Tag: United Kingdom

Ed Sheeran in “Shape of You” Court Battle

Singer Ed Sheeran is currently giving evidence in a three week High Court copyright trial over his 2017 chart-topping hit “Shape of You.”

Sheeran has been accused by two musicians, Sami Chokri and Ross O’Donoghue, that his hit song, “Shape of You” plagiarises “particular lines and phrases” of their 2015 composition, “Oh Why.” The two songs in question share a similar melody.

The dispute began back in May 2018 and saw Sheeran and his co-writers prevented from obtaining an estimated £20 million in royalties from performances or broadcasts of “Shape of You” after Chokri and O’Donaghue accused Sheeran and his co-writers of “appropriating” their music. Chokri claims that he sent the track to Sheeran in a bid to work with the star, but later heard the chorus on “Shape Of You” – which became the biggest selling single of 2017 in the UK.

Sheeran’s lawyers told the High Court at that time, that the musician and his co-writers had no recollection of having heard the song in question before the dispute began and asked the High Court to declare that he and his co-writers had not infringed Chokri and O’Donoghue’s copyright, with Sheeran also stating his reputation had been tarnished by the allegations.

In July 2018, Chokri and O’Donoghue issued a counterclaim for “copyright infringement, damages and an account of profits in relation to the alleged infringement”.

In a November 2020 ruling, the parties involved “anticipated that they would incur costs in the region of £3 million between them on the dispute”.

Andrew Sutcliffe QC, for Chokri and O’Donoghue, said the question at the heart of the case was “how does Ed Sheeran write his music?” and whether he “makes things up as he goes along during songwriting sessions or whether his songwriting process involves the collection and development of ideas over time which reference and interpolate other artists.”

Whilst the trial plays out in the High Court over the course of the next three weeks, it serves as a timely reminder that content created should be original and independent to avoid falling within the remit of copyright infringement. Otherwise, the risk of copyright infringement can be reduced by:

  • Obtaining relevant authorisations and approvals from a Collective Management Organisation, such as; PPL PRS (the UK’s music licensing company) or the Copyright Licensing Agency (for printed material);
  • Obtaining relevant permissions from a copyright owner/the copyright owner’s agent which may require the payment of licencing fees;
  • Entering into an assignment of intellectual property where copyright work has been produced as part of an underlying contractual agreement; and
  • Checking any relevant copyright/licencing terms to ascertain whether there is permission to reproduce certain content.

Article By Keisha Phippen of K&L Gates

For more intellectual property legal news, click here to visit the National Law Review.

Copyright 2022 K & L Gates

COVID-19 Fears Prompt State Department ‘Do Not Travel’ Advisory for UK, Other Restrictions Continue

The State Department, in coordination with the CDC, raised its Travel Advisory for the United Kingdom to “Do Not Travel” because of COVID-19 (Level IV).

Coincidentally, the Department’s move came on the same day Prime Minister Boris Johnson lifted most COVID-19-related restrictions in the United Kingdom (yet, excluding Wales, Scotland, and Northern Ireland). He made this move as the case numbers are rising because most adults in the United Kingdom are fully vaccinated.

Despite the United Kingdom lifting its restrictions, the European Union has opened its borders to individuals from the United States (with various restrictions). Further, Canada is about to open its borders to fully vaccinated U.S. citizens and permanent residents. Moreover, the White House reported that the United States will not be lifting travel restrictions due to the spread of the Delta variant. Press Secretary Jen Psaki said that it is not clear how long the restrictions will last. As of July 23, 2021, the CDC announced that the seven-day average of COVID-19 cases in the United States was up over 46 percent from the prior week.

Therefore, despite lobbying efforts aimed at increasing summer tourism from Europe, the Presidential Proclamations restricting travel to the United States due to COVID-19 are likely to remain in effect throughout the tourist season and beyond. The travel restrictions were imposed more than a year ago, in January 2020, when President Donald Trump instituted the ban on travel from China. Further bans were instituted in 2020 and 2021 on individuals travelling from Iran, the United Kingdom, Ireland, the 26-member countries of the Schengen Zone, Brazil, South Africa, and, more recently, India. To overcome these restrictions those who need to travel to the United States but are subject to the bans must either “camp-out” in a non-banned country (if they can enter such a country) for 14 days before attempting to enter the United States or they must apply for and receive a National Interest Exception (NIE) to the relevant ban. Eligibility for NIEs is set forth in a web of complex and changing guidance from the Department of State and Customs and Border Protection.

