With Brexit, the United Kingdom (“UK”) becomes a third country to the European Union of which France is a part, and leaves its judicial area.
Among the recurring questions, those related to the future of contracts concluded with companies located in the UK and the new rules applicable arise.
While the principle is that the legal validity of current contracts is not challenged, it is however and as recommended by the French government (www.brexit.gouv.fr), preferable to carry out a full audit of current contracts between you and a customer or supplier based in the UK.
Content of the contract
A distinction must be made according to the legal nature of the contracts: contract for the sale of goods, contract for the provision of services, work rental contract, commercial agent contract, etc. Depending on the nature of the contract, European directives which have been transposed into English law and which remain (as they are incorporated into English law) and European regulations which are no longer directly applicable by definition and the new British regulations if they exist (see below for example on the sale of goods and the new marking) should be checked.
Moreover, each clause will have to be audited as the study of the contract is much more complex than it appears.
More generally, the parties to a commercial contract will have to be attentive to the clauses related to the attribution of jurisdiction but above all to the clause on the choice of law. Any clause referring to European law will indeed have to be modified and to specify the applicable law (UK law or that of an EU Member State).
Brexit also triggers an increase of the customs duties and some companies should anticipate in their contract a price adjustment clause.
Those companies must also imperatively question the INCOTERM used. A poorly defined or non-negotiated Incoterm can have irreversible consequences on contractual relations and lead to an extremely substantial financial burden.
Distribution contract after Brexit – Movement of goods – CE marking
For French products exported to the United Kingdom :
For any company exporting products to the United Kingdom, the products will have to comply with the applicable UK legislation.
Since January 1, 2021, the United Kingdom has a new UKCA marking (the CE marking will cease to be recognised in the United Kingdom from January 1, 2022).
This new marking must be used from January 1, 2021 if the product meets the following conditions:
Distributors bringing EU products into the UK market are subject to new obligations:
For products from the United Kingdom
Products from the UK imported into the EU that become third party products can only be placed on the market in France if they comply with the applicable European safety and compliance rules.
Any company manufacturing its products in the UK or importing products from the UK should therefore pay particular attention.
British manufacturers have stopped using the CE marking since December 31, 2020.
Under these conditions, if a company imports products into the EU from the UK, these products will still have to comply with EU legislation in order to be placed on the European market.
In particular, the importer will have to:
Fate of contracts that can no longer be performed as a result of Brexit
As stated in the preamble, Brexit does not invalidate the contract. However, let imagine the case of a contract whose main obligation is radically changed or whose performance becomes impossible as a result of Brexit.
In such cases, it will be possible (depending on the applicable law chosen by the parties) to invoke the provisions relating to “force majeure” or unforeseen circumstances codified in Articles 1218 and 1195 of the Civil Code (if French law applies), or the provisions relating to the theory of frustration (if English law applies).
Consequences on the enforcement of court decisions after BREXIT
For actions brought before January 1, 2021: the Brussels I and Brussels II Regulations (providing that judgments given in civil and commercial matters by the courts of an EU Member State are automatically recognised and enforceable in other EU Member States) remain applicable.
For decisions rendered by English courts to be enforced in France:
For actions brought on or after January 1, 2021, the Hague Convention of June 30, 2005, on Choice of Court Agreements will apply. The United Kingdom may ratify the Lugano Convention on Jurisdiction, Recognition and Enforcement of Judgments in Civil and Commercial Matters, already ratified by the EU, Switzerland, Norway, Iceland.
However, if this is not the case, it will be the ordinary law of exequatur that will apply, after the French court has verified that judgments given by UK courts have been properly given and that they are in accordance with international public policy.
For decisions given by French courts to be enforced in England:
In the absence of international or bilateral conventions, recognition in the United Kingdom of a French decision will be subject to English common law and therefore to the Foreign Judgments (Reciprocal Enforcement) Act 1933.
It will then be necessary to ask for an English court to register the decision. For this purpose, a number of documents will have to be provided, including an authentic copy of the decision, a certified English translation of the decision and a witness statement. The registration document, which sets a time limit within which the other party may challenge the registration of the judgment, will then have to be served on the other party. If no objection is raised within the time limit, the foreign decision may be enforced and will be enforceable.
This article has been prepared for informational purposes only. It is not a substitute for legal advice addressed to particular circumstances. You should not take or refrain from taking any legal action based upon the information contained herein without first seeking professional, individualized counsel based upon your own circumstances. The hiring of a lawyer is an important decision that should not be based solely upon advertisements.
Information by ALARIS AVOCATS, English speaking lawyers in France (Paris) specialized in French labor law, especially any kinds of Social Plans, dismissal procedures and labor contract clauses.