The UK–EU Withdrawal Agreement is the Brexit deal that formally took the UK out of the EU. It covers the terms of the UK exit from the EU including citizen’s rights, the financial settlement and the Northern Ireland protocol. It is a legally binding international treaty and contains two mechanisms to ensure that both parties comply with their obligations under the agreement:
- Infringement proceedings: Where the UK is required to apply EU law under the Withdrawal Agreement – most notably under the Northern Ireland protocol — the European Commission can pursue legal action if the UK fails to comply as if it were a member state.
- Dispute resolution mechanism: Where there is a disagreement over the interpretation and application of the agreement, the UK or EU can use the dispute resolution mechanism in the Withdrawal Agreement to resolve an issue through arbitration.
The EU has used both mechanisms in response to the UK government’s proposed or actual non-compliance with elements of the Northern Ireland protocol. However, these cases have now been dropped or paused while the two sides seek mutually agreed solutions to some of the problems posed.
Media reports have suggested that the European Commission will likely resume legal action and launch new disputes in the event that the UK government pursues unilateral measure to override parts of the protocol, invoking the safeguarding mechanism in Article 16 of the protocol.
Infringement procedure under the Withdrawal Agreement
What is an infringement procedure?
In the EU context, an infringement procedure is a course of legal action that the European Commission can take when it considers that a member state is in breach of, or refusing to implement, EU law.
Article 12 of the Northern Ireland protocol gives the European Commission and the European Court of Justice (ECJ) continuing powers to oversee the application of EU law in Northern Ireland. This means that the European Commission has the power to launch an infringement procedure against violations of EU law that apply in Northern Ireland under the protocol.
Under Article 131 of the Withdrawal Agreement, the commission can launch an infringement procedure against the UK for any breaches committed by the UK during the transition period, the period of time in which the UK was no longer an EU member state but was still obliged to apply EU law. The commission can take action up to four years after the end of the transition period (from 31 December 2020).
How does the infringement procedure work?
The process can take up to 35 months to complete.
Step 1: European Commission identifies suspected infringement
Commission identifies – or is alerted to – a suspected breach of EU law and raises it with the UK.
Step 2: Formal notice
The commission sends a letter of formal notice to the UK declaring that it believes the UK is in direct breach of, or failing to implement, its commitments under the Withdrawal Agreement. The UK then has up to two months to explain, and remedy, its actions.
Step 3: Reasoned opinion
If the commission does not find the UK’s justification compelling, it can send a reasoned opinion – a formal request to the UK to comply with EU law. The UK then has up to two months to put measures in place to comply. EU infringement procedures are usually resolved at this stage. If the UK still does not comply, the commission could refer the dispute to the ECJ.
Step 4: European Court of Justice ruling
The ECJ has up to 18 months to issue a ruling, though the commission can ask the court to expedite the process. In the meantime, the commission can ask the UK to take interim measures to comply with the Withdrawal Agreement.
If the ECJ rules in favour of the commission, then the ruling becomes binding on the UK in international law. However, if the government refuses to comply then the UK courts may not be able to enforce the ECJ’s ruling against the UK government in domestic law.
Step 5: Penalties
If the UK still refuses to comply, the commission can choose to ask the ECJ to seek further action in the form of financial penalties on the UK.
Why did the EU launch an infringement procedure against the UK?
In March 2021, the EU launched infringement proceedings for a breach of the Northern Ireland protocol after the UK government announced it would unilaterally extend two of the ‘grace periods’ agreed by the UK and the EU in December – delaying the full application of EU law required under the protocol without the EU’s consent. In July, the EU agreed to pause proceedings after the UK government requested a ‘standstill’ on the legal action while the UK and EU explored long-term solutions on the implementation of the protocol.
The EU had previously launched infringement proceedings under Article 131, in October 2020, over the UK Internal Market Bill, which, if passed in that initial form, would have given UK ministers powers unilaterally disapply aspects of protocol. The EU halted legal proceedings after the UK government dropped the offending clauses of the bill following a UK–EU agreement on the issues concerned through the UK–EU Joint Committee.
The dispute settlement mechanism in the Withdrawal Agreement
If the UK and EU disagree over the interpretation and application of terms of the Withdrawal Agreement itself, either side can launch a dispute through the dispute settlement mechanism in the Withdrawal Agreement.
