Brexit highlights—3 July 2020

Brexit highlights—3 July 2020

These Brexit highlights bring you a summary of the latest Brexit news and legislation updates from across a range of LexisNexis® practice areas, collated on 3 July 2020.

General Brexit headlines

This section contains key overarching Brexit news headlines.

Brexit Bulletin—key updates, research tips and resources (June 2020)

We have published an update to our Brexit Bulletin—key updates, research tips and resources. The latest edition includes commentary and updates on key priorities including intensified negotiations on the future UK-EU relationship, plans to accelerate work on the implementation of the Withdrawal Agreement and reflections on progress following the second meeting of the Withdrawal Agreement Joint Committee and the High Level Conference in June 2020.

See: LNB News 30/06/2020 60.

Brexit Bulletin—option to extend transition period under Withdrawal Agreement expires

After exiting the EU on 31 January 2020, the UK entered into a time-limited transition or implementation period, during which the transitional arrangements provided in Part 4 of the Withdrawal Agreement apply. The transition period was intended as a standstill period during which the UK and EU could finalise the implementation of the Withdrawal Agreement and negotiate and implement the terms of their future relationship. The transition period is due to end on 31 December 2020, but Article 132 of the Withdrawal Agreement made provision for the transition period to be extended by agreement for up to one or two years on a one-off basis. Despite the tight timescales, the UK pledged not to request or agree any extension early on, and has stuck to this pledge despite calls to reconsider, particularly in light of the impact of coronavirus (COVID-19). Article 132 of the Withdrawal Agreement specified that any extension to the transition period must be agreed in the Joint Committee before 1 July 2020. With this deadline passed, many consider the question of an extension to be closed, but there is much left to resolve in order to prepare fully for the end of transition and the new regime taking effect on 1 January 2021.

See: LNB News 01/07/2020 105.

Brexit Bulletin—intensified talks underline serious differences on the future UK-EU relationship

The UK and EU have reported limited progress following the first round of 'intensified' negotiations endorsed by UK and EU leaders at the High Level Conference on 15 June 2020. Negotiators met face-to-face in Brussels this week for focused talks on a smaller scale. The talks incorporated a series of restricted two-hour sessions on a number of core issues, beginning with some of the more contentious areas including level playing field, governance, and fisheries. Sessions on trade in goods and services, criminal law enforcement and judicial co-operation, energy and transport were also scheduled, as well as sessions on participation in EU programmes, social security co-ordination and thematic co-operation. The aim of the meetings was to work towards breaking the deadlock in the talks, bringing new momentum towards an agreement. Though the talks were reported as constructive, there does not appear to have been a change in the dynamics. Once again, the talks underlined the 'significant differences' between the UK and EU positions, with 'serious divergences' remaining on priority issues. The next formal round of negotiations is scheduled for the week of 20 July 2020. Meanwhile, interim talks will continue next week (week commencing 6 July 2020) in London.

See: LNB News 02/07/2020 95.

Brexit Bulletin—UK chief negotiator continues to lead future UK-EU relationship talks despite new national security role

The UK chief negotiator in the future UK-EU relationship talks, David Frost, has been appointed to succeed Sir Mark Sedwill as the Prime Minister's National Security Adviser. Sir Mark will stand down as Cabinet Secretary, National Security Adviser and Head of the Civil Service in September 2020. With the Cabinet Office taking a key role in Brexit-related policy and civil service coordination central to domestic preparation for the end of transition, the announcement is significant. Frost has confirmed that he will remain in post as chief negotiator on the future UK-EU relationship negotiations until their conclusion 'one way or another'.

See: LNB News 29/06/2020 41.

Brexit Bulletin—government consults on regulations extending powers for courts and tribunals to divert from retained EU case law

The Ministry of Justice (MOJ) has launched a six-week consultation on rules governing the departure from retained EU case law by UK courts and tribunals after IP completion day. The document consults on government proposals for exercising powers introduced into the European Union (Withdrawal) Act 2018 (EU(W)A 2018) by the European Union (Withdrawal Agreement) Act 2020 (EU(WA)A 2020), which allow ministers to make regulations designating additional courts or tribunals with the power to depart from retained EU case law, the extent to which they may do so and the test to be applied. Under the original provisions, only the UK Supreme Court and the High Court of Justiciary in Scotland have such powers. The deadline for submissions is 13 August 2020.

