The UK-EU Trade and Cooperation Agreement: governance and dispute settlement

Governance of the Agreement

The Trade and Cooperation Agreement (TCA) includes provisions on governance (in Part One of the Agreement) and dispute settlement (in Part Six). Overall the TCA has seven Parts. These contain separate titles, sometimes divided into chapters. Part Two also contains separate headings covering different titles and chapters. The governance provisions apply across the Agreement and any supplementing agreement, whereas some Parts and other provisions of the TCA are exempt from the dispute settlement provisions.

As set out in the “common provisions” in Part One, supplementing agreements to the TCA will form part of the overall institutional framework. They will be subject to the TCA’s governance and dispute settlement provisions unless otherwise stated. The Security of Classified Information Agreement, announced at the same time as the TCA, is a supplementing agreement (but exempt from the TCA’s dispute settlement provisions).  A Nuclear Cooperation Agreement was also agreed between the UK and Euratom, but is not a supplementing agreement to the TCA. Other UK-EU agreements could become supplementing agreements in the future.

The TCA applies to the UK and the territories to which the EU treaties apply. It does not apply to Gibraltar or other UK overseas territories. 

Partnership Council

Part One of the TCA establishes a UK-EU Partnership Council to supervise the operation of the Agreement at a political level, providing strategic direction. Similar to the Joint Committee set up by the UK-EU Withdrawal Agreement, the Partnership Council will be chaired by a UK Government Minister and European Commissioner. Decisions will be taken by mutual consent and will be binding on the two parties. The Partnership Council will meet at least once a year. It met for the first time on 9 June 2021. The Partnership Council is supported by a network of committees (see figure 1). 

Either party can refer any issue relating to the implementation or interpretation of the TCA and supplementing agreements to the Partnership Council. It will have the power to adopt decisions and recommendations in relation to the application of the Agreement. 

Figure 1. Trade and Cooperation Agreement: Committee structure

Parliamentary cooperation and civil society engagement

The TCA provides that the UK and European Parliaments “may establish” a Parliamentary Partnership Assembly  (PPA) consisting of Members of the two parliaments.  The Assembly may seek information from the Partnership Council and make recommendations on the implementation of the TCA and any supplementing agreement. Talks are going between representatives of the two parliaments regarding the establishment of the PPA.

The TCA also provides for civil society engagement, referring to consultation with domestic advisory groups and a civil society forum.

Dispute settlement

Dispute settlement provisions are set out in Part Six, involving an initial period of consultation between the parties and possible recourse to an independent arbitration tribunal (see figure 2). 

These provisions do not apply to all areas of the Agreement. Among the exceptions are Part Three covering law enforcement and judicial co-operation in criminal matters, which has its own specific mechanism, and Part Four covering thematic co-operation.  There are also variations and exemptions for parts of the level playing field provisions in the trade heading of Part Two. 

The main Part Six dispute settlement provisions will apply to most areas of Part Two covering trade, transport, fisheries and other arrangements, and Part Five covering UK participation in EU programmes. 

Unlike the Withdrawal Agreement there is no role for the Court of Justice of the EU (CJEU) in the dispute settlement provisions. Provisions of the TCA will be interpreted in line with public international law including the Vienna Convention on the Law on Treaties 1969.

Retaliatory measures

In cases of non-compliance with a tribunal ruling, the complaining party can take retaliatory measures, involving suspension of obligations under the Agreement. In some cases, the suspension of obligations can only apply in the same title or heading of the TCA.  Where the breach has occurred in certain headings in Part Two of the Agreement (trade, aviation, road transport and fisheries) then there can be cross-retaliation across these headings if the circumstances are serious enough and suspension of provisions in the same area would not be effective enough. The use of cross-suspension mechanisms should be at a level equivalent to the “impairment” caused by the breach.

TCA provisions can also be suspended in the case of persistent non-compliance of arbitration rulings under the Withdrawal Agreement. 

Law enforcement and judicial cooperation

There is a separate dispute settlement procedure for the law enforcement and judicial co-operation provisions set out in Part Three of the TCA.  This involves consultations between the parties, for up to three months following the consultation request. This period can also be extended by agreement. If a mutually agreed solution is not reached, the complaining party can suspend the relevant Part Three titles where it considers there has been a “serious breach” of treaty obligations by the other party. The other party can respond by suspending all remaining titles under Part Three.  Both parties have to give three months’ notice of suspension of titles.

