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Brexit: What to do now

“Keep calm and carry on” is the motto of the British. And this is also essentially how the Queen reacted to the referendum on the Brexit. If you entertain business relations with Great Britain, you should nevertheless follow a few tips. This is our summary:

1. Nobody knows how the British law will develop after the Brexit, which is why we advise against choice of law clauses in favor of British law. We also advise against agreements according to which British courts are responsible for the settlement of disputes. The recognition of German decisions in Great Britain and British decisions in Germany can no longer be taken for granted. We therefore advise that you conclude arbitration agreements with respect to British-German conflicts.

2. Whenever an authorized dealer agreement, an agency agreement or a license agreement mentions the “EU” as a territory, it must be clarified whether or not this will continue to include Great Britain after a change of member states. Agreements regulating the future allocation of further decreases in the value of the British pound or any customs among the parties after the Brexit are also advisable. Where the development of the law is to date unpredictable, such as in competition law, rights of termination or clauses providing for contractual adjustments should be considered.

3. Existing contracts should be reviewed with a view to whether the outcome of the referendum or a Brexit would have direct effects on the contract. If conflicts cannot be resolved by way of interpretation or a consensual adjustment of the contract, a judicial contractual adjustment pursuant to sec. 313 of the German Civil Code (Bürgerliches Gesetzbuch – “BGB”) may be considered. However, case law has been rather conservative in the past as it asks for a solution which may prove to be unreasonable for one of the parties. Therefore, explicit regulations are advisable, especially termination rights or clauses regarding contractual adjustments.

4. In the event of new registrations of trademarks, patents and industrial designs, property rights for Great Britain should be directly applied for. Whereas this may be achieved without significant effort for trademarks via the Madrid Trademark Agreement, the protections of industrial designs will be more difficult in future, as Great Britain is not a member of the Hague Convention of Industrial Designs. As soon as concrete developments regarding the realization of the Brexit become evident, owners of property rights should reconsider their IP strategy in Europe.

5. A Brexit could turn the UK into an insecure third country with regard to data protection. Data exchange (also intra-company) with the UK requires a certain level of protection. Companies should review in advance, whether an exchange of personal data with Great Britain can be avoided.

6. Businesses in Germany in the legal form of a Limited or a Ltd. & Co. KG with administrative seat in Germany and without headquarters in Great Britain are prone to the risk of personal liability in the event of a Brexit. In order to continue business operations in Germany, a cross-border change of legal form of the Limited or a cross-border merger into a German GmbH or UG (with limited liability) may be considered. It may also be possible to transfer the business operations of the Limited to a different (German) company, although tax considerations will probably stand in the way in most cases.

1:1. This is how we work together. You decide upon a competent partner; he/she will then remain your point of contact. > more