The UK Parliament International Trade Committee has issued a report on "UK Trade Options Beyond 2019." There are lots of interesting items in there. Here is the section on dispute rules in a UK-EU FTA:
Dispute resolution
95.A key consideration regarding the terms of a UK-EU FTA is the form of dispute-resolution procedure that will apply. In respect of financial services, Mr Browne told us:
It is completely normal in trade agreements to have dispute resolution mechanisms […] [Y]ou can start off with the current regime, but in order to be dynamic and future-proofed against changes on either side you need some sort of dispute resolution mechanism that both sides accept.130
96.The UKTPO told us in written evidence that:
an EU-UK agreement might have its own dispute settlement or mutual recognition body that eased the continuation of existing standard setting procedures for food and other products.131
97.As we have noted, a key “red line” of the Government in negotiating Brexit is for the UK no longer to be within the jurisdiction of the ECJ. The Prime Minister’s Lancaster House speech clearly ruled out the form of dispute resolution that applies to non-EU EEA members (involving another supranational court which has a collateral relationship with the ECJ).132 This, she said: “would mean accepting a role for the European Court of Justice that would see it still having direct legal authority in our country”.133
98.As we have also noted, the Prime Minister said in her Conservative Party conference speech that Brexit will mean Britain no longer has laws made in Brussels and interpreted by judges in Luxembourg.134 However, as we heard in evidence, entering into any form of international dispute-resolution mechanism inevitably entails relinquishing an element of sovereignty. Dr Ortino of King’s College London told us “in theory, there is no difference” between the ECJ and any other dispute-resolution body: “Whether it is a panel decision or an appellate body decision or any other decision of an international tribunal, it may have the effect of telling a country that that certain behaviour is not complying with a specific international obligation”.135
99.The Brexit White Paper states that:
The UK already has a number of dispute resolution mechanisms in its international arrangements. The same is true for the EU. Unlike decisions made by the [ECJ], dispute resolution in these agreements does not have direct effect in UK law.
As with any wide-ranging agreement between states, the UK will seek to agree a new approach to interpretation and dispute resolution with the EU.
[…]
The actual form of dispute resolution in a future relationship with the EU will be a matter for negotiations between the UK and the EU, and we should not be constrained by precedent. Different dispute resolution mechanisms could apply to different agreements, depending on how the new relationship with the EU is structured.136
100.Dr Fox told us in evidence that:
All the EU FTAs have dispute resolution mechanisms that lie outside the ECJ. All the current EU FTAs tend to have bespoke agreements, depending on the agreement they […] and I think that that would be a good model going forward for a potential EU FTA […]137
101.This leaves open a wide range of possibilities. Notably, it remains unclear whether any possible dispute-resolution mechanism could involve provision for foreign investment protection, such that companies could sue states in an international tribunal for alleged discriminatory practices. As we heard in evidence, the inclusion of such investment protection arrangements (in the form of the Investor-State Dispute Settlement system and the Investment Court System) in FTAs has proved highly controversial.138
I would be surprised if a UK-EU FTA had anything other than the typical state-state dispute process used in most FTAs. It seems to me that this kind of process has the balance between economic integration and national sovereignty that most Brexiteers are looking for. (The only reason I can think of to include ISDS would be as a poison pill to undermine the negotiations.)
