LONDON (BLOOMBERG) - Prime Minister Theresa May conceded that European Union law will influence the UK long after Brexit, a climbdown aimed at accelerating divorce talks that seemed to be initially accepted by eurosceptics in her Conservative Party.
Seven months after May declared the UK would "take back control of our laws and bring an end to the jurisdiction" of the European Court of Justice, her government will say in a position paper on Wednesday (Aug 23) that it's now seeking to bypass just the body's "direct jurisdiction".
The diluting of a onetime "red line" paves the way to EU judges having some say in the UK following Brexit, though perhaps not in a binding way. The test will be if EU officials accept the shift as enough to speed up sluggish negotiations resuming next week.
"Talk of the ECJ having no direct jurisdiction suggests that the government recognises that if we are to have a close working relationship with the EU immediately after Brexit and into the future, then European judges will continue to play an important role in determining the shape of the laws that could affect us," said Andrew Hood, a trade lawyer at Dechert LLP and former UK government official.
In the most closely watched of a series of papers, the UK will argue it would be unprecedented for the Luxembourg-based court to have direct jurisdiction over a non-member state, according to a statement released before the publication. It will instead list alternative ways to enforce rights and obligations once Britain departs in March 2019.
Justice Minister Dominic Raab told the BBC the government's preferred option was an arbitration system. He said that the government had "absolutely not" backed down, and that instead of the ECJ having jurisdiction over the UK, there would be a situation where the UK keep "half an eye on the case law of the EU." "It is about having a balanced process where both sides could have confidence," Raab said. "It is not about one side imposing its will on the other."
The new approach suggests May realises the EU is unwilling to sign a deal that would leave the bloc's judges with no long-term sway in the UK. The EU has already said the court should have "full jurisdiction" of the rights of its citizens living in Britain. It will want a way to oversee a future trade accord, too.
Failure to find an agreement would erode the time available for the UK and the EU to craft a long-term trade accord - and that is where the bloc holds the upper hand. A prolonged fight over the law would also complicate Britain's ability to win the post-Brexit transition it now admits it needs and wants.
May will nevertheless hope any concession still allows her to persuade voters that she had delivered on her promise to end the power of the ECJ in Britain. That is where the language and recurrence of the word "direct" comes into play.
The paper will formally reject EU demands that its citizens residing in the UK remain protected by ECJ jurisdiction, according to the Daily Telegraph newspaper. The future status of EU citizens in the UK - and Britons living in the bloc - has so far proved one of the most contentious points of the negotiations.
In other policy documents released this month the UK signalled it would like to maintain many of the arrangements it now enjoys with the EU. Fans of a softer Brexit laced applause for May with calls for her to make other compromises.
Opposition Labour Party lawmaker Chuka Umunna said the government seemed "to be hinting that total judicial sovereignty is impossible" and that it should now rethink its plan to quit the single market for goods and services.
Liberal Democrat leader Vince Cable called the change in stance "sensible and long overdue" and that "we should build on this progress". Some of those who pushed for Brexit may be less enamoured, given their arguments that the UK should enjoy complete sovereignty after the split and that the EU court is overly activist. While approving of May's Brexit strategy so far, eurosceptics could still make life hard for her politically if they turned on her.
Early comments, though, suggested they accepted the government's proposals. "Govt's policy is fine!" one Conservative member of Parliament, Bernard Jenkin, said on Twitter, describing it as a "normal nation-2-nation dispute resolution mechanism".
"The key point is that there should not be any direct effect of decisions by any new tribunal on the UK," fellow Tory lawmaker Jacob Rees-Mogg told The Times newspaper. "As long as that is the case, it is a matter of detail, not principle."
The proposed body could be akin to that which arbitrates the trade deal with Canada or working with the court which oversees the European Free Trade Association.
The EFTA court resolves disputes under the European Economic Area agreement, which covers Norway, Liechtenstein and Iceland. National courts can refer questions to it, but unlike the top court its judgments aren't binding. Even so, some argue it is merely a rubber stamp for rulings handed down by the larger court.