Brexit Week 2

JG:  Good morning, everybody, on this horrible Thursday January morning. I think it's rained for about three or four days and it's pitch-black outside most of our houses. Welcome to our Brexit week 2 webinar. We have a packed agenda. I'm going to introduce everyone and do a couple of formalities. Just by way of background, last week we concentrated more in-depth on what the trade deal is and isn't and that webinar is available elsewhere. If you need details, please get in contact on that email address below or with myself or Elly and we'll make that available, but that's was really about what the trade deal is. We are going to recap that this morning and that will be led by Ross who is the Head of our International Trade and he's been dealing in export controls and international trade issues for 30 years and he's going to remind us of the key points on the trade deal and we're going to have a couple of reflections a couple of weeks in on what that is all about.

We're then going to move on to talk about contracts. What are the consequences? What do I need to know? What do I need to change? What should I be worried about? And with a bit of luck, my partner David Capps will be doing that one. I'm going to check if everyone is here in a second. Many of you know David, who are regular webinar and regulatory breakfast listeners. I was going to say callers in, we're not quite at that level yet, thankfully. And David specialises in complex financial services, litigation in particular, and is a contractual law specialist. We are then going to talk about key employment and immigration issues with my partner Crowley who heads our Employment team and Liz, a senior lawyer, a specialist on immigration.

So I think we are about right. I'm going to check if everyone is there. Ross, are you here?

RD:  I am here.

JG:  Awesome. David?

DC:  Yeah I'm here.

JG:  And Crowley?

CW:  Yeah here Jake.

JG:  Liz yes please.

LP:  Yep. Here, morning.

JG:  And we've got a little bonus. We have one of my colleagues, Lindsey Davies, is also here who's an expert, one of our senior expertise lawyers expert on most things being expertise law and contractual law. One of the things we were discussing whilst we were getting ready was the most googled thing yesterday and tweeted thing yesterday was the word "what is impeachment" and "what does impeachment mean"? And Lindsey, I think you had the clearest explanation, and then we talked about it, and there is going to be no political leanings on this whatsoever but before we get into Brexit, for those who want a clear message to give to your kids this morning when you do home schooling on what impeachment is and what it isn't, who is going to jail, who isn't going to jail, can you ship us 30 seconds on what impeachment is?

LD:  Of course Jake, yeah, morning everybody. Yeah impeachment is … it's basically a charge of misconduct against a public officeholder and Trump last night became the only president in American history to be impeached twice. In effect it's a two-stage process. So last night the House of Representatives voted to impeach Trump. So that has happened and again that's only the first time that's ever happened twice, but now it has to go off to the Senate, which for those of you that watch American politics will realise this happened last time and while the House voted to impeach the Senate in effect has a trial and they have to find him "guilty" to be properly impeached as such. And I believe they need 17 Republican senators to cross the floor and vote "guilty" in the Senate trial and the chances of that happening are increasing. We think they now said 10 or 11 senators have said they will vote to impeach but getting to that 17 is going to be an interesting watch. But even if he is impeached by the Senate it isn't a criminal trial as such; it doesn't result in criminal charges but practically speaking that would then bar Donald Trump from ever running for Public Office in the States again. So that would be the practical effect that he won't be marched out in chains or put in prison or any of those things which are some of the things circulating on Google and Wikipedia. So it's a civil process in effect which would just bar him from Public Office if the Senate votes to convict.

JG:  Thank you very much. I have definitely learnt something and I'm going to feel very superior this morning when I teach my nine-year-old about impeachment. Okay we are going to start on … sorry the impeachment, by the way, trumps, pardon the pun, but that is good and you all laughed, trumps fact of the day. If you've got time at the end I have a fact of the day but impeachment trumps that.

We're going to start with explaining the trade deal and Ross, and just we'll get into this Ross, I was listening to a Treasury Select Committee hearing on Monday of this week where, about an hour or two to when they talked about financial services, so I must admit I did this in three hours by listening to the financial services part. And I'm going to come on to talk about financial services at the end of this talk on a slightly tangential note, but what struck me was how little people really know about the trade deal. What's in it, what isn't in, and again, some of the base questions about financial services and what's included and what's not included, was scary and worrying and indeed some of the witnesses giving evidence were practically giving evidence with some political stance, which is slightly odd to me. But there we go. Ross, over to you, you going to remind us as to where we are and then fraying the rest of this talk. So thank you very much Ross and good morning.

RD:  Good morning everybody. Okay so I'm going to take you through some slides here. Is that one the first one, the ladder of doom the first one? Okay well that's fine. I can explain this one.

JG:  Yeah I did the ladder of doom as opposed to how we got here but certain people have just got there.

RD:  Okay. So the ladder of doom is really explaining the situation that we now find ourselves in as a result of having entered into the TCA. So the options that were available to the parties, that were the EU and the UK, were effectively ranging from continuing in the single market - that wasn't really an option because the UK decided it was going to leave the European Union down to what's called the WTO option which was the no deal option. So we would just leave the European Union with no future trading relationship. And sort of halfway between, so I've gone from green I suppose meaning good and helpful to red meaning bad and not particularly helpful. In the middle we've got a sort of an ambery colour which is a free trade agreement which is actually what the TCA is, the Trade and Cooperation Agreement is.

So what does that mean? Well that means that we've decided that we are going to leave the single market and all of the good, warm useful things that we found ourselves used to over the years. That would be the ability to move freely around; our qualifications for example would be recognised on the continent of Europe; our goods would move without duties; services would move unencumbered etc, etc. We could go off making investments in the European Union as businessmen or individuals and all of that is effectively the single market. So we've decided we going to leave that.

