Parliament debates post-Brexit sanctions

The House of Commons is debating the implications of sanctions policy today. Debate pack of background material and details are here, and live feed on Parliament TV here.  This follows a public consultation on the future legal framework for imposing and implementing sanctions and the announcement of new sanctions legislation in the Queen’s Speech. Tomorrow the EU External Affairs Sub-Committee of the House of Lords will hear evidence as part of its inquiry into UK sanctions policy after Brexit, including from Maya Lester QC. Details here and coverage here.

EU trade deals and the death of Investor-to-State Dispute Settlement

Aidan Robertson QC

The EU is about to sign a free trade agreement with Japan and it has released, in the last few days, a short FAQ document. Usually such agreements included investor-state dispute resolution mechanisms such as UNCITRAL, ICSID, and so on. The EU’s policy on this is made clear on page 6 of the recent FAQ: http://trade.ec.europa.eu/doclib/docs/2017/july/tradoc_155684.PDF

“A new system – called the Investment Court System, with judges appointed by the two parties to the FTA and public oversight – is the EU’s agreed approach that it is pursuing from now on in its trade agreements. This is also the case with Japan. Anything less ambitious, including coming back to the old Investor-to-State Dispute Settlement, is not acceptable. For the EU ISDS is dead.”

Thus, even if the UK secures a trade deal with the EU, disputes will not (on the EU’s approach) go to UNCITRAL or ICSID or anywhere else but the Investment Court System that is outlined in the FAQ.

The future of CAP subsidies in the UK

Aidan Robertson QC

The Common Agricultural Policy accounts for nearly 40% of EU expenditure during the 2014-2020 budget period.

http://researchbriefings.parliament.uk/ResearchBriefing/Summary/SN06455#fullreport

UK agriculture receives approximately €3bn CAP funding annually in various forms.

http://researchbriefings.files.parliament.uk/documents/CBP-7602/CBP-7602.pdf

The new Secretary of State for Environment, Food and Rural Affairs, the Rt Hon Michael Gove MP, was questioned on Radio 4’s Today Programme on 13 June 2017 on the future of CAP subsidies in the UK, being asked ‘can you guarantee them to the scheduled end of this Parliament’ i.e. 2022? Mr Gove replied ‘yes – that is a manifesto commitment’.

http://www.bbc.co.uk/programmes/b08tbdxw at 2:19:30.

This appears to give broad continuity of funding for the agriculture sector in the immediate post-Brexit years.

It is, however, important to appreciate that the legal environment for the agriculture sector is nevertheless likely to change on Brexit, whatever the terms of the forthcoming (one still assumes) Great Repeal Bill. Until now, agriculture has enjoyed a limited degree of protection from the full application of EU rules on competition conferred by Article 42 TFEU. This provides that Union rules on competition apply to production of and trade in agricultural products only to the extent determined by secondary legislation, account being taken of the objectives of the common agricultural policy set out in Article 39 TFEU. The extent of that protection is currently under consideration by the Court of Justice of the EU in the Endive Cartel case (Case C-671/15 APVE). Advocate General Wahl’s opinion was delivered on 6 April 2017 and the Court’s judgment is awaited.

http://curia.europa.eu/juris/liste.jsf?language=en&jur=C,T,F&num=c-671/15&td=ALL

That protection will cease to apply once the TFEU itself ceases to apply on Brexit, thus exposing the agriculture sector to the full application of the UK’s domestic competition law. I will examine the potential implications in a future blog, after the Endive Cartel judgment has been handed down.

The CJEU rules that the EU is more competent than previously thought

Aidan Robertson QC

In earlier blog posts (here and here) I explained that the Court of Justice of the European Union (CJEU) was due to rule on the extent of the Union’s exclusive competence to negotiate trade deals in a case in which the Commission was seeking an opinion on the EU/Singapore trade deal (Opinion 2/15) and that this would be significant for the trade deal that the UK is hoping to negotiate with the EU.

The CJEU’s Opinion was handed down on 16 May 2017. The CJEU has ruled that the extent of the EU’s exclusive competence is much broader than the Court’s Advocate General had advised in her opinion handed down on 21 December 2016. In that opinion (see https://brexit.law/2016/12/) AG Sharpston had identified several areas where the EU did not have exclusive competence, albeit none of these would likely be core to any trade deal.

The CJEU has now ruled that EU’s competence is broader than its Advocate General had advised. The only areas in the EU/Singapore free trade agreement which the CJEU identified as falling within shared competence with Member States were the fields of non-direct foreign trade investment and the regime governing dispute settlement between investors and Member States.

This means that any trade deal struck between the EU and the UK, even if it covers those two areas of mixed competence, can enter into force on the basis of provisional application even without ratification by all Member States (including regional parliaments where relevant). Member State ratification will only be required to give effect to the two areas of mixed competence, if they form part of an EU/UK agreement. This should simplify the task of negotiation of a new trade agreement.

The CJEU’s press release is here.

The CJEU’s Opinion is here.

