brexit implications - hedgeyedocs.hedgeye.com/he_brexit_implications_jul2016.pdf · contracts:...

30
TEAM MEMBER ONE TEAM MEMBER TWO TEAM MEMBER THREE TEAM MEMBER FOUR BREXIT IMPLICATIONS CALL WITH SQUIRE PATTON BOGGS | JULY 22, 2016

Upload: others

Post on 15-Jun-2020

5 views

Category:

Documents


0 download

TRANSCRIPT

Page 1: Brexit Implications - HEDGEYEdocs.hedgeye.com/HE_Brexit_Implications_JUL2016.pdf · Contracts: Drafting New Contracts and Analysing Existing Contracts . squirepattonboggs.com 17 Contracts:

© Hedgeye Risk Management LLC. All Rights Reserved.

JAN 1, 2015

TEAM MEMBER ONE TEAM MEMBER TWO

TEAM MEMBER THREE TEAM MEMBER FOUR

© Hedgeye Risk Management LLC. All Rights Reserved.

PRESENTATION SUBTITLE JAN 1, 2015

© Hedgeye Risk Management LLC. All Rights Reserved.

BREXIT IMPLICATIONS CALL WITH SQUIRE PATTON BOGGS | JULY 22, 2016

Page 2: Brexit Implications - HEDGEYEdocs.hedgeye.com/HE_Brexit_Implications_JUL2016.pdf · Contracts: Drafting New Contracts and Analysing Existing Contracts . squirepattonboggs.com 17 Contracts:

2 © Hedgeye Risk Management LLC. All Rights Reserved.

DISCLAIMER Hedgeye Risk Management is a registered investment advisor, registered with the State of Connecticut. Hedgeye Risk Management is not a broker dealer and does not provide investment advice for individuals. This research does not constitute an offer to sell, or a solicitation of an offer to buy any security. This research is presented without regard to individual investment preferences or risk parameters; it is general information and does not constitute specific investment advice. This presentation is based on information from sources believed to be reliable. Hedgeye Risk Management is not responsible for errors, inaccuracies or omissions of information. For more information about Hedgeye Risk Management, including Terms of Use of our information, please go to www.hedgeye.com. The presentation is the work of Squire Patton Boggs and is protected intellectual property. Views and opinions expressed herein do not necessarily reflect the opinions of Hedgeye Risk Management. This presentation is for information purposes and is not intended as investment recommendations.

TERMS OF USE This report is intended solely for the use of its recipient. Re-distribution or republication of this report and its contents are prohibited. For more details please refer to the appropriate sections of the Hedgeye Services Agreement and the Terms of Use at www.hedgeye.com

DISCLAIMER

Page 3: Brexit Implications - HEDGEYEdocs.hedgeye.com/HE_Brexit_Implications_JUL2016.pdf · Contracts: Drafting New Contracts and Analysing Existing Contracts . squirepattonboggs.com 17 Contracts:

© Hedgeye Risk Management LLC. All Rights Reserved.

PLEASE SUBMIT QUESTIONS* TO

[email protected]

*ANSWERED AT THE END OF THE CALL

Page 4: Brexit Implications - HEDGEYEdocs.hedgeye.com/HE_Brexit_Implications_JUL2016.pdf · Contracts: Drafting New Contracts and Analysing Existing Contracts . squirepattonboggs.com 17 Contracts:

Legal Implications of a Brexit – a 360° analysis

This presentation is not a statement of fact but reflects a point of view.

Page 5: Brexit Implications - HEDGEYEdocs.hedgeye.com/HE_Brexit_Implications_JUL2016.pdf · Contracts: Drafting New Contracts and Analysing Existing Contracts . squirepattonboggs.com 17 Contracts:

5 squirepattonboggs.com

Agenda

The timing and procedure of the withdrawal, and the negotiation of the future relationship between the UK and the EU;

The consequences for UK, EU and US companies arising from the end of the application of EU Freedoms, Mutual Recognition, Passports and other privileges;

Consequences under the domestic laws of the UK and the remaining 27 Member States;

What happens to International Agreements entered into by the EU? What you need to know when entering into new contracts after June 23, 2016 and

what you should do with respect to existing contracts; What alternatives are available to the UK, including WTO, EFTA, EEA, Swiss-Style,

Free Trade Agreements; and Labour, Employment and Immigration

Page 6: Brexit Implications - HEDGEYEdocs.hedgeye.com/HE_Brexit_Implications_JUL2016.pdf · Contracts: Drafting New Contracts and Analysing Existing Contracts . squirepattonboggs.com 17 Contracts:

6 squirepattonboggs.com

Squire Patton Boggs Brexit Task Force

Our Brexit Task Force is a multi-disciplinary team of lawyers and policy advisers who are uniquely placed to support clients across the globe on the effects Brexit will have on business.