The process can take over a year to complete.
Step 1: Consultations in the Joint Committee
The UK and EU must first try and resolve disputes through the Joint Committee – the UK–EU body responsible for overseeing the implementation of the Withdrawal Agreement — to find a “mutually agreed solution”.
Step 2: Arbitration
If a solution is not agreed within three months, either side may request the establishment of an arbitration panel administered by the Permanent Court of Arbitration. The arbitration panel should be established within 15 days of either side requesting it.
The arbitration panel consist of five members, two each from lists nominated by the UK and EU, and one from the list of jointly proposed chairs. The UK and EU have identified 25 people who are able to serve as members of the arbitration panel, including 10 people from the highest judicial office within their respective countries with specialised knowledge of EU and public international law. Members of the arbitration panel cannot work for the UK government, member state governments or EU institutions.
If a dispute involves a “question of interpretation” of EU law, the arbitration panel must ask the ECJ to provide its interpretation. The ECJ’s rulings on EU law are binding on the arbitration panel.
The arbitration panel will try to reach a consensus decision and must notify the UK and EU of its decision within 12 months of being established (although in urgent cases it will try to do this within six months). However, if the panel asks the ECJ to make a ruling on EU law, the time limit is suspended while the ECJ considers the matter. The panel then has 60 days from the ECJ’s judgement to give a ruling.
Step 3: Enforcement
The arbitration panel’s ruling is binding on the parties. If the panel finds that the respondent has breached the Withdrawal Agreement, the parties have 30 days to decide a reasonable timeline for the respondent to comply. If they cannot, they can ask the arbitration panel to decide a timeframe.
If, at the end of that period, the complaining party does not believe the respondent has complied with the arbitration panel’s ruling, it can ask the arbitration panel to give another ruling (which it must do within 90 days of being asked).
If the arbitration panel finds the respondent has failed to comply within a reasonable time, the complaining party can access “temporary remedies”. Initially, the complaining party can ask the arbitration panel to impose a financial penalty proportionate to the breach. If the penalty is not paid within one month, or if the respondent continues not to comply with the panel’s initial ruling for six months, the complainant can suspend some of its obligations under the Withdrawal Agreement (apart from the chapter on citizens’ rights) "or any other agreement" between the UK and EU, including the Trade and Co-operation Agreement (which would probably take the form of imposing tariffs on the respondent’s exports).
If the respondent believes the measures taken by the complaining party are not proportionate to the breach, it has 10 days to ask the arbitration panel to review them (which the panel must do within 60 days of being asked).
If the respondent begins to comply, the complainant has to stop suspending its obligations and any financial penalties end. However, if the parties disagree about whether the respondent has complied, they have 45 days after the respondent claims to have complied to ask the arbitration panel to rule on the matter (which the panel must do within 75 days of being asked).
Has the dispute settlement mechanism been used?
The EU launched proceedings under the dispute settlement mechanism on two occasions:
- In October 2020, after the UK introduced the UK Internal Market Bill that would have allowed ministers to unilaterally disapply aspects of the Northern Ireland protocol
- In March 2021, after the UK unilaterally extended grace periods to delay fully implementing the protocol. Both claims were about whether the UK was abiding by its obligation to act in "good faith" in implementing the Withdrawal Agreement.
The EU could also seek to trigger the dispute settlement mechanism in the event that it believes the UK has improperly invoked Article 16 – the safeguarding mechanism in the Withdrawal Agreement – to take unilateral measures overriding aspects of the agreement.
- Connelly T, EU likely to challenge any move to trigger Article 16, RTE News, 24 September 2021, www.rte.ie/news/2021/0924/1248762-eu-northern-ireland-protocol/
- European Commisson, Withdrawal Agreement: European Commission sends letter of formal notice to the United Kingdom for breach of its obligations, 1 October 2020, https://ec.europa.eu/commission/presscorner/detail/en/ip_20_1798
- European Commission, Withdrawal Agreement: Commission sends letter of formal notice to the United Kingdom for breach of its obligations under the Protocol on Ireland and Northern Ireland, 15 March 2021 https://ec.europa.eu/commission/presscorner/detail/en/ip_21_1132