Brexit is likely to have a significant impact on the financial services market in the UK and Ireland.
One of the main impacts of Brexit is likely to be the loss of passporting rights where UK based financial services firms were able to operate across the EU on the strength of their UK regulatory authorisation. Under the current regime, there is no requirement to apply for separate authorisation in every EU jurisdiction but that is likely to change in a post-Brexit world. The equivalent, but opposite, concern will apply to EU based financial services firms that want to operate in the UK. This concern has already led to financial services firms relocating from London to other financial hubs within the EU. As at the start of October 2019, Dublin has been the main beneficiary (115 firms have opted for the Irish capital city as their new base for post-Brexit operations) but Luxembourg, Paris, Frankfurt and Amsterdam are all benefitting from this rush to relocate in advance of the UK’s exit from the EU.
The loss of passporting rights will undoubtedly have an impact on financial services firms’ strategic direction and the jurisdictions in which they operate. The consequences are unclear, but it is reasonable to expect that this may lead to a contraction in the number of market participants or on financial services firms becoming more focused on their “home” jurisdictions. It also means that lenders will have to assess whether or not they continue to have the relevant authorisation to perform their obligations under the loan documents. While this might be a less pronounced risk for corporate lending, lenders operating in the regulated/consumer lending space will certainly need to be particularly alert to that risk and take steps to mitigate risk of regulatory non-compliance.
Template loan and security documentation should also be reviewed to ensure it remains valid and fit for purpose following Brexit. Particular concerns would be the removal or replacement of redundant legislative references, a review of covenants requiring compliance with all laws and whether those remain capable of performance or might trigger unintended default, the consideration of whether confidentiality and data protection obligations can continue to be met, whether a change in the insolvency or loan restructuring landscape as a result of Brexit will impact on enforcement and security rights and whether jurisdiction and choice of law provisions need to be reviewed in light of changes to the processes for mutual recognition of judgments.
Our Banking team has a strong and proven track record of advising lenders and borrowers across the UK and Ireland on all aspects of their funding and financing requirements. We are ideally placed to advise on the implications and consequences of Brexit for client’s lending structures.
If you or your business have any questions on the potential implications of Brexit in relation to banking and finance, please feel free to get in touch.
Many of the most immediate challenges posed by Brexit for our clients centre on the impact of Brexit on their existing and new contractual relationships. Brexit (and more particularly the uncertainty still surrounding Brexit) has the potential to alter the bargain underpinning those contracts. The pain points for our clients include security of supply, imposition of tariffs, currency fluctuations and restriction on freedom of movement of people.
For clients with significant operations in NI, GB and Ireland, we have been working with senior management to identify and assess the risks arising from potential Brexit scenarios. We can provide a tailored analysis of your business including the consideration of delays in logistics, impact of tariff changes, changes to subsidies and funding, changes to regulatory standards and potential access to other markets outside the EU.
In relation to existing contracts, the key contract terms under consideration are those relating to delivery, price and payment, change control, termination and law and jurisdiction. In relation to new contracts, the focus remains Brexit planning, in particular, prescribing the means by which a range of Brexit outcomes on the operation of the contract are to be addressed.
Changes in the legislative landscape may also have a significant impact on existing contractual relationships. We have also been assisting clients in preparing for Brexit in relation to the legislative changes expected to be brought about on and after Brexit. In turn, these legislative changes will need provided for in the contracting documents relied on by our clients.
If you or your business have any questions on the potential implications of Brexit in relation to commercial contracts, please feel free to get in touch.
While company law in the United Kingdom (implemented through the Companies Act 2006 and secondary legislation) incorporates substantive EU company law as set out in EU directives, Brexit is not expected to trigger significant changes to general UK company law in the near future.
To date, some limited and largely technical amendments to UK company law have been introduced (to take effect from “exit day”) in anticipation of Brexit, including changes to Companies House reporting requirements for EEA companies and the revocation of the Companies (Cross-Border Mergers) Regulations 2007.
Our corporate team is continually monitoring the impact of Brexit on UK company law in order to provide our clients with appropriate and up to date advice. While those provisions of the Companies Act 2006 which deal with mergers and acquisitions are unlikely to be affected by Brexit to any great extent (if at all), it is accepted that the broader economic implications of Brexit (whatever form it may take) will present many challenges for the mergers and acquisitions market.
Our corporate team advises clients across all business sectors in Northern Ireland, the Republic of Ireland and Great Britain. We understand that our clients are concerned about the impact of Brexit on the future growth and development of their businesses, be that through mergers and acquisitions, investment or borrowing. We have an unrivalled understanding of the trends in the Northern Irish marketplace and the challenges facing purchasers, funders and lenders, so we are alive not only to the challenges faced by our clients and the markets in which they operate, but also to the opportunities available to them.
