This post, written by Philip Moser Q.C. of Monckton Chambers, explores the nature of the UK-EU Trade and Cooperation Agreement, which is governed primarily by international law, rather than EU law.
That the Trade and Cooperation Agreement between the European Union and the United Kingdom (the “TCA”) is an international Treaty is a trite statement of the obvious. Yet it is a statement of the obvious that the Parties have found worth emphasising both in the Preamble and in the (still provisional) Articles of the TCA. There are express terms on the interpretation of the TCA through international law, expressly contrasted with domestic laws, which might be thought copperplate Treaty provisions. However, this element is emphasised to an extent unusual in the EU’s international agreements, and appears to have been done by the Parties with a clear purpose in mind.
Thus, the fifth paragraph of the Preamble of the TCA speaks of “dispute settlement and enforcement rules that fully respect the autonomy of the respective legal orders of the Union and of the United Kingdom, as well as the United Kingdom’s status as a country outside the European Union.” Such a set of dispute resolution rules by way of an independent arbitrator with bespoke enforcement provisions is then provided in Part 6 of the TCA.
Part 1 of the TCA on “Common and Institutional Provisions” states, at Article 13, which bears the sub-heading “public international law”, at paragraph 1, that:
“The provisions of this Agreement and any supplementing agreement shall be interpreted in good faith in accordance with their ordinary meaning in their context and in light of the object and purpose of the agreement in accordance with customary rules of interpretation of public international law, including those codified in the Vienna Convention on the Law of Treaties, done at Vienna on 23 May 1969.”
That is both an express reference to, and echoing of the terms of, Article 31 of the Vienna Convention on the general rule on the interpretation of Treaties, which provides inter alia for a contextual interpretation of Treaties, where the relevant context is the Treaty text, including its preamble and annexes, together with any accompanying instruments. That context is further limited to any subsequent agreements between the parties. It is worth noting that it does not include previous Treaty relations.
The background to these TCA provisions on interpretation and dispute resolution is the determination of the UK Government to ensure that the TCA is outwith the orbit of EU law. Thus, its interpretation is not to be governed by the EU principles of interpretation developed by the Court of Justice of the European Union (the “CJEU”) and is not to be carried out by that body. Instead, it is to be governed by international law principles and carried out by an independent arbitrator.
In case there were any doubt about the matter, paragraph 2 of Article 13 TCA makes it express that: “For greater certainty, neither this Agreement nor any supplementing agreement establishes an obligation to interpret their provisions in accordance with the domestic law of either Party.”
The mentioned “domestic law” of the EU is self-evidently intended to mean, or to include, EU law.
And further to avoid any doubt about the jurisdiction of the CJEU, at least as far as the UK is concerned, paragraph 3 of Article 13 TCA adds that: “For greater certainty, an interpretation of this Agreement or any supplementing agreement given by the courts of either Party shall not be binding on the courts of the other Party.”
This insistence on greater certainty on the matter of interpretation and jurisdiction is explicable in view of the UK’s ‘red line’ in relation to the status of the CJEU and of EU law after 1 January 2021. It is worth noting that this renders the TCA different to previous EU trade Treaties, such as the EU-Ukraine Free Trade Agreement. That agreement is an example of the family of “Deep and Comprehensive Free Trade Agreements” which the EU has entered into with a number of mainly Eastern European countries. It is a feature of those agreements that due account shall be taken of the case law of the European Court of Justice in their interpretation and that where the dispute resolution procedure turns upon the interpretation of EU law the arbitration panel shall not decide the question, but request the CJEU to give a ruling on the question (see e.g. Article 322 of the EU-Ukraine Agreement). It may be recalled in this context that in her 2 March 2018 Mansion House speech, then-Prime Minister Theresa May set out her desire to conclude such a Deep and Comprehensive Free Trade Agreement, apparently within a wider association arrangement. This was later expressly disavowed by the Johnson Government, the current Prime Minister having resigned from the May Cabinet on the issue.
It was considered by many commentators that the EU would not be willing to entertain a pure international law interpretation of a trade agreement touching so intimately on the law of the single market. That is because it is a basic tenet of the interpretation of EU law that the CJEU is to be the ultimate arbiter of the same (see e.g. Opinion 2/13 of the Court of 18 December 2014). Yet the TCA goes as far as it is possible to go, short of making it express, that this is not a Treaty within the wider ambit of EU law. Viewed from the EU-side of the telescope, the provisions of Article 13 TCA may, however, also be seen as a mechanism to ensure that the EU remains true to that basic tenet of EU law and Opinion 2/13 of the CJEU. By remaining a creature of pure international law, any independent interpretation of the TCA and its terms ought not to be the interpretation of EU law, nor to run the risk of being seen as judicial review of the acts of the EU or its Court. Thus it may well be the case that the UK Government was not in fact the only Party wishing to ensure that the TCA was outwith the orbit of EU law. Opinion 2/13, after all, was a case about the unlawfulness of the ratification of a Treaty by the EU (in that case, the ECHR), something the EU will be keen to avoid happening again.
What will be interesting to observe, once the TCA is in force, is how the rules of interpretation of the TCA may develop. The agreement contains many terms that are similar or identical to concepts of EU law, even where WTO terms are used in preference to TFEU terms. Thus, for example, as George Peretz Q.C. has pointed out elsewhere on this blog, the definition of “subsidy” in Article 3.1 TCA essentially parallels the definition of “State aid” in EU law. State aid lawyers will immediately be tempted to look to the case law of the CJEU to interpret the similar TCA subsidy provisions. Will that work? The immediate answer is that it is at least permissible: Article 13(2) TCA, cited above, provides that there is no “obligation” to interpret the TCA provisions in accordance with the case law of (in this case) the EU. That does not mean it is impermissible, however. Indeed, it is extremely common for parties in international trade disputes to cite interpretations of similar provisions by other courts or tribunals. It will be up to the TCA arbitrator to decide, on a case by case basis, whether or not the relevant TCA provision is to be interpreted the same way as – say – an equivalent TFEU provision on State aid. No doubt there will be areas where “TCA law” will diverge to a greater or lesser extent from EU law, not least in areas of bespoke bilateral UK-EU TCA provisions. In many areas there will likely be little or no diversion.
Beyond the interpretative and jurisdictional minutiae, it is worth pointing out that the Vienna Convention-based international nature of this Treaty does require something of a cultural shift for EU lawyers in the UK and elsewhere. The TCA is, by definition, not an instrument of EU law and it would be a category error to approach it as a species of EU Treaty within the wider family of association agreements, such as the EEA, EU-Ukraine or indeed the Withdrawal Agreement (and its Northern Ireland Protocol). The title of this blog is “EU relations law” and the TCA, when it is ratified, will form one (in fact the central) pillar of this new area of law. An essential characteristic of the TCA pillar is that it is not EU law.
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