Speaking to reporters in Dublin, Mr Varadkar was discussing the so-called Stormont Brake, the mechanism by which a minority of MLAs can formally raise concerns with the UK Government about new EU rules applying to the region.
Mr Varadkar was asked about comments by Northern Secretary Chris Heaton-Harris in Belfast on Thursday when he said if the brake was activated, the UK would be "bound" to block the new law.
Some Stormont parties have expressed concern over whether his comments indicate that the brake will end up handing a powerful veto to a minority of MLAs.
Mr Varadkar said: "I think what we're going to have to see is the legislation that the British Government introduces, and they've committed to consulting with the five main parties in Northern Ireland on that and also the Irish Government.
"We see the Stormont Brake as a red flag mechanism, a mechanism by which 30 Assembly members from two parties or more can raise an issue, an issue that we will then try to sort out between the EU and UK and that if things can't be resolved, we then go to international binding arbitrations.
"That's how we would see it develop. That's certainly how it's written down in the legal text that was agreed between the EU and the UK."

UK required to engage over new EU laws in North'

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{{magzter}} is the World's largest and fastest growing self-service, cross-platform digital newsstand with over 87 million users since its inception in 2011 and thousands of magazines and newspapers across 40+ categories and 60+ languages. Headquartered in New York, Magzter has its local presence in Amsterdam, London, Mexico City, Chennai, Mumbai, New Delhi, Bengaluru, Singapore, and will soon be expanding to other countries. Founded by global entrepreneurs, Girish Ramdas and Vijay Radhakrishnan in June 2011, Magzter enables magazine and newspaper publishers around the world to create and deliver digital editions of their titles to global consumers.