Consultations on post Brexit UK sanctions law and policy

Maya Lester QC

There are currently 2 major consultations into the shape of UK economic sanctions post Brexit:

1. The Foreign & Commonwealth Office has published a white paper consulting on the legal powers it will need to be able to continue imposing and implementing sanctions once the UK leaves the EU.  Its focus is on the legal powers necessary to operate UK sanctions and not on the shape of UK sanctions policy in the future or other policy issues. Comments on the questions for consultation should be sent to the FCO by 23 June 2017 (details on the consultation paper).

2. The House of Lords EU External Affairs Sub-Committee is undertaking an inquiry into UK sanctions policy after Brexit.  The inquiry will hear oral evidence and take some written evidence by the end of June, and will explore the advantages and disadvantages of future co-operation between the UK and the EU on sanctions policy and how co-operation might take place, the current EU sanctions regime and how this will be transposed into UK law, and the impact of a separate UK sanctions regime on the UK’s ability to achieve its foreign policy goals. The UK Sub-Committee’s page giving information about the inquiry is here.

This follows also the call from the House of Commons Foreign Affairs Committee for the FCO to clarify by March 2018 “how the UK will impose sanctions post-Brexit, explain whether Brexit would entail changes from the current sanctions regime and analyse the costs and benefits of the possible models for future UK-administered sanctions”.  This was in the Committee’s report on the UK’s relations with Russia (link here).

These follow 2 other recent UK sanctions consultations:

3. A consultation by HM Treasury’s Office of Financial Sanctions Implementation (OFSI) on its new powers to impose civil monetary penalties for sanctions breaches, which led to new guidance and a consultation response (link here).

4. A report by the House of Lords EU Justice Sub-Committee on the legality of the EU sanctions listing procedure (link here).  The purpose of this inquiry was to understand why EU targeted sanctions were being struck down by the EU courts, and whether improvements could be made to the sanctions listing process, and the report makes a number of recommendations to Government (consultation response here).

Further details and links on www.europeansanctions.com

Terrorism: the EU picture

David Anderson QC

David Anderson QC’s article about Brexit and Security, Terrorism: the EU picture, has just been published in Counsel magazine.

In summary:

  • The leadership role in the EU exercised by the UK in matters relating to security (in particular counter-terrorism) will inevitably be lost after Brexit.
  • There are reasons to hope that broadly satisfactory arrangements can be made for subsequent access to EU databases, institutions and procedures such as the European Arrest Warrant.
  • But six factors are identified that have the potential to obstruct agreement: lack of precedent, desire for bespoke arrangements, the UK red line over acceptance of CJEU rulings, acceptance of future EU developments, political contagion and data sharing.

The article reflects in part his oral evidence of 28 February 2017 to Parliament’s Committee on Exiting the European Union (“Brexit Committee”) on the same subject, which is reflected in the Committee’s report at paras 92 and 232-272.

Preparing for Brexit: the legislative options

Richard Gordon QC and Tom Pascoe have published a paper on the legislative process of preparing for Brexit. The paper follows the release of the government’s White Paper on the Great Repeal Bill on 30 March 2017. It examines the major constitutional implications of the Bill, including the anticipated use of extensive Henry VIII powers to ‘repair’ EU law after Brexit, the status of EU case law after Brexit day and the effect of devolution on the Bill. It also sets out three further legislative models for preserving EU law, and describes the way in which these may be used alongside a Great Repeal Bill to ensure that the law operates coherently after the UK’s departure from the EU.

The paper can be found here

Government publishes White Paper on the ‘Great Repeal Bill’

Hugo Leith

The Government has released an initial outline of the legislation intended to provide the domestic legal system with a transition from membership of the EU, to Brexit.

The term itself, ‘Great Repeal Bill’ (an ambitious echo of the Great Reform Act of 1832) captures only a small part of the process.  The Bill would in fact effectively entail the wholesale re-enactment and continuation of law; the Secretary of State has though explained in evidence to Parliament the terminology on the basis that alternative names, such as the ‘Great Continuity Bill’ lack “the same appeal”. Continue reading

Parliamentary reports on legal implications of Brexit

Maya Lester QC

The House of Commons Justice Committee has published a report on the implications of Brexit for the justice system, including key priorities for criminal justice, civil law and the legal services sector. The report welcomes the Government’s indications of continued cooperation with the EU on criminal justice (an area “too precious to be left vulnerable to tactical bargaining”), recommends a continuing role for the European Court of Justice as regards “procedural” regulations on choice of jurisdiction and mutual recognition and enforcement of judgments, and retaining efficient mechanisms to resolve family law cases involving EU Member State and the UK.

The House of Lords EU Sub-Committee has published a paper on ‘justice for families, individuals and businesses’ (Sir Richard Aikens, Richard Lord QC and Oliver Jones of Brick Court Chambers all gave evidence to the committee) setting out options for continued judicial cooperation in civil matters (the Brussels I Regulation recast, Brussels IIA and the Maintenance Regulation) again recommending that the Government should “keep as close to these rules as possible when negotiating their post-Brexit application”.