Brexit Webinar Series 1

  • Published on
    09-Jan-2017

  • View
    301

  • Download
    0

Embed Size (px)

Transcript

  • Allen & Overy 2016

    Brexit: Understanding the context and

    consequences of the UK referendum vote

    Richard Cranfield, Marc Feider and Sarah Garvey

    18 October 2016

    Brexit Webinar Series

    Presented in partnership with

    the U.S. Chamber of Commerce

  • Allen & Overy 2016 2 2 2

    Brexit webinar series 2016 Programme Agenda

    6

    2

    3

    1 Brexit: Understanding the context and consequences of the UK referendum vote Tuesday, 18 October 2016

    Trade, tariffs, and taxes Tuesday, 25 October 2016

    Employment, data protection, and data transfers

    Tuesday, 1 November 2016

    Securing the best legal frame work for your businesses Thursday, 17 November 2016

    4 Antitrust, intellectual property, and environmental regulations Tuesday, 8 November 2016

    5 Commercial contracts Tuesday, 15 November 2016

  • Allen & Overy 2016 3 3 3

    23rd June 2016 51.9% of UK electorate vote in referendum for

    UK to leave the EU

    Brexit an historic moment

  • Allen & Overy 2016 4 4 4

    The European Union a recap

    Map from The Economist

    European Union is a club of 28 countries

    UK originally joined in 1973

    UK is not in the eurozone (common currency)

    EU members apply common laws and

    regulations overseen by a European Court of

    Justice

    EU members make financial contributions

    EU members agree 4 fundamental freedoms:

    free movement of goods

    free movement of services and

    establishment

    free movement of citizens and workers

    free movement of capital

    Other groupings European Economic Area

    (EEA) includes Iceland, Norway, and

    Liechtenstein; European Free Trade

    Association (EFTA) includes Switzerland

    http://www.google.co.uk/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwjyiPeM9PrLAhVLlB4KHQmXCkEQjRwIBw&url=http://www.economist.com/news/briefing/21567914-how-britain-could-fall-out-european-union-and-what-it-would-mean-making-break&psig=AFQjCNH3ErgRI3sD5HL_wbB0TRyEQ_9ZbQ&ust=1460062844320170

  • Allen & Overy 2016 5 5 5

    An historic moment - retreat from globalisation?

    David Cameron resigned the next day, and Tory party leadership context

    commenced

    Theresa May (who was on the Remain side) won the contest and on 11 July

    2016 became the UKs second female PM

    23 June 2016 - UK electorate surprise vote to leave the EU 51.9% free

    movement (immigration) and sovereignty (taking back control) key issues

  • Allen & Overy 2016 6 6 6

    The Brexit process straight forward in theory

    Under the EU Treaties, the UK must serve a notice (Article 50 notice) to start

    formal exit process

    After service of the Article 50 Notice, the UK and EU 27 have two years to

    negotiate a withdrawal agreement

    UK and EU 27 may also enter a separate agreement about the future relationship

  • Allen & Overy 2016 7 7 7

    The Brexit process an uncertain path with lots

    of variables

    Legal challenges over Article 50 Notice may delay exit (see below)

    What deal will be negotiated? EU 27 will not want to set a precedent. Soft Brexit

    (status quo) or hard Brexit (no access to single market/WTO arrangements)? PM

    May wants a bespoke deal

    What impact will the German and French elections in 2017 have on the process?

    When will Article 50 Notice be served? UK PM Theresa May now suggests

    March 2017, meaning exit 19 March 2019?

    How do businesses contingency plan in this context?

  • Allen & Overy 2016 8 8 8

    Legal challenges

    Judicial review proceedings brought against the UK Government re Article 50

    EU treaty provides that a member may decide to withdraw in accordance with its

    own constitutional requirements

    Claimants argue that Parliament should pre-approve service of Article 50 Notice,

    the Government argues that it is a matter of the royal prerogative and its decision

    alone

    UK has a largely unwritten constitution

    Referendum Act silent on what happens after the vote and referenda advisory

    under UK law

  • Allen & Overy 2016 9 9 9

    Legal challenges (contd)

