Overview of other implications of Brexit

Legal

Following the formalisation of the UK’s exit from the EU, EU legislation and judicial decisions may no longer be binding in the UK. 

There will be no requirement for the UK to abide by ECJ decisions as they will no longer be bound by such decisions. A question also arises as to whether this may operate on a retrospective basis to the effect that the UK will be free to ignore unfavourable historical ECJ decisions. 

Another implication for Ireland, a common law jurisdiction where the use of UK caselaw precedent is commonplace, is that UK caselaw may no longer form precedent as the UK courts are free to make decisions without referring to EU law, EU directives, and EU Regulations and/or ECJ decisions which has overarching reach in Ireland. 

EU Directives and Regulations will cease to have effect. This has an almost insurmountable number of social; cultural; economic and environmental implications that make it impossible to reduce the impact to a few sentences. Suffice to say, the UK will no longer be bound by the EU rules seeking equality across socio-economic and political issues, ironically many of which were instigated in the EU by the UK in the first instance. It may of course be the case that the UK will decide to transpose some or all of these into UK domestic law. 

The majority of tax reliefs, withholding tax exemptions and/or preferential treatment in our tax legislation and company law legislation are particular to companies or individuals located within the EU or in certain circumstances where there is a Double Tax Agreement (“DTA”) in place. 

Once the dust has settled and the terms of the EU/UK relationship is determined, we may need to review the terms of the Irish/UK DTA and the circumstances in which transactions with the UK are not intended to be penalised. Any such overhaul would of course have to be carried out in the context of restrictions imposed on Ireland as an EU Member State and limitations on providing preferential treatment to the UK. 

There are a myriad of other potential legal implications to name but a few; governing law clauses; contracts overly reliant on EU definitions and/or principles; service of proceedings; cross jurisdictional insolvencies/mergers/divisions; application of TUPE provisions on the transfer of an undertaking; competition law;  and enforcement of judgements in the future. The financial services sector will need to be mindful in this regard particularly by reference to clauses in loan documentation such as definitions; grossing-up provisions; and withholding tax provisions. 

Global mobility

One of the founding pillars of the EU is the free movement of people and workers within EU Member States. The severance of the relationship with the EU by the UK means that free movement of people into and out of the UK from other Member States (including Ireland) may now be restricted.

Any immigration restrictions will see working and visiting visa requirements imposed with the process likely to be similar to the existing regime for non-EU citizens. This operates in both directions; for EU citizens working and visiting the UK, and for UK citizens working and visiting EU Member States (including Ireland). This presents administrative and cost burdens for businesses that have employees that regularly travel between the two countries. It also has a knock on effect from a tourism perspective for non-business travellers.

In an environment where most businesses are increasing their global mobility, the potential barrier of UK borders will create time delays, additional administrative burden and increases costs for businesses. This only serves to make the UK less accessible and therefore one would imagine less attractive for businesses with a global and fluid workforce.

Northern Ireland

In the words of the Taoiseach Enda Kenny “…many people in Northern Ireland are deeply concerned that Northern Ireland will be outside of a project that has delivered so much for political stability, reconciliation and economic prosperity.” 

Ireland and the UK have enjoyed open borders since 1920 but this special relationship looks as though it is to be committed to history as it is hard to fathom how an open border policy between our two countries could be maintained in circumstances where all other EU Member States’ borders with the UK would be closed. Where a “soft” border does not present a viable option we may see the re-introduction of a “hard” border with Northern Ireland and the possible introduction of customs posts and passport control as the border will form an external EU land border. 

This could set back the years that have been plied into the integration efforts on the island of Ireland; with potential risks to peace; potential risks to cross border businesses; unknown risks to cross-border EU funding between the UK and Ireland including scientific; arts; film; transport links and cultural programmes. There have even been some murmurings that Game of Thrones will no longer be shot in Northern Ireland due to the absence of future EU funding, necessary due to the expense of filming each episode. 

Enda Kenny has stated that the Irish Government will continue to work urgently and intensively with the British Government and the Northern Ireland Executive to see how collectively they can ensure that the gains of the last two decades are fully protected in whatever post-exit arrangements are negotiated. 

While considered a likely outcome in the absence of a viable alternative, the “hard” border is not pre-determined and it is understood that there will be negotiations at UK and EU level to keep borders open between the North and South of the island with all three administrations sharing the common objective of wanting to preserve the Common Travel Area and an open border on the island of Ireland.