16 March 2021
On 15 March 2021, the European Commission (the Commission) announced that it has commenced legal action against the United Kingdom (UK) over its alleged breach of the substantive provisions of the Protocol on Ireland/Northern Ireland (the NI Protocol or the Protocol) to the Withdrawal Agreement (WA) and the good faith obligation under the WA (Article 5). The Commission argues that the UK has breached these obligations by unilaterally extending the grace period for post-Brexit requirements on some goods entering Northern Ireland from Great Britain under the NI Protocol (on which we reported last week).
As our previous post identified, one route open to the Commission for the resolution of the dispute over the extension of grace periods is the initiation of infringement proceedings under Article 258 of the Treaty on the Functioning of the EU (TFEU), pursuant to Article 12(4) of the NI Protocol. On the other hand, a dispute relating to Article 5 of the WA – the obligation to act in good faith – would arguably be covered only by the dispute settlement provisions in Part Six, Title III, and would therefore begin with consultations in the UK–EU Joint Committee. In yesterday’s press release, the Commission announced that it is pursuing the first route and prepared to resort also to the second, if no mutually agreed solution is found within one month.
First, the Commission served the UK with a “Letter of Formal Notice” for breaches of “substantive provisions of EU law concerning the movement of goods and pet travel” applicable under the NI Protocol. In particular, the Commission’s announcement cites the UK’s obligations under Article 5 of the NI Protocol in relation to customs and movement of goods. The letter requests the UK to carry out “swift remedial actions to restore compliance with the terms of the Protocol”. The UK has one month to submit its observations to the letter of formal notice. After examining these observations, or if no observations have been submitted, the Commission may, if appropriate, decide to issue a “Reasoned Opinion”. If, after that, the Commission is still not satisfied with the UK’s compliance, the Commission may decide to refer the matter to the Court of Justice of the European Union (CJEU). The Commission’s press release observes that under Article 12(4) of the Protocol, the CJEU has full powers to impose a “lump sum or penalty payment” on the UK.
Second, European Commission Vice-President Maroš Šefčovič sent a “political letter” to the UK’s co-chair of the Joint Committee, David Frost, calling on the UK government to “enter into bilateral consultations in the Joint Committee in good faith, with the aim of reaching a mutually agreed solution by the end of this month.” The letter alleges that the UK’s unilateral measures are a violation of Article 5 (good faith) of the WA and calls on it to “rectify and refrain from putting into practice the statements and guidance published on 3 March and 4 March 2021”. The Commission stated that if the UK fails to enter into consultations in the Joint Committee in good faith, with the aim of reaching a mutually agreed solution by the end of this month, the EU may provide “written notice to commence consultations” under Article 169 of the WA. This would represent the first step in the process for settling disputes set out in Title III of Part Six of the WA.
The Commission added that, if no solution is found, the EU could refer the dispute to “binding arbitration”. The Commission also warned that, if the UK failed to comply with an award of the arbitration panel, the EU could suspend its obligations under the WA (with the exception of the citizens’ rights part of the agreement) or the Trade and Cooperation Agreement (TCA), in accordance with Article INST.24(4) TCA.
The text of the WA and the NI Protocol are available here.
The text of the TCA is available here.
If you wish to discuss these or other issues raised in our Brexit Insights, please contact Stephen Fietta, Laura Rees-Evans or Miglena Angelova.