Brexit Agreement. The Legal Advice

EU Legislation Team
26 November 2018
—Legal note–not for general distribution—

The Withdrawal Agreement: Legal and Governance Aspects
Part One: Overview
The Withdrawal Agreement (WA) can only come into force if it is concluded
(ratified) by the EU and ratified by the UK before 29 March 2019. EU ratification
requires the agreement of a super qualified majority in the Council and the
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consent of the European Parliament. No individual Member State has a veto.
However, Member States are very likely to have a veto over any Future
Arrangements Agreement (FAA), creating the possibility that a Member State
disgruntled at the WA could decide, in the future, to veto the FAA.
Agreement of the WA on the EU side can be challenged by a Member State or
an EU institution that considers that its terms are incompatible with the EU
Treaties.
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The WA comprises six Parts and three Protocols.
● Part One: Common Provisions including the territorial scope, a
requirement that the WA be given the same “direct effect” and
“supremacy” in the UK as applicable to EU law in Member States,
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and provides some definitions used throughout;
● Part Two: Citizens’ Rights. This essentially enables EU citizens
resident in the UK and UK citizens resident in a Member State at the
end to the transitional or implementing period (TIP) to continue to
enjoy the bulk of the rights they presently enjoy. There are some
exceptions. A notable omission is that UK citizens to whom these
rights apply will not enjoy free movement rights to other Member
States;
● Part Three: Separation Issues, disentangling situations straddling
Brexit;
● Part Four: Creating a transitional or implementing period (TIP) up to
31 December 2020 during which EU law essentially applies to the UK
(to the extent it did) but the UK does not participate in the making of
that law, nor in the agencies and bodies of the EU, and cannot
participate in any new JHA/Schengen regime. The TIP is extendable
by a mutually agreed decision of the Joint Committee, which must be
made by 1 July 2020, for one further fixed period of either one year or
two years. Such extension will entail a further decision of the Joint
Committee on the financial arrangements applicable, and also entail
(a) treating the UK as an ordinary third country in respect of EU
programmes during any extension, and (b) capping UK agricultural
support;
● Part Five: The Financial Settlement;
● Part Six: Institutional and Final Provisions, including requirements for
interpretation of the agreement, the institutional structure of a Joint
Committee and dispute resolution by arbitration. The governance
provisions envisaged in the Political Declaration setting out the
Framework for the Future Relationship between the EU and the UK
are based on those found in this Part (the Political Declaration).
● The Protocol on Ireland/Northern Ireland which includes the
“backstop” provisions intended to prevent a hard border. Again the
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Political Declaration cites these provisions as inspiration for a
long-term tariff free area underpinned by “ambitious customs
arrangements”;
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● The Protocol Relating to the Sovereign Base Areas of the UK in
Cyprus, making these parts of the customs territory of the Union,
applying certain EU law (and CJEU jurisdiction) to them and
specifying the checks to be made on persons crossing their external
borders (other than with Cyprus);
● The Protocol on Gibraltar covering preparation for the application of
the Citizens’ Rights part of the WA, permitting EU law to be applied to
Gibraltar Airport if the UK and Spain reach agreement, establishing
cooperation between Spain and the UK on fiscal matters,
environmental protection and fishing, and police and customs matters.
This note now focusses on the provisions of the WA which raise points of legal
significance and the provisions which concern its governance (including dispute
resolution). This note does not focus in detail on the Political Declaration.
Part Two: Summary of Key Legal and Governance Issues
A Relationship between the WA and the Future Arrangements Agreement (FAA)
The performance of obligations under the WA is not conditional upon the
agreement of an FAA. Parties must use their “best endeavours” to reach and
ratify in good time such Agreement – on the basis of the Political Declaration
which sets out a programme to facilitate reaching agreement by the end of
2020.
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B Continued application of EU law
● EU law will apply during the TIP, but essentially without formal UK
participation in its making;
● EU law will apply after the TIP to protect the rights of EU citizens in
the UK. This could extend for some considerable period.
● EU law also will apply after the TIP in relation to the Separation Issues
and the Financial Settlement. Again, this could extend for a
considerable period.
● EU law will apply extensively, particularly in Northern Ireland, under
the “Backstop” found in the Ireland/Northern Ireland Protocol.
● EU law in relation to goods, turnover taxes, agriculture and fisheries
as well as veterinary and phytosanitary rules will apply in the
Sovereign Base Areas of Cyprus.
● After the end of the TIP the CJEU will continue to determine the
interpretation of EU law applicable under the WA by the mandatory
reference procedure from the arbitration panel.
C The “Backstop” arrangement to prevent border controls on the Irish border
The Backstop is the core of the Protocol on Northern Ireland (NI). The Protocol,
including the backstop, is intended to be temporary and applies unless and until
it is superseded in whole or in part by an FAA, which the parties will use their
best endeavours to achieve by 31 December 2020.
Under the Backstop the UK will form a customs union with the EU (except for
trade in fisheries and aquaculture products which await further agreement on
fishing opportunities – which the parties shall use their “best endeavours to
achieve by 1 July 2020).
The UK will conform to specific EU legislation on customs, including with respect
to third countries. To provide a ‘level playing-field’ the UK commits to
non-regression (from the law as it stands at the end of the TIP) on EU
environmental protection, labour and social standards, state aid and competition
and state-owned undertakings in respect of administration of tax.
This customs union would be a practical barrier to the UK entering separate
trade agreements on goods with third countries.
On the UK side of the customs union, in the “United Kingdom in respect of
Northern Ireland”, specific additional EU legislation applies on customs, certain
VAT and excise, and certain technical standards relating to goods.
