Enforcement and dispute resolution under the Withdrawal Agreement and any future relationship agreement: no role for the CJEU….or is there?

On its face, the thrust of the UK Government’s Future Partnership Paper on Enforcement and Dispute Resolution (the Paper), published on 23 August, is to rule out the jurisdiction of the Court of Justice of the European Union (CJEU) to determine the enforcement of rights and obligations by individuals and businesses derived under the Withdrawal Agreement (and any future relationship agreement) and disputes between the EU and the UK.  Since the Paper was published, the Prime Minister has again reiterated the Government’s position that “the UK will be able to make its own laws – Parliament will make our laws – it is British judges that will interpret those laws, and it will be the British Supreme Court that will be the ultimate arbiter of those laws.”

However, as discussed below, whilst perhaps consistent with the stage of negotiations, the Paper is drafted to leave considerable room for manoeuvre, and it leaves many questions unanswered regarding enforcement of rights and obligations under the Withdrawal Agreement and any future relationship agreements and dispute resolution between the UK and the EU after Brexit.

The Paper follows the publication on 22 August of the UK Government’s Future Partnership Paper on Providing a Cross-border Civil Judicial Cooperation Framework, considered in our blog post here, which presented the UK’s position on the extent to which current EU rules on choice of law, jurisdiction and enforcement of judgments should continue to apply as between the UK and the EU Member States post-Brexit.   Continue reading

CETA UPDATE: CETA is signed; Provisional application of CETA and Brexit; First government-to-government meeting to discuss establishing the multi-lateral investment court system

On 30 October 2016, the EU and Canada signed the Comprehensive Economic and Trade Agreement (the CETA).  As explained in our blog post here, the text of the CETA, which was originally agreed in 2014, was subjected to "legal scrubbing" in February 2016 which led to the inclusion, at the instigation of the EU, of an Investment Court System (an ICS) in place of the ad hoc investor-State arbitration provisions which had originally been included in CETA, and are included in roughly 3200 international investment agreements and other treaties. 

On 13 and 14 December 2016, the European Commission (the Commission) and the Canadian Government met in Geneva to engage in "exploratory discussions" with government representatives from around the world on the establishment of the multilateral ICS. It will have been the first meeting at government-to-government level on this initiative since the ICS was first proposed by the Commission in its Concept Paper of May 2015. For the multilateral ICS to succeed in the way envisioned by the Commission, broad global support will be required.

The CETA will be provisionally applied in advance of its ratification. However, as discussed below, provisional application will not extend to certain of the substantive investor protections, nor to the ICS. The exclusion of certain provisions from provisional application raises a number of questions as to how the agreement will operate in practice. 

Interestingly, whilst the UK has indicated that it intends to provisionally apply the CETA, the exclusion of the ICS from the provisional application has been described by the UK Government as its "main ask" of the EU in this context. The UK Government has also concluded that, even though CETA is being put forward as a "mixed agreement" and ratified by all the Member States, the UK will not automatically benefit from CETA's provisions after the UK leaves the EU.

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Trade Post-Brexit: What would a hard Brexit mean for international trade?

The UK’s vote to leave the EU brings with it the possibility of so-called 'hard Brexit'. Business needs to understand what Britain leaving the EU without a smooth transition to a new framework might mean for cross-border trade both within Europe and between Europe and the rest of the world.

At the point when the British government announces its formal intention to exit the EU by triggering Article 50, a two-year countdown will begin to the UK leaving the EU. Understanding the various changes, analysing the risks they pose and working through potential solutions will all be essential to help firms position themselves to navigate the challenges and opportunities that lie ahead.

The peculiarity of the Article 50 process – with its two-year ticking clock – makes this preparatory work all the more urgent. If no alternative relationship or even temporary transitional arrangement were to be agreed between Britain and the EU before the two years run out, the EU treaties would cease to apply to the UK, with nothing to replace them. This has profound implications for both sides.

Herbert Smith Freehills has worked in collaboration with The Boston Consulting Group and Global Counsel to produce a report that considers the potential impact on trade in goods and services if the UK left the EU single market and the EU Customs Union without any new trade agreement in place.The report is designed to help business leaders understand and prepare for a sharp shift in the UK’s relationship with the EU: hard Brexit. Regardless of the eventual outcome, planning for a hard Brexit scenario provides businesses with a baseline to see most clearly the potential impact of the possible changes and to make corresponding plans of action.

Our conversations with business leaders suggest the mood is not necessarily one of negativity, but the scale of the potential change coupled with the lack of clarity as to how it might be effected leaves a lot of uncertainty in the short-to-medium term. Businesses are struggling to understand what Brexit would mean for them. Understanding hard Brexit is a good place to start.

