Is Britain the new Norway? Stance on ECJ suggests London seeks a softer Brexit

The ECJ is a particularly contentious Brexit topic. EPA/Julien Warnand

The British government has outlined its vision for what role the European Court of Justice will play after Brexit. As speculated, its position papers outlining this vision state that it wants to end the ECJ’s “direct jurisdiction” in the UK.

But the papers seem to indicate that the UK is seeking a Norway-style Brexit, effectively remaining in the European Economic Area in the interim.

The UK government has put forward its position in two papers. The first deals somewhat indirectly with the issue of the jurisdiction of the ECJ in relation to interpretation of EU law. The UK wants ECJ’s decisions to no longer be binding.

But what’s really interesting is that the UK expresses the intention of being part of the Lugano Convention – the rules on jurisdictional matters that apply to EEA states. This is a strong indication that the UK is eyeing a Norway-style Brexit.

The second paper adds more weight to this hypothesis. The apparent position of the UK government is that the ECJ will maintain its interpretative jurisdiction within the EU area and that there is no real need for the ECJ to act as a dispute resolution mechanism in the eventual trade agreement between UK and the EU. This is what it means by ending its “direct” jurisdiction.

However, the paper does seem to imply that the UK now accepts that the ECJ will have to continue ruling in cases where the new law affecting both the UK and the EU is essentially the same as EU law. This is what happens with the EEA, which has its own court. But ultimately the rulings of the ECJ are binding there.

The position of the European Union

According to Michel Barnier, chief Brexit negotiator for the European Commission, the EU’s position on this matter has never changed.

It believes the ECJ must remain the main arbitrator and enforcer of the obligations both sides have towards each other. The ECJ would retain its jurisdiction to interpret and force compliance of EU law that may still be applicable after the effective date of Brexit. Moreover, the ECJ would be the court to go to if a disagreement between the UK and the EU arose.

When it comes to applying EU law, it makes sense that the EU should maintain its interpretative role. EU law would apply to people and businesses wanting to trade with the EU.

On the other hand, the UK is perfectly entitled to defend the exclusive jurisdiction of its courts to matters affecting UK residents (people and businesses) even when it comes to how EU law is interpreted.

Making a deal

It’s important to remember that neither side of this negotiation know what their post-Brexit relationship will look like. That matters because, ultimately, when we talk about the the European Court of Justice, we are simply talking about a dispute resolution mechanism to deal with two types of disagreements: between the parties to the trade agreement (probably the UK and the EU) and between parties subject to the law (such as a UK business and a German business or consumer).

When a trade agreement is signed between two parties, they will, at the same time, normally decide a method through which they will resolve potential disputes and interpret the new law which will develop as a consequence of the agreement.

When it comes to the EU’s dealings, both these roles are fulfilled by the ECJ. It adjudicates disputes when member states are suspected of infringing EU law (such as failing to enforce tax regimes) and interprets the law when national courts ask it do so (e.g. on issues such as consumer rights, data protection or employee rights).

The distinction is important because the UK seems to accept that the ECJ must adjudicate, but is less willing to allow it to overrule British courts when it comes to questions of how to interpret the law.

The sticking point is, in reality, the dispute resolution mechanism for the withdrawal agreement. The EU is certainly betting on a more traditional approach – i.e. using the ECJ to interpret the agreement. The UK negotiating seems to be hoping for an alternative system (mediation or arbitration), but since the EU’s position has been approved by the member states, a change in that proposal would have to be approved again – and that’s not always a walk in the park.

Other trade agreements entered into by the EU have considered a dispute resolution mechanism which did not include the ECJ (for example, Canada), but the ECJ maintains its role in the interpretation of the new law that may develop as a consequence of that trade agreement (the interpretative hat mentioned above).

David Davies seems to understand this. That’s why it looks as though the UK is working towards a Norway-style Brexit – a return to the EEA, subject to the EFTA court, and maintaining a less obvious submission to the ECJ court.