Introduction
A recent decision by the European Court of Justice (CJEU) in Case C-600/23 represents a re-iteration of a long line of decisions made by the CJEU asserting its supremacy and limiting the scope upon which arbitral panels can infringe on the jurisdiction of the European Union. This has significant implications for the United Kingdom’s ongoing negotiations with the European Union to implement new energy and SPS deals where the UK will align with the EU rulebook in these areas. It also opens the door to the reviewability of arbitral awards under the EU-UK Trade and Cooperation Agreement (TCA) by EU member state courts or the CJEU itself, with the EU potentially refusing to enforce them if they do not comply with EU law.
An Inviolable Legal Order
Under the Judgment, the CJEU made clear that while arbitration by individuals is possible, it must be implemented in a way that is compatible with the judicial architecture of the European Union and is consistent with EU public policy. In the case at hand, however, the Court of Arbitration for Sport (CAS) award was made pursuant to a unilateral arbitration mechanism imposed by FIFA in sports-related disputes, and the panel had sought to apply EU law – an action the CJEU deems impermissible by an outside body.
This is not the first time that the CJEU has made clear the inviolability of the EU legal order. In its seminal Opinion 2/13, delivered in December 2014, the CJEU found that a draft agreement for the EU to accede to the European Convention on Human Rights was not compatible with the EU treaties. The Court’s reasoning was that such a move would superimpose an outside court over the CJEU insofar as human rights matters were concerned, thereby undermining its autonomy.
Implications for UK-EU Agreements
This unwavering legal doctrine has direct consequences for post-Brexit arrangements. The current EU-UK Agreement provides for a mechanism for the resolution of disputes by virtue of an arbitral provision. A proposed EU-UK Sanitary and Phytosanitary (SPS) Agreement is likely to increase the degree to which arbitral awards will touch upon or otherwise involve questions of law as made by institutions of the European Union. This is particularly relevant as the United Kingdom would be mirroring such provisions closely and keeping abreast with the EU rulebook.
Consequently, any future EU-UK SPS Agreement is likely to require that questions concerning the interpretation of EU law or applied EU law be decided exclusively by the CJEU upon referral from the arbitral panel. The arbitral panel would then be bound to apply those interpretations. There is no question of the arbitral panel taking on the role of interpreter of EU law in line with the CJEU’s long-established caselaw.
Conclusion
The inescapable conclusion is that the influence of EU law and its institutions within the UK’s domestic order is set to increase, not decrease, in any area where new agreements are struck. It is likely that the EU negotiators will ensure that the CJEU remains the ultimate arbiter of any arrangement that relies on the EU’s legal framework, a reality that will fundamentally shape the next phase of the UK-EU relationship.