Employers all over the country are suffering due to the bans. Their key employees cannot travel back and forth from or to the United States for important business purposes. The highly skilled or temporary, seasonal workers they need to boost their businesses and the economy cannot be hired. This is compounded by the fact that most U.S. consulates abroad are extremely back-logged and understaffed due to COVID-19.

Jackson Lewis P.C. © 2021

UK Withdrawal Agreement Becomes Law

On January 23, the European Union (Withdrawal Agreement) Bill became an Act of Parliament and is now legally binding in the UK. The purpose of this legislation is to give binding force to the withdrawal agreement that was made between the UK and the EU on October 19, 2019.

The next step will be for the withdrawal agreement to be ratified by the European Parliament, which is scheduled for January 29. If this vote is passed, the UK will leave the EU on January 31, 2020. The UK will then enter an ‘implementation period,’ during which all EU laws will continue to apply in the UK, while the UK and the EU negotiate their future relationship. This implementation period is scheduled to end on December 31.

©2020 Katten Muchin Rosenman LLP

For more Brexit developments, see the Global Law section of the National Law Review.

University Of Surrey Announces New Study On Microbial Organisms To Digest Plastic Waste

On October 16, 2019, the University of Surrey, United Kingdom, announced that its researchers have partnered with colleagues from France, Germany, and Spain to start working on a new technique to tackle plastic waste. According to the university’s article, this novel technique may revolutionize the recycling industry. The plan is to create engineered microbial communities that will digest two types of plastic polymers — polyethylene terephthalate (PET) and polyurethane (PU) — and transform them into molecules that can be used to develop a more environmentally friendly material called Bio-PU. This more environmentally friendly material is often used as a construction and insulation material.

According to the University of Surrey, current physical or chemical methods to degrade PET and PU are inefficient. Impurities in PET polymers and high energy costs associated with the high temperatures required to break down the material make its degradation very difficult. Similarly, degradation of PU is limited due to the difficulty in breaking down urethane bonds in the material. Given these challenges, University of Surrey Senior Lecturer in synthetic biology Dr. Jose Jimenez highlights that “[m]oving away from the reliance on single use plastics is a positive step; however, the problem of how we deal with current plastic waste still needs to be addressed.” Hence, the project will investigate the ability of microorganisms to digest plastic waste and turn it into a more environmentally friendly material that can be recycled.

©2019 Bergeson & Campbell, P.C.

For more plastics pollution activities, see the National Law Review Environmental, Energy & Resources law page.

UKIPO Knocks Undefeated Reds off Their Perch: The Liverpool Trademark and Lessons for Brand Owners

To the interest of many a scouser and football fan alike, Liverpool Football Club’s attempt to register as a UK trademark LIVERPOOL has been rejected by the UKIPO on the grounds that the word is of “geographical significance” to the city. Liverpool FC had filed its application in regards to various goods in relation to football and the filing had attracted significant public attention.

Other English football clubs (Everton, Chelsea and Tottenham) have managed to register several trade marks for each of their respective area names. In addition Southampton Football Club has managed to register SOUTHAMPTON as an EU trade mark. As a result, it is not surprising that Liverpool FC would seek to register a similar mark to help protect its valuable brand.

However, as a result of the filing the club received significant backlash from the people of Liverpool, including their own supporters, and – probably in a related move – Liverpool FC has said that it does not plan to appeal the refusal and it has withdrawn the application. An additional trade mark application for LIVERPOOL with different claims has also been withdrawn.

The matter presents a great case study for brand owners on balancing the need to protect their brand whilst being considerate of the potential adverse PR that will come with the application for certain trade marks.

Innovation in protecting your brand

Brand owners certainly need to adopt innovative tactics when looking to fight counterfeiters and to protect their brand and Liverpool FC has shown a keen eye to identifying new brand assets.

Liverpool FC may have been unsuccessful with this application but they recently successfully applied to trade mark the phrase “LET’S TALK ABOUT SIX BABY” in the UK. The saying was coined by Reds Manager Jürgen Klopp when he ended his run of six successive final defeats and claimed a first trophy as Liverpool FC’s manager with the UEFA Champions League triumph earlier this year. No doubt will form an important part of the club’s merchandise moving forward and is a cunning registration.

