Clarifications needed over UK clarifications!

This post is by Dr Jonathan Fitchen.

The UK’s recent attempt to begin to clarify its position during the Brexit negotiations concerning the future role, if any, for the ‘jurisdiction’ of the Court of Justice of the European Union (CJEU) in the UK post-Brexit is overdue. The UK Government has allowed the other 27 Member States of the EU and the European Parliament to effectively set the agenda for the entire Brexit negotiations. Now the UK is trying to vary that agenda by arguments advanced in several position papers. Among the issues dealt with by these position papers is the UK’s wish to end the ‘jurisdiction’ of the CJEU over the UK and its laws: this post is concerned with this issue and the UK’s position on CJEU ‘jurisdiction’

The CJEU ‘red-line’

Whether one is (or was) for or against Brexit, the UK’s red-line position concerning the CJEU has been confused and confusing ever since Prime Minister May indicated that she interpreted the Leave vote to mean (in part) that we had to, ‘… bring an end to the jurisdiction of the European Court of Justice in Britain’. The confusion arose not only from the perplexing use of the term ‘jurisdiction’ to describe the very limited opportunities for the CJEU to exercise any influence over ‘British’ laws while we are members of the EU, but also from the glaring contradiction in professing this wish while planning to ‘cut and paste’ vast swathes of EU law (including the majority of the decisions of the CJEU) into domestic ‘UK’ laws such that only the UK’s Supreme Court could even hypothetically contemplate a post-Brexit overruling of a CJEU decision within the UK. It seems very strange to try to escape something that no lawyer would regard as an existing CJEU jurisdiction over UK law and courts by compelling every ‘liberated’ UK court (except the UK Supreme Court) to then follow slavishly pre-Brexit CJEU decisions.

The UK sought to resolve one aspect of this confusion in its 13 July policy paper ‘Converting and Preserving Law’ (PDF) on the intended Repeal Bill; this indicated (sensibly) that the Repeal Bill would not compel UK courts to follow CJEU rulings, but would instead allow them to take CJEU decisions into account in reaching their own decisions. This clarification has however been undermined by the publication of the UK’s ‘Enforcement and Dispute Resolution’ paper on 23 August which (at paragraph 45) repeats that decisions of the CJEU will have the same status as decisions of the UK Supreme Court (i.e. will bind every UK court other than the Supreme Court).

Clarifying the ‘jurisdiction’ of the CJEU?

The August position paper additionally tries to resolve uncertainties including those arising from the UK’s political soundbites concerning the end of the so-called ‘jurisdiction’ of the CJEU in Britain. What does jurisdiction mean? At its simplest, ‘jurisdiction’ (understood about a court) defines aspects of that court’s lawful power to act: if the court has no jurisdiction it cannot act and must reject the case. Thus, can a given court hear a case valued at £3,000 or less? Can a given court entertain a given type of case? We would not wish to send cases on technical aspects of construction law to a court specialising in family law matters (etc.). A further type of jurisdiction concerns the types of actions or procedures that may be brought before a given court. With the greatest of respect to those who have clamoured for the end of the so-called jurisdiction of the CJEU over ‘British’ law (i.e. the different laws of England and Wales; Scotland; and Northern Ireland), the Member States have never given the CJEU an independent ability to act in relation to the application of any law by a Member State court. The most that can be said in this respect is that if (and only if) a court in a given Member State decides to ask the CJEU to clarify the interpretation of an aspect of EU law which clashes with a principle of domestic law, the decision of the CJEU on this matter will be binding on all Member State courts. It is important to notice two further points; first, the CJEU might decide that there is no clash and dismiss the application without affecting domestic law at all, second, it is always for the national court to apply the CJEU’s decision to the facts of the case. At no point have the EU’s Member States given (nor wished to give) the CJEU any independent jurisdiction over their domestic laws.