There will be unfettered movement for goods moving from NI to the rest of the
UK and Union. The EU and the UK will use best endeavours to facilitate trade
between Great Britain and NI with a view to avoiding controls at the ports and
airports of NI.
UK authorities are responsible for implementing and applying EU law applicable
under the Protocol but, additionally, where EU law continues to apply to the UK
in respect of Northern Ireland the EU institutions and bodies shall have the same
powers as they have under the Treaties, CJEU jurisprudence will apply, and the
CJEU shall have preliminary reference jurisdiction.
Union law applicable to the United Kingdom in respect of Northern Ireland can
be amended or replaced. However, new EU legislation that is not listed in the
Protocol but is in its scope would need to be adopted by the Joint Committee (or
JC) – failing which the EU can take appropriate remedial measures.
The Protocol is subject to review and may be ended in whole or part by decision
of the Joint Committee.
D The Institutional Structure
This is based on a Joint Committee of representatives of the two parties, jointly
chaired, which acts by consensus. It is the forum for supervision of the WA, and
the Backstop. It has important powers including: amending within defined
parameters the substantive provisions of the WA and bringing the Backstop to
an end. It provides a forum to discuss and resolve disputes prior to invocation of
any formal dispute resolution.
E Dispute Resolution
Where invoked, this is undertaken by an arbitration panel of 5, two nominated
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by each party and a chairperson from a list agreed by both. It is encouraged to
act by consensus but can act by majority. Questions of interpretation of EU law
must be referred to the CJEU for a binding ruling.
F Supervision and Enforcement of the WA
Full EU supervision applies during the TIP. Thereafter there are areas where
the EU institutions, particularly the Commission retain supervision powers.
Failure of a party to comply with the WA can lead ultimately to a fine and/or to
the injured party suspending either parts of the WA or parts of any other
Agreement between them – most likely any FAA.
G Court of Justice Jurisdiction
● The CJEU retains its full jurisdiction during the TIP, including on the
interpretation and application of the WA. This bites notably on the
Financial Settlement which is in force during that period. In this
respect it is significant that the CJEU also retains jurisdiction after the
TIP in respect of cases brought before then, so that a case brought
before the end of the TIP continues afterwards (Article 86).
● The CJEU retains jurisdiction a binding jurisdiction to rule on the
Citizens’ Rights provisions for a period of 8 years from the end of the
TIP.
● The CJEU retains jurisdiction to rule on those EU financial provisions
which continue to apply after the TIP, in relation to the Financial
Settlement.
● The arbitration panel must refer questions of the interpretation of EU
law applicable under the WA to the CJEU and is bound by the CJEU
ruling.
● The CJEU has jurisdiction in respect of EU legislation applicable to
Northern Ireland during the backstop (see section C) and to Cyprus.
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H Roll over of EU External Agreements.
During the TIP the UK is bound by the obligations to third countries in any
external agreement which the EU has entered into (with or without Member
States also having entered into them – although the precise extent is unclear in
the WA) and any agreements entered into by Member States on behalf of the
EU. The UK does not automatically gain the benefit of such agreements.
During this period the UK may negotiate and enter into international agreements
in the area of EU exclusive competence provided that they do not come into
force. There is no mention of agreements covering areas of shared competence.
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Part Three: Key Legal and Governance Issues (Detail)
A Relationship between the WA and the Future Arrangements Agreement
The fulfilment by the UK of its obligations under the WA (for example making
payments under the Financial Settlement) are not conditional on reaching a
satisfactory FAA.
Article 184 provides for the Parties to
“use their best endeavours, in good faith and in full respect of their
respective legal orders, to take the necessary steps to
negotiate expeditiously the agreements governing their future
relationship referred to in the political declaration [to be
specified] and to conduct the relevant procedures for the
ratification or conclusion of those agreements, with a view to
ensuring that those agreements apply, to the extent possible,
as from the end of the transition period”
This provision is reinforced by a duty, imposed by Article 5, of sincere
cooperation requiring each party to the WA to assist each other in carrying out
the tasks which flow from the WA, in full mutual respect and good faith.
Whilst these are legal obligations (at the international law level) they do not
stretch as far as obliging the EU to enter into an FAA which it does not consider
to be in its interest. If the UK wanted to try to enforce this obligation the legal
route of recourse would be by complaint to the Joint Committee and ultimately
dispute resolution – before the CJEU during the TIP or by arbitration after that.
In this respect it should be noted in relation to the financial settlement involving
payment by the UK of £39bn or so that:
● There is not legal consensus how much might be owed, under
international law, in any event; and
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● About half this sum relates to the UK still applying substantive EU law
during the TIP.
The degree of detail in the Political Declaration affects the assessment of the
risk of the lack of conditionality in the WA. The language of the Political
Declaration varies. Some provisions are couched in firm language (with or
without conditioning words), some are matters for “consideration” or
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“exploring”, or matters the parties “envisage” happening.
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B Continued application of EU law
During the TIP, EU law applies including amendments and new legislation, but
without UK attendance at meetings of the EU institutions or participation in their
decision making; nor participation in decision-making and governance of EU
bodies, offices and agencies. Continued EU law is interpreted and enforced by
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the CJEU.
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During the TIP the UK may, exceptionally, be invited to participate (but not vote)
in comitology committees, meetings of expert groups or meetings of EU bodies,
offices and agencies if either:
● the discussion concerns individual acts addressed to the UK or natural
or legal persons residing or established here; or
● UK presence is necessary and in the interests of the Union.
