The Government’s ‘no deal’ Brexit paper on mergers and antitrust

The Government has today published 28 new planning documents explaining what will happen in the event of a ‘no deal’ Brexit, including this one covering the merger and antitrust regimes.

Some of the key points are as follows:

  • The Government says that the only changes to the competition regime will be those necessary to manage Brexit, and they will be made through SIs under the EU Withdrawal Act 2018.
  • The CMA and UK courts will no longer be bound to follow future CJEU case law. The Government is here presumably contemplating amendments to s.60 CA98.
  • EU block exemptions will be maintained as parallel exemptions (with any necessary modifications, e.g. converting figures in euros to sterling).
  • Businesses will need to seek their own legal advice as to the implications of Brexit for current EU merger and antitrust cases covering UK activities.
  • Commission decisions that pre-date Brexit will continue to be binding as to liability in follow-on actions.
  • Commission decisions that post-date Brexit will not bind UK courts as to liability. As stated, it appears that this will be the case even insofar as post-Brexit Commission decisions cover pre-Brexit conduct and agreements.
  • If a claimant wishes to bring an action for an alleged breach of EU competition law that took place after Brexit, they will need to bring a standalone claim for breach of a foreign tort.
  • UK companies may find themselves being investigated by both the UK and EU competition authorities (both for mergers and antitrust violations).

The proposed change to s.60 CA98 arguably goes beyond what is strictly needed to cope with Brexit. One could have taken the view that domestic competition law should continue to develop in parallel with EU competition law in order to minimise the additional compliance costs that will result from the two regimes substantively diverging.  But this was presumably considered politically unpalatable.

Overall, though, the Government’s approach is to minimize the number of changes, consistent with its general approach under the Withdrawal Act, disappointing those who had advocated for more fundamental reform.  The reality is there is no legislative time for this at the moment; any wider reforms will need to wait until things have settled down after Brexit.

These ‘no deal’ proposals assume there will be no Withdrawal Agreement. If there is a deal (as hoped), there will be a transition period until 31 December 2020 during which everything will (more or less) remain as it is now.

If the Government and EU also manage to reach agreement over the terms of their future relationship, some of the proposals for a ‘no deal’ scenario will never be implemented.  Any longer-term deal will almost certainly put in place co-operation arrangements, for example in respect of mergers.

Further, a response paper published by the Government in March stated that “the Government may choose to commit some areas of our regulations, including competition and State aid, to remain in step with the EU’s”.   This raises the possibility that the UK might ultimately decide not to make any significant amendments to s.60 CA98 and the current regime governing follow-on damages claims.

Julian Gregory is a competition practitioner who assisted the Brexit Competition Law Working Group (including Jon Turner QC) with its report on the implications of Brexit for competition law.

Article 50 decision validly taken: new judgment

R. (on the application of Webster) v Secretary of State for Exiting the European Union

On 12 June 2018, Lord Justice Gross and Mr Justice Green refused permission to apply for judicial review to challenge the Brexit negotiations on the basis that the United Kingdom had, so it was argued, failed to make a valid decision to leave the European Union pursuant to Article 50(1). The Judgment has today (20 June 2018) been publicly released, and is available here.


Permission was refused (both on the papers by Supperstone J, and after a renewed application at an oral hearing by Gross LJ and Green J) on three grounds:

(1) The claim is out of time. As is well known, CPR 54.51 requires a claim form to be filed promptly and in any event not later than three months after the grounds to make the claim first arose. The UK’s notification letter was sent on 29 March 2017. The claim form, however, was not filed until nearly 9 months after the notification. No good reason had been advanced for the extension of time; indeed, Gross LJ stated:

“There is no conceivable – let alone good – reason for extending time. This is a paradigm instance of a claim needing to be made promptly and within the applicable time limit.”

(2) There had been undue delay in bringing the claim such that it would be to the detriment of good administration to hear it (see section 31(6)(a) Senior Courts Act 1981). Gross LJ explained:

“If the claimant was to pursue this claim…then it cried out for a prompt pursuit… The notion that good administration would be assisted by the grant of permission here or that the negotiations would not be derailed is with great respect wholly unreal, not least given the timetable under which the negotiations are taking place.”

(3) The claim is, in the words of the Court, “unarguable”, “doomed to fail on the merits” and “Totally Without Merit”. The Article 50(1) decision, the Court held, was authorised by Parliament in the European Union (Notification of Withdrawal Act) 2017 and was contained within the Prime Minister’s letter of notification.


Permission could conceivably have been refused simply on the basis of the first two grounds summarised above, namely, that the application was out of time and the delay in hearing it would be contrary to good administration. These two grounds are individually determinative – that is, regardless of the potential merits, permission could have been refused on either basis alone. Nevertheless, the Court’s assessment of the relevant Article 50 decision is constitutionally interesting.

The effect of Shindler v Chancellor of the Duchy of Lancaster [2016] EWCA Civ 469 and R (Miller) v Secretary of State for Exiting the European Union [ 2017 ] UKSC 5 was as follows:

(1) The referendum was not itself the decision for the purposes of Article 50(1). The European Union Referendum Act 2015 did not say anything about what should happen if the majority of votes were cast in favour of the UK’s leaving the EU. As such, as a matter of domestic law, it was an advisory referendum: see Shindler and Miller. The availability of an expressly ‘binding’ model was well known to Parliament before enactment of the European Union Referendum Act 2015 (see, e.g., section 1(2) of the Northern Ireland Act 1998), but Parliament chose to legislate for a referendum the outcome of which would not legally require the Government to take, or to refrain from taking, a particular course of action. Nor was there anything in the 2015 Act itself to suggest that the holding of the referendum amounted to the taking of a decision that Parliament would, if it wished to do so, be legally incapable of overriding or reversing.

(2) The referendum was, however, “part of” the UK’s “constitutional requirements” for the purposes of Article 50(1), as Parliament had required a referendum to be held on the question of whether the UK should leave the EU: see Shindler.

(3) Miller concerned the other “part” of the “constitutional requirements” for triggering the Article 50 process. As is well known, the Supreme Court held (by a majority of 8 against 3) that an Act of Parliament was required to trigger Article 50; the Prime Minister had no relevant prerogative power to so act.

