19 September 2017

Two new Brexit policy papers were released by the government prior to the August negotiating round. The papers covered dispute resolution and enforcement, and providing a cross-border judicial co-operative framework. In presenting the UK's position and proposals for managing our transition out of the EU, these papers may seek to address the EU’s previous criticism that the UK’s negotiating position is unclear and unrealistic.

The newest policy papers are produced in the context of the third round of Brexit negotiations. They make clear the UK's hopes for a Brexit which maintains clarity and minimises disruption for businesses and consumers. They acknowledge the potential "cliff-edge” if appropriate arrangements are not made and emphasise the need to avoid this if possible. However, firm proposals are thin on the ground; the actual means by which the UK’s aims are to be achieved are not (yet) specified. Whether this is a deliberate negotiating tactic, or a genuine lack of certainty, remains to be seen.

Enforcement and dispute resolution

Emphasis is on the hoped-for “deep and special partnership” between the UK and the EU, during and after Brexit. Key concerns are stated as being the need for certainty for individuals and businesses in enforcing their rights, and the balance to be struck between, on the one hand, respecting the autonomy of EU and UK law, and on the other, the UK taking control of its own laws. The paper confirms the UK's continuing commitment to compliance with international law.

Since the principle of direct effect – by which EU law automatically has effect within member states – will cease to apply to the UK upon Brexit, the UK government will enact domestic legislation which gives effect to any UK-EU agreements reached. Such legislation will be "clear and binding" and "capable of scrutiny by the EU and third countries”. An interim period is proposed, in order to avoid a “cliff edge” of uncertainty. Distinction is drawn between enforcement and dispute resolution and it is proposed that separate bodies should deal with each.

The UK proposes that the direct jurisdiction of the Court of Justice of the European Union (CJEU) will also end following Brexit. The EU has stated that there are limits to the extent to which it can be bound by an international judicial body other than the CJEU. The UK paper comments that this does not mean that the CJEU should have the power to enforce or interpret international agreements between the EU and third countries, citing EU trade agreements with non-EU countries which include provisions for dispute resolution through binding arbitration. Nevertheless, it is proposed that the CJEU should still have a role – for example, on the interpretation of EU law (or agreements which replicate it in identical language).

When it comes to enforcement of UK-EU agreements, these are to be enforced by UK courts. Where a dispute between the EU and UK arises, the UK does not accept that an EU court (such as the CJEU) should have jurisdiction to resolve such disputes. While several "illustrative examples” are given as possible alternatives, no firm commitment or proposal is made as to the UK’s suggested mechanism.

This may be a deliberate negotiation tactic – since discussions are still in early stages and the government may not wish to show its cards yet – or, given the overall lack of clarity to date, it may be an indication that DExEU themselves has not yet formed a clear view on how best to address these issues.

Providing a cross-border judicial co-operative framework

The need for clarity and confidence for businesses, citizens and families is similarly emphasised in the paper on cross-border judicial framework. This discusses the need to negotiate and agree a framework governing the interaction between different legal systems, whether issues relate to jurisdiction, applicable law, or enforcement. Acknowledgement is made of the “interconnectedness” of the world today, whether it be multi-national families or cross-border trade.

As with the paper on dispute resolution, the end of direct jurisdiction of the CJEU in the UK is confirmed; the paper asserts the intention to ensure that this does not weaken individuals’ rights or the UK’s commitment to complying with international law. What it does not address is the fact that English judgments will not, absent EU agreement, themselves be recognised or enforced in the EU.

It is further confirmed that the Rome I and Rome II instruments (dealing with choice of law and applicable law) will be incorporated into domestic law. The UK intends to continue as a member of the Hague Conference, to participate in Hague Conventions of which it is already a party, and to continue participation in the Lugano Convention (the basis for civil judicial cooperation with Norway, Iceland and Switzerland). This has been pointed out in the UK press as being a step back from previous assertions that Britain will be judicially independent of the EU following Brexit.

The paper echoes the EU position as set out in July 2017, in its assumption that an agreement cannot be reached and the principles that should then apply. Existing EU rules on applicable law should continue to apply to contracts concluded before the withdrawal date or (for non-contractual liabilities) to events pre-dating withdrawal. Similarly, existing rules on jurisdiction should still apply to legal proceedings instituted before withdrawal, and existing rules on recognition and enforcement of judicial decisions should apply to decisions given before the withdrawal date (or after that date in proceedings instituted before withdrawal).

These confirmations and proposals aside, the paper contains few specifics on how the UK proposes to manage, pragmatically, its departure from the EU and subsequent judicial co-operation. As the Bar Council commentary notes, whilst it is a good start, the “devil will be in the detail”.

How do these position papers fit in to negotiations generally?

To date the UK has been criticised by the EU for a lack of clarity on its position. While these papers make much of the need for clarity, any firm proposals remain thin on the ground. The papers do not go much beyond a general indication of UK's stance, although the suggestion of an interim or transitional period rather than a 'cliff edge' withdrawal is helpful and reassuring, if ultimately accepted by the EU.

Previous suggestions that the UK is over ambitious may continue; the most recent papers do run the risk of an apparent attempt at the UK cherry-picking and holding onto those elements of the EU which are advantageous to it. This is reflected in reports of the most recent round of negotiations at which Europe’s chief negotiator, Michel Barnier, expressed concerns about the UK’s wish to “adopt its own standards and regulations” at the same time as having those standards "recognised automatically in the EU”, stating that this is “simply impossible”.

The next stage will be to see whether the aims and ambitions of the UK, as set out in its most recent round of policy papers, will be firmed up with greater detail to enable further progress in negotiation.

Should you wish to discuss any aspect of this update further, please contact Caroline Brown or Ian Tucker.

Key contact

Ian Tucker

Ian Tucker Partner

  • Dispute Resolution
  • Procurement Disputes
  • Procurement and Subsidy Control

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