Arbitration panel proposed for post-Brexit dispute resolution

An independent dispute resolution mechanism will be a key part of the UK’s ‘deep and special partnership’ with the EU after 2019, the government said today in an apparent retreat from its position on making a clean break with the Court of Justice of the European Union (CJEU).

In the latest in a series of papers setting out the UK government’s stall in the next round of Brexit negotiations, the government dismisses the European Commission’s demand for disputes to be handled by the CJEU, saying such a role would be unprecedented.

‘One common feature of most international agreements, including all agreements between the EU and a third country, is that the courts of one party are not given direct jurisdiction over the other in order to resolve disputes between them,’ the paper states. ‘Such an arrangement would be incompatible with the principle of having a fair and neutral means of resolving disputes, as well as with the principle of mutual respect for the sovereignty and legal autonomy of the parties to the agreement.’

Instead, the paper says the UK and EU should pick from ‘a number of existing models and approaches’. These include joint committees and arbitration models. In a BBC interview earlier today, Dominic Raab, justice minister, appeared to favour an arbitration panel suggesting suggesting that each side might appoint one arbitrator who would then agree on a third.

Pressed on whether this amounted to a retreat on the government’s promise to leave the jurisdiction of the CJEU, he said the UK would continue to keep ‘half an eye’ on EU law - as the EU would on British law. This has been widely seen as a recognition that CJEU case law will continue to have relevance for the interpretation of existing EU legislation incorporated into UK law upon Brexit. 

Bar chair Andrew Langdon QC said ‘the paper raises more questions than it seeks to answer on what is a matter of crucial significance to the UK. A number of suggested alternate mechanisms to the CJEU are listed, though it is not clear which, if any, the government favours. There are important regulatory, economic and rights-based reasons for ensuring legal certainty which underline the ongoing relevance of the CJEU case law post March 2019.’

Bart Van Vooren of international firm Covington’s Brexit task force, said the paper ‘has the seeds of a compromise on the CJEU’.

International arbitration expert Mathew Rea, partner at Bryan Cave LLP, said that the proposals mark a retreat from the previous stance that there could be no future role for the ECJ in post-Brexit Britain. The paper ‘recognises that where, as they must, agreements between the EU and the UK mirror language used in existing EU law, that language will need to be interpreted and applied by any independent dispute resolution body in accordance with ECJ decisions. This makes sense. Decisions by an independent body on interpretation of EU law cannot bind the EU and its member states, and divergence in interpretation of the same laws would, as the paper acknowledges, be “undesirable”.’

Labour’s shadow Brexit secretary, Keir Starmer, called attention to the government’s use of the words ‘direct jurisdiction’. He said: ‘This appears to contradict the red line laid out in the prime minister’s Lancaster House speech and the government’s white paper.’ He added: ‘Nothing the government says it wants to deliver from Brexit – be it on trade, citizens’ rights or judicial cooperation – can be achieved without a dispute resolution system involving some role for European judges.’