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

Lord Anderson of Swansea Excerpts

Wednesday 17th October 2018 Lords Chamber

[Lord Anderson of Swansea (Lab)]

My Lords, I am the first member of the sub-committee to speak—a sub-committee very ably chaired by the noble Baroness, Lady Kennedy, who opened this debate. It is an honour to be with such congenial colleagues and very professional staff.

We began our inquiry on 21 November with a high-powered seminar—or “scoping session”—with four eminent retired judges. I recommend that all noble Lords read the transcript of that session. One of those committee members has just spoken and given us of his wisdom. The other members were the noble and learned Lord, Lord Thomas of Cwmgiedd, the noble Lord, Lord Neuberger, and Sir Konrad Schiemann, all of whom are very senior legal figures and all of whom stressed that it was difficult to see how the courts would co-operate with EU judges and legal systems after Brexit. They were concerned about government plans to give judges a wide discretion in deciding what weight to attach to decisions of the Court of Justice of the European Union. They also feared that the implications of leaving the EU had not been thought through, could overwhelm the caseload of the Supreme Court and could even endanger the independence of the British judiciary. When we met the two Ministers more recently, it was clear that these basic concerns remained largely unanswered: there was much whistling in the dark and hoping that all would turn out all right in the end.

In this debate I will offer various random reflections on our work on dispute resolution. I note what the noble Baroness said about Monsieur Barnier’s comment during the EU Committee’s Brussels visit, when he described the issue of dispute resolution as “the second most difficult point after Ireland”. Yet all the attention in the current crisis—particularly of late—is on the Irish border question, an issue in respect of which many of us consider the DUP has vastly overplayed its hand and been a sort of perverse recruiting sergeant for a united Ireland.

Again, the legal implications for us and our citizens after Brexit played no—or virtually no—role in the referendum debate, save in the platform rhetoric of “taking back our laws”, in spite of being, in the words of Michel Barnier, the second most important question. However, these legal matters, which were covered by the sub-committee and were so neglected in the referendum, impact considerably on the generality of our citizens, particularly in the area of family law, as my noble friend has said. Hard questions arise as we move beyond the rhetoric. The evidence given to us by practitioners and academics revealed the complexities involved. These complexities may well deter other countries—I think of Hungary, which, however Eurosceptic it may be, is very much in favour of retaining its membership. There is, too, a list of countries queuing to join the EU, particularly in the western Balkans.

The Government therefore appear to have very limited views on the way forward and on the appropriate forum, or forums, to resolve disputes. They have ruled out certain options, such as docking with the EFTA Court, but have not indicated their favoured option. Paragraph 43 and the following paragraphs of the report provide a helpful summary of the alternatives, all of which have serious drawbacks.

The problem is, in part, that the Government appear to act on the basis that the EU is leaving the UK rather than the UK leaving the EU. They fail to appreciate that when we leave our own legal clout will be reduced because of our size, compared with the United States and the European Union—a fact that appeared to be clear from the evidence given to us. It has all the elements of a Greek tragedy. Perhaps the origin of many of the problems is the Government’s initial thick red line concerning the Court of Justice of the European Union which, as the noble Lord said, has been much demonised by Brexiteers and in our press—and even, alas, by the Prime Minister. Indeed, I think it was the noble and learned Lord, Lord Kerr, who pointed out in an earlier debate that in the debate in another place, there was much confusion between the Court of Justice of the European Union and the European Court of Human Rights at Strasbourg, which was in bad odour because of the then dispute over the Hirst case.

The White Paper of August 2017 states:

“In leaving the European Union we will bring about an end to the direct jurisdiction of the Court of Justice of the European Union”.


That begs the question: how direct is direct?

Did the majority in the referendum seriously want a total and clean break with the European Union and all its works? That thick line has become thinner as the Government make concessions in areas such as our relationship with the European Union agencies—aviation, medicines, and so on. There have been more concessions on the European arrest warrant, which is so much in our interests, as the noble and learned Lord, Lord Hope, has indicated, and on security policy—a debate that has yet to come.

There will, no doubt, be artificial devices proposed to circumvent the wrath of the Brexiteers, and there will be many semantic sleights of hand. For example, I note that the Government have said in the White Paper that,

“the UK would respect the remit of the CJEU such that if there was a challenge to a decision made by an agency that affected the UK, this could be resolved by the CJEU”—

I underline this—

“noting that this would not involve giving the CJEU jurisdiction over the UK”.

Now you see it, now you don’t.