If you or your business have any questions on the potential implications of Brexit in relation to corporate and M&A, please feel free to get in touch.
Our employment and immigration team is advising clients across business sectors in Northern Ireland, the Republic of Ireland and Great Britain about the impact of Brexit on their workforces.
We can provide up-to-date advice on the current visa implications of Brexit for EU nationals who currently work, or have applied for work, in the United Kingdom or the Republic of Ireland, including the requirements for settled or pre-settled status under the Settlement Scheme.
Regardless of whether the United Kingdom exits the European Union with or without a deal, our employment and immigration team can support your contingency planning by providing bespoke and commercially driven advice on how Brexit will affect the rights of EU nationals and the requirements they must meet to live and work in the UK in the short and medium term.
We regularly advise clients on the current business visa pathways for non-EU nationals and expect similar rules to apply to EU citizens under the UK’s incoming immigration rules. We can keep you up-to-date with these changes as they unfold.
Many of the UK’s employment laws are derived from European law and in the long term, worker’s rights and employer obligations may begin to diverge. We have particular expertise in dealing with the most likely areas of change, including TUPE, agency workers and holiday pay and will be closely assessing how the UK’s courts and tribunals rely on existing European case-law after Brexit.
If you or your business have any questions on the potential implications of Brexit in relation to employment and immigration, please feel free to get in touch.
There are several potential implications for the energy sector arising as a result of the UK’s departure, particularly in light of the potential for future regulatory divergence in a no deal scenario. Whilst domestic subsidies are unlikely to be impacted, most of the recent focus has been on the potential implications for the Single Electricity Market in Ireland, and the future operation of cross-border capacity markets and DS3 system services markets. Considerations have also arisen around the potential for tariffs on cross-border energy supply. Gas networks and supply are considered less likely to be impacted.
We have been assisting clients in preparing for Brexit by helping them to consider their organisation’s specific energy requirements and assessing any Brexit related risks or opportunities arising in respect of energy supply. This includes contingency plans and legal advice to one of Northern Ireland’s largest electricity users (who also operate their own renewable energy facility).
Andrew Kirke, a Director in the Contracts and Energy team at Tughans, specialises in energy law, and has recently completed a secondment as in-house counsel at SONI Ltd (the electricity transmission system operator for Northern Ireland). He also serves as a member of Mutual Energy and as secretary for the Northern Ireland branch of the Energy Institute, and recently spoke at a SONI and Chamber of Commerce energy forum event on the potential implications of a no-deal Brexit on the energy sector in Ireland.
If you or your business have any questions on the potential implications of Brexit in relation to energy and renewables, please feel free to get in touch.
The final outcome of the Brexit negotiations remains uncertain and therefore the impact on Planning and Environmental Law in Northern Ireland also remains uncertain.
In the short term, Brexit will have limited impact on Planning and Environmental law in Northern Ireland. The European Union Withdrawal Act is designed to convert all EU law into UK law, as well as creating temporary powers for Parliament to fill any gaps or amend legislation to fit the UK framework. However, in some areas, such as REACH or Air Emissions, where the EU law is underpinned by a separate EU institution, it may be more difficult to put in place meaningful amendments.
Planning law incorporates environmental regulatory aspects from the European Union (EU) on matters such as Environmental Impact Assessment, Strategic Environmental Assessment and Habitat Assessment and the UK’s withdrawal from the EU will, in the long term have a major impact in these areas.
There are several international environmental treaties which have been ratified by the EU and not the UK individually, others have been ratified by both the EU and the UK. The status of such treaties post Brexit is uncertain. One such treaty is the Aarhus convention which amongst other things sets out the regime to limit exposure to legal costs in environmental matters and includes provisions on access to information, public participation and access to justice in environmental matters. It acquires much of its force in the UK legal system through the relevant EU secondary legislation implementing it, for example, on Environmental Impact Assessment.
There will also be a loss of the enforcement powers currently available to the European Commission and the important associated procedure in which citizens may make a complaint, informally and free of charge, to the Commission. It is notable that most infringement proceedings have been in respect of environmental matters. The use of judicial review to enforce environmental standards is extremely costly and therefore the loss of the Commission Complaints procedure will be keenly felt.
The latest proposed deal between the EU and the UK includes a declaration that the UK will maintain a “level playing field” in terms of environmental standards. However, this declaration is contained within the political declaration of the agreement and therefore, as some commentators have noted, may not be legally binding.
The extent to which Northern Ireland is free to depart from EU standards will obviously depend on the terms of any trade agreement with the European Union. It seems unlikely that the EU would be content to accept a position where the United Kingdom gives its industry a competitive advantage by lowering domestic standards. This will be particularly the case in respect of Northern Ireland given its geographic location.