Consideration of PR implications

However, all innovative steps in brand protection must be considered in their context.

Liverpool FC argued that the trade mark application was purely “in the context of football products and services” and to stop counterfeiters from benefiting from the sale of counterfeit Liverpool FC products. However, this does raise the question as to why the existing portfolio of club name, mottos and logos would not be sufficient to defeat the majority of inauthentic products that are currently on the market.

In addition, the vitriol with which the application was greeted raises further queries concerning the club’s decision to apply to register the trade mark. The Liverpool FC supporters group ‘Spirit of Shankly’ called the UKIPO’s rejection of the application a “victory for common sense” and declared that the word LIVERPOOL belongs to the “city of Liverpool”. Supporters also took the decision to wear non-official items of clothing carrying the club’s name and logo during a match against Newcastle in protest.

As a result, the case highlights the perils brand owners face when pursuing a robust approach to protecting their brand, particularly when looking to register terms as trade marks with cultural significance. Applicants must bear in mind the negative PR that can accompany any new filing strategy.

Copyright 2019 K & L Gates

ARTICLE BY Simon Casinader and Niall J. Lavery of K&L Gates.
For more trademark law, see the National Law Review Intellectual Property law page.

FCA Publishes “Brexit Special” Market Watch

On October 7, the Financial Conduct Authority (FCA) published a “Brexit Special” of its monthly Market Watch newsletter, in which it summarized some recent developments and publications in connection with the regulated sector’s preparedness for the forthcoming departure of the UK from the EU on November 1.

In the newsletter, the FCA noted that Andrew Bailey, FCA CEO, gave a speech in September at Bloomberg London on the Brexit “state of play”. Mr. Bailey outlined recent developments and the outstanding issues, such as the desire for an equivalence agreement for the Share Trading Obligation (STO). (For more information, please see the June 14 edition of Corporate & Financial Weekly Digest).

The FCA explained that transaction reporting rules under the Markets in Financial Instruments Regulation (MiFIR) will not be subject to the temporary transitional power. (For more information, please see the September 27 edition of Corporate & Financial Weekly Digest). Therefore, firms, trading venues and approved reporting mechanisms will need to take “reasonable steps to comply with the changes to their regulatory obligations”. Firms who cannot comply on the day that the UK leaves the EU will need to back-report missing, incomplete or inaccurate transaction reports as soon as possible thereafter.

The FCA provided an updated statement on the operation of the Markets in Financial Instruments Directive (MiFID) transparency regime following Brexit. The FCA published a statement on this topic in March 2019 (please see the March 8 edition of Corporate & Financial Weekly Digest), and the main purpose of this update was to change dates to reflect the extension of the departure date from March to October 2019.

The FCA’s MiFID transparency regime update also reflects a statement made on October 7 from the European Securities and Markets Authority (ESMA). In addition to other updates, ESMA described how reference data submitted by UK trading venues and systematic internalisers will be phased out of EU calculations. ESMA will “freeze” the quarterly calculations until Q1 2020, during which time the EU will re-determine the relevant competent authority (RCA) for all financial instruments that remain available for trading in the EU, for which the FCA is currently the RCA.

Finally, the FCA announced that industry testing for the FCA Financial Instruments Transparency Systems (FITRS) would start on October 10 and noted that it continues to update the Brexit material available on its website.

The Market Watch newsletter is available here.

Andrew Bailey’s speech is available here.

The FCA’s updated statement is available here.

ESMA’s statement is available here.

©2019 Katten Muchin Rosenman LLP

Brexit: Can the Remainers Stop a No-Deal Brexit?

Brexit has driven fault lines through British politics as seen at no time since the 1680s. Fervent ‘leavers’ and fervent ‘remainers’ can be found in both of the main political parties, although most favour various compromise options in between.

This is reflected in the composition of the UK Parliament and has resulted in an impasse, with Parliament rejecting both the transitional ‘deal’ to leave the EU negotiated by former Prime Minister Theresa May at the end of 2018 and the prospect of leaving the EU without a deal – a ‘no deal’ Brexit. The election of Boris Johnson as the new UK prime minister and his appointment of a government leaning firmly towards leaving the EU, with or without a deal on October 31, 2019, throws up some distinctive legal challenges: If a new deal cannot be struck with the EU, is a no-deal Brexit inevitable, or can the remainer MPs stop it?