    Further legal challenge against the UK Government brought in Northern Ireland

    Also legal challenge against Mr Juncker in Luxembourg re his prohibition of

    Commission officials from negotiating with UK prior to service of Article 50

    Majority pro Remain MPs in Parliament but many have constituencies that voted

    Leave

    Potential to delay the process but maybe not halt it

  • Allen & Overy 2016 10

    The Brexit negotiators: Brexit means Brexit

    https://www.google.co.uk/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwiCwqa514TOAhUEXRQKHYMoDSAQjRwIBw&url=https://en.wikipedia.org/wiki/Boris_Johnson&bvm=bv.127521224,d.ZGg&psig=AFQjCNF8UlyH593xmb7PaavUisCyPgll3w&ust=1469194843650972https://www.google.co.uk/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwiQ9LKH2ITOAhUGWRQKHe72AhcQjRwIBw&url=https://twitter.com/daviddavismp&bvm=bv.127521224,d.ZGg&psig=AFQjCNEsT2NKMXMPGB-86ABpsc0vU5Wp_w&ust=1469194880180303http://www.google.co.uk/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwihmsKW2ITOAhXKbhQKHdi3CbwQjRwIBw&url=http://www.independent.co.uk/news/uk/politics/theresa-may-s-new-immigration-rules-labelled-ludicrous-and-simplistic-in-key-debate-a6917766.html&psig=AFQjCNHvQwSabMh8oQWwgbAkWXfxy8u4dA&ust=1469195039955856

  • Allen & Overy 2016 11 11 11

    Sharing of sovereignty Market access

    Swiss model

    Norwegian

    model

    Turkish model

    (customs union)

    Significant market access

    EEA membership

    Extensive application of EU laws

    Significant financial contribution

    Only consultation in legislative process

    Access to parts of market

    (depending on outcome of negotiations)

    Complex array of agreements

    EFTA membership

    Application of many EU laws

    Partial financial contribution

    Only consultation in legislative process

    Access to goods market

    Some EU law applied

    No financial contribution

    No say in legislative process

    Canadian

    model

    Deep free trade agreement

    Access to market in goods and certain services

    UK remains in control of tariff arrangements

    with other (non-EU) countries

    Not bound by EU law

    No financial contribution

    WTO model No application of EU law

    No financial contribution

    Reduced tariffs on goods

    General Agreement on Trade in Services

    Post-Brexit models Hard Brexit v Soft Brexit

  • Allen & Overy 2016 12 12 12

    The scale of the task the biggest de-merger in history

    40+ years of EU legislation deeply entrenched in legal landscape directly applicable

    Regulations/UK enactment of Directives, plus soft law, eg case law

    Much depends on the model, but even the Norwegian model likely to involve some repatriation

    of EU laws

    Former head of UK civil service quoted as saying the job is vast and as an administrative

    venture it would be absolutely all consuming

    Need to address impact on EU and non-EU trading relations

    Impact on EU post UK exit reshaping of worlds biggest trading block

    PM May said she will enact Great Repeal Act transposing EU law into UK domestic law and

    then pruning but many uncertainties

    EU27 have said no informal negotiation before Article 50 Notice served

  • Allen & Overy 2016 13 13 13

    There are certain assumptions that can be made

    Largely consensual process (unilateral exit in breach of Treaties would be highly

    controversial)

    UK will remain a Member State until Brexit and be bound by EU law

    UK influence on new EU law is already decreasing

    The impact will extend beyond the UKs relationships with the EU global

    relationships will be affected

  • Allen & Overy 2016 14

    Overview of post-Brexit implications for business

    Finance

    Employees

    Tax

    R&D and other EU

    funding

    Sterling drop means

    imports more expensive,

    but exports cheaper for

    UK companies

    UK targets - more M&A

    activity?

    Derivatives

    Pension schemes

    Public procurement

    Intellectual property

    Data protection

    UK-incorporated group

    entities

    Contracts

    Insurance

    Law and regulation

    Product safety

    Environment and

    climate change

  • Allen & Overy 2016 15 15 15

    Trade there could be a big impact on market in

    goods and services

    Freedom of access to EU single market from the UK may well be restricted

    (although extent difficult to predict until model is chosen/agreed)

    UK company access to non-EU markets may also be affected if current access is

    via Free Trade agreements (FTAs) with the EU (although there may be

    workarounds via sister companies in continental Europe) or other jurisdictions

    2

    Europe to UK UK to 3rd state

    with EU FTA

    1

    UK to Europe

    3

    e.g. South Korea

  • Allen & Overy 2016 16

    Dual regulation as new norm

    EU regulation significant in following areas, what happens on Brexit?

