The European Union involves complex governance processes, as set out below. In the event of no deal, the UK will be outside those processes and there will be no agreement on how future relations between the UK and the EU should be managed, including how disputes should be resolved.
In order to appreciate the implications of a governance vacuum, it is necessary to understand the current arrangements.
4.1 Current governance of the UK-EU relationship
In discussing the governance of both the current UK-EU relationship and the future UK-EU relationship, a clear definition of the concept is helpful. While there are various ways to explain ‘governance’, the Commission’s definition (echoing the terminology of the Council’s negotiating guidelines) is a useful starting point. It suggests that governance of any international agreement is made up of three components:
- Ongoing Management/Supervision
- Dispute Settlement
- Enforcement after dispute settlement
As an EU Member State, all three components of governance of the UK-EU relationship are currently dealt with via EU mechanisms.
Ongoing management and supervision of the EU Treaties, or the Member States’ compliance with those, is carried out by several different institutions. There are various ‘managerial’ bodies in the EU, with tasks ranging from ‘big picture’ management to ‘day to day’ management.
The European Council, formally given legal personality in the Treaty of Lisbon, is the ‘big picture’ management institution. As the body where the EU Heads of State or Government meet at least bi-annually, it sets the direction of travel that it wishes other EU institutions to pursue. It is also the body that can formally re-open Treaty negotiations.
However, day to day ‘management’ as well as supervision of EU law falls to the European Commission. Unlike most other international organisations, which do not have powers to produce ‘secondary’ legislation, the EU has legislative abilities that are either initiated or (in the case of tertiary legislation) exercised by the Commission. It behaves like an executive in charge of ‘management’ in this sense, though its activities are steered by the political sign-posting of the European Council. Its supervision powers are more specific and can give rise to the ‘infringement proceedings’ set out in Article 258 of the Treaty on the Functioning of the EU (TFEU). Under this procedure, the Commission can take action against any Member State it believes is not complying with EU law.
Supervision of compliance with the EU Treaties works in other directions, however. The Member States can also take action against each other (Article 259 TFEU) and the EU institutions (Article 263 TFEU), and the EU institutions can also accuse each other of ultra vires action (Article 263 TFEU). Consequently, rather than speaking of a single ‘supervisor’, the EU has a complex and multi-structural system of ‘observing’ compliance with, and the functioning of, the Treaties, which is led (but not exclusively) by the Commission.
Dispute settlement in the EU is first of all dealt with via the aforementioned infringement proceedings. If Member States are unresponsive to a Commission administrative action that sets out how they are perceived as not complying with their EU obligations, the Commission can take its case to the CJEU, which then issues a binding judgment either in favour of the Commission or the Member State.
However, early in the EU’s existence, it was realised that the EU legal system would not only give rise to disputes between Member States and the EU, but also to disputes originating with individuals and companies who were either benefitting from or suffering from their Member States not having complied with EU law. Such complaints may arise between such private parties and their Member State, or even between two private parties affected by an EU law provision. The Treaties have to date remained silent on the dispute settlement mechanism applicable to private parties with complaints rooted in the EU Treaties; it is clear only that they do not (generally) have standing before the CJEU. Questions of dispute settlement stemming from EU law arose in national courts, however, and when the CJEU was asked how to address these disputes, the CJEU filled this gap in the Treaties with several seminal judgments.
First, it established in Van Gend en Loos that private parties could rely directly on EU law provisions before domestic courts where those EU provisions met certain criteria: they were clear, precise and unconditional.68 Second, it established in Costa that EU law was ‘supreme’ over domestic law, and so where a national court observed a clash between domestic and EU law, EU law took precedence.69 Third, it eventually found in Von Colson that even if EU law is not clear, precise and unconditional, domestic courts (under the duty of ‘sincere cooperation’ as set out in Article 4(3)TEU) must do everything within their power to interpret a national law in light of any EU law that a Member State was meant to comply with.70
The consequence of this case law is that since 1963 there have been two concurrent streams of ‘dispute resolution’ within the EU. The first is at the ‘macro’ level and involves disputes between the Member States and the EU institutions; these are resolved by the Commission through administrative processes or by the CJEU if those administrative processes fail. The second is at the ‘micro’ level and involves private parties making a claim in a domestic court, which applies CJEU-developed principles to ensure that they attain their EU law rights.
Enforcement following dispute settlement is not EU-level enforcement; the judgment issued in private party complaints about a failure to comply with EU law is a purely domestic judgment and is enforced via whatever
68 Case 26/62 Van Gen den Loos ECLI:EU:C:1963:1
69 Case 6/64 Costa v ENEL ECLI:EU:C:1964:66
70 Case 14/83 von Colson and Kamann ECLI:EU:C:1984:153
enforcement systems the Member States themselves have in place. The EU has no competence to dictate what those are.
The EU (like most international organisations) has very limited enforcement powers with regard to failures to comply with CJEU judgments. If Member States are persistently unwilling to comply with a CJEU judgment, under Article 260(2) TFEU the Commission can bring a further case to the CJEU regarding non-compliance, and the CJEU can impose a ‘lump sum’ or ‘penalty payment’ if it finds for the Commission, with the CJEU itself determining the amount of penalty payment or lump sum (or both) that is appropriate in a given case (albeit with Commission input, as set out in its applications under Article 260 TFEU).71
Many other international agreements have enforcement mechanisms, such as an ability to suspend rights or ‘concessions’ gained under a treaty in response to persistent harmful non-compliance with treaty obligations. The EU model does not, however; the consequences of this appear to be that there is no EU-level enforcement option that ‘excludes’ a Member State from aspects of EU law as a punishment and source of pressure for its own non-compliance. This has been considered in the past; the 1984 Spinelli Draft Treaty endorsed by the European Parliament included a sanctions mechanism that included the suspension of rights for ”serious and persistent violations of treaty provisions”. The proposal was not adopted, however, and has not since been revisited.
