What is ‘dispute resolution’ in a trade agreement?

Dispute resolution is the mutually agreed process by which disagreements over the interpretation, application or breach of a trade agreement can be resolved between parties. These processes are designed to provide clarity about what action either side can take in the event that a dispute arises. Most often in a free trade agreement, this involves formal procedures for political dialogue to take place, before eventually being escalated to independent arbitration.

There are dispute resolution processes set out in both the UK-EU Trade and Cooperation Agreement (TCA) and the Withdrawal Agreement.  Under both, the process begins with a consultation between the UK and EU at political level. If a solution is not found, the complaining side can escalate the dispute to an arbitration tribunal/panel made up of a mutually agreed chair, plus UK and EU nominees. If one side is found to have breached the terms of the agreement, they must comply, failing which the other side can take remedial action. Under the Withdrawal Agreement, some questions on the interpretation of EU law have to be referred by the arbitration panel to the Court of Justice of the European Union, whose judgement is binding. In respect of citizens rights, UK courts can refer cases to the Court of Justice until 2028.

This fact was first published on 18 Dec 2020. It was updated on 25 Jun 2021.