The EU draft FPA text: What role for arbitration?

The EU has published its draft text of the EU/UK Future Partnership Agreement (FPA), revealing some interesting pointers on the use of #arbitration.

First the biggie: Under draft Article INST.15 (in Title II of Part 5), bilateral disputes that can't be resolved by the Partnership Council or in accelerated consultations may be referred to an arbitral tribunal, which must refer questions of EU law to the CJEU for a ruling (INST.16). No surprises there -- after all, both sides signed up to exactly the same approach to resolution of bilaterals in Articles 170-174 of the UK/EU Withdrawal Agreement.

But also some more subtle thinking about procedures available to organisations and individuals affected by governmental measures in the sphere of economic activity. Draft Article TRNSY.6.1 requires both Parties to establish "judicial, arbitral or administrative tribunals... for the purpose of the prompt review and, if warranted, correction of administrative decisions with respect to any matter covered by Part Two". That's the whole panoply of Economy and Trade provisions. And within that Part, a specific shout-out in draft Article SERVIN.5.1.3 for arbitration in relation to services and investment: “A Party shall maintain judicial, arbitral or administrative tribunals or procedures which provide, on request of an affected investor or service supplier of the other Party, for the prompt review of, and if justified appropriate remedies for, administrative decisions that affect establishment or operation, cross-border trade in services or the supply of a service through the presence of a natural person of a Party in the territory of the other Party”. Note the contrast between "remedies" in this specific provision and mere "correction" in its more general counterpart.

The draft FPA also envisages contnuing use of arbitration in individual agreements under continuing EU programmes and projects open to UK participants under Part 4. Draft Article UNPRO 4.4.2 provides for enforceability in the UK of "judgments and orders of the Court of Justice of the European Union delivered in application of an arbitration clause contained in a contract or agreement in relation to Union programmes, activities, actions or projects" - a necessary patch once the CJEU's jurisdiction ceases (mostly) to have direct effect in the UK legal systems.

Finally, the detailed procedural provisions that will govern arbitral tribunals established under Title II of Part 5 are also imported, mutatis mutandis, to proceedings of the Panel of Experts under draft Article LPFS.2.52. The Panel provides the mechanism for resolving disputes about the application of the "other instruments" provisions (Section 8 of Part 2, Title III, Chapter two) dealing with Level Playing Field and Sustainability. These encompass commitments by the parties in relation to a variety of international instruments, organisations and initiatives, including the Rio Declaratio, core labour standards under the ILO Conventions, and "soft law" codes such as the UN Guiding Principles on Business and Human Rights and the OECD Guidelines concerning Multinational Enterprises. So while the role of the Panel of Experts is not strictly an arbitral one, the text proposed by the EU side appears to envisage the Panel conducting much of its work in the manner of an arbitral tribunal.

The UK side has yet to publish its proposed text for the future relationship. It will be interesting to see how far the two sides speak with one voice when it comes to the scope for arbitral dispute resolution in this uncharted territory.