Brexit: Dispute Resolution and Enforcement (European Union Committee Report) - Motion to Take Note

Part of the debate – in the House of Lords at 4:50 pm on 17th October 2018.

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Photo of Lord Bilimoria Lord Bilimoria Crossbench 4:50 pm, 17th October 2018

My Lords, I thank the noble Baroness, Lady Kennedy, for leading this debate and her committee for its excellent report. This debate is full of noble Lords and noble and learned Lords from the UK legal profession, which is respected around the world as the finest, fairest and most just. I am humbled to be in this company, having read law merely as part of my commerce degree in India, as part of my chartered accountancy qualification, and at Cambridge. In 2016, when I took part in the debate led by the noble Lord, Lord Boswell, chair of the European Committee—what was possibly the last debate in our House before the referendum—I realised, from my humble position, how complicated and almost impossible it would be to implement Brexit should the country decide to leave. How prescient that debate was.

Over the past two and a half years, we have seen that a free trade agreement with the EU is far from “the easiest in human history” to negotiate, as was claimed by our illustrious International Trade Secretary, Liam Fox. Not only was he talking nonsense—here I would add: as usual—but the negotiation has been incredibly difficult, and extricating ourselves from the EU has proved hugely complicated from a legal point of view. It has turned out to be not as simple as passing a withdrawal Bill, deciding to take on all sorts of EU law and regulations, and then changing it whenever we want to in the future. We have been legally attached to the EU in every area in which we operate, whether it is medicine, space or security.

The irony is that we are meant to be leaving the EU to free ourselves, to regain the sovereignty we have supposedly lost and to take back control. Yet at every stage we seem to be trying to get a deal that is equivalent—a word so regularly used—to what we have at the moment. As an entrepreneur and a businessman, when I want to change something, it is to improve things; I do not change things to make things equivalent and keep them the same. Why would I bother? What is the point? If we have equivalence, and have the same regulations as the EU, who will be in charge of it? Who will be in charge of the disputes? That is what the report talks about.

Most importantly, the law is not static; it is dynamic. Look at our tax laws. We have the Office of Tax Simplification—an oxymoron, because our tax system grows and becomes more complicated by the year, and the relevant legislation grows by thousands of pages. Equivalence with Europe does not mean that regulations will stand still. At the moment, the ECJ is the ultimate arbiter. As we have already heard in this debate, implementing this will involve huge complications.

The report is very clear and I commend it. It says:

“Outside the CJEU, no ‘one size fits all’ dispute resolution model could deal with these issues. The Government will have to agree multiple dispute resolution procedures post-Brexit”.

It goes on to suggest, as noble Lords have mentioned, that the EFTA Court could be applied. Although not ideal, this is a possible solution that the Government should not discount. The report then says:

“Liabilities and obligations under the Withdrawal Agreement may arise for many years after the UK has left the EU”.

The Government’s proposed solution appears to be that any disputes relating to the withdrawal agreement should be settled in the political sphere by a joint EU-UK committee. The noble Baroness, Lady Kennedy, has said very clearly that if it is a state-to-state dispute, that could apply. But what pragmatic model will exist? Of course, as the noble and learned Lord, Lord Hope, has said, during the transition period we will continue to be bound by the ECJ. The Government want to pursue a deep and special partnership, which involves participating in EU agencies; if we do that, we have to respect that the CJEU will have the final say in those areas, whether that is medicines or European arrest warrants, which the noble and learned Lord, Lord Hope, and others have mentioned. Rejecting the remit of the European Court of Justice entirely will limit our access to the agencies upon which we rely: aviation, medicine, chemicals. As the report says, any enforcement and dispute resolution established under the future relationship has to be accessible to citizens and businesses. I started as a micro-business, then a small business, then a medium business, and then a large business; SMEs are the engine of this country and they are being ignored completely.

What about the important point regarding mutual recognition of civil, family and commercial judgments? The report concludes by saying that UK lawyers and judges have played an important role in the evolution of EU law, but after Brexit the UK’s ability to affect the development of case law in the EU is likely to diminish significantly. Let us just think about that: taking back control and sovereignty is likely to diminish our ability to do that.

