Panel would not directly impact on national laws
In a report published this week, the International Regulatory Strategy Group (IRSG), which represents financial services companies and law firms in the City, sets out the need for a “judicial… rather than political or diplomatic” panel for disputes between the UK and EU arising out of any legal agreement on trade.
As negotiations continue towards a post-Brexit landscape, the report, compiled in collaboration with City bigwigs, Hogan Lovells, addresses the key problem of which body should interpret any free trade agreement between the EU and the UK when disputes arise.
At the moment, disputes arising out of EU law are handled by the Court of Justice of the European Union (CJEU), of which the European Court of Justice (ECJ) is a part. But the UK government has sought to reassure Brexit supporters that the ECJ will have no ‘direct jurisdiction’ over the UK, and Britain’s distance from the Luxembourg court is seen as a “red line” issue.
The IRSG report makes it clear that the judicial body which it envisages would be limited in its scope to dealing with disputes arising out of the free trade agreement only rather than EU law more generally — and would not directly impact on national laws, which is what vocal Brexit supporters are so concerned about.
Rachel Kent, global head of the financial institutions sector at Hogan Lovells and Chair of the IRSG’s working group which authored the report, tells Legal Cheek:
Our proposals on dispute resolution follow the premise: ‘one of us, one of them and an independent’ as David Davis, Brexit minister, recently put it. We see that there may well be situations in the future with ‘material divergence’, where the regulatory regimes between the EU and the UK potentially become unaligned after Brexit. If agreement cannot be reached between the parties this lead to disputes between the two sides and in extremis to the UK and EU no longer having access to each others’ markets. We know that a rigorous dispute resolution body is needed to resolve any such disputes, and that it has to be acceptable to both the UK government and the EU.
Kent adds that it looks like the UK government is beginning to tackle these issues. Referencing an interview with David Davis on The Andrew Marr Show at the weekend, she says: “In recent media coverage, it does look as if [Davis] has also taken the problem of “material divergence” on board and recognises that a mechanism to resolve those divergences is needed.”
Meanwhile, in a terse letter to The Times earlier this week, Professor Sir David Edward, former judge of the CJEU, criticised Theresa May’s speech made in Florence last week where she stated that: “The EU has never felt like an integral part of our national story, in the way it does to so many elsewhere in Europe”.
Edward’s letter (embedded below) says that May “does not speak for his family”, referencing a family member who died during World War II and who is buried in a war cemetery in France.
— Philippe Sands (@philippesands) September 26, 2017
Edward, currently an emeritus law professor at the University of Edinburgh, has previously lambasted the UK government for its stance on the ECJ, and was quoted in the press as arguing that it’s “not this big bogeyman” and that Ms May “doesn’t know the difference between the court of human rights and the court of justice”.
For all the latest commercial awareness info, and advance notification of Legal Cheek’s careers events, sign up to the Legal Cheek Hub.