Brexit: Deal, no deal or extension?

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The United Kingdom is leaving the European Union, and this is causing profound changes for many businesses. But what exactly Brexit will look like is still to be determined. For now, we remain captivated and the only question that keeps us all under its spell: Will there be a ‘deal’ a ‘no deal’ or an ‘extension’?

Deal or no deal: The Withdrawal Agreement

The Agreement published on 14th November 2018, sets out the arrangements for the UK’s withdrawal from the EU’s legal framework following a ‘Transition Period’ of 21 months, thus until 31st December 2020. It contains a clause that states that ‘The Joint Committee may, before July 2020, adopt a single decision extending the transition period up to [31st December 20XX].’ The year has been left blank, which means that it is possible that the transition period may last way longer than the proposed 21 months. If the Withdrawal Agreement is signed by both parties, we speak of a ‘deal’. If the Withdrawal Agreement is not signed by both parties, we speak of a ‘no deal’. Lastly, there is also the possibility of an extension of Brexit.

Deal

A deal scenario would be the best possible outcome if it comes down to legal certainty. If a deal is reached between the UK and the EU, European procedures such as the European Payment Order procedure[1] and the Small Claims Procedure[2] are then still possible until (at least) 31st December 2020.

No Deal

We speak of a ‘no deal’ or ‘cliff edge’ if the Withdrawal Agreement is not signed on 29th March 2019. Think of the current situation where the House of Commons keep rejecting the plan. Brussel has said multiple times that they will not change a letter of the Withdrawal Agreement. If the aforementioned does not change, no deal will be reached. The UK becomes a third country, such as China and Australia, immediately.

If there is no agreement, the International conventions and treaties will come into effect. The EU (member states) and UK will probably try to limit chaos by concluding ad hoc agreements. However, it is not clear what kind of ad hoc agreements these might be.

A no deal is the most unfavorable in case of legal certainty. European legislation stipulates that European regulations – if no withdrawal agreement is concluded (No Deal scenario) – will no longer apply after two years from the notification (29th March 2017 – 29 March 2019).

Do you want to know more about procedural changes in case of a no Deal Brexit?  Read our blog: ‘No deal Brexit: Procedural Changes’. 

Extension

A no deal would be disastrous to all parties, so the UK and the EU are considering a possible delay of Brexit. This delay could take a few months but even a few years. Right now, extension of Brexit is the most obvious scenario.

Do you have any questions regarding Brexit or would you like further clarification? Contact us today. Our specialists can advise how Brexit might affect you and what the best possible steps are in judicial procedures against a UK based company.

 

 

[1] A simplified procedure for cross-border monetary claims which are uncontested by the defendant, based on standard forms.

[2] This is designed to simplify and speed up cross-border claims of up to €5000.