Brexit: Trick or Treat?

03 Oct 2019

First published in Management Today.

The UK leaving the EU will present businesses with a number of legal implications. BLM's head of commercial law, Jonathan Askin, provides Management Today an overview of what organisations need to consider.‚Äč

The 31 October 2019 Brexit deadline is nearly upon us and, as befitting of Halloween season, many are wondering whether it will be a time of tricks or treats. With the UK’s exit from the EU still shrouded in uncertainty, businesses still have little clarity on how to prepare for the future.

The UK Parliament has largely been celebrating as they pushed through a domestic (UK-only) law requiring the Prime Minister to request the EU to extend the UK’s membership of the EU until 31 January 2020. Yet, a key point is largely going missed – the UK’s EU membership extension cannot be decided by domestic law – it will only be decided by EU law (and the relevant treaties). 

This is because the UK has been a member of the EU for many years and the agreement for the UK to initially join and remain in the EU is recorded in (and the terms set out in) the EU treaties.

Article 50 of the Treaty on the European Union (TEU) sets out the process for a member state to leave the EU. As we all know too well, that process was triggered some time ago by the UK.

Article 50(3) of the TEU is the crucial provision in relation to the attempt to compel the Prime Minister to seek an extension. 

The article states: "The Treaties shall cease to apply to the State in question from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification referred to in Paragraph 2, unless the European Council, in agreement with the Member State concerned, unanimously decides to extend this period."

Whilst the European Council will meet on 17 – 18 October 2019, such unanimous approval to a further extension for the UK until 31st January 2020 is very much up in the air at the moment. Many EU members have made it clear there will be no further negotiations and the horror show of the prorogation has taken up much time that the Prime Minister could have spent negotiating a deal or extension with the EU members ahead of the European Council meeting.

There is still no certainty on if, when, or how the UK will leave the EU and so all businesses must have, or be forming, strategic plans and taking action to cope with a hard Brexit taking place on 31 October 2019.

BLM’s commercial legal team has been assisting businesses of all sizes to understand the risks and opportunities that a hard Brexit will create, as well as advising on strategies that need to be put in place.

Here is a short summary of actions businesses can take to prepare for a potential hard Brexit:

The Brexit Audit
Firstly businesses should conduct a 'Brexit Audit' and consider if:

The Plan
Some areas that businesses may need to incorporate into the strategic plan include:

While disruption is inevitable if a hard Brexit occurs on 31 October 2019, businesses can ensure continuity, flexibility and resilience by having a strategic plan in place that can be implemented as the need arises.

To help with Brexit planning for your business, contact Jonathan Askin at jonathan.askin@blmlaw.com.

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Disclaimer: This document does not present a complete or comprehensive statement of the law, nor does it constitute legal advice. It is intended only to highlight issues that may be of interest to customers of BLM. Specialist legal advice should always be sought in any particular case.

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Jonathan Askin

Jonathan Askin

Partner,
London


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