Commercial news vlog - January 2021

Commercial news vlog - January 2021

 

 

In association with Iain Larkins from Radius Law, we discuss:

  • Brexit – Focus on Dispute Resolution

  • Brexit – Focus on Employment

  • Brexit – Focus on Advertising and Marketing

  • Brexit – Focus on Competition Law


 

Brexit

After over 4 years of haggling, the UK-EU Trade and Cooperation Agreement (‘TCA’) came into effect on the 31st December and ended the transition period.

The headline point is that deal does provide for tariff and quota-free trade in most goods, but services and some key issues including data transfers are still to be agreed.

In the next 10 minutes, we’ll give you our summary of the TCA and try to cover some other important legal updates from the past two months.

 

Brexit – Focus on Contracts

Whilst tariffs for most goods have been removed, new customs documentation will be required. These obligations have been partly mitigated by the mutual recognition of Trusted Trader Schemes and there are some concessions on full declarations in the first six months.  

We recommend reviewing contracts to understand whether the seller or the buyer has the responsibility for customs clearance.  UK sellers should however note that the HMRC will expect them to provide relevant paperwork, regardless of the contract terms.

Not all goods will be tariff free – there are complex exceptions and requirements. More information is available on the gov.uk website. Electric cars, for example, will only be tariff-free if >40% of value is added in the UK and/or the EU.

Businesses should also note that the TCA has not agreed recognition of conformity assessments. This is likely to mean additional burdens for UK distributors of products manufactured in the EU.

 

See LNB News: Customs controls—updated Brexit transition guidance from HMRC

See Practice Note: What does IP completion day mean for supply of goods?

See Practice Note: What does IP completion mean for Commercial?

 

Brexit – Focus on Dispute Resolution

If the parties have chosen a particular country’s law to apply to any dispute, then this is unlikely to be affected by Brexit and generally it is expected that choice will still be respected.

Which country will have the jurisdiction to hear and enforce a claim is however more complicated in cross-border disputes.

Prior to the 31st December, the UK was subject to the Brussels regime as well as the Lugano Convention 2007. These provide a system of allocation of jurisdiction and the reciprocal enforcement of judgments as between EU Member States and relevant EFTA states (namely Norway, Iceland and Switzerland) respectively.

The UK is applying to re-join the Lugano Convention 2007, but its application may be blocked and is likely to take several months. 

In the interim, subject to the ongoing application of transitional provisions in the Withdrawal Agreement whereby the Brussels regime will continue to apply in respect of proceedings issued prior to 31 December 2020, the UK can fall back on the Hague Convention on Choice of Court Agreements (the Hague Convention) (to which the EU, but not the EFTA states, is a contracting state). The UK’s membership of the convention is, as of 1 January 2021, now direct rather than via the EU, leaving it unclear whether contracts signed before that date are covered by it – some businesses are therefore re-signing contracts to remove this risk.  The Hague Convention is also limited. It will only apply to contracts containing exclusive jurisdiction clauses and it does not apply to insolvency, consumer or employment disputes. Disputes falling outside of the conventions will be more complex and costly from a jurisdiction and enforcement perspective. 

Until the UK re-joins the Lugano Convention 2007, businesses may prefer to choose arbitration in their contracts as this is unaffected by Brexit. 

 

See Practice Note: Brexit post implementation period—considerations for dispute resolution practitioners

See Practice Note: Hague Convention on Choice of Court Agreements—application by contracting states

See Practice Note: What does IP completion day mean for contract breach and remedies?

See Practice Note: Brexit—arbitration law and practice in England and Wales

See Checklist:  Arbitration—IP completion day—checklist


If the parties have chosen a particular country’s law to apply to any dispute, then this is unlikely to be affected by Brexit and generally that choice will still be respected.

Which country will have the jurisdiction to hear and enforce a claim is however more complicated in cross-border disputes.

Prior to the 31st December the UK was, via its EU membership, a member of the Lugano Convention which provided a system of allocation of jurisdiction and the reciprocal enforcement of judgments.

The UK is applying to re-join the Lugano Convention,but its application may be blocked and is likely to take several months. 

In the interim the UK can fall back on the Hague Convention, but this has gaps. Its membership is now direct rather than via the EU leaving it unclear whether contracts signed before 31st December are covered by it – some businesses are therefore re-signing contracts to remove this risk.  The Hague Convention is also limited. It will only apply to contracts containing exclusive jurisdiction clauses and it does not apply to insolvency, consumer or employment disputes. Disputes falling outside of the conventions will be complex and costly.  

