The future relationship between the UK and the EU remains uncertain. The current exit date is 31 October 2019, unless: (i) the Withdrawal Agreement is ratified sooner; or (ii) the UK and the remaining EU27 agree a further extension.
The orderly withdrawal provided by the Withdrawal Agreement offers certainty to all parties, but the new UK Prime Minister has indicated that he wants to re-open negotiations on the Withdrawal Agreement, despite the clear resistance of the EU. Technically, renegotiation is possible and could focus on the question of Northern Ireland, i.e. the "Irish Backstop" issue. However, there is still a risk that the UK will leave the EU on 31 October 2019 without a deal.
In the meantime, the EU has requested that all interested parties prepare adequately and make proper use of the existing extension to 31 October 2019.
In this video (available in Spanish only), Antonio Pastor (Consultant, Dispute Resolution, Madrid) will set out some key legal considerations in relation to both "deal" and "no-deal" Brexit scenarios. In any event, businesses must identify as soon as possible all of their exposures to the UK's anticipated departure from the EU, taking into account their structure, legal composition, business activities and plans. For example, a group with its central administration in Spain should consider whether it has any company registered in the UK or in Gibraltar which might not be recognized in Spain after Brexit.
In summary, in the event that the UK leaves the EU with a:
- Withdrawal Agreement – businesses should understand the regime during the transition period and closely follow the negotiations for the UK's future relationship with the EU which will take place within the framework of the Political Declaration. They could join lobby groups or similar which may have an influence on the EU and Member States. Businesses should also follow the agreements that the UK puts in place with third countries and would take effect after the end of the transition period.
- "No-Deal" – The legal framework will be complex, fragmented and in many cases temporary and changing. Depending on business activity and sector, Brexit may have significant administrative effects such as the requirement to obtain new authorisations from the EU or Member State entities should UK authorisations no longer be recognized in the EU. A "no-deal" Brexit will also lead to significant regulatory change in certain sectors, including financial services, and companies should consider the effects on the structuring of their group and business activities. It will also require contracts to be adapted to deal with Brexit, for example through Brexit clauses which set out trigger events, the contractual consequences and the process for invoking them.
In conclusion, inaction is not an option and even if companies have already prepared action or contingency plans for Brexit these should be revisited in line with developments.