If you or your business have any questions on the potential implications of Brexit in relation to the environment and planning, please feel free to get in touch.
How the UK’s current state aid and competition law regimes, which are largely determined under an EU wide legislative framework, will change post-Brexit remains to be seen. The non-binding political declaration agreed between the UK and EU currently reflects a joint commitment between the EU and the UK to maintain common high standards in the areas of (amongst other things) state aid and competition, but such commitments are not legally binding.
Whilst even under a no deal scenario, the legislation laid before Parliament would immediately transpose large parts of the current body of EU law into UK domestic law (subject to limited amendments), there is scope for UK competition law to diverge from that of the European Union over the coming years.
If you or your business have any questions on the potential implications of Brexit in relation to EU state aid & competition law, please feel free to get in touch.
Within our dedicated Contracts and Technology Department we have market-leading expertise in negotiating distribution, reseller, agency and OEM agreements and software licences working with leading global organisations. We also provide assistance and advice concerning the protection and exploitation of intellectual property, and data protection regulations.
As with every other aspect of life following the triggering of Article 50 by the UK government in 2017, Brexit poses a fundamental challenge to the way that insolvency proceedings are undertaken. This is not just because insolvency involves several strands of EU law but also because the manner in which assets are recovered has the potential to change overnight if a no deal, or a non-reciprocal deal is reached between the UK and EU.
Under the current process, insolvency and asset recoveries are predominantly conducted via the Centre of Main Interest (“COMI”) principle. This determines in which member state or jurisdiction the insolvency proceedings should be opened and primarily conducted from, based upon which state the individual or company is most closely associated with. These principals have provided invaluable in reducing costs in insolvency proceedings when individuals or companies have assets across the EU e.g. a bankrupt with a holiday home in Spain or a Northern Irish Company in Administration with a factory in Germany.
The current EU legislation allows for much efficiency when conducting insolvency proceedings and attempting to reclaim assets. These allow for an Insolvency Practitioner (“IP”) when appointed in the member state in which COMI has been established, can ask the courts in other member states to allow the IP to recover assets without the need for further applications.
Post Brexit, there is the possibility that UK IP’s will be unable to avail of this efficiency as they will have no means to compel EU member states to recognise the UK appointment of the IP, thus creating delays and increasing costs in recovering assets outside of the UK.
If, however a withdrawal agreement is concluded and this allows for the continued and reciprocal recognition of IPs appointed both in UK and EU member states, then this scenario may be avoided. However, with all things Brexit, the devil will be in the detail and so we would encourage IPs, creditors and companies who are facing or considering insolvency proceedings to seek legal advice, particularly if you have knowledge of assets located outside of the UK.
If you or your business have any questions on the potential implications of Brexit in relation to insolvency, please feel free to get in touch.
Following Brexit, the Courts in Northern Ireland will continue to have jurisdiction to deal with disputes that involve individuals and businesses living or registered in Northern Ireland. However, it will impact individuals and businesses who are involved in cross-border civil and commercial disputes with EU Member States.
Under current EU law and international agreements, there are streamlined processes for the mutual recognition and enforcement of judgments obtained in Northern Ireland in other EU Member States. However, clients seeking to enforce a judgment in an EU Member State after the UK leaves the EU will no longer have the benefit of these processes. Clients based in Northern Ireland will have to rely on common law and statutory instruments, such as the Rules of Court of Judicature (Northern Ireland) 1980 as a mechanism to have Northern Irish judgments recognised or enforced in an EU Member State. This also applies after Brexit to judgments obtained in an EU Member State who then seek to enforce the judgment in Northern Ireland.
The removal of these streamlined procedures is likely to increase costs in cross-border litigation for all parties due to the more cumbersome court procedures.
We have been assisting client’s in preparing for Brexit by reviewing existing contracts in respect of jurisdiction, choice of law and dispute provisions. We have also been advising in relation to prospective disputes that may arise as a result of a material adverse change clause being triggered or lead to a party terminating due to the commercial viability of the contract, for example, due to increased tariffs, regulatory constraints or custom checks.
It is also anticipated that Brexit will lead to an increase in disputes, given the level of uncertainty, particularly in areas of law which are primarily derived from EU legislation such as data protection, competition law and intellectual property.
Until the UK leaves the EU, clients can still benefit from the current EU legislative framework regarding service of cross-border proceedings and the enforcement of judgments in EU Member States. We would encourage clients to take early advice should they anticipate or become involved in a cross-border dispute.
If you or your business have any questions on the potential implications of Brexit in relation to litigation and disputes, please feel free to get in touch.
