The following article is a high level view of the consequences of Brexit from a legal perspective as it relates to Internet related business.
At the outset there is only one thing for certain and that is that the legal position after Brexit does not have to be uncertain. Indeed, it is possible to extrapolate which laws will fall away and what will be left in place as this will largely depend on what type of post-Brexit model is adopted by the UK. With this in mind the background position regarding Brexit so far is as follows.
The EU is governed by (1) The Treaty of the European Union (TEU); and (2) The Treaty on the Functioning of the European Union (TFEU) (the “EU Treaties”). The referendum does not mean that the UK has automatically left the EU. Article 50 of the TEU sets out the necessary mechanisms for the UK’s departure. It provides that:
i) A Member State may leave within two years of notifying the European Council (the Council) of its intention to withdraw from the EU. There is a negotiation process for the withdrawal and future working relationship with the EU Art 50(2)(b);
ii) A qualified majority of the Council will have to sign the withdrawal agreement and majority consent of the European Parliament is required Art 50(2)(c );
iii) The Treaties would cease to apply to the withdrawing state from the date of entry into force of the withdrawing agreement, or, two years from the date the withdrawing state informs the Council of its intention to leave, such period may be extended by unanimous decision of the Council Art 50(3).
The Treaties themselves do not provide much guidance as to what legal regime a departing state should follow on withdrawal from the EU. It is therefore necessary to theorise what the legal regime might be based on different possible Brexit UK models.
The possible Brexit UK models
There are five possible models that have been widely discussed.
(1) A World Trade Organisation model in which the UK makes no financial contribution to the EU and is not bound by EU laws.
(2) An extensive free trade agreement like the one between the EU and Canada that has been negotiated but is not yet in force.
(3) A customs union based on the Turkish model. Under this model the UK would not be bound by the majority of EU law.
(4) The Swiss model which would require a more detailed arrangement with the EU.
(5) The Norwegian model in which the UK would become a member of the European Free Trade Association (EFTA) this option would leave the majority of EU law in place, including laws in relation to consumer protection.
What happens to UK law on Brexit?
The consequences of Brexit on UK law depends on existing EU laws and their implementation.
EU laws are divided into Directives, Regulations, Decisions, Recommendations and Opinions.
Regulations are addressed to all member states and are directly effective. This means that they are applied directly without the need for national legislation. Once the UK is out of the EU and depending on the model adopted, these regulations would fall away. So for example the General Data Protection Regulation which comes into effect on the 25 May 2018 would no longer be applicable to UK law.
Directives are not directly effective. This means that they require an objective to be put in place by a certain date by the national state. The period in which the directive is being implemented is known as the period of transposition. In the UK Directives are usually implemented by Statutory Instruments and occasionally by Acts. For example, the Electronic Commerce Directive 2000/31/EC was implemented into UK law by the Electronic Commerce (EC Directive) Regulations 2002. In the case of a Directive the laws are actual UK laws once implemented and will probably continue to apply unless they are repealed. If, however a Directive has not been implemented yet there will be no obligation on the UK to implement it and it will fall away.
Decisions are issued by the council or commission. They are not of general application. They are usually addressed to a particular member state, individuals or companies to whom they are addressed. For example, the Commission issued a decision on the EU participating in the work of various counter-terrorism organisations on the 27 August 2015. This decision related to those various counter-terrorism organisations only.
There are also Recommendations and Opinions. Neither of these are binding on a member state.
So it is inevitable that the UK legal regime will change following Brexit and it will be significantly different. We will give regular updates as to the particular areas of law that concern e-commerce and e-business such as consumer law; intellectual property; cross border litigation – breach of contract, online harassment and libel in particular; data protection; and privacy law, as the situation progresses. We will also be organising a series of webinars and workshops for small and medium sized businesses to help plan for Internet business after Brexit.
Brexit will significantly impact cross border international litigation. Read our article on international litigation in the UK here.– Added on 29/06/2016.
For a consultation at our hourly rate please get in touch, contact us.