The UK-EU Withdrawal Agreement: dispute settlement and EU powers

Arrangements relating to the UK’s exit from the EU are covered by the Withdrawal Agreement (WA) agreed by the UK Government and EU in October 2019. The WA was ratified by both the UK and EU in the days leading up to the UK’s withdrawal from the EU on 31 January 2020, and came into force immediately following the UK’s exit.

The WA provides for a transition period, during which EU law (with a few exceptions) continues to apply to the UK, and the UK remains part of the EU Single Market and Customs Union. The transition period ends on 31 December 2020. The WA establishes a Joint UK-EU Committee to oversee the implementation of the Agreement. It has a number of decisions it needs to take before the end of the transition period, in order to implement arrangements envisaged by the WA. These include tasks relating to the implementation of the WA Protocol on Ireland/Northern Ireland (See Commons library briefing paper 8996, The UK-EU Withdrawal Agreement Joint Committee: functions and tasks).

In September 2020, the UK Government introduced the Internal Market Bill which included controversial clauses which would enable the Government to disapply parts of the Protocol on Ireland/Northern Ireland. This led to the launch of infringement proceedings by the European Commission against the UK for a breach of the WA. The WA enables the European Commission to bring infringement proceedings and refer potential breaches of EU law to the Court of Justice of the EU, as if the UK is a Member State, until the end of the transition period (and for four years after the end of transition period for breaches committed before the end of the transition period). It also extends this power to apply in relation to alleged breaches of the WA during the transition period.

The WA also establishes a dispute settlement process for where the UK and EU disagree over the interpretation or application of the Agreement, but this comes into operation after the end of the transition period. Where there is a dispute, the UK and EU will initially seek to resolve it within the Joint Committee. Where this is not possible, the dispute may be referred to an arbitration panel which can make binding rulings. The Court of Justice of the EU (CJEU) will provide interpretations of questions of EU law to the panel. Failure to comply can result in the imposition of a lump sum or ongoing penalty payment, and non-compliance would ultimately entitle the complainant to suspend certain treaty obligations or elements of other UK-EU agreements.

Following the end of the transition period, the CJEU will have jurisdiction in a limited set of areas. This includes jurisdiction to give rulings relating to the WA citizens' rights provisions for a further eight years. EU institutions will have powers in relation to certain provisions of the Protocol on Ireland/Northern Ireland