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EU law applies extensively after the TIP to protect the rights of EU citizens in the
UK. It is clear from the following examples that EU law (as updated) and the
influence of CJEU case law (see Article 158 below) could continue to apply in
this field of Citizens Rights for some significant time after the end of the TIP:
● EU law will continue to apply protect the Free Movement rights of EU
citizens residing in the UK and UK nationals residing in the other
Member States before the end of the TIP. This is for the entirety of
their lives (Article 39). Their family members resident in the host state
by the end of the TIP are also covered. Any child born to these
individuals within the scope of the WA is also protected if that parent
has sole custody . Professor Catherine Barnard has illustrated this
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graphically by saying that if a family member born just before the end
of the TIP then goes on to have a child late in life (say in their
seventies), this could mean that the WA could have effect for
approximately 150 years from the end of the TIP.
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● Regulations on social security including the main substantive
Regulation 883/2004 for social security, as amended or replaced
before the end of the TIP, (Article 31) will continue to apply to certain
EU and UK citizens (and family members and survivors). Those
persons will maintain their right to healthcare, pensions and other
social security benefits. This would appear to enable qualifying EU
citizens to continue to export child benefit out of the UK to the Member
State where their children are residing. In addition, the Joint
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Committee “will make sure” that UK law remains aligned with EU law.
This appears to mean that the UK will have to accept amendments to
those Regulations in respect of qualifying EU nationals, with
consequential amendments being made to the relevant list of EU
legislation in Annex 1, Part II of the WA.
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Another example of the potentially extensive application of EU law is contained
in Citizens’ Rights, Part 2. Article 33 extends the same Part 2 protections to EEA
and Swiss nationals resident in the UK prior to the TIP. Professor Catherine
Barnard questions whether this extension is compatible with the Article 50 TEU
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legal basis for the WA as this is framed in terms of the UK’s exit from the EU.
Article 50 TEU does not mention the EEA.
EU law also applies after the TIP because of Separation Issues. In some cases,
EU law could continue to apply for some considerable time after the end of the
TIP. For example, in the case of:
● The processing of the data of EU citizens by the UK: EU law could
apply beyond the TIP if a data adequacy decision is not adopted to
come into force before the end of the TIP. Although the Political
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Declaration contains a commitment to ensuring UK data adequacy
decisions are adopted by the end of 2020, that may not be achieved.
However, it is worth noting that if a data adequacy decision is no
longer applicable, perhaps revoked or suspended by the Commission
as provided by the GDPR or invalidated by the CJEU as in the case
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of the US adequacy decision in Schrems, EU data protection law does
not reapply to the UK. Instead the UK is to ensure that its domestic
laws provide an essentially equivalent level of data protection for EU
citizens’ data.
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● Cross-border VAT transactions: VAT Directives will continue to apply
to cross-border supplies involving the UK and the EU that were
initiated before the end of the TIP. Specifically, certain provisions in
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the 2006 Principal VAT Directive will continue to “apply in respect of
goods dispatched or transported from the territory of the United
Kingdom to the territory of a Member State, and vice versa” if the
transport or despatch took place before the end of the TIP. (Similar
provisions apply in relation to movements of goods which span the
end of the TIP for customs purposes.) Moreover, the WA provides that
the 2006 VAT Directive will continue to apply until 5 years after the
end of the TIP to a “taxable person’s rights and obligations in relation
to transactions with a cross-border element” between the UK and a
Member State” which took place before the end of the TIP or which
falls within Article 51. This will however be subject to a deadline of 31
March 2021 for applications for refunds of VAT under the Eighth VAT
Directive.
Another potentially lengthy period of continued application of EU can be
expected in relation to certain aspects of the Financial Settlement. For example:
● In the case of pensions, Article 142 requires the UK will pay its share
of the funding of pensions and other employee benefits in respect of
the members and staff of the EU institutions, accumulated by the end
of 2020 The National Audit Office concluded in April of this year that
the UK’s obligation to contribute to the EU pension liability may last
until at least 2064;
● Article 136 applies EU law “concerning the Union’s own resources,
relating to financial years until 2020” after the end of the TIP.
Effectively, this means that the rules governing the UK’s contributions
to the EU budget for unpaid funding commitments as at 31 December
2020 will in principle continue to apply until the UK has fully paid off its
share of those commitments. There is a non-exhaustive list of specific
legislation which applies with amendments, irrespective of the date of
their adoption, entry into force or application. This is set out in the
Government’s Explainer at paragraphs 130-132.
After the end of the TIP the CJEU continues to determine the interpretation of
EU law applicable under the WA by the mandatory reference procedure from the
arbitration panel.
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During the TIP EU law is interpreted and enforced by the CJEU (possibly subject
to a contrary decision on the specific matter by the Joint Committee).
EU law applies extensively in the event of the Backstop coming into force and to
a lesser extent to the Cyprus Sovereign base areas.
C The Northern Ireland “Backstop”
Relationship between the WA and the Future Arrangements Agreement (FAA)
The key provisions of the Backstop will only come into effect if an FAA, which
adequately replaces the terms of the Protocol, is not in place by the time the TIP
ends. All or some of the Protocol may be superseded by the terms of a FAA.
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The parties must use their best endeavours to conclude a superseding
agreement by 31 December 2020.
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Whether or not an FAA adequately replaces the Protocol is a matter to be
formally decided by both the UK and the EU (in the Joint Committee). If a
positive decision cannot be reached, the Protocol will remain un-replaced.
The Protocol will cease to apply when the Joint Committee decides, by
consensus, that it has been superseded by other agreement(s).
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Continued application of EU law
1. General elements
Specified EU law continues to apply to both i) the UK as a whole; and ii) the UK
in respect of Northern Ireland. Unless otherwise stated, where a reference is
made to EU law, this should be understood as applying to the law as amended
or replaced.