Until the UK re-joins the Lugano convention, businesses may prefer to choose arbitration in their contracts as this is unaffected by Brexit. 

 

See Practice Note: Brexit post implementation period—considerations for dispute resolution practitioners

See Practice Note: Hague Convention on Choice of Court Agreements—application by contracting states

See Practice Note: What does IP completion day mean for contract breach and remedies?

See Practice Note: Brexit—arbitration law and practice in England and Wales

See Checklist:  Arbitration—IP completion day—checklist


Brexit – Focus on Data Protection

Brexit has a number of implications for data protection law. This article highlights two of those.

Membership of the EU allowed the free-flow of personal data to other member states and to countries that the EU deemed data adequate.

There was concern that after the 31st December personal data would not be allowed to flow from the EEA to the UK without additional safeguards.  This ‘cliff edge’ has been averted for now and the UK has a four-month window (which can be extended to six months) to be awarded an ‘adequacy decision’. 

UK businesses processing personal data of EEA citizens should also note that they must have an EEA branch, office, establishment or representative in the EEA in many cases. 

See Practice Note: What does IP completion day mean for Information Law?

See Practice Note: Brexit—implications for data protection  

 

Brexit – Focus on Employment

Mobility

The free movement of people has now ended.  Europeans who were in the UK before 1 January 2021 are likely to be able to remain but must apply for settlement status under the EU Settlement Scheme (‘EUSS’). The deadline for applications is 30 June 2021. From 1 July 2021, employers must check whether Europeans hold a right to work in the UK.

UK employers employing European staff who are not eligible for the EUSS, must act now on the new points-based immigration system except for Irish nationals, who will not require immigration permission to work in the UK.

Business trips

Generally short-term business trips to the EU or UK are allowed, without visas for purposes such as attending meetings and conferences, but trips that involve selling goods or services directly to the public will require a visa. Short term visits without a visa are limited to 90 days in any 6-month period. Some member states may also apply additional restrictions.

Level Playing Field

The UK, to the extent that it materially impacts trade or investment, must maintain and enforce the employment rights that existed on 31st December and must not significantly diverge from future EU employment laws. 

The UK must also continue to respect the rights set out in the European Convention on Human Rights.

These obligations are likely to restrict UK’s ability to reintroduce fees for Employment Tribunal claims.

Existing EU derived laws

All EU-derived laws that have been implemented before 31 December 2020 carry on and must still be interpreted in conformity with the relevant EU law, although the Court of Appeal and the Supreme Court can depart from the European Court of Justice decisions if it ‘seems right to do so’

This could lead to some changes on the calculation of holiday pay that have been particularly problematic.  The Supreme Court is scheduled to hear three holiday pay cases this year.

Social security contributions

The general rule remains that social security contributions are due in the country in which the employee is working but it may be possible, subject to some detailed rules, to continue to pay social security contributions only in the UK notwithstanding that the employee is temporarily working in an EU country. HMRC has provided guidance on these new rules.

 

See: The EU Settlement Scheme—overview

See Practice Note : Brexit and IP completion day—implications for employment lawyers

See Practice Note : What does IP completion day mean for Immigration?

See Practice Note : The post-Brexit immigration system: what will it look like?

See Practice Note : Brexit materials—citizens’ rights

 

Brexit – Focus on IP

Trademarks and registered design rights

Owners of EU trademarks registered before 31st December will be granted equivalent UK trade marks. Businesses that have ongoing EU trademarks application have a 9 month grace period to apply for an equivalent trade-mark.  Registered Community design rights will be treated in the same way.

Patents

Patents are unaffected by Brexit. European Patent Convention and the European Patent Office (the EPO) that manages it are independent of the EU.

Copyright

Copyright is unlikely to change. Copyright is a national right that each country provides separately. Reciprocal protection for copyright works between the UK and EU is assured by international conventions.

 

See Practice Note : What does IP completion day mean for intellectual property?

See Practice Note : What does IP completion day mean for TMT?

 

Brexit – Focus on Competition Law in the UK

EU competition law will still be applicable to any businesses trading within the EU.

Current EU block exemptions will also be retained in the UK with their current expiry date in adapted form removing specifically EU references (except for the insurance block exemption which lapsed in 2017).

Behavioural Competition rules in the UK will also continue to largely follow EU competition law as the UK Competition Act was modelled on EU Law. 

Note though that M&A transactions may now require notification to both the European Commission and the UK’s CMA (if notification thresholds are met) as a result of the ending of the one-stop-shop.

See Practice Note: The effect of Brexit on UK competition law

In other news…..

