Settlement of disputes in Draft Withdrawal Agreement on Brexit

The Draft Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community unveiled on the 14th of November, 2018, lays down a new mechanism for settlement of disputes through arbitration arising between the European Union and United Kingdom (Article 170 to 181 of the agreement). For the purpose of arbitration, following provisions have been laid down under the agreement:

1. Constitution:

If no mutually agreed solution has been reached within 3 months after a written notice has been provided to the Joint Committee, either the Union or United Kingdom may request the establishment of an arbitration panel. Such a request has to be made in writing to the other party and to the International Bureau of the Permanent Court of Arbitration. Such a request shall identify the subject matter of the dispute along with a summary of the legal argument in support of the request which is to be brought before the arbitration panel.

2. Composition:

The Joint Committee shall establish a list of 25 persons who are willing and able to serve as the members of an arbitration panel. The United Kingdom and the European Union shall elect 10 members each and shall jointly elect 5 persons to act as the chairperson of the arbitration panel. All the necessary compliances must be observed by the Joint Committee. The persons who are elected, as stated above, need to possess the qualifications required for appointment to the highest judicial office in their respective countries or who are juris consults of recognised competence, and who possess specialised knowledge or experience of Union law and public international law. The arbitration panel shall be of five members. Two members each must be nominated from the Union and the United Kingdom, and one chairperson of the panel must be nominated jointly within 15 days from the date of request. On failure of agreement as to selection of the chairperson, the Union or the United Kingdom may request the Secretary-General of the Permanent Court of Arbitration to select a chairperson from amongst the five elected persons and such selection must be made within 5 days upon receipt of the request. In case the two parties are unable to nominate the members of the panel, they shall, within 5 days each appoint two members to the panel. In event of failure to nominate a chairperson mutually, the Secretary General of the Permanent Court of Arbitration shall, within 5 days, with consultation with the Union and the United Kingdom propose a chairperson, and if no objections are raised by the two parties, such person must be appointed to the panel. Finally, if the two parties are unable to establish an arbitration panel within 3 months from the date of request, the Secretary-General may upon request of either party, with consultation within 15 days must establish an arbitration panel.

3. Time-frame of procedure:

The arbitration panel shall notify its ruling to the Union and the United Kingdom within 12 months of date of establishment of the arbitration panel. Moreover, in case of urgency an application can be sent either by the Union or the United Kingdom within 10 days of establishment of the arbitration panel, it must give its ruling as to the urgency of the case within 15 days, and if it is urgent, the final ruling must be notified within 6 months of establishment of the arbitration panel.

4. Compliance with the arbitration ruling:

The arbitration panel ruling shall be binding on both on the Union as well as the United Kingdom. Both shall take all the measures to comply in good faith with the arbitration panel ruling and shall endeavour to agree on the period of time required to comply with the ruling.

5. Temporary remedies in case of non-compliance:

At request of the complainant, the arbitration panel may impose a lump-sum or penalty payment to be paid to the complainant. If the respondent has failed to pay any lump-sum or penalty provisions imposed within 1 month, or if the ruling of the arbitration panel has not been complied within 6 months, the complainant shall be entitled, upon notification to the respondent, to suspend the obligations arising from any provision of agreement except provisions in part two, or parts of any other agreement between the Union and the United Kingdom under the conditions set out in that agreement.