The next rundown was the Customs Union which would simply be dealing with the issues of tariffs that are being placed on goods. So with the Customs Union, as a name implies, only deals with customs and would really only affect the trade relationship in goods not in services or not to do with investment either. And then we dropped down, we decided not to do that and that was a Mrs May decision very early on and the reason was, and I think it's a kind of compelling reason politically, it's not such a compelling reason economically. But the Customs Union was rejected because it would stop the UK entering into its own free trade deals with third countries which was seen by the conservatives and the Brexiteers as being really important and it may turn out to be. I have no particular axe to grind on that point but once we reject the Customs Union you then get into the situation of having to think about tariffs that are going to be imposed on certain goods and that's where we've ended up.

The free trade agreement in the middle is where we ended up with the TCA and the key point there which I want to sort of reiterate is that for the purposes of goods it has two very, very important implications, neither of which have really been fully explained in the press and certainly not been stuck up there by HMG. One is that it's been described as being a tariff free, quota free relationship. I would actually turn that on its head and say it's only tariff free and it's only quota free if the goods that you are trying to sell to the other party originate in your country. So if you are a UK business trying to sell goods into the European Union you only get that tariff free, quota free treatment if the goods that you are trying to sell into the European Union originate in the UK and vice versa. The second thing is notwithstanding anything that we would have done, so this would've happened pretty much in any situation, we are going to have customs arrangements between us and the European Union; we are going to have regulatory borders between us and the European Union.

So I was amused, and I guess this is one of those quirky things that sticks in people's minds, but I was amused to see a BBC article yesterday about how the nasty Dutch have been stealing UK truck drivers' sandwiches from them as they enter into the Netherlands because there are now food controls or controls on sanitary and flights of sanitary products being entered into the European Union. And because we are a third country now and because we are not members of the single market truck drivers' sandwiches will get taken away from them because they can't let the Dutch regulators know that those sandwiches are safe and they haven't got weird things in them and products they shouldn't have or maybe diseases etcetera, etcetera.

So this is the new world and I've just seen in today's FT an interview with Michel Barnier and that's very interesting because he refers to these changes as not being little speedbumps in the road that we're going to get over. This is the new normal. There will be grit in the system, there will be impediments to us doing business, because that’s the whole point. We spent 40 years taking those impediments away and then we decided the leave the European Union, those impediments come back into the system. So we are stuck with these systems and Michel Barnier says the deal is the deal.

So let's go to the next slide. So what is the TCA? Well, as you'll imagine, from what I've said, where we ended up is with an international agreement on how the EU and the UK are going to trade in goods plus a number of other provisions. If you look over to the right hand side of that slide, you'll see a number of boxes that are mentioned in the TCA. These other agreements, or these other areas, are not mentioned as positive deals where we have new positive conditions for trading in these things. Think of these as being simply structures in which we've unplugged from the single market. So we've taken the single market position, we've decided we're going to drop down to a lower position, and what these other areas that are in the TCA show you is how we got to this mind of minimal, thin, just about … we can just about do trade between us positioned in each of these areas.

So, for example, if you look at public procurement, the public procurement rules that are now between the UK and the EU are not single market public procurement rules, they are a lesser, lower standard and give, obviously, the UK and the European Union lower rights and obligations in respect of each other. Important for this call, it does not cover trade in services in the same way as goods so there is no service equivalent of the goods part of this agreement. So for all the banking and all the banking people on the call, financial services insurance, you are going to be facing a radically different trading relationship with the European Union. It's going to be much more like simple third countries like the US or China face with the European Union, and it's probably going to be a colder and less hospitable place for you. In fact, I'm almost certain it's going to be a colder and less hospitable place.

The other point which I've made but I just want to reiterate it is that what we have in the TCA does not in any sense replicate the single market. We are in this much lower run down the ladder of doom. Just mentioning there on the trade part of this, we are in a free trade area that's consistent with Article 24 of the GATT but it's a thin trade agreement. The only sort of good news that I can find in it really is that it covers all goods. So, in principle, if your goods originate in the UK, even if they're agricultural goods, you will be able to move those goods into the European Union duty free, and vice versa. So actually one of the ironies of this is that actually the Brexit-voting farmers have actually come out of this a little bit smelling of roses and the manufacturers who were largely against Brexit have come out slightly worse.

So if we can go to the next slide, please. So, as I said, just very quickly here, the UK is now unplugged from the European Union, specifically the single market. While the UK have been a third country since it left the EU, there was a transitional period which was called the implementation period that ran from, I think it was February to December of 2020, and we are now … we've now left the EU proper so there is no transitional period in place, so we are literally being treated like we are Japan or Canada with similar rights and obligations.

As I've said, the starting point is that all goods moving between the EU and the UK will have to pay customs duties unless the exporter can show that the goods originated in either the EU or the UK, so there are complex and serious … complex and onerous rules of origin there that that we can talk about in the questions if that's helpful. As I mentioned, all movements of goods between the UK and EU will be subject to customs and regulatory checks on import. And finally, and I'm just teeing up what the others are going to say on this, services and people, including their qualifications, are going to be subject to let's call them different controls, maybe not new controls, because they were the situation we found ourselves in 40 years ago. But I think, on that, I'm going to hand over to the next speaker.

JG:  Thank you very much. And we've got quite a few questions that have come in, but I'm going to try and get them at the right point. But please do send questions and then we'll try and get to them. So it's FinancialRegulatoryEvents@Ashurst.com and – gosh, they really are flying in – and they will find their way to us. David, it's a pleasure to have you on a webinar where you're not telling people about fines and enforcement, so this is happy David maybe with a bit of luck to bounce through contracts and governing law.

So I suppose we'll start with, I think, an easy question and I just wanted you to just give us, yes, I want a real positive start to the day. If you could give us a bit of the background but with the context of is the choice of English law still a good one, or should we be doing what Huber and Detmar want, having French and German courts and all that kind of good stuff? Good morning, David, and over to you.