Concluding a new deal with the EU by October 31 is challenging, not least given the limited time available for negotiating it and having it approved by the European and UK Parliaments. This is compounded by the complexity of the issues the UK government seeks to renegotiate, particularly the Irish backstop, and the EU’s no-renegotiation stance – although it has indicated willingness to revisit the nature of the future relationship between the EU and UK.

The legal position on a no-deal Brexit is set out in the European Union (Withdrawal) Act 2018, as amended in April 2019. This Act sets Brexit date at October 31, 2019. It also requires Parliament to approve any withdrawal agreement with the EU. What it does not require is that there should, in fact, be a withdrawal agreement. Consequently, the Act does not require parliamentary consent for a ‘no deal’ Brexit. Prime Minister Johnson does not, accordingly, need to secure any parliamentary majority for this. And since the Act will prevail over any parliamentary vote to reject a no-deal Brexit, he does not have to comply with any vote passed to the contrary.

The first legal route open to remainer MPs is to seek to amend the 2018 Act. The problem that they would have is timing. Parliament is in recess until September 3. There is usually a further recess from mid-September to the second week in October for the party conference season. Even if the second recess were to be abandoned, there is insufficient time for an amending bill to be passed before October 31 using normal parliamentary procedures. There is provision for emergency legislation to be passed very quickly, but this would require a consensus among all parties and the support of the government, both of which seem unlikely given the split between remainers and leavers within the main parties and the new government’s express intention to achieve Brexit by October 31.

The second legal route open to remainer MPs is to force a general election. Under the terms of the UK Fixed-term Parliaments Act 2011, Leader of the Opposition Jeremy Corbyn would need to propose a motion of no confidence in Prime Minister Johnson’s government. At present, the Conservatives have a majority of one in Parliament, but only with the support of the Democratic Unionist Party from Northern Ireland. However, a number of Conservative MPs have indicated that they would be prepared to bring their own government down on this issue. An unknown factor is whether leaver MPs in the Labour Party are prepared to abstain or even vote against such a motion.

A motion of no confidence under the 2011 Act requires only a simple majority of MPs voting in favour. However, there are still timing issues. The earliest that such a motion can be proposed is September 3. If passed, it would trigger a cooling-off period of 14 days for an alternative government to be formed. At the end of this period, if, as he would be entitled to do, Mr Johnson were to remain prime minister, UK electoral law would require him to announce the date for a general election within a further 25 days. However, there is no requirement for the election actually to be held within a particular time. Although the Queen must be consulted about the date, this is a formality. Prime Minister Johnson would, therefore, be within his constitutional rights to call an election only after the October 31 Brexit deadline has passed and the UK has left the EU.

Remain supporters have indicated that their strategy, if they are able to force an election, would be to rely on the legal status of the ‘standstill’ or status quo convention to prevent a no-deal Brexit on October 31. When an election is called, the government immediately becomes a caretaker administration. By parliamentary convention (‘convention’ in the sense of accepted practice), this administration should not embark on any major new projects and may not use the UK civil service for such a purpose. Cabinet Secretary Sir Mark Sedwill, the head of the civil service, is reported as having expressed the view that the ‘standstill’ in this situation would be that the UK remains in the EU. However, government spokespersons have said that this would involve the civil service effectively acting in contravention of the 2018 Withdrawal Act.

It seems likely, if this scenario develops, that the matter will be referred to the UK Supreme Court. The British constitution is not written down and relies on many traditions and convention, some of considerable antiquity. However, there is precedent in a December 2018 Supreme Court case, which decided that the legislative consent motions passed by the Scottish Parliament under the Scotland Act 1998 could not be used to affect the validity of the 2018 Withdrawal Act. It had been argued that the convention requiring the Scottish government to be consulted on any UK legislation that involved matters devolved to Scotland was absolute. The Supreme Court disagreed, on the basis that a convention could not take precedence over a statute. On this basis, any reference to the Supreme Court seeking to block the operation of the 2018 Act through convention would likely fail.