Squire Patton Boggs: Top 10 law firm 16 European offices 45 offices in 21 countries across the globe 1500 lawyers and policy advisors.

Our Public Policy team in Europe, and particularly in Brussels, alongside our colleagues in Washington DC, are one of the only global law firms offering top tier Public Policy experience, we can provide for seamless and coordinated discussions with the relevant authorities. We can also make sure your voice is heard at the right time and in the right places.

Page 7: Brexit Implications - HEDGEYEdocs.hedgeye.com/HE_Brexit_Implications_JUL2016.pdf · Contracts: Drafting New Contracts and Analysing Existing Contracts . squirepattonboggs.com 17 Contracts:

7 squirepattonboggs.com

The Position Today! (21/07/2016)

We are still in a period of uncertainty: • The new UK Prime Minister Theresa May has said that she will not

trigger the Article 50 mechanism prior to year end • David Davis new “Brexit Minister” • Boris Johnson new Foreign Minister • Liam Fox – in charge of International Trade • The EU institutions and Member States offered a mixed response • So where does that leave us?

Page 8: Brexit Implications - HEDGEYEdocs.hedgeye.com/HE_Brexit_Implications_JUL2016.pdf · Contracts: Drafting New Contracts and Analysing Existing Contracts . squirepattonboggs.com 17 Contracts:

8 squirepattonboggs.com

Article 50 Mechanism for Withdrawal

• Article 50 (1) TEU • Article 50 (2) and (3) TEU

Negotiation of Details of Withdrawal Agreement, “taking into account framework for future relationship” Details of withdrawal Details of future relationship: Need for Future Relationship Agreements (parallel or

separate negotiation?) Majority decision of council and adoption by qualified majority with consent of

European Parliament Two year Sunset Period Unanimous extension of Sunset Period

Page 9: Brexit Implications - HEDGEYEdocs.hedgeye.com/HE_Brexit_Implications_JUL2016.pdf · Contracts: Drafting New Contracts and Analysing Existing Contracts . squirepattonboggs.com 17 Contracts:

9 squirepattonboggs.com

End of Application Freedoms, Mutual Recognition, Passports and other privileges

• Freedom(s) of Movement of Goods, Services, Persons, Establishment and Capital

• Equal Treatment

• Secondary EU Law since 1957: acquis communautaire Directives Regulations Case Law of the ECJ Direct Applicability Hierarchy of Rules

Page 10: Brexit Implications - HEDGEYEdocs.hedgeye.com/HE_Brexit_Implications_JUL2016.pdf · Contracts: Drafting New Contracts and Analysing Existing Contracts . squirepattonboggs.com 17 Contracts:

10 squirepattonboggs.com

End of Application Freedoms, Mutual Recognition, Passports and other privileges

Mutual Recognition and Passports

• Principle • Examples

Banks Insurance Companies Airlines Logistics Car Industry Other Industries

Page 11: Brexit Implications - HEDGEYEdocs.hedgeye.com/HE_Brexit_Implications_JUL2016.pdf · Contracts: Drafting New Contracts and Analysing Existing Contracts . squirepattonboggs.com 17 Contracts:

11 squirepattonboggs.com

End of Application Freedoms, Mutual Recognition, Passports and other privileges

Other Examples

• ECB Eligibility Criteria for Repo Transactions (Guidelines of the European Central Bank on monetary policy instruments): Place of issuance, place of issuer, debtors and guarantors, governing laws of assets, security and underlying instruments.

• Delegated Regulation 2015/61 in relation to Regulation 575/2013 re Liquidity Requirements Article 10: Member States (Level 1 Assets) Article 13 (2): Securitisation (Level 2B Securitisations)

• Regulation 648/2012 on OTC derivatives, central counterparties and trade repositories: Article 14: Authorisation of a legal person established in the Union for clearing

services as a CCP Article 20: Withdrawal of Authorisation or automatism? Article 25: Recognition of a third-country CCP by ESMA

Page 12: Brexit Implications - HEDGEYEdocs.hedgeye.com/HE_Brexit_Implications_JUL2016.pdf · Contracts: Drafting New Contracts and Analysing Existing Contracts . squirepattonboggs.com 17 Contracts:

