared with that envisaged in the March 2018 draft text.
68.Notably, the inclusion of an arbitration mechanism, with input from the CJEU only in circumstances where questions of Union law arise, moves toward the Government’s goal of ending the direct jurisdiction of the CJEU, while still respecting the autonomy of the European Union’s legal order and the role of the CJEU. Nonetheless, it is possible that concerns may arise if a decision of the CJEU were effectively to determine a dispute between the parties.
69.Other provisions, such as the retention of CJEU jurisdiction during the transition, and over the provisions relating to citizens’ rights for an eight-year period following the transition, have long been accepted by the UK Government, though they too arguably fall short of the Government’s original red line on CJEU jurisdiction.
70.We welcome the fact that the Agreement addresses concerns raised in our earlier report, Dispute resolution and enforcement after Brexit, about the need for a longstop, or limitation period, for any claims that arise before, or during, the transition period. This will give parties involved in legal disputes greater certainty as to the legal regime which will apply to their case.
71.The rights of EU citizens in the UK and UK nationals in the EU were one of the first issues that this Committee addressed after the referendum, and were explored in detail in our December 2016 report on Brexit: acquired rights. In May 2018 the Office for National Statistics estimated that there were 3.7 million individuals in the UK who were born elsewhere in the EU. It is estimated that over a million UK nationals live in other EU states. Despite appeals from across the political spectrum, and our own clear recommendations, the rights of these individuals have yet to be legally assured.
72.There was broad agreement between the UK and the EU on the parameters of the deal on citizens’ rights as part of the Joint Report, published in December 2017. These commitments were transposed into a text which was agreed at negotiator level upon the publication of the March 2018 draft of the Withdrawal Agreement. The current version of the legal text is little changed. However, not all of the issues have been resolved in the way sought by stakeholders.
73.In particular, there is no agreement on a lifelong right of return (where family or work obligations mean that an individual has to leave the country for five years and does not benefit from settled status); or on the onward free movement rights of UK citizens in the EU. In addition, the UK Government has decided not to issue new residence documents for settled status free of charge. Nor has provision been made for EU citizens resident in the UK to retain their voting rights in elections for the European Parliament. This includes Irish citizens resident in Northern Ireland, notwithstanding the prospect, if the ‘backstop’ came into force, that substantial elements of EU law would continue to apply in Northern Ireland.
74.Part Two of the Withdrawal Agreement protects EU citizens who were residing in the UK and UK nationals who were residing in one of the 27 EU Member States at the end of the transition period, provided that such residence was in accordance with the Free Movement Directive (the EU law relating to free movement). Free movement itself will end at the conclusion of the transition period, unless the UK and EU sign a separate treaty as part of the future relationship extending it.
75.EU citizens and UK nationals arriving in a host state during the transition period would enjoy the same rights and obligations under the Withdrawal Agreement as those who arrived before 30 March 2019.
76.For those who fall within the scope of the citizens’ rights provisions, the substantive conditions of residence will remain the same as under current EU law on free movement. Where the host state opts for a mandatory registration system, decisions for granting the new residence status under the Withdrawal Agreement will be made based on objective criteria (i.e. no discretion), and on the basis of exactly the same conditions as are set out in the Free Movement Directive. Articles 6 and 7 of that Directive confer a right of residence for up to five years on those who work or have sufficient financial resources and sickness insurance, and Articles 16, 17 and 18 of that Directive confer a right of permanent residence on those who have resided legally for five years.
77.Citizens will meet these conditions if they are:
78.In addition, those who would otherwise be protected by the Withdrawal Agreement, but who have not yet acquired permanent residence rights—if they have not lived in the host state for at least five years—will continue to be entitled to reside in the host state and acquire permanent residence rights even after Brexit. In the UK, such individuals would be granted a domestic residence right of “pre-settled status”, entitling them to reside in the UK for a further five-year period in order to qualify for settled status. A person with pre-settled status would be entitled to spend up to two years in a row outside the UK without losing that status. But such a person would nonetheless have to demonstrate continuous residence to qualify for settled status.
79.Individuals covered by the Agreement could be joined by close family members (spouses, civil and unmarried partners, dependent children and grandchildren, and dependent parents and grandparents) at any point in the future, as long as the relationship existed on the last day of transition and still exists when the person wishes to come to the UK.
80.The Withdrawal Agreement provides for EU rules on social security coordination to apply to the beneficiaries of the citizens’ part of the Withdrawal Agreement. Such persons will maintain their rights to healthcare, pensions and other social security benefits.
