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Lewis Silkin - What Is The Impact of Brexit On Commercial Contracts
Lewis Silkin - What Is The Impact of Brexit On Commercial Contracts
Lewis Silkin - What Is The Impact of Brexit On Commercial Contracts
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The UK formally left the EU on 31 January 2020 but was subject to a transitional (implementation) period until
31 December 2020. Therefore, the full effects of Brexit only took effect from 1 January 2021, with the
Christmas Eve trade and cooperation agreement
(https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/948119/EU-
UK_Trade_and_Cooperation_Agreement_24.12.2020.pdf) between the UK and EU in effect.
However, there is the potential for Brexit to generate problems with the interpretation of contract
provisions referring to the EU or EU law, as well as to have commercial or profitability impacts
UK consumer protection law in respect of contracts has been considerably amended in line with EU
harmonisation Directives and case-law, but this is now embodied in UK legislation and regulatory
arrangements and will be largely unaffected by Brexit itself. That said, the government has decided
(https://www.gov.uk/government/consultations/departure-from-retained-eu-case-law-by-uk-courts-and-
tribunals), after consultation, to give not just the Supreme Court but also lower courts the ability to
depart from EU law interpretations, so case law may start to change in the short to medium term. It is
also worth noting that the UK government has recently responded to a consultation on changes to
consumer law, which are similar to recent EU changes, but not identical, so traders need to be aware of
some upcoming divergence.
Certain important aspects of the EU E-Commerce Directive may no longer apply to UK-based
information service providers from the end of the transition period. The government updated its
guidance in this area
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Action: if not carried out already, conduct a contract audit to identify problem provisions, and
consider discussing with counter-parties whether to amend problematic drafting or to put in place
new contractual provisions
Brexit could continue to have commercial and profitability implications for individual contracts as a result
of effects from non-tariff barriers, free movement of people and goods etc
Action: the courts will often be slow to intervene based upon arguments of force majeure or
frustration, but consider taking legal advice where such issues affect high value contracts
Information society service providers established in the UK but not in the EU are no longer be able to
rely upon the regime established by the EU E-Commerce Directive – for example its ‘country-of-origin
principle’, prior authorisation scheme and basic information requirements.
Action: such UK-established service providers instead fall under the individual national rules of
each of the 27 remaining Member States of the EU when providing services to customers in those
countries, and so country-by-country compliance advice will potentially be needed; (likewise, EU-
based service providers must now to comply with UK rules in addition to those of their EU country-
of-origin)
The limitations on liability set out in the E-Commerce Directive also no longer apply to service providers
established in the UK but not in the EU
Action: the UK government has stated it will ensure that UK rules ‘continue to align with the
Directive’, including in this respect
Action: UK-established Information service providers for whom the applicability of the EU
‘country-of-origin principle’ and limitations on liability are important may want to consider whether
they can benefit from continued application of the Directive based upon an alternative
‘establishment’ in a continuing EU member state
UK-based Digital service providers* offering marketplace, search engine or cloud computing services
online in the EU (*those of the requisite size under the Network & Information Systems Directive) no
longer benefit from being based in the EU
Action: such service providers are now be obliged to designate a representative in one of the EU
Member States served
Action: likewise, EU-based providers of such services were required to appoint a representative in
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BREXIT
Following the UK’s departure from the EU, the
Trade and Cooperation Agreement sets out the
shape of the ongoing future relationship between
the UK and the EU and provides some degree of
certainty for UK businesses.
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