See: LNB News 02/07/2020 87.

Can the Brexit transition period still be extended?

Having left the EU on 31 January 2020, the UK entered the transition period provided for by the Withdrawal Agreement. Article 132 of the Withdrawal Agreement allowed for the Joint Committee to adopt ‘a single decision extending the transition period for up to one or two years’ before 1 July 2020. The government decided to not seek an extension to the Brexit transition period. Catherine Barnard, professor at Cambridge University and senior fellow at The UK in a Changing Europe, discusses the various possibilities still available for an extension to the Brexit transition period.

See News Analysis: Can the Brexit transition period still be extended?

Brexit legislation updates

This section contains Brexit news headlines relating to Brexit-related primary legislation and legislative preparation for Brexit generally.

Immigration and Social Security Co-ordination Bill completes Committee stage

The House of Commons Library has published a briefing on the progress of the Immigration and Social Security Co-ordination (EU Withdrawal) Bill, which completed the Committee stage in the House of Commons, with the Report stage and Third Reading taking place on 30 June 2020. The Bill now moves to the House of Lords for further consideration. Meanwhile, the Home Office issued a memorandum for the Delegated Powers and Regulatory Reform Committee of the House of Lords to assist with its scrutiny of the Bill. It identifies the Bill’s provisions that confer powers to make delegated legislation, stating the Home Office's explanation in each case on why the power has been granted and explaining the nature of, and the reason for, the procedure selected. This includes measures in relation to ending free movement; and social security coordination.​​​

See: LNB News 30/06/2020 6 and LNB News 02/07/2020 89.

Fisheries Bill enters House of Commons

The Department for Environment, Food & Rural Affairs has announced that the Fisheries Bill, the first major fisheries legislation in nearly 40 years, passed the House of Lords and has entered the House of Commons for further scrutiny, following Lord’s proposed amendments at report stage. The Fisheries Bill creates the powers for the UK to operate as an independent coastal state and manage its fish stocks sustainably outside the EU. In addition, the Bill ends current automatic rights for EU vessels to fish in British waters. Provided that access to UK foreign vessels is negotiated, the Bill will also enable the fisheries administrations to ensure that foreign vessels follow the same rules as UK vessels. Fisheries Minister, Victoria Prentis, said: ‘Now that we have left the EU, we have the opportunity to create a more resilient and profitable fishing industry, leaving behind the outdated Common Fisheries Policy’. It is expected that the legislation will ensure that fish stocks, and the marine environment, are better protected for future generations with new powers to set UK fishing opportunities and days at sea, new measures for the devolved administrations, and a single set of UK-wide fisheries objectives.

See: LNB News 25/06/2020 93 and LNB News 03/07/2020 8.

Brexit SIs and sifting updates

This section contains updates on the latest final and draft Brexit SIs laid in Parliament, plus updates on proposed negative Brexit SIs laid for sifting.

Made Brexit SIs laid in Parliament

Product Safety and Metrology etc (Amendment to Extent and Meaning of Market) (EU Exit) Regulations 2020

SI 2020/676: This enactment is made in exercise of legislative powers under the EU(W)A 2018 in preparation for IP completion day. This enactment amends an existing Brexit SI in relation to product safety and metrology to address failures of retained EU law to operate effectively and other deficiencies arising from the withdrawal of the UK from the EU. It comes into force immediately before IP completion day.

See: LNB News 03/07/2020 1.