DC:  Yeah, I hope you can hear me at the back. Is this coming through loud and clear?

JG:  We can hear you clearly.

DC:  The short answer on choice of English law is … I think the answer is, yes, it still is a good choice. The good news is that choice of governing law clauses I think are unlikely to be impacted by Brexit. So governing law, the existing key pieces of EU legislation are firstly something called the Rome I Regulation, which concerns contractual obligations, and there's something else called Rome II which is relation to non-contractual obligations like wrongs in tort.

Both of those EU regulations have been on-shored as a matter of English law, so they've now become English law with some modifications. Rome I, which basically says we will abide by, and comply with, an English choice of governing law clause or another law choice, that has been applied under Rome I up to 1 January and will be applied in the UK under the sort of UK version of Rome I thereafter. And the important point is that EU member state courts are going to continue to apply both Rome I and II, so that means they'll continue to give effect to a choice of English law clause in contracts even though we ourselves, the UK, have left. So hopefully no change there.

JG:  Now, David, of course one or two questions that I'm going to ask you are rehearsed, and this one isn't, so doing the typical throwing you under the bus.

DC:  No change there.

JG:  Yeah. That's correct but Rome I choice of law, just remind me, we've got quite a lot of retail … not retail clients on the call, but people that serve retail, but am I right in thinking that even if I've got English law, if I'm dealing with let's say a German or a French or a Dutch or a Luxembourg client, ignore financial services and whether you can or can't for the minute, but that choice of law might still not be good and … or have I got that wrong, or is that … which court that that local can bring actions? So can you just remind me of that.

DC:  I think it's … most of that consumer protection legislation deals with where people can be sort of sued or sue rather than governing law and we are going to sort of come onto that, and quite a lot of the consumer protection legislation is more to do with consumers can't be sued in England, for example, if they're based in Germany or France, they normally have to be sued in their jurisdiction of domicile.

JG:  Okay. And we'll come onto that, and thank you. So then your third bullet point, references to EU law in existing contracts or MiFID or stuff, what do you think about that, and do you have tips for drafting?

DC:  Yes sure, Jake. I mean there are going to be some long term contracts that were entered into before the Brexit date, which are likely to refer to either EU institutions or particular EU laws like regulations and so on. I think a combination of quite an old Act, the UK Interpretation Act in 1978, together with the various EU withdrawal agreement and provisions, are going to be mean that most of … in most cases, the references to old law are going to be construed as referring to the UK equivalents from 1 January. That's as a matter of English law; it gets a bit more complicated in relation to what other courts are going to make of them. So it's not a very easy answer, that one.

There are going to be some difficulties where you've got concepts about, for example, EU and members states because the scope of who's in the EU and who are member states will have changed as a result of Brexit. And then I think for new contracts going forward, I think it's going to be important to refer to the UK domestic legislation which has on-shored these provisions, so making sure you do that. And also any specific EU provisions which you think are still going to apply because there are some, for example, performance overseas. I mean the other sort of tip probably is that you might want to think about more general drafting, so a more general reference to all applicable laws and regulation, and maybe just a couple of examples of the ones that you think are most likely to apply. So it's not straightforward. Old contracts are a bit more tricky. Going forward, make sure you refer to the current legislation I think is the short answer.

JG:  A question that has come in that we could forecast, because we're good like that. Again, I think there's a slight financial services slant but I think works across the piece. Existing contracts for terms of business, should we have reviewed and changed them all by 1 January, i.e. 13/14 days ago? I'm going to start just with an observation. This isn't an answer, and David can maybe give a bit more detail on the answer, that in general people haven't. That might just be fatigue given MiFID changes, MAR changes etc. In general, people haven't and there an on-shoring element to this. We've done on-shoring separately, we'll come back to it, but on-shoring, you have some time to put in place changes. The FCA has provided forbearance, to a degree. So I'm going to start with people haven't generally changed their terms of business but that might be a little bit because life's too short. David, there might not be an answer to this but should people have changed their terms of business if they had nothing better to do because they were in lockdown and shouldn't have been out on New Year's eve anyway?

DC:  So it's a good question. I mean I think the answer is unfortunately it depends a bit. I think that there's no current absolute "yes" or "no" answer to this. The only thing I would say is, that what I'm going to come on to talk about in terms of jurisdiction clauses, where you can sue or be sued, and that's an area where I do think people might want to have a think about where they are at the moment and whether they need to change things. But, you know, I think I agree with you that's it's not an absolute mandatory you need to have done this, that and the other, but it really depends upon what it is in your terms and conditions now as to whether they need to be refreshed.

JG:  Thank you very much. I'm going to go I think, with a bit of luck, onto the next slide. So I think I kind of perhaps jumped the gun a little bit on jurisdiction. So taking a step back, what does this mean in terms of jurisdiction clauses, and perhaps you might get 30 seconds even beforehand just to kind of explain the concept of a jurisdiction clause to people like me that wanted an explanation on impeachment. They might want an explanation on exactly what a jurisdiction clause is.

DC:  Okay. A jurisdiction clause basically is a clause which indicates that the parties agree that the courts of a particular jurisdiction will have jurisdiction over determining disputes under that contract and there are broadly three types.

There's firstly an exclusive jurisdiction clause which basically the parties agree that the courts of a particular state, and most particularly for example we said the courts of England are not being sort of, you know, specific, but the courts of England shall have exclusive jurisdiction to determine disputes which normally means it ousts any other alternative possibilities of suing other states.

Non-exclusive means that the parties agree that a particular state shall have jurisdiction but that does not preclude other states, not necessarily member states, having jurisdiction over disputes if they can do so under other more general laws, for example often a court can have jurisdiction over a dispute if the defendant is domiciled in that particular state.

