ECJ President: UK firms will be ‘begging’ for court’s jurisdiction after Brexit

British firms doing business in the EU after Brexit will be "begging" for the protection of the European Court of Justice, President Koen Leaerts said. [University of Leuven]

British companies operating in the EU will be “begging on their knees” for the jurisdiction of the European Court of Justice (ECJ) after Brexit, the Court’s president has warned.

The primacy of the ECJ – the EU’s highest court – has been one of the principal bugbears of British eurosceptics, and its removal a chief negotiating demand of the UK government.

But, speaking to EURACTIV.com at the ECJ headquarters in Luxembourg, Koen Lenaerts said British companies would still insist on the jurisdiction and protection of the court in order to have their commercial rights upheld.

Lenaerts – who is a professor of comparative constitutional Law at Leuven University as well as president of the ECJ – also pointed out that the UK government would still be bound by the ECJ if it manages to negotiate a full Free Trade Agreement with the EU27 after departure.

That is because the ECJ would uphold the rights of EU companies under their half of any deal negotiated as part of the Brexit deal.

Asked precisely which agreements the ECJ would have jurisdiction over after Brexit, Lenaerts said: “After Brexit, there will be British firms begging our court to get ‘locus standi’ [the right to hear a case].

“Of course they will.

“If they create a subsidiary on the European continent, or a company on the European continent – just like we have Chinese companies which are incorporated and having their seat of operation, that is, all Chinese capital, here in the European Union.

“This is a company of the relevant member state, although all the interests might be Chinese, American, Australian, British etc, and I can tell you that if the company for one reason or another, like any company in the internal market, feels breached in its rights, it will be asking, begging on its knees, that this court exercises its jurisdiction to protect it.

“So British capital and British business will of course remain, on their own request, as a beggingly demanding party, right, willingly subject to the jurisdiction of this court, to see their rights enforced.”

Lenaerts remarks are bound to infuriate the Conservative London government, which has made freeing the UK from the “foreign judges” of the Luxembourg-based supreme court one of the main planks of its Brexit negotiations.

That has been aided by a press campaign against the ECJ, largely spearheaded by the Daily Mail.

A Daily Mail splash promising ‘freedom’ from EU judges. [Sky News/Twitter] [Sky News/Twitter]

In fact, the court has judges from all member states, including Britain, and John Mackenzie-Stuart, a British judge, was the ECJ president for four years at the height of the Thatcher government.

Lenaerts went on to suggest that a future free trade agreement between the UK and the remaining bloc – if one can be achieved within the two-year Brexit talks, or following a transition period afterwards – would also be policed by the court.

He said: “It’s not totally unrealistic that there is a bilateral trade agreement and you have goods coming in from the UK in[to] the EU.

“But the EU is now a third country, just like South Korea, Japan, Thailand, whatever.

“And the EU says ‘yes but actually you are giving subsidies by way of excessive tax breaks, or you’re not enforcing…the UK is no longer bound by the state aid rules in that hypothesis – and the EU says we are now going to tax, in order to have the compensatory level (this is under the WTO rules, the countervailing measures, anti-dumping measures, anti-subsidy measures like this..)

“When the EU imposes such measures, of course the UK government will run to this court to ask for judicial review. So that this court says, ‘no, no no, this was only an appearance of a subsidy, it was not a subsidy, the anti-subsidy measures are lawful and a matter of EU law.

“So they [the UK] will  be in exactly the same position as China, Australia, etc. So there will of course be a whole range of EU-law relevant subjects which will continue to come up for businesses, for governing authorities, for national courts, in both the UK and here.”

 

The European Court of Justice’s headquarters in Luxembourg. [Matt Tempest/Flickr]

David Davis, the British minister negotiating Brexit with the European Commission, has made it clear he wants no role for the ECJ after Brexit – even on adjudicating the rights of EU citizens in the UK, and UK citizens living in the EU.

Instead, he wants some unspecified form of new international arbitration body, even if that includes EU officials.

Gibraltar is 'one EU entity' with UK, ECJ says in Brexit gambling blow

Britain and Gibraltar count as one EU state in terms of a key aspect of the single market, a senior EU lawyer said Thursday, in an opinion that could effect the territory’s life after Brexit.