On the European arrest warrant, which is so important to us, it is unlikely that the more pragmatic current move of the Government will satisfy the European Union. Donald Tusk, giving a degree of help to us, I think said, “If you think you can eat your cake and keep it, I suggest a simple experiment: buy a cake, eat it and then see what you have left”. Overall, the impression given by the Government is that of seeking damage limitation, having impaled themselves initially on the position of the CJEU. As we saw in our report on consumer protection, even if it is not perfect, it best serves our national interests, and our citizens have learned to rely so much on the work of the court.

I end with a few questions. Of course, our common-law system is deeply entrenched and well respected globally, but do the Government accept the validity of the concern expressed by the four senior judges and the General Council of the Bar about the likely reduction of our legal standing overseas, set out in paragraphs 186 and 188 of our report? The Government’s response thus far, of noting various missionary visits to Kazakhstan and to China, is hardly convincing. How concerned are the Government about the potential loss of law firms and the movement of practitioners to the continent and to Ireland? Is there any evidence that is of concern to the Government on this? Do they accept that arbitration would not be appropriate in respect of many areas of UK-EU co-operation, including judicial and security co-operation? If so, what is their alternative?

The real nub question is: can the Government tell us today—can they make it any clearer—what their preferred model or models are for future dispute resolution after Brexit? Perhaps more importantly, what are the prospects of our partners in the European Union accepting that model?

--- Later in debate ---

[Lord Anderson of Swansea]

That is the definitive response? Have the Government told Monsieur Barnier that there will be no extension at all of the withdrawal period?

[Lord Callanan]

Indeed, and it is the EU position as well that there will be no extension of the implementation period. The terms of it are agreed. That is the position of the Government, and as far as I am aware that is also the position of the EU.

The noble Lord, Lord Hannay, asked me about the forthcoming withdrawal Bill. It used to be called the withdrawal agreement and implementation Bill, but to confuse matters further it is now called the withdrawal Bill—to add on to the withdrawal Act that we already have. Yes, the noble Lord is correct in his interpretation that to legislate for the implementation period, depending on the final agreement, we will need to modify parts of the withdrawal Act.

Moving on to the longer term, our White Paper on the future partnership published a detailed vision for the future security and economic partnership—a framework which we believe will deliver the unprecedented partnership all our leaders are committed to. The proposal advanced in the White Paper builds on the vision set out by the Prime Minister at Lancaster House, in Florence, at Mansion House and in Munich. As we leave the EU, we want to build a new deep and special partnership based on mutual trust and reliability, with a transparent way of ensuring that each side is acting in accordance with the final agreement.

To ensure that that new relationship stands the test of time, we will need to have the right structures in place for co-operation, decision-making and the prevention and resolution of disputes. We are proposing a system that provides institutional governance over the future relationship, including the areas where the UK and the EU agree to apply the same rules, and over our participation in certain EU bodies. We hope to achieve an arrangement that recognises the unique starting point of having the same rules and regulations. We have set out a clear structure to underpin the deep and special relationship we are seeking. The future relationship should be based on an overarching institutional framework which will encompass most of the individual agreements that make up the partnership and set out any common governance arrangements. These should include political oversight and a joint committee.

This framework draws on precedents from other international agreements, including those that the EU has entered into, which all have some form of institutional architecture. In general, the broader and deeper the relationship, the more important it is that there is a strong institutional architecture in place to govern it. We are seeking an ambitious deal, one that recognises the deep and special partnership that we have with the EU and its member states. This institutional framework, carefully designed to respect the autonomous legal orders of the UK and the EU, has the strength and flexibility to support the depth of the relationship we wish to create. In line with that principle of respecting our autonomous legal order, we have been clear that in leaving the EU we will bring an end to the jurisdiction of the CJEU. The proposal delivers on that commitment. No longer will courts in the UK be able to refer cases to the CJEU, or the CJEU arbitrate disputes between the UK and the EU.

We are proposing that, in some areas, the UK will make a choice to retain a common rulebook with the same rules as the EU. Where we have a common rulebook, it is possible that a dispute could relate to whether these rules have been interpreted correctly. The UK recognises that only the CJEU can bind the EU on the interpretation of EU law and therefore, in these instances there should be an option for a referral to the CJEU for an interpretation, either by mutual consent from the joint committee or from an independent arbitration panel. The joint committee or arbitration panel would have to resolve the dispute in a way that is consistent with this interpretation. This would respect the principle that the court of one party cannot resolve disputes between the two. In those areas where we have a common rulebook, it will be important for businesses and citizens here and in the EU that these rules are interpreted and applied consistently.

