With the end of the Brexit transitional period looming (31 December 2020) UK based businesses with contractual agreements, especially for the supply of trade goods or services with other EU nations, will need to make key decisions now to prevent potentially expensive disputes arising from the applicable laws.
One of the many effects of the Brexit separation is that, via the European Union (Withdrawal) Act 2018, a significant proportion of the EU laws that are in force in all EU states will still be law in the UK; however, it is how they are applied that is the potential route of the future disputes for contracts.
Given time, the laws within the EU member states (then not including the UK) will evolve and change; however, there will no longer be an obligation upon the UK to make any such changes or retain the former EU laws.
UK based companies with contracts with those in EU members states may need to decide whether to vary their contracts to apply either:
- the laws of the respective parts of the UK, made by Parliament or those with devolved powers (owing to the potential national variations between England, Wales, Scotland and Northern Ireland); or
- the laws of the remaining EU country of the other party.
The failure to ensure either that the current clauses are clear, or that they are varied to elect one of the above, may well lead to disputes of applicable law and potentially jurisdiction.
Anyone who has been involved in claims of this type previously will know that these types of issues alone can lead to significant cost and usually a small amount of legal preventative work may well avoid the need for expensive litigation.