Banking and Finance LAw

Brexit

A law firm that embraces
change

Learning to sail in high winds is a tough task. In fact, it is unlikely that you would even think of setting sail without getting your charts out and getting clear weather reports. There are also a whole set of different rules and it requires a whole different set of skills. To be prepared is half the victory but choppy waters lie ahead.

We are at a crucial turning point in the European story. Ireland sits on the western front of Europe still committed to European ideals. Its greatest ally and trading partner, the United Kingdom has raised its sails and is about to exit port with its route, for the most part, unknown. The element of the “unknown” for Irish, UK, European and Worldwide countries and their citizens is the greatest challenge ahead. Businesses crucially depend on advanced planning, strategy and tactics for success.

How is your business going to plan for the future without knowing the exact or even likely direction the United Kingdom is going to take following Brexit? What form is Brexit going to take? Is it going to happen at all? Maybe we might see a half-hearted exit whereby the United Kingdom seek a partial alignment with Europe on a whole range of issues and critically seek to self-determine matters such as immigration. The reality is that if you are a business in the United Kingdom, Ireland or elsewhere, there will be a whole range of legal issues that will arise which will alter your business thinking and the way that you do business.

It is also important to realise that your strategic and commercial thinking will change as the Brexit story unfolds. From a legal perspective there are matters that you can address now but your strategy may change in a year’s time as the British Government formulate their wish list prior to negotiating with the European Union.

It is important for businesses to carry out a SWOT (Strengths, Weaknesses, Opportunities & Threats) analysis in relation to the effects of Brexit on its business. Is your business selling into the United Kingdom and are you likely to be hit by tariffs? What impact is the currency instability going to have on your sales? How do you protect your current sales, get stability and future growth? Are competitors going to move to Ireland and steal part of your market? These are all questions that a business needs to plan for. There may be great opportunities for Ireland and for the United Kingdom but being prepared is the most critical, if you intend on navigating through these unknown waters.
Here are some issues that you might need to consider:-

CORPORATE ISSUES

  • CONTRACT LAW Some contracts may contain conditions that specifically relate to European Laws or have a requirement that a contract is subject to the laws of the United Kingdom or some other European Country, if the laws are going to change then this is going to have an impact on your contract. The question as to whether a contract may become invalid, unenforceable or frustrated, really depends on the type and content of the agreement. Contracts should be reviewed with this in mind.
  • MERGERS & ACQUISITIONS The United Kingdom may depart from the European code in relation to mergers and acquisitions and may apply stricter or different criteria for takeovers and mergers.
  • COMPETITION LAW Similarly, one of the most used forms of enforcement in the European Union is competition law. Stricter rules may apply or different criteria may apply to anti-competitive agreements, abuses of dominance and State aid.

Adams Law are continually monitoring the situation and we shall advise clients in a commercial and strategic manner as opportunities arise and equally where it becomes evident that there are going to be threats in the market.

DOING BUSINESS IN THE UK

  • TAXATION the UK could potentially introduce a whole new tax regime, changing the rules in relation to withholding tax, corporation tax and of course in relation to goods and services it may introduce additional duty and Vat. These all will have a significant impact for Irish companies doing business in the UK.
  • GOODS & SERVICES There is also a risk that in order to keep their competitive advantage or to take advantage of other trade deals it may develop with other countries, the UK may impose restrictions on the importation of goods, tariffs and change the law, for example, in relation to sales that take place on the internet.
  • FINANCIAL SERVICES If your company offers financial services in the UK then it may be the case that you will be subject to a separate licensing regime in the UK and also to separate laws. The famous EU passport used to operate in the EU is likely to become a thing of the past in the United Kingdom as they look to apply their own rules in relation to a whole range of matters such as prospectuses and market dominance to name but a few.

YOUR COMPANY

  • EMPLOYMENT LAW This will be an incredible challenge for Irish companies doing business in the UK. It will be open to the UK to change their employment laws in relation to matters such as maternity leave, the transfer of undertakings, working times, zero hour contracts and other important contractual issues.
  • DATA PROTECTION The free movement of personal data between EEA countries may likely come to an end if the United Kingdom exits the EU. However, without doubt it is in the interests of both the EU and the UK to retain as much compatibility in relation to personal data flow as possible. It is not guaranteed that the UK will leave the EEA but if it does, it may seek to become a white listed country such as New Zealand.
  • INTELLECTUAL PROPERTY It is extremely likely that EU trademarks and EU registered and unregistered community design rights may not have legal effect in the UK after Brexit. Your business will need to respond to these challenges. Additionally, life science regulations would also be set to change and one would question whether the European Medicines Agency which is based in London will move to another EU location. In addition, there are significant issues and challenges in relation to the unitary patent system. There is very likely to be a delay in implementing the Unified Patent and the Unified Patent Court (UPC). The UK is still a signatory to the European Patent Convention and a patent could still be obtained through this system, however, the UK will not be able to take advantage of the UPC system which solely applies to participating EU member states.

‘Brexit is a game changer for Irish and UK businesses. Be strategic in your thinking. Be thorough in your planning. Take good advice. A good commercial and legal strategy will inevitably bring success to your business”.

Milan Schuster, Senior Partner