Financial Services (Miscellaneous Amendments) (EU Exit) Regulations 2020

SI 2020/628: This enactment is made in exercise of legislative powers under the European Communities Act 1972 and the EU(W)A 2018 in preparation for IP completion day. This enactment amends 16 pieces of UK secondary legislation, five pieces of retained EU legislation, and revokes two pieces of retained EU legislation in relation to financial services and markets in order to address failures of retained EU law to operate effectively and other deficiencies arising from the withdrawal of the UK from the EU. It comes into force partly on the day after the day on which these Regulations are made and fully on IP completion day. (Updated from draft on 30 June 2020.)

See: LNB News 06/05/2020 55.

Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc, and Transitional Provision) (EU Exit) Regulations 2020

SI 2020/646: This enactment is made in exercise of legislative powers under the EU(W)A 2018 in preparation for IP completion day. This enactment amends UK primary legislation, 13 pieces of UK subordinate legislation and one piece of retained EU legislation in relation to over the counter derivatives, central counterparties and trade repositories in order to address failures of retained EU law to operate effectively and other deficiencies arising from the withdrawal of the UK from the EU. It comes into force partly on 25 June 2020 and fully on IP completion day. (Updated from draft on 29 June 2020.)

See: LNB News 25/03/2020 10.

Health and Safety (Consequential Amendments) (EU Exit) Regulations 2020

SI 2020/660: This enactment is made in exercise of legislative powers under the European Union (Withdrawal Agreement) Act 2020 in preparation for IP completion day. This enactment amends an existing Brexit SI in relation to health and safety. It comes into force immediately before IP completion day.

See: LNB News 30/06/2020 70.

Insolvency (Amendment) (EU Exit) Regulations 2020

SI 2020/647: This enactment is made in exercise of legislative powers under EU(W)A 2018 in preparation for IP completion day. This enactment amends an existing Brexit SI in relation to Insolvency. It comes into force on IP completion day.

See: LNB News 30/06/2020 32.

Somalia (Sanctions) (EU Exit) Regulations 2020

SI 2020/642: This enactment is made in exercise of legislative powers under the Sanctions and Anti-Money Laundering Act 2018 (SAMLA 2018) in preparation for IP completion day. This enactment amends one and revokes three pieces of UK secondary legislation and revokes two pieces of retained direct EU legislation in relation to sanctions in Somalia. It comes into force in accordance with regulations made by the Secretary of State under SAMLA 2018, s 56.​

See: LNB News 30/06/2020 42.

Pressure Vessels (Amendment) (Northern Ireland) (EU Exit) Regulations 2020

SI 2020/678: This enactment is made in exercise of legislative powers under the EU(W)A 2018 in preparation for IP completion day. This enactment amends two pieces of UK secondary legislation in relation to pressure vessel and equipment in Northern Ireland to address failures of retained EU law to operate effectively and other deficiencies arising from the withdrawal of the UK from the EU. It comes into force on IP completion day.

See: LNB News 03/07/2020 2.

Draft Brexit SIs laid in Parliament

Alternative Dispute Resolution for Consumer Disputes (Extension of Time Limits for Legal Proceedings) (Amendment etc) (EU Exit) Regulations 2020

SI 2020/Draft: This draft enactment is laid in exercise of legislative powers under EU(W)A 2018 in preparation for IP completion day. This draft enactment is proposed to amend five pieces of UK primary and secondary legislation in relation to consumer protection in order to address failures of retained EU law to operate effectively and other deficiencies arising from the withdrawal of the UK from the EU. It comes into force partly immediately before IP completion day, and fully on IP completion day.

See: LNB News 01/07/2020 76.

Equivalence Determinations for Financial Services (Amendment etc) (EU Exit) Regulations 2020

SI 2020/Draft: This draft enactment is laid in exercise of legislative powers under EU(W)A 2018 in preparation for IP completion day. This draft enactment is proposed to amend nine pieces of UK secondary legislation in relation to financial services and markets to address failures of retained EU law to operate effectively and other deficiencies arising from the withdrawal of the UK from the EU. It came into force on the day after the day on which these Regulations are made.

See: LNB News 26/06/2020 56.

