Brexit - Legal considerations for Irish businesses with UK Trading Partners
Posted on 14th December 2020 at 13:33
With Brexit looming fast, Irish businesses need to make sure that they are as prepared as possible. We set out below some of the main legal points which Irish businesses need to consider if they have UK trading partners.
It is important for businesses to have interrogated their supply chains and have appropriate agreements in place which contemplate the impacts of the UK’s departure, in particular, businesses need to consider the following terms:
Pricing - there may be significant fluctuations in sterling once the transition period ends, which may result in UK inflation and general currency volatility. Currency volatility, particularly where agreed pricing is in sterling could have serious financial impacts for Irish businesses. Businesses need to review the pricing terms in all contracts with UK trading partners to establish risks and how to mitigate them.
Customs & Other Costs – Businesses need to review any clauses in relation to customs and taxation to see who is liable for customs, tariffs charges and any other associated costs of the UK’s departure from the EU e.g. additional administration costs, changes in VAT treatment etc. If agreements are currently silent as to who will bear these costs, businesses will need to quickly agree this point with their trading partners.
Delivery Timelines – as a result of customs delays, delivery timelines are likely to be longer. Delayed deliveries could cost businesses money in lost time and sales. Businesses need to factor this in to financial projections and ensure that they have agreed appropriate and satisfactory delivery timelines with suppliers.
Termination – if appropriate providers can be easily sourced elsewhere in the EU it might be worth considering reviewing current agreements with UK suppliers to see if they can be terminated. Whether or not they can easily be terminated will greatly depend on the terms of any existing agreements and the particular circumstances. If there is not a general right of termination, businesses should consider whether UK trading partners are currently or will be, following the UK’s departure, in breach of any of the existing terms e.g. unable to deliver on time, refusing to supply on the current pricing arrangements, will be in breach of requirements to provide EU certified products, in breach of GDPR requirements etc.
Data protection – if the transition period ends and the UK leaves Europe without a formal agreement in place with the EU which includes data protection, the Irish Data Protection Commissioner has stated that the UK will be considered a “Third Country” without a designation of adequacy. This means that there is likely to be a need for Irish business who transfer or store personal data in the UK, to put in place an agreement including Standard Contractual Clauses, as required under GDPR.
Governing Law & Jurisdiction – Businesses need to carefully consider the governing law of any agreements. Such clauses will be particularly important where the contract relates to regulated industries or data processing, where EU law may need to be expressly stated as continuing to apply. Depending on how the UK proceeds, it may also be more difficult for Irish businesses to enforce judgments in the UK.
Regulated Industries – Currently, the EU’s formal position is that it will not accept UK certified goods after Brexit and UK suppliers will need to apply for EU certification which will take time. In this case, businesses need to seriously consider whether the UK goods are of any use to them without recognised certification, if not, businesses will need to consider terminating the existing agreement with UK suppliers and sourcing goods elsewhere.
The UK has indicated that it will accept EU certified goods at least for a period of 6 to 9 months but this may change depending on the outcome of the ongoing negotiations. During any grace period, it is likely that EU suppliers would need to apply for UK certification. Certification requirements vary from industry to industry and businesses need to discuss any contingency plans with their trading partners.
Businesses also need to agree who is responsible for any regulatory compliance issues which might arise as a result of the UK’s departure, for example, licensing, registration, certification or other requirements.
Changes to UK Law – Irish businesses will need to monitor changes in UK law and how those changes may affect its operations, for example, food suppliers need to be aware of the proposed amendments to food labelling i.e. it is proposed that rom 1 October 2022, that packaging of foods placed on the UK market must include a UK address for the Food Business Operation (“FBO”) or, if the FBO is not in the UK, the address of the UK importer. Additionally, from that date onwards the packaging may no longer bear “EU” based origin claims and must instead use “UK” or “non-UK” where the label does not list each country of origin.
However, it is important to note that this postponement is not applicable to the use of the EU organic logo. From 1 January 2021, the EU organic logo may no longer be used on any UK organic foods unless the control body is authorised by the EU to certify UK goods for export to the EU or the UK and EU agree to recognise each other’s standards.
Food labelling changes is just one example of how requirements in the UK may diverge with EU requirements and businesses need to monitor changes in UK law for their industry and more generally so as not to be caught out.
This is a time of great uncertainty for many Irish businesses as a result of Covid and the UK’s exit from the EU. If you have UK trading partners, it is vital that you are clear as to the terms and conditions upon which you are transacting with them, in an attempt to avoid any more uncertainty or unwelcome surprises.
This briefing is for general guidance only and should not be regarded as a substitute for professional advice. Such advice should always be taken before acting on any of the matters discussed.ontent will only be shown when viewing the full post.
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