Deal or no deal – An overview of how a no-deal Brexit will impact UK law



The current deadline to leave the EU is fast approaching and with the Government putting aside £2 billion in preparation for a no-deal Brexit; it is looking more likely that this will be the case. If Article 50 is not revoked or extended by 31 October 2019 and a withdrawal deal hasn’t been approved, the UK will leave the EU without a deal. This means we will leave without any withdrawal agreement or transition period. There will also be a sudden break in the application of EU law to the UK which could cause significant disruption to individuals and businesses.

EU Regulations currently have ‘direct effect’ on UK law; this means the Regulations are applied directly into our courts without being replicated in UK law. In the event of a no-deal Brexit, any EU provision that the UK currently relies on will need to be copied into UK law, however there is no guarantee that the new legislation will be unilaterally ready on Brexit day.

EU law will stop applying to the UK at 11pm (GMT) on Brexit day and whilst Brexit legislation will secure some degree of continuity for each respective area of law, the UK will not have the guarantee of reciprocity from the EU and its member states. UK law will therefore require further amendment as it currently relies heavily on this.

See how a no-deal Brexit will affect an area of law that matters to you by clicking on the relevant title below:

There are approximately 1.3 million British citizens living in other EU member states and 3.8 million EU citizens living in the UK. This illustrates the importance of having a synchronised family law system across the EU to maintain certainty and cooperation.

The UK’s legal links to the EU for family law rests on two key pieces of legislation; Brussels II Revised and the EU maintenance regulations. Both of these will be revoked in the UK in the event of a no-deal Brexit. The government have indicated that they will replicate both of these to fill the void but this will not retain the important reciprocity with EU member states that we currently rely on. This means the Regulations will operate on a one-way basis; English courts will have to recognise and enforce orders made in EU member states but the EU member states will not need to recognise or enforce UK orders by return.

If you have links to an EU country and are considering divorce proceedings, contact with children or maintenance matters, you will need to understand how a no-deal Brexit could affect your circumstances. You should seek legal advice both in this jurisdiction and the jurisdiction of the related country.

Divorce
A no-deal Brexit will not impact the basis on which you can apply for a divorce or the assessment for the division and distribution of assets; however it will cause jurisdictional issues where the UK and EU countries begin to use different regulations.

Brussels II Revised is the law currently used to decide which jurisdiction will hear divorce proceedings where either party of the married couple have connections to other EU countries.

Divorce proceedings are currently handled by way of ‘first past the post’ which avoids duplicated proceedings taking place across jurisdictions. If we leave with a no-deal this rule will no longer apply in the UK and as such we will lose the reciprocity from other member states that proceedings will only be lodged once.
The courts will instead need to assess which is the most appropriate jurisdiction to hear each case if more than one jurisdiction is eligible. This is likely to lead to an increase in contested litigation for divorce jurisdiction as each party may opt for different jurisdictions if their laws are favourable to their circumstances. This will result in uncertainty as well as time and cost implications while it is decided which court will be used.

If you are considering issuing divorce proceedings and you or your partner have connections to an EU country, you should discuss which jurisdiction will be used with your partner or obtain legal advice in both jurisdictions if you have any concerns.

Maintenance
Claims for family maintenance in England and Wales are currently based on EU Maintenance Regulations. These regulations are scheduled to be re-implemented following Brexit as the UK intends to re-join the 2007 Convention in its own right if we leave without a deal.

With a no-deal Brexit, we will not have any cross border powers to enforce spousal maintenance orders between the UK and the EU and this is likely to be very problematic.
If you and your partner both reside in the UK, there will be no changes to the enforcement of maintenance between you following Brexit. However, if you or your partner have connections with an EU country and live abroad or are likely to move abroad in the near future, you should seek legal advice in this jurisdiction as well as the other relevant jurisdiction. This is a complex area of law requiring specialist advice. Those advising you will need to ascertain the enforcement criteria in the relevant EU country and assist you with considering the various types of maintenance orders that you may apply for. Each of these will have different benefits in the short and long term for you.

