Davor Jancic
Brexit and Rights Engagement Network
As the Brexit negotiations progress, the question of judicial authority in enforcing the withdrawal agreement remains moot and raises a number of issues concerning the level of influence of the European Court of Justice (ECJ) in post-Brexit UK. This commentary, which complements my earlier article explaining why the ECJ is not going away, discusses the implications of the legal solutions proposed in the Draft Withdrawal Agreement published in March 2018, and argues that the impact of the ECJ will remain significant even after Brexit Day – a matter that has already caused headaches in the UK Supreme Court.
The EU’s Insistence on ECJ Jurisdiction
On 26 May 2018, at the FIDE Congress held in Lisbon – Michel Barnier, the EU’s Brexit chief, clarified why ECJ jurisdiction over the withdrawal agreement is so essential. His restatement of what this Court has consistently held in its case law is punchy: the withdrawal agreement is not a usual treaty, and the ECJ is not a usual international court. The Court needs to have the upper hand in order to preserve the fundamental principles which the Union has established throughout the process of European integration.
The withdrawal agreement itself is directly effective, and private parties can rely on its provisions in courts to protect their rights without any state’s intervention. It is also an agreement whose provisions are organically linked to EU law because it is about the extraction of one of its Member States from the body of that law. ‘This is simply about the orderly withdrawal’, Barnier explains, using the British Prime Minister’s favourite phrase. Orderly, yes, but on whose terms?
The motive behind the push to entrench ECJ jurisdiction in the withdrawal agreement lies in the Union’s strive to preserve the autonomy of EU law. This is requisite for two reasons. First, and more generally, this is necessary in order to avoid the risk of competing interpretations that could challenge the Court’s authority and jeopardize coherence and legal certainty in the EU. Second, and consequently, no foreign authority should be able to rule on what EU law means and impose interpretations of that law that would be legally binding on the EU and its institutions. That is why as soon as an international agreement takes over the substance of EU law provisions or mandates their application, the ECJ must become their sole interpreter. This is also why Barnier warns that ‘without an agreement on governance…there will be no Withdrawal Agreement, and therefore no transition period’. So, let us explore how the EU envisages the governance of this agreement.
First, the body of EU law covered by the Agreement would produce the ‘same legal effects’ in the UK as within the EU and its member states – thereby making it directly effective and supreme over British law. The UK would also be obliged to pass legislation to confirm this (Article 4). This in turn could constrain the ‘sovereignty’ of the Westminster Parliament in case it wished to derogate from that body of law. Similarly, during the transition period, British judicial and administrative institutions would be obliged to interpret EU law covered by the withdrawal agreement in accordance with ECJ case law, while after the transition period, they would have to have ‘due regard’ to post-Brexit ECJ case law. There is no certainty as to how such ‘due regard’ will be had, but one would expect judges to carry on applying the usual interpretative methods unless otherwise instructed by Parliament. The President of the UK Supreme Court, Lady Hale, has indeed expressed concern about the lack of detail as to how future ECJ case law is to be taken into account. At the same time, the said provisions on the effects and interpretation of EU law are imperatively worded, so non-observance may cause frictions in UK-EU relations.
Second, there is considerable potential for EU law to creep into UK law. One clear example relates to two EU Regulations concerning the coordination of social security systems (883/2004 and 987/2009). If the EU amends or replaces them after the expiry of the transition period, their amended versions or replacement EU legislation would apply in the UK without the UK having been involved in their adoption (Article 31). Also, EU legislation made applicable to the UK through the withdrawal agreement would include the application of all EU acts supplementing and implementing such legislation (Article 5(3)). There is hence a degree of porousness when it comes to changes in EU legislation after Brexit.