An issue that was never fully resolved in explicit terms in the Miller litigation remained, however: when and by whom the underlying decision to withdraw from the EU was taken. This was the legal issue at the heart of the latest crowdfunded action, which Gross LJ and Green J have now answered in Webster.

Whatever uncertainty might have surrounded the issue of when and by whom the ‘decision’ was taken in the immediate aftermath of Miller, the matter was put beyond doubt by the legislation enacted in the wake of the Supreme Court’s judgment, namely the European Union (Notification of Withdrawal) Act 2017. This authorised the giving of notification under Article 50(2). Section 1 of the European Union (Notification of Withdrawal) Act 2017 simply states:

(1) The Prime Minister may notify, under Article 50 of the Treaty on European Union, the United Kingdom’s intention to withdraw from the EU.
(2) This section has effect despite any provision made by or under the European Communities Act 1972 or any other enactment.

As Gross LJ explained, this legislative authorisation in the 2017 Act “plainly contemplated and encompassed the power to take a decision to withdraw and conferred that power expressly on the Prime Minister”.

The UK’s “constitutional requirements” (as required by Article 50(1)) were therefore satisfied: (i) primary legislation required a referendum; (ii) that referendum was held and resulted in a majority in favour of a particular result; (iii) legislative approval of that result was forthcoming; (iv) the Prime Minister was given a (statutory) power to effectively implement that result; and (v) the Prime Minister utilised that power in giving notification. It followed, in the crucial conclusion of the Court, that:

“The Prime Minister’s letter itself contains a decision; backed by the authority of the 2017 Act, that decision complies with the requirements of Miller. No additional UK constitutional requirements remained to be satisfied.”

It is important to bear in mind that Article 50 does not speak of a formal ‘decision’ having to be made: it speaks of a Member State’s having “decided” to leave in accordance with its “constitutional requirements”. Those requirements – as elucidated in Shindler and Miller – are met, in my view, by the combination of the referendum outcome plus the 2017 Act. What Webster now confirms is (i) that those constitutional requirements were, indeed, met (and comprehensively so) and (ii) that the 2017 Act is to be interpreted as authorising a decision, rather than forming the decision. There was thus no need for any other action to be taken before the Article 50 negotiations could begin, such as an additional Act of Parliament which the applicant in Webster was seeking. Gross LJ – correctly in my view – put it this way:

“I reject the argument that additional formality was required under the UK constitution or that there was any requirement for the Art. 50(1) decision to be in some separate document from the Art.50(2) notification.”

This is undoubtedly correct. Against the background of the Shindler and Miller litigation, the resolution in Parliament during the Miller litigation (in favour of leaving) and the terms of debate concerning the Bill which became the 2017 Act, the notion that the UK’s notification is invalid because no ‘decision’ to withdraw had (yet) been taken seemed remarkably hard to sustain. Indeed, the Supreme Court in Miller stated expressly that only a short Act would be required. The 2017 Act records the UK’s intention – present tense – to leave, and authorises an action (notification) which would be otherwise meaningless without that precondition having been met. There is no requirement in UK constitutional law for the Act to state in bold text something along the lines of “This is a decision” – the meaning of the words used, in the context outlined, have that effect.

What is more dubious, however, is whether it was necessary for the Court to hold that the Prime Minister took the decision. In light of the fact that the Court agreed that no formal “decision” is needed – Article 50 only speaks of “constitutional requirements” – one cannot help but think that it may have been simpler to say that it was the electorate plus Parliament (in concert) that decided to the leave the EU, rather than the Prime Minister. This would have married the concepts of “constitutional requirements” with a “decision”. Nevertheless, it is beyond doubt that a decision has, indeed, been made. The Court has therefore reached the right result. Whether that decision to leave is inherently conditional (as a matter of domestic law on account of parliamentary sovereignty) or unilaterally revocable (as a matter of EU law) are different matters, of course…

Forthcoming Brexit Book “The UK Constitution after Miller: Brexit and beyond”

Next month, Hart Publishing will publish “The UK Constitution after Miller: Brexit and beyond”, edited by Jack Williams and Professors Mark Elliott and Alison Young.

The judgment of the UK Supreme Court in R (Miller) v Secretary of State for Exiting the European Union is of fundamental legal, constitutional and political significance. The Supreme Court’s judgment discussed the relative powers of Parliament and the Government, the relationship between Westminster and the devolved legislatures, and the extent to which the UK’s membership of the EU had changed the UK constitution, both prior to and even after departure. It also provided further evidence of the emerging role of the UK’s Supreme Court as a constitutional court, despite the lack of a codified constitution in the UK.

This edited collection critically evaluates the decision in Miller, providing a detailed analysis of the reasoning in the judgment and its longer-term consequences for the UK constitution through the period of Brexit and beyond. The case is used as a lens through which to evaluate the modern UK constitution and its potential future evolution. Whatever form Brexit may eventually take, the impact that EU membership and the triggering of Brexit has (already) had on the UK’s constitutional settlement is profound. The book will be of great value to anyone interested in the effect of the Miller case and Brexit on the UK’s constitution.

To pre-order, see here


Foreword by Sir Stephen Sedley

  1. The Miller Tale: An Introduction
    Mark Elliott, Jack Williams and Alison L Young
  2. Prerogative Powers After Miller: An Analysis in Four E’s
    Jack Williams
  3. Miller and the Prerogative
    Anne Twomey
  4. Miller, Treaty Making and the Rights of Subjects
    Eirik Bjorge
  5. Miller, EU Law and the UK
    Paul Craig
  6. Of Power Cables and Bridges: Individual Rights and Retrospectivity in Miller and Beyond
    David Howarth
  7. Constitutional Change and Territorial Consent: The Miller Case and the Sewel Convention
    Aileen McHarg
  8. Sovereignty, Consent and Constitutions: The Northern Ireland References
    Gordon Anthony
  9. The Miller Case and Constitutional Statutes
    Sir John Laws
  10. Sovereignty, Primacy and the Common Law Constitution: What has EU Membership Taught Us?
    Mark Elliott
  11. Miller, Constitutional Realism and the Politics of Brexit
    Richard Ekins and Graham Gee
  12. Miller and the Future of Constitutional Adjudication
    Alison L Young

Dispute Settlement under the “Future Arrangements”


In April, I wrote a post (here) describing the dispute settlement mechanisms (DSMs) in the draft Withdrawal Agreement (here) as they relate to the transitional period, which is set to run from the day after Brexit day (30 March 2019) until the end of December 2020. Last month, this was followed by another post, which concerned the provisions in that draft relating to the period commencing on 1 January 2021 (here).