12 squirepattonboggs.com

End of Application Freedoms, Mutual Recognition, Passports and other privileges

Other Examples – continued

• EU Jurisdiction and Enforcement Regulation 1215/2012

• EU Insolvency Regulation 1346/2000 (and Recast 2015/848, as of 26 June 2017) Art 3 (2) COMI in a Member State Application of Law of Member State in which proceedings have been commenced Recognition of in rem rights situated in a Member State

• Rome I Regulation and Rome II Regulation: See for example Art 7 Rome I on insured risks situated in a ‘Member State’

• Parent Subsidiary Directive 90/435 • Companies established under European law: Societas Europaea Regulation 2157/2001,

EEIG Regulation 2137/85, SCE Regulation 1435/2003

Page 13: Brexit Implications - HEDGEYEdocs.hedgeye.com/HE_Brexit_Implications_JUL2016.pdf · Contracts: Drafting New Contracts and Analysing Existing Contracts . squirepattonboggs.com 17 Contracts:

13 squirepattonboggs.com

End of Application Freedoms, Mutual Recognition, Passports and other privileges

Other Examples – continued

• Recognition of English Limited Companies and PLCs • Community Trade Mark Regulation 207/2009 • General Data Protection Regulation 2016/679 of 27 April 2016

(applicable as of 25 May 2018) and Data Protection Directive 95/46

Page 14: Brexit Implications - HEDGEYEdocs.hedgeye.com/HE_Brexit_Implications_JUL2016.pdf · Contracts: Drafting New Contracts and Analysing Existing Contracts . squirepattonboggs.com 17 Contracts:

14 squirepattonboggs.com

• Association Agreements

• Free Trade Agreements – incl. on-going negotiations (TTIP/ ASEAN etc.)

• Partnership and Cooperation Agreements

• Air Transport Agreements (e.g. US, Canada, Israel and others in force or with Australia, New Zealand, Brazil and others still in state of negotiation)

• Other (Fishery, etc.)

International Agreements entered into by the EU (including mixed Agreements)

Page 15: Brexit Implications - HEDGEYEdocs.hedgeye.com/HE_Brexit_Implications_JUL2016.pdf · Contracts: Drafting New Contracts and Analysing Existing Contracts . squirepattonboggs.com 17 Contracts:

15 squirepattonboggs.com

Future Contracts (irrespective of governing law) • Should English law govern the contract? Should English courts be the competent

courts to decide any disputes? Should the parties agree on arbitration?

• Would the potential new legal rules and regulations to be adopted under a Withdrawal Agreement or Future Relationship Agreements give rise to termination rights; or would an Unregulated Status give rise to termination rights; or should termination rights be expressly excluded; or should all the parties live with the uncertainty?

Contracts: Drafting New Contracts and Analysing Existing Contracts

Page 16: Brexit Implications - HEDGEYEdocs.hedgeye.com/HE_Brexit_Implications_JUL2016.pdf · Contracts: Drafting New Contracts and Analysing Existing Contracts . squirepattonboggs.com 17 Contracts:

16 squirepattonboggs.com

• Existing Contracts (irrespective of governing law)

• General Principles: Explicit and Implicit Termination Rights, Frustration, Increased Costs, Market Disruption

• References and trigger points Counterparties Debtors, guarantors, agents, assignees and other parties COMI covenants and events of default VAT definition Eligibility criteria Other (e.g. multi-sourcing agreements in ECA environment

Contracts: Drafting New Contracts and Analysing Existing Contracts

Page 17: Brexit Implications - HEDGEYEdocs.hedgeye.com/HE_Brexit_Implications_JUL2016.pdf · Contracts: Drafting New Contracts and Analysing Existing Contracts . squirepattonboggs.com 17 Contracts:

17 squirepattonboggs.com

Contracts: Drafting New Contracts and Analysing Existing Contracts

• Would the potential new legal rules and regulations to be adopted under a Withdrawal Agreement or Future Relationship Agreements or would an Unregulated Status give rise to rights to, for example, payment of duties and taxes, increased costs demands, changes in required margins and interest, additional fees, rights to demand collateral, right to demand bail in provisions in any English law governed contracts, right to change the flow of personal data and modified confidentiality requirements, rights to demand the obtaining of licenses, approvals, modifications or consents for products or services, or any other contract specific rights; or should any such rights be expressly excluded; or should all the parties live with the uncertainty?