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UK authorities are responsible for implementing and applying the provisions of
EU law. EU representatives may receive information about UK oversight, ask
UK authorities to conduct checks and have their own powers of oversight.
Questions remain about how provisions about the rights of EU representatives
will work in practice. In recognition of the need for more detail, the Joint
Committee is to make a decision.
2. The UK as a whole
● The UK will ensure that there is no diminution of EU law that protects
the “rights, safeguards and equality of opportunity” as provided for in
the 1998 Good Friday Agreement;
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● For all trade of goods between the UK and EU and, where provided,
with third countries, the UK agrees to operate by relevant EU customs
rules;
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● The UK will ensure non-regression of EU law as at the end of the TIP
on good tax governance, environmental protection and social and
labour protection;
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● Specified EU law on state aid, competition and state-owned
undertakings in respect of administration of tax will continue to apply
to the UK.
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As an exception, these rules will not apply to trade of specified fish and
aquaculture products unless an agreement on access to waters and fishing
opportunities is agreed.
The practical impact of these provisions is to link the UK’s laws on customs, tax,
environmental protection, labour protection, and state aid, substantially to EU
law. In most cases this is limited to EU law as at the end of the TIP. The
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requirements related to state aid are different as these apply to EU law as it
continues to evolve.
Combined with the provisions on how the UK is to ensure national compliance
with EU law, this represents a significant ongoing connection to EU law. It also
effectively limits the UK’s ability to amend existing laws in these areas after the
end of the TIP.
3. The UK in respect of Northern Ireland
● Where goods are imported to NI from the EU, EU law prohibiting
quantitative restrictions on imports and measures having equivalent
effect, must be complied with;
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● From the end of the TIP, EU customs legislation will apply to the UK in
respect of Northern Ireland. However, fish products are treated
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differently. For these, the Joint Committee is to establish conditions for
import of fish products to the EU by vessels flying a UK flag and
registered in NI.
No process is provided for what would happen if agreement in the
Joint Committee were not reached, suggesting that the UK, which
would have a clear interest in establishing these conditions, would be
at a negotiating disadvantage;
● Specified EU law on VAT and excise, environment, electricity markets
and state aid apply to the UK in respect of NI.
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Taken together the application of EU law to the UK in respect of Northern
Ireland is a deeper application of EU law than to the rest of the UK.
The Backstop recognises that such an arrangement has the potential to lead to
i) some form of friction in trade between NI and the rest of the UK; or ii) some
form of distortion in trade. Hence Article 7 asserts that there should be an
unfettered market for NI goods to Great Britain. For trade between NI and
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Great Britain the UK and the EU must use their best endeavours to facilitate
such trade and the Joint Committee is given a role to avoid, to the extent
possible, controls at the ports and airports of Northern Ireland, as outlined
below. This is aimed primarily at trade from Great Britain to NI.
The Institutional Structure
The Joint Committee, operating by consensus, has a role throughout the
application of the Protocol. It has some powers to supplement or amend the
Protocol or take decisions in order to ensure its proper functioning. It will, for
example:
● Determine how the provisions on maintaining aligned frameworks on
good tax governance will be achieved;
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● Determine levels of financial support that the UK can provide for
agriculture;
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● Adopt detailed rules for the trade of goods between the UK and EU;
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● Adopt decisions laying down minimum commitments for certain
environmental standards; and
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● Adopt recommendations, if necessary, to avoid controls at ports and
airports in Northern Ireland.
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It is an influential and important forum that has a real role in the practical
delivery of the Protocol. Both UK and EU are represented on the Joint
Committee, so no decision may be made without the UK’s agreement.
This may not be the same thing as the two parties having equal power, as the
aims of the parties will matter. If the Joint Committee is unable to reach a
decision, in some circumstances, that will block next steps. The party that wants
those next steps to occur, will then be at a practical disadvantage. By way of
example, i) the Joint Committee sets the limits of state aid that can be
authorised by the UK for agriculture. If limits are not agreed, state aid may not
be authorised; ii) if the Joint Committee does not agree that the Protocol is
superseded by the terms of a FAA, the Protocol continues to take effect.
The Joint Committee is supported by a Specialised Committee, established to
support on the implementation of the Protocol. Operating under the supervision
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of the Specialised Committee is a joint consultative working group. All three
groups are made up of representatives of the UK and EU.
Dispute Resolution
For the areas of EU law that apply to the UK as a whole, the dispute resolution
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mechanism of the main WA will not apply to disputes about interpretation and
application. Alternative dispute resolution approaches include:
● The EU may apply customs restrictions if it relates to the trade in
goods from third parties;
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● The matter will be referred to the Joint Committee if it relates to import
duties or customs rules.
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For environment, social and labour, and competition provisions there is no
dedicated dispute mechanism with the EU. It is for the UK to enforce. For state
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aid provisions the UK’s new independent authority will cooperate with the
European Commission.
If the functioning of the Protocol leads to serious economic, social,
environmental difficulties, or diversion of trade, EU or UK may “unilaterally take
appropriate measures”. If those measures cause some imbalance, the other
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party may take ‘rebalancing measures’, with the Joint Committee involved in any
such process.
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This framework does not, for example, i) establish more specifically how
‘difficulties’ or ‘diversion’ is to be measured, or thresholds of significance; or ii)
the types of measures that may and may not be taken. Joint Committee
involvement will therefore be crucial to navigating this and making progress.
Supervision and Enforcement
Some elements of enforcement and oversight are currently only sketched out in
the Protocol, with commitments to flesh them out. Agreement on those details
will be made via the Joint Committee, an important role as ongoing enforcement
will require striking a suitable balance between the interests of UK and EU.
