Commission Launches Infringement Proceedings Against UK for Breach of Northern Ireland Protocol

On 15 June 2022, the European Commission launched infringement proceedings against the United Kingdom with regard to significant parts of the Protocol on Ireland/Northern Ireland (“the Protocol”). According to the Commission, the UK’s failure to comply with the Protocol – despite numerous calls from the EU – is a clear breach of international law. According to the UK, it is well within its rights as established by international law and the Protocol to act unilaterally in the face of the current trade situation at Northern Ireland ports and the failing negotiations with the EU.

The infringement proceedings are a revival of the infringement action commenced by the Commission in March 2021, coupled with two new infringement actions. The infringements are in response to the EU’s belief that the UK breached its obligations under the Protocol, notably, through not implementing the certification requirements for the movement of agri-food to EU standards (the cause of the March 2021 proceedings), not ensuring adequate staffing and infrastructure at Border Control Posts in Northern Ireland to comply with EU sanitary and phytosanitary (“SPS”) rules, and not providing the EU with certain trade statistics data in respect of Northern Ireland. The March 2021 infringement action was formerly paused last year in an effort to accommodate negotiations over the Protocol. But, after over a year and a half and hundreds of hours of work, negotiations have proven fruitless, and the UK has decided to act unilaterally – issuing a draft law on 13 June 2022 which would undermine key aspects of the Protocol.

Since it came into force at the beginning of 2021, the Protocol has been at the centre of the controversy between the UK and the EU. Hong Kong traders may recall that under the Protocol, goods can freely flow across the border between Northern Ireland and the Republic of Ireland, leaving Northern Ireland in the EU's Single Market for goods. However, in order to protect the EU Single Market, goods arriving into Northern Ireland from the rest of the UK are subject to inspections at Northern Ireland ports to ensure they comply with EU laws on product standards.

Given the precarious nature of this border, the Protocol has built in a process for taking unilateral safeguard measures, like the one pursued by the UK. According to Article 16, safeguard measures can be taken if either the EU or UK concludes that the protocol is leading to serious “economic, societal or environmental difficulties” that are expected to persist. Although Article 16 is not intended to be used for temporary or minor obstacles, there is no specific guidance on what qualifies as “serious”.

This ambiguity in the language of Article 16 has led to controversy on the legality of the UK’s unilateral action. According to the UK government, the Protocol-mandated inspections are hindering the movement of goods between Britain and Northern Ireland and damaging community relations. It is the UK government’s view that the threshold has been reached for using safeguards. Its draft law calls for changes to the Protocol that amount to, essentially, putting an end to inspections and paperwork between Great Britain and Northern Ireland. The UK wants to ensure that goods which are destined for Northern Ireland only, have to simply meet UK standards without also having to comply with EU law. The UK also wishes to once and for all bring an end to oversight by the European Commission and the European Court of Justice on how the Protocol functions. In contrast, the EU believes the threshold for safeguards has not yet been reached, and implementation of the provisions of this law would amount to UK’s breaching of the Protocol.

Regardless of the legality of the UK’s proposed legislation as a valid unilateral action, the EU is within its rights established by the Protocol to respond with alleged infringements. The Commission asserts that its overarching objective remains finding solutions with the UK within the framework of the Protocol – as “that is how legal certainty and predictability can be ensured for people and businesses in Northern Ireland.” Thus, along with commencing the infringement proceedings, the Commission has also published position papers describing in additional detail the possible solutions it proposed during negotiations in October 2021 (in an effort to demonstrate what it envisions appropriate solutions within the Protocol would entail) and calls on the UK government to engage seriously and constructively with them.

The UK has two months to respond. If the UK government does not reply within two months, the Commission will consider taking the UK to the Court of Justice of the European Union. Under Article 12(4) of the Protocol, the Court of Justice has full powers provided for under the Treaties, including the possibility to impose a lump sum or penalty payment. British Foreign Minister Liz Truss has previously agreed with the Commission’s stance on the need to resolve the deadlock through negotiations, but it is unclear whether the UK believes further negotiations would produce a different outcome than the last year and a half has, and that it will respond to the infringements according to the procedure as set by the EU and the Protocol.

Hong Kong traders should be aware of the developing situation – particularly within the two-month period the UK has to respond – since, if the UK adopts this Bill into law, traders operating in these markets would be given more freedom in the sense that they would be “able to choose between meeting UK or EU standards in a new dual regulatory regime” depending on the destination of the goods. At the same time, Hong Kong traders should note that the UK Government has proclaimed that the EU will not be negatively impacted “in any way” and stated that it aims to protect the EU Single Market by “implementing robust penalties for those who seek to abuse the new system”, and by ensuring that there is no hard border on the island of Ireland.