The government should not go along with the European Union’s preferred model for resolving post-Brexit disputes with the UK, even though such a stance risks leaving the EU in 2019 with no deal on exit terms or future relationship, the Institute for Government has said.
A paper from the independent Whitehall think-tank instead proposes two alternative routes for creating a forum in which future disagreements between the UK and the EU over elements of the UK's exit – such as over regulatory discrimination, the non-payment of debt, citizens’ rights or implementation of the withdrawal deal – can be resolved.
The IfG said ministers should back a model based on the European Free Trade Association Court or bring forward proposals for an “inventive and untested” new dispute resolution system for the withdrawal agreement.
Its report, Dispute Resolution After Brexit said accepting the EU’s proposals for the European Court of Justice to settle post-Brexit disputes would not be in the UK interests, as the body would “struggle to be neutral” and the move would represent an “extraordinary departure” from its current role.
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But the report also cautioned that it was “inevitable” that ECJ would continue to influence UK businesses and residents, and that any dispute resolution system that challenged the ECJ’s role as final arbiter of EU law would be difficult to negotiate and “would likely be struck down by the court”.
Report author Raphael Hogarth said the ECJ was a “jealous guardian” of its monopoly on the interpretation of EU law, but urged both the EU and UK sides to move the conversation on and think pragmatically about the options available – arguing that solutions existed within both sides’ “red lines”.
“Since citizens’ rights, the divorce bill and any transitional arrangements will all be rooted in EU law, UK and EU negotiators are constrained in terms of what dispute resolution mechanism they can dream up for the withdrawal agreement,” he said.
“The ECJ will throw out anything which, in its view, threatens the EU’s legal autonomy.”
Under the first of the IfG’s proposed routes the UK could sign up to the EFTA Court – which currently deals with issues between the EU and EFTA states Iceland, Lichtenstein, and Norway – which would see British judges added to its roster. It would, however, mean accepting some influence from the European Court.
An alternative would be the creation of a UK-only version of the EFTA Court, which the think tank said may be legally acceptable to the EU, but could be seen as the UK “marking its own homework” as the court would involve only UK judges.
Away from an EFTA court model, the IfG said Brexit secretary David Davis’ proposals for an “arbitration arrangement” were workable for a trade deal, but could prove to be a “legal and political minefield” for oversight of the details of the exit deal because of EU rules about who interprets EU law. The report said add-ons to such an arrangement could be agreed that would make the model acceptable.
It said that the idea of a joint EU-UK court was a “tempting starting point for a new system”, but was unlikely to be accepted by the EU as a joint EU-EFTA court had already been rejected. The IfG said a Swiss-style model of dispute resolution by committee would also likely be struck down – although Switzerland is a member of the EFTA, it is not subject to the jurisdiction of the EFTA Court; as would be utilisation of the World Trade Organisation dispute system for non-trade issues.
Jill Rutter, director of the IfG’s Brexit programme, said Davis’ team faced a stark choice between stepping as far away as possible from the oversight of the ECJ and limiting the scope of the withdrawal that could be agreed.
“The deeper the government wants the future partnership deal with the EU to be, the more it needs an effective dispute prevention and resolution mechanism,” she said.
“But this could be perceived as limiting the extent to which we have taken back control of laws.”