Draft Brexit SIs laid for sifting and sifting committee recommendations

Brexit SI Bulletin—latest drafts and sifting committee reports, 3 July 2020

Public Law analysis: The Commons European Statutory Instruments Committee (ESIC) and the Lords Secondary Legislation Scrutiny Committee (SLSC) are responsible for the sifting process under the European Union (Withdrawal) Act 2018 (EU(W)A 2018). These committees scrutinise proposed negative Brexit SIs and make recommendations on the appropriate parliamentary procedure before the instruments are laid in Parliament. This bulletin outlines the latest updates and recommendations, collated on 3 July 2020.

See News Analysis: Brexit SI Bulletin—latest drafts and sifting committee reports, 3 July 2020.

Brexit SI Bulletin—drafts laid for sifting 1–2 July 2020

Public Law analysis: Under the European Union (Withdrawal) Act 2018 (EU(W)A 2018), before certain statutory instruments are formally laid in Parliament, they have to go through a preliminary sifting process to determine the appropriate parliamentary procedure. The latest draft Brexit SIs laid for sifting are outlined here. This update includes Brexit SIs laid for sifting on 1–2 July and published on 2 July 2020. Subjects covered include amendments to legislation in the fields of civil jurisdiction and judgments, product safety and metrology, online intermediation services, aviation, transport and insurance.

See News Analysis: Brexit SI Bulletin—drafts laid for sifting 1–2 July 2020.

Brexit SI Bulletin—drafts laid for sifting on 30 June 2020

Under the European Union (Withdrawal) Act 2018 (EU(W)A 2018), before certain statutory instruments are formally laid in Parliament, they have to go through a preliminary sifting process to determine the appropriate parliamentary procedure. The latest draft Brexit SIs laid for sifting are outlined here. Subjects covered include amendments to legislation in the fields of electricity and energy conservation to define internal references to 'exit day' as meaning immediately before IP completion day. The effect of these amendments is to ensure that the drafting intent of related domestic legislation is preserved, following the UK’s withdrawal from the EU.

See News Analysis: Brexit SI Bulletin—drafts laid for sifting on 30 June 2020.

Beyond Brexit

Committee publishes twenty-third report scrutinising Brexit-related international agreements

The House of Lords European Union Committee (EUC) published its twenty-third report scrutinising Brexit-related treaties and international agreements on 26 June 2020. This is the first such report prepared by the EUC's International Agreements Sub-Committee (IASC) under its revised Terms of Reference, which include a provision 'to consider matters relating to the negotiation and conclusion of international agreements'. Under these terms, the IASC is responsible for scrutinising all international agreements laid before Parliament under section 20 of the Constitutional Reform and Governance Act 2020. This includes international arrangements the UK is putting in place in preparation for the end of the Brexit transition period. In the latest report, bilateral agreements with Morocco and Poland are reported for information.

See: LNB News 26/06/2020 57.

Committee seeks evidence on various issues on UK-Japan trade negotiations

The House of Lords International Agreements Sub-Committee has launched a further inquiry into the ongoing UK-Japan trade negotiations. The Committee is seeking evidence on various issues, ‘including an initial focus on the automotive sector, and trade in digital goods and services’. It asks that written evidence to be submitted by 31 August 2020.

See: LNB News 25/06/2020 70.

Editor's picks—the practice area/sector view

This section contains key Brexit news hand-picked by Lexis®PSL lawyers from their own practice areas.

Banking and Finance

Comment—UK financial regulation begins its promised drift from EU moorings

If UK financial services firms weren’t clear before, they should be in no doubt now that the government will plow ahead with amending the EU rulebook where it sees fit. The UK Treasury’s first granular set of post-Brexit proposals for banks, investment firms and others, published on 23 June 2020, paint a picture of what's to come—a rulebook broadly similar to that written in Brussels but different enough both to please UK financial institutions and to annoy EU Member States.

See News Analysis: Comment—UK financial regulation begins its promised drift from EU moorings.