And those are the two main ones. There's another little tweaky one called an asymmetric jurisdiction clause which is a combination of an exclusive jurisdiction clause for one party and an ability to be more flexible and non-exclusive for the other. So those are the three types.

JG:  Thank you very much.

DC:  Now, going onto sort of your question, what does this mean for jurisdiction clauses? I mean on the slide, I think the fact is we did not get an agreement on jurisdiction and enforcement as part of the TCA deal at least in relation to civil and commercial matters. So what that means is that the existing provisions under something called the EU Recast Brussels Regulation or the RBR will only continue to apply to legal proceedings started before the end of the implementation period, so that's before 31 December, and in addition, recognition and enforcement of judgments that that Brussels Regulation will only continue to apply to judgments in proceedings that will have begun before 31 December. So after 31 December things are going to change, but if the proceedings started before then they're covered by the old EU legislation which was pretty comprehensive.

And then we might go to the next slide.

JG:  Yep, yep, I'm just trying to get my clicker to work, it's not quite straightforward, you know, I have to hit an arrow and if I miss the arrow it doesn't click, for those interested in how it works.

Okay 1 January 2021, what changes and what do we need to look for?

DC:  Well unfortunately things are going to get a lot more complicated. So the main reason is that from the UK's perspective, so if you are choosing English courts, that Recast Brussels Regulation is no longer going to apply to proceedings that have started after 31 December. So we then have to look at what the alternatives are, and firstly I have already kind of said there's nothing in the TCA in relation to replacing the Brussels Recast Reg and I don't think there's much of a prospect of any EU deal on that very soon.

So other than that, and this is in sort of a decreasing order of preference if that makes sense, so the first is the best and working our way down, one alternative would be for the UK to become party to something called the 2007 Lugano Convention on jurisdiction and recognition and enforcement of judgments in civil and commercial matters, that's a mouthful. The Lugano Convention is a bit like the Brussels Reg but it currently applies between the old EFTA countries like Switzerland and the EU on the other hand. So it broadly follows the same principles of the Brussels Regulation, but an old version of it, and it's not yet been updated to incorporate a number of the advantages of this Recast Brussels Regulation or the RBR.

The big advantage of Lugano over something called the Hague Convention, which I am going to come onto, is that it applies to all of those different types of jurisdiction clauses that I mentioned, not just exclusive jurisdictional clauses, but non-exclusive and asymmetric. It's also more comprehensive than Hague and it's pretty well tried and tested because it's been tested in relation to, for example, litigation between EU member states, individuals and companies and those based in places like Switzerland.

Now the UK has tried to sign up to Lugano. It did try to do that early in 2020 but that requires the unanimous agreement of all of the contracting parties. While Norway, Iceland and Switzerland have all indicated their support for the UK joining, it does require the consent of the all of the parties and that includes the EU and the EU has not yet agreed to us joining Lugano.

So currently we've got no RBR and we aren't able to join Lugano until the EU says we can. So although Lugano is good we haven't got the benefits of it. So the next option is this thing called the Hague Convention on Choice of Court 2005 and there's a bit better news here because we can join that and we have joined that without having got the EU to agree to it. They don’t have a sort of veto right if you like.

Now we were party to this Hague Convention through our membership of the EU since October 2015 but we only became a member in our own right on 1 January via a kind of a long-winded English Act that signed us up to it. Now Hague is good but it does have some limitations. It only applies, meaning the English courts have jurisdiction if there's an agreement, if you've got an exclusive jurisdiction clause. It does not apply to non-exclusive jurisdiction clauses. So that's why I mention what you might want to revisit whether you've an exclusive or non-exclusive clause. And as I said an exclusive clause indicates that, so the English courts, have exclusive jurisdiction to resolve disputes and effectively ousts any other court jurisdiction.

One other small advantage in Hague is it provides that if a choice of court agreement says that the courts of one contracting state has jurisdiction, that's deemed to be exclusive unless the words say otherwise. So it's kind of an assumption.

There's also however quite a complicated timing issue with Hague because it only applies to exclusive choice of court agreements or clauses which were entered into after Hague became law in the state of the chosen courts, so for English courts that would be when Hague became law in the UK. Now the UK says Hague became law in the UK when we joined up as a member of the EU on 1 October 2015. But that's us just saying what we think the law is. In the EU, and in individual member states, that question is still open to interpretation and the EU Commission rather unhelpfully issued a statement last year saying that they don't think that the UK signed up to Hague in its own right until 1 January. So that means that the Hague can only apply to exclusive jurisdiction clauses entered into after 1 January if you take the EU Commission's word for it. That is not binding. The irony here is that ultimately the question probably would end up in the European Court which is the one court we decided we weren't going to be going to anytime soon.

So lastly if you can't benefit from Hague, say for example, you know, you have a non-exclusive clause or there are some things that are excluded from Hague, and in particular it doesn't cover business to consumer matters or claims and tort, then you would be stuck with arguing in the local courts that the English court has jurisdiction if somebody tries to sort of get the jump on you by starting proceedings in France, Germany, Italy etc. So it's pretty complicated I'm afraid.

So next slide, recognition. Have you got any questions on this one, Jake?

JG:  Well yeah, I'm just to catch [audio cut] question come in about BRRD, I'll try and get to it, thanks for that whoever has chucked me under the bus on that one. Ridiculous, that's the kind of questions you pay for advice, whoever has written that one in. I know I could help them. How does all of this impact cross-border recognition of English judgments then?

