brexit webinar series 5
TRANSCRIPT
© Allen & Overy 2016
Commercial contracts Mike Green, Sarah Garvey and Karen Birch
November 15, 2016
Brexit Webinar Series
Presented in partnership with
the U.S. Chamber of Commerce
© Allen & Overy 2016 2 2
Brexit webinar series 2016 – Programme Agenda
1 Brexit: Understanding the context and consequences of the UK
referendum vote
Tuesday, 18
October 2016
2 Trade, tariffs, and taxes Tuesday, 25
October 2016
3 Employment, data protection, and data transfers Tuesday, 1
November 2016
4 Antitrust, intellectual property, and environmental regulation Tuesday, 8
November 2016
5 Commercial contracts Tuesday, 15
November 2016
6 Securing the best legal framework for your businesses Thursday, 17
November 2016
© Allen & Overy 2016 3 3
Implications for contracts – general
© Allen & Overy 2016 4 4
Brexit is likely to have only a limited impact on
existing English law contracts
Some provisions may
need to be amended in
due course
Unlikely to be any
impact on enforceability
or substance of
rights/obligations
Some existing
transactions will
mature before
Brexit
Some
counterparties may
be adversely
affected in longer
term
Unlikely to trigger
termination provisions by itself
Existing
contracts
© Allen & Overy 2016 5 5
The position is broadly the same for new English law
contracts
Specific Brexit
provisions unlikely to
be needed/agreed
Timing and commercial
terms may be affected
Some new
transactions will
mature before
Brexit
Keep position
under review as
events progress
No need to change
approach to governing law
and jurisdiction
New
contracts
© Allen & Overy 2016 6 6
Implications for contracts – governing law
and jurisdiction clauses
© Allen & Overy 2016 7 7
English governing law clauses are still an attractive
option
As indicated above, English contract law is largely unaffected by EU law and English
contract law will still be certain, stable and predictable post-Brexit
Currently two EU Regulations (Rome I and Rome II) require contractual and non-
contractual governing law clauses to be respected throughout the EU
Post-Brexit, the English courts will still respect English governing law clauses even if
Rome I and II no longer apply
EU Member States will also still respect English governing law clauses post-Brexit as
Rome I and II apply even where a non-Member State law has been chosen
So no need to move away from English governing law clauses
© Allen & Overy 2016 8 8
The same is broadly true in relation to English
jurisdiction clauses
Worst-case scenario – no reciprocal European regime for respecting jurisdiction
clauses and enforcing judgments between EU and UK
BUT UK will almost certainly sign up to 2005 Hague Convention – a reciprocal regime
for respecting exclusive jurisdiction clauses and enforcing related judgments, which
will apply between the EU and UK where a US party involved
Position re respecting non-exclusive/asymmetric English jurisdiction clauses in
member state courts less clear (but may see resurgence of anti-suit injunction in UK)
English judgments are likely to be enforced in member state courts (although the
process may be slower and more costly)
Service in EU may be less straightforward (although not particularly straightforward
now and can be avoided through use of process agent clause)
So in most cases no need to move away from English jurisdiction clauses
© Allen & Overy 2016 9 9
Litigation risks
© Allen & Overy 2016 10 10
…Interpreting the ECA 1972 in the light of the constitutional background
referred to above, we consider that it is clear that Parliament intended to
legislate by that Act so as to introduce EU law into domestic law…in such a way
that this could not be undone by exercise of Crown prerogative power…The
Crown therefore has no prerogative power to effect a withdrawal from the
relevant Treaties by giving notice under Article 50 of the TEU
“
”
We’ve already seen some Brexit litigation – Article 50
© Allen & Overy 2016 11 11
This may prolong the uncertainty for commercial parties but it may also mean
there is more time to plan
Article 50 litigation – what next?
Appeal to UK Supreme Court (11 judges) will be heard on 5 December, with a
decision likely in January (assuming no reference to the CJEU)
If the Supreme Court upholds the decision, a Parliamentary Act will likely be
required before notice is served – readings, debates and votes in both Houses
This may mean the timetable for serving notice (and so the date of Brexit itself)
will slip; Government may also be forced to clarify its negotiating stance
BUT it is unlikely to lead to a decision not to serve the Article 50 notice at all
© Allen & Overy 2016 12 12
We may see disputes in other areas, including
Counterparties being adversely affected by Brexit and unable to perform obligations
– usual analysis will apply
Reservation of rights issues
Disputes about Brexit legislation – eg in relation to the terms of the proposed Great
Repeal Act
Claims re acquired rights, particularly in free movement context
Disputes about the meaning of references to the EU
© Allen & Overy 2016 13 13
The Great Repeal Act
PM May said she will introduce a “Great Repeal Act” transposing EU (“acquis”)
law into British domestic law on Brexit day and then pruning
Re-establish UK Supreme Court as the final appellant court in UK (no longer
CJEU references)
Role of Parliament? How much power will executive
have when making secondary legislation?