Does this mean that a Member State cannot be ‘excluded’ from EU law against its wishes, even if it continuously fails to comply with its Treaty obligations? The argument has been made that public international law permits ‘sanctions’ options beyond those set out in Article 258-260 TFEU – suspension of rights on a temporary basis seems impossible, but expelling a Member State is accounted for in a general principle of international law, namely pacta sunt servanda. Article 60 of the Vienna Convention on the Law of Treaties (VCLT) permits the parties of a treaty to terminate the operation of a treaty vis-à-vis another signatory that has committed a ‘material breach’ of treaty provisions. A ‘material breach‘ is defined as covering a “violation of a provision essential to the accomplishment of the object or purpose of the treaty”, which appears to be a similar trigger condition as that applicable to the infringement proceedings under EU law. Logically, therefore, a first ‘material breach’ of the EU treaties should be dealt with under the infringement proceedings.72
However, various international lawyers have argued persuasively that where the EU’s own enforcement mechanisms do not work (and so there is consistent breaching of obligations), Article 60 of the VCLT covers a scenario that is not set out in the Treaties, and thus should apply. The alternative would be the Member States effectively being forced to tolerate a regime that consistently fails to comply with promises it has made under
71 Case C-304/02 Commission v France
72 See, for the opinion that EU law’s own ‘sanctions’ mechanism supersede public international law, S Biernat, ‘Ratification of The Constitutional Treaty and Procedures for The Case of Veto’. (http://www.ecln.net/elements/conferences/book_prag/BiernatFinal.pdf) 23.
the Treaty, and still being obliged to extend the benefits of EU law to that regime.
73 As a final resort, Article 60 of the VCLT appears to permit ‘expulsion’ of sorts from the EU – but not before any complaining Member State or EU institution has taken recourse to Article 258-260 TFEU.
4.2 Governance if there is no Withdrawal Agreement
Withdrawal from the EU will mean the end of most of the architecture described above. The relevant institutions will no longer have the jurisdiction to provide oversight/management, dispute settlement or enforcement functions unless the UK and the EU specifically agree this in any agreement on a future relationship.
Without such an agreement, and without an agreed Withdrawal Agreement that sets out its own governance structure (as discussed in this Commons Briefing Paper), there would be very little structure to the governance of the relationship between the EU and the UK. The framework of interactions would resemble that of the UK and any other third country: it would require diplomatic presence not only in the EU27, but presumably also in the EU seat, Brussels. Management and supervision of the overall relationship would need to take place via a newly established UK ‘mission’ to the EU – but it is inconceivable that diplomacy alone would govern the relationship for any length of time, given the significant connections between the UK and the EU in economic, political and social terms.
There are of course aspects of a no-deal EU-UK relationship that will be governed by existing international organisations and treaties that both the EU and the UK have ratified, each accompanied by their own dispute settlement and enforcement mechanisms. EU-UK trade, for instance, would fall under the WTO’s remit, and disputes would be settled under the WTO’s Dispute Settlement Understanding, which has exclusive jurisdiction over WTO-related disputes (implications for trade are discussed in section 6 below).
Where the UK and the EU have ongoing ‘relationships’ in areas not explicitly covered by existing treaties, in the absence of an overarching deal with the EU, the parties would have to establish treaty infrastructure underpinning those relationships themselves. This would inevitably involve establishing governance mechanisms for the relationship as set out in these new treaties. These may take the standard form set out by the Commission in its slides on governance, of having a joint committee, with representatives from both the EU and the UK, having supervision/management functions and ‘first stage’ dispute settlement functions, with second-level dispute settlement functions falling to binding arbitration.
Alternatively, any new treaty may include a jurisdictional clause that allows any disputes about its interpretation or application to be referred to the
73 E.g., B Simma, ‘Self-Contained Regimes’ (1985) 16 Netherlands Yearbook of International Law 127; G Conway, ‘Breaches of EC Law and the International Responsibility of Member States’ (2002) 13 European Journal of International Law 679. For a recent discussion, see Paul Gragl, ‘The Silence of the Treaties: General International Law and the European Union’ (2014) 57 German Yearbook of International Law 375.
International Court of Justice at request of either party. A new court could also be established by any UK-EU treaties.
Raphael Hogarth of the Institute for Government suggests that in the future relationship, the UK and the EU may pursue novel or hybrid dispute settlement and enforcement setups. This is equally true for a no-deal relationship, but the key difference is that extensive governance structures tend to accompany international agreements that encourage or maintain close cooperation between countries. Agreements surrounding a no-deal Brexit may not necessarily be characterised as such. Any suggestion that a particular governance model or hybrid is likely to appear post-Brexit in the event of no deal would be purely speculative; the most that can be noted is that new governance structures would have to be adopted post-haste to take the place of the elaborate framework set up by the EU, and to manage the intertwined nature of UK-EU relations that on exit day will need careful unravelling, even without a deal.
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