Third, the ECJ retains full jurisdiction over the UK during the transition period (Article 126). In particular, this Court would rule on infringement actions which the European Commission or a member state would bring against the UK during the transition period, giving rise to proceedings that could extend beyond the expiry of that period. This may end up in financial sanctions being imposed on the UK after transition has ended, and can involve the payment of millions of euros from Britain’s public purse. The ECJ would also issue a preliminary ruling if asked for one by a British court, where the latter considers this to be necessary to enable it to decide a case concerning facts that occurred before the end of the transition period. In both situations (Articles 83 in conjunction with 85(1)), ECJ would be competent to pronounce beyond the end of the UK’s EU membership. This overrun of ECJ jurisdiction beyond Brexit Day creates uncertainties for the work of the UK Supreme Court, urges its former President, Lord Neuberger.
Fourth, during the period of 8 years after the expiry of the transition period, British courts may ask the ECJ for a preliminary ruling concerning the interpretation of EU citizens’ rights of residence in the UK (Article 151). As a related but separate issue, the monitoring over the enforcement of these rights by the British administration is entrusted to an independent authority, which the UK ought to establish (Article 152). One wonders, however, how independent this body would be able to be in a general climate of mistrust against EU citizens and amid deportation letters erroneously ordering them to leave the country. However, the existence of such an authority would not in itself prevent the aggrieved EU citizens from referring their problem also to the European Commission, which could then initiate a discussion within the Joint Committee. Although this Committee is not meant to provide relief in individual cases, if the same issue occurred systematically, the matter could eventually end up before the ECJ.
Fifth, the ECJ would play a pivotal role in the settlement of disputes between the EU and the UK that may arise under the withdrawal agreement (Article 162). While the Joint Committee, which would gather EU and UK officials, is the primary dispute-resolution body, it would be able to submit any dispute to the ECJ at any time. If the Committee neither decided the matter within 3 months nor submitted it to the ECJ, then either the EU or the UK may do the latter. Once the ECJ handed down its ruling and the offending party did not comply with it, the aggrieved party would have two options: either to start a fresh procedure before the ECJ to seek the imposition of the aforesaid financial sanctions; or suspend a part of the withdrawal agreement with the exception of provisions on citizens’ rights. The suspension itself would be reviewable by the ECJ. In addition, during the transition period, the EU would be entitled to suspend the UK’s access to the single market if the latter ignores the ECJ’s orders and judgments (Article 165).
The enforcement regime of the Draft Withdrawal Agreement is still subject to negotiations with changes remaining possible to any of the arrangements mentioned above. Yet what this overview shows is the EU’s determination to ensure, whether through facultative or mandatory procedures, the presence of its Court in overseeing the enforcement of this Agreement.
The UK’s Response
Although the UK has not drawn up an alternative text of the withdrawal agreement, Prime Minister Theresa May has underlined in her Mansion House speech that ECJ jurisdiction ‘must end’, arguing that ‘the ultimate arbiter of disputes about our future partnership cannot be the court of either party’. Foreign Minister Boris Johnson instead hopes for an independent arbitration panel. However, neither of the two options are acceptable to the EU and the ECJ.
The European Union (Withdrawal) Act, enacted on 26 June 2018, also tries to limit the ECJ’s influence on post-Brexit Britain. The Act stipulates that British courts and tribunals ‘cannot refer any matter to the European Court on or after exit day’ (Section 6(1)(b)). This brings it into conflict with the EU’s Draft Withdrawal Agreement, which enables this for 8 years after exit. Another objective of this Act is to incorporate all directly applicable EU law into UK law, so as to provide legal continuity and certainty for businesses. But the Act does not retain EU directives, supposedly because they will have been implemented into UK law and thus become part of the domestic legal system. However, this assumes that directives have been implemented fully and correctly. This is not always certain, although admittedly the UK is not the worst performer at this. According to the latest annual report of the ECJ, the UK has failed to fulfil its EU law obligations eight times in the period 2012-2016. In this, the UK shared the 8th place with Germany as the member state with the highest rate of infringements. At the same time, the UK is the 6th most frequent submitter of references for a preliminary ruling, which suggests that British courts are enthusiastic interlocutors of the ECJ. However, given that the Act explicitly outlaws Francovich-style damages (Section 4 of Schedule 1), this leaves those affected without an important tool of redress against potential failures in the transposition of directives.
