Negotiations – the end game
As a lawyer, I am often sent details of providers offering a range of professional courses. A frequent item on the menu is “negotiating skills”. Just how successful will the government’s negotiators be, in the run up to the final stages of the Brexit negotiations?
Not only must the Prime Minister secure the support of her cabinet to her plan, she must also gain that of parliament. It still seems a long way off, despite the fact that the Prime Minister has said we are now “in the end game”.
Just what will the “end game” be and what might it hold for businesses?
There still seem to be a range of potential outcomes available from no deal, to a deferral, to a deal of sorts - the precise terms of which have yet to be determined. Uncertainty prevails.
A key aspect of the negotiations which will impact business, and which has yet to be finalised, is the trade deal. As a member of the British Export Association, we have spoken to many businesses who have followed the government’s encouragement and are seeking to grow their businesses through international exporting.
Their concerns are very real:
- How will they be impacted by changes in duties and tariffs?
- What impact will there be on their supply chain?
- Will prices have to increase, and if so, who will absorb that price increase?
- How will the overall movement of goods be affected?
- Will stricter border checks be imposed?
- Who will be responsible for the shipping costs?
- How can they mitigate against currency fluctuations?
For many businesses who have long standing contracts in place, with agreed delivery timescales and pricing arrangements, it is essential that they enter into a dialogue with their trading partners now. If contracts need to be renegotiated or alternative suppliers found, this is not something that can be done quickly – as the Brexit negotiations themselves, on a larger scale, have shown.
A critical practical recommendation that I would make is for businesses to check the terms of their contracts now. Do not wait until March 2019. Is there a break clause in the contract that might need to be implemented? Despite the uncertainty that prevails, take control of the aspects of your business that you can. This includes, in particular, ensuring that contracts contain a clear choice of law clause – selecting English law as the applicable law. This will ensure that English law will continue to govern the interpretation, performance and consequences of a partial or total breach of contract, regardless of the outcome of Brexit.
What about jurisdiction clauses? A jurisdiction clause which provides that the contract is governed by English law currently ensures that you are entitled to recognition and protection within the EU, falling within the scope of the Brussels I Regime. If there is a no deal scenario, however, the UK will automatically fall outside of this protection. This could result in the validity of an English jurisdiction clause being determined by the domestic law of another country.
There are steps that you can take to avoid this – in particular you should include an arbitration clause in your contracts. Arbitration falls outside the scope of the Brussels I Regime, and any contract containing such a clause would be unaffected by a no deal scenario. This will provide the business with certainty as to the terms of the contract that have been agreed, and avoid the time and cost involved in litigating overseas.
The terms of the final Brexit positon are still “in play”, but this should not stop you taking steps to protect your business.
This blog was first published by UKFast.Net Limited on 14 September 2018
Related item: Brexit focus area