UK authorities are responsible for implementing and applying the provisions of
EU law that are made applicable by the Protocol. EU representatives will have
ongoing rights to be informed about enforcement work and to ask UK authorities
to carry out checks. This role for the EU is arguably in lieu of an ongoing role
for the CJEU and therefore represents a lower level of EU oversight than might
otherwise have been the case.
To achieve this in practice, the UK will take various steps nationally including:
● creating a ‘dedicated mechanism’ to ensure no diminution of
individual’s rights;
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● ensuring administrative and judicial proceedings to ensure effective
enforcement and operation of environmental protection, and social
and labour protection laws; and
● establishing a national system for oversight of environmental and state
aid requirements, including an independent body with adequate
powers to ensure compliance.
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Where additional EU law applies to NI:
● EU institutions and agencies will have their normal powers under EU
law; and
● References can be made to the CJEU.
This is a higher level of engagement for EU authorities than for the UK-wide
provisions, reflecting the greater connection with EU law for NI.
The Joint Committee is tasked with keeping any restriction on trade between NI
and the rest of the UK, as a result of the Backstop, under review, and if
necessary suggesting measures to alleviate these. This is a broad authority
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that acknowledges that issues may occur. However, it does not explicitly allow
for any of the Protocol requirements to be dis-applied, so the extent to which the
Joint Committee would be able resolve issues is not entirely clear.
Court of Justice Jurisdiction.
Where the Protocol refers to EU law, it is to be interpreted in conformity with the
relevant case law of the CJEU. There is no time-limit on this requirement,
meaning that for as long as EU law is applicable under the Protocol, the UK will
be obliged to interpret it in accordance with evolving EU case law.
Where EU law continues to take effect in the UK in respect of NI, in respect of
EU law the CJEU shall have jurisdiction and power to interpret EU law and to
hear cases where national remedies have been exhausted. In any cases before
the CJEU the UK would be able to participate as if still a Member State.
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D The Institutional Structure
The oversight of the WA is based on a Joint Committee and a system of
specialised Sub-Committees. This comes into being as soon as the WA comes
into force.
The JC is to be composed of representatives of the EU and the UK , chaired
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jointly.
Its overarching remit is to be “responsible for the implementation and application
of this Agreement” supplemented by a specific list of tasks which include to:
● “supervise and facilitate the application of this Agreement”;
● “seek appropriate ways and methods of preventing problems that
might arise in areas covered by this Agreement or of resolving
disputes that may arise regarding the interpretation and application of
this Agreement” Should the “appropriate ways” be able to stretch to
making a formal Decision that, in accordance with Article 166, would
have the same legal effect as the WA itself there would be conflict with
the jurisdiction of the CJEU during the TIP as conferred by Article 131;
● “adopt decisions and make recommendations as set out in Article
166…” This Article allows decisions to be made “for which this
Agreement provides…”
● adopt decisions amending Parts Two, Three and Five of the WA (its
substantive provisions). These powers end at the end of the fourth
year following the end of the TIP and are limited to correcting errors,
addressing omissions or other deficiencies or address unforeseen
situations – provided that the amendments do not amend the essential
elements of the WA; and
● take such other actions in the exercise of its functions as decided by
the Union and the UK.
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The JC and its specialist Sub-committees operate by mutual consent. Annex
VIII provides Rules of Procedure (which the Joint Committee can amend).
These do not prescribe how many representatives from each side comprise the
Committee nor the institutions from which, on the EU side they are drawn. This
may be significant if it leads to institutional tension.
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Notably these initial Rules of Procedure do provide for:
● Chairmanship by a Member of the Commission on the EU side and at
Ministerial level on the UK side. Their tasks include drawing upon the
provisional agenda;
● Minutes to be drawn up, and a summary of the minutes which the
co-chairs can decide to make public;
● Decisions and recommendations to be adopted by a written procedure
consisting of an exchange of notes between the co-chairs;
● Meetings of the JC to be confidential unless otherwise decided by the
co-chairs;
● A party to insist that information it provides to the JC be confidential or
protected from disclosure by its laws to be treated as confidential; and
● (Subject to the previous bullet point) for each party to decide
individually whether to publish JC decisions or recommendations.
The absence of transparency would impact on any proposal for Parliamentary
scrutiny of the UK participation in the working of the JC.
Article 166 provides for the JC to adopt, by mutual consent, decisions in respect
of all matters to which the WA so provides, and to make appropriate
recommendations. Any decision of the JC has the same legal effect as the
Agreement.
E. Dispute Resolution
Individuals
The WA and the EU law made applicable by it has “direct effect”. This means
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that individuals can pursue a dispute based on the WA invoking the terms of the
WA against the state or emanation of the state through the courts provided that
the relevant provision meets the conditions for direct effect under the Treaties
namely:
● the provision is sufficiently clear and precisely stated;
● it is unconditional and not dependent on any other legal provision; and
● it confers a specific right upon which a citizen can base a claim.
Direct effect applies principally to the provisions on Citizen’s Rights.
The WA requires this right to be enshrined in UK primary legislation.
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Disputes between the UK and the EU during the TIP
During the TIP disputes between the parties are governed by Article 131. The
CJEU has jurisdiction as provided by the Treaties as regards the interpretation
and application of the WA. This principally affects the Financial Settlement as
the other substantive Parts of the WA (on Citizens’ Rights, Separation Issues
and the Irish and Cyprus Protocols) do not come into force until the end of the
TIP.
