What Can You Do Now To Prepare For A Possible Brexit
The EU referendum has sparked much debate as to the consequences that may follow if the UK leaves the EU (“Brexit”). However, the consequences largely depend on which method the UK chooses to maintain its relationship with the EU hence the uncertainty for many businesses.
The poll tracker seems to suggest that the vote is close – so what can businesses that trade with EU counterparties do to prepare for any changes? We’ve highlighted some considerations:
- Review existing commercial relationships to determine whether there will be any issues with the nature of the contract if the UK leave the EU. For example, can certain contracts be terminated which would no longer be required or profitable. If not, we would be happy to go through your options with you.
- Seek legal advice if you are entering into new long-term contracts with EU counterparties so that the contracts can factor in clauses to protect your interests if the UK do leave the EU, for example, the right to terminate the contract or provide an alternative mechanism to do business.
- Review your dispute resolution procedures including those set out in your trading agreements and consider what law governs your contracts. There may be uncertainty around what laws will apply or be repealed and how the courts will make decisions (i.e. on UK interpretation or on EU interpretation). You may wish to consider alternative dispute resolution outside of court, for example, arbitration, to overcome these issues. We would be happy to go through the options with you.
- Compliance with existing UK laws and regulations that derive from EU Directives (such as TUPE or the Commercial Agents Regulations 1993) is still important. It is unlikely that the UK will simply repeal such legislation and in any event consistency in the application of laws across multi-national countries is more accepted and easier to follow for your business.
- EU Regulations however have direct effect in the UK without the need for member states to implement the EU legislation into national law. If the UK exit the EU, such EU Regulations will therefore not directly apply to the UK. Each EU Regulation needs to be considered separately as, for example, the new General Data Protection Regulation which came into force on 25 May 2016 and which will be applicable from 25 May 2018, affects businesses outside of the EU who offer goods and services to data subjects in the EU. Please see our data protection article here or contact us on our details below for more information. Other EU Regulations cover issues such as product safety, trade measures with other states, environmental issues and agricultural matters. It is therefore likely that the UK will review such matters and implement UK legislation accordingly.
- If you export or import goods to the EU, a UK exit may mean that you will face high tariffs which could be particularly significant if you export goods such as cars and food. You may need to re-evaluate business plans if you want to continue to trade or change the path of the business.
If you are concerned about the changes that a UK exit may bring to your business and want us to review your trading agreements, talk to Tollers on 01908 396 230 and ask for Liz Appleyard in our Commercial Team, who will happily assist you.