81.There are also specific provisions covering workers (including frontier workers), and the continuing recognition of professional qualifications of individuals who have taken up residence in a host state before the end of the transition period.
82.The right to reside permanently in the host state could only be lost through an absence of more than five years, unless it was restricted due to a person’s conduct.
83.The citizens’ rights provisions have proved contentious due, in part, to concerns that they might exclude individuals who do not qualify under the Free Movement Directive (for example, people who are not economically active and are not in possession of comprehensive sickness insurance). Although the Government has indicated that it will not apply these rules strictly to individuals who apply for settled status under the domestic settlement scheme, until individuals are granted settled status, they could be at risk of removal. This may result in differential treatment of individuals during the transition period, depending upon whether they have applied for settled status or not. On 19 November 2018, the Immigration Minister, Rt Hon Caroline Nokes MP, offered this explanation:
“The draft Withdrawal Agreement does not protect those who are not exercising or are misusing free movement rights. This means that, while free movement rules continue to operate to the end of the planned implementation period, there will remain scope, as a matter of law, for a person to be removed from the UK on those grounds. It is logical that this is reflected in the Immigration Rules for the EU Settlement Scheme.”
84.Article 18(1)(p) would allow a host state to conduct systematic checks on criminality and security prior to issuing a residence document. Applicants can be required to declare past criminal convictions “in accordance with the law of the State of conviction at the time of the application”.
85.Although applicants would have access to judicial and administrative redress if their applications for residence status were refused for any reason, under Article 20(4) the host state would be entitled to remove applicants who submitted “fraudulent” or “abusive” applications prior to the final judgment in any appeal. Thus in effect appeals in such circumstances would not suspend the removal of the applicant.
86.The implementation and application of citizens’ rights in the EU would be monitored in the EU by the European Commission, acting in conformity with the EU Treaties. In the UK, this role would be fulfilled by an “independent authority”. This authority, which will presumably be set up under domestic statute, would be granted “powers equivalent to those of the European Commission”, to receive and investigate complaints from Union citizens and their family members, to conduct inquiries on its own initiative, and to bring legal actions before UK courts concerning alleged breaches by the administrative authorities of the UK of their obligations under Part Two of the Withdrawal Agreement.
87.The Commission and the UK authority should each report annually to the specialised committee on citizens’ rights, and the Joint Committee would assess, no earlier than eight years after the end of the transition period, the functioning of the independent authority. Following this assessment, the Joint Committee would be able to decide that the UK could abolish the authority.
88.In its Fact Sheet on the Withdrawal Agreement, the European Commission notes:
“The text of the Withdrawal Agreement on citizens’ rights is very precise, so that it can be relied upon directly by EU citizens in British courts, and by UK nationals in the courts of the Member States. Any national law provisions that are not consistent with the provisions of the Withdrawal Agreement will have to be disapplied.”
89.Moreover, as noted at paragraph 53, above, UK courts would continue to be able to refer cases to the CJEU for preliminary rulings over the interpretation of Part Two of the agreement for eight years following the end of transition.
90.The roll out of the settled status scheme is currently being scrutinised by the EU Justice Sub-Committee, which has taken evidence from the Immigration Minister and the Home Secretary, Rt Hon Sajid Javid MP. We understand that the Government has successfully trialled the software in a phase one ‘Beta’ phase involving around 1,000 people; and that it is moving ahead with a further trial involving 250,000 EU nationals over the coming months. The Sub-Committee will continue to keep the scheme under review.
91.The European Parliament, among others, has called for the citizens’ rights provisions to ensure that any documents securing residence rights should be issued free of charge; that EU citizens granted settled status in the UK should enjoy a lifelong right of return; and that UK nationals in the EU should be entitled to move freely between Member States (‘onward free movement’). These efforts have been unsuccessful. Under Article 18 of the Withdrawal Agreement charges for documents would be permissible, provided that they do not exceed those imposed on nationals of the host state for the issuance of similar documents. Although the House of Commons Exiting the European Union Committee has proposed linking onward free movement rights for UK citizens to a right of unlimited return for EU citizens in the UK, the Withdrawal Agreement addresses neither issue. In the event, any discussion of onward free movement rights will now have to form part of the negotiations on future relations.
92.It remains unclear what would happen to citizens in the event of a ‘no deal’ Brexit. A small number of EU citizens in the UK may already have been through the Government’s ‘Beta’ test scheme and obtained settled status. But Government statements in respect of the remaining EU nationals in the UK have lacked detail.
