Bars, Bets & Brexit: What Legal Departments Need to Know - Mitratech

Bars, Bets & Brexit: What Legal Departments Need to Know

Bars, Bets & Brexit:  What Legal Departments Need to Know
 

Brexit Background

Ever been on a night out? Of course you have.

Last week on a Tuesday night out after football, my friend Ben turned to me and said, “If we leave the EU, it’ll be just like every time we go for a night out. We start at our usual place, people start to talk about moving on to the other bar like it will somehow completely change the way your night is going, the people you’re surrounded with, and your life moving forward. In reality, the new bar gives you just what you had before. More often than not, you have lost time moving the group with very little benefit in the new venue”.

“That’s what Brexit would be; going to the new bar thinking everything will be amazing with new people and new opportunities. It’ll be just what you had before, plus the hassle of moving.”

Thursday, the 23rd of June, will arguably be one of the most historical and decisive days for the United Kingdom, Europe and the Rest of the World. The possible exit decision, referred to as Brexit, will be determined. Brexit is a word that has become used as a shorthand way of saying the UK leaving the EU – merging the words Britain and exit to get Brexit – in the same way as the Greek exit from the EU was dubbed Grexit in the past. Following response to growing calls from both Conservative MPs and the UK Independence party, the British public now have their own chance to settle the question of European Union membership in British Politics.

The possibility for the UK leaving the European Union throws up a possible entirety of legal complexities, and much like your average Brit out on a Tuesday night, the legal community is planning for and anxiously awaiting the results of this all-important vote.
 

Key points up for discussion are as follows:

The exit options

There are a multitude of options describing how the United Kingdom would depart from the European Union. A leading London law firm illustrates the potential exit options in their latest publication, ‘BLP Brexit Guide

    1. EEA but not EU. The UK could leave the EU but remain part of the European Economic Area (EEA) and have a relationship with the EU like Norway, Iceland and Liechtenstein.
    2. EFTA but not EEA. The UK could also re-join the European Free Trade Association (EFTA) but remain outside the EEA in a manner similar to Switzerland. The UK was a founding member of EFTA before joining the then EEC in 1973. By becoming an EFTA member, the UK could enter into bilateral trade agreements with the EU, as Switzerland has done.
    3. Customs Union. The UK could leave the EU and follow Turkey’s example by entering into a customs union with the EU.
    4. Free Trade Agreement. The UK could seek to negotiate a comprehensive Free Trade Agreement with the EU, covering both goods and services. The UK would then only be subject to EU law if specifically maintained in the agreement.
    5. WTO-only relationship. This is the purest form of “out” requiring no formal connections or negotiated agreements. The UK would leave the EU and rely on its membership of the World Trade Organisation as a basis for trade with the EU, providing the UK with the same access to the EU as China or the USA.

 

The departure process

Both Vote Remain and Leave campaigners have failed to illustrate exactly what the departure process would look like should departure be voted for by the majority. Until 2007, joining the European club was assumed to be a one-way ticket. There was no formal mechanism in the rules explaining how a state could leave the European Union. Now, Article 50 of the Lisbon Treaty has created a road map for such an occasion. It boils down to a couple of deceptively simple steps. The prime minister would have to write a letter to the President of the European Council notifying him of the intention to leave, the council would appoint a lead negotiator and a negotiating team, and a two-year window to negotiate a withdrawal treaty would follow. Any withdrawal treaty would be concluded by the European Council through qualified majority voting, and ratified by the European Parliament as well as the Westminster Parliament.

No nation state has ever held a referendum and then left the EU, so Britain would be carving out an unprecedented path.

Therefore, massive legal implications can ensue, Unless the UK government ensures existing EU legislation remains in force as part of UK law, such legislation would no longer have legal effect. This leads me to the next point.
 

Legal Implications:

In my experience renegotiation has an associated cost of time and/or money. Should the vote to leave come to pass, it is widely accepted that existing policy and tariff agreements will have to be renegotiated. At the moment, the U.K. benefits from EU-agreed policies and tariff exemptions on the trading of both goods and services. Because the legal ramifications to leave the EU have been unclear, such renegotiations will certainly cost the government and legal departments significant time and money as they navigate the policy changes. Instead of focusing on propelling the organization forward, legal departments will be focused on the impact of Brexit as it pertains to new regulations.
It’s also not been clearly stated whether such negotiation would be passed to the hands of the politicians, large corporations, or similarly voted for by the British public.

To conclude, I understand and appreciate the anxiety and pre-planning that this period of uncertainty causes. Organizations based in the U.K. will likely take the brunt of all legal implications in case of a Vote Leave win, however US-based corporations with global legal operations should be prepared for a shift during the two-year grace period as well.For me, only facts on offer are provided within the current betting markets and odds which show a noticeable favour toward the UK remaining in the EU. For those of you that are data-driven like myself, let’s consult the bookmaker.

8/13 – odds to remain in EU
6/4 – to leave.

Although any outcome is possible, in this two-horse race Brexit seems relatively unlikely.
(Source: oddschecker.com)

Working in the legal industry– or any industry for that matter– I’d be consulting this data source as an indication to the likelihood of Brexit.

Either way, this will not be an overnight change; individuals, corporations and legal departments alike will have the two year timeframe to prepare. Just like legal policies, the associated solutions and vendors too shall adjust. Of course it may take some time, but human nature will force adaption to those potential new surroundings.


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