In contrast, as promised, this post concerns the DSMs which might be enshrined in the “future arrangements” (i.e. the treaty or treaties governing the longer term) between the EU and the UK.

These “arrangements” may take several years to negotiate and ratify. The fast-track procedure enshrined in Article 50 TEU will no longer be available. What is more, it is highly likely that the treaty or treaties will extend to matters within the powers of the Member States, in which case they will have to be mixed agreements requiring ratification by all the Member States as well as by the EU. Indeed, in a recent speech, Michel Barnier, the EU’s chief Brexit negotiator, said as much (here).

Even though according to Article 50(2) TEU the Withdrawal Agreement must “take account of the framework” of the “future relationship” between the parties, discussions between the EU and the UK about the nature of that relationship are only just beginning; and the EU has made it clear that there is no question of the treaty governing the “future arrangements” being signed, let alone ratified, until after Brexit day (29 March 2019).

As was pointed out in my two previous posts, we are still in the dark as to precisely what the DSMs in the draft Withdrawal Agreement will look like – or whether the negotiations on that agreement will even come to fruition. Still less can anyone have a clear idea of what the substance of these “future arrangements”, including the DSMs, is likely to be.

Accordingly, what follows in highly speculative – all the more so because, as explained below, the Court is set to rule in the coming months on the extent to which disputes can be settled by arbitration.

Nevertheless, some points are relatively clear.

First, in keeping with the EU’s practice the “future arrangements” will no doubt provide for a Joint Committee of the parties, one of whose functions will be to resolve differences of view between them. However, the EU is most unlikely be content with that purely political body but will insist that a court or at the very least a tribunal of arbitration be established to decide disputes which cannot be resolved amicably.

Second, the “future arrangements” are likely to provide for a range of different mechanisms depending on the subject matter and the identity of the parties.

Third, in view of Opinion 1/91 (here), it will not be possible for disputes to be decided by a body consisting of current members of the Court of Justice and representatives of the UK, as that would undermine the integrity of the Court of Justice.

Fourth, whatever precise form the DSMs take, one can expect a clear shift away from the EU law model in which (as in domestic law) individuals and legal persons can enforce their own rights in the courts towards a range of mechanisms closer to traditional international law. This would suggest that less, if any, reliance will be placed on courts than under the draft Withdrawal Agreement.

The cases most obviously suited to being heard by courts are those relating to citizens’ rights. But in any case, as explained in my previous post, the UK has accepted Article 151 of the draft, which would empower the UK courts to make references for preliminary rulings to Luxembourg until the end of 2028.

All the rest is a matter for speculation.


The first major question is: assuming that it wishes some matters to be heard by courts at all, to what extent will the EU continue to insist that jurisdiction be conferred on its Court of Justice? In its resolution of 14 March 2018 (here), the European Parliament declared that there must be “a binding role for the CJEU in the interpretation of Union law” (paragraph 12). The Government will be loath to accept this.

In its report of 3 May entitled “Dispute settlement mechanisms after Brexit” (here), the House of Lords Select Committee on the EU paid considerable attention to this issue. The Select Committee expressed concern at the prospect of the court of one of the parties having jurisdiction over disputes involving the other party or its citizens, since “justice must not only be done, but should manifestly and undoubtedly be seen to be done” (paragraph 84 of the report). Despite this, it saw the wisdom of maintaining the present system during the transitional period (30 March 2018 to 31 December 2020), because the period is relatively short and it would be “too burdensome and time-consuming” to set up another system at this late stage (indeed, it seems scarcely possible to envisage how this could be done at all).

Crucially, however, the Select Committee took the view that the jurisdiction of the Court of Justice should only be maintained for a short period after the end of the transitional period.

If that approach is followed, there would seem to be little room for the mechanism laid down in the EU’s mixed Agreement with the Ukraine (here). Under this Agreement, certain types of case are to be decided by arbitration but, in the event of a dispute as to the interpretation of a relevant provision of EU law, the panel will be required to refer the matter for a preliminary ruling to the Court of Justice, whose judgment will be binding on the arbitrators (Article 322(2)).

An alternative possibility might be to confer jurisdiction over certain categories of proceedings on the EFTA Court. Even though that body would be seen as more neutral than the Court of Justice, it is by no means clear that the Government would accept it; and the EEA-EFTA States (Norway, Iceland and Liechtenstein) would also have to consent. On this website, the reader will find a link (here) to the written evidence which Carl Baudenbacher, Michael Bowsher QC and I gave a few days ago to the House of Commons EU Scrutiny Committee for its current enquiry on the same subject. This evidence relates to the provisions in the draft Withdrawal Agreement concerning the immediate aftermath of the transitional period, but it is fully relevant here.

Of course, the third option would be to create a “bespoke” court specifically for the “future arrangements”, but that would raise considerable practical problems.


The second major question is: to what extent can disputes be settled by arbitration?

Needless to say, arbitration can take several forms: for instance, it can be used for “interstate” disputes (including those between a State and an international organisation), investor-State dispute settlement (ISDS) or disputes between commercial entities.

In its ground-breaking Opinion 2/15 on the Agreement with Singapore (here), the Court held that an ISDS mechanism which “removes disputes from the jurisdiction of the courts of the Member States” could not be regarded as “purely ancillary” to matters within the competence of the EU, so that the Agreement could not be ratified by the EU alone (paragraph 292). Like other Free Trade Agreements negotiated recently by the EU (e.g. those with Canada (CETA) and Vietnam), this agreement contains a provision stating expressly that its provisions lack direct effect – thereby excluding in the clearest possible terms recourse to the courts of the Member States and thus indirectly to the Court of Justice. In any case, the Court did not rule on the compatibility of such a mechanism with the EU Treaties.