93.On 21 September 2018, the Prime Minister said, in respect of EU nationals in the UK:
“I want to be clear with you that even in the event of no deal your rights will be protected. You are our friends, our neighbours, our colleagues. We want you to stay.”
94.This commitment was reiterated on 5 November by the Immigration Minister, Rt Hon Caroline Nokes MP, but she highlighted that the position of UK citizens resident in the EU 27 is less clear:
“This country has made an offer to EU citizens and we have made it very clear that we want them to stay, but the same cannot be said of some of our European counterparts. This matter is pressed with Ministers at every available opportunity, and indeed with ambassadors and the EU, because it is important that British citizens living in the EU 27, the majority of whom are in France and Spain, are afforded the protections to which we believe they are entitled under the withdrawal agreement.”
95.One of the Government’s primary aims in negotiating Brexit has been a desire to end free movement of people. A necessary consequence has been that the citizens’ rights guaranteed under the Withdrawal Agreement fall short in some respects of those enjoyed during the UK’s EU membership. Most notably, for UK citizens in the EU, onward free movement rights are not guaranteed. EU nationals in the UK will generally be obliged to pay a small fee to register for settled status, and will face automatic criminal records checks, if they wish to remain after Brexit.
96.Notwithstanding these specific reservations, the agreement on citizens’ rights is fairly comprehensive and will, if the Withdrawal Agreement is ratified, allow individuals and families to continue with their lives and careers with a minimum of disruption. We therefore broadly welcome the citizens’ rights provisions.
97.It remains far from clear what would happen to EU citizens in the UK and UK nationals in the EU in the event of a ‘no deal’ Brexit. Throughout the negotiations, we have called on the Government to give a clear and unilateral assurance that all EU nationals in the UK would be entitled to stay and retain their rights.
98.We therefore welcome the Prime Minister’s assurance that the rights of EU citizens will be protected in the event of a ‘no deal’ Brexit, and we call upon the Government formally to undertake to honour all the obligations set out in Part Two of the Withdrawal Agreement, regardless of whether the Agreement itself is ratified.
99.We are concerned that similar commitments have not been received from the EU 27, and call on the Government as a matter of urgency to seek assurances that the rights of UK nationals in the EU will be secured on a reciprocal basis.
100.The provisions relating to the financial settlement were agreed at negotiator level as early as March 2018. The relevant provisions are found at Part Five of the Agreement, between Articles 133–157.
101.Although the UK Government estimates that the settlement—which includes the UK’s continuing contributions to the EU Budget during the transition period—would have a net cost of around £35–39 billion, the final figure will depend on future events. For example, the settlement will be calculated and paid in euros, and the sterling figure is thus exposed to changes in exchange rates.
102.Thus, as the European Commission Fact Sheet sets out, “The agreement is not about the amount of the UK’s financial obligation, but about the methodology for calculating it.” The House of Commons Library Paper, Brexit: the exit bill provides a detailed summary of the agreement reached on the settlement, which will become legally binding in international law if the Withdrawal Agreement is concluded by the UK and the EU. We do not rehearse this analysis at length in this report.
103.Under the Agreement the UK would, among other things:
104.As set out in Figure 1 and Table 1, the Office for Budget Responsibility has estimated that while the bulk of the payments under the settlement will be made by the mid-2020s, some elements of the settlement will still be payable until 2064.
UK Participation in EU annual budgets to 2020
Reste à liquider
Other net liabilities
105.In March 2017 we published our report on Brexit and the EU budget. In that report we asked the question, whether the United Kingdom was under any legal obligation to reach a financial settlement. The point we made in our 2017 report was important, but narrowly drawn and often misrepresented: if there is no agreement, the UK could in principle leave the EU without accepting any liability for outstanding financial obligations. This is in part because there is no court with obvious jurisdiction to enforce such liabilities once the UK has left the EU. But, as we also noted, the consequences of such a decision would be profound, and the UK Government has acknowledged that even in the event of a ‘no deal’ Brexit, the UK Government would accept some of the liabilities listed in the Withdrawal Agreement. The then Secretary of State for Exiting the EU, Rt Hon Dominic Raab MP, told us in evidence in August that whatever the outcome of the negotiations, the UK Government would “pay their dues”.
106.At the same time, he accepted that a no deal scenario would have an impact upon any financial settlement:
“I do not think that it would be safe for either side to assume that the financial settlement as agreed as part of the withdrawal agreement would then be paid in precisely the same shape, with the same speed or at the same rate if there was no deal.”
