The post-Brexit legal landscape: dispute resolution and the role of the CJEU

The role of the CJEU after UK withdrawal

What EU law rights will still be available to individuals and businesses after UK withdrawal?

After UK withdrawal, it seems that individuals and businesses will have no EU law rights in the UK. That seems to be what the White Paper means in practice by bringing ‘an end to the jurisdiction of the CJEU in the UK’.  The underlying point is that, on the assumption that section 2 of the 1972 Act will be repealed or radically amended with effect from UK withdrawal, none of the rights currently conferred on individuals under EU law will be available to individuals or businesses in the UK.

As such, section 3 of the 1972 Act, which makes rulings of the CJEU binding on UK Courts, will have no binding impact on issues arising within the UK itself, as EU law itself will no longer have any such impact. The fact that the ‘Great Repeal Bill’ may replicate or re-enact equivalent rights into UK domestic law, including by reference to existing EU law, will not alter the fact that any such rights will be UK domestic law rights rather than rights that are conferred on individuals by the EU Treaties themselves.

the CJEU’s jurisdiction to give rulings on the validity and interpretation of EU law will similarly be reduced dramatically in scope

Likewise, UK nationals and businesses will in general have no EU law rights in the other 27 Member States, at least under the EU Treaties, even though EU law will still apply in those other Member States; and the CJEU will still be the ‘ultimate arbiter’ of its content throughout the EU. Again, the fact that other Member States may confer equivalent rights on individuals under their domestic law will not alter the fact that an entire category of substantive rights derived directly from EU law will cease to be available to UK nationals and businesses.

The necessary consequence of this radical diminution or extinction of EU law as a source of rights within the UK and, outside the UK, for UK nationals and businesses, is that the CJEU’s jurisdiction to give rulings on the validity and interpretation of EU law will similarly be reduced dramatically in scope.

To take two well known examples:[1]

1. Miss van Duyn, were she to be offered a post at the Church of Scientology in East Grinstead in 2020, would not be able to rely on her directly applicable EU law rights of free movement under the EU Treaties or the secondary legislation implementing such rights, but only on UK domestic law rights, if any, conferred on Dutch nationals after UK withdrawal.[2]
2. Mr Cowan, were he to be mugged on the Paris Metro after UK withdrawal, would have no directly enforceable EU law right to equal treatment as a national of an EU Member State in terms of compensation under French law. Again, any preferential rights conferred on UK nationals in France would be a matter of French domestic law.[3]

In each case, the CJEU’s jurisdiction over the issue would have been abrogated by UK withdrawal and the drastic reduction in the scope of rights formerly conferred by EU law in the UK and on UK nationals and businesses.

What status will rulings of the CJEU on EU law have after UK withdrawal?

In addition to this reduction in the scope of rights conferred by EU law within the UK and on UK nationals and businesses, it seems to be generally assumed that the status of the CJEU as the ‘ultimate arbiter’ of EU law will change in the UK after UK withdrawal.[4] Indeed, that seems to be a core objective of the UK Government in its negotiations

But it is not obvious why that should be the case:

1. as noted above, the UK will apparently still be committed to complying with ‘international law’;
2. rulings of the CJEU will no longer have any direct legal impact on rights or obligations conferred or imposed under UK law; and
3. the CJEU’s role under the EU Treaties will not change after UK withdrawal, any more than it did on the accession of the UK and other Member States.

In that sense, there is no legal reason for section 3 of the 1972 Act to be amended, other than to delete the reference to preliminary rulings from UK courts to the CJEU on difficult points of EU law, which will (presumably) no longer be available to litigants when the UK ceases to be a Member State of the EU.

However, the status of CJEU rulings, on and after UK withdrawal, may give rise to some very difficult and sensitive political issues in the context of UK withdrawal, particularly in relation to:

