Julian Jessop, the former Chief Economist at the Institute of Economic Affairs, said if the EU still refused to budge, a little-known body based in Holland called the Permanent Court of Arbitration may hold the key to unlocking the Brexit impasse. The issue of the £39billion Britain is supposedly liable for once it quits the bloc has been the subject of enormous controversy, with many Brexiteers suggesting it should be withheld completely. A policy paper published last month and presented by European Research Group (ERG) chairman Steve Baker said: “In the absence of a Withdrawal Agreement, the Government must not consider the UK to be liable for the estimated £39billion payable to the EU under that agreement, according to the doctrine that nothing is agreed until everything is agreed.”

One strategy would be making them an offer to pay our annual contributions for the next two years

Julian Jessop

Mr Jessop said: “One strategy would be making them an offer to pay our annual contributions for the next two years.

“That would amount to somewhere between £16billion and £20billion – that would be roughly half the money.

“Then we could say the rest depends on striking a wide-ranging deal with them on long-term trade.”

Such an offer would probably need to be made directly by the new British Prime Minister to the EU’s Brexit negotiator Michel Barnier.

Mr Jessop urged caution from those advocating all the money to be cautious about alienating future trading partners, suggesting his approach would be regarded as a “gesture of good will” in Brussels which would pave the way for arrangements which benefited both parties.

He also suggested the PCA would be the right forum for any disputes over the money to be heard.

He said: “People talk about the UK and the EU fighting this out in courts but the PCA is more of a process of arbitration than a court as such, and as such would probably be more appropriate.

“Certainly there would be no point in having this done by the European Court of Justice (ECJ), which is precisely what the UK is trying to get away from – rather it has to be an international body.”

“That is the disadvantage of going to court or arbitration – you simply don’t know what the outcome is going to be.”

Professor David Collins, Professor of International Economic Law at City University and author of a new document entitled The EU, The UK and Global Trade – A New Roadmap, spoke at the same event as Mr Baker.

He later told Express.co.uk: “I believe that the PCA could be an appropriate forum for this.”

He added: “The International Court of Justice would not be appropriate because only states can appear before the ICJ and the EU commission and agencies are not states.”

Nevertheless, he likewise struck a note of caution about taking a dispute to any organisation which would be required to give a ruling on the matter.

He said: “This is an unprecedented situation – nobody’s ever left the EU before.

“As such, nobody knows what the correct answer is.

“People who say we owe nothing, and those who say we owe the full £39billion, don’t know how it would turn out if it got to that stage.

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