• Analysing Existing Contracts as to whether and in which time frame action needs to be taken

Page 18: Brexit Implications - HEDGEYEdocs.hedgeye.com/HE_Brexit_Implications_JUL2016.pdf · Contracts: Drafting New Contracts and Analysing Existing Contracts . squirepattonboggs.com 17 Contracts:

18 squirepattonboggs.com

• European Communities Act 1972 and European Union Act 2011

• Implementation of Directives through either 2.1 primary legislation (Act of Parliament) or; 2.2 secondary legislation, i.e. Orders or Statutory Instruments (Section 2(2) ECA 1972). The vast majority has been implemented through Sis.

• Domestic legislation for England, Wales, Northern Ireland and Scotland: Scotland Act 1998, Schedule 5, Section A3: Reserved matter for legislation in the UK Parliament in London: „Financial Services, including investment business, banking and deposit taking, collective investment and insurance“

Domestic Laws of the UK

Page 19: Brexit Implications - HEDGEYEdocs.hedgeye.com/HE_Brexit_Implications_JUL2016.pdf · Contracts: Drafting New Contracts and Analysing Existing Contracts . squirepattonboggs.com 17 Contracts:

19 squirepattonboggs.com

Domestic Law Considerations – 1

• Money Settle outstanding EU Bills Contributions to 2017-2020 budget expected to be £56.6bn gross

• Corporate Rights Establish rights for UK and EU companies with cross-border affiliates

• Regulations Re-nationalise 5,896 full EU Regulations and 6,399 technical regulations by abrogating them,

passing legislation or negotiating a transition. Quid of MPs vote?

• Directives Re-nationalise EU directives by adjusting or repealing Brussel's inspired law; at least 15% of the

UK statute booked is based on 978 EU directives and 656 related technical directives

Page 20: Brexit Implications - HEDGEYEdocs.hedgeye.com/HE_Brexit_Implications_JUL2016.pdf · Contracts: Drafting New Contracts and Analysing Existing Contracts . squirepattonboggs.com 17 Contracts:

20 squirepattonboggs.com

New UK-EU trade relations – the existing options

Page 21: Brexit Implications - HEDGEYEdocs.hedgeye.com/HE_Brexit_Implications_JUL2016.pdf · Contracts: Drafting New Contracts and Analysing Existing Contracts . squirepattonboggs.com 17 Contracts:

21 squirepattonboggs.com

• Customs Union (Turkey) Tariff-free No say in EU trade deals with third countries but must abide by their rules No free-movement Turkey benefits as part of accession path

• EEA – e.g. Norway. Outside Customs Union. Pay reduced dues to the EU but no vote at European level Accept free movement from EU and EEA No say in EU rules

New UK-EU trade relations – the existing options – 1

Page 22: Brexit Implications - HEDGEYEdocs.hedgeye.com/HE_Brexit_Implications_JUL2016.pdf · Contracts: Drafting New Contracts and Analysing Existing Contracts . squirepattonboggs.com 17 Contracts:

22 squirepattonboggs.com

New UK-EU trade relations – the existing options – 2

• Bilateral agreement – e.g. Switzerland More than 120 bilateral agreements since 1956 on various specific sectors and matters

Took 20 years to negotiate and still on-going talks No access to financial services (Swiss) / insurance dealt separately Accept free movement of persons Outside Customs Union Pays in budget No say in shaping of EU rules

• WTO No specific trade deals

Accept standard MFN principles Quid of tariffs commitment? No access to Single Market No free movement

Page 23: Brexit Implications - HEDGEYEdocs.hedgeye.com/HE_Brexit_Implications_JUL2016.pdf · Contracts: Drafting New Contracts and Analysing Existing Contracts . squirepattonboggs.com 17 Contracts:

23 squirepattonboggs.com

Domestic Law Considerations – 2

• Agree residence and residual working rights for 3 million EU born UK

residents and some 1.8 million British passport holders in EU countries

• Post-Brexit UK immigration policy without free movement would look very

different to UK current policy

Continued ban on unskilled migration?

Transitional measures?