It is unusual to give the courts of one party jurisdiction to resolve disputes
concerning an international agreement. To date the Government has justified
this as necessary to ensure that businesses and people will only be faced with
one set of changes. Whilst this could be considered as more justified in
67
respect of EU law applied by the WA during the transition period this is less the
case in respect of other provisions of the WA particularly disputes arising
between the parties to the agreement.
68
Disputes between the UK and the EU after the TIP
After the end of the TIP disputes between the UK and the EU arising under the
agreement will be subject to a political phase of dispute resolution by the Joint
Committee. If not resolved within three months of there is an arbitration
69
procedure.
The 5 arbitrators are picked from a panel of 25 established by the EU and the
UK -10 nominations from the EU, 10 from the UK and 5 independent persons
jointly nominated as able to act as chairperson by agreement. An arbitration
panel shall consist of 5 persons, 2 from the list of EU nominations, 2 from the list
of UK nominations and these shall elect a chair from the list of 5 joint
nominations.
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The arbitration panel should take written submissions from the parties and
conduct a hearing and reach its decision within 12 months of being established,
or 6 months if it decides, on the application of a party, that the matter is urgent.
71
The arbitration panel must try to take decisions by consensus, but can decide by
majority. This raises the prospect of a decision adverse to the UK on the view
72
of the EU appointed panel members and the jointly appointed chairperson
outvoting the view of the UK appointed panel members.
Where a question of interpretation of a provision of EU law referred to the WA
arises, or a question whether the UK has complied with an CJEU judgment
pre-dating the end of the TIP, the arbitration panel is bound to make a reference
for a binding preliminary ruling by the CJEU. Whilst either side may request a
preliminary ruling from the CJEU it is up to the arbitration panel to decide
whether the matter does actually concerns the interpretation of EU law referred
to in the WA, or is indeed a question whether the UK has complied with an
CJEU judgment pre-dating the end of the TIP This provision may come
73
under scrutiny of the CJEU as deviating from its principle of the autonomy of the
EU legal order under which it must be the final arbiter of questions of EU law.
It also raises the question how far this reference procedure perpetuates CJEU
jurisdiction. The Government makes the point that this reference procedure
does not represent “direct” jurisdiction for the CJEU. Experience of the
reference jurisdiction indicates that a significant number of disputes (but not all)
are effectively determined by the interpretation provided by the CJEU in
response to a reference.
For enforcement of arbitration rulings see the next section.
F Supervision and Enforcement
During the TIP the WA, insofar as it is in force, is subject to ordinary EU
supervision, principally by the Commission, and enforcement by the CJEU –
leading, ultimately, to a financial penalty.
74
Thereafter supervision by the Commission (or other EU bodies, offices and
agencies) or a Commission role in supervision by UK authorities, as well as
enforcement procedures can be found in the following provisions of the WA:
● Commission powers to bring infringement proceedings to the CJEU
under Article 87 in respect of breaches of EU law or Part Four of the
WA occurring before the end of the TIP;
● Article 92 which provides for continuation of administrative
procedures, for example a competition investigation, initiated before
the end of the TIP;
● Article 93 permitting state aid procedures to be initiated up to 4 years
after the TIP in respect of aid granted before the end of the TIP, and
OLAF to similarly initiate investigation in respect of fact arising in the
same period and customs debt arising 4 years from the end of the
period for discharge;
75
● Article 159 requires the UK to set up an independent monitoring
authority in respect of Citizens’ Rights which shall inform the
Commission annually on the implementation and application of Part
Two of the WA (and vice versa);
● The Commission can bring infringement proceedings, possibly leading
to fines against the UK, in respect of EU law applicable to the UK
concerning EU own resources, applicable to EU programmes in which
the UK continues to participate after the TIP in connection with the
Financial Settlement; and
● Article 176 allows the arbitration panel, on written request to
determine the time in which its ruling should be complied with, Article
177 allows it to rule whether there has been compliance and Article
178 permits it to impose a penalty for non-compliance which if not paid
can lead to the complainant Party to temporarily suspend its
obligations under the WA (except in respect of Citizen’s Rights) or
under any other agreement, likely the FAA. The proportionality of
such retaliatory measures can be determined by the arbitration panel
and the request of the respondent. This enforcement process is more
similar to the provisions in international agreements cited in the White
paper on the Future Relationship between the United Kingdom and
the European Union. The later are tailored more to recompense than
punishment.
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● The Protocol on Ireland/Northern Ireland contains a web of
surveillance and enforcement provisions (see section C)
G Court of Justice Jurisdiction.
During the TIP
Under Article 131 the CJEU has the jurisdiction provided by the Treaties in
regard not only to EU law referred to in the WA but also the application and
interpretation of the WA itself. See section E.
After the TIP
A wide variety of provisions preserve CJEU jurisdiction to a greater or lesser
extent and in some cases for a fixed period of time:
● In cases commenced within 8 years from the end of the TIP in a UK
court or tribunal that court or tribunal may make a reference to the
CJEU for a binding interpretation on that Part of the WA;
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● The CJEU has jurisdiction to deal with infringement proceedings
brought by the Commission and preliminary rulings in respect of the
application of Union law concerning own resources relating to the UK
and EU law relevant to the UK’s continued participation in EU
programmes and activities;
78
● Any arbitration panel must make a reference to the CJEU in respect of
any question as to the interpretation for an interpretation of EU law
referred to the in the WA (see section E);
● Article 86 gives the CJEU continuing jurisdiction in respect of cases
brought by or against the UK before the end of the TIP and for the
CJEU to continue to interpret EU law in preliminary references made
to it by UK courts before the end of the TIP. Such judgments are
binding and enforceable under the Treaties. Such proceedings may
79
last several years;
● Article 87 provides for the CJEU to have jurisdiction in infringement
proceedings against the UK in respect of any alleged breach of EU
law or its Part 4 (Transition) obligations by the UK occurring before the
end of the TIP. However, the Commission must bring those
proceedings within four years of the end of the TIP. This applies
equally to similar proceedings brought in respect of state aid; and
● The CJEU has extensive jurisdiction over elements of the Backstop
(see section C).