It is often said ‘a week is a very long time in politics’. Prime Minister Johnson may be able to secure some last-minute concessions from the EU negotiators enabling a withdrawal agreement to be approved by Parliament, but this looks challenging. Legal routes to block Brexit are also likely to meet several hurdles. Consequently, at this stage, Britain’s exit from the EU on October 31 looks the more likely outcome. Whether that means an abrupt departure from the EU, or whether a managed ‘no-deal’ Brexit could be achieved through negotiation and agreement on key matters, remains to be seen.

©2019 Greenberg Traurig, LLP. All rights reserved.
This article was written by Gillian Sproul at Greenberg Traurig, LLP.
For more Brexit developments, please see the Global Law page on the National Law Review.

Hungry for Change: ASA and Government Target Junk Food Ads

With childhood obesity rates in the UK among some of the worst in Europe, the Government has set a national target to halve childhood obesity by 2030. Whilst the Government acknowledges that this is a multi-faceted problem, it has reported that evidence suggests that children’s exposure to advertising of products that are high in fat, salt and/or sugar (“HFSS”) contributes to their consumption patterns.

HFSS product advertising is currently subject to content and placement restrictions under the Committees of Advertising Practice (“CAP”) broadcast and non-broadcast codes of advertising (“Codes”); however, campaigners and industry bodies have raised concerns that adverts are not being targeted correctly and that the existing rules do not go far enough. The Advertising Standards Authority (“ASA”) and the Government have taken steps in recent months to address these issues, with the ASA launching a monitoring exercise on targeted ads and the Government consulting on options to reduce children’s exposure to HFSS ads.

The rules

Each of the Codes contains rules dealing with adverts that are directed at or feature children, as well as specific rules in relation to advertising HFSS products, whether directly or indirectly. The restrictions include:

  • a prohibition on the use of licensed characters and celebrities popular with children in ads for HFSS products where the ad is targeted at under 12s;
  • in relation to broadcast TV, a prohibition on HFSS products being advertised “in or adjacent to programmes commissioned for, principally directed at or likely to appeal particularly to audiences below the age of 16”; and
  • in relation to ads placed in children’s media, “HFSS product advertisements must not be directed at people under 16 through the selection of media or the context in which they appear. No medium should be used to advertise HFSS products, if more than 25% of its audience is under 16 years of age”.

ASA monitoring

Although compliance with the Codes by advertisers is generally high, the ASA recently published the results of a ‘compliance sweep’ that used online avatars to monitor ads for HFSS products that were served to children. Similar technology was used earlier this year to track brands that breached CAP’s gambling rules on advertising to under 18s, which we reported on in April.

The avatars replicated the browsing habits of children of various ages and collected information about HFSS adverts appearing on children’s websites and on YouTube. The monitoring exercise found that the vast majority of HFSS ads on children’s websites were being targeted correctly; however, potential issues were identified in relation to HFSS ads being served on YouTube.

Moving away from its typically ‘reactive role’, the ASA took proactive action to notify a number of non-compliant brands which were each required to take steps to prevent further breaches, including making improvements to their targeting approach.

Government consultation

Despite strong compliance by the industry, the Government is still considering further advertising prohibitions and earlier this year launched a consultation in which it sought views on options to further reduce children’s exposure to HFSS in broadcast and online media, including the introduction of a 9pm watershed. Other options included a ‘ladder’ system for advertising restrictions on broadcast TV, the strengthening of current targeting restrictions for online advertising and a mixed option for online advertising consisting of a watershed for video and additional targeting restrictions for other types of marketing.

Whilst the watershed proposals have received extensive support from campaign groups such as The Children’s Food Campaign (Sustain) and the Obesity Health Alliance, the ASA and the Institute of Practitioners in Advertising have both stated that the proposed changes would be ineffective and disproportionate, particularly given the high level of compliance with the HFSS rules in the Codes.

Steps to take

The ASA has stated that it will carry out further compliance sweeps in future, and so advertisers should take care to continue to comply with the Codes.

Anyone advertising in the area should also make use of any available tools which allow the targeting of ads so as to restrict children and young people from seeing adverts for HFSS products. Advertisers must also ensure that terms with their media buyers are sufficient to guarantee that targeting has been put in place correctly. As with labelling or other regulated industries such as financial services, agencies may wish to make clear that responsibility for compliance with these specialist rules lies with their clients (in particular if an assessment as to whether a product is indeed HFSS is required).

