Dispute Settlement after the Transitional Period: the Intermediate Regime

01 May 2018

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.