Tell us about your company and what you do?
The Daswani Law Company (The DLC) was set up in January 2019 by sole practitioner Geeta Daswani and is driven by the following two objectives:
(1) To provide the entire suite of legal services relating to business and commerce and
(2) To contribute towards a kinder and compassionate future (Towards this objective we actively seek clients engaged in sustainable, ethical and cruelty-free businesses).
As a solicitor specialising in commercial contracts and business law, Geeta is passionate about providing complete legal support to entrepreneurs. In addition, the DLC assists businesses with employment related agreements, terms and conditions of business, compliance with the GDPR, advice on Intellectual Property Law and assistance with laws relating to the Indian jurisdiction.
Most importantly, as part of The DLC’c vision to provide legal solutions for a more ethical future, The DLC offers reduced fees to businesses that work to create a social impact.
WHAT SHOULD YOUR CONTRACTS LOOK LIKE POST-BREXIT?
When the UK left the EU on 31 January 2020, it entered into a transition period during which most of the existing arrangements continued as-is. The transition period came to an end on 31 December 2020, which means that EU rules now cease to apply to the UK.
Although the UK government intends on importing existing EU law into domestic law “wherever practical”, it may be a while before we see complete clarity on the implementation of EU derived legislation in the UK.
If you are involved in UK-EU trade or supply of services across the border, it would be prudent to draw up contracts in anticipation of the BREXIT implications.
What are some of the contractual clauses that should be reviewed post-Brexit?
Now that the transition period is over you should be mindful of the following aspects while drawing up your contracts.
- Reference to EU as a territory
Where your contract makes references to the EU as a territory, bear in mind that, should you wish to include the UK in addition to the EU member states, this must now be done expressly.
In addition, it may also be prudent to refer to the UK “as it stands constituted on the date of the Agreement” in order to ensure that the territory covers England, Scotland, Wales and Northern Ireland and that the territorial scope remains unaffected by any subsequent changes to the UK’s constituent countries.
For example, “A agrees to supply goods to B exclusively for the territories of the United Kingdom as it stands constituted on the date of this Agreement, France, Germany and any other member states of the European Union (EU) as shall be mutually agreed upon by the Parties.”
- Reference to legislation
A reference to legislation is often included in the definitions/interpretation section of a contract. The European Communities Act 1972 which made EU law part of the UK legal system has now been repealed by the UK, as a result of which the UK will have to make adjustments to its legislation in order to harmonise it with EU law. Since the UK will have to make amendments to local legislation following Brexit, it may be prudent to mention that a reference to legislation shall be to legislation “as amended” and shall include any subordinate legislation or regulations. However, the disclaimer here is that to the extent that such amendments impose greater liabilities on the parties or have a material adverse effect on the standing of the parties, such amendments should be disregarded.
- Clause relating to Force Majeure, frustration and adverse material change
It would be prudent to consider including certain Brexit-related events relevant to the subject matter of the contract within the definition of Force Majeure. For example, if a certain EU legislation on which the contract depends is on the date of the Agreement in force in the UK but is subsequently dis-applied.
- Clauses relating to the movement of people
With the end of the transition period the free movement of people across Britain’s borders into the EU and vice versa will come to an end. British citizens staying in the EU for more than 90 days in a 180- day period will need a visa. Businesses providing cross-border services which require individuals to move between the UK and EU member states should therefore ensure that their contracts set forth terms relating to the movement of people across borders.
Would Brexit have an impact on the law governing a contract and on the choice of courts that should have jurisdiction over a contractual dispute?
The choice of governing law, jurisdiction and dispute resolution mechanism is governed by several EU instruments. These are the Rome I and Rome II Regulations and the Brussels Regulations and Lugano Convention. These instruments ensure that each EU member state and Lugano state applies the same rules relating to: (i) the choice of governing law to determine which court will have jurisdiction over a dispute; (ii) the recognition and enforcement in one EU member/Lugano member state of a judgment obtained in another.
However, following the end of the transition period these EU instruments are not applicable in the UK, and although the UK intends to harmonise domestic law with EU regulation, the reciprocal nature of some of the instruments does not permit complete adoption of the EU instruments. As such Brexit will have a bearing on the choice of jurisdiction and dispute resolution mechanisms.
Brexit’s impact on choice of law clauses– Brexit will not have an impact on the choice of governing law as the Rome I Regulations govern the choice of law in contractual disputes. Rome I Regulations do not require reciprocity, as a result of which the governing law chosen by contracting parties must be respected by every jurisdiction. Post- Brexit parties can therefore continue to choose English law as the law governing their contracts and it would have to be upheld by EU member states.
Brexit’s impact on choice of court/jurisdiction and dispute resolution clauses– The Brussels Regime governs the rules applied by EU member states as well as Lugano states in relation to upholding the jurisdiction clauses and the enforcement of judgments within the member/Lugano states. This means that an EU/Lugano court will uphold jurisdiction clauses that confer jurisdiction on the courts of the EU member/Lugano states and a judgment given by an EU/Lugano court can be enforced in another EU member/Lugano state.
Post-Brexit the Brussels Regime has ceased to apply to the UK. The UK has applied to accede to the Lugano Convention, which is important because of the reciprocal nature of the arrangement. Such accession, however, requires all Lugano states to consent, and the UK is awaiting EU’s consent (as on the date of this article). In the meanwhile, with effect from 1 January 2021 the UK has acceded in its own right to the Hague Convention on Choice of Court Agreements. Under the Hague Convention exclusive jurisdiction clauses must be upheld and resulting judgments must be enforced in all member states. Therefore, until the UK’s accession to the Lugano Convention, contracting parties can rely on the Hague Convention to achieve the enforcement of English judgments within the EU, provided that the determination of jurisdiction and enforcement of judgment results from an exclusive jurisdiction agreement, and that the judgment does not cover interim measures of protection such as interim injunctions/freezing orders. Where the Hague Convention cannot be applied, the national law of each EU member/Lugano state will determine the enforceability of English judgments. As such contracting parties should be extremely careful while drafting their dispute resolution clause.
If parties are concerned about the enforcement of English judgments post-Brexit, it may be worth considering Alternate Dispute Resolution such as arbitration and enforcement of arbitral awards under the New York Convention which remains unaffected by Brexit.