In the report, I saw a table of potential jurisdictional gaps post Brexit. It has been accepted that, during the transition period, it will be the CJEU. However, dispute resolution relating to the withdrawal agreement has not been agreed; trade, not agreed; regulatory agencies, not agreed; security and justice, not agreed; mutual recognition of civil, family and commercial judgments, not agreed. Could the Minister please explain all of these “not agreeds”?

Here is another factor: the UK ends up in court far less often than many other member states. If you look at a table of actions brought before the European Court of Justice against member states, the UK has 63, compared to Italy, with 191. When the UK takes matters before the ECJ, it wins more often than other member states. That is another fact. Then, on the proportion of favourable ECJ judgments by country, the UK is top of the list. We have not done so badly out of this. We talk about crashing out into WTO rules. The EU is a huge participant in the WTO and is the second most prolific initiator of WTO complaints after the United States of America. We use the WTO very effectively already.

Fear has been put into the minds of people and, I am sorry to say this, but our public have been conned left, right and centre. To be told, in the words of the former Foreign Secretary, that we are a “colony of the EU” is nonsense. To be given the impression that all our laws are controlled by the EU is nonsense. People have been so badly fooled. I have been privileged to be in this House for 12 years, and I have seen, and been privileged to take part in, the making of legislation that affects our day-to-day lives. The laws— whether they relate to our universities, our National Health Service, or our taxes—are made here, in this House, and in the other place.

There is a suggestion that, if we leave the EU, we can become like Singapore, or a low-tax economy such as Switzerland. What is stopping us doing that now? Ireland is part of the EU and has a corporation tax of 12.5%. There is nothing to stop us doing that right now; why do we have to leave the EU to do it? Comparing ourselves with Singapore? Get real. It is a city state of 5.5 million people. I am a great admirer of Singapore and its economy—it has done brilliantly—but to compare us, a country of 65 million people, with Singapore is, again, nonsense.

Here is the other fact. People are under the impression that the ECJ or the CJEU are the same as the European Court of Human Rights. They do not realise that, if we leave the European Union, we will still be subject to the ECHR and the International Criminal Court. Are we going to leave the global economy? In terms of taking back sovereignty and taking back control, we are giving up our seats in the European Parliament, our seat on the Commission and our seat on the ECJ. We are losing sovereignty and losing control. The worst part of all is that the world does not want us to leave the EU. I have hosted here in this Parliament delegation after delegation of senior Indian civil servants and I always ask: “Looking at us from India, do you think that we should leave the European Union?” One hundred per cent of them put up their hands and say, “You should be remaining in the European Union”. At one meeting, one said, “We feel sorry for you as a country”.

We are becoming a laughing stock. I did not approve of Donald Tusk posting that Instagram picture of the cake and the cherries. That was not right. I do not necessarily approve of Jean-Claude Juncker dancing and mimicking our “Dancing QueenPrime Minister—I am sorry; I shall be ticked off for dancing while making a speech. There is no question but that we have lost respect and are losing our standing in the world. London has already lost its position as the No. 1 global financial centre thanks to Brexit and nothing else. We had beaten New York but have now gone into second place. In reality, how are we going to come to a solution for Northern Ireland—the Achilles heel of Brexit? How will we get out of the backstop and then the backstop to the backstop? How will we prevent our union breaking up?

I have always maintained and been very open about the fact that I am a Eurosceptic. I do not particularly like the way that the European Parliament works, and I am delighted that we did not join the euro, which has been a disaster. It has been kept together only because it would be too difficult to break it up. From a security point of view, we are lucky not to be in Schengen, and I am not for any further unification of the European Union. Yet we have done so well out of it. We have the highest cumulative growth rate of the original EU countries since the beginning.

Therefore, this is about the law, and the law is about the scales of justice and about balance. No case is ever cut and dried; it is always a matter of weighing up the pros and cons, and about judging what, on balance, is the right decision. In spite of my Euroscepticism, on balance by far the best option for this country would be to remain in the European Union. In order to extricate ourselves, the best solution now, based on this report and everything else, would be to allow the people to have a say on “deal”, which will probably be a bad deal, “no deal” or “remain”.