1. EU law rights of individuals and businesses in the UK that arose before the date of withdrawal – will the UK accept that the CJEU remains the arbiter of the nature and extent of such rights and, if not, how will such issues be adjudicated – will preliminary rulings that are pending on withdrawal be included or excluded from the scope of section 3 as it currently stands?
2. The extent of the UK’s final assets/liabilities under the EU Treaties on withdrawal – on the face of it, such issues will be matters of EU law over which the CJEU has exclusive jurisdiction under the EU Treaties up until the moment of UK departure – the extent of such assets/liabilities could be a crucial element in any negotiated agreement between the UK and the EU, so it will be equally crucial to understand how such an issue will be determined if agreement cannot be reached. Again, will the UK accept that the CJEU retains exclusive jurisdiction over such issues of EU law up until the date of actual withdrawal and, if not, how will such issues be adjudicated?  Will the UK respect this aspect of international law if the CJEU makes a ruling after the date of UK withdrawal, and how will that be reflected in UK domestic law?[5]
3. Any transitional arrangements agreed between the UK and the EU, under which the UK might agree to abide by some elements of EU law during the transitional period – the same questions arise: will the UK accept CJEU jurisdiction over any disputes that may arise during this transitional period and, if not, what alternative could be proposed or agreed?

So far as the EU is concerned, it is likely to take the view that:

1. the CJEU must continue to have exclusive jurisdiction over issues of EU law that arise up to and including the date of UK withdrawal; and
2. thereafter, just as the ECJ was the ‘ultimate arbiter’ of the European Communities Treaties before UK accession, the CJEU’s role under the EU Treaties will not change after UK withdrawal.

But that approach is likely to be very politically controversial in the UK, given the expectations that have been generated both by the Leave campaign and by the UK Government since the Referendum. In domestic law terms, the question will be how section 3 of the 1972 Act should be amended in relation to the transitional period of UK withdrawal – at what point will rulings of the CJEU cease to be accepted as binding on issues of EU law affecting the UK and UK nationals and businesses?

Expectations in the UK may be that at some point prior to UK withdrawal, Parliament will be asked to enact a legal if not economic ‘cliff edge’, after which the UK will no longer respect either EU law or the rulings of the CJEU as binding – but it is far from clear when that will be or how it could work consistently with the Government’s firmly stated commitment to full compliance with international law.

transitional arrangements will need to be addressed for these important changes

From the EU perspective, neither the EU institutions nor the other Member States will accept the UK Courts as the appropriate forum to decide issues of EU law after UK withdrawal; while adherents of the ‘control’ agenda that underlay the Leave campaign would be unlikely to be satisfied either by the CJEU retaining its traditional jurisdiction after UK withdrawal, or by some ad hoc arrangement being adopted for resolving issues between the UK and the EU at the international level over which the UK had no greater, and possibly less influence or control, than over the CJEU itself.

That leads on to the other inevitable change in the status of CJEU rulings from the UK point of view – a serious and permanent loss of UK influence over the future development of EU law:

1. The UK will presumably no longer have any right to propose UK judges or an advocate general at the CJEU or General Court, nor any input into the procedures of the CJEU.
2. The UK will lose its right as a Member State to take part in all cases before the CJEU.
3. UK courts faced with difficult issues of EU law will need to decide those questions for themselves as matters of international law, without the possibility of making references for preliminary rulings to the CJEU. I
4. Finally, it seems doubtful that UK rulings on points of EU law will be regarded as having any significant persuasive authority after UK withdrawal – this will be a particular problem where UK law is to a large degree modelled on EU law.

the UK and its judges and lawyers will no longer have any role in the future development of that major source of international law

Again, transitional arrangements will need to be addressed for these important changes. In addition, these changes may make it politically more difficult for the UK and its Courts to accept the continuing role of the CJEU as the ‘ultimate arbiter’ of issues of EU law arising in UK litigation. Although the impact on UK law of changes to EU law will be less immediate and direct than before withdrawal, there is still likely to be a significant indirect impact, but the UK and its judges and lawyers will no longer have any role in the future development of that major source of international law.

What rights will be available to individuals and businesses under any new agreement between the UK and the EU?

These rights will of course be the subject matter of the negotiations – but it seems inevitable that there will be a loss of many if not all EU law rights for:

1. all current EU citizens and businesses (including UK nationals and business) in the UK; and
2. UK citizens and businesses in all other 27 Member States.

Parliament may of course enact at least some equivalent rights but:

1. they will no longer be underpinned by EU law or the interpretation of the CJEU, so there will be a further loss of procedural rights; and
2. it is likely that most if not all Treaty rights and fundamental principles of EU law, in particular non-discrimination on grounds of nationality, will be lost altogether.

it seems inevitable that there will be a very significant loss of procedural as well as substantive rights

The EU might also agree to give UK nationals and businesses some equivalent rights as part of the negotiations and, in return, such equivalent rights may also be protected under national law in the national legal systems of other Member States. However, those reciprocal rights may have little or no protection under EU law itself, so that UK nationals and businesses will have to rely on the procedures of the other Member States to enforce those rights without any of the guarantees of non-discrimination or effectiveness applicable to rights based on EU law.