That is precisely what the Court is called upon to decide in answer to Belgium’s request for a Opinion on the highly contentious DSMs enshrined in the Comprehensive Economic and Trade Agreement (CETA) between Canada on the one hand and the EU and its Member States on the other (here). As just mentioned, the provisions of CETA are expressly stated not to have direct effect. The hearing in that case has been scheduled for 26 June.

To what extent the recent judgment in Achmea (here) can be seen as a guide to the outcome of those proceedings is a matter of debate. There the Court held that provisions in an treaty between two Member States which established an ISDS mechanism were repugnant to the EU Treaties because they excluded the jurisdiction of the national courts and thus indirectly precluded the Court of Justice from delivering preliminary rulings. In CETA, the Court might distinguish Achmea on the grounds that it concerned an agreement between Member States.


In short, in this bizarre chess game, which could drag on for many years, some of the key rules have yet to be laid down by the Court. And then there is the politics.

Many thanks to Carl Baudenbacher and Panos Koutrakos for their helpful comments on an earlier draft of this post.

Members of Monckton Chambers submit evidence to House of Commons inquiry on Dispute Resolution in the Withdrawal Agreement

Carl Baudenbacher, Peter Oliver and Michael Bowsher QC made a joint submission to the House of Commons EU Scrutiny Committee in connection with their inquiry into Dispute Resolution and Enforcement in the Withdrawal Agreement. The submission is here.

The submission suggests that despite misgivings over the Court of Justice of the EU continuing to exercise jurisdiction in the EU after Brexit, this situation should be accepted for a short period. Apart from any other considerations, it is hard to see what other process can be put in place in the time available. The Court of Justice should only retain jurisdiction for a short time after the transitional period. The EFTA Court would then provide a sensible forum for resolution of the various disputes that will have to be addressed.

Procurement after Brexit: the UK and the GPA

The UK has expressed its interest in joining the WTO’s Agreement on Government Procurement (as revised) (‘GPA’) (available here) in its own right for after Brexit. The letter from the UK’s Permanent Representative to the WTO is available here.

The GPA is a plurilateral agreement i.e. optional and subject to accession by WTO Member States. There are currently 19 parties to the GPA comprising of 47 WTO members. The UK is currently a member pursuant to its EU membership.

In the usual WTO format, the GPA is composed of two parts: the text of the Agreement itself and the parties’ own market access schedules of commitments (‘schedules’). As common in the WTO, most rules do not automatically apply to all procurement activities of each party; instead, the parties’ schedules determine whether a procurement activity is covered by the GPA or not. The schedules are divided into seven annexes:

Annex 1: central government entities
Annex 2: sub-central government entities
Annex 3: other entities
Annex 4: goods
Annex 5: services
Annex 6: construction services
Annex 7: general notes.

The EU’s schedule is available here.

Benefits of the GPA

A possible vacuum

There are no general multilateral obligations concerning government procurement (the WTO’s label for what is more commonly known as public procurement) under WTO rules. (There are certain specific provisions concerning State-Trading Enterprises, for instance.) Government procurement is therefore largely excluded from the basic obligations under both GATT and GATS. Absent the UK being a party to the GPA, the default position under WTO rules apply with the result that there are no mutual rights of access to public procurement. As such, without membership of the GPA, a ‘hard Brexit’ scenario (i.e. the WTO membership fall-back option, absent any deal with the EU) becomes ever harder in procurement terms, with particular consequences for UK entities looking to bid for government contracts abroad and in so doing needing to be able to rely upon GPA rights.


The scope of procurement activities covered under the GPA schedules for the EU (and the UK at present) is, however, narrower than the scope of covered procurement under the EU procurement laws. For example, market coverage access is particularly more limited in terms of below-threshold or private contracts subsidised by government; defence; and utilities. However, activities could be added to the UK’s GPA schedule if the UK wished to expand the coverage of the public procurement market access in the UK. Further, there is no most favoured nation rule regarding the coverage of the GPA, so the UK and EU (or, indeed, the UK and other GPA parties) could extend coverage between themselves without extending such coverage to other WTO members or GPA parties.

However, the initial indications surrounding the UK’s application to re-join the GPA are that the UK and EU have agreed that the UK will remain subject to the same rights and obligations currently applicable pursuant to the commitments in the current EU schedule. This is understandable: proposing to adopt the commitments would have delayed and possibly complicated matters if done as part of the UK’s application for accession rather than simply adopting the status quo of the currently-applicable schedule. First, protracted negotiations with the EU would likely have pursued (both concerning any division and ‘horse-trading’ if the UK proposed to widen access for other markets or restrict EU access). Second, such a course would increase the risk of potential negotiations with other GPA parties seeking to alter the terms of their access, though this is an inherent risk of re-application in any event. British officials have been keen to highlight that rolling over membership of the Agreement should be relatively easy, since there is an incentive for other members to retain their access to the UK procurement market too. But any negotiation in the WTO provides the opportunity to make new demands.

Obligations and requirements

The nature of the obligations and requirements under the Agreement are also less ‘deep’ in the GPA than under EU law. For example, whilst — unlike most WTO rules — the GPA provides for remedies for affected undertakings before national review bodies (including the suspension of contracts), this is significantly less stringent than those for enforcing EU Regulations and Directives. For instance, there is no standstill period or automatic suspension of award decisions under the GPA and more limited remedies post-contract (see, further, GPA Article XVIII).

Whilst that all may be true, the benefits of access to the GPA parties’ markets (including open, fair and transparent conditions of competition in government procurement in some of the UK’s most important trading partner economies) is likely to be a great attraction, especially when compared with a “no-deal” counterfactual scenario. Even if a deal were struck between the EU and UK, there is still great benefit in maintaining GPA membership in order to maintain rights to participate in procurement markets covered by other parties, including the USA and other growing markets.

To apply or not to apply?

