Finding a new umpire for the UK's Brexit Treaty

28 Mar 2018

 

Earlier in March, Theresa May made another landmark speech on Brexit, the so-called Mansion House Speech. The significance of this intervention was that it conveyed, in some modest detail, the UK’s propositions for a future relationship with the EU after Brexit.

 

One particularly interesting aspect of the speech was the reference to the role of the European Court of Justice. More specifically, Mrs May laid out three ways in which deliberations from the EU’s ultimate arbiter would still impact the UK post-Brexit. First, the ECJ will determine whether the agreement struck between the UK and the EU is consistent with EU law. Second, courts in the UK will keep a close eye on the developments in EU case-law to decide on those EU laws being transferred into the UK law books via the Withdrawal Bill. Third, and perhaps most potently, Mrs May referred to the ECJ’s potential role in settling disputes with regard to the eventual treaty struck between the UK and the EU. She claimed that “the ultimate arbiter of disputes about our future partnership cannot be the court of either party.”

 

It is quite possible that apart from the provisions on trade for goods, services, security and other important aspects, deciding on a dispute resolution mechanism will also be a politically sensitive area. This is due to the insistence from Mrs May and prominent Brexiteers in Parliament that the ECJ should cease to have any influence on the UK’s legal system. Though there now seems to be a realisation that the ECJ will still play a role in the UK’s future relationship with the EU. The crucial question, however, is what exactly that role may be. The answer may be summoned from a few options available to the UK and the EU during the negotiations. Although it will be the political compatibility of each which could determine whether they would be ideal or not.

 

As a baseline, international law confers states with the right to a free election of means for the settlement. Such freedom is provided for under the UN Charter, with the only caveat being that the methods for dispute resolution be peaceful and not a threat to international peace and security. In addition, both the UK and the EU must consent to the method in place, which will obviously be a requisite element of the treaty when it is concluded and ratified.

 

Since the EU exists on the international plane as it own legal entity, it is therefore capable of concluding agreements with third countries, like the UK in this case, as if it were a state itself. This is why the provisions under international law stipulating the means for settlement form merely as a backdrop, and it will be up to the UK and the EU decide a specific means of which they both consider satisfactory.

 

By default, it would be the ECJ that has sole jurisdiction over the application and interpretation of the treaties with third countries since such agreements form part of EU law. But Mrs May made clear in her speech that such an arrangement would not be acceptable to the UK, and so it is necessary to look to the alternative arrangements which could be put in place instead.

 

Two agreements the EU has struck in past can provide as a template for what the Brexit treaty could contain. The first, and perhaps the most mentioned, agreement is that with Canada, formally called the EU-Canada Comprehensive Economic and Trade Agreement (CETA). In this particular agreement, arbitration is the main means for dispute resolution. The arbitration is combined with the Joint Committee, which is made up of representatives from Canada and the EU. This body is given, under the agreement, the power to oversee the implementation of the agreement as well as disputes arising in relation to it. Its decisions are binding on Canada and the EU, who are required to give effect to the body’s decisions. However, while this could be a possible model for the EU-UK treaty, the Belgium government has flagged a number of issues with the CETA arbitration terms, questioning in particular whether it achieves the requirement of an independent and impartial judiciary. If the ECJ rules that this part of CETA is unlawful, then this could have significant implications for the Brexit negotiations.

 

Alternately, the Ukrainian model could be sought. Under the Deep and Comprehensive Free Trade Area (DCFTA), concluded between the EU and Ukraine, an arbitration mechanism moderates relations between the two States. An Association Council is delegated responsibility for the application and implementation of the agreement and its decisions are binding. The procedure for disputes however, conducted by an arbitration panel, require matters to be sent to the ECJ for a ruling in relation to certain obligations that make reference to EU law. Thus, whether this would suit the UK government’s position is questionable.

 

Interestingly though, in a government paper from last year, the UK appeared to show interest in such a system, in which voluntary references may be made to the ECJ on questions of EU law. Such a condition could mirror Article 267 of the Treaty for the Functioning of the European Union which requires the national courts of Member States to obtain a preliminary ruling from the ECJ when a question on the meaning or the validity of an EU law provision arises.

 

But it is yet to be seen whether the UK decides to put this option on the table. In the interest of maintaining the integrity of the EU legal system, the EU may be keen to include this in the Brexit treaty whereas pressure from some Brexiteers may push May to reject such a term. How this will eventually play out remains to be seen when the negotiations for the future relationship officially begin later this year. 

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