DC:  Short answer is that recognition and enforcement of judgments is likely to kind of stand or fall on those jurisdiction provisions I just mentioned. So we haven't signed up to Lugano, so that hasn't happened. So the key point will be if you can apply the Hague Convention, which I keep on banging on about, in relation to your jurisdiction clause. So you've got an exclusive jurisdiction clause and it's in an agreement which was either entered into on or after 1 January or, if the UK is right on this question, October 2015 then sort of the Hague Convention provides that the relevant EU court must recognise and enforce an English judgment in those circumstances. So that should be straightforward. If, however, the Hague doesn't apply, for the reasons I've explained, so it's a non-exclusive clause, then if you want to take an English judgment over to France, Italy, Spain etc, and enforce it, that's going to be governed by the national rules of that particular state where you're seeking enforcement, so you'll be dependent upon the French court or Italian court etc recognising your judgment. That's not as bad as it sounds because most of the time they will do that but the main difficulty is it could increase delay, there are cost implications and, depending on where you're going with your judgment, there is some uncertainty. So it's not a perfect world.

JG:  Okay. We are going to round off with a couple of points but, I suppose, what … this is complicated, so I suppose the easiest question I'm going to ask, but it's not easy to answer, is, what's our advice on what people should be thinking about? What's your checklist, I suppose? Well, you've actually given a checklist, David, so thanks for that. So can you just talk through the checklist and then I think we'll talk a little bit about service, and then I'm am going to humour whoever has asked all the questions on Hague as well. But, anyway, checklist and then Hague and then service, then employment I think.

DC:  Yeah. I mean I think … you know, again the answer depends a bit on which route you should go, but if you really want certainty about enforcement and you want to keep your dispute in the English courts, I think that going forward, you're probably better off putting in an exclusive English jurisdiction clause in your agreements because that gives you Hague protection and the ability to enforce your judgment in the EU states. If, however, your kind of incentive is to be able to sue and recover monies in different jurisdictions, not just in the EU, but elsewhere, you might want the flexibility of a non-exclusive clause which means you can start your proceedings in, for example, the domicile of where the person that you want to sue is. And that, sort of, you know, kind of is the trade-off.

I've mentioned asymmetric clauses, that they are, kind of, the hybrid, like [alliance] standard, they may not benefit from Hague. And the final alternative is possibly going down the route of an arbitration clause which, again, it does not really get affected by Brexit and is subject to different rules altogether about enforcement. But I think, overall, I would have thought that maybe an exclusive English jurisdiction clause is the way to go, going forward. But watch out on that timing point.

JG:  Okay. Now, you said the word "asymmetric" and "Hague" earlier, and when you say asymmetric, I think of best execution. So I am going to read the question out that I have been asked, and apologies if you already covered it, but just, can you remind people, does Hague cover asymmetric jurisdiction clauses?

DC:  I don't know if Lindsey is on the line here, but my understanding is that it would not fall under Hague because it's non-exclusive, as to part of it. I do not know whether Lindsey's still on the line, but is that our current thinking?

LD:  Hi David. Yes, the Hague Convention itself refers to asymmetric clauses and says, in the explanatory report, they are not intended to be covered. And we had a Court of Appeal case just before Christmas, I think, in that misty area of December that I had forgotten about, which said it was not exactly on the point. So, I suppose, we call it, in litigator language, an obiter decision, it was not the main reasoning, but the Court of Appeal's suggestion was, similarly, that because of what the Hague Convention itself says, asymmetric clauses do not fall within the protection of the Hague Convention.

DC:  Yeah. And asymmetric clauses also have some other issues in that some jurisdictions don't regard them as being sort of … that there is certain issues about them in France, so you're probably better off … I mean asymmetric clauses are usually entered into where one party has greater bargaining power over the other, and they give themselves the ability to sue in their own state but also flexibility to go elsewhere, whereas the weaker bargaining party tends to only have the ability to sue in the exclusive jurisdiction court chosen by the stronger party, which would usually be their own … the stronger party's jurisdiction. And that's pretty complicated so I am not going to get too much into that.

JG:  Well, I going to ask you another complicated question, you might want Lindsey on standby as well, and then, Ross, there is a question for you. We will do all of employment. I'm going to whiz through, at best, at the end because we've got our regulatory breakfast next week. So, don't worry, we will get everyone in and done by 9.30. Sorry, this is really difficult, we've got so many questions coming in. Okay. It is definitely free advice territory. So, if you have been trading on the … a master agreement, I suppose a GMRA's, something like that, pre-Jan, as an exclusive jurisdiction clause. So pre-Jan, we're trading under that agreement, assume it has not changed, would disputes, arising under a contract entered into prior to '21, get the benefit of Hague, or just those entered into under the MA post-2020? So you have got a trade on the 30th, and then a trade on 3 Jan, does the 3 Jan one get the benefit or … because that is what the contract says, I suppose? Do we have a clear view on that?

DC:  That's complicated. But the first point is that, depending on which master agreement or whatever you're using, it depends on when the agreement is deemed to be made, whether it is made when the individual transactions, under the umbrella trade, are deemed as separate and, sort of, severable contracts, and then they would be deemed to be entered into on the date of the individual trade, or whether they are deemed to be entered into by reference to the date of the master agreement, so if that was before. So that is … I am not saying that there is an answer there, I am saying that that's an issue.

JG:  Yeah.

DC:  The second point to mention is that there were some questions as to whether things like the 2002, is the master agreement, is or isn't non-exclusive, and I have a view on that but I'm not going to give it over the phone. I think there's some court authority that suggests that the 2002 is non-exclusive but, you know, I'm not … this is about … it's not definitive, and that's why one always needs to get advice in relation to this. So, the answer to that is that if you're dealing with GMRA, ISDA master agreements, etc., you need to get specific advice and we can help you with that but I don't really want to stick my neck out on this one, on this call.

JG:  No. That is absolutely fair. I want to talk a little bit about service. And I think, just explaining service, if you could explain what the idea is behind service and then what our advice is over the … I know we're going to do this one slightly quicker, for 90 seconds or two minutes, because I want to give employment and immigration a good 15-minute chunk. Is that alright, David?