The post-Brexit direct jurisdiction of the CJEU

When the UK leaves the EU, it will naturally no longer be possible for the UK’s courts to refer questions of law to the CJEU because the UK will not be a Member State; this is elementary and therefore raises the question of what does the UK mean by ending the ‘direct jurisdiction’ of the CJEU? This is the clarification offered by the August position paper. The UK wishes to end the ‘direct jurisdiction’ of the CJEU in Britain post-Brexit. It may be that this is an attempt to indicate that the UK is willing to entertain some future ‘indirect’ role for the CJEU in its laws post Brexit (there might be some negotiating value in attempting such a gambit in certain situations). That said, the main aim of the UK’s position paper appears to be to try to dislodge the CJEU from playing any role in the administration or interpretation of the withdrawal agreement or its contents: this UK wish is understandable, but comes very late in the day and long after the EU’s agenda documents have been published (complete with significant default roles for the CJEU at various points in the Brexit processes).

Other options than the CJEU, the EFTA court

The UK rightly suggests that there are viable post-Brexit alternatives to relying on the CJEU to administer the withdrawal agreement or to police matters involving EU citizens’ rights (which the UK argues the domestic courts in the UK can adequately protect). The UK’s position on this matter seems instinctively correct: how can the UK leave the EU but still somehow be involuntarily subject to its laws? The EU’s default negotiating position on these matters is thus open to objections based on political reality and sovereignty. These arguments have been noticed by even current and former judges of the CJEU. (Strong criticism of the EU negotiating position on attempting to continue EU law and CJEU influence in the UK post-Brexit has been expressed by F. Dehousse (former CJEU judge for Belgium), and on 9 August The Times reported (£) that Koen Lenaerts (the President of the European Court of Justice) suggested the EFTA court could resolve withdrawal agreement or other disputes between the EU and UK post Brexit. That said, the EU’s default position does allow for the possibility of a different court/body than the CJEU acting in some circumstances to regulate post-Brexit UK EU relations. One difficulty is that the UK has left it very late to engage with the EU on this matter: The countdown to 29 March 2019 (two years after the triggering of the Article 50 EU exit mechanism) ticks away. A further difficulty is that the UK seems quite lukewarm in its position paper to the obvious judicial alternative to the EU’s CJEU, the EFTA court. (An overview of the EFTA court as an option can be found here.) As a rule in negotiations it is a bad idea to offer an objection to an agenda item without a viable ‘plug-in-and-play’ solution. A further potential risk of attempting to entirely dislodge the CJEU from the Brexit process is found in Article 218(11) TFEU:

‘A Member State, the European Parliament, the Council or the Commission may obtain the opinion of the Court of Justice as to whether an agreement envisaged is compatible with the Treaties.’

If the CJEU is asked such a question, and then renders an adverse opinion, the agreement cannot enter into force unless it is amended. Article 218(11) has seen the EU prevented from joining the European Convention on Human Rights by the CJEU because of the inevitable demotion of the Luxembourg based CJEU in any Human Rights case potentially heading to the Strasbourg Human Rights Court (per its Opinion 2/13 of 18 December 2014). The UK should be careful that, having triggered the countdown to departure from the EU and having been out-manoeuvred by the elephantine EU in setting the agenda, it does not then so focus on bypassing the CJEU as to accidentally create a withdrawal agreement that the CJEU can de-rail via Article 218(11) TFEU leaving us dangling over a Brexit cliff-edge on 30 March 2019.

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A Response to Judicial Comments on the Arbitration-Litigation Debate

Blog post by Derek Auchie

Recently, the Lord Chief Justice of England and Wales, The Right Hon. The Lord Thomas of Cwmgiedd, argued that the balance between litigation and arbitration as processes for resolving commercial disputes under the English and Welsh system had been taken too far in favour of arbitration. I was interested to read Lord Thomas’s points from the Bailii Lecture 2016 (PDF) as, on the face of it, they go against almost everything I have read and that I hear about the litigation-arbitration debate. I have to say I disagree with the tenor of what he said in his speech.

Before setting out why I disagree, let me be clear about two things. Firstly, I do agree that the choice of method of resolution of a commercial dispute is a complex one, dependent on many factors. Secondly, arbitration is not perfect as a process, even if it is deemed to be a suitable method in any particular case.

However, the speech delivered appears to be based on the notion that what is important is the development of the common law by judicial decision making. In my view, that is rarely, if ever, a matter of any priority for those in commerce who become involved in disputes. What they care about are issues such as: cost, speed, confidentiality, quality of decision making and enforceability. Now, I am not suggesting that arbitration always lives up to its billing in these areas, but I believe that it delivers a better process and outcome more often against these factors than litigation does.