 

© Copyright 2019 Squire Patton Boggs (US) LLP

Brexit – Squaring Circle and involving European Court of Justice

Clash of Philosophies

There is a potentially irreconcilable clash of constitutional philosophies between the UK and the EU which results in certain “no go” areas on the EU side for the forthcoming Brexit negotiations.

Perspective of the EU27

EU UK FlagsThe EU27’s approach is driven by the perception that the European Union is not merely representative of a negotiable bundle of international trade treaties but is a supranational entity based on and subject to a constitution created by the Treaty on European Union (TEU) and the Treaty on the Functioning of the European Union (TFEU). From the perspective of the EU and the EU27 , the constitution of the EU goes well beyond international treaties.  The Treaties establish a Union which is based on principles similar to those in Federal States.

Any of the member states of the EU (including the UK) accordingly is, from the perspective of the EU, not only a counterparty to an international treaty but an integral part of an autonomous Union. The driving principle of the European Union – which was correctly identified and repeated by Leave campaigners – is the supremacy of the EU’s legal order over the legal order of its member states, including the supremacy of the EU’s legal order over the constitutions of the member states.

One of the most important principles of the EU is laid down in Article 3 (2) TEU.  This provides that the EU is an area within which its citizens are free and can freely move. This is a general principle which is not restricted to trade but applies in all areas of life. In addition to such general principle Article 3 (3) TEU states that, inter alia, one of the consequences of this area of freedom and free movement is the internal market.

That is the context of the European Union placing the future rights of EU citizens in the UK at the forefront of any of the forthcoming Brexit negotiations.

Since the EU is bound to such constitutional order, any agreement with the UK pursuant to Article 50 TEU needs, from the perspective of the EU, to comply with such constitutional principles. “Constitutionality” is a major issue for the continental European member states since governments and politicians on the continent are used to be bound by constitutions which cannot be overridden by domestic governments or parliaments by simple act of parliament or government. Constitutions can only be amended or overridden if a qualified majority in Parliament and, in some member states, a referendum so approves. In some member states, such as Germany, there are even some constitutional principles which cannotbe changed by Parliament at all.

Perspective of the UK

The UK approach is driven by its perspective that the EU is simply the creation of a bundle of international treaties which establish a common market in which various different principles of free trade and free movement apply, and the contents of which can be freely negotiated between the various parties to such international treaties. Accordingly the UK takes the point of view that the agreements to be entered into pursuant to Article 50 TEU upon Brexit can be freely negotiated and that such negotiations are not subject to or restricted by overriding constitutional principles which are binding on the EU during such exit negotiations.

How to reconcile the differing points of view and how to involve the European Court of Justice

The two above described perspectives of the UK and the EU would appear to be legally irreconcilable, but there is a potential avenue out of such dead-lock by making use of:

(a) the fact that Article 50 (3) TEU does not conclusively state that the UK ceases to be a member state of the EU two years after the Article 50 Notice has been given, but in principle refers to the date on which the relevant withdrawal agreement becomes effective, which effective date can either fall on a date occurring after the two years or on a date occurring prior to the two years.

Accordingly, a simple withdrawal agreement could provide that Brexit becomes effective only once certain specified additional agreements have been finalized and entered into.

(b) the Commission, the European Parliament, the European Council and/or any member state (including the UK) being entitled to request from the European Court of Justice (ECJ) pursuant to Article 218 (11) TFEU legal opinions on any draft agreement – like the agreements between the UK and the EU on their future relationships – to be entered into with a third country (which the UK would be once the withdrawal agreement becomes effective) in order to avoid and/or mitigate concerns relating to the constitutionality of the future relationship agreement with the UK.

It is likely that the EU27 will at some stage call upon the European Court of Justice to opine on the constitutionality of the future relationship agreement(s) with the UK because of the fundamental nature of the agreement(s).

Samples of constitutionally important legal opinions rendered by the European Court of Justice in relation to Agreements which the EU had entered into in the past under Article 218 (11) TFEU (and its predecessors) include, for example:

– ECJ opinions 1/91 and 1/92 on the European Economic Area Agreement and the system of judicial review thereunder,

– ECJ opinion 1/94 relating to the EU agreeing to accede to WTO, GATS and TRIPs

– ECJ opinion 2/13 relating to the accession of the EU to the European Convention on Human Rights

– ECJ opinion 2/15 relating to the Free Trade Agreement with Singapore.