DC:  Yes, sure. Yeah, very quickly, there was something that applied which was called the EU Service Regulation that made it very easy to serve court documents in relation to proceedings started here, for example, on people in other member states, if the defendants were there. This EU Service Regulation has fallen away, for these purposes, as between the UK and EU and therefore you may have to fall back on now what's called the Hague Service Convention, but that follows the same rules as the Hague Convention, so you need an exclusive jurisdiction clause etc. If you don't have that, then you may now need to seek permission to serve out of the jurisdiction. But the big point here is, make sure, if you're signing off an agreement, get a process agent in the UK or an address for service in the UK, so you don't have to then end up trying to send documents in relation to your proceedings across border. So, the very short answer, get a process agent or address for service, from your client in England, if possible [talking together].

JG:  No problem. I suppose this is an opportune time to say we are going to be doing some webinars on similar topics over the next couple of weeks, with a European and rest of the world field, i.e. how does Brexit impact the rest of the world? Please tell, therefore, your New York, Eurasian offices etc., and we will come up and we will look at these issues again. Just pausing for 30 seconds before I get over to employment and immigration, a very direct question to Ross. Ross, is there a simple summary anywhere of how the rules of origin apply to UK goods across sectors? Is there a good document that people can look at, or is it complicated? And I think that is actually coming in … that question looks like it is coming in from France, so hello to France.

RD:  Well, the simple answer is, no, there is no easy document. Because the way in which it's been done, and it's a little unfortunate, but I suppose we could have thought it was going to happen this way, is that each of the tariff lines, of which there are hundreds of pages, it's a great cure for insomnia if you ever want to read it, each of those separate tariff lines has potentially a different rule of origin next to it. They break down, effectively, into two types, so change of tariff heading, which is a complicated issue I can come back to, or the amount of value you add in your territory in the UK or the European Union.

That doesn't sound so bad, but unfortunately the value that has to be added in, either the European Union or the UK, is 50 per cent, which is really quite high, given modern day supply chains. So you actually need … you first of all need to look at the products you are talking about. So you go there, you look at your line item, and then you have to start applying one of these two relatively tricky tests. So the simple answer is, there is no easy way of telling whether your products meet the test. Obviously the tests themselves are easily explained, but applying it to your products, and particularly to your supply chain, is actually going to be very tricky. Sorry about that.

JG:  No, it sounds good for lawyers. Crowley and Liz, we are going to go … and in many ways, Crowley and Liz, this is almost a taster session because I think you are doing a full one-hour whack on employment and immigration as well, maybe with a bit of data thrown in just besides, over the next week or two as well. But, Crowley, Liz, welcome and over to you guys on … I think we are starting with immigration, from memory. yeah There we go.

LP:  Thanks, Jake. I am conscious of time so … and, as you said, this is more of a taster really. I'd like to really just chat about the core areas for consideration now that that transition period has come to an end. I mean during that transition period, the principle of free movement of people continued to apply so that EEA nationals were free to come and go in and out of the UK as they wished. But that has obviously come to an end. So that means that we've been left with various routes and options, both in respect of employing EEA nationals to work in the UK, but also then looking at your workforces and are business's workforces travelling in and out of Europe, and what those, kind of, core considerations need to be. We are, I think, so used to being able to come and go free within Europe that this has taken a little bit of time for people to get their heads around. And a lot of businesses are coming to us, at the moment, just trying to work out how best to discuss this with their workforce and also how to track and log quite a large proportion of the workforce that previously there were no sort of restrictions or impacts on.

So moving on swiftly, I think the first area that I wanted to touch on is the EU Settlement Scheme. So this is considering the position of all those EEA nationals and their direct family members who were already living and working in the UK by the end of 2020. So, quite a lot of our clients have got individuals who fall into this category and anybody, just as a quick reminder, who has been continuously resident in the UK, for five years or more, can apply using the really simple online process to get settled status. And if they're successful, that gives them the right to remain in the UK indefinitely, unless they do anything very, very naughty, and they can spend up to five years out of the UK without losing that settled status. So that's a right that's been negotiated under the Withdrawal Agreement and then was put into our legislation over 18 months ago now. So that system's been in place and people have started to apply.

For people who don't have that continuity, so they've been here for less than five years, but they arrived before 31 December 2020, they can apply for what we call pre-settled status which again gives them the right to live, work, in the UK, to enter freely, and they can spend up to two years outside of the UK without losing that status. The deadline for applying for this settled and pre-settled status is 30 June 2021. So we do actually have a bit of a grace period this year which allows individuals to continue to live, work and enter the UK without having to have that legal status, but they do need to have got this sorted sort of by the middle of the summer. And there are some exceptions to that deadline for family members abroad coming to join people.

I think the core things that we are seeing come up with clients at the moment is actually around absences, particularly with COVID, and the way that the Home Offices have decided to deal with absences. I mentioned this five-year continuity rule. You can have an absence in the UK for under six months in any 12-month rolling period without it impacting that five years' continuous residence. The difficulty is, is if you've been in and out of the country, and cumulatively it's, you know, eight months over the last year, because of COVID, if someone has got pre-settled status, their pre-settled status is only valid for five years, and by the time they get to the end of that five-year period, they will need to have that continuous residence to be able to upgrade into settled status. And we've got quite a lot of clients at the moment looking back at how long someone is, say, been working remotely from France or working remotely from Spain, and whether that's actually now going to be a significant barrier to them being able to upgrade to that settled status when their pre-settled status comes to an end. So this is a real area that we're asking clients to just, you know, open that discussion up with members of staff because it's something that really wasn't envisaged when the rules came into place and actually, somewhat unsurprisingly, the Home Office have taken quite a significant hard line when it comes to absences and they're saying, unless you were essentially so ill you couldn't travel, or you couldn't get out of your country because the airport was shut, then unfortunately it's tough luck.