Wrongful trading laws

Due to the COVID pandemic the Government suspended the wrongful trading laws that impose personal liability on directors found to have over-traded while a company was insolvent.  That suspension expired at the end of September 2020 but has now re-introduced and will remain until 30th April.

See News Analysis: Corporate Insolvency and Governance Act 2020- temporary change to the wrongful trading regime revived until 30 April 2021

See Practice Note : Wrongful trading claims under sections 214 and 246ZB of the Insolvency Act 1986

Subject to contract

A recent case has re-confirmed that correspondence that is marked ‘subject to contract’ will not create any legal commitment until a formal contract has been made1.

See News Analysis: Court of Appeal—‘subject to contract’ negotiations and Part 36 offers (Joanne Properties Ltd v Moneything Capital Ltd)

 

See Practice Note: Forming e

nforceable contracts—offer

 

Personal Data transfers

When transferring personal data to a country that does not have an EU Commission approved data adequacy decision, businesses have typically used the EU’s standard contractual clauses (‘SCC’) as a way of making the data transfer lawful.  Last year the European Court2 said that businesses should no longer use SCCs unless they have completed a risk assessment on the data laws of the recipient’s country. The European Data Protection Board has now published a 6-step evaluation process for this purpose.

In addition, the European Commission has  published draft new SCCs. Once the SCCs are finalised, (which is expected to happen in 2021) organisations will have a one-year grace period to update their contracts that incorporate the new SCCs. 

 

See Practice Note:   UK GDPR and EU GDPR—transfers of personal data internationally and to international organisations

See Practice Note: EU GDPR—transfers of personal data internationally and to international organisations

See Practice Note:  UK GDPR—transfers of personal data internationally and to international organisations

Eco-friendly claims

The UK Competition and Markets Authority (CMA) has announced that it will be investigating descriptions and labels used to promote products and services claiming to be ‘eco-friendly’. By summer, the CMA aims to produce guidance for the marketing of environmental claims. The UK Government has already issued guidance on its website on how to make an accurate environmental claims and the UK Advertising Standards Authority (ASA) has produced rules on environmental claims.

See News Analysis - ‘Eco-friendly’ products and services to be examined by CMA

Justification for discrimination

The Court of Appeal has confirmed that saving costs in order to balance the books can be a legitimate aim which could justify indirect discrimination. In this case3 the employer had introduced a new pay policy which slowed pay progression and had a disproportionate impact on younger employees.

See News Analysis : Compelled need to reduce expenditure may justify indirect discrimination on pay (Heskett v SoS for Justice)

Green light for first mass consumer claim

In December the Supreme Court4 ruled that that the class action against Mastercard relating to alleged overcharging of credit card fees of 46m British citizens must now be heard again by the Competition Appeal Tribunal (CAT). The case is the first mass consumer claim brought under the new collective action regime introduced in the Consumer Rights Act 2015.

See News Analysis: Top court MasterCard ruling lowers bar for UK class suits

 

In-house lawyers – please join our free virtual round-table discussion - Brexit – Thriving in a new era. Please click here to register.
 


Cases, laws, decisions referred to in this Bulletin

1 Joanne Properties Ltd v Moneything Capital Ltd [2020] EWCA Civ 1541
2 Data Protection Commissioner v Facebook Ireland and Maximillian Schrems, CJEU C-311/18
3 Heskett v Secretary of State for Justice [2020] EWCA Civ 1487
4 Merricks v MasterCard [2020] UKSC 51

 

Disclaimer

Nothing in this Bulletin, or on the associated website, is legal advice. We have taken all reasonable care in the preparation of this Bulletin, but neither we nor the individual authors accept liability for any loss or damage (other than for liability that cannot be excluded at law).

 

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About the author:

Louisa leads marketing for the in-house legal community at LexisNexis. She joined the dedicated in-house team at LexisNexis four years ago and has a passion for driving and facilitating initiatives which are customer-focused at their heart. Her vision is to support in-house counsel succeed in their fast-evolving role based on deep insight, data analysis and best practice gathered across the in-house community.

Prior to her in-house focused role, Louisa led the marketing for the bar and mid-market private practice sectors as well as product marketing lead for LexisPSL - LexisNexis' cloud based, practical guidance and legal research software solution.

She brings 20 years' marketing experience both client and agency side, specialising in B2B marketing in the Legal, TMT (Telco, Media and Technology) and Financial Services industries. In both South Africa, Europe and the UK.

Louisa is also an active member on the LexisNexis Gender Equality Matters (GEM) steering committee and is involved with the Families at LexisNexis Group which brings together, supports and lobbies for change those with an interest in balancing the challenges of work and family.