It’s Brexit – Now What?
“I’m sort of depressed,” said Jonathan Armstrong, Cordery, London. “There’s a long list of questions but we can’t answer any of them.”
Armstrong was among a group of international lawyers discussing the impact of Brexit on commercial transactions, litigation and privacy regulations. Their conclusion? A high level of uncertainty.
Led by moderator Gonzalo Zeballos, BakerHostetler, New York City, panelists Armstrong; Peter Utterström, Peter Utterström Advocat, Sweden; Robert Leo, Meeks, Sheppard, Leo & Pillsbury, New York City; and Philip Shepherd, Taylor Wessing, London; scratched their collective heads.
Their discussion was part of the International Section’s programming on Brexit and cross-border issues held during New York State Bar Association’s Annual Meeting in New York City.
The United Kingdom will officially leave the European Union on Jan. 31. But that opens 11 months of negotiations, during which the UK effectively will remain in the EU. During this period, third count\ries will treat the UK as if it were in the EU for purposes of trade, other business interactions and movement of people.
Philip Shepherd noted that now that the tumultuous Brexit process was – likely – over, he believed things would stabilize: A decision has been made. The Brexit campaign promise to “take back control” would be fulfilled.
Shepherd also pointed out an unintended effect of three years of Brexit – a lower pound has made the UK more attractive for some investors. Venture capital investment reached an all-time high in 2019.
This new Brexit process, however, lives on. And an extension of up to two years, after the Jan. 1, 2021, deadline can be granted if the parties cannot reach agreement on their future partnership. But Prime Minister Boris Johnson ruled out an extension. The next “cliff edge” for Brexit is this June, when the UK must decide whether to ask for that extension.
Ergo, more uncertainty.
Jonathan Armstrong talked about the difficulties of advising clients involved in merger and acquisition deals with companies in the UK. They want solid answers; he has none. Depending on the outcome of the trade and security negotiations with the EU, a deal made today may look very different 11 months from now.
The panelists also discussed the impact on the EU’s General Data Protection Regulations. Would a deal negotiated in the UK under auspices of its EU membership be different if negotiations continue into 2021? The UK has its own strong privacy laws, but the EU’s may become stricter in the near future.
And what if a breach of the GDPR takes place in the UK and is litigated there in an EU court? Who would hear the appeal in 2021? Or would no one have jurisdiction?
Robert Leo pointed out other wild cards that are exacerbating Brexit issues: trade sanctions and trade penalties, and the roller coaster stock market. Business owners and investors considering moving factories or changing their supply chains can’t plan ahead.
“You can’t even plan for right now,” Leo said, adding that a tweet from the U.S president on Jan. 24, upended certain markets by imposing tariffs on derivative steel and aluminum products.
There was discussion as to whether a separate trade deal between the UK and the United States would hinder a deal with the EU or bring more countries to the table. “Eleven months to negotiate a trade deal is not a lot of time,” said Shepherd.
Currently all EU-based lawyers have privilege to practice in the EU courts. That might change. More than 3,700 UK lawyers re-registered in Ireland in 2019, to maintain privilege. That number, Armstrong noted, is 31 times the number in 2018.
Armstrong admitted that he is one of them.