Article 4 governs the effect of CJEU case law on UK courts by requiring that:
● provisions of the WA referring to Union law are to be interpreted in
accordance with “the methods and general principles of Union law”
and CJEU case law prior to the end of the TIP; and
● UK courts and authorities to have “due regard” to CJEU judgments
after the end of the TIP for the interpretation and application of the
whole of the WA.
Article 163 provides for dialogue between the UK’s highest courts and the
CJEU.
H Roll over of EU External Agreements
This is governed by Article 129. This provides that during the TIP the UK is
bound by the obligations to third countries in any external agreement which the
EU has entered into on its own, agreements entered into by the Member States
on behalf of the EU and agreements entered into “by the Union and its
80
Member States jointly, as referred to in ….Article 2”.
Ordinarily, reference to agreements entered into by the EU and its Member
States “jointly” would be understood as being “bilateral” agreements where the
EU and the Member States are described as (or implicitly form) one party to the
agreement and a third country is the other party, for example the
Comprehensive Economic and Trade Agreement with Canada. These
agreements can be contrasted with true multilateral agreements where the EU
and its Member States are more distinct parties, such as the UN Convention on
the Law of the Sea. However, Article 2 makes no mention of “joint” agreements
– it applies to any agreement entered into by the EU whether jointly with the
Member State or not. This creates some uncertainty as to the extent of the
obligation on the UK to meet the obligations contained in EU international
obligations. This may not cause problems in practice as the UK will likely be
regarded as automatically taking over the entirely of the obligations imposed by
multilateral agreements (including those that before Brexit fell upon the EU). The
discrepancy in language between Articles 2 and 129 ought to be an issue picked
up in the process of “legal scrubbing”.
The UK does not automatically gain the benefit of EU international agreements
after Brexit. It relies on the agreement or acquiescence of the third country to
accord the UK such benefits. However, that may raise issues of the legality of,
or the process for, for third countries, to simply roll over their EU agreements,
when that entails, legally, entering into new agreements.
In the absence of acquiescence or agreement by the third countries concerned,
the UK will be relying on a footnote to Article 129 to the effect that “The Union
will notify the other parties to these agreements that during the transition period
the United Kingdom is to be treated as a Member State for the purposes of
these agreements.” This does not have legal force as far as the third country is
concerned.
During the TIP the UK may negotiate and enter into international agreements in
the area of EU excusive competence provided that they do not come into force.
There is no mention of agreements covering areas of shared competence.
The absence of a reference to shared competence may not have significant
practical impact because it is arguable that this provision is declaratory of the
general proposition that that the UK would not be inhibited by the duty of sincere
cooperation (either in the TEU or in the WA) from negotiating agreements with
third countries to come into force at the end of the TIP provided the process of
doing so did not involve undermining the EU position.
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Arnold Ridout, Counsel for European Legislation
Joanne Dee, Emily Unwin, Deputy Counsel for European Legislation

Notes:
1
72% of the Council representing 65% of the population. A minimum of 20 Member States.
2
For example, where the compatibility of the WA with the EU Treaties has been question see
Part Three B below. See also the written evidence of Professor Baudenbacher to the
European Scrutiny Committee, 3 October 2018, page 4 in particular. Even if the CJEU
considered the WA to be incompatible with the Treaties it has the power to enable it to
continue in force in order for any incompatibility to be remedied. An EU institution (for
example, the European Parliament) could request an opinion as to the draft WA’s
compatibility with the Treaties pursuant to Article 218(11) TFEU. In that case, any
incompatibility with the Treaties would need to be remedied before the WA could enter into
force.
3
See Part Three Section E below.
4
Professor Steve Peers sets out these exceptions in “The Brexit Withdrawal Agreement:
Overview and First Observations”, EU Law Analysis, 22 November 2018.
5
See Part Three, Section C.
6
Paragraph 22.
7
Paragraphs 138 to 147. The Political Declaration remains non-binding.
8
Experience of other international agreements indicates that formal dispute resolution is
rarely invoked.
9
See Part Three Section C.
10
Where the EU has exclusive competence only it may act. Where competence is shared
wither the EU or the Member States may act, the choice is one of policy.
11
There is no compulsory system of determining and enforcing any sum that might be owing
under international law.
12
E.g paragraph 26;”The Parties will put in place ambitious customs arrangements.…”
13
E.g. paragraph 54: “The Parties agree to consider addressing social security
coordination….”
14
E.g. paragraph 55: “…the Parties will explore the possibility to facilitate the crossing of their
respective borders for legitimate travel.”
15
E.g paragraph 20: “The Parties envisage having a trading relationship on goods that is as
close as possible …”
16
Article 7.
17
Article 131.
18
Article 128(5)
19
Article 10.
20
Episode 51: The Draft Withdrawal Agreement, Law Pod UK, 1 Crown Office Row
21
Articles 30 and 31.
22
Article 36.
23
See footnote 5.
24
Article 71.
25
Article 45(3) of the GDPR.
26
Article 71.
27
Article 51.
28
Article 174.
29
Whether or not the TIP is extended.
30
Protocol Article 1.
31
Protocol Article 2.
32
Protocol Art 20.