Many uncertainties – how will pruning of EU legislation
be approached?
What about references to EU bodies and standards in existing legislation? Will
there be a ‘sunset’ clause?
© Allen & Overy 2016 14 14
Financial services investigations – business as usual?
FCA has stated that firms should continue to abide by UK and EU obligations and
implementation plans
Possible change to enforcement agenda post-Brexit?
© Allen & Overy 2016 15 15
Brexit webinar series 2016 – Programme Agenda
1 Brexit: Understanding the context and consequences of the UK
referendum vote
Tuesday, 18
October 2016
2 Trade, tariffs, and taxes Tuesday, 25
October 2016
3 Employment, data protection, and data transfers Tuesday, 1
November 2016
4 Antitrust, intellectual property, and environmental regulation Tuesday, 8
November 2016
5 Commercial contracts Tuesday, 15
November 2016
6 Securing the best legal framework for your businesses Thursday, 17
November 2016
© Allen & Overy 2016 16 16
Contacts
Michael Green
Counsel
Banking – London
Tel +44 20 3088 2451
Michael is Counsel in Allen & Overy’s London banking practice. Michael advises the firm’s lawyers
and clients on a broad range of finance law issues. His expertise includes all aspects of secured
and unsecured corporate debt finance. Michael also analyses the implications of legal
developments for the firm’s banking practice, designs and delivers training to the firm’s lawyers
and clients, and helps to manage the firm's general banking know-how and precedents. Michael is
one of the firm’s representatives on the Loan Market Association's documentation committee. He
is also a member of the advisory panel for Butterworths Journal of International Banking and
Financial Law, and a section editor of the Australian Journal of Banking and Finance Law and
Practice.
Michael has worked in London and Sydney, and is dual-qualified in England and Australia.
© Allen & Overy 2016 17 17
Contacts
Sarah Garvey
Counsel
Litigation – London
Tel +44 (0)20 3088 3710
Sarah is an experienced litigator with particular expertise in conflict of laws, state immunity issues
and EU laws. She regularly advises clients on topics such as governing law, jurisdiction, immunity
and arbitration. Sarah is part of Allen & Overy's core Brexit team and has been heavily involved in
advising clients on the legal implications of Brexit. Sarah is Chair of the Law Society's EU
Committee and sits on the Lord Chancellor's Advisory Committee on Private International Law.
Sarah edits the Forum Chapter of Butterworths' Encyclopaedia of Banking and is secretary to
Allen & Overy's Global Legal Opinions Committee. Sarah is a Board Member of the London
Women's Forum.
© Allen & Overy 2016 18 18
Contacts
Karen Birch
Counsel
Litigation – London
Tel +44 (0)20 3088 3710
Karen is Counsel in Allen & Overy's London litigation practice. She has particular expertise in advising on
cross-border governing law and jurisdiction issues and dispute resolution clauses in the context of
complex international transactions. She advises clients globally across a wide range of sectors on the
legal issues that arise in this area and on their practical implications for clients doing business
internationally. Karen has recently been invited to edit the Conflict of Laws Chapter of Butterworths'
Encyclopaedia of Banking Law.
Karen also advises widely on other litigation and arbitration related issues, in particular on state immunity,
English litigation procedure and legal privilege and on how clients can best manage their litigation risk.
Karen is part of Allen & Overy's core Brexit team and has been heavily involved in advising clients on the
legal implications of Brexit. Prior to that Karen was involved in advising clients on the risks arising from
the eurozone crisis as part of a small team of Allen & Overy experts in this area.
© Allen & Overy 2016
Contacts
19
Marjorie Chorlins
Vice President, European Affairs
+1 202-463-5305
Garrett Workman
Director, European Affairs
+1 202-463-5639
The U.S. Chamber of Commerce's European Affairs team champions a
pro-business agenda across Europe and in Washington to expand
commercial opportunities for members by advancing open and
competitive markets, economic growth, and transatlantic cooperation.
© Allen & Overy 2016 20 20
Questions?
These are presentation slides only. The information within these slides does not
constitute definitive advice and should not be used as the basis for giving definitive
advice without checking the primary sources.
Allen & Overy means Allen & Overy LLP and/or its affiliated undertakings. The term
partner is used to refer to a member of Allen & Overy LLP or an employee or consultant
with equivalent standing and qualifications or an individual with equivalent status in one
of Allen & Overy LLP’s affiliated undertakings.