How will any issues about the interpretation and enforcement of those rights be decided?

The outcome of the negotiations between the UK and the EU will presumably require implementation both in the UK and in the other Member States. So far as the UK is concerned, difficult issues will undoubtedly arise in the UK as to the interpretation of:

1. domestic UK legislation that was originally adopted to reflect EU law – although that law may in principle be left unaltered, its underlying legal basis may have to be changed or reconsidered; and
2. new provisions of UK law incorporating EU law to avoid a legal gap on withdrawal, under the so-called ‘Great Repeal Bill’ – although this may replicate or imitate existing EU law, it will be a matter for Parliament to specify the legal basis for such measures and for the UK Courts to interpret and enforce them without guidance from the CJEU.

Within the UK, the question will be what will be the status of past and future CJEU case law for the interpretation of UK legislation derived from or modelled on EU law:

1. On this question, even if section 3 of the 1972 Act were left unamended, so that the CJEU was accepted by Parliament as retaining its traditional role in respect of EU law, as laid down by the EU Treaties and loyally accepted by the UK during its membership of the EU, there would be no necessary read across to UK national measures that reflected EU legislation. And Parliament would of course be free to amend the UK measures so that they diverged from the EU original or to override an interpretation by the CJEU to which it took exception.  It seems clear that this will be fertile ground for imaginative legal arguments and the drawing of fine distinctions.
2. But equally, were section 3 repealed or radically amended, so that the CJEU was no longer accepted as the ‘ultimate arbiter’ of the validity and interpretation of EU law so far as the UK Courts are concerned, it would seem futile for the UK Courts to embark on a process of reinterpreting EU law themselves, given that the EU Treaties will continue in existence and the role of the CJEU under those Treaties will not in itself be changed by UK withdrawal. There seems to be little point in the UK Courts seeking to develop a parallel interpretation of EU law to that authoritatively expounded by the CJEU; and it would not obviously be consistent with the UK’s commitment to performing its international obligations for the UK or its judges to stand against a ruling of the CJEU on an issue of EU law.

In other Member States of course, in so far as some limited category of EU law rights might still be available to UK nationals and businesses (for example, if they are subject to investigation for suspected anti-competitive conduct within a Member State of the EU), the CJEU will still be the ‘ultimate arbiter’ of EU law. However, the question of how any new agreement between the UK and the EU is to be interpreted and enforced may be an open question in other Member States as it will be in the UK.

Could the CJEU have a role in dispute resolution after withdrawal?

Finally, and perhaps most importantly, there is the question of how to resolve any disputes arising after UK withdrawal. Such disputes could of course cover a wide range of issues, either (i) between the UK and the EU themselves at the international plane; or (ii) between UK and EU individuals or businesses in civil litigation; or (iii) between private parties and public authorities in criminal or administrative proceedings. The issues that might arise could include at least the following:

1. points that were left open or unresolved during the negotiations themselves;
2. the interpretation of any new arrangements that may be put in place in due course between the UK and the EU;
3. claims by the UK or the EU that the other is not abiding by the terms of those arrangements or of the exit or transitional arrangements agreed on withdrawal;
4. issues arising in relation to EU schemes in which the UK continues to participate after withdrawal; and
5. civil or public law claims raised by or against UK or EU nationals or businesses in reliance on any of the above arrangements.

Although the Annex to the White Paper sets out a range of possible dispute resolution models for any future relationship between the UK and the EU, it pointedly does not mention the existing role of the CJEU in relation to external agreements concluded by the EU.

