European Commission Triggers Infringement Procedure Against UK for Failure to Withdraw Controversial Bill

On 1 October 2020, the European Commission officially submitted a letter of formal notice to the UK Government, for, in the Commission’s words, “breaching its obligations under the Withdrawal Agreement”. This marks the beginning of a formal infringement procedure against the UK. The UK has one month to respond to the Commission’s letter of formal notice.

The infringement procedure has begun due to the UK Government’s tabling of a Bill on 9 September 2020 (the ‘United Kingdom Internal Market Bill’). According to the European Commission, this Bill, if and when adopted, would flagrantly violate the Protocol on Ireland/Northern Ireland, as it would allow the UK authorities to disregard the legal effect of the Protocol's substantive provisions under the Withdrawal Agreement.

As reported previously in MEPs Threaten to Veto Potential Brexit Trade Deal and Commission Threatens to Walk Away from Trade Talks of the Regulatory Alert–EU, the UK’s Internal Market Bill, which is designed to govern trade within the UK following the end of the transition period on 31 December 2020, ensures that there will be no new checks on goods moving from Northern Ireland to the rest of Great Britain (England, Scotland and Wales). It also gives the UK powers to modify or “disapply” rules relating to the movement of goods that will come into force on 1 January 2021, if a trade agreement between the UK and EU is not achieved. The UK Government has said that the bill is essential to enable goods and services to flow freely across Great Britain and Northern Ireland when the UK leaves the EU’s single market and customs union. Boris Johnson has claimed that the ability to modify or disapply parts of the Withdrawal Agreement is a failsafe mechanism in case the EU interprets the agreement, in particular the Irish Protocol, in an “extreme and unreasonable” way, which could lead to excessive checks and even tariffs on goods moving from Great Britain to Northern Ireland.

The European Commission, in its announcement of 1 October 2020, points out that, according to Article 5 of the Withdrawal Agreement, the EU and the UK must take all appropriate steps to ensure the fulfilment of their obligations under the agreement. This means that they should not resort to measures which could jeopardise the attainment of the agreement’s objectives. Both parties are “bound by the obligation to cooperate in good faith in carrying out the tasks stemming from the Withdrawal Agreement”.

The Commission has also stated in its announcement that by failing to withdraw its Bill, the UK has breached its obligation to act in good faith, as set out in Article 5 of the Withdrawal Agreement. Furthermore, it has launched a process, which – if the Bill is adopted into national law – would impede the implementation of the Withdrawal Agreement. As a result, the Commission has launched infringement proceedings in line with the provisions of the Withdrawal Agreement itself.

Hong Kong traders may not be familiar with the infringement proceedings process which the European Commission is now resorting to. As part of the process, the UK has until the end of October to submit its observations to the letter of formal notice. After examining these observations, or if no observations have been submitted, the Commission may, if appropriate, decide to move to the next step, i.e., issue a Reasoned Opinion. If the alleged wrongdoing continues, the matter is referred to the EU’s highest court.

As will be recalled, the Withdrawal Agreement was ratified by both the EU and the UK. It entered into force on 1 February 2020 and has legal effects under international law. Following the publication by the UK of the Bill, Commission Vice-President Maroš Šefčovič called for an extraordinary meeting of the EU-UK Joint Committee to request the UK Government to elaborate on its intentions and to respond to the EU's serious concerns. At the meeting that was held, Vice-President Maroš Šefčovič stated that if the Bill were to be adopted, it would constitute an extremely serious violation of the Withdrawal Agreement and of international law. He called on the UK Government to withdraw these measures from the draft Bill in the shortest time possible and in any case by the end of September. On 28 September 2020, Vice-President Maroš Šefčovič repeated his call to the UK Government to withdraw the contentious measures from the Bill. The UK Government instead confirmed its intention to go ahead with its draft legislation.

As reiterated in the Commission announcement, the Withdrawal Agreement stipulates that during the transition period ending on 31 December 2020, the Court of Justice of the EU (CJEU) has jurisdiction in the event of disputes between the parties. This can be seen as resulting from the fact that the UK is still treated as if it were a Member State until the end of the transition period.

The European Commission has pointed out that the Treaty on the Functioning of the EU (TFEU) gives it, as Guardian of the Treaties, the power to take legal action against a Member State that is not respecting its obligations under EU law. This is known as the infringement procedure, which begins with a request for information (a Letter of Formal Notice) to the Member State concerned, which must be answered within a specified period. If the Commission is not satisfied with the information and concludes that the Member State in question is failing to fulfil its obligations under EU law, the Commission may then send a formal request to comply with EU law (a Reasoned Opinion). If a Member State still fails to ensure compliance with EU law, the Commission may then decide to refer the Member State to the CJEU. If the CJEU rules against a Member State, the Member State must then take the necessary measures to comply with the judgment.