Free Consultant
The New Inter-state Arbitration under the EU-UK Trade and Cooperation Agreement
After more than four years since the Brexit vote and just a week before the end of the UK-EU withdrawal agreement, on December 24, 2020, the EU and the UK finally reached a mutual agreement on the Trade and Cooperation Agreement (TCA), which became temporarily effective on 1 January 2021 [1], and provided the basis for the UK partnership with the European Union. The deal represents an ambitious and balanced economic partnership, and is the foundation for the law that will be related to trade competition, controls on financial assistance, as well as, public procurement.
TCA is an international treaty and its interpretation is governed by international law only. It is not an interpretation under the internal law of either parties (either EU or UK law) [2].
Additionally, the dispute resolution process is also a sensitive part of the TCA negotiations as the Court of Justice of the EU (CJEU) will be terminated and will play no role in the process. This is an issue that the United Kingdom insists on.
Overview of the New EU-UK Dispute Resolution Protocol
The settlement requirements are set out in Section 6 of the TCA, and should be studied in conjunction with a separate appendix that defines the Rules of Procedure for this adhoc arbitration. Dispute settlement under the TCA is a special mechanism which stipulates that both the EU and UK courts will not have any jurisdiction with regards to dispute settlement under the TCA. TCA also includes additional dispute resolution procedures in the TCA, as follows; 1. Consultations, and 2. Arbitration, followed by the Compliance Phase and the Review Phase.
Phase 1 Consultation
Both the UK and the European Union, which are “Parties”, whether they are the “Complaining Party”, or the “Responding Party”, are both bound to undertake a consultation process based on good faith with the intention of reaching a mutual resolution. The consultation process will be concluded within 30 days counting from the date of a written request which is submitted to the responding party, unless the parties agree to continue the consultation process.
However, if the dispute is an urgent matter, e.g., a dispute that may be related to perishable assets or seasonal products, the conclusion of this process will be reduced to 20 days and the responding party is obliged to accept it within 10 days after the date of submission.
All consultations and information used during consultation process are considered as confidential and must not affect each parties’ right to take any further action.
Phase 2 Arbitration
Progress to this arbitration process can be executed under the following conditions;
- The responding party did not provide a response within the above mentioned 10 days.
- Consultations was not held within the aforementioned timeframe.
- The consultation process was able to be concluded, but no mutual agreement could be reached between the parties.
- The parties agree not to enter into the consultation process, thus in this situation, the parties can immediately proceed to the arbitration process.
Proceeding to the arbitration process begins with a written request by;
- Identifying the measures in question, and
- Provide an explanation as to why the measure violates any applicable law or provision in a manner that is substantially adequate to submit a legal petition.
The Arbitration Tribunal will consist of a total of three independent arbitrators [5] with one of them serving as chairperson. The designated chairperson must possess the relevant experience with regards to dispute resolution processes. In addition, each arbitrator must also have expertise in international law and trade, in addition to, the specific issues identified for the TCA [6]. Every arbitrator must “have the required qualifications to be appointed as a senior judiciary in their respective country, or be a widely-accepted competent judiciary” [7] [8].
Under the TCA, the Arbitration Tribunal has 160 days in order to issue a final ruling, counting from the date of the Tribunal appointment [9], the ruling of which can either be the result of an unanimous or from a majority vote [10].
The arbitration ruling is considered to be binding [11] to both the European Union and the United Kingdom, and both parties must publicly announce the ruling under the protection of the confidential information law [12].
Source:
- https://www.mayerbrown.com/en/perspectives-events/publications/2021/01/arbitration-of-eu-and-uk-disputes-under-the-eu-uk-trade-and-cooperation-agreement-a-whistle-stop-tour#_edn21
- https://www.ashurst.com/en/news-and-insights/legal-updates/the-eu-uk-trade-and-cooperation-agreement/
- https://www.instituteforgovernment.org.uk/explainers/future-relationship-dispute-resolution
- https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/957694/TCA_SUMMARY_PDF_V1.pdf
- https://globalarbitrationnews.com/new-inter-state-arbitration-mechanism-under-the-eu-uk-trade-and-cooperation-agreement/
- [1] The agreement will remain temporarily in effect until the European Parliament gives its consent.
- [2] Part 1, Title II, Article COMPROV.13 and Article COMPROV.16
- [3] Part 6, Title 1, Chapter 2, Article INST.13
- [4] Part 6, Title 1, Chapter 2, Article INST.14
- [5] Part 6, Title 1, Chapter 2, Article INST.15(1)
- [6] Part 6, Title 1, Chapter 2, Article INST.16(1)(a)
- [7] Possess the qualifications required for appointment to high judicial office in their respective countries, or who are jurisconsults of recognized competence.
- [8] Part 6, Title 1, Chapter 2, Article INST.16(2)
- [9] Part 6, Title 1, Chapter 2, Article INST.20(4)
- [10] Part 6, Title 1, Chapter 4, Article INST.29(1)
- [11] Part 6, Title 1, Chapter 4, Article INST.29(2)
- [12] Part 6, Title 1, Chapter 4, Article INST.29(5)
