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Commercial contracts

Choice of law

In the absence of any choice of law by parties, the law applicable to contractual obligations involving more than one country is determined in the EU by the ROME I and ROME II Regulations. These Regulations only apply to Member States, meaning that future decisions will have to be made on the basis of general international private law principles. It may be wise to define the choice of law when drafting the contract.

Jurisdiction / Arbitration

Under the Brussels Ibis Regulation, decisions by EU Member State courts are automatically recognised and enforceable in other EU Member States. After Brexit, decisions by UK courts are not likely to enjoy the same benefit, requiring enforcement proceedings. Attention should then be paid to the application of international jurisdiction and conflict of law rules in actual or future agreements.

Price mechanisms

After Brexit, there may be concerns about customs duties, increased transport costs, additional bank charges or other levies imposed on parties to a contract. This could have an impact on the pricing structure and overall costs of the agreement. It may be necessary to negotiate over who will bear such additional costs, some of which may be unknown at the time.

Increased trade barriers

Trade barriers between the EU and the UK seem likely to increase, meaning that costs when trading in Europe would increase. It is important to assess the commercial impact this will have on your agreements and if, in light of this increased cost, your position under any agreements needs to be revisited. When negotiating future contracts, you may wish to consider the extent to which prices should include or exclude any new taxes, duties or other similar levies.

Movement of persons

The freedom of UK nationals to travel within Europe and indeed for those in Europe travelling to the UK seems likely to be impacted by Brexit. This should be of particular importance to businesses operating in the services industry; the impact of the restriction of movement of persons should now be assessed.

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