Either party can terminate the law enforcement and judicial co-operation provisions, with nine months’ notice. However termination can take place sooner if either side denounces the European Convention on Human Rights (ECHR) or ECHR protocols relating to the prohibition of the death penalty. Either party can also suspend Part Three, or titles within it, in cases of “serious and systemic” deficiencies in fundamental rights or rule of law principles in the other party.

Level playing field

There are variations from the main dispute settlement provisions for the level playing field provisions relating to labour and social standards, and environment and climate. Rather than an arbitration tribunal, disputes can be referred to a panel of experts. This operates in a similar way to the arbitration tribunal, but with longer timelines. The main Part Six dispute settlement provisions for compensation or suspension of treaty obligations in cases of non-compliance then apply in the same way.

The level playing field provisions also include a rebalancing mechanism, enabling a party to take “rebalancing measures” where it feels that a significant divergence from the other party has “material impacts” on trade or investment between the two parties. These measures can involve tariffs across the trade and related provisions of the TCA.

These provisions also involve recourse to an arbitration tribunal, but with swifter mechanisms. There is a 14-day consultation period after a party notifies that it intends to take rebalancing measures. If there is no mutually acceptable solution, the other party can request an arbitration tribunal to rule on whether the measure is justified. The ruling is issued within 30 days.  The concerned party can impose its rebalancing measure if arbitration has not been requested or after the arbitration period if the tribunal rules in its favour. It can also impose this measure if the tribunal has not ruled within 30 days, in which case the other party can take countermeasures. Where the concerned party does not comply with the tribunal ruling (for example a ruling requiring it to withdraw or adjust its countermeasure), then the other party can suspend treaty obligations. This can involve cross-retaliation across the trade, road transport, aviation and fisheries provisions.

A party can request a review of the trade provisions of the TCA after four years, and if it feels that the rebalancing mechanism has been used frequently or a measure under it has been in place for 12 months. Further reviews can take place every four years after the first review.

Fisheries

The fisheries heading in Part Two has additional dispute resolution mechanisms. A party may suspend in whole, or in part, access to its waters and the preferential tariff treatment granted to fishery products if the other party changes the agreed level of access. The other party can refer the matter to an arbitration tribunal, which will rule on whether the compensatory measures are commensurate with “the economic and societal impact” of the change in the access.

In addition, an escalating level of responses can be applied by a party in response to an alleged failure by the other party to comply with the fisheries heading. This can lead to application of tariffs on both fisheries and non-fisheries products, and ultimately to suspension of the entire trade and road transport provisions, but the matter also needs to be referred to an arbitration tribunal.

The fisheries heading can be terminated by either party with nine months’ notice. However, this would lead to the trade and road transport headings being terminated at the same time.

Review and termination of the Agreement

The Final Provisions (Part Seven) provide for a review of the TCA every five years. They also provide for the possibility of termination of the Agreement by either party with twelve months’ notice.

The TCA can be terminated more swiftly if one party breaches the “essential elements” of the partnership. These are defined in Article COMPROV.12 as comprising “democracy, rule of law and human rights”, “the fight against climate change”, and “countering proliferation of weapons of mass destruction”. Such breaches would have to be of a grave and exceptional nature. If a party wishes to terminate the TCA on these grounds, there would first need to be a thirty consultation period.

Conclusion of the Agreement

The EU and UK originally agreed to provisionally apply the TCA until 28 February 2021, to provide time for the EU to complete its procedures for concluding the agreement (involving a European Parliament consent vote). In February, the EU and UK then agreed to further extend provisional application until 30 April to also provide additional time for a process of legal and linguistic revision of the TCA, and legal authentication in all EU languages. These processes were completed at the end of April 2021, enabling full application of the TCA from 1 May 2021.

Article renumbering

The process of legal and lingustic revision of the text of the TCA also involved a renumbering of the articles of the Agreement. The initial version of this briefing, published in February 2021, was based on the provisional Agreement article numbering. In this revised version of this briefing, published in August 2021, all references to the Agreement reflect the new numbering of articles. See the attached spreadsheet showing the new numbering alongside the old numbering.