With the Government’s aim being to maintain its current WTO commitments and rights, including the GPA for the reasons outlined, the question becomes how the UK could achieve that. The UK is currently a party to the GPA only through its EU membership. In the absence of any clear precedent, there has been some uncertainty as to whether there was a legal obligation for the UK to formally apply to re-join the GPA for post-Brexit by following the same process as any new Party to the Agreement, or whether the UK could have succeeded to all rights and obligations to the GPA in its own right without an application.

The UK has seemingly opted for the prudent and cautious approach of making that application. The accession process starts with the submission of an application for accession and has two main aspects: negotiations between the acceding member and parties of the GPA on the former’s coverage offer, and verification that the acceding member’s procurement legislation is consistent with the GPA’s requirements – for example, regarding transparency, procedural fairness for suppliers and domestic review.

One would imagine that this ought to be a relatively swifter and easier process than the accession of an entirely new party. First, UK procurement legislation is already compliant with GPA requirements by virtue of the UK implementing into domestic law the EU procurement directives. Whilst gravely over simplified, the current terms of the EU (Withdrawal) Bill would copy across those requirements into domestic law post Brexit so that domestic law would continue to be compliant. Second, since GPA accession is based on the UK’s existing GPA obligations that may not even involve the difficulties in adjusting schedules or fresh negotiations that may arise under some other WTO Agreements. Presumably most parties are content, at least for the short term, with the current arrangements. Third, the mutual interests involved of reciprocal market access continuing, at a minimum, on the current basis means that parties are unlikely to object. Nonetheless this is no doubt an opportunity to seek to take advantage of the UK’s position and in particular to require that any necessary updating be done to the UK’s schedules.

The WTO’s Committee on Government Procurement is now expected to assess the UK’s accession request when it meets later this summer. That Committee will review the draft market access offer and checklist of issues circulated with the UK’s letter.

Two souls in Europe’s breast

Written by former President of the EFTA Court Professor Carl Baudenbacher who joined Monckton Chambers as a door tenant on 1 May 2018, see news.

In 1992, Jacques Delors, then President of the EU Commission, said that if, over the next ten years, Europe would not be imbued with a soul, meaning that it would be given a spirituality and a deeper sense, the game would be over. This was a somewhat presumptuous statement because Europe had from the very beginning of integration two souls. On 25 March 1957, the EEC Treaty with supranational institutions was concluded by France, Germany, Italy and the three Benelux countries. On 4 January 1960, the EFTA Convention was signed by Austria, Denmark, Norway, Portugal, Sweden, Switzerland and the United Kingdom. EFTA had no competence to enact legislation; there was no common surveillance and no common court; however, EFTA was an immediate economic success. However, the attractiveness of the EEC, later EC and EU, became so strong that from 1973 on, when the U.K. and Denmark left EFTA for the EEC, most EFTA States were determined to switch sides and in fact did so.

Nevertheless, today the three EEA/EFTA States, Iceland, Liechtenstein and Norway, prosper outside of the EU; their ambition is limited to economic objectives, namely to secure their operators comprehensive access to the single market. The fourth EFTA State, Switzerland, is linked to the EU by way of a series of bilateral agreements which do not, however, cover the whole single market acquis. Whereas the three EEA/EFTA States are linked to the EU by way of a two pillar system which gives them the right to have their own independent surveillance authority and their own court, the Swiss-EU agreements are governed by diplomatic bodies. All the four EFTA States have safeguarded their sovereignty in crucial areas which in the EU have been communitised, such as agriculture, fisheries or foreign trade. “Two souls, alas, dwell in my breast” is the lament of Goethe’s Faust, describing one as clinging to the world with robust love’s desires and the other as rising from the dust to reach sublime ancestral regions.

Europe’s division is made manifest, in part, through its two families of legal systems. Britain is the birthplace of the common law. Unlike in civil law jurisdictions, the traditional focus is not on legislation, but on case law. The comparative law theory of legal origins holds that institutions depend on political factors, in particular the dominant beliefs in France on the one hand and in England on the other on the roles of the King/Queen/Government, the Parliament, the judiciary and individuals in society. The school’s basic finding has been described by Professor Paul G. Mahoney from the University of Virginia, in the following words:

“English common law developed as it did because landed aristocrats and merchants wanted a system of law that would provide strong protection for property and contract rights, and limit the Crown’s ability to interfere in markets. French civil law, by contrast, developed as it did because the revolutionary generation, and Napoleon after it, wished to disable judges from thwarting government economic policies.”

In order to achieve certainty, uniformity and consistency, the common law relies on judicial precedent (stare decisis). When a court engages in vertical stare decisis, it follows a precedent from a higher court. A court adhering to its own precedent or a precedent by another court on same judicial level engages in horizontal stare decisis. But the doctrine of precedent allows for a certain degree of flexibility. Under specific conditions, courts may overrule, reverse or disapprove of previous decisions. As a result of the precedent system, judges have enormous power to shape the law. Civil law systems place the main emphasis on comprehensive codes of law and other statutes. Courts find the law by interpreting the law enacted by the legislature.

The four EFTA countries are usually considered civil law countries. On closer inspection, however, one discovers that they have a flair of a hybrid between common and civil law. Article 1 of the Swiss Civil Code gives the judge the power and the duty to act like a legislature in certain situations. Benjamin N. Cardozo, the later Justice of the U.S. Supreme Court, wrote in 1920 that “the tone and temper in which the modern judge should set about his task are well expressed in the first article of the Swiss Civil Code of 1907.” Iceland and Norway do not have a concise civil code. The courts have thus been given a significant role in developing judge made law. As regards Liechtenstein, it should be added that the country has, as the only civil law jurisdiction, largely adopted Anglo-Saxon trust legislation.

The five countries at issue have more commonalities. They are in particular characterised by their belief in free trade and open markets. In the U.K. as in Switzerland, the Hegelian glorification of the state as “the reality of the moral idea” has barely found followers. Nor has the French idea of “la Nation” as being the only legitimate power been adopted. The same goes for Liechtenstein. Norway is, on the other hand, characterised by a strong state. This is, however, not the case in Iceland. Both in the U.K. and in Switzerland, courts base themselves on the assumption that human beings are reasonable in the sense of “normal.” In 1933, Lord Justice Greer in Hall v Brooklands Auto-Racing Club famously termed the reasonable man ‘the man on the Clapham omnibus.’ In Switzerland, the same liberal image of man has been used by the courts in unfair competition cases. Similarly, in cases concerning internet law and insurance law such as Inconsult or Vienna Life, the EFTA Court has based itself on such an image of man.