One can anticipate the following general problems for any negotiations to include:

1. What role will the EU expect the CJEU to play in resolving disputes concerning:
   • future UK-EU arrangements; and
   • EU projects in which UK wishes to participate, e.g. European Investment Bank, medicines regime?
2. If the EU starts from the position that the CJEU will continue to have a central role in relation to at least some of these issues, then:
   • Could the UK credibly maintain that the CJEU had no role in the interpretation of EU law as it applied in relations between the UK and the EU?
   • If the UK did take that negotiating position, what other judicial or arbitral body could the UK credibly suggest to interpret EU law in so far as it bears on obligations entered into between the UK and the EU?
   • What control would the UK exercise over any such new body as might be proposed, as against the role the UK currently plays in the CJEU as an EU Member State?
3. Last but not least, from the perspective of individuals and businesses, a crucial question is what procedural rights, if any, will individuals and businesses have to use whatever dispute resolution arrangements are eventually agreed to enforce their rights:
   • At the moment, EU law rights can be asserted by individuals in all EU national courts in accordance with national procedures and subject to extensive guarantees of non-discrimination and effectiveness. There have been numerous cases where the CJEU has been called on to determine the scope of such guarantees.
   • The cases of Miss van Duyn and Mr Cowan are good examples of individuals who would be unlikely to enjoy such procedural protections under any future UK-EU agreement, however generous its substantive terms. Miss van Duyn would be unlikely to retain an enforceable right to challenge UK immigration rules directly in the UK domestic courts even if some form of substantive protection for the rights of EU nationals were to be agreed between the UK and the EU; and Mr Cowan would no longer be able to argue before the French authorities that he, as a UK national, had a directly enforceable right to equal treatment in the French courts and tribunals.

the position seems likely to be very different from the perspective of the rights of individuals and businesses

In general, under any future arrangements, it seems inevitable that there will be a very significant loss of procedural as well as substantive rights currently enjoyed by individuals nationals and businesses throughout the EU, if future disputes, whether under the WTO or some form of special procedure, are operated only at the international level between the UK and the EU. And of course the same will be true for all EU nationals and businesses, including UK nationals and businesses, in respect of their substantive and procedural rights within the UK legal system.

In conclusion, whatever the benefits that may be claimed for the autonomy of the UK in determining its own laws and trading policies after withdrawal from the EU, the position seems likely to be very different from the perspective of the rights of individuals and businesses:

1. So far as substantive rights go, the entire class of rights derived from EU law for current EU nationals and businesses will be lost within the UK; and many though not all such rights for UK nationals and businesses will be lost throughout the other 27 Member States as well.
2. This will of course be matched by an equal and opposite reduction in the obligations of the UK State towards those persons and businesses, and of the other 27 Member States towards UK nationals and businesses.
3. Some of those substantive rights and obligations may of course be replicated within the UK or the other Member States either as a matter of the domestic law of the individual Member States or as part of the new arrangements between the UK and the EU. However, even if that is the case, so that the UK or other national legislators create new rights reflecting rights more or less equivalent to those formerly protected by EU law, it seems inevitable that there will be a major loss of procedural protections:
   • If these rights are not derived from EU law, then the CJEU will have no jurisdiction to guarantee that individuals or businesses are treated equally or that they have effective access to judicial remedies.
   • In addition, international trading agreements generally operate only at the international level, so that there is a realistic possibility that individuals and businesses facing breaches of rules or principles agreed between the UK and the EU may have no effective redress, merely a right to approach their national competent authorities in a hope that they may be prepared to take up their complaints.

Notes:

[1] These examples are deliberately taken from a period prior to the creation of the Euro and the Schengen area, to take account of the fact that some enthusiasts for UK withdrawal justify their position on the basis that the EU is no longer focused on free trade but has assumed a different, and political, aspect – if that were indeed all that the UK objected to then the logical negotiating position would be to revert to a –pre-Maastricht trading relationship within the single market, but that compromise position has been abandoned by the UK Government before negotiations have even begun.

[2] Case 41/74 van Duyn v. Home Office [1974] ECR 1337.

[3] Case 186/87 Cowan v. Tresor Public [1989] ECR 195.

[4] See the citation from § 80 of Miller at fn. 1 of the previous post.

[5] A recent report of the House of Lords European Committee, Brexit and the EU Budget, 15^th Report of Session 2016-17, HL Paper 125, appeared to conclude that any such obligations would end on the date of UK withdrawal, but it is hard to see why that should be either as a matter of principle or as a matter of international law.  Certainly, it seems unlikely that the EU will accept this to be the case, notwithstanding the practical difficulties of enforcement that may arise after UK withdrawal, subject to the transitional provisions of the Great Repeal Bill.

A version of this paper was given in Stockholm on 22 March 2017 at a seminar organised by the Stockholm, Vinge and the Stockholm School of Economics. A previous version also appeared on the Matrix Brexit Hub. Part 1 of the post appears here.