By Laurence Norman 

When leaders of 27 European Union states meet on Saturday to settle guidelines on how to negotiate Brexit, they will show their determination to give EU courts a major role over U.K.-EU affairs.

To the surprise of some European officials, determining the role of the bloc's courts looms as a central battle in the divorce talks.

Many expected British concerns about immigration and EU rules guaranteeing freedom of movement to the bloc's citizens to dominate the negotiations. And they anticipated a major clash over the EU's insistence that Britain agree to payments to settle past spending pledges.

Yet Theresa May, from her first major speech on Brexit as prime minister at October's Conservative party conference, has made British freedom from EU courts a firm red line.

"We are not leaving the European Union only to give up control of immigration again. And we are not leaving only to return to the jurisdiction of the European Court of Justice," Mrs. May said.

"Our laws will be made not in Brussels but in Westminster. The judges interpreting those laws will sit not in Luxembourg but in courts in this country. The authority of EU law in Britain will end," she said.

The implication was clear: Mrs. May had decided the U.K. should leave the EU's single market, a common zone of laws and rules to ensure that products lawfully sold in one EU country can be sold in the rest of the bloc.

The EU's courts, in particular the Luxembourg-based European Court of Justice, are the ultimate authority in deciding when national laws breach EU rules, when EU legislation breaches the bloc's treaties and how EU rules should be interpreted across the bloc.

If the U.K. rejects the authority that polices the single market, it can't be part of the single market.

This could conflict with two of Mrs. May's other key objectives: to limit economic disruption after leaving the bloc, and to secure the closest possible economic ties between the EU and the U.K. in the medium term.

Mrs. May has conceded that some ECJ rulings will apply to British exporters. "U.K. companies that trade with the EU will have to align with rules agreed by institutions of which we are no longer a part, just as we do in other overseas markets," she said in March.

Moreover, to avoid a legal vacuum post-Brexit, the U.K. is pasting the body of EU law onto its own books through its so-called Great Repeal Bill. Until the British courts decide differently or U.K. law is changed, the ECJ's interpretation of EU law is the only one U.K. courts will have to rely on.

But Britain's EU partners also say that if Mrs. May wants to avoid a cliff-edge exit from the bloc she will have to accept that EU courts will continue to have a role in Britain.

Draft negotiating guidelines to be discussed at Saturday's summit say the ECJ should continue to adjudicate on cases pending at the court when Britain leaves. These could involve anything from antitrust rulings against British firms to penalties against the U.K. government if it breaches EU law.

The draft guidelines say EU institutions should have the right to start new cases post-Brexit "for facts that have occurred before the withdrawal date."

They also set out the need for dispute mechanisms to enforce and interpret the divorce agreement and to adopt measures to respond to situations not foreseen in the pact.

While that would open the way to EU-U.K. tribunals on issues such as the rights of EU citizens in the U.K., the guidelines say these dispute mechanisms must be arranged to protect the EU's legal order, including the role of the ECJ.

In other words, while future tribunals can make autonomous decisions, they will have to factor in the decisions and case law of the ECJ. The same would be true for any joint tribunals or enforcement mechanisms established under a future EU-U.K. trade agreement.

ECJ President Koen Lenaerts said Wednesday that since the terms of Brexit will be agreed to under Article 50 of the EU's Lisbon Treaty, the court will have jurisdiction, if cases are brought to them, to strike down aspects of the divorce deal that infringe EU law.

Since the original draft negotiation guidelines were sent out by European Council President Donald Tusk on March 31, EU capitals have also hardened their position on another crucial point: the role of the EU courts in any transitional agreement. A transitional deal is seen by many officials on both sides as crucial for smoothing Britain's exit from the bloc.

If a temporary extension of the U.K.'s membership of the single market or other EU arrangements is negotiated, the draft guidelines say, "this would require existing Union regulatory, budgetary, supervisory, judiciary and enforcement instruments and structures to apply."

EU law will thus continue to shape British rules and regulation. Even if Britain escapes the jurisdiction of the ECJ, it won't escape the jurisprudence of the court for years.

--Stephen Fidler in London contributed to this article.

Write to Laurence Norman at laurence.norman@wsj.com

(END) Dow Jones Newswires

April 27, 2017 13:42 ET (17:42 GMT)

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