33 Protocol Art 15. If the EU adopts new law that is not listed in the Protocol but is arguably
within its scope, the EU will seek agreement via the Joint Committee, to include the law in the
Protocol. If the UK does not agree the EU can, ultimately, adopt remedial measures.
34
Protocol Article 4 and Annex 1. Laws relevant to protection from discrimination.
35 This includes that: i) customs duties and charges having equivalent effect are prohibited; ii)
the UK will align tariffs and rules for trade with third countries, to relevant EU rules; iii) the UK
will harmonise its commercial policy with the CCP of the Union; iv) the UK and EU will
cooperate on the apportionment of WTO tariff-rate quotas; and v) the EU’s trade defence
regime will apply to the UK.
36
As listed in Protocol Annex 4 parts 1, 2 & 3.
37
Protocol Article 4, part 4, and Annex 8.
38
Paragraph 79 of the Political Declaration envisages an open and fair competition, building
on the level playing field arrangements provided in the WA.
39
Protocol Article 8; Arts 34 & 36 TFEU.
40
As defined by article 5(2) of Regulation 952/2013.
41
Protocol Articles 9-12 and Annexes 5-8.
42
In response to a Question from George Freeman on 21 November 2018 the Prime Minister
said: “… if we were in the situation where the backstop had to be in place for a matter of
months, for example, it would be right for the United Kingdom to give the commitment that we
would not be looking to diverge from regulations during that period and that we would ensure
that we kept that free access for the goods from Northern Ireland coming into Great Britain, as
we have committed in the withdrawal agreement—in the text that is set out—and as we had
committed previously.”
43
Protocol Article 6 and Annex 4.
44
Protocol Article 12, Annex 4, Art 8 and Annex 9.
45
Protocol Art 6.
46
Annex 4, Article 2.
47
Protocol Article 7.
48
Article 165(c) WA; Art 16 Protocol.
49
Article 6.
50
Protocol Annexes 2 Article 6(1), Annex 3 Article 10, and Annex 4 Articles 1(5), 2(7), 4(2) &
24, disapplying Articles 170-179 of the WA.
51
Protocol, Annex 2 Article 6(1).
52
Protocol, Annex 2 Article 6(2), and Annex 3 Article 10.
53
Protocol Annex 4, Articles 3 & 6. If the UK did not enforce the law effectively there is no
explicit path but it may be assumed that the Joint Committee would become involved.
54
Protocol Art 18.
55
The procedure for taking measures is set out in the Protocol, Annex 10.
56
Protocol Art 14.
57
Protocol Article 4.
58
Protocol Article 6 and Annex 4, parts 2, 3 & 4.
59
Article 7.
60
Protocol Article 15.
61
Protocol Article 14.
62
Presumably appointed by the Government.
63
Article 164.
64
For example: if the European Parliament is not represented and objects to a decision taken
by the JC. During the TIP it may have recourse to the CJEU.
65
Article 4(1).
66
Article 4(2). This does not require the entire WA to be implemented by primary UK
legislation.
67
See the Government Response to the Report of the European Scrutiny Committee Report
EU Withdrawal: Transitional provisions and dispute resolution
68
The effects of Article 131 can extend beyond the end of the TIP. Under Article 86 the CJEU
retains jurisdiction in respect of cases started before this date.
69
Article 169.
70
Article 171. In the absence of agreement on who should be chair the Secretary General of
the Permanent Court of Arbitration shall choose by lot.
71
Rules of Procedure at Annex IX of the WA. Article 171 and 172.
72
Article 179.
73
Article 174.
74
Article 131.
75
Decisions adopted in pursuance of the administrative procedures under Article 92 and 93
shall be binding and enforceable with the Commission able to monitor and enforce
compliance – Article 95.
76 The White Paper on The future relationship between the United Kingdom and the European
Union the cites, at page 94 the US and Australian free trade agreements as including
provision for financial penalties. The Australian Guidance on the US-Australia agreement
indicates the limits and the limited circumstances of the financial sanctions regime in that
agreement: “An innovation introduced through this Agreement is the capacity of a government
to choose to pay a monetary assessment in lieu of providing trade compensation (Article
21.11.5). This may prove a preferable policy option where:
● a breach cannot be rectified – where, for example, a state government measure is
at fault and the Commonwealth has no constitutional capacity to intervene, and
● the Government does not consider it appropriate that traders in the broader
economy should bear the burden of such a breach.
Such a monetary assessment will be set at fifty percent of the value of suspended benefits
determined by the panel unless agreed otherwise by the governments (Article 21.11.5). The
Joint Committee can agree that this monetary assessment be paid into a joint fund and
expended on initiatives to facilitate trade between the United States and Australia (Article
21.11.6).
Where a Party is found to be in breach of its core commitment (not to fail to enforce effectively
the Party’s own laws) under the Environment or Labour Chapters (see Chapters 18 and 19), a
dispute panel can impose an annual monetary fine, not exceeding US$15 million, to be paid
into a fund established under the Agreement for expenditure on appropriate labour and
environment initiatives in the territory of the country that violated the Agreement, in a manner
consistent with its law.
The Agreement makes specific provision for a review of the effectiveness of these
compensation arrangements within the first five years, or following compensation being
provided with regard to five separate complaints, whichever comes first (Article 21.14).”
77
Article 158. There are some minor adjustments in the time limit in respect of the issuance
of residence permits.
78
Article 160.
79
Article 89.
80
Normally where the international agreement is only open to state parties.
81
Given that the UK does not participate in EU matters during the TIP, including formulating
the EU position in relation to international agreements, the potential for such UK negotiations
to undermine EU negotiations with the same state is limited.

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