When I spoke on Brexit and EEA at UCL on 7 February 2018, Professor Piet Eeckhout argued that the five non-EU countries in question ought to join forces. I concur. The goal should be to establish a comprehensive European two pillar system whose common denominator would be the single market. The experience of the EEA Agreement and of its institutions, ESA and the EFTA Court, could play a role in this. With the participation of Switzerland and of the U.K., the non-EU States could possibly negotiate some sort of a co-decision right on the legislative level. That is what the influential Brussels based Bruegel Think Tank has suggested in late August 2016.

I finally add that the five non-EU countries seem to have important brothers in spirit within the EU27. The U.K.’s closest partners in the North – the Netherlands, Denmark, Ireland, Sweden, Finland, the Baltic states – appear to feel orphaned by Brexit. Their approach to trade and economic policy is basically the same as the one of the five outsiders. The concerns of the northern EU States are all the more justified since then French President François Hollande stated a few days after the Brexit vote that the EU27 should consider “adapting” EU competition law focusing on growth, employment and investment. This corresponds to traditional French wishes could easily go hand in hand with an (even) more protectionist trade policy. One may therefore assume that the Northern EU states have an interest to support the construction of two structures of the kind outlined above.

Dispute Settlement after the Transitional Period: the Intermediate Regime

Last month, I wrote a post describing the dispute settlement provisions in the draft Withdrawal Agreement as they relate to the transitional period, which is set to run from the day after Brexit day (30 March 2019) until the end of December 2020. As promised at the time, the present post concerns the period beginning on 1 January 2021.

As explained in the last post, the draft WA, which had been prepared by the Commission, consists of green, yellow and white passages. The parties have highlighted in green the passages on which they have reached a consensus, subject only to improvements in the drafting. With respect to the provisions marked in yellow the negotiators have reached an agreement on the policy objectives. Finally, the UK has not yet agreed to any of the text which has been left white.

Most unfortunately, although negotiations between the UK and the EU took place from 16 to 18 April, no progress appears to have been made on any front. Ominously, no fresh documents at all have been posted on the Commission’s website since then.

Even if the WA is concluded, it will only postpone the “cliff edge” by 21 months and 2 days. In other words, at the end of the transitional period, the overwhelming majority of the provisions of the EU Treaties will cease to apply between the EU and the UK with very serious consequences. (Of course, the Government intends to continue applying swathes of EU law unilaterally in an amended form for some time on the basis the European Union (Withdrawal) Bill) in particular; but that is another matter.)

Having said that, the draft WA and the protocol on Ireland and Northern Ireland set out a few exceptions: the UK would continue to be bound by a few provisions of EU law to which the EU attaches particular importance.

In addition, the draft WA envisages various dispute settlement mechanisms which would be applicable for a limited period (“the intermediate period”). The purpose of this post is to consider these mechanisms. Since the relevant provisions are as convoluted as they are numerous, what follows is merely a summary of the salient points.

As explained in the previous post, all the British judges and the British Advocate-General will be required to leave the Court on Brexit day (29 March 2019) by virtue of Article 6 of the draft WA. After that date, proceedings before the Court of Justice or the General Court will take place without them.

The relevant provisions fall into various different categories which will now be considered in turn.

1) Judicial Proceedings Relating to Facts which Occurred before 2021

By virtue of Article 82 of the draft WA, the Court would not lose its jurisdiction over proceedings brought by or against the UK before the end of the transitional period.

Article 83(1) would empower the Commission to commence proceedings against the UK for infringement of the Treaties or the transitional provisions in Articles 121 to 126 of the draft WA, so long as the facts occur before the end of transitional period. It would also be open to one of the 27 remaining Member States to initiate proceedings against the UK pursuant to Article 259 TFEU in the same circumstances. But the UK would not be able to bring such proceedings against the EU27 – a lack of reciprocity which seems hard to justify.

By the same token, a UK court or tribunal would be able to make a reference for a preliminary ruling so long as the facts of the case occurred before the end of the transitional period: Article 83(2).

What is more, the Court will be able to impose pecuniary sanctions on the UK pursuant to Article 260 TFEU for failure to comply with a judgment finding that it has committed an infringement, even where the latter judgment was delivered before 2021 or pursuant to Articles 82(1) or 83(1). This is spelt out in Article 85(3).

All these provisions would apply across the board. They have all been left in white, indicating that the UK had not yet agreed to them.

2) Citizens’ Rights

Unsurprisingly, the EU is particularly concerned about the fate of EU27 citizens and their families residing in this country, including their right to continue carrying out economic and professional activities here. Accordingly, Articles 151 and 152 of the draft WA provide for additional mechanisms for the enforcement of the substantive rules set out in Part Two of the draft. British citizens resident in the EU27 would enjoy the same rights mutatis mutandis under all these provisions.

In essence, Article 151 would confer on courts in the UK the power to make a reference for a preliminary ruling in cases which commenced at first instance within 8 years of the end of the transitional period; and the judgment of the Court of Justice would be binding in the usual way.

What is more, the UK would be required to establish an independent authority with “equivalent powers to the Commission acting under the Treaties” to monitor the implementation of Part Two by the UK’s administrative authorities and to enforce the rights concerned in the UK courts for at least 8 years after the end of the transitional period: Article 152.

The UK has agreed to both Article 151 and Article 152.

3) The Protocol on Ireland and Northen Ireland

Just one draft protocol is annexed to the draft WA; it relates to Ireland and Northern Ireland. As is well known, the most thorny issue is how, if at all, a “soft” Irish border can be maintained. But the draft protocol also contains a number of other important provisions such as Article 1 which requires the UK to ensure full compliance with the part of the Good Friday Agreement of 1998 entitled “Rights, Safeguards and Equality of Opportunity”, and the provisions of EU law on combatting discrimination which are to be listed in Annex 1. In the current version of the draft, Annex 1 is merely an empty shell; but it is to be hoped that the list will include all the anti-discrimination provisions of EU law – or at least those which are relevant to Northern Ireland’s particular situation.

