Brexit and Agency Law – The Latest

Although progress can seem frustratingly slow, much has actually happened in the interim, though significant uncertainty remains.

However, it is possible at this stage to make some predictions regarding the effect of Brexit on the Commercial Agents (Council Directive) Regulations 1993 (“the Regulations”)

Progress to date

In March 2018, the UK and the EU agreed the draft European Withdrawal Agreement. This confirmed the UK’s leave date from the EU of 30 March 2019 and agreed a transition period until 31 December 2020. In addition, the UK Government passed the EU Withdrawal Bill (or the “Great Repeal Bill”) which has the effect of converting all EU Legislation into EU law following Brexit.

The proposed transitional arrangements therefore ensure the Regulations will remain untouched until at least 31 December 2020, and will remain in place beyond this date for an indefinite period until the UK Government acts to repeal or alter existing legislation and thus diverge from the EU’s laws.

Earlier this month Theresa May’s cabinet agreed the Chequers Proposal (further detailed in a subsequent White Paper) setting out the UK government’s proposals for an ongoing trading relationship with the EU, post Brexit. (It should be noted that at the time of writing this article, Mr Davis and Mr Johnson have just resigned from the cabinet and so the proposals within this White Paper look particularly shaky).

The proposed trading arrangements are somewhat more conciliatory to the EU than many perhaps expected and propose a full legal alignment with the EU on laws relating to the trade in goods and agricultural products. As the Regulations apply only to the sale of goods it can be assumed that if a deal along these lines is achieved with the EU then the Regulations will remain untouched. The passage of this proposal is somewhat uncertain given that it appears to have irritated both Remainers and Brexiters equally (and it can probably best be described as a “medium-soft” Brexit as opposed to hard Brexit).

The Regulations in the event of a “hard Brexit”

Even if regulatory alignment cannot be achieved with the EU and a “hard Brexit” or “no deal” Brexit is the outcome, there will be no immediate divergence from EU law given terms of the EU Withdrawal Bill.

The Regulations are a statutory instrument that implements the EU Directive into UK law. It should be noted that in the ten year period between 1994 and 2014, some 4,283 statutory instruments importing an element of EU law were passed by the UK Government. The Regulations are just one of thousands that will need to be analysed by the UK Government’s lawyers over the coming years post Brexit and I suspect that if there is a “bonfire of red tape” the Regulations will be a long way down the list.

Any assessment of the Regulations is likely to be many years down the line and even then will be subject to a lengthy consultation period with the opportunity given to interested parties to make representations to the Government.

Upon analysis, even in the case of a “no deal” Brexit, I suspect that all but the most ideological law-makers will concede that albeit the origin of the Regulations is foreign, there would be nothing to gain and much to lose from doing away with them.

The fact is that the European equivalents of the Regulations are never going to disappear. With ever-increasing trade between countries many UK agents are retained by European manufacturers often as an (initially) cheap and risk-free way of breaking into UK markets, just as UK manufacturers utilise EU-based agents.

There is no point in the UK Government unilaterally removing protections for UK agents, leaving them open to abuse by EU manufacturers, whilst at the same time leaving our manufacturers liable to pay large sums in compensation upon termination to EU-based agents. The only outcome would be a net transfer of wealth from the UK to the EU with the UK unilaterally removing a trade barrier and the EU not.

Given all of the above, and despite all the current uncertainty, I am prepared to stick my neck out – the Regulations are here to stay.

If you require further legal advice regarding Brexit and the potential risks posed to your business then please contact us on 0161-941-4000 or alternatively via email on lawyers@myerson.co.uk.