Status of EU law and ongoing role for the Court of Justice ?

24 Aug 2017

The Government today has published its position paper on the “Enforcement and dispute resolution“, in which it sets out its vision for its future partnership with the EU. A copy of the DEXEU paper can be found here.

Since her Lancaster House in January 2017 speech, the Prime Minister has been insistent on her redline that the UK will leave the jurisdiction of the European Court of Justice and that “taking back control” means that individual rights and obligations will be determined ultimately by the Supreme Court alone1.

Whether that is a realistic proposition will have far reaching consequences, not just for the outcome of the imminent negotiations which are due to resume next week but also for the future UK legal system in terms of providing effective relief and legal certainty for citizens and businesses here and abroad. It is also critical for ensuring equal treatment and a level playing field for cross border business and trade.

Dispute resolution will be a key aspect of the negotiating process since there may be inter-state trade disputes if state measures are perceived to act as a barrier to trade or disputes regarding the correct interpretation of the terms of the Withdrawal Agreement or Future Relationship Agreement. There will need to be some international mechanism for overseeing those arrangements and resolving those disputes efficiently. If that mechanism is not agreed in good time between the UK and the EU, nothing else will be agreed and the UK could be forced to leave without a deal.

Importantly, unlike most international agreements, it is envisaged that the Withdrawal Agreement will provide for ongoing protection of individual rights. Those rights will continue to be protected under the terms of any transitional arrangements, possibly until 2022 or beyond if individual rights are also covered by the Future Relationship Agreement. There may be private disputes, brought by individual citizens or affected companies, challenging the compatibility of state measures with the terms of the new arrangements or enforcing such rights against the UK Government, other EU States or private operators within the EU. Those disputes may, in large part, be resolved within the domestic judicial system in the UK or other EU-27 States.

However, to the extent that the Withdrawal Agreement, Future Relationship Agreement and UK law (courtesy of the Withdrawal Act) “cut and paste” concepts of EU law into the domestic statute book, there will be ongoing disputes about the proper interpretation of those terms. This raises three immediate issues:

(a) Will English judges be bound by rulings of the Court of Justice (or other EU measures such as Commission decisions or fundamental principles of EU law)?

(b) If they are not strictly bound, can they take account of such statements of EU law and what weight should they give to them?

(c) If there are challenges to state measures (whether the UK or EU-27 States), how are such challenges to be resolved? Should there be a different enforcement mechanism for inter-state disputes compared to individual claims?

The DEXEU paper is not so much a “position” paper but a preliminary discussion paper of the various options available. It poses a series of possible dispute resolution models in briefest outline but does not present their various strengths and weaknesses nor does it commit to any particular solution. However there are four striking concessions, which appear to “colourwash” the Government’s “no CJEU” red line:

(a) First it concedes for the first time that the red line only applies to the “direct jurisdiction” of the CJEU;

(b) Next, it envisages that it may be agreed that “language which is identical in substance to EU law” in international agreements, such as the Withdrawal Agreement and the Future Relationship Agreement, should be interpreted and applied in line with any relevant pre-Brexit interpretations of the CJEU;

(c) Thirdly, it accepts that international agreements may also provide for account to be taken of post-Brexit CJEU decisions in interpreting language which is identical in substance to EU law, where that is necessary to facilitate cooperation or prevent undesirable divergence.

(d) Lastly, it concedes that, whether for inter-state disputes or private claims, there may be a facility whereby dispute resolution body or both parties can seek a voluntary ruling from the CJEU to give a binding interpretation of the meaning of terms in the international agreement which are derived from concepts of EU law.

In essence, this means that although the Government is intent on leaving the direct jurisdiction of the Court of Justice, there will be considerable scope for it to have an indirect role. The UK will certainly not be leaving the influence of the Court of Justice’s jurisprudence, even in the brave new world under the Future Relationship Agreement.

These developments are to be welcomed as a pragmatic solution to the Brexit conundrum of securing exit whilst ensuring legal certainty and effective judicial protection for UK businesses and individuals. They reflect input provided by the Bar Council in its “Brexit Papers” which emphasised the need for a clear statutory indication of the extent to which national judges should be required to have regard to CJEU case law (and other EU measures) regardless of whether they pre-date or post-date Brexit day. As Lady Hale and Lord Neuberger have stressed, the status of EU decisions cannot be left purely to judicial discretion. It would put individual judges in an untenable position if they are called upon to flesh out the meaning of obscure concepts of EU-derived law (in the very same way as the CJEU has been criticised for entering into policy arena). The workload of justifying every occasion on which they might or might not have regard to EU rulings in individual cases and ensuring consistency would be a heavy judicial burden. The resulting legal uncertainty and inconsistency between individual cases would lead to a proliferation of appeals risking sclerosis of the legal system. Further, it would create disparity in legal protection as UK citizens abroad would be able to commence proceedings before the French courts and have certainty of consistent interpretation and/or the ultimate protection of CJEU preliminary rulings whereas UK or EU citizens in the UK would not. Could the English Courts be criticised for following or ignoring the ruling of the CJEU in a preliminary ruling from France on exactly the same provision in the Future Relationship Agreement? In cross-border sectors or those subject to common regulatory frameworks, such as e-commerce, aviation, telecoms, pharmaceuticals, any resulting divergence and legal uncertainty will lead to an uneven playing field, distorting competition between companies in the UK and those in the wider EEA.

In terms of dispute resolution, the Bar Council Brexit Papers make three main recommendations:

(a) For the Withdrawal Agreement and transitional period, the UK Government should have recourse to existing judicial architecture of the EFTA Court, which is the only realistic option to have adjudication of claims from Brexit Day in March 2019.

(b) For the Future Relationship Agreement, it recommends that the UK adopt a CETA-model arbitration arrangement for inter-state disputes.

(c) For individual claims, private enforcement should take place before national courts with the optional facility of obtaining an Advisory Opinion from the Court of Justice. It also emphasises the need for an explicit statutory provision in the Withdrawal Act for national courts to have due regard to pre- and post- Brexit EU rulings and decisions and, where necessary, apply consistent interpretation to EU-derived law ensure equality, legal certainty and the maintenance of a level playing field.

The Brexit Papers have been written by members of the Brexit Working Group set up by the Bar Council to examine the range of complex issues arising from Brexit and to help the Government identify the legal and constitutional priorities. Led by Hugh Mercer QC, the group has drawn on the combined expertise and experience of the profession across a wide range of practice areas.

Anneli Howard of Monckton Chambers has assisted in the development of the following recent papers:

Brexit Paper 9: CJEU Jurisprudence

Brexit Paper 10: Dispute Resolution and Enforcement Mechanisms post-Brexit

Brexit paper 17: Competition Law.

Thomas Sebastian has assisted with Brexit Paper 21 on WTO law.

Click here to access these and the other 22 Papers which form the third edition and latest edition of the papers released in June 2017.

1 In Scotland, the Court of Session or High Court of Justiciary.