‘Brexit’, as it is generally referred to, came as a great shock to many people and resulted in a climate of worldwide commercial uncertainty.
In this, the age of the internet, geographic distance from the UK does not automatically mean that an Australian company will not be impacted by the fallout from Brexit and it is reasonable to consider what impact Brexit will have on Australian businesses particularly in respect of commercial dealings with UK and EU based organisations.
Ways in which your commercial contract may be affected post Brexit
While core legal principles will remain unchanged it is likely that Brexit will impact Australian companies and how they trade with other organisations including those that are UK based and those that remain in the EU.
Currently many Australian organisations have structures in place that utilise the UK as a gateway to the broader and very lucrative European market. While it still largely remains a matter of speculation as to exactly how Brexit will impact commercial contracts, some potential issues to consider include:
· Whether contractual references to the EU including references to EU legislation or legislation originating in the EU need to be changed in existing contracts or altered for new contracts to include a specific additional reference to the UK;
· Whether separate agreements with overseas suppliers and distributors or trading partners will need to be put in place if and when the UK does exit the EU;
· Whether an express right to terminate a contract already exists or will arise when Brexit actually occurs and, if such a right does exist, whether any contractual termination or revocation which may be triggered could have an adverse effect on your business;
· Whether Brexit, will constitute a force majeure that would hinder or delay the contracting parties and as such be considered to be a trigger event outside the control of the contracting parties which gives rise to a right to terminate the contractual arrangement;
· Similarly, for contracts that predate the referendum vote, whether Brexit is likely to be considered a materially adverse event or materially adverse change that the parties could not have known about at the time of entering the contract and which subsequently gives rise to a right to terminate or revoke the contract;
· Whether the dispute resolution options in a contract reference relying on the law of EU and what alternative, if any was envisaged if the UK was not part of the EU. If no alternative is provided for can the parties agree on an alternate jurisdiction for dispute resolution?
· Whether the definition of relevant areas and territories is affected. A reference to the EU should no longer be taken to include the UK.
While the ramifications of a post Brexit world are not yet fully crystallised especially for Australian businesses it is worthwhile to proactively consider these issues.