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EU court ruling clarifies Brexit trade negotiating powers

17 May 2017

A ruling with significant implications for the Brexit negotiations has been given by the European Union Court of Justice in relation to a proposed free trade agreement with Singapore.

Requested by the EU Commission for an opinion on whether the EU had competence to sign the agreement by itself or whether it required the consent of the member states, a full court of 25 judges held that the agreement in its present form could not be concluded by the EU on its own, but that only limited parts of it did not fall within the EU's exclusive competence.

In particular, the court declared that the EU had exclusive competence so far as concerns the parts of the agreement relating to the following matters:

  • access to the EU market and the Singapore market so far as concerns goods and services (including all transport services) and in the fields of public procurement and energy generation from sustainable non-fossil sources;
  • protection of direct foreign investments of Singapore nationals in the EU (and vice versa);
  • intellectual property rights;
  • anti-competitive activity and the framework for concentrations, monopolies and subsidies;
  • sustainable development;
  • exchange of information and obligations governing notification, verification, cooperation, mediation, transparency and dispute settlement between the parties, unless concerning non-direct foreign investment.

The only two aspects of the agreement over which the court considered that the EU did not have exclusive competence were non-direct foreign investment ("portfolio" investments made without any intention to influence the management and control of an undertaking), and the regime governing dispute settlement between investors and states, which removed disputes from the jurisdiction of the courts of the member states. In both of these matters, the court said the EU had a competence shared with member states.

The court made it clear that its opinion related only to the issue of whether the EU had exclusive competence, and not to whether the content of the agreement was compatible with EU law.

Click here to view the opinion.


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