107.The provisions on the financial settlement set out in Part Five of the Withdrawal Agreement do not set out the precise amount of the UK’s financial obligations, but set out the agreed methodology for calculating them. The precise amounts paid will be contingent upon future events.
108.The Government has acknowledged that it will ‘pay its dues’, whether or not the Withdrawal Agreement is successfully concluded, while also indicating that, in the absence of an Agreement, both the total amount, and the timetable for repayments, could vary from what is currently proposed. We reiterate the conclusion reached in our March 2017 report on Brexit and the EU budget, that the consequences of seeking to leave the EU without settling claims under the EU budget would be profound.
109.Much of the sum payable relates to UK contributions to the 2019 and 2020 EU budgets, which coincide with the transition period, during which the UK will continue to be subject to EU law and be part of the EU Single Market.
110.The payment of these sums is not contingent upon a successful outcome to negotiations on future UK-EU relations. Once the UK and the EU conclude the agreement under Article 50 of the TEU, the UK’s financial commitments will crystallise as clear legal obligations in international law, irrespective of the outcome of the future negotiations.
111.Part Three of the Withdrawal Agreement broadly covers what are referred to as ‘separation issues’. These issues are not considered in detail in this report, though the Committee may return to them in future inquiries. The list below gives an impression of the broad range of matters that are covered between Articles 40–125.
112.The Government’s Explanatory Memorandum makes clear that these provisions “aim to provide legal certainty”, providing the technical basis for the winding down of ongoing processes and arrangements “to ensure an orderly withdrawal”.
10 (25 November 2018), Article 3
11 Anguilla; Bermuda; British Antarctic Territory; British Indian Territory; British Virgin Islands; Cayman Islands; Falkland Islands; Montserrat; Pitcairn; Saint Helena; Ascension and Tristan da Cunha; South Georgia and South Sandwich Islands; and Turks and Caicos Islands.
12 Described as “integral” in (25 November 2018) Article 182
13 ), Protocol Relating to the Sovereign Base Areas of the United Kingdom of Great Britain and Northern Ireland in Cyprus, Article 2 (25 November 2018
14 ), Protocol Relating to the Sovereign Base Areas of the United Kingdom of Great Britain and Northern Ireland in Cyprus, Article 6 (25 November 2018
15 ), Protocol Relating to the Sovereign Base Areas of the United Kingdom of Great Britain and Northern Ireland in Cyprus, Article 1(1) (25 November 2018
16 ), Protocol Relating to the Sovereign Base Areas of the United Kingdom of Great Britain and Northern Ireland in Cyprus, Article 1(3) (25 November 2018
17 ), Protocol Relating to the Sovereign Base Areas of the United Kingdom of Great Britain and Northern Ireland in Cyprus, Article 1(4) (25 November 2018
18 ), Protocol Relating to the Sovereign Base Areas of the United Kingdom of Great Britain and Northern Ireland in Cyprus, Article 7 (25 November 2018
19 ), Protocol Relating to the Sovereign Base Areas of the United Kingdom of Great Britain and Northern Ireland in Cyprus, Article 9 (25 November 2018
20 ), Protocol on Gibraltar, Article 1(1) (25 November 2018
21 ), Protocol on Gibraltar, Article 1(3) (25 November 2018
22 ), Protocol on Gibraltar, Article 4 (25 November 2018
23 ), Protocol on Gibraltar, Article 5 (25 November 2018
24 ), Protocol on Gibraltar, Article 6 (25 November 2018
25 HM Government of Gibraltar, Press release: HMGoG Approves Signature of MoUs (29 November 2018): [accessed 4 December 2018]
26 UK Representation to the EU Brussels, Interpretation of the United Kingdom of Article 184 of the Withdrawal Agreement (24 November 2018): [accessed 3 December 2018]
27 ), Article 164 (25 November 2018
28 ), Annex VIII, Rule 1 (25 November 2018
29 ), Article 166 (25 November 2018
30 ), Annex VIII, Rule 2 (25 November 2018
31 ), Annex VIII, Rule 10 (25 November 2018
32 ), Annex VIII, Rule 8(5) (25 November 2018
33 ), Article 164(4) (25 November 2018
34 ), Article 164(4)(f) and Article 164(5)(d) (25 November 2018
35 Save in relation to Parts One (the Common Provisions, including definitions, scope etc.), Part Four (the Transition) and Part Six (the Institutional and Final Provisions) of the ). (25 November 2018
36 ), Article 166(3) (25 November 2018
37 ), Article 165 (25 November 2018
38 ), Article 164(5)(b) (25 November 2018
39 ), Article 164(5)(c) (25 November 2018
40 ), Article 165(3) (25 November 2018
41 ), Article 165(4) (25 November 2018
42 ), Annex VIII, Rule 13 (25 November 2018
43 HM Government, Explainer for the agreement on the Withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union (14 November 2018): [accessed 3 December 2018]
44 Francovich v Italy (1991) C-6/90 was a decision of the CJEU which established that EU Member States could be liable to pay compensation to individuals who suffered a loss by reason of that Member State’s failure to transpose an EU directive into national law. This principle is sometimes known as the principle of state liability.
