Brexit: Dispute Resolution and Enforcement (European Union Committee Report)

Lord Thomas of Gresford Excerpts

Wednesday 17th October 2018 Lords Chamber

[Lord Thomas of Gresford (LD)]

My Lords, it is always a great pleasure to follow the noble Baroness, Lady Kennedy, and I congratulate her and the staff of her distinguished sub-committee for their immense labours in producing a report on this highly complex and intractable issue. I was interested to hear that it is regarded as being the second largest stumbling block to the withdrawal agreement which is in the process of being negotiated.

We are looking at a number of agreements, the first of which is the withdrawal agreement, which will cover a number of components: the question of finance—how much to pay—citizens’ rights and the protocol on Ireland and Northern Ireland. We expect future agreements to cover the relationship between the UK and the EU in a number of areas, principally trade and security, and there will be other agreements to cover ongoing participation in the EU programmes to which the noble Baroness referred. The governance of each of these agreements contains three elements or components. The first is management of the agreement, the second is dispute settlement, and the third is enforcement after dispute settlement.

The withdrawal agreement has been published in draft form with the areas of agreement coloured in green. From this it appears that agreement has been reached under draft Article 157 for the establishment of a joint committee responsible for the supervision and implementation of the agreement. That covers the first management component of the agreement. The joint committee is to be a political committee, but one of its functions under draft paragraph 4(c) is to,

“seek appropriate ways and methods of preventing problems that might arise in areas covered by this Agreement or of resolving disputes that may arise regarding the interpretation and application of this Agreement”.

That is intended to be the first stage, the political stage, in the settlement of disputes, but what about the second or appeal stage of dispute resolution? There is still substantial disagreement between the United Kingdom and the European Union over how to deal with this and how a dispute settlement should be enforced. On the one hand, the EU has proposed that the European Court of Justice should be the final arbiter because it says that the draft withdrawal agreement still embodies many provisions of EU law and the CJEU has declared itself to be the only binding interpretative authority of EU law. On the other hand, the United Kingdom has argued that it is unacceptable that the appeal body, the final resolution body, in a dispute over the withdrawal agreement or indeed any agreement it concludes with the EU, should be a court whose judges are drawn only from the continuing EU member states. That is the nub of the matter.

Of course, the issue is bedevilled by the irrational demonisation of the European Court of Justice, first by those who campaigned to leave the EU and later by the Prime Minister, who has lost no opportunity to declare that leaving the jurisdiction of the CJEU is one of her red lines. I have never understood how that court could have been painted in such scarlet colours. In the first place, its function has never been to lay down draconian law which binds us all in servitude, but to interpret law which, even if it starts with the Council of Ministers or the Commission, has been subjected to a democratic process in the European Parliament. The United Kingdom has, since joining the EU, had full representation in these three bodies.

Secondly, we have always provided a distinguished judge to sit on the court. Sir Konrad Schiemann, the former United Kingdom-nominated judge of the court between 2004 and 2012, said in evidence to the Committee that,

“in the Luxembourg court the tradition is that you lose your nationality the moment you join the court, which makes no distinction between judges of one nationality and another. … The tradition was that you were not there to plug the point of view of your national Government. That was not your job. Your job was to try to decide the law in the light of the general European interest”.

That, indeed, is the way in which the Court of Justice has operated: it is not a court of competing national judges.

Thirdly, the United Kingdom has, through the power of its legal advisers and advocates, been very successful in the European Court of Justice. The European Commission does not bring cases that it does not expect to win. Of the 63 cases the Commission brought against the United Kingdom that resulted in rulings between 2012 and 2016, the UK submitted a defence in only 30 of those 68 and conceded the rest. In the cases the United Kingdom defended, its success rate was 53%. Its overall success rate of all cases in the period 2003-16 was 25%, the highest of any of the 28 member states. Penalties have never been imposed on the United Kingdom by the Court of Justice for failing to abide by its judgments. In other words, our Governments have always accepted its judgments, even in the cases that we have lost.

The Government’s response to the Committee’s report of 5 July says that they will “respect the role” of the European Court of Justice in the interpretation of EU law in disputes between member states. They expect the EU in return to “respect the role” of our Supreme Court. That is a gnomic utterance: what does it mean? I hope the Minister will enlighten us. It certainly does not help to resolve the current dispute on the appropriate legal body or arbitration process to resolve disputes.

The Committee explored the idea of locking on to the EFTA Court as an independent judicial body, but is rightly not enthusiastic about it because it would require the agreement of Norway, Liechtenstein and Iceland radically to revise the purpose and structure of that court to accommodate a far greater caseload than it was designed to carry and to extend its jurisdiction in economic matters into areas of justice, security and family law. It is clearly not appropriate.

Is there not room for more creative thinking? The institution of the European Court of Justice exists. Its physical building and its administration exist. The United Kingdom has played its full part in its procedures, has been part of its development and has been successful both in the judicial sphere and in advocacy before it. Would it not be sensible to create a special chamber of the European Court of Justice for dealing with disputes arising out of the special circumstances of our leaving the EU? We are not leaving Europe. The judges of that special chamber could comprise an equal number of members of the continuing court and members or former members of our Supreme Court, together with an eminent president from a neutral jurisdiction. This is the important point: since it would be a part of the Court of Justice, it could meet the European Union’s requirement that only that court can interpret provisions of EU law where that this necessary. At the same time, there would be participation from the United Kingdom.

That special chamber would be of particular advantage if disputes arose in respect of the future agreements: the elusive trade deal, agreements concerning our participation in existing EU programmes, the security stuff, the European arrest warrant, Interpol, data protection, family matters and in those areas where the Government wish to continue to participate and co-operate in other fields. It could also be a forum for pursuing individual rights, those of European Union citizens in the United Kingdom and United Kingdom citizens in the European state. We would not want European citizens in the United Kingdom to have remedies solely in the courts of this country if that meant that our citizens abroad in Europe would have remedies only from a European court.

I cannot help comparing the present impasse to the successful negotiations over Hong Kong, where the innovative principle of “one nation, two systems” was developed, and the Court of Final Appeal, which replaced the Privy Council, introduced non-permanent judges to supplement its Bench—I see one of them here today. Judges from the United Kingdom, Canada, Australia and New Zealand play a part in assisting the Bench in the Hong Kong court.

Incidentally, I believe that the answer to the Northern Ireland impasse would be to declare Northern Ireland a special administrative region. With direct access to both the EU and the UK, it would be highly attractive as a centre for financial and other services—legal, accountancy and banking. I am sure that Wales would jump at the chance of becoming a second Hong Kong.

Would the Government’s aversion to the European Court of Justice, fuelled by the empty and ill-informed rhetoric of the Brexiters, stand in the way of such a solution? Surely it would be more acceptable to the public of this country to know that if enforcement proceedings in the nature of fines or the withdrawal or suspension of concessions were imposed on us, it would be as a result of an order of an established and transparent court, whose proceedings were open and readily accessible, rather than some obscure, supranational arbitration body such as that outlined in the Government’s response to this excellent report.