Children
Maintenance - The Child Maintenance Service in the UK applies to cases where the paying parent, the receiving parent and the child are all in the UK and this will not change following Brexit.
If one parent resides in another EU country, the jurisdiction for orders relating to that child is determined based on where the child is resident. Whilst Brexit legislation will hopefully replicate this rule, enforcement of maintenance across jurisdictions is already problematic without the added implications of Brexit. A no-deal Brexit will create a risk of duplicate proceedings in both countries causing time, stress and cost implications as other EU countries will have no obligation to recognise and enforce UK orders.

Care Arrangements - EU law currently allows a child arrangement order for contact to be directly enforced in the EU without the need for registration, as long as the relevant criteria is met. For orders relating to where and with whom a child lives, registration is required in the relevant EU country. The registration must be completed prior to exit-day for the order to be enforceable under the current rules. If your application is not complete and we experience a no-deal Brexit, the enforcement of any order in an EU member state is unknown at this stage.

If you have any concerns about your own situation, you should seek legal advice in both this jurisdiction and the other relevant jurisdiction. For more information, please call our Family team on 01225 750 000.

An important part of future planning is putting a Will in place to ensure that your wishes are carried out after your death. When arranging your Will, is it prudent to consider what assets you have and who you wish to receive these.

If you have assets located in an EU country, you will need to understand how a no-deal Brexit could affect your circumstances when passing assets on your death. You should seek legal advice both in this jurisdiction and the jurisdiction of the related country.

Pre Brexit:
If you are a British citizen with only British assets, your Will and the way in which you wish to leave your assets will be governed by the law of England and Wales.
If you are a British citizen with European assets (in a country that is governed by the EU), the way in which you wish to leave your European assets will be governed by the law of that European country.

The EU Succession Regulation (EU 650/2012) was introduced with the aim of uniting succession and inheritance rules across the Member States. The rules meant that you could decide which laws applied to the way in which your property passed after death.

The UK did not “opt-in” to these rules, however, if a British citizen owned property in a Member State that did “opt-in” (for example France) they could apply the Regulations to their foreign Will so that the laws of England and Wales governed the succession of their assets.

Example:
Holly owns a holiday home in France. She lives and is domiciled in the UK.
Holly wishes to leave her holiday home in France to her niece and nephew rather than her two children. Holly received money from her deceased brother to purchase the holiday home, which her niece and nephew have spent a lot of time in.
Holly makes a Will in France gifting her holiday home to her niece and nephew. Under the EU Succession Regulation, Holly choses English law to apply to her estate. On Holly’s death, her niece and nephew receive the holiday home as intended.
If Holly did not apply the Regulations or for whatever reason these were to be dis-applied on her death, French succession law would apply and forced heirship would mean that a percentage of the holiday home will pass to her children.

Post Brexit:
As the UK did not “opt-in”, the application of the EU Succession Regulation should not be affected in relation to the example with Holly above.

However, if the UK leaves the EU without a deal, there may become a risk that legislation is enacted in England and Wales which contradicts the Regulations causing uncertainties and potentially lengthy and costly proceedings.

If the UK leaves the EU with a deal in place, the nature of that may deal with the application of the Regulations and how European property is dealt with by non-EU individuals.

If you have any concerns about your own situation, you should seek legal advice in both this jurisdiction and the other relevant jurisdiction. Our Private Client team can point you in the right direction

With a crash-out exit from the EU looking increasingly likely, how will this affect your commercial dispute?

The first thing to realise is that no-deal means no agreement for ongoing cross-border judicial cooperation. In the event of a no-deal exit, come 11pm on 31 October, therefore, EU Regulations and other legislation will disappear from our legal system. Whilst the government has passed legislation to adopt into UK law the body of EU law, including the EU legislative framework (which concerns the management of cross-border EU litigation) as already applied, is it as simple as that?

As far as the management of your dispute is concerned, where there is a cross-border element, the short answer is no. Many EU Regulations, such as, for example, those relating to the service of proceedings or the taking of witness evidence, are dependent on reciprocal arrangements and the UK will no longer be part of those arrangements.

