On June 23, 2016, UK has voted to leave the EU. Prime Minister Theresa May and the UK government announced that they would use the Crown’s prerogative powers to trigger Article 50 TFUE. The use of such prerogative would allow the government to trigger Article 50 without the approval of the UK parliament.
In response to the above, the UK High Court has drafted a ruling stating that the government’s position had no basis in law. The High Court found that any trigger of Article 50 requires parliament to vote on such matter. The government has confirmed that it will seek to appeal the judgment to the UK Supreme Court.
After Brexit and its last developments, the economy all over the world is in a massive flux, the previously established guidelines have been thrown out of the window. In such context of uncertainty, attorneys have a lot of work to do: indeed, they have to examine their clients’ contracts in order to ensure that representations, warranties and other provisions remain true after Brexit.
For this purpose, contract lawyers have to check, among the many, the clauses providing “English law” as governing-law. Such provisions are currently interpreted as including also EU law; this would no longer be the case after Brexit. Lawyers should consider to amend agreements that provide English law as governing law by explicitly including or excluding references to EU law, directives and EU regulations as well.
Lawyers must also take into account, territorial provisions that are, for example, included in distribution, franchise and license agreements. The effects of Brexit on these provisions will depend on the outcome of negotiations between UK and EU. This situation is likely to give rise to great uncertainty, and parties should be forced to change their contracts in order to clarify their position by amending those agreements.
In addition, purchase prices and clauses regarding contracts value and invoicing, have become uncertain. Therefore, parties should consider to amend agreements that contain these provisions to include clauses to reprice or switch currency if the currency applicable to the contract crosses certain thresholds.
Existing contracts may also include force majeure or material adverse change clauses that could be triggered by Brexit. Lawyers must check existing contracts for the definition and effects of a force majeure event or a material adverse change and ensure whether or not such clauses apply in light of Brexit.
Finally, Brexit might have an impact on a party’s ability to enforce a UK contract in the remaining EU states. Therefore, contract lawyers, in drafting or negotiating the terms of a new contract, have to consider how that contract might be affected by the UK’s eventual departures from EU and structure the agreement accordingly.
In conclusion, lawyers have a lot of work to do, new opportunities will arise and the economic centers of Europe could change. According to Financial Times, after Brexit, Milan, the most business focused city in Italy, is considering to set up a tax free zone, in order to attract businesses to rival London.