By virtue of Article 12(1)(c) of the Protocol, all the provisions of that instrument would be governed by the mechanisms enshrined in Articles 151 to 156 of the draft WA. The most important mechanisms in issue are outlined immediately below.

Those provisions

In relation to the economic matters covered by Chapter III of the Protocol, including the fraught customs status of Northern Ireland, the above-mentioned provisions would be supplemented by the more elaborate mechanisms contained in Article 11. In the absence of a satisfactory solution proposed by the UK, the EU envisages that the province would continue to be treated as part of the EU so that all the usual judicial remedies laid down in the Treaties would continue to apply there indefinitely. This is highly contentious!

The UK had not yet given its consent to Article 11 or Article 12.

4) Miscellaneous Provisions on Judicial Proceedings

Article 258, 260 and 267 would continue to apply for an unlimited period to the UK with regard to the diverse sectors referred to in Part Three of the draft WA (e.g. customs, VAT, IP and judicial cooperation in criminal matters) and certain issues relating to the EU budget. This is spelt out in Article 153. To date, the UK has only agreed to this provision in so far as it concerns the EU budget.

By virtue of Article 154, the UK would be entitled to intervene in any proceedings before the Court of Justice. Conversely, Article 155 would empower the Commission to intervene in writing before the UK courts in pending cases involving the interpretation of the WA and, with the permission of the court concerned, to make oral submissions. Both provisions would appear to apply to all areas of EU law and for an unlimited period.

The UK has agreed to Articles 154 and 155.

5) The Joint Committee: Referrals to the Court and Possible Sanctions

When the EU concludes agreements with third countries, it is customary for a Joint Committee consisting of representatives of the parties to be established. Usually, these bodies are simply talking shops where differences of view are settled (see Article 162 of the draft WA).

However, under the draft WA the Joint Committee would play a more important role: under Article 162(3) and (4): a dispute could be submitted to the Court by the Joint Committee or by either the EU or the UK, and the Court’s judgment would be binding.

Should either party fail to comply with the ensuing judgment, then in accordance with Article 163 the other party may request the Court to impose a lump sum or period penalty payment. Whilst such a mechanism already exists with regard to the Member States pursuant to Article 260 TFEU; for the EU to be sanctioned by the Court in this way would be unprecedented.

Rather than taking a dispute to the Court, the aggrieved party may opt to suspend parts of the WA other than the provisions on citizens’ rights. The suspension must be proportionate to the breach complained of.

The UK has not yet agreed to any of these provisions.


Many of these provisions go well beyond the classic dispute settlement mechanisms in international law; and some are intended by the EU to last for several years after the end of the transitional period.

But the risk of the UK leaving the EU without any Article 50 agreement cannot be ruled out. Of course, the particularly thorny issue of the Irish border is likely to be the main sticking-point, but the need to reach consensus on the dispute settlement mechanisms is equally pressing. Regrettably, the negotiations on many of the provisions discussed in this post have still not been concluded.

In any case, a subsequent post will be devoted to the mechanisms which might be laid down as part of the “future relationship” referred to in Article 50. Those future arrangements are not expected to come into force until some years after 2020 – not least because the EU is insisting that no Agreement between the EU and the UK on those arrangements can even be signed until after the transitional period.

Dispute Settlement under the draft Withdrawal Agreement: the Transitional Period

On Monday 19 March, the Commission published a new version of the draft Withdrawal Agreement to be concluded with the United Kingdom pursuant to Article 50 TEU. A most welcome feature of this document is that whole swathes of the text have been agreed between the parties.

The draft, which had been prepared by the Commission, consists of green, yellow and white passages. The parties have highlighted in green the passages on which they have reached a consensus, subject only to improvements in the drafting. With respect to the provisions marked in yellow the negotiators have reached an agreement on the policy objectives. Finally, the UK has not (yet) agreed to any of the text which has been left white (so much less frightening than red which, rumour has it, was used initially for these passages !).

On Friday, the EU27 gave their seal of approval to the draft – in so far as it is complete – at their summit in Brussels. So the time is ripe for an update on dispute settlement following my earlier posts on the subject (see here and here).

Some of the relevant provisions of the draft Agreement are “green”, while many are “white”. This comes as no surprise: the Government is opposed to any suggestion of the Court of Justice of the EU retaining any jurisdiction over the UK in certain after Brexit, although it has now made certain concessions as we shall see. While it is highly unusual for the domestic courts of one State or of an international organisation to enjoy jurisdiction over another State, it is not wholly unprecedented: as mentioned in my first post (link 3), the Agreement on air transport between the EU and Switzerland confers jurisdiction over disputes on the Court of Justice. (It may also interest readers to know that, in parallel with the Brexit negotiations, the EU is also seeking to persuade that country to grant the Court much wider jurisdiction over its disputes with the EU.)

Let us start at the very end of this rather lengthy document (Article 168 (yellow)). Arguably, this is the most important provision of all because the draft is not structured chronologically; and it is only when you reach Article 168 that you discover which provisions apply during the transitional period and which ones only take effect at the end of the transitional period (1 January 2021). The beginning and the end of the transitional period (which runs from 30 March 2019 until 31 December 2020 inclusive and is also known as the implementation period) are spelt out in Articles 122 (green) and 168.

Another notable feature of the relevant articles is that they are both numerous and complex. Consequently, we cannot possibly consider them exhaustively here. Instead, this post only concerns the transitional period, leaving the rules applicable thereafter to be dealt with in one or more further posts.

The crux of the draft is that, subject to certain exceptions, EU law is to be preserved during the transitional period. This key principle is set out in the first subparagraph of Article 122(1) and in Article 122(6) (both green). The former provision reads as follows:

Unless otherwise provided in this Agreement, Union law shall be applicable to and in the United Kingdom during the transition period.

Article 122(6) provides:

Unless otherwise provided in this Agreement, during the transition period, any reference to Member States in the Union law applicable pursuant to paragraph 1, including as implemented and applied by Member States, shall be understood as including the United Kingdom.

