Brexit and the EU Budget (EUC Report)

Baroness Ludford Excerpts

Thursday 6th April 2017 Lords Chamber

[Baroness Ludford (LD)]

My Lords, I too thank the sub-committee under the chairmanship of my noble friend Lady Falkner for a very interesting report. Before I go any further, I should draw attention to my interests declared in the register. I particularly agree with the contributions of the noble Lord, Lord Davies of Stamford, my noble friend Lord Thomas of Gresford, and the noble Lord, Lord Hannay, and with much of what my noble friend Lord Shutt said. I am sure that the sub-committee will be much the poorer for his contributions sadly having to come to an end.

We mainly all agree that an orderly withdrawal arrangement is needed, free of what the noble Lord, Lord Haskins, called irresponsible game playing. I was glad that the noble Lord, Lord Taylor of Warwick, stressed that these negotiations were more important than a game show. I was getting a bit nervous with all his references to people such as Noel Edmonds.

I am among those who are not really persuaded by the report’s conclusions—indeed I find them quite puzzling in the light of the weight of the evidence from legal witnesses, and the clear reading of Article 50 of the treaty and Article 70 of the Vienna convention. I find it quite awkward to disagree with the very distinguished former legal adviser to the EU Select Committee whose period of employment ended on the very day that the report was published, so there was no opportunity, even in private, to discuss it with him. I feel rather uncomfortable commenting on that legal advice. I do not know whether there is any precedent for the legal advice of an official being published in a report. I am not sure that it is one I would recommend to be followed.

I found myself much more persuaded by the evidence on the legal situation from Professor Tridimas and Rhodri Thompson QC than by that of Dr Sánchez-Barrueco, and it is surprising that the advice of our former legal adviser does not reflect what I regard as the balance of that evidence.

Of course, the practical situation is that it is not about what the UK might agree to pay for future post-Brexit access. The issue is about the liability for obligations assumed while we were still a member. I find the sort of everyday examples that I can relate to include those invoked by Rhodri Thompson QC that if you have a 10-year lease and give notice to leave the premises after six months you may well still be liable for the full term of the lease. Indeed, in view of my current domestic travails with my telecoms supplier, which I will not bore noble Lords with, it is common for telecoms contracts to commit one to paying money if you want to leave a contract in less than the 12 or 24 months that you signed up to. So that is the kind of situation that we are in. The obligations under the EU treaty that the UK assumed as a member state do not disappear when we decide to denounce that treaty. That is a fairly common-sense conclusion.

The advice from the former legal adviser drew attention to the incontestable fact that Article 50 sets out the provisions on withdrawal from the EU. The rules on withdrawing from a treaty in Article 70 apply only if the treaty in question does not have any provisions on withdrawal. But withdrawal is not the issue: Article 50 clearly governs the process of withdrawal from the EU. What it is silent on is the assumption of rights and obligations, and their discharge, assumed when one was a member of that treaty. So the conclusion of the former legal adviser, that Article 50 does not need to be interpreted in the light of the Vienna convention but on its terms alone, is the one I find the most difficult to accept. It is precisely because Article 50 is silent on the question on the ongoing liabilities that I believe that, if we were to withdraw without an agreement, Article 70 of the Vienna convention would kick in to take up the slack. If we have, as I very much hope we will, an orderly withdrawal agreement, we are all expecting that that would cover the question of negotiated liabilities. I am certainly not desiring that this country should pay a penny more than is reasonable as a result of negotiations undertaken with good will on all sides. There is no reason for us to be overgenerous, but to undertake that in the spirit of all lively negotiations. Of course, there are plenty of other calls on money in this country.

The very fact that there is no express provision in Article 50 on picking up the existing rights and obligations means that Article 70 of the Vienna convention comes into play, because there are no rules in Article 50 to prevail over Article 70 of the Vienna convention. So Article 50 has to be interpreted consistently with Article 70 of the Vienna convention, because Article 50 does not dictate any specific solution.

The question of jurisdiction and enforcement is another matter. As we know, under EU law, the interpretation of EU law is ultimately a matter for the Court of Justice, and the 27 member states will be bound by Article 36 of the TFEU, which states:

“Member States undertake not to submit a dispute concerning the interpretation or application of this Treaty to any method of settlement other than those provided for therein”—


the Court of Justice of the European Union. The EU institutions, in the draft Council guidelines and the European Parliament resolution of yesterday, are making it very clear that EU enforcement mechanisms apply. It is going to be a very interesting discussion on how you work all that out once the UK is no longer a member state, but we can all see that there will be a very good argument why the Court of Justice may well come into play in the negotiation of a transitional agreement and a future relations treaty.

I am reminded of the fact that the Brexit White Paper not only recognised the established position of the CJEU as the EU’s,

“ultimate arbiter on matters of EU law”,

but also committed to the fact that the UK,

“will of course continue to honour our international commitments and follow international law”.

Whether it ends as a matter of enforcement under EU law by the CJEU or through some international means and tribunal is above my pay grade, but I should have thought that, one way or another, the question of jurisdiction and enforcement will be rather closer to the CJEU than any other solution. The Government will want that jurisdiction enforcement to be worked out and not left hanging in the air, not least because, as all the legal witnesses to the committee stressed, there would be a significant price to pay politically were the UK to refuse to honour obligations under EU law that the CJEU were to find that we owed. It would not leave us in a very comfortable place, if we refused to honour those obligations. There would also be significant international implications if we were not prepared to comply with our obligations on exit from the EU. It would not augur well for all these other international treaties that are being mooted.

I am not sure that it is terribly helpful to the Government to be told that they do not need to pay anything at this part of our process of exit from the EU. I would love to have been a fly on the wall when the Government read this report. Although we have heard various statements in the public domain about how, “Of course, we do not owe a penny—that is absolutely the case”, I am sure that in private they know that that is a long way from the real world and that negotiations will have to converge on some kind of honourable solution all round. The noble Lord, Lord Jay of Ewelme, reminded us that the press is not going to be a pretty sight when told the sum that the UK does agree, and the Government would do well to prepare the press for that day, not for any kind of overpayment but for whatever is agreed in the negotiations to achieve other negotiating objectives over the next few years. In that context, I look forward to hearing how the Government interpret the report as a guide to their future conduct.