‘We do not necessarily think that a hard Brexit is the most likely outcome of negotiations,’ says Lode Van Den Hende, a partner and international trade law specialist at Herbert Smith Freehills. ‘But planning for this scenario is the most effective way for businesses to compare their current position from within the EU single market with a counterfactual position in which the UK trades with the EU and the rest of the world on the basis of WTO rules. From this baseline, organisations can see most clearly the potential impact of the possible changes and make a corresponding plan of action.’

This report not only aims to help businesses understand the implications of a hard Brexit, but the role they may play in shaping that or an alternative outcome.

The report, produced by Herbert Smith Freehills, The Boston Consulting Group and Global Counsel contains expert contributions from Stephen Adams, Partner, Global Counsel, Pierre Mercier, Senior partner and managing director, The Boston Consulting Group, and Lode Van Den Hende, Partner, Herbert Smith Freehills.

Please follow this link to Herbert Smith Freehills' Brexit hub to download a copy of the report. 

Lode Van Den Hende
Lode Van Den Hende
Partner
+32 2 518 1831

The recognition of new States at international law: UK Parliament passes motion on Palestine

When it comes to questions of recognition, “..there is probably no other subject in the field of international relations in which law and politics appear to be more closely interwoven.” (Hersch Lauterpacht, 1947)

The Motion

On 13 October 2014 a backbench motion passed in the House of Commons of the United Kingdom (UK). The motion, put forward by Member of Parliament (MP) Grahame Morris, stated after amendment:

That this House believes that the Government should recognise the state of Palestine alongside the state of Israel, as a contribution to securing a negotiated two state solution.

The number of votes cast represented less than half of all MPs (650 in all) but among those who voted the motion passed by a wide margin: 274 to 12. The recognition of States is within the purview of the executive branch as a discretionary power of the Crown and the vote does not bind the government of the UK. Current UK policy is to reserve “…the right to recognise a Palestinian state bilaterally at the moment of our choosing and when it can best help bring about peace“.

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ECHR reaffirms State immunity from civil proceedings for acts of torture in Jones v United Kingdom

In the recent case of Jones and others v United Kingdom, the European Court of Human Rights (the Court) found that the United Kingdom had not breached Article 6 of the European Convention on Human Rights (the right of access to a court) by granting immunity from jurisdiction to Saudi Arabia and its officials in respect of civil claims brought against them for alleged acts of torture. The Court held that the generally recognised rules of public international law did not contain an exception to State immunity in respect of civil claims concerning alleged acts of torture. It also found that such immunity of a State also protects individual employees and officers in respect of acts undertaken on behalf of the State.

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SFO brings first Bribery Act charges

The Serious Fraud Office (“SFO“) had its first day in court in a Bribery Act prosecution on 24 September 2013, with three of four defendants connected with a £23m fraud at Sustainable AgroEnergy plc (“AgroEnergy“) facing charges of making and accepting a financial advantage contrary to sections 1(1) and 2(1) of the Bribery Act 2010. Continue reading

New EU Directive: Reporting by Extractive Companies on Government Payments

The European Parliament and Council of Ministers have agreed the final form of the new EU rules for the disclosure, on a project by project basis, of payments to governments by companies operating in the extractive  industries. The EU’s agreement is part of a suite of transparency initiatives which are designed to promote good governance and improved national development outcomes for developing countries.

All large companies “active” in the oil, gas and minerals industries or the logging of primary forests will be affected and the rules will apply to both EU-incorporated companies and non-EU companies that have a listing in the EU.

We have summarised in a briefing the key aspects of the new requirements, when they will come into force and how they compare with the similar requirements being introduced in the United States under the Dodd-Frank Act.

Please email Fiona Rafla if you would like a copy of this briefing.

EU takes steps towards easing Zimbabwe sanctions

Susannah Cogman and Jeremy Sher comment on the EU’s recent easing of the Zimbabwe sanctions regime.

On 19 February 2013, the European Union (“EU“) took a small step towards easing its sanctions regime in relation to Zimbabwe.  Twenty one individuals and one entity were removed from the EU’s list of designated persons, and the travel ban imposed on six members of the Government was suspended.  These twenty one designated persons had been subject to the EU’s asset freezing regime under Council Regulation (EC) No 314/2004.  These amendments have effect from 21 February 2013. 

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The UK court refuses permission for judicial review of a decision by UK government to provide intelligence to the CIA for use in drone strikes

On 21 December 2012, in R. (on the application of Noor Khan) v Secretary of State for Foreign and Commonwealth Affairs [2012] EWHC 378 (Admin), the High Court refused permission for the judicial review of a ‘decision’ by the Secretary of State for Foreign and Commonwealth Affairs to provide intelligence to the US authorities for use in drone strikes in Pakistan.

The claimant alleged that employees of UK Government Communication Headquarters (GCHQ) were at risk of committing criminal offences in England and Wales as secondary parties to murder or war crimes by providing “locational intelligence” to the Central Intelligence Agency (CIA). However, the court considered that the application was, in reality, an attempt to persuade the court to sit in judgment on the sovereign acts of a foreign state, and as such it should be refused.

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