    Product

    safety

    Exit arrangements should clarify the position and the UK

    may well retain much of the existing regimes

    Environment Antitrust

    Public

    procurement

    IP/Data

    protection

  • Allen & Overy 2016 17 17 17

    An era of greater complexity

    Financial sector passporting rights from UK into EU 27 may not be maintained

    Dual regulation (UK and rest of EU) likely to become the norm in many areas (see

    above)

    May be more difficult to recruit or move employees from UK into EU (and vice versa)

    possible skills gaps

    EU R&D funding likely to switch to UK Government

    BUT impact on commercial contracts likely to be limited - English contract law largely

    unaffected by EU law and no need to change English law/courts selection

  • Allen & Overy 2016 18 18 18

    Does Brexit offer any opportunities for

    U.S. investors?

    Sterling fallen to lowest level against USD for 30 years - UK assets may look

    attractive

    Uncertainty and market volatility can present opportunities

    Possible introduction of favourable corporate tax rates in UK (at a time of

    harmonisation in Europe)?

    New trade deals signed by the Brexiteers?

  • Allen & Overy 2016 19 19 19

    US reaction

    We respect the choice the people of the United Kingdom have made. Our first task has to be to make

    sure that the economic uncertainty created by these events does not hurt working families here in

    America.

    We also have to make clear America's steadfast commitment to the special relationship with Britain

    and the transatlantic alliance with Europe Hillary Clinton

    "great thing" that the people of the UK have "taken back their country" in voting to leave

    the EU. Donald Trump

    I think its fair to say that maybe some point down the line there might be a UK-US trade

    agreement, but its not going to happen any time soon because our focus is in negotiating with a

    big bloc, the European Union, to get a trade agreement done - The UK is going to be in the back

    of the queue. Barack Obama

  • Allen & Overy 2016 20 20 20

    If you have a UK base / exposure - steps to be taken

    Identify aspects of the business most affected by Brexit mapping

    Consider approach to lobbying or contributing to government or industry

    consultations on post-Brexit regime

    How can you best make your voice heard? Will lobbying continental EU

    governments be more effective than lobbying at a UK level?

    Note antitrust/lobbying rules

    Prepare strategy for responding to employee and other stakeholder queries and

    to enquiries from the media. Every investment decision seen through eyes of

    Brexit vote by UK media

    Take a view on timing when do you need to take any necessary steps?

  • Allen & Overy 2016 21 21 21

    Brexit webinar series 2016 Programme Agenda

    Brexit: Understanding the context and consequences of the UK referendum vote Tuesday, 18 October 2016

    Brexit: Trade, tariffs, and taxes Tuesday, 25 October 2016

    Brexit: Employment, data protection, and data transfers

    Tuesday, 1 November 2016

    Brexit: Securing the best legal framer work for your businesses Thursday, 17 November 2016

    Brexit: Antitrust, intellectual property, and environmental regulations Tuesday, 8 November 2016

    Brexit: Commercial contracts Tuesday, 15 November 2016

  • Allen & Overy 2016

    Contacts

    22

    Richard Cranfield

    Partner

    Corporate London

    Tel +44 (0)20 3088 200

    richard.cranfield@allenovery.com

    Richard is global chairman of A&O's Corporate practice and co-head of A&O's financial institutions

    group. He has over 30 years' experience in mergers and acquisitions, and in capital markets (both

    international and domestic) for equity financings. His corporate client base includes FTSE 100 and

    FTSE 250 companies and banks in the UK and large public and private corporations and financial

    institutions outside the UK.

  • Allen & Overy 2016

    Contacts

    23

    Marc Feider

    Partner

    Corporate Luxembourg

    Tel +352 44 44 5 5411

    marc.feider@allenovery.com

    Marc heads the Luxembourg corporate practice. He specialises in private equity, mergers and

    acquisitions, securities and stock exchange-related work, takeovers and joint ventures. He has 30

    years of experience advising clients across all sectors, particularly financial institutions, private

    equity, insurance, energy, communications, media and technology.

  • Allen & Overy 2016

    Contacts

    24

    Sarah Garvey

    Counsel

    Litigation London

    Tel +44 (0)20 3088 3710

    sarah.garvey@allenovery.com

    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

    Contacts

    25

    Marjorie Chorlins

    Vice President, European Affairs

    +1 202-463-5305

    mchorlins@uschamber.com

    Garrett Workman

    Director, European Affairs

    +1 202-463-5639

    gworkman@uschamber.com

    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 26 26 26

    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 LLPs affiliated undertakings.