Failure of Normalization in Impredicative Type Theory with Proof-Irrelevant Propositional Equality

Normalization fails in type theory with an impredicative universe of propositions and a proof-irrelevant propositional equality. The counterexample to normalization is adapted from Girard’s counterexample against normalization of System F equipped with a decider for type equality. It refutes Werner’s normalization conjecture [LMCS 2008].