So whilst the UK may want to maintain those arrangements and adopt them into UK law, other EU member states are under no obligation to do the same for the UK. Key areas in litigation and dispute resolution which will be affected by a no-deal Brexit are the taking of witness evidence, service of documents, recognition and enforcement of judgments and jurisdiction. In a no-deal scenario, the following will all be repealed throughout the UK:

• The Recast Brussels Regulation – governs jurisdiction, recognition and enforcement of judgments as between the UK and the EU.
• The Lugano Convention – governs the UK’s judicial relationship for civil disputes with Switzerland, Norway and Finland.
• The EU/Denmark Agreement – concerns rules on enforcement of judgments between the EU and Denmark (UK will no longer be a party).
• The European Enforcement Order, European Order for Payment and European Small Claims Procedure Regulations – deals with undefended debts and small claims of up to €5,000.

The good news is that in the event of a no-deal the UK will be able to accede in its own right to the Hague Convention, which applies to jurisdiction and enforcement of judgments and which should allow for some certainty (as long as the matter is within the remit of Hague). If not, then the parties will need to consider both the rules of the individual member state and UK law. The adoption by the UK of current EU law as it applies now will also provide certainty as to how the courts will decide disputes. 

There may be other steps that need to be taken, so if your dispute has a cross-border element or if you want to enforce in an EU member state, it is best to take specialist advice sooner rather than later.

For more information, please call 01225 750 000 and our Dispute Resolution team would be happy to assist

In a no-deal scenario the UK will no longer be part of the EU’s single market and customs union and the four freedoms (movement of people, goods, services and capital) will no longer apply.

UK-EU trade will be under the EU rules that apply to non-EEA countries and will therefore be based on World Trade Organisation rules.

A customs and regulatory border would arise between the UK and the EU and between Northern Ireland and the Republic of Ireland.

UK businesses would no longer be eligible to receive EU funding for projects under EU programmes.

Tariffs on imports and exports are likely to have a direct effect on the cost of goods and services which could affect you either directly or indirectly through your supply chain and could therefore impact on the cash flow and profitability of your business.

You may need to make changes to your business to ensure compliance with any new import and export control processes, as you may need to comply with additional regulatory requirements, security and safety controls and custom declarations.

How to manage disruption
Without the safety net of a withdrawal agreement or a transition period, the only way to minimise the potential disruption to your business is to undertake a Brexit Audit. This will help you to better understand the risks posed to your business of a no-deal Brexit and allow you to take steps where possible to mitigate your exposure.

Areas you should consider as part of your Business Brexit Audit are as follows:

1. Trade-Related Effects
- Supply chain
- Locations of customers and suppliers
- Tariffs on import and exports
- New border controls
- Additional regulatory requirements

2. Skills and Staffing
- Retention of existing staff
- Reliance of your workforce on EU rights (e.g. freedom of movement)
- Skill-set availability

3. Data Transfer (cross border)
- Additional longer term requirements to ensure compliance with EU data protection regime when a business transfers personal data from EEA to UK

4. Intellectual Property
- European registered intellectual property rights and their application in the UK
- Loss of existing seniority claims in EU trademarks based on existing UK trade marks

5. Short Term and Long Term Economic Effects
- Cash flow
- Inflation
- Potential reduction of investments
- Fall in the value of sterling (exchange rates)
- Reliance on credit/finance
- Reliance on EU funding

What action should I take?
Carry out your Business Brexit Audit assessing the potentially vulnerable areas of your business and plan for them.

  • Review your insurance policies.
    Do they or can they cover you for any potential losses?
  • Review existing agreements.
    Do they have any Brexit-related trigger events?
    Are there opportunities to renegotiate, terminate or restructure?
  • Considered agreements due for renewal and new agreements.
    Consider business costs, pricing, access to finance, labour and the markets.
    Do you need additional Brexit-related clauses to offer some protection and allocate risk?
  • Review your staff retention policies and recruitment strategies.
  • Assess implications on timescales, costs, workforce and tax.
  • Identify if additional qualifications of licences will be needed to operate your business;
  • Identify possible areas of cost reduction

The business team at Mogers Drewett can help you plan for a no-deal Brexit, conduct an audit and ensure disruption is minimal. Call our Corporate Commercial team on 01225 750 000 for more information.

