Brexit Impasse - European Commission Commences Infringement Proceedings Against the UK
This article considers the recent decision of the European Commission to commence infringement proceedings against the United Kingdom and examines possible outcomes.

 

On 1 October 2020, the European Commission ("Commission") issued the UK with a letter of formal notice, the first step in the formal infringement process under Article 258 of the Treaty on the Functioning of the EU. The letter of formal notice alleges that the UK breached its obligations under Article 5 of the Withdrawal Agreement ("WA") between it and the EU.

The Bill

In early September 2020, the UK government introduced the Internal Market Bill ("Bill"). The Bill allows the UK government to disregard elements of the Northern Ireland Protocol ("Protocol") which forms part of the WA. The primary purpose of the Protocol is to avoid the creation of a "hard border" on the island of Ireland. For example, Article 5 of the Protocol provides that any goods moving from Britain to Northern Ireland that are at risk of subsequently being moved into the EU (including Ireland) shall be subject to customs duties. In other words, Article 5 provides for the creation of a border down the Irish Sea. The Bill purports to give the UK power to disregard Article 5 (amongst other things).

Relevant Provisions of the WA

The WA entered into force on 1 February 2020 and has direct effect (Article 4 of the WA). The letter of formal notice states that the UK, through the Bill, has violated Article 5 of the WA which provides:

"The [EU] and the [UK] shall, in full mutual respect and good faith, assist each other in carrying out tasks which flow from [the WA]. 

They shall take all appropriate measures, whether general or particular, to ensure fulfilment of the obligations arising from [the WA] and shall refrain from any measures which could jeopardise the attainment of the objectives of [the WA].

This Article is without prejudice to the application of Union law pursuant to [the WA], in particular the principle of sincere cooperation."

The EU called upon the UK government to withdraw the controversial elements of the Bill by 30 September. This did not happen. The Commission stated that the very nature of the Bill breaches the "good faith" obligation of Article 5 . Moreover, the UK government's refusal to remove the contentious elements as requested is a further breach of this duty. The Commission further stated that if enacted, the Bill would "flagrantly violate"  the Protocol and would "impede the implementation of the [WA] ". (That said, a potential breach of the Protocol is not specifically addressed in the Commission's letter given that such powers have not yet been exercised by the UK.)

Next Steps

The UK has one month to respond to the letter of formal notice. Following on from this, if the Commission finds that the UK is in breach of EU law, it will issue a reasoned opinion which will 

  1. contain the reasons as to why the Commission believes the UK is breaking EU law 
  2. formally request that the UK abides by EU law, and
  3. request details of measures undertaken to ensure adherence to EU law. 

Similar to the letter of formal notice, there will be a specific time in which the UK must respond. 

If the UK still does not comply, the Commission may refer the matter to the Court of Justice of the European Union ("CJEU"). If the CJEU finds that the UK is breaching EU law, the UK must ensure that the breach is remedied. Notwithstanding this, if the breach of EU law continues, the Commission has two options, firstly it can commence a new infringement action or, more likely, the Commission can refer the matter back to the CJEU which may impose financial penalties on the UK. (Other EU Member States also have the option of bringing infringement proceedings against the UK for failure to abide by EU law obligations.)

The UK has agreed to be bound by any judgments of the CJEU in actions commenced prior to 31 December 2020 (Article 86 of the WA).  

Wider Implications

The Commission's decision to sue the UK clearly shows the exasperation of the EU at the former's decision to infringe an international agreement it signed less than a year ago. That said, the Bill must be seen in the context of the ongoing negotiations over the future trading relationship between the UK and the EU, once the transitional period ends on 31 December 2020. The most controversial issues in these talks are the control of UK subsidies to domestic businesses, the 'level playing field' regarding matters such as workers' rights, and environmental protection and access to EU waters for British fishing vessels (and vice versa.) 

It remains to be seen whether the UK will amend the Bill in return for 'concessions' in one or more of these areas. That said, it is ironic that the UK, whose wish to leave the EU was partly motivated by a desire not to be subject to the CJEU, could find itself being fined by that very same court. It is preferable that the obvious 'gaps' between the EU and the UK are resolved by negotiation rather than litigation. 

 


Key Contacts

Claire Waterson Partner

Sheila Tormey Partner

Related Practice Areas