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© Allen & Overy 2016
Commercial contracts
Mike Green, Sarah Garvey and Karen Birch
November 15, 2016
Brexit Webinar Series...
© Allen & Overy 2016 22
Brexit webinar series 2016 – Programme Agenda
1
Brexit: Understanding the context and consequences...
© Allen & Overy 2016 33
Implications for contracts – general
© Allen & Overy 2016 44
Brexit is likely to have only a limited impact on
existing English law contracts
Some provisions m...
© Allen & Overy 2016 55
The position is broadly the same for new English law
contracts
Specific Brexit
provisions unlikely...
© Allen & Overy 2016 66
Implications for contracts – governing law
and jurisdiction clauses
© Allen & Overy 2016 77
English governing law clauses are still an attractive
option
As indicated above, English contract ...
© Allen & Overy 2016 88
The same is broadly true in relation to English
jurisdiction clauses
Worst-case scenario – no reci...
© Allen & Overy 2016 99
Litigation risks
© Allen & Overy 2016 1010
…Interpreting the ECA 1972 in the light of the constitutional background
referred to above, we c...
© Allen & Overy 2016 1111
This may prolong the uncertainty for commercial parties but it may also mean
there is more time ...
© Allen & Overy 2016 1212
We may see disputes in other areas, including
Counterparties being adversely affected by Brexit ...
© Allen & Overy 2016 1313
The Great Repeal Act
PM May said she will introduce a “Great Repeal Act” transposing EU (“acquis...
© Allen & Overy 2016 1414
Financial services investigations – business as usual?
FCA has stated that firms should continue...
© Allen & Overy 2016 1515
Brexit webinar series 2016 – Programme Agenda
1
Brexit: Understanding the context and consequenc...
© Allen & Overy 2016 1616
Contacts
Michael Green
Counsel
Banking – London
Tel +44 20 3088 2451
michael.green@allenovery.co...
© Allen & Overy 2016 1717
Contacts
Sarah Garvey
Counsel
Litigation – London
Tel +44 (0)20 3088 3710
sarah.garvey@allenover...
© Allen & Overy 2016 1818
Contacts
Karen Birch
Counsel
Litigation – London
Tel +44 (0)20 3088 3710
Karen.birch@allenovery....
© Allen & Overy 2016
Contacts
19
Marjorie Chorlins
Vice President, European Affairs
+1 202-463-5305
mchorlins@uschamber.co...
© Allen & Overy 2016 2020
Questions?
These are presentation slides only. The information within these slides does not
cons...
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Brexit Webinar Series 5

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Commercial Contracts

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Brexit Webinar Series 5

  1. 1. © 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
  2. 2. © Allen & Overy 2016 22 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
  3. 3. © Allen & Overy 2016 33 Implications for contracts – general
  4. 4. © Allen & Overy 2016 44 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
  5. 5. © Allen & Overy 2016 55 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
  6. 6. © Allen & Overy 2016 66 Implications for contracts – governing law and jurisdiction clauses
  7. 7. © Allen & Overy 2016 77 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
  8. 8. © Allen & Overy 2016 88 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
  9. 9. © Allen & Overy 2016 99 Litigation risks
  10. 10. © Allen & Overy 2016 1010 …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 law…in such a way that this could not be undone by exercise of Crown prerogative power…The Crown therefore has no prerogative power to effect a withdrawal from the relevant Treaties by giving notice under Article 50 of the TEU “ ” We’ve already seen some Brexit litigation – Article 50
  11. 11. © Allen & Overy 2016 1111 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
  12. 12. © Allen & Overy 2016 1212 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
  13. 13. © Allen & Overy 2016 1313 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?
  14. 14. © Allen & Overy 2016 1414 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?
  15. 15. © Allen & Overy 2016 1515 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
  16. 16. © Allen & Overy 2016 1616 Contacts Michael Green Counsel Banking – London Tel +44 20 3088 2451 michael.green@allenovery.com Michael is Counsel in Allen & Overy’s London banking practice. Michael advises the firm’s 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 firm’s banking practice, designs and delivers training to the firm’s lawyers and clients, and helps to manage the firm's general banking know-how and precedents. Michael is one of the firm’s 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.
  17. 17. © Allen & Overy 2016 1717 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.
  18. 18. © Allen & Overy 2016 1818 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.
  19. 19. © 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.
  20. 20. © Allen & Overy 2016 2020 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 LLP’s affiliated undertakings.

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