45 See for instance C-6/64, Costa v. ENEL  ECR 585; C-106/77, Simmenthal  ECR 629; C-106/89 Marleasing  ECR I-7321 and R (Factortame Ltd) v Sec. of State for Transport (No 2)  1 AC 603
46 European Union Committee, (15th Report, Session 2017–19, HL Paper 130), para 64
47 A duty to have “due regard” could be expected to mean that the domestic courts would be under an obligation to take the case-law of the CJEU into account. It is not the same as an obligation to follow the case-law on every occasion. However, when such words are used, it would usually require good reasons to depart from applying it.
48 See also: Public Law for Everyone, The Brexit Withdrawal Agreement: Taking back “control of our laws”? (23 November 2018): [accessed 3 December 2018]
49 Discussed in detail in Chapter 4 of this report.
50 HM Government, EU Exit: Legal position on the Withdrawal Agreement, Cm 9747, December 2018: [accessed 3 December 2018]
51 See for instance Opel Austria Gmbh v Austria, T-115/94, EU:T:1997:3 (para 90); Portugal v Council, C-149/96, EU:C:1999:574 (para 41); Nuclear Test cases (Australia v France), Judgment of 20 December 1994, ICJ Reports 1974, p 253 (para 46)
52 HM Government, Enforcement and dispute resolution: a future partnership paper (2017) para 1: [accessed 3 December 2018]
53 HC Deb, 15 November 2018,
54 European Union Committee, (15th Report, Session 2017–19, HL Paper 130), Summary
55 ), Article 131 (25 November 2018
56 European Union Committee, (15th Report, Session 2017–19, HL Paper 130), para 146
57 ), Articles 86 and 87 (25 November 2018
58 ), Article 158 (25 November 2018
59 The specific provisions relate only to Articles 136 and 138(1) and (2) of the ). These are respectively, the provisions applicable after 31 December 2020 relating to the applicable law concerning the EU’s “own resources”; and the EU law applicable after 31 December 2020 relating to the UK’s participation in the implementation of the Union’s programmes and activities committed under the 2014–2020 MFF. (25 November 2018
60 European Commission and HM Government, Draft Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community, 19 March 2018, Article 163: [accessed 3 December 2018]
61 Oral evidence taken before the EU Justice Sub-Committee, 27 March 2018 (Session 2017–19), (Suella Fernandes MP)
62 ), Article 171(1) (25 November 2018
63 ), Articles 177 and Article 178(1) (25 November 2018
64 ), Article 178(2) (25 November 2018
65 ), Article 89(2) relates to judgments and orders of the CJEU handed down before the end of the transition period. (25 November 2018
66 Article 267,
67 Public Law for Everyone, The Brexit Withdrawal Agreement: Taking back “control of our laws”? (23 November 2018): [accessed 3 December 2018]
68 See for instance: Sylvia de Mars, The Role of the CJEU in the (November) Withdrawal Agreement, (16 November 2018): [accessed 3 December 2018]
69 See for instance ‘Swiss soften line on foreign judges in bid to bolster EU ties’, Financial Times (5 March 2018), available at: [accessed 3 December 2018]
70 European Union Committee, (15th Report, Session 2017–19, HL Paper 130), paras 110,156–162
71 Professor Dr. Dr. h.c. Carl Baudenbacher, ‘Britzerland’: the problem of dispute resolution post-Brexit (29 October 2018): [accessed 3 December 2018]
72 ), Article 180(2) (25 November 2018
73 ), Article 180(1) (25 November 2018
74 ), Annex IX (25 November 2018
75 European Union Committee, , (15th Report, Session 2017–19, HL Paper 130), paras 34-58 and 123
76 See Department for Existing the European Union, Government Response to the European Union Committee’s report Dispute resolution and enforcement after Brexit (5 July 2018): [accessed 3 December 2018]
77 European Union Committee, (10th Report, Session 2016–17, HL Paper 82)
78 Office for National Statistics, Population of the UK by country of birth and nationality: 2017 (24 May 2018): [accessed 3 December]
79 Full Fact, ‘Brits abroad: how many people from the UK live in other EU countries?’ (1 February 2018): [accessed 3 December 2018]
80 European Union Committee, (10th Report, Session 2017–19, HL Paper 82), para 47
81 See for instance British in Europe, Letter to Theresa May (21 November 2018): [accessed 3 December 2018] and The3million, Newsletter (November 2018): [accessed 3 December 2018]