As regards the options available for institutional design of post-Brexit dispute resolution, the House of Lords concedes, in its May 2018 report, that there is no easy solution and following the EFTA Court model is not likely. Indeed, no degree of ingenuity will change the fact that the ECJ simply does not accept the interpretative authority over EU law of any external body.
What Next for the Role of the ECJ in Brexit?
Having in mind the EU’s and the UK’s differences in envisioning life after Brexit, any final agreement will be shaped by the following observations on the ECJ’s authority.
Most importantly, there is no clear blueprint, a model that could easily be reshuffled and applied. Since no member state has ever withdrawn, there is no precedent. That said, the ECJ has an incentive to assert its authority in order to set such a precedent in its favour should any other member state decide to withdraw in the future.
Furthermore, dispute-resolution mechanisms foreseen in free trade agreements are not particularly suitable in the context of withdrawal from the EU, because the two have different goals and the nature of the tensions that may arise differ. This is why it is necessary to differentiate the regime of governance under the withdrawal agreement from the that under an agreement on future UK-EU trade relations. The key difference here is that the withdrawal agreement is much more tightly linked to EU law, it concerns the life and livelihoods of millions of British and EU citizens in a much more direct way than any free trade agreement does. This is reinforced by the fact that the UK is negotiating exit as a Member State. This means that, unlike any other potential trade partner of the EU, if the UK were to change its mind, it would remain in the EU, not out of it, so how exit happens is of crucial importance to the Union. There is also asymmetry concerning citizens’ rights to remedies. This is because British citizens living in another EU member state will enjoy an additional layer of protection through mechanisms of enforcement at the EU level, which EU citizens in the UK will not have after the withdrawal. All of this strengthens the case for ECJ influence in the withdrawal process.
Conversely, there is marginal scope for the argument that the reasoning informing the ECJ’s Opinion 1/91, which forbade the establishment of an EEA Court, would not apply in the case of withdrawal. On the one hand, the EEA Agreement is far more wide-ranging and concerns trade and economic relations: free movement of goods, services, persons, capital and competition law. It aims at integration. The withdrawal agreement, conversely, does not focus on trade and integration but merely on one-off separation. On the other hand, one could imagine an argument that the autonomy of EU law would not be affected because any interpretation of EU law by a judicial body other than the ECJ would only create effects for EU citizens living in the UK (thus, outside the EU) and for British citizens living in the EU (non-EU nationals), but not for all the other citizens. However, the ECJ would certainly discard both arguments. Its central preoccupation is this: as long as an international agreement takes over ‘fundamental provisions of the Community legal order’ (para 41 of the said Opinion), the ECJ must have the last word. The Draft Withdrawal Agreement does precisely this by enabling the application of the Citizenship Directive (2004/38/EC), citizenship being the fundamental status of EU citizens according to the ECJ’s case law.
So, how is one to resolve the clash? The EU is highly unlikely to compromise on the autonomy of its legal order, which it has defended for decades as part of its legal heritage. Any hybrid UK-EU body overseeing withdrawal that would rival the ECJ would have to be a part of a carefully crafted compromise but is unlikely. A limitation to ECJ authority is more likely in an agreement on future relations: the farther the UK moves away from the EU, the less power the ECJ will be able to retain.
Finally, if the UK definitively rejects ECJ jurisdiction in the withdrawal agreement, the latter would not be adopted, and the ‘divorce’ would revert to diplomacy. Even then, the ECJ’s rulings would continue to have an effect on the UK as a third country by adjudicating on standards that the latter’s exporters ought to abide by in order to engage in business in the EU. In sum, while a definitive solution is still unknown, the Brexit process continues to be an intriguing governance lab that, for better or worse, provides us with much food for thought.
Davor Jancic
Queen Mary, University of London
Dr Davor Jancic is Lecturer in Law and Director of the European Law LLM & English and European Law LLB programmes at Queen Mary, University of London. His research interests include national parliaments in the EU, parliamentary diplomacy and transatlantic relations.
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