So that is one of the core areas that we have been talking about on that settlement scheme and something we've been given quite a bit of advice around. The other area that we have been talking to clients about which, again, is these existing rights for nationals, so something that has, again, come out of the withdrawal agreement, is the rights of frontier workers. So these people that commute cross-border. Our Home Office left it quite late to publish the rules, they came out in the middle of December, so we're all getting to grips with what this means, but helpfully, and I think really positively, actually, for nationals who, say live in Spain or France or the Netherlands, and we've got a few clients that do commute cross-border, there is continuing rights for them to reside in their home nation. So as long as they are not residing in the UK, they can continue to commute cross-border into the UK. So, long as they go back to their home nation for once in every six-month period, then they'll be fine on that basis. And, again, they have got until 30 June 2021, this year, before they have to actually physically apply for a permit to be able to continue with that right.

And just on a side note, there are similar, not the same, but similar provisions for frontier workers, living in the UK, commuting to an EEA state. So long as this was an existing right before we ended that transition period. So as long as those arrangements were in place before 31 December, again, people should be able to continue to move freely across those borders. So there has been some positive movement on that front.

One of the other … go on, sorry Jake.

JG:  No. I've got a question. No, go on and then I'll catch my question in, do not worry.

LP:  One of the other areas then, that we're talking to clients about, is what happens for those EEA nationals that weren't here before the end of that transition period. And that pulls us into what has been called our new immigration system, a new points-based system, which is essentially just a brush-up of the existing system.

So those EEA nationals who are new to the UK from 1 January 2021 will be treated as if they are essentially coming from the States or coming from Australia. And they will need to go through the points-based system, in most instances, in order to be able to take a job in the UK. And we don't have time to really go through the details of that system but there are various routes within that system and the core consideration is that an employer needs to have a sponsor licence, so you have to have already gone through the sponsor licence application process, to be able to bring those people into the UK. So there are time considerations and there are cost considerations. I think the core, sort of, pinch points that we are seeing when we are talking to clients at the moment, about this new immigration system, is, number one, that there are obviously minimum salary thresholds that apply to these routes. Number two, that there are skills thresholds, albeit they have been reduced, but it has to be an A-level or equivalent role, and, thirdly, that there's an English language requirement. And that English language requirement, for a lot of nationals, is fine but we are so used to being able to employ somebody from France or Italy or Germany without them having to show that they've got those English language requirements. So, with COVID, at the moment, going to a test centre to take an English language test is actually taking anywhere between two to eight weeks. So there is a bit of a time lag at the moment with getting people into the UK if they are coming from Europe and the rest of the world at the moment.

There are other routes within this immigration system, so we have got the intra-company route, which already existed and is still there, which allows multinational companies to move people around the world and into the UK. But, fundamentally, it is a more cumbersome process in terms of trying to employ EEA nationals than it used to be. It is being streamlined by the Home Office but it's not as simple, essentially, and there are time and cost considerations. And, again, this is something that we are helping a lot of businesses, particularly in the financial sector, to get to grips with.

Moving on, at a pace, because I am conscious of time, the final area is travel, business travel in and out of the UK. So for those coming into the UK, EEA nationals are now going to be treated the same way as a US or a Chinese citizen would be treated when they're visiting the UK for business reasons. So, helpfully, they don't need to apply for a visa in advance, but they do need to comply with the business visitor rules. So you can only stay for up to six months per visit and there are quite limited permitted activities. So you can come to attend a meeting, sign a contract, carry out a site visit, for example, or even to install a piece of equipment if you are a foreign manufacturer. But you cannot take substantive employment, fill a UK role, and there are very strict restrictions on receiving payment from a UK entity for you doing any duties in the UK.

So those aren't new rules on the business visitor route, it just means that EEA nationals, coming into the UK now, now will have to comply with those obligations, time limits, permitted activities. And then the other way around, in terms of business travel to Europe, so for UK nationals this is something that is causing a bit of a kerfuffle, particularly with our financial [audio cut] clients. You will need to consider the fact that your UK nationals going to France, Germany, Italy etc, can travel, for limited business reasons, so business meetings, that's fine. But they can't spend more than 90 days in any 180 period in a Schengen area. So that's all of the EEA, save for Bulgaria, Croatia, Cyprus and Romania. So if you're going to be travelling for a long period of time around Europe, people are going to have to track their travel. And it's cumulative for business and leisure. So if someone goes on holiday for a long period over the summer, that will potentially have an impact on how long they'll be able to then spend for the rest of the year travelling for business reasons. So quite a lot of businesses are now requiring people to keep spreadsheets of their business and leisure travel so that they can just track to see if they are anywhere near that process. It is, again, visa free travel, which is really great. And thankfully that's been a reciprocal arrangement under these exit arrangements. That is me done, I am very conscious that we are [talking together].

JG:  No, don’t worry too much about time, people can leave without disrupting the seats and we haven't had a mass … a rundown of people leaving, so people … and, to be honest, we're running late because of all the great questions from the floor, which are greatly received. So we have got a couple of questions. But what I'm going to do, Crowley, why don’t you go through yours at a normal pace and then we'll catch up with some employment questions and we'll get done by 9.44. For which I apologise but also, look, I think we've got through as many questions as we can do, which is great stuff, and we are doing another session so we can catch back up. But, Crowley, over to you and then we will come back around with some employment and immigration questions.