Full transcript of the Q&A between European Court of Justice President Koen Lenaerts and reporters:

Q [EurActiv.com] Can I ask you – perhaps for a personal view rather than the view of the court -but in terms of Brexit and the referendum campaign in Britain, the ECJ was this incredible bogeyman in the imagination of the right-wing media and some parts of the government – why do you think that is? And, more topically, at the moment you would ‘judge’ between the rights of EU citizens in the UK and UK citizens in Europe, which is something the British side are demanding is taken away from you – why do you think you’re best-placed to make those judgements?

Koen Lenaerts, President of the European Court of Justice: Well, those are really two questions in one. The second part has nothing to see with the first part, and I’ll explain this. The first part is going back to the referendum campaign of last year. It is not for me to comment on this. But the relationship between say a parliament, the Westminster parliament (and I’m speaking here more as a professor because my chair in Leuven University in Belgium is Comparative Constitutional Law and European Union Law, and my comparative legal interest has always  existed and continues to exist with the United States of America. And I start there:

After the independence of the United States, 4 July 1776, it didn’t last long before the USA took a 180 degree opposite route than the Common Law basis that existed in the UK. And this on the crucial point, that lawyers know under the code name, Marbury Vs Madison 1803, Chief Justice Marshall writing for a unanimous court at the time composed of five judges. And that ruling said that an act of Congress can be quashed by the Supreme Court for being in conflict with constitution. And there you have it.

In the United Kingdom, nothing of the sort exists. Because their paradigm is 180 degrees the opposite. Parliament can do no wrong. So an act of the parliament of Westminster cannot be quashed a British court. This is comparative constitutional law – we should de-emotionalise all of this.

So mentally, emotionally, it is in the British perception of the ‘triangle’ – representative democracy, rule of law, fundamental rights – unthinkable that a court can quash an act of parliament. This exists for 220 years in the US, that system, not in Britain.

The European Union has the exact same system as the US. And for an obvious reason – the EU is united in diversity. The US motto is pluribus unum – out of the many, one. So both systems are confronted with keeping the balance between unity and diversity, which is the proper picture of federalism? Often ill-understood in the UK, because federalism there is seen as something uniting, not federalism as something with Belgium – with us, it has exact opposite meaning. That is, that you empower all these regional governments, and keep the proper balance, like in Germany – the Bundeslaender etc. That’s also the balance of the European Union, like the balance of the United States.

So when in the campaign in Britain people turned on vis a vis the Court of Justice, I must frankly tell you I said ‘well, what would you expect otherwise?’, but I can tell it [UK] is the only member state having this very confined view which is only fed by its own insular of the legal system. In Germany, this is normal. I mean, the Bundesverfassungsgericht in Karlsruhe quashes laws of the Bundestag. So when we hear that the German law is in conflict with the European Union law, people in Germany might say – some will be very happy, depending on who wins, some might be very critical – but it’s the same as what we know nationally. And the same applies to Belgium, to France, all the constitutional courts…etc. So we have these same systems. So the UK vocalised that. On the other hand, let me be plain – you cannot be a member of the European Union without adhering to the equality of all member states before the law.

And like the Yale Law Professor Charles Black who later was a judge on the Supreme Court, Charles Black said I can perfectly imagine the federal system of the United States where the Supreme Court could not quash an act of Congress, that is a federal governmance, I could not see, he said, a federal system that would survive – that is, the balance of community and diversity – without there being a single umpire – that’s what he calls it, an umpire – making sure that all the 50 states remain equal before federal law.

It is that paradigm that has not been understood. In the UK, whenever a judgement is not of the liking of the UK, it pretending that oh, a big drama is happening. But that happens with all the member states. And they know it. Because it is not this court that has made the power grab one beautiful morning, no. This court is strictly exercising what all the member states including the UK have entrusted this court to do. That is, interpret and enforce, uniformly, Union law. It’s everywhwere valid or invalid, the same everywhere, because of the equality of member states under Union law.

So rejecting the jurisdiction of this court is in fact rejecting the membership of the union. In that sense, it is two sides of the same coin. So basically, the whole discussion on the court is in fact a discussion on ‘can we members of the union which has legislative competences in specific fields, competences that, when exercised, can prevail over conflicting national law. It’s basically that paradigm which was rejected in majority with the referendum. And that’s a democratic choice we have to respect. But it’s nothing specific with this court, it’s the system, that should be understood.

