Irish Business, Brexit and the Law
What are the risks?
The United Kingdom is set(ish) to leave the European Union (EU) on October 31st 2019. Along with a multitude of other social and political complications, this brings some legal uncertainty to Irish businesses, trading both domestically and internationally.
It is still of course possible that a ‘no-deal Brexit’ will be avoided and a Withdrawal Agreement, of some description, implemented. This would mean that there would be a transition period until at least the end of December 2020.
This post identifies five areas in which businesses who are clients of our practice may be affected, and how they might address them.
1. Commercial Contracts
In terms of commercial contracts which have been entered into, the legal enforceability of those existing commercial contracts should not generally be affected by Brexit. However, as most pre-Brexit contracts will have been drafted on the assumption of the UK’s membership of the EU, it would be prudent for a business to conduct an audit of contracts to identify which are subject to UK laws, and which have a term exceeding the transition period, if any, before the UK formally leaves the EU. Into the future, as UK and Irish laws diverge, commercial contracts will have to address legal issues that were previously aligned in each jurisdiction (for example competition law, which restricts unfair practices by dominant or colluding companies, may become subject to diverging regimes). Businesses should also carefully consider the governing law of new contracts. If a common law system subject to EU primacy is desired then Irish law is an obvious choice.
2. Data Protection
Irish companies that transfer personal data to the UK (including Northern Ireland) by, for example outsourcing their HR, IT or Payroll function, or by using a UK based marketing company to send marketing communications to your customer database, may need to put extra measures in place to legally transfer this data, as the UK will no longer be a member of the EU. Therefore, in order to comply with GDPR rules, an Irish company intending to transfer personal data to the UK will need to put in place specific safeguards to protect the data in the context of its transfer and subsequent processing. This can be done by use of “Standard Contractual Clauses” and this is likely to be relevant to most Irish businesses that transfer personal data to the UK. Alternatively, where the Irish-based controller and UK-based processor already have a contract in place between them, they may decide to incorporate the Standard Contractual Clauses into that existing contract.
3. Company Law
Under Section 137 of the Companies Act 2014, Irish registered companies are required to have at least one director who is resident in the European Economic Area (EEA). Existing Irish companies that have fulfilled this incorporation requirement by appointing a UK resident director could consider replacing that director, or adding an additional director who is an EEA-resident. In addition, UK Companies that have a sufficient presence in Ireland may have elected to register an Irish branch company. Before Brexit, this would have been registered as a branch of an EEA company. However, post Brexit the branch will be changed to that of a non-EEA company and will be subject to filing annual returns with the CRO under the external company legislation.
4. Litigation – Service of Proceedings
The EU regulations (“the Service Regulations”) governing the service of legal proceedings are an example of a piece of EU law which, at present, provides a method of governing the service of Irish proceedings on an UK domiciled defendant, when proceedings are commenced in Ireland. In the event of a ‘no deal’ Brexit, the UK may no longer remain party to these Service Regulations. This was made clear by the publication, in late 2018, by the UK government of a UK regulation which provides for the revocation of the Service Regulations in the event that a deal between the EU and the UK is not reached.
We wrote about Beneficial Ownership and EU Anti Money Laundering legislation here.
The material contained in this post is for general information purposes only and does not constitute legal advice. Specific legal advice should be sought on any particular matter. No liability whatsoever is accepted by PF Solicitors for any action taken in reliance on the information in this post.