CW:  Thanks Jake. I will be quick on my section because I think immigration was probably the most pertinent. But, on the future of UK employment law, I think it's true to say that a lot of employment law, in the UK now, has derived from EU law, in lots of very important areas. But it's also true to say that the UK often gold-plated a lot of the EU law. So, was even more protective than the baseline that was provided by EU law, despite comments in the media to the contrary. So actually the position is, already the landscape in the UK is quite protective of UK employees where it's based on EU law, because it has implemented it in a more protective way. So, the starting point for employment law is broadly reflective of the general position, is that EU legislation is going to be retained in its entirety. That means, as of now, of course, the status quo is going to be maintained. And … but there's a huge amount of case law that comes out of the employment arena. And here, of course, like EU law and the decisions that come from EU law, up to the end of 2020, will continue to apply. And the courts will continue to apply that. However, there is now scope, from the UK Supreme Court and Court of Appeal level, to depart in its judgment from those previous EU legislation. So you may see, over time, through case law, some divergence from the general continental EU position on employment. But equally that the courts may have an eye to future EU court decisions and may take a similar tone.

So, what do we think might happen in the future, as regards employment law. As you know, one of the main sitting points in the negotiations over the Brexit Trade and Cooperation Agreement, was the need for this level playing field between the UK and the EU. And that that's particularly important in the context of employment laws, given the EU's concern that the UK might, you know, slash employment rights. Meaning reduced costs for employers and therefore providing a, sort of, unfair, competitive advantage. So what the agreement, that we've come to, says in this area, is something about a compromise and it provides, first of all, that neither the EU nor the UK will weaken or reduce employment standards that were in place at the end of the transition period in a manner which affects trade or investment between the two parties. And if there is a weakening of those standards, then there is a recourse available. And this commitment is known as the non-regression principle. But it doesn't necessarily mean that the UK can't change employment law in the future. Amendments to retained employment laws, that do not affect trade or investment, are permitted. So … but, of course, I think employment law is a very charged political and social issue. So you can see there's going to be great tension, I think, in the future, around what areas we might choose to look to depart and whether that does create that unfair, competitive advantage in the future. It's also worth mentioning that, in the agreement, the UK is also committing to respect the rights set out in the European Convention on Human Rights. So that Human Rights Court will still be relevant where it impacts on employment law. But, broadly, and to summarise, given where we are, I don't think that there is going to be a wholesale shift or slashing of UK employment laws. One, because there is a check, within EU agreement, effectively, and sanctions if we were to create some sort of unfair competitive advantage. And secondly, a Tory government, let alone the Labour government here, have already been very public around wanting to enhance worker rights. And that is even more so now in the time of COVID. But if I were to guess what areas would be the subject of particular review and departure in the future, if we were allowed to do so, it would be the working time legislation. Because that was always hugely unpopular, as was the Agency Workers Directive, which effectively tried to give agency workers mirror rights to normal employees. And possibly in the area of TUPE transfers. But I think nothing is going to happen in the short to medium term and it's going to be very much a longer term cumulative effect, especially through departures through case law. So that is all, Jake, I had to say on UK employment law.

JG:  Thank you very much. I have got one question, it has come in a couple of times, in different forms. I must admit … I'm just going to say the words because it does not mean as much to me as it does to you guys. What about settled status, especially relevant to Ireland and frontier worker status, is there any changes on that? Again, I apologise that I am stumbling a little bit over the various situations in that question.

LD:  So Irish nationals have been, thankfully, given … essentially specialist status, because of the pre-existing arrangements we had there. So Irish nationals, despite the fact that they are technically still EU nationals, do not have to apply for a frontier worker permit, settled status, pre-settled status, in order to work, for example, in Northern Ireland or the rest of the UK.

JG:  Thank you. That's a good answer. Look, we were going to do financial services two weeks in. I promised we would do it … and I have got about 15 financial services questions. They are all going to be addressed in a Q&A on the reg breakfast, this time next Thursday, so I'll get there. I want to flag one thing. We were going to talk about reverse solicitation and I had written this slide, it is a great slide, as you can also see, probably the best slide in today's pack, I would say, because I wrote it. And as I was writing it, this came out from ESMA yesterday, their public statement on reverse solicitation. Most of you have seen it, if you haven't, read it and spit your coffee out. With the end of the UK's transitional period, some question on practices by firm's around reverse solicitation, have emerged. For example, some firms appear to try to circumvent MiFID II by including general clauses in the terms of business stating that I agree, where clients state that any transaction is executed at the exclusive initiative of the client. That is annoying and it's an ESMA view, it is a restatement of guidance. I mean, I'm not sure it is right contractually, but ESMA's position is pretty clear. It also cuts across, probably other views from other regulators, the Spanish regulator said something that I think is a bit different, to that, a few days ago as well. We're going to capture this on Thursday, next Thursday. I think, look, starting position, rules haven't changed, guidance hasn't changed and political tone is absolutely clear. So, you know, you're relying on reverse solicitation, that is a risk-based call, that is a circumstantial call, but we're going to be talking about this, unfortunately, for the next week, month and probably year or so. So, look, I know I have missed out some questions, we'll get to them next week, we'll get to the BRRD question next week as well. Thank you to Ross and to David and to Lindsey and to Liz and to Crowley and to all of you for joining. We have kept more than 80 per cent of you on, right up until 9.40, which is a great effort. Go for your walks and your exercise and your home-schooling now and we will speak to you next Thursday and please remind your, rest of the world, colleagues that we will be doing these sessions at times that might suit them in the evenings, we'll be up late with a glass of wine, doing similar, I think next Wednesday and the Wednesday after and then midday the next day for the New Yorkers etc. So let us know if we can help in any way, and, like I said, we're going to get to all of the Q&As on FS next week and there's going to be plenty more on employment, in particular, where we are doing a one hour spin-off special. So thanks again to everyone and thanks to everyone for joining and we will speak soon.

RG:  Thanks guys

DC:  Thanks a lot.

CW:  Thank you.