Brexit – Preparing for the unpredictable

At the date of drafting this article, the Government is still expecting to meet its target of triggering Article 50 of the Lisbon Treaty by the end of March 2017. This will start the countdown on the two year notice period until exit, and allow negotiations with the European Union to begin. As those negotiations progress and April 2019 approaches, contracts will still need to be put in place, and disputes will still arise.

For those contracts with a term potentially lasting beyond 2019, it is worth looking now at their terms. Knowing that the courts will continue to give contract terms their natural interpretation (whatever the commercial consequences), are there likely to be any areas of contention in these contracts which could be dealt with pre-emptively?

Just as important, in relation to contracts being negotiated now, is there scope to engage in a candid discussion with your contracting party as to the terms impacted by Brexit?

In this setting, key points to consider will include:

• Territory – if the reach of the contract is defined by reference to the European Union, does this need to be looked at again?

• Price variation – we have already seen the impact of fluctuation in currency exchange rates, both positive in terms of increased exports, and negative in terms of increased prices. Is there scope to provide for adjustment should certain triggers occur?

• Tariffs and customs checks – if tariffs or additional taxes are likely to arise following Brexit, who will bear the cost of these? If goods were held up in customs, would this have an impact on your supply chain and ability to deliver other contracts?

• Governing law – if a contract states that it will be governed by the ‘laws of Northern Ireland’ or ‘the laws of England and Wales’, it is currently likely to be construed as including EU laws. Post-Brexit, there may be an eventual divergence in laws. Who will bear the risk of this gap? What happens in the event of a conflict?

• Jurisdictional enforcement – if a judgment given by a court in Northern Ireland needed to be enforced in another jurisdiction, how easily could this be done? Can an alternative dispute resolution process be used?

Whilst the temptation may be to batten down the hatches and see what happens, the more prudent approach would be to analyse your position early on and see what steps can be taken now to protect against, or capitalise upon, Brexit.

If you would like to discuss your options or how Brexit may affect you, please contact one of our Contracts & Technology team.


While great care has been taken in the preparation of the content of this article, it does not purport to be a comprehensive statement of the relevant law and full professional advice should be taken before any action is taken in reliance on any item covered.