In my response to an urgent question on Wednesday 20 March, I stated that during the implementation period, we will “technically be a member state [of the European Union]”, that “payments or penalties [for non-compliance with the withdrawal agreement] would be imposed only by mutual consent”, and that “the CJEU will have some role in interpreting EU law, but we will be outside its jurisdiction”.
The correct position is that, first, during the implementation period, the UK will no longer be a member state of the European Union, but market access will continue on current terms.
Secondly, my statement that the Joint Committee cannot unilaterally impose financial penalties was correct: all decisions of the Joint Committee are mutual and, under the withdrawal agreement, neither party is allowed to impose financial penalties on the other, whether through the Joint Committee or not. However, for clarity I wish to confirm that the independent arbitration panel set up under article 171—which was referred to by right hon. Friend the Member for North Shropshire (Mr Owen Paterson)—can impose a financial penalty where a party has failed to comply with a ruling made against it.
This is not a unilateral imposition of a penalty by one party against the other, as it would be done by the arbitration panel, which is independent of both parties and made up of experts in both international and EU law, qualified for high judicial office. It could only occur under certain conditions as set out in the WA, and after all other stages of dispute resolution and crucially must be proportionate to the continuing breach that has been identified by the arbitration panel.
Thirdly, I also said that we would be “outside [the] jurisdiction [of the CJEU] ” after the end of the implementation period. While that is of course very largely the case, I should also remind the House that, in bringing the CJEU’s jurisdiction to an orderly end, there are a small number of limited areas where we have agreed we will continue to accept rulings for a time-limited period in order to facilitate legal certainty.