Could arbitration be a solution for Brexit?

ISDS

The discussions about the United Kingdom’s exit from the European Union are ongoing. Recently, it was suggested that some of the open questions are instead determined by an arbitral tribunal.

It is the think-tank Bruegel that launched the idea. It is based on the reports that the EU and the UK differ on how much UK would have to pay in order to leave the union. This divergence stems from the fact that the parties use different calculation models. Since the quantification of the UK’s bill is a relatively technical issue – that often ends up before tribunals in other contexts – Bruegel suggests that it could be put before a tribunal, for example at the Permanent Court of Arbitration in the Hague. Then the two parties could instead focus on their future relationship, rather than disputing over liability and quantification.

It is far from unusual that complicated disputes between states are put before arbitration tribunals; history is full of such cases. However, even if the prospect of such a procedure for the economic and legal consequences of Brexit is attractive, it is not automatically achievable in this case, because of EU law. For example, it is not likely that the Court of Justice of the European Union in Luxembourg would allow an independent tribunal to determine an issue that is so intertwined with EU law. Therefore, it remains to be seen to what extent the proposal is supported by the parties.