Now the second part of your question is a totally different matter. That is, would this court be better off to another court? No. This is absolutely not the real issue. The dispute settlement mechanisms, if there have to be some, they have to be politically negotiated. And that is why I repied to your colleague – this is a matter of political negotiation and we shall see what comes out of it. But I repeat, this court will in any event be competent for EU27, for all that has been adopted, as normative acts, in the framework of the Brexit, because these acts are acts of union law, including the agreement with the UK, so this court will in any event interpret them in order to make sure that the 27, over the same paradigm, are equal before union law, which will at that point in time comprise the acts based on Article 50 and further implementation of what has been agreed.

 

Q: Jurisdiction of ECJ after Brexit – can you clarify which agreements will and will not have jurisdiction over?

 

Yes. We have to see, all of us, what will be in the Article 50 agreement, if there is one. But the first impression that I must immediately dispel, is the simple use, in your question and also in the previous question there at back, and sometimes also in British press... which I’m reading on the internet… the way the word jurisdiction is used is something like total – you are kept under the jurisdiction as if you were kept under the heavy foot of a power, something external. That is totally wrong.

After Brexit there will be British firms begging our court to get ‘locus standi’ and that is more the general court, whose president is here. Of course they will. If they create a subsidiary on the European continent, or company on the European continent – just like we have Chinese companies – which are incorporated and having their seat of operation, that is, all Chinese capital, here in the European Union. This is a company of the relevant member state, although all the interests might be Chinese, American, Australian, British etc, and I can tell you that company for one reason or another, like any company in the internal market, feels breached in its rights, it will be asking, begging on its knees, that this court exercises its jurisdiction to protect it.

So British capital and British business will of course remain, on their own request, as a beggingly demanding party, right, willingly subject to the jurisdiction of this court, to see their rights enforced.

And the same of course will apply to all sorts of other policies. I was at a conference as an academic on Brexit at a British University and a former member of this court told the United Kingdom to adopt the following hypothetical example. He says Brexit has been achieved – those were his words, I’m summarising – Brexit means Brexit, right, which is what the European says, and many people in the European Union says: the only way to do it, is to do it clean. So that was his hypothesis. And he says now it needs a bilateral trade agreement, still in the hypotehticals but it’s not totally unrealistic that there is a bilateral trade agreement and you have goods coming in from the UK in the EU. But the EU is now a third country, just like South Korea, Japan, Thailand, whatever. And the EU says yes but actually you are giving subisidies by way of excessive tax breaks, or you’re not enforcing – the UK is no longer bound by the state aid rules in that hypothesis – and the EU says we are now going to tax, in order to have the compensatory level (this is under the WTO rules, you know, the countervailing measures, anti-dumping measures, anti-subsidy measures like this. Still follow me?) When the EU imposes such measures, of course the UK government will run to this court to ask for judicial review. So that this court says, no, no no, this was only an appearance of a subsidy, it was not a subsidy, the anti-subsidy measures are lawful and a matter of EU law. You see? So they will be in exactly the same position as China, Australia, etc. So there will of course be a whole range of EU-law relevant subjects which will continue to come up for businesses, for governing authorities, for national courts, in both the UK and here.

Again, we’ll have to see what the double role of that will come in the Article 50 agreements if there is one but that as the main interface, it’s quite clear, if I do business today with Thailand, it’s a simple as that. I may end up in a Thailand court – not personally as a defendant, but I may even go there under contract litigiation, to pursue performance of the contract where my co-Thailand contractor is complying with the contract. Things of that sort. And that is all general EU law but it can go much further.

The fight against terrorism through enhanced security – its quite clear that this remains a concern, for the EU, for Britain, including Turkey and other countries. Here again, if there are cooperative ventures you may have cases where EU law remains relevant in the UK context, and that even seeking access to this EU court..but then you will be in the position where now Switzerland finds itself – because you’re no longer a member and of course now I say it and repeat it, we have outstanding British colleagues and we always had them, by the way one of the former presidents of this court was for four years the British member of the court, so they always played a very important role in this court, and that is maybe ill-understood, but that’s the way it is. That of course will not probably be totally redesigned and reconceived with Article 50 agreement – although we’ll still have to see that as well

 

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