The draft WA contains several exceptions to this principle (provisions which “provide otherwise”), including Article 6 which will be discussed below.

Article 161 of the draft Withdrawal Agreement (green) requires the EU and the UK to resolve any disputes which they may have by having recourse to the procedures set out in the Agreement. This mirrors Article 344 TFEU which prohibits the Member States from seeking other fora for settling their disputes.

As is usual in treaties concluded by the EU with third countries, the draft provides for the establishment of a Joint Committee consisting of representatives of each party (Articles 157 (green)). Among the tasks assigned to this body is to “seek appropriate ways and methods of preventing problems that might arise in areas covered by this Agreement or of resolving disputes that may arise regarding the interpretation and application of this Agreement” (Article 157(4)(c) (green).

In addition, by virtue of Article 126, the jurisdiction of the Court of Justice over matters concerning the United Kingdom will remain intact throughout the transitional period. In particular, the UK courts will be able to continue making references for preliminary rulings pursuant to Article 267 TFEU, and infringement proceedings could still be brought against the UK pursuant to Articles 258 to 260 TFEU – and the UK would also be entitled to bring such proceedings against a Member State under Article 259.

Although it has been hostile to any suggestion that the Court of Justice might retain jurisdiction over the UK after Brexit day, the Government has apparently made this concession – as regards the transition period only. No-one is likely to be surprised though that the Government is continuing to balk at Article 165 (white), which would empower the EU to suspend “certain benefits deriving for the United Kingdom from participation in the internal market”, should it fail to comply with a judgment in infringement proceedings or an interim order delivered by the Court. By virtue of Article 165(2), the suspension must be proportionate and the Union must “take account of the possible consequences of a suspension on the rights and obligations of natural and legal persons” (the language quoted here is taken from Article 7 TEU, which confers on the EU the power to suspend certain rights of a Member State which persistently breaches the rule of law and respect for democracy). The suspension may not exceed 3 months, although it is renewable (ibid.). Before the sanctions can take effect, the UK must be given 20 days’ notice to allow it to remedy the breach (Article 165(3)).

On a related matter, it follows from Article 122 of the draft that parties will retain the right to be represented before the Court of Justice by British barristers or solicitors.

According to Article 6(1)(a), one change in EU law which will come into effect immediately after Brexit day is that the United Kingdom will cease to be treated as a Member State as regards “the nomination, appointment or election of members of the institutions, bodies, offices and agencies of the Union, as well as the participation in the decision-making and the attendance in the meetings of the institutions”. Manifestly, this means (or is intended to mean) that the judges and Advocates-General of the Court of Justice who have been nominated by the UK will have to leave the Court on Brexit day (29 March 2019), as they will no longer be able to “participate in the decision-making”.

This will make no difference to the outcome of pending cases, since a very high percentage of cases have always been decided without the participation of a judge of the nationality of the Member State concerned. Indeed, it is clear from Article 18 of the Statute of the Court, a protocol to the EU Treaties, that a party may not challenge the composition of the Court or the Chamber by reason of the absence of the judge of his nationality. By the same token, for obvious ethical reasons, Advocate-Generals do not sit on cases in which a measure taken by their own Member State is in issue.

What of the position as regards the application of EU law in the UK courts during the transitional period?

Unsurprisingly, the definition of “Union law” in Article 2 of the draft (green) is all-embracing. As one would expect, this definition expressly includes both the Charter of Fundamental Rights and the general principles of EU law. Article 2 applies to all proceedings, not merely those before the UK courts; but only in relation to the latter is a political problem at all likely to arise.

The UK has given its blessing to this provision, although it means that the European Union (Withdrawal) Bill currently before Parliament will have to be amended: clause 5 of the Bill as it stood when it reached the Lords in January of this year (link 6) expressly precludes the UK courts from applying the Charter after Brexit day and Schedule 1 to the Bill would severely restrict reliance on general principles. As George Peretz QC explained back in October 2016, attempting to sever the substantive provisions of EU law from the Charter and the general principles is not only artificial, but would lead to EU law as applied in the UK courts diverging from EU law proper.

The UK has not yet agreed to the following provisions of Article 4 of the draft WA:

    1. Where this Agreement provides for the application of Union law in the United Kingdom, it shall produce in respect of and in the United Kingdom the same legal effects as those which it produces within the Union and its Member States. …
    2. The United Kingdom shall ensure compliance with paragraph 1, including as regards the required powers of its judicial and administrative authorities, through domestic primary legislation.
    3. The provisions of this Agreement referring to concepts or provisions of Union law shall be interpreted and applied in accordance with the same methods and general principles as those applicable within the Union.
    4. The provisions of this Agreement referring to Union law or concepts or provisions thereof shall in their implementation and application be interpreted in conformity with the relevant case law of the Court of Justice of the European Union handed down before the end of the transition period. …

Quite why that UK has any objection to Article 4 when it has approved Article 2 is not entirely clear, although of course the former provision applies only to the UK. It is also true that Article 4(4) would require an amendment to clause 6 of the Withdrawal Bill, which specifically states that the UK courts will not be bound by any judgments or orders delivered by the Court of Justice after Brexit day. But then the UK has accepted a number of provisions in the draft WA (and not just Article 2) which would require amendments to the Bill.

Needless to say, none of these provisions will come into force unless there is a meeting of minds on the “white” passages – including those providing for the Court of Justice to retain jurisdiction over the UK in respect of some matters, especially citizens’ rights, after the end of the transitional period. A restful Easter break in warmer climes will be needed before the complex and thorny issues raised by those provisions can be confronted in another post on this Brexit blog.

Prime Ministers Brexit Speech: Analysis by the Bar

In her wide-ranging Mansion House speech last week, the Prime Minister said she wanted to see a comprehensive system of mutual recognition that would enable self-employed legal professionals to continue to travel to the EU to provide services to clients in person.

That would be good news for justice and the legal services sector, but as Brexit Working Group Members Philip Moser QC and Evanna Fruithof explain, such an offer may look like a bid to have a deal more favourable than existing Member States.

The full article is available on The Bar Council (Guest Blog).