The noble Lord, Lord Anderson of Ipswich, asked about individuals’ access to dispute resolution mechanisms such as arbitration. While they will not have access to these mechanisms as they are at present for state-to-state disputes, we are committed to ensuring the consistent interpretation and application of the rules that we agree with the EU. The UK would also, therefore, commit by treaty that its courts will pay due regard to the relevant CJEU case law, in so far as this is relevant to the matter before them. As the White Paper makes clear, UK courts will not, however, be able to make preliminary references to the CJEU. This will not affect consistent interpretation of a common rulebook, which will be delivered through the commitment to pay due regard to existing case law. In other areas there will be a recognition that rules are equivalent. We will need to agree governance arrangements that, first, oversee the application of regulatory commitments, secondly, ensure that the common rulebook is interpreted consistently and, thirdly, enable the UK to participate in EU bodies and agencies where needed for co-operation to take place.

We believe that it is in the national interest and in the interests of certain sectors of our economy to maintain a smooth trading relationship by having rules similar to the EU’s, and to continue UK involvement in certain EU bodies. This is all aimed at enhancing our wider economic and security partnership with the EU, providing effective structures to oversee the process and providing certainty to businesses and citizens, so that their rights and obligations will be applied consistently in both the UK and the EU. The noble Baroness, Lady Kennedy of The Shaws, asked whether this model, set out in the White Paper, would also serve for governing the withdrawal agreement, while the noble and learned Lord, Lord Hope of Craighead, asked for an update on progress in negotiations. I would like to acknowledge that a great deal of progress has been made over the past couple of weeks in negotiations concerning the withdrawal agreement; however, there are still a number of areas that are subject to ongoing negotiations, one of which is the governance of this agreement.

I think I answered the question of the noble Lord, Lord Anderson, about individuals. He also asked about the British judge on the Court of Justice. Of course, as he will be well aware, judges do not “represent” their member states. As Sir Konrad Schiemann said in his evidence to the committee, the UK will no longer be a member state from March 2019 and it is therefore right that we should withdraw from the institutions. While we will not have a UK judge, we will still have the right to intervene before the CJEU and our lawyers will maintain their rights of audience.

Moving on to the issue of civil judicial co-operation and the Lugano convention, mentioned by a number of noble Lords, we also recognise in the sphere of private law the important role of civil judicial co-operation for businesses, consumers, employees and families in providing clear rules to resolve disputes in sensitive matters quickly and efficiently. That is why the UK wants our future relationship with the EU to include a mutually beneficial agreement on civil judicial co-operation. This would include co-operation in civil, commercial, family and insolvency matters. The UK has presented its position to the Article 50 task force team in the Commission, and that presentation is available on the GOV.UK website. That is subject to ongoing negotiations that we are taking forward with our EU partners.

I also reassure noble Lords about our continued participation in the 2007 Lugano convention. The UK has been clear that we will seek to participate in the convention after our exit from the EU. At the March 2018 European Council, we agreed that the EU will notify other countries that the UK is to be treated as a member state—

[Lord Anderson of Swansea]

The Minister has on many occasions used the phrase, “negotiations are continuing” over a very wide field, but the clock is ticking. Is he confident that it will have stopped ticking in time for us to be ready by the end date in March?

[Lord Callanan]

The clock will not stop ticking. I hope that it will continue to tick and that negotiations will continue to advance, but of course, as he is well aware, we cannot wait until March to get agreements. Noble Lords are aware that we have to legislate for the withdrawal agreement through both Houses. We are very aware of the needs of parliamentarians; they will insist on proper parliamentary scrutiny of this important legislation, and therefore we will need to get an agreement swiftly, certainly in terms of the withdrawal agreement, in order to provide for the meaningful vote and then to provide for appropriate scrutiny of the legislation to implement it.

As I said, at the March 2018 European Council we agreed that the EU will notify other countries that the UK is to be treated as a member state for the purposes of international agreements for the duration of the implementation period. This includes the Lugano convention. We are seeking to put in place arrangements to continue our participation in that convention at the end of the implementation period. However, the exact arrangements for continuing our participation are a matter for future negotiations with our EU partners.

My time is up, but let me say a word about agency participation. We believe that it is in the mutual interests of the UK and the EU for us to continue to participate in various EU agencies and we have set those out. We are seeking to maintain co-operation on the EU’s law enforcement tools, including the European arrest warrant, although the legal form and governance of these arrangements are subject to negotiation. I say, for the benefit of the noble Baroness, Lady Ludford, that where we participate in an EU agency we will respect the remit of the CJEU, as set out in the White Paper.

I hope that I have, as far as possible, reassured the House that we are developing a robust framework that will ensure that, while we are leaving the EU, we will continue to build on our deep and special partnership for the long term. When we have finally, I hope, reached agreement, I look forward to coming back to the House and updating Members further.