Negotiation bilateral agreements with other EU countries to safeguard EU nationals here, and

UK citizens in countries such as France and Spain

Page 24: Brexit Implications - HEDGEYEdocs.hedgeye.com/HE_Brexit_Implications_JUL2016.pdf · Contracts: Drafting New Contracts and Analysing Existing Contracts . squirepattonboggs.com 17 Contracts:

24 squirepattonboggs.com

BREXIT – Immigration

What now … • The UK are still members of the EU – single market / freedom of movement

• Too early to predict long term outcome of Brexit

• 2 years to plan and negotiate exit

• 3 million EEA nationals living and working in the UK

• 2 million British nationals working abroad in EEA countries

Page 25: Brexit Implications - HEDGEYEdocs.hedgeye.com/HE_Brexit_Implications_JUL2016.pdf · Contracts: Drafting New Contracts and Analysing Existing Contracts . squirepattonboggs.com 17 Contracts:

25 squirepattonboggs.com

BREXIT – Immigration

What can EEA national employees do? • Apply for a Registration Certificate Less than 5 years residence or cannot qualify for permanent residence Not essential to have BUT provides evidence of lawful status in the UK as a qualified person i.e.

employment, self-employment, self-sufficiency or study May be beneficial for any transitional arrangements

• Apply for a document certifying permanent residence Resident in the UK as a qualified person for at least the last 5 years Applications can take up to 6 months to process

• Apply for British nationality Resident in the UK as a qualified person for at least 6 years; and Hold a document certifying their permanent residence status

Page 26: Brexit Implications - HEDGEYEdocs.hedgeye.com/HE_Brexit_Implications_JUL2016.pdf · Contracts: Drafting New Contracts and Analysing Existing Contracts . squirepattonboggs.com 17 Contracts:

26 squirepattonboggs.com

BREXIT – Immigration

What Next … • We do not believe there will be a mass repatriation policy • Transitional arrangements to be implemented to regularise immigration status from

EEA to UK rules May require applicants to prove qualified person status to qualify for stay May require applicants to qualify for stay under the current PBS system

• Restrictions could be imposed on further EEA immigration to the UK • Current PBS system will need to be reviewed to cater for increase in demand for

sponsorship Restricted CoS allocation quotas currently set at 20,700 per year Tier 3 for low skilled / seasonal workers may need to be activated

Page 27: Brexit Implications - HEDGEYEdocs.hedgeye.com/HE_Brexit_Implications_JUL2016.pdf · Contracts: Drafting New Contracts and Analysing Existing Contracts . squirepattonboggs.com 17 Contracts:

27 squirepattonboggs.com

BREXIT – Immigration

The current Points Based System • Tier 1 – ‘highly’ skilled workers without a sponsor

(CLOSED – Tier 1 Post Study Work & Tier 1 General Highly Skilled)

• Tier 2 – skilled workers with a sponsor and job offer

• Tier 3 – low skilled (never used)

• Tier 4 – students

• Tier 5 – temporary workers and youth mobility Points assessment on variety of attributes including skill level of role, salary, qualifications, English language ability and maintenance

Page 28: Brexit Implications - HEDGEYEdocs.hedgeye.com/HE_Brexit_Implications_JUL2016.pdf · Contracts: Drafting New Contracts and Analysing Existing Contracts . squirepattonboggs.com 17 Contracts:

28 squirepattonboggs.com

Speaker Contact Details

Dr. Jens P. Rinze, LL.M. (Exeter) Partner, Financial Services [email protected]

Aline Doussin Partner, International Trade [email protected]

Paul Anderson Partner, Financial Services [email protected]

Page 29: Brexit Implications - HEDGEYEdocs.hedgeye.com/HE_Brexit_Implications_JUL2016.pdf · Contracts: Drafting New Contracts and Analysing Existing Contracts . squirepattonboggs.com 17 Contracts:

29 squirepattonboggs.com

Abu Dhabi Beijing Berlin Birmingham Böblingen Bratislava Brussels Budapest Cincinnati Cleveland Columbus Dallas Denver Doha Dubai Frankfurt Hong Kong Houston Kyiv Leeds London Los Angeles Madrid

Manchester Miami Moscow Newark New York Northern Virginia Palo Alto Paris Perth Phoenix Prague Riyadh San Francisco Santo Domingo Seoul Shanghai Singapore Sydney Tampa Tokyo Warsaw Washington DC West Palm Beach

Israel Italy Mexico Panamá Peru Turkey Venezuela

Global Coverage Africa Argentina Brazil Chile Colombia Cuba India

Office locations

Regional desks and strategic alliances

Page 30: Brexit Implications - HEDGEYEdocs.hedgeye.com/HE_Brexit_Implications_JUL2016.pdf · Contracts: Drafting New Contracts and Analysing Existing Contracts . squirepattonboggs.com 17 Contracts:

© Hedgeye Risk Management LLC. All Rights Reserved.

FOR MORE INFORMATION, CONTACT US AT:

[email protected] (203) 562-6500