82 See also para 164.
83 ), Articles 9–39 (25 November 2018
84 Directive 2004/38/EC of the European Parliament and of the Council of 29 April 2004 on the right of citizens of the Union and their family members to move and reside freely within the territory of the Member States , (30 April 2004), pp 77–123
85 See HM Government, ‘Settled and pre-settled status for EU citizens and their families’: [accessed 3 December 2018]
86 ), Articles 30–36. Article 33 is a new provision, which would extend the Articles on social security co-operation to Norway, Iceland, Liechtenstein and Switzerland, provided that each of those countries entered into a corresponding agreement with the UK and the EU. The ‘explainer’ published by the UK Government notes that agreements on citizens’ rights and a small number of separation issues are also being negotiated by the UK with Norway, Iceland, Switzerland and Liechtenstein (see (25 November 2018).
87 ), Articles 24, 25, and 26 (a frontier worker lives in one EU member state and works in another, returning home daily or weekly). (25 November 2018
88 ), Articles 27, 28 and 29 (25 November 2018
89 ), Article 20 sets out restrictions of the rights of residence which may be imposed due to conduct. (25 November 2018
90 Written Answer , Session 2017–19
91 ), Article 159 (25 November 2018
92 European Commission, ‘Brexit Negotiations: What is in the Withdrawal Agreement’ (14 November 2018): [accessed 3 December 2018]
93 Oral evidence taken before the EU Justice Sub-Committee, 21 June 2018 (Session 2017–19), (Rt Hon. Sajid Javid)
94 See European Parliament resolution on the framework of the future EU-UK relationship (2018/2573(RSP)) (14 March 2018): [accessed 3 December 2018]
95 The UK Government has indicated that the charges would usually be £65 for those over 16 and £32.50 for those under 16 (although there would be some exemptions, notably for those who already have indefinite leave to remain). HM Government, ‘Settled and pre-settled status for EU citizens and their families’: [accessed 3 December 2018]
96 See for instance House of Commons Exiting the European Union Committee, (Eighth Report, Session 2017–19,HC 1439), paras 6–13
97 For commentary on this issue see for instance The3million, Newsletter (November 2018): [accessed 3 December 2018]
98 Rt Hon Theresa May MP, ‘PM Brexit negotiations statement: 21 September 2018’ (21 September 2018): [accessed 3 December 2018]
100 ), Article 133 (25 November 2018
101 European Commission, ‘Brexit Negotiations: What is in the Withdrawal Agreement’ (14 November 2018): [accessed 3 December 2018]
102 House of Commons Library, Brexit: the exit bill, Briefing Paper , 22 November 2018. See also Institute for Government, Financial Settlement Agreement (8 December 2018): [accessed 3 December 2018]
103 The scheduled end of the transition period, 31 December 2020, coincides with the end of the current (2014–2020) EU Multiannual Financial Framework, under which the UK’s contributions have already been calculated.
104 In oral evidence to the EU Financial Affairs Sub-Committee on 21 November 2018, HM Treasury stated that the UK had secured repayment of its ‘paid-in capital’, but that the EIB Statutes did not contain provisions for the repayment of any profits accumulated over the term of UK membership. Session 2017–19, (Robert Jenrick MP)
105 European Union Committee, (15th Report, Session 2016–17, HL Paper 169)
106 Oral evidence taken on 29 August 2019 (Session 2017–19), (Rt Hon. Dominic Raab MP). On 3 December, the Attorney General expanded on the Government’s position on the financial settlement, noting that “we would have obligations to pay a certain amount of money were we to leave the European Union without a deal”. While it might be difficult to enforce this obligation in public international law, he noted that “if this country, acknowledging that such obligations probably exist or do exist, did not pay them, it would be likely to cause the deepest resentment”. HC Deb, 3 December 2018,
107 HM Government, Explainer for the agreement on the Withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union (14 November 2018) p 13: [accessed 3 December 2018]