The UK’s withdrawal from the European Union continues to be shrouded in uncertainty but the likelihood of a no-deal Brexit is an increasing possibility. So what does this mean for Commercial Property?

As far as the law governing commercial property transactions is concerned, these are heavily enshrined in English Law and do not rely heavily on EU Law. As such, the end of EU Law applying to English Law is unlikely to have as significant an impact on commercial property than in other areas of law. However, there are some points that parties should consider in the lead up to the UK’s exit from the EU:

Should we consider a Brexit Clause?
A “Brexit Clause” inserted into a contract, for example for the purchase of a commercial property freehold or the grant of a new lease could be beneficial in any transaction where completion of the contract is due to take place post-Brexit. The effect of a “Brexit Clause” is that if certain trigger events (such as the imposition of tariffs) occur then the affected party may be in a position to seek to re-negotiate the terms of the Contract. Given the uncertainty of Brexit such provision may provide comfort to the potentially affected party and enable contracts to be entered into during these intervening times when the impact of a no-deal Brexit is unknown.

What impact will a no-deal have on Energy Performance Regulations?
One area of law that has flowed from EU Law and has now become part of English Law is energy efficiency. This covers wide aspects but something that affects our clients is the requirement to produce an Energy Performance Certificate (EPC) and the requirement for all commercial properties being let to reach certain minimum efficiency standards (unless specific limited exemptions apply). Should the UK leave the EU without a deal then the UK will be at liberty to revoke these laws, however, given the importance being attributed to laws relating to reducing the impact of climate change it is unlikely that the Government, in any immediate post-Brexit period, would revoke such legislation. As a consequence, landlords, sellers and buyers should all be mindful that the EPC and Minimum Energy requirements have been and continue to be followed in order to avoid potential enforcement action and fines for non-compliance.

Please call our Commercial Property team on 01225 750 000 for more information or if you have any concerns about your property transaction.

Without access to a crystal ball, it is impossible to predict what the employment law landscape will look like post Brexit. 

Whilst the UK has historically led the way in the development of employment laws, our membership of the EU has seen the majority of those laws being developed and shaped within a number of areas, for example the rights of workers on the transfer of a business, being introduced solely as a result of that membership. 

In the case of a no-deal Brexit any trade between the UK and EU would take place under World Trade Organisation (WTO) rules which say nothing about employment regulation. 

Strictly speaking, this would mean that Parliament would be empowered to repeal or amend any employment laws, including those which have originated from the EU.  In addition, any rulings by the European Court of Justice (ECJ), and there have been many important such decisions, would no longer be binding in the UK Courts.  New EU laws would not apply to the UK. 

So what could this mean going forward? 

At this stage, and for a variety of reasons, it seems very unlikely that a UK government would seek to repeal existing employment laws whether they emanate from the EU or otherwise.  Many of our most significant employment laws; equal pay, sex, race and disability discrimination, predate our membership in the EU whilst in other areas the UK has chosen to exceed the minimum requirements imposed by EU law makers; think paid leave. 

Additionally, the post Brexit socio-political landscape will be a key factor.  Whilst it is easy to criticise what is often perceived by our National press, as the EU overstepping the mark on workers’ rights, will a post Brexit government be reckless enough to risk losing the votes of the millions of workers’ whose rights may be weakened by introducing the types of changes only a very small number of people would want to see made?  This would be particularly so in the increasingly challenging area of discrimination.  At a time when society is becoming increasingly diverse, making our employment laws less so, makes no sense at all.   

In our experience, employers recognise the importance of protecting their workers from exploitation; ensuring they are paid a fair wage and that they are not subjected to discrimination or unsafe working conditions.  Membership of the EU or not, is unlikely to change that. 

However, laws which have, not without some justification, proved hugely unpopular with industry, including TUPE (with particular regards to harmonising terms and conditions) and the operational aspects of annual leave (such as holidays accrued during periods of sickness and how holiday pay is calculated), are likely to be scrutinised by a post Brexit Government. 

Please contact our Employment & HR team on 01225 750 000 for more information or if you have any concerns.