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

Baroness Hayter of Kentish Town Excerpts

Wednesday 17th October 2018 Lords Chamber

[Baroness Hayter of Kentish Town (Lab)]

It is always a pleasure to follow the noble Baroness, Lady Ludford. I am afraid we are becoming a bit of a double act. I am not sure it is one the Minister always appreciates, but there you are—it is his penalty in life.

I also thank my noble friend Lady Kennedy of The Shaws, and her committee, for yet another insightful, clear and informative report. Like the noble Lord, Lord Hannay, I only wish that the Government could be as clear and incisive—and also, perhaps, speedy, as the noble and learned Lord, Lord Hope, so politely put it—on how they propose to deal with the issues raised in the report.

Perhaps the most urgent issue raised in the paper—although there is competition for urgency—is the one on which the Government have said the least, which considers any disputes arising from the withdrawal agreement. Both my noble friends Lady Kennedy and Lord Anderson of Swansea have quoted Michel Barnier as calling this the second most difficult issue after Ireland.

I remind the Minister that, on Monday, the Prime Minister claimed that real progress had been made on the withdrawal agreement, with,

“the shape of the deal across the vast majority … now clear”.—[Official Report, Commons, 15/10/18; col. 409.]

Yet the response to this report from the Government states that the dispute resolution mechanism “is a matter for negotiation”.

So I ask the question, along with that posed by the noble Earl, Lord Kinnoull: if it is subject to negotiation, how is that going? Has it been negotiated and, if so, what is it? Is there to be an arbitration panel, or is the ECJ itself to do the dispute resolution during transition? As my noble friend Lord Judd said, in case anyone has forgotten, time is getting very short. We should by now have rather more detail than we have been given, both about the withdrawal Joint Committee and also about any arbitration panel being discussed. Who will be the members, particularly on the Joint Committee? What will be its terms of reference? Will it be a transparent body? Will its meetings be open? Will its decisions, and the reasoning behind them, be made public?

The Joint Committee, as we know, has the,

“power to adopt decisions and to make recommendations”,

and that power is to be reached “by mutual consent”. But what if such an accord cannot be reached?

Anyway, one must assume that the committee—which, I assume, will be made up of political persons appointed by the two sides—will not actually be independent, but will be a purely political negotiating entity. The question arises: who could take issues to that Joint Committee? Given that businesses, and indeed citizens, may want to challenge both the interpretation and the implementation of the withdrawal agreement, will they have access to that Joint Committee, or to any arbitration panel that is established, should the implementation disadvantage them? If they do not have that direct access, will our Government have a mechanism for referring any business disputes to an arbitration panel, or some other way of enabling those issues to be raised? As my noble friend Lady Kennedy said, while the Government seem to accept that dispute resolution should be accessible, they have given no information on how this might be achieved.

Turning to the Joint Committee itself, which—if we have read it correctly—might only meet once a year, does the Minister actually think that this is going to be adequate to deal with all the queries that could arise? Will the Minister also say something about the enforcement mechanism for any finding from the Joint Committee or, indeed, from any arbitration panel?

The EU agencies of which we are currently members have been mentioned. When is it envisaged that we would leave these, assuming that there is a deal? Alternatively, if, in transition, we remain members and the Government accept that we would abide by the rules and “respect the remit” of the CJEU in that regard, would that also entail businesses being able to take relevant issues to the CJEU if they were party to any of the cases being held there? As with the withdrawal agreement query, would businesses and citizens have the same rights as now, not only for their disputes to be heard but to any remedy should a case be found in their favour?

The EU Committee noted that the Government seemed rather sanguine about being subject to the CJEU in certain circumstances while having no UK judges there. Whether or not the Government think it would be helpful to maintain a UK presence there, has the issue even been raised in negotiations? I have heard suggestions that this would not be completely unthinkable. As raised by the noble Lord, Lord Anderson of Ipswich, should a longer transition now be envisaged, that matter might become even more pertinent. It would therefore be helpful to know whether such discussions have taken place with the EU. Will the Minister also give some thought to the interesting proposal from the noble Lord, Lord Thomas of Gresford, for a special committee in the CJEU? It is beyond my remit to comment on the legality of such a proposal.

Turning to the civil, family and commercial issues—including insolvency, as stressed by the noble Earl, Lord Kinnoull—will the Minister update the House on negotiations relating to the recognition and enforcement of judgments across the EU after exit day, with particular reference to divorce, maintenance, adoption and child custody, in the way described by the noble Baroness, Lady Shackleton? There is real urgency in this—the committee said it had “significant concerns” in its recent letter to the Lord Chancellor—because families form or change according to timetables completely unrelated to the Government’s priorities. As we have heard, lawyers in this field worry that children will be badly affected if there is any uncertainty at the time we leave.

Regarding lawyers themselves, the Government’s response to the report states that during the transition,

“our lawyers will maintain their rights of audience”,

at the CJEU. Can the Minister confirm that this has been agreed by the court and the Commission and that it applies to all cases, not just those to which the Government are a party? Will he also inform the House what discussions have taken place regarding the ability of UK lawyers to retain rights of audience at courts within member states, on the same sort of fly-in, fly-out basis as now, during the transition period, where a UK national or business is party to a case in one of those domestic tribunals?

There are big issues facing our country and our negotiators, both today, as we have heard, and in the days and weeks ahead. There are political challenges within the Prime Minister’s own party and there has been a failure—so far—to agree a deal likely to win support among the EU 27 and, indeed, in the House of Commons. It would be unpardonable to complete a deal without having in place robust, open and transparent mechanisms for ironing out future difficulties and disagreements, and even more so to leave our citizens—such as families dealing with adoption, maintenance or divorce—or businesses without clear, reciprocal, fair and transparent legal processes to replace those now in operation, as described by the noble Lord, Lord Bilimoria.

This report covers some of these issues, as have others by the same committee. Answers from the Government are needed in order to offer certainty to everyone likely to face difficulties as a result of our withdrawal, even assuming that we have a deal. Needless to say, however, the no deal scenario is even more worrying, with very little comfort coming from the Government’s technical notices—as I think they are called—on handling civil legal cases involving EU countries, in that situation. As we have heard, tried-and- tested EU rules currently determine which country’s court will hear cross-border civil, commercial or family law cases, and how judgments in one member state are recognised and enforced in another, mainly on the basis of reciprocity. Without a deal, such co-operation will fall away, possibly on 1 April.

This paper—the so-called advice from the Government—states only that any party to such a cross-border dispute would need to consider the effect of these changes on any existing or future cases, or seek professional advice. It is, however, precisely the professionals who need to hear what the Government intend, because they will be unable to advise their clients without that clarity. Family lawyers are highly alarmed about the implications of the sudden withdrawal of co-operation, recognition of judgments and lack of enforcement. We are talking about families—families who are divorcing, dividing assets or arguing over custody of their children.

Some Brexiteers may say that no deal is perfectly bearable, probably because they will not suffer the costs. It will be families that take the hit if the negotiators fail in their task, or give in to extreme Brexiteers who seem to think that no deal is acceptable to the UK. Will the Minister, therefore, take these concerns back to those of his friends who are in that group? Will he make sure that we do not face that outcome?

However, assuming for the moment that there is a deal—let us be positive—we, and indeed the businesses or individuals who may be affected by it, still need far more clarity on the issues raised today about disputes over either the interpretation or the implementation of the withdrawal deal. We look forward to the Minister’s response.