Draft Brexit Divorce Bill – Our Initial Observations
By Wattey Kemnay – Legal Executive, Corporate & Commercial. Published 5 March 2018
Draft Withdrawal Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union.
The European Commission published its draft Withdrawal Agreement on 28 February 2018. The entire draft Agreement can be found here. We set out below our initial observations on those articles in the draft Withdrawal Agreement that are particularly relevant to the commercial relationships.
Unless other arrangements are made between the EU and the UK, dealing with unique circumstances on the island of Ireland after the Withdrawal Agreement, the draft Withdrawal Agreement spells out that “the territory of Northern Ireland, excluding the territorial waters of the United Kingdom … shall be considered to be part of the customs territory of the Union”. It confirms that customs duties of fiscal nature and quantitative restrictions on imports and exports between the EU and the UK in respect of Northern Ireland shall be prohibited.
The draft Withdrawal Agreement contains particular reference to the following industries in the UK in respect of Northern Ireland, which shall be governed by the relevant EU law:
– Sanitary and phytosanitary in agriculture and fisheries;
– Single electricity market; and
– Circulation of substances or material, plant or animal species.
The draft Withdrawal Agreement confirms that “all EU citizens arriving in the host State during the transition period should have exactly the same rights as EU citizens who arrived before the UK’s withdrawal”.
Those EU citizens, and UK citizens who arrive in an EU Member State after withdrawal but before the end of the transition period (i.e. 31 December 2020), should be covered by the personal scope of the Withdrawal Agreement in respect of their rights to residence, right of exit and entry, rights of workers and self-employed and professional qualifications. It would mean that those citizens arriving between 29 March 2019 and 31 December 2020 should be covered by the citizens’ rights agreement, in the same way as those already here, rather than any new post-Brexit immigration system.
Goods and Services
Any good that was lawfully circulated in the EU market or the UK market before the end of the transition period (i.e. 31 December 2020) may be further circulated on both markets. The draft Withdrawal Agreement further noted that the provisions set out in Articles 34 and 35 TFEU (being, in essence, provisions that can be used to strike down national legislation which impedes the free movement of goods) shall apply to these goods along side any other relevant EU regulations governing the marketing of goods.
Live animals and germinal products and other animal products (such as food, feed and animal by-products) will be governed by a particular set of EU regulations so long as their movement started before the end of the transition period.
Intellectual property rights: holders of those intellectual property rights validly registered or granted under the EU route before the transition period shall, without re-examination, become the holder of a comparable registered and enforceable intellectual property right in the UK. The UK shall ensure that such registration or grant can be carried out free of charge and without the need to introduce an application or undertake any particular administrative procedure.
During the transition period (proposed as 31 December 2020), the entire EU acquis communautaire will continue to apply to the UK, including its trade policy. The UK cannot become bound by new agreements on its own in areas of EU competence unless authorized to do so by the EU.
In the U.K. as well as in the Member States in situations involving the U.K., the following will apply to in respect of legal proceedings instituted before the end of the transition period (i.e. 31 December 2020):
Governing law: it confirms that Rome I (law applicable to contractual obligations) and Rome II (law applicable to non-contractual obligations) shall apply for contracts concluded/events giving rise to damage which occurred before the end of the transition period (i.e. 31 December 2020).
Jurisdiction: EU Regulation in respect of Jurisdiction and the Recognition and Enforcement of Judgements in Civil and Commercial Matters shall apply in respect of legal proceedings instituted before the end of the transition period (i.e. 31 December 2020).
Choice of court agreements: Article 25 of Regulation (EU) No 1215/2012 and Article 4 of Regulation (EC) No 4/2009 on choice of court agreements will apply in respect of agreements concluded before the end of the transition period (i.e. 31 December 2020).
Recognition and enforcement of judgments: relevant EU Regulations on recognition and/or enforcement of judgments shall apply to the recognition and enforcement of judgments given before the end of the transition period (rather than before the withdrawal date).
Pending cases: the CJEU will have jurisdiction over: (i) any proceedings brought before it by/against the U.K. before the end of the transition period (i.e. 31 December 2020); and (ii) for preliminary rulings on requests from a U.K. court/tribunal referred before the end of the transition period (i.e. 31 December 2020). Judgments and orders in such cases will be binding in the U.K. even if handed down after the end of the transitional period.
New cases: where questions are raised in a U.K. court/tribunal concerning the interpretation of the Treaties or validity/interpretation of acts of EU institutions etc. that occurred before the end of the transition period (i.e. 31 December 2020), and that the U.K. court considers that a decision is necessary to enable it to give judgment, the CJEU may give a preliminary ruling.