Yesterday afternoon I was interviewed by Business Insider's Adam Payne in a nice pub in the London Bridge area. He's a very pleasant chap, who may prove somewhat useful in the coming months as he has been focusing on the merits of EFTA and the EEA, as well as the political plausibility of pursuing a softer Brexit. We spoke, among various other topics, about the potential role that the EFTA Court could have in settling trade disputes in the event of a comprehensive trade agreement being concluded. I owe great thanks to EFTA4UK for the opportunity.
Both Adam and I agree that completely escaping the jurisdiction of the European Court of Justice, and thus the law that it interprets and enforces, will be virtually impossible. But this does not mean subordination is unavoidable. The problem with this issue is that there appears to be some confusion over whether ceasing to be subject to a court necessarily equates to escaping it's jurisdiction entirely. For instance, neither Norway nor Iceland or Liechtenstein is subordinate to the ECJ in principle, but its rulings do impact upon the EEA's EFTA states.
To argue that we can untangle ourselves totally from the remit of the ECJ is to misunderstand the legal nature of trade. Trade between countries is enhanced not by deregulation but by harmonisation. When importers and exporters engage in trade on a level regulatory playing field, trade flow is boosted by the minimisation or elimination of checks and the simplification of paperwork designed to assess conformity to standards and process. The 'frictionless' movement of goods between exporters and importers that the government is craving in its position papers can only be achieved through regulatory convergence. And this regulation requires surveillance and enforcement.
In the event of the unlikely conclusion of a deep and comprehensive FTA, mechanisms will have to built in to mediate dispute settlement between the UK and the European Union. This could, in theory, be achieved on a bilateral, trilateral or multilateral basis. I am speculating because we've not seen a trade agreement anywhere close to the complexity of Brexit in political history. Provisions for dispute settlement in an FTA between the UK and the EU would, at least in part, equal the ECJ retaining some influence over Britain's trade with Europe. It would not mean being subject to, but being influenced and often mediated by the ECJ.
The distinction here is important. I think, judging by the introduction of a red line over ECJ subordination, an idea is had that we can completely avoid the rulings of any European Court. Hard Brexit does tend to suggest leaving all institutions and having very little or nothing to do with them in future, regardless of whether that is the case. The issue, though, that is raised by the prospect of an FTA is the legal arbiter that the UK will rely on or 'dock' to in order to provide effective co-determination in any trading settlement.
There is scope for the UK docking to the EFTA Court, as has been recommended to Switzerland in exchange for further market access to compliment its existing arrangements with the EU. There may also be scope for a trilateral system in which a UK Court, the ECJ and the EFTA Court work collaboratively in the course of settling disputes. If Britain were to pursue the WTO option, in one of the most economically suicidal policies in political history, the remit of dispute settlement would indeed divert somewhat from the ECJ. The trouble, as I have written, is that dispute settlement that relies upon WTO mechanisms is arduous and ineffective. A case between Airbus and Boeing, for instance, lodged back in 2004, is still ongoing and yet to be resolved.
But this is all guesswork. The trouble is that since nothing remotely resembling Brexit has ever taken place in international trade, there are no templates with which to work. This all depends on negotiation. And this uncertainty to me further reinforces the fact that the two-pillar structure characterising the Single Market, as per almost every facet of this debate, provides us with the most stable and useful legal framework in which to service trade with our nearest and dearest European market.
This, from Carl Baudenbacher, the president of the EFTA Court, on the homogenity achieved in the relationship between the ECJ and the EFTA Court is pretty enlightening:
"When it comes to the law on the books, the EFTA Court is supposed to follow relevant ECJ case law, whereas the ECJ is free to follow EFTA Court case law. As regards the law in action, this system has, however, largely been replaced by judicial dialogue. In this discourse, Advocates General and the General Court also play an important role.
ECJ President Vassilios Skouris wrote in 2014 that the relationship between the two EEA courts is a symbiotic one marked by mutual respect and dialogue which allows the flow of information in both directions. Homogeneity has therefore become a process-oriented concept.
The EFTA Court is in fact the only court of general jurisdiction whose jurisprudence is regularly taken into account by the ECJ when interpreting EU law. There have been cases in which the ECJ initially did not follow the EFTA Court, but in later cases put itself in line (taxation of outbound dividends, state gambling monopolies, the legal nature of a website)."
EFTA states are cushioned by the security of what this interesting study refers to as a 'constructive judicial dialogue', whilst unbound by a supranational authority. The EEA is really a trade agreement in itself, both configurable and constantly evolving. It seems increasingly obvious to me that any eventuating Brexit will in some significant way be influenced by the functions of the ECJ. The government knows this; hence their quite reasonable proposal to take ECJ rulings into account after a settlement has been finalised. I just wish we'd confront the blindingly obvious and stop beating about the bush.