The U.K. proposed to put an end to the court's direct jurisdiction. This means that the rulings taken by the European Court of Justice (ECJ) will no longer be binding in U.K. law. However, this results in a legal headache.
Andrew Hood, former legal advisor to David Cameron and senior director of Dechert LLP, told CNBC: "Imagine you're producing a car in the U.K. and selling it to the EU. The law that applies through the Great Repeal Bill will be EU law but the ECJ might interpret it one way and the U.K. Supreme Court another. Effectively, even though the manufacturer is based in the U.K. and the EU law is no longer binding on the U.K., the manufacturer will have to obey the ECJ interpretation of the rules if the car is to be sold in the EU."
"How do you keep these two regulatory systems?," Hood wondered, "It's not easy," he said.
"All this proposal does is show the differences of opinion," Hood added.
At the same time, the U.K. wants a third body to oversee bilateral issues including the highly contested issue of citizens' rights. The EU wants the European Court of Justice to keep overseeing the rights granted to EU citizens even if they have chosen to live in the U.K.
Irish Prime Minister Leo Varadkar said earlier this month that the EU should accede to Britain's wish to have a third institution.