In relation to the Free Trade Agreement with Singapore the ECJ held on 16 May 2017 that such Free Trade Agreement is, because of its far reaching comprehensive content, a so-called “mixed-agreement” and therefore requires the consent of all 28 Member States of the European Union. Depending on the contents of the future relationship agreement between the UK and the EU, such agreement will also need to be ratified by the Parliaments of the EU27 Member States.

Agreements to be negotiated between the UK and the EU

The minimum number of agreements to be negotiated in the context of the UK leaving the EU pursuant to Article 50 is two:

(i) the withdrawal agreement on the details of the withdrawal “taking account of the framework for its future relationship with the Union” and

(ii) an agreement on the details of the future relationship between the EU and the UK.

Even though the minimum number of agreements to be entered into is two, it is likely that there will be more than two agreements since there are areas which need to be dealt with instantaneously (like aviation between the UK and EU27 and a potential accession of the UK to the ECAA Agreement in order to enable the flow of air traffic between the UK and the EU to continue as normal) irrespective of whether other areas may be dealt with at a later stage.

Whereas the withdrawal agreement can be adopted by the EU pursuant to a qualified majority decision pursuant to Article 50 TEU, any agreement on the details of the future relationship will require the “normal” majority contemplated in the TEU and TFEU for the relevant matters concerned, because Article 50 does not apply to such agreements on the details of the future relationship.

From the EU27 perspective, the principal items of the withdrawal agreement are those set out in the Brexit Negotiation Guidelines adopted by the European Council on 29 April 2017, the European Parliament on 5 April 2017 and the Non-Paper of the European Commission of 20 April 2017 and the Commission Recommendation for a Council Decision of 3 May 2017.

Withdrawal Agreement and the date at which it comes into force

The EU and the UK could agree that the withdrawal agreement is ratified in accordance with Article 50 TEU before the lapse of the two-year period but provides that it comes into force only after the agreement on principles for the future relationship has been (i) agreed on working level; (ii) submitted to and reviewed by the European Court of Justice pursuant to Article 218 (11) TFEU, and (iii) been ratified by the UK and the EU – or after the ratification process has been declared by the UK to be defunct.

That would mean that the UK would not cease to be a member state of the EU until there is an agreement on the principles for the future relationship without having to achieve this within the tight two years period.

The UK would also continue to enjoy all rights as a member state under existing international trade and other agreements entered into by the EU with countries around the world, like free trade agreements, air transportation agreements etc. until the ECJ has determined that the principles agreed between the UK and the EU in the agreement on principles for the future relationship are compliant with TEU and TFEU. Once this has been determined, the details of the future relationship could be negotiated in detail between the UK and the EU.

If the UK ceased to be a Member State on 30 March 2019 and “only” some transitory period or implementation period thereafter was agreed on during which certain specified EU rules continue to apply, this would not prevent the UK from losing its rights under existing International Agreements which had been entered into by the EU.

There is clarity in the approach of the EU27. The approach that the UK will take should become clearer after the General Election on 8 June, and later in the year as the UK government begins to identify its Brexit strategy in more detail, and identifies the trade offs it is prepared to make.  The historical and current political climate, as well as the sheer complexity of Brexit, is such that the UK cannot necessarily be expected the trade offs which history will regard as the “right” ones.

By Jens Rinze and Jeremy Cape of Squire Patton Boggs.

European Union Adopts Brexit Negotiation Guidelines

Brexit Bull HornOn April 29, a Special European Council, meeting as 27 member states (as opposed to the full 28 member states, as would usually be present), adopted the Article 50 guidelines (Guidelines) to formally define the EU’s position in Brexit negotiations with the United Kingdom. This follows the resolution of the European Parliament on key principles and conditions for the negotiations, adopted on April 5 (for further information, see the April 7 issue of Corporate & Financial Weekly Digest).

The Guidelines are set out under six headings covering:

  • core principles;
  • a phased approach to the negotiations;
  • agreement on arrangements for an orderly withdrawal;
  • preliminary and preparatory discussions on a framework for the EU-UK future relationship;
  • the principle of sincere cooperation; and
  • the procedural arrangements for negotiations under Article 50.

On May 22, the EU General Affairs Council is expected to authorize the opening of the negotiations, nominate the European Commission as the EU negotiator and adopt negotiating directives.

The Guidelines are available here.