Environment

Committee asks for clarification on government plans to align with EU’s Taxonomy Regulation

The House of Commons European Scrutiny Committee (ESC) has published a letter from its chair, Sir William Cash MP, to the economic secretary to the Treasury, John Glen, regarding the UK’s planned approach to implementing the EU’s sustainable investment taxonomy. In the letter, dated 25 June 2020, Cash asks HM Treasury to clarify the extent to which it intends to align UK legislation with the EU’s Taxonomy Regulation after the Brexit implementation period has ended.

See: LNB News 30/06/2020 26.

For further updates from Environment, see: Environment weekly highlights—overview.

Financial Services

UK and Switzerland announce pathway to mutual recognition for financial services

The chancellor of the exchequer, Rushi Sunak, and the head of Switzerland’s Federal Department of Finance, Ueli Maurer, signed a joint statement outlining a commitment by the UK and Switzerland to negotiate an outcomes-based mutual recognition agreement on financial services. Sunak also announced that HM Treasury has completed its equivalence assessment of Switzerland in relation to Swiss stock markets and found them to be equivalent.

See: LNB News 01/07/2020 48.

EU’s Barnier rejects UK proposals for equivalence framework

The EU’s chief Brexit negotiator, Michel Barnier, has rejected UK proposals for a legally enforceable regulatory co-operation framework on financial services. In an address given remotely to the Eurofi General Assembly, he said there was no way that Member States or the European Parliament would accept the UK’s attempts to frame the EU’s process for withdrawing equivalence decisions and limit the scope of the prudential carve-out.

See: LNB News 01/07/2020 102.

Italian securities regulator issues warnings to UK banks and investment firms

ISDA published a memorandum on warnings in relation to Brexit from Italian securities regulator CONSOB. CONSOB provided information to address the ability of UK banks and investment firms to provide investment services, including in respect of OTC derivatives entered into with Italian counterparties, in light of Brexit.

See: LNB News 01/07/2020 17.

Comment—missed financial-services Brexit deadline will set ominous precedent for UK, EU

The near certainty that the EU and UK will fail to wrap up their appraisal of each other’s financial services laws by 30 June 2020 bodes ill for the sector post-Brexit. With that deadline for the two sides’ ‘best endeavours’ commitment to conclude equivalence assessments set to be missed, it both lays bare the realities of the diverging views between Brussels and London on how the world should look after Brexit, and it represents a slippery slope in the increasingly sour negotiations.

See: Comment—missed financial-services Brexit deadline will set ominous precedent for UK, EU.

For further updates from Financial Services, see: Financial Services weekly highlights—overview.

Immigration

One year left before the EU Settlement Scheme application deadline

The Home Office has recalled that there is one year left to apply to the EU Settlement Scheme before the closing date scheduled for 30 June 2021. As of 30 June 2020, 3.6 million applications have been received and 3.3 million have been granted status.

See: LNB News 30/06/2020 76.

For further updates from Immigration, see: Immigration weekly highlights—overview.

IP

IP―updated Brexit transition guidance from the Intellectual Property Office

The IPO has published updated guidance on EU and international IP rights to help stakeholders prepare for the end of the transition period. Further new and updated guidance may be issued depending on the precise terms upon which the UK leaves the EU, so stakeholders are advised to monitor these pages for updates.

See: LNB News 26/06/2020 103.

Notice to stakeholders on Community plant variety rights post-IP completion day

The European Commission has reminded stakeholders that EU rules in the field of plant variety rights will no longer apply to the UK after IP completion day. The notice explains the general legal situation which will apply after IP completion day and confirms that holders of Community plant variety rights will become holders of a comparable registered and enforceable plan variety right in the UK prior to IP completion day. The notice also advises breeders who only have a seat in the UK to designate a procedural representative domiciled in EU territory in order to participate in proceedings before the Community Plant Variety Office.

See: LNB News 26/06/2020 40.

