Brexit Webinar Series 5

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  • 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 lawin such a way

    that this could not be undone by exercise of Crown prerogative powerThe

    Crown therefore has no prerogative power to effect a withdrawal from the

    relevant Treaties by giving notice under Article 50 of the TEU

    Weve 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?

    http://www.google.co.uk/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwiHtIvA3vrPAhWHDBoKHb8gDyMQjRwIBw&url=http://www.parliament.uk/about/living-heritage/evolutionofparliament/houseoflords/house-of-lords-reform/from-the-collections/from-the-parliamentary-collections-the-parliament-act/parliament-act-1911/&psig=AFQjCNE_ehWachbbt839K_nlFI1ht_wqIQ&ust=1477649137683168

  • 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.green@allenovery.com

    Michael is Counsel in Allen & Overys London banking practice. Michael advises the firms 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 firms banking practice, designs and delivers training to the firms lawyers

    and clients, and helps to manage the firm's general banking know-how and precedents. Michael is

    one of the firms 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.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 18 18

    Contacts

    Karen Birch

    Counsel

    Litigation London

    Tel +44 (0)20 3088 3710

    Karen.birch@allenovery.com

    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

    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 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 LLPs affiliated undertakings.