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

Lord Callanan Excerpts

Wednesday 17th October 2018 Lords Chamber

[The Minister of State, Department for Exiting the European Union (Lord Callanan) (Con)]

My Lords, on behalf of the Government I very much welcome the EU Justice Sub-Committee’s report Dispute Resolution and Enforcement After Brexit. The detailed analysis and consideration of the areas covered by the report is a welcome contribution to the wider discussions on how disputes between the UK and the EU should be resolved after we leave in March 2019. The report was ably introduced by the noble Baroness, Lady Kennedy, and we are fortunate to have the benefit of her vast experience of these matters. I also thank noble Lords from all sides of the House for their constructive and insightful speeches during the debate.

I will say as much as I can on these matters and respond to as many questions as possible, but I ask noble Lords to accept that this is a live negotiation. Many of these matters are being discussed and negotiated on at the moment. Some parts are agreed; others are not. Some parts are agreed at the technical level; others are outstanding and waiting for related parts to be agreed. In some respects, therefore, it would not be helpful to go into too much detail on some aspects of the negotiations. Nevertheless, I will try to respond to as many of the points raised as possible.

Noble Lords have expressed concerns about how disputes will be resolved after the UK leaves the EU, in particular—this was referred to by many noble Lords—the proposal that the jurisdiction of the CJEU would be replaced by a judicial or quasi-judicial body to oversee disputes between the UK and EU. I assure noble Lords that, since the EU Justice Sub-Committee published its report in May, we have made significant progress in the negotiations on establishing appropriate and workable dispute resolution mechanisms. I would like to update noble Lords on these negotiations and note that the UK and the EU are close to concluding a withdrawal agreement that sets out the terms of the UK’s orderly exit from the European Union. The withdrawal agreement will provide important certainty to individuals and businesses, setting out the deal on citizens’ rights, on the financial settlement and on the implementation period. We are close to reaching agreement on a number of other separation issues, which will provide for winding-down provisions across a number of areas as we leave—for instance, cases pending at the CJEU and ongoing customs processes.

The noble Baroness, Lady Kennedy, asked specifically for an update on these ongoing judicial proceedings. I can assure her that the relevant provisions will set out the process winding down UK involvement in legal proceedings before the CJEU in an orderly manner. These will support the legitimate expectations of, and efficient access to justice for, those who have spent time and money progressing cases through the UK and the European court systems, allowing all cases in train at the end of the implementation period to continue to their natural conclusions. Once the final areas of the withdrawal agreement have been settled, we will consider the necessary legislative requirements for those areas. I realise that this will be a disappointment to the noble Lord, Lord Thomas, in particular, but it remains the Government’s position that, in leaving the European Union, we will bring about an end to the jurisdiction of the CJEU in the United Kingdom.

A number of noble Lords asked me about judicial co-operation and the European arrest warrant. We are pleased that we have reached agreement with the EU on the content of Part Three, Title V, of the withdrawal agreement on ongoing police and judicial co-operation in criminal matters. Title V provides clarity and legal certainty for individuals, for law enforcement stakeholders and the judiciary in the unlikely event that we do not reach agreement on future police and criminal justice co-operation as part of our future security partnership with the EU. We want to continue to play a leading role in Europol and Eurojust, and we will continue to do so during the implementation period.

[Baroness Ludford]

I am sorry to interrupt the Minister—he might be going on to answer this question—but he has just repeated the mantra about ending the jurisdiction of the court, and he has cited the fact that we want to stay part of agencies such as Europol and Eurojust. How is the remit of the court, in respect of enforcing the rules regarding the UK, going to work if we do not recognise the jurisdiction of the court?

[Lord Callanan]

If the noble Baroness will have a little patience, I will come on to talk about the agencies and the remit of the ECJ.

Withdrawal from the EU will mean a return to the situation where the UK and the EU have their own autonomous legal orders. The Government agree with the committee’s observation that the withdrawal agreement and the future partnership must respect the autonomy and integrity of both legal orders.

On the points made by the noble Lords, Lord Thomas and Lord Anderson, this is not about demonising the CJEU in any way. Our position has always been that we respect the role of the CJEU as the ultimate arbiter of the meaning of EU law, and we respect the autonomy of the EU legal order, as indeed we expect it to respect ours. However, it would be wholly unprecedented for a non-member state to be subject to the jurisdiction of the CJEU, and we do not believe that it would be appropriate for the court of one party to resolve disputes between the two.

There are, of course, limitations under EU law on the extent to which the EU can be bound by an international judicial body other than the CJEU. Therefore, we will also need to find a principled and pragmatic solution to respecting our unique status as a third country with our own sovereign legal order. For these reasons, the EU and the UK need to agree on how both the provisions of the withdrawal agreement and our new deep and special partnership can be monitored and implemented to the satisfaction of both sides, and how any disputes that arise can be resolved.

As the committee acknowledged in its report, there is not a one-size-fits-all solution for dispute resolution after our exit. Despite the fact that dispute resolution mechanisms are common within international agreements, the form these mechanisms take varies considerably across the spectrum of agreements, given the different areas of international co-operation, and consequently the varied nature of potential disputes that could arise. That is why we are negotiating bespoke mechanisms across the different areas where we need a dispute resolution mechanism.

The sub-committee and noble Lords have raised concerns on the rights of EU citizens. Let me assure the House that, in setting out governance principles, we will ensure that the rights of EU citizens living in the UK, and of course UK nationals living in the EU, are safeguarded. This reflects the fact that the Prime Minister made it clear that that was her first priority for negotiations. The agreement reached in December and set out in our joint report with the Commission, alongside Part Two of the withdrawal agreement, will provide these citizens with certainty about their rights going forward.

In the UK, EU citizens’ rights will be upheld by incorporating Part Two of the withdrawal agreement into our law. As the noble Lord, Lord Hannay of Chiswick, noted, there will be a time-limited period when our courts may choose to refer questions on specific points of law concerning citizens’ rights to the CJEU for a decision, having had regard to whether relevant case law exists, but it will be up to our courts to decide whether to do so. Let me reassure the noble Lord that it will be for our courts to make final judgments, not the CJEU. Any continuing CJEU role in our legal system will be temporary and narrowly defined. The ability of UK courts to make voluntary references to the CJEU will, as the noble Lord is aware, be time-limited to eight years. These short-term, limited arrangements have been agreed to help ensure consistency and certainty for citizens over these new rights as they are implemented.

For the implementation period to operate effectively, the UK will need to remain in step with the EU. The withdrawal agreement will be underpinned by a duty of good faith, with a joint committee in place enabling either side to raise issues or concerns. These arrangements will help ensure the implementation period works properly for both sides. We have agreed that, for the implementation period, the existing EU mechanisms for supervision and enforcement will apply, including continued CJEU jurisdiction. This is necessary so that there will be one set of changes for businesses and people. I hope that that reassures the noble and learned Lord, Lord Hope of Craighead, and the noble Lord, Lord Hannay of Chiswick, who raised their concerns about the need for certainty during the transition period. This does not change the fact that in the long term, after the end of the implementation period, the UK will no longer be under the jurisdiction of the CJEU.

Let me answer the point raised by the noble Lord, Lord Anderson of Swansea, by making it clear that the implementation period will not be extended. I thank him for the offer of co-operation from the Bar Council; we continue to have regular consultations with lawyers in practice, as well as the judiciary, on all aspects of the complicated legal mechanisms in both the withdrawal Act and the future partnership.

[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.