Notice to stakeholders on the exhaustion of IP rights post-IP completion day

The European Commission has issued a notice to stakeholders on the matter of the exhaustion of IP rights after IP completion day. The notice explains that after IP completion day, EU law providing for the exhaustion of IP rights will no longer apply to the UK. The consequences of this are detailed in the notice. In addition, it is noted that Article 61 of the Withdrawal Agreement provides that IP rights which were exhausted both in the EU and in the UK before then under the conditions provided for by EU law remain exhausted both in the EU and in the UK. The Commission has advised all interested parties, and especially economic operators, to keep in mind the legal situation applicable after IP completion day.

See: LNB News 26/06/2020 33.

For further updates from IP, see: Weekly highlights (IP)—overview.

Pensions

Regulations made on post-Brexit supervision of third-country CCPs

The Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2020, SI 2020/646 were made on 24 June 2020 and make amendments to retained EU law relating to the supervision framework for third-country central counterparties (CCPs). The European Market Infrastructure Regulation (Regulation (EU) 648/2012) (EMIR) was introduced in the EU following the financial crisis. It implemented a mandatory requirement for some derivative trades to be cleared through CCPs. Regulation (EU) 2019/2099 (known as EMIR 2.2), the latest amendment to the EMIR framework, entered into application on 1 January 2020 and introduced a new supervisory regime for third-country CCPs. As a directly applicable EU Regulation, EMIR (as amended by EMIR Refit and EMIR 2.2) will become retained direct EU legislation under the operation of the European Union (Withdrawal) Act 2018, save to the extent that the changes made by EMIR Refit and EMIR 2.2 are not operative by the end of the implementation period. Since the implementation of the post-crisis reforms contained in EMIR, the importance of CCPs within the financial system has increased, such that they can sometimes have a significant impact on countries outside their home jurisdiction. As a result, EMIR 2.2 amends the requirements that third country CCPs (including potentially the UK post-Brexit) must satisfy in order to be recognised by the European Securities and Markets Association (ESMA) and thus provide clearing services to clearing members or trading venues established in the European Economic Area (EEA). The new UK Regulations therefore amend EMIR and related UK legislation to ensure that the UK continues to have an effective regulatory framework for third country CCPs in accordance with EMIR 2.2 with effect from the end of the implementation period.

For further updates from Pensions, see: Pensions weekly highlights—overview.

Public Law

Brexit Bulletin—ESC issues fourteenth report on EU documents

The European Scrutiny Committee (ESC) published its fourteenth report of session 2019–2021 on 1 July 2020, focusing on recently drafted EU documents. The ESC gauges the legal and political importance of each legislative proposal and, where appropriate, inquires further on its implications and/or recommends it for debate. Reasons identified as legally and/or politically important include implications of the implementation of the Withdrawal Agreement, including 2020 Fishing Opportunities' relevance to the UK's fisheries sector; implications of the implementation of the Northern Ireland Protocol, including the European Green Deal's proposed legislative changes applicable to Northern Ireland's regulation of chemicals, batteries, waste, pesticides, energy, emissions and State aid; implications of EU's response to the coronavirus (COVID-19) pandemic; implications of the EU's 'Sustainable Investment Taxonomy' on statutory 'green finance' schemes or financial market participants in the UK; and raise of post-Brexit policy questions concerning trade and environment. In separate correspondence published by the ESC, government departments have been asked to provide an update on aspects of the UK position post-Brexit, including clarification on the provisions of the Northern Ireland Protocol concerning VAT rules, specifically with respect to Article 8 thereof requiring the continued application of EU VAT law in Northern Ireland.

See: LNB News 02/07/2020 91 and LNB News 30/06/2020 94.

For further updates from Public Law, see: Public Law weekly highlights—overview

 

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About the author:
Holly joined LexisNexis in July 2014 and works primarily on the PSL Public Law module. Holly read law at university and qualified as a solicitor in private practice. Before starting her legal career, she gained experience working in local government and spent a year studying politics. Prior to joining LexisNexis, Holly worked in the Global Technology and Sourcing team at BP, supporting a variety of global procurement and compliance projects. Upon joining LexisPSL, she worked in the Commercial and LexisAsk teams before assisting with the development and launch of the PSL Public Law module. Holly looks after a number of core public law subject areas, including Brexit.