Lord Thomas suggests that the criteria for appealing an arbitral award could be relaxed. However, that would give rise to an increase in unpredictability. The suggestion that arbitration stifles contribution to the development of the common law, even if a valid consideration for the parties (which I doubt), is not really borne out by the significant volume of arbitral appeal cases which end up in the English Commercial Court.

Litigation has its place, of course, but not as a means to allow the development of the law. In my view, it is not there for that purpose. The courts and the law are there to serve the public, not the other way around.

What is striking in today’s era of the search for better systems to resolve commercial disputes (an era which exists globally) is the suggestion that more appeals from arbitral awards (which could come from relaxing the grounds of appeal) would be a good thing. Those in the commercial sector who would pick up the costs of such additional appeals would not, I suspect, be thankful that their payment had contributed to the development of the common law.

It strikes me that the right approach to concentrate upon is having an understanding of all the methods available (whether mediation, litigation, arbitration, expert determination), ensuring that those who negotiate have the skills to do so effectively, and judging when any post-negotiation method might best be used. In my view, this is the future, not one where we consider the development of the law via litigation as an important aim in itself.

Derek has a keen interest in dispute resolution processes (court, tribunal, arbitration and mediation). He is the Programme Leader of our online LLM Dispute Resolution.

Resolving a dispute – Do you have the skills?

How should a dispute be resolved? This is a complex question, which used to have a simple answer – by negotiation and, if this fails, straight to court. Nowadays, it is not so simple.

Firstly, how may an effective negotiation be conducted? Strangely, lawyers and business graduates are not routinely taught negotiation skills. Yet, there are good and bad negotiation techniques. It is well understood that the use of certain techniques can lead to a fruitful negotiation where in the absence of those techniques, the outcome is likely to be less favourable. There is a vast volume of literature in this area, especially in the US, where the Harvard Programme on Negotiation is based. It is not only in commerce that good negotiation skills are needed; they are useful in the workplace too, whether dealing with colleagues, suppliers or even management. Workplace disputes that can be resolved early can solve a lot of time, effort and distress. Indeed, the same can be said (to a greater or lesser extent) of all disputes.

Where negotiation does not work, the ‘straight to court’ model is no longer viable. Lawyers have a duty to inform clients of all alternatives, as provided for in recent Law Society of Scotland guidance and these include mediation and (especially in commercial contracts) arbitration. These methods have their place, and, when chosen well, can bring critical benefits to any dispute process, such as: speed, less cost, privacy and can (especially with mediation) even allow parties to repair an ongoing relationship (family, employment, or even commercial). This latter dynamic is simply absent from most court processes. Further, recent research on resolving family law disputes suggests that a hybrid model (whereby lawyers can act both as lawyer and mediator) can work. Indeed, the perception of mediation as only for disputes involving relationships is now in the past, with regular increases in the use of mediation of commercial disputes: The Centre for Effective Dispute Resolution (CEDR) estimates that it was involved in 9,500 commercial mediations in 2014, 9% growth on the previous year.

Disputes can happen in any environment, and they are a fact of life. They are, in one sense, a waste of time. They are not productive or enjoyable. No-one has disputes recreationally. It is not a hobby. Making the process as streamlined, quick, painless and cheap as possible should therefore be a key priority of any dispute adviser, transactions adviser or line manager.

Learning about the different forms of resolution and the techniques involved, whether with a view to advising on disputes or to resolve them more effectively, is important. The Law School here is very active in this area; it already offers courses and programmes on dispute resolution, at undergraduate and Masters levels, including a Masters programme which is professionally accredited by the Chartered Institute of Arbitrators.

The plan is to specialise further in this area by launching a new Masters online part-time programme: LLM Dispute Resolution. If you are interested in being kept informed of developments on this new, exciting addition, please register your interest here. At the moment, we are collecting evidence of demand, so the higher the level of interest, the more likely this programme will launch.

The more education offered in this area, the more harmonious our relations with others will be. How can you argue with that?

Blog by Derek Auchie