No Deal Brexit Planning
In the past week Carson McDowell representatives have met with officials from the UK Department of Culture, Media and Sport (“DCMS”) pressing for clarity on the issue of Brexit and the implications for data protection. Following these discussions we have decided to write to our clients on what we perceive to be the key issues, and where possible, propose some steps to mitigate the risks. Please click here for our “Data Protection No Deal Planning” update.
Carson McDowell has been monitoring the developments of Brexit since the referendum result in June 2016. As at the date of writing, the UK is scheduled to leave the European Union against the background of two consecutive defeats for the proposed Withdrawal Agreement between the UK government and the European Union in the House of Commons.
Uncertainty therefore persists and the time for the “wait & see approach” has passed, businesses should be stepping up preparations for all eventualities including addressing, insofar as possible, the implications of a “no deal” scenario. Our checklist has been prepared as a practical aid to assist our clients in this process. Whilst non-exhaustive in nature, it identifies what we believe to be the principal issues of concern across all sectors.
With more experts in more practice areas than any other law firm in Northern Ireland, we believe we are best placed to assist you as you navigate through these challenging times. Please do not hesitate to contact us on [email protected] or alternatively reach out to a member of our Brexit team, whose contact details are set out below.
Please click here to access our Brexit checklist.
No Deal Brexit – Concern expressed whether trading on WTO rules will be possible…
With time marching on and the prospect of a No Deal Brexit looking increasingly possible, the House of Lords appears to have hindered the UK’s ability to move towards trading on World Trade Organisation (WTO) terms in the event that a deal cannot be agreed.
On Monday 21 January, the House of Lords voted to shelve the Government’s proposed Trade Bill by 243 votes to 208 on the basis that it didn’t contain enough detail about future arrangements, for example, in relation to food safety and animal welfare in the proposed trading regime. The Government has been asked for more detail on how future trade agreements will be agreed and scrutinised for the last 15 months but still failed to provide a bill that satisfied the House of Lords’ concerns. The decision to shelve the proposed bill means it is unlikely meet the scheduled date of 25 February for the report stage, without the publication of more detailed proposals on trade.
According to Cabinet minister and International Trade Secretary Liam Fox, this makes the UK’s move to the WTO’s terms “impossible”. The Trade Bill would enable the UK to make any changes required in domestic legislation as the UK accedes to the Government Procurement Agreement (GPA). Dr Fox explained that it would not be possible for the UK to accede to membership of the GPA and trade on WTO rules in the event of a No Deal Brexit without having the proposed legislation in place.
To put this in context however, the Trade Bill is one of a total of nine bills which Parliament is required to pass in order to enable the UK to exit as cleanly as possible on 29 March (if no deal is agreed beforehand). The contentious nature of the issues being discussed is highlighted by the fact that, to date, only 5 bills have passed since the date of the referendum (5 passed in 31 months versus 9 required in less than 40 days…..).
Brexit: The “Meaningful Vote”
By this evening the House of Commons will have closed its debate on the EU Withdrawal Agreement in its current form. This will conclude with an all-important “meaningful vote” on the draft agreement. If the UK government is defeated, there are six possible outcomes envisaged. They could:
- Second Vote: bring the agreement back to Parliament for a second vote;
- Further Negotiations with the EU: attempt to bring the draft Agreement and Framework back to the table with the EU negotiators;
- General Election: they may take the view that a general election is required to avoid deadlock and provide the House of Commons with a mandate to take the next steps;
- Referendum: call a second referendum, referred to by its supporters’ as “the People’s Vote”, it is not clear what might be on the ballot paper and what is more, this option would almost certainly require an extension of Article 50;
- Vote of No Confidence: call a vote of no confidence. It could be called from either the government or opposition MPs, if a vote of no confidence is passed and no government can be formed within 14 days, a general election would have to be called no less than 25 days later; or
- No Deal: this is the default positon under the EU Withdrawal Act; in legal terms this is what will happen if the deal is voted down and no further steps are agreed upon by the House of Commons.
It is readily apparent (although not really surprising) that businesses remain very uncertain as to what the future holds. Carson McDowell have been actively monitoring the Brexit process in a Northern Ireland business context since June 2016. With 10 weeks to go until “Brexit Day”, our advice very much remains the same – regardless of sector or size – prepare for ALL eventualities as and until firm detail begins to emerge. We will endeavour to keep on top of political events as they progress and interpret the implications for business. To date we have prepared the following documents which we trust will inform the view of local businesses in the lead up to today's vote:
- Draft withdrawal deal: Click here for an overview of the draft withdrawal agreement and the implications for NI Business;
- Brexit Clauses: Click here for a note on the growing area of discussion around how to “brexit proof” your commercial contracts; and
- No Deal: Click here for an infograph on five key issues for businesses to consider in the event of "no deal".
Carson McDowell’s Brexit team can be contacted on [email protected].
Companies should be analysing risk in their contracts while uncertainty remains over UK exit deal, says Carson McDowell
Businesses should expect to see an increase in Brexit related clauses being inserted into new commercial contracts in coming months and should be actively assessing potential Brexit risks in their existing contractual arrangements.
That is the view of Northern Ireland’s largest independent law firm, Carson McDowell, who outlined the options to businesses at a breakfast event titled Do I need a Brexit clause? at the Merchant Hotel in Belfast on November 29.
While most businesses have now started to plan for different Brexit scenarios, the firm says many companies are not reflecting this planning in contracts currently being negotiated and have not yet investigated whether existing contract arrangements afford them any flexibility to renegotiate terms in the event of an adverse outcome.
Dawn McKnight, partner and head of Commercial at Carson McDowell said: “We want to convey to clients that as they are preparing their business for Brexit they need to look at their existing contractual arrangements with customers and suppliers and those in the process of being negotiated.
“We are often asked by clients whether they will be bound by contracts if Brexit causes, for example, prices to soar, or if they could be left in a position post-Brexit where customers want to pull out of contracts for the same reason.
“We don’t know exactly what the final deal – or no deal – on Brexit will mean for businesses and their contracts but a Brexit clause that acknowledges the potential for trading conditions to change for the worse is a sensible step. Businesses may also have options in existing supply agreements through clauses that relate to material adverse change or force majeure and we will outline these options for them.”
This event featured a discussion on commercial contracts and Brexit with panellists including Rob Heron, partner at EY, Claire Guinness, CEO of Warrenpoint Harbour Authority and Aidan Gough, Strategy and Policy Director at InterTradeIreland.
Speakers from Carson McDowell included Dawn McKnight and Rosanne Brennan, Associate, from the firm’s commercial team and Richard Gray, partner and joint head of its corporate team. Kerry Teahan, partner and head of procurement also gave an overview of free trade arrangements and what it could mean if the UK had to trade under World Trade Organisation rules.