Brexit challenges: what do you need to know when traveling, trading and having legal issues?
March marks the end of the first quarter after Brexit materializing. Although many businesses resolved various legal or regulatory issues before 1st January, new challenges inevitably keep rising when Brexit is a reality.
What has changed in law? This year, EU law no longer applies to the UK, and the Trade and Cooperation Agreement (TCA) governs relations between the parties reached after lengthy negotiations. Due to the broad scope of EU law, Brexit’s impact has been felt by companies across various sectors – having a business link with the UK means challenges in adapting to the changed regulations and new rules set out in the TCA and domestic law of the UK and EU member states.
We invite you to look at the changes that have taken place in consumer protection, movement of workers, trademark protection, and dispute resolution.
As of 1st January 2021 consumer protection forms two different legal systems in the UK and EU. Yet the UK consumer protection system is at the moment fully aligned with the EU consumer protection legislation. Therefore businesses can rest assured that they will meet the UK consumer protection requirements when offering goods or services to the UK market.
However, two aspects need to be borne in mind. Firstly, UK consumers are no longer legally considered EU consumers, even though they are currently protected in the same way as EU consumers. Secondly, it should not be forgotten that over time UK consumer protection requirements are likely to diverge, so it is advisable to remain vigilant.
Finally, looking from a perspective of a Lithuanian consumer, a Lithuanian consumer who will be purchasing goods or services from the UK from now on will be protected in the same way as UK (and not EU) consumer (with certain exceptions – if e. g. a consumer as a passenger buys a flight from the UK to the EU with an EU-based carrier EU passenger rights will be applicable. Yet if a flight from the UK to the EU is operated by UK-based carrier, EU passenger protection rights will no longer apply (but UK passenger rights will apply)).
Movement of workers
In general, the situation of EU citizens who have moved to the UK or UK citizens who have arrived in Lithuania until 31 December 2020 does not change – such persons can continue to live and work in the UK or Lithuania without additional restrictions. However, people who left to work in the UK before 31 December 2020 must apply for a Settlement Scheme by 30 June this year. This status will prove the entitlement to work in the UK under the conditions applicable until the end of the transition period. Since the beginning of this year, a system of points has been applied for employment in the UK, i.e. it is assessed whether the person seeking employment in the UK meets the UK’s immigration requirements for the worker (for example, a qualified worker visa, a global talent visa or other visas will be required).
As for the work of UK citizens in Lithuania, UK citizens who come to Lithuania after 1 January of this year and want to work there will have to obtain a residence permit, but they will not be subject to a work permit (unlike other third-country nationals). When posting workers from a UK company to Lithuania, it is allowed to work in Lithuania during the visa-free period (90 days in 180 days), and if you want to work longer, you will need to apply for a temporary residence permit (but a work permit will not be required).
One of the most significant changes that the representatives of specific professions will face is that as of January 1 of this year, the recognition of professional qualifications will no longer exist. Thus, a person (e.g., a doctor, nurse, architect, etc.) will have to additionally seek recognition of his or her professional qualifications to find employment in the UK or Lithuania.
For business travel to and from the UK, traveling visa-free and without work, a permit is allowed for 90 days over 180 days for the following purposes: attending meetings, market research, participation in seminars and fairs, purchase of goods and services, accepting orders, etc. However, before traveling, it must be checked whether travel’s specific purpose allows for simplified traveling. For example, if the purpose of the journey involves the direct offering of goods or services, such a trip would require a work visa.
Following the end of the transition period for the United Kingdom’s withdrawal from the European Union on 1 January 2021, European Union trademarks will no longer enjoy the United Kingdom’s trademark protection. For all valid EU trademarks, the UK Intellectual Property Office will grant UK trademark equivalents, which will have their legal status and be registered in the UK trademark register but will retain the relevant EU trademark application filing dates. There should be no additional registration fees for creating equivalent EU trademarks in the UK.
EU trademarks filed but not registered before 1 January 2021 will also be able to be registered in the UK with the original filing date of the EU trademark until 30 September 2021. These trademarks are registered in the UK under the usual registration procedure.
Before Brexit and during the transitional period cross-border disputes with UK-EU element were heard in accordance with EU legal instruments establishing the uniform rules on applicable law, jurisdiction, recognition and enforcement of judgements etc. Starting from 1 January, these rules no longer apply and the UK-EU dispute resolution is governed by the international conventions, domestic rules and – to a certain extent – relevant provisions of the Withdrawal Agreement.
Due to the specific nature of cross-border dispute resolution, the consequences of the regulatory changes have not yet become apparent to a large extent. Nevertheless, as time passes, the new UK-EU dispute resolution regime will undoubtedly affect companies with business links with the UK.
There have been isolated cases when the claimants who wanted to bring an action before UK or EU member state’s court after 1 January encountered new jurisdiction rules that are not always familiar and clear. Until 1 January, international jurisdiction was regulated by the Brussels I Recast regulation. This regulation was uniformly applicable all across the EU, including in the UK. The uniform rules provided in the Brussels I Recast and a large body of case-law on the matter facilitated the dispute resolution. Since the beginning this year, the establishment of international jurisdiction under national rules has raised questions about their specific nature and the content of the rules themselves.
Another notable trend is the increase in questions concerning the contractual in favour of applicable English law and English courts’ jurisdiction. While Brussels I Recast provides clear rules on choice-of-court agreements, this regulation is no longer applicable in the UK. Instead, the choice-of-court agreements are now regulated by Hague Convention of 2005 on Choice of Court Agreements. However, the scope of application of this Convention is more limited than that of the Brussels I Recast. In addition, the UK and the EU disagree as to whether the convention should be applied to agreements made after 1 October 2015 (the UK’s position) or after 1 January 2021 (the EU’s position). As for choice-of-law agreements, the rules essentially remain unchanged – the UK has retained the provisions of EU regulations in its domestic law. Nevertheless, when agreeing on the application of English law, the parties should not forget a wider context, for example, that a choice-of-law agreement in favour of English law might be interpreted as a ground for English courts to assume jurisdiction in accordance with Common law rules.
Finally, more questions are being raised about other Common law rules, as they significantly differ from those provided in EU regulations and in the domestic law of EU member states. For example, forum non- doctrine allows an English court to dismiss a civil action even though it has jurisdiction over the case. The parties and anti-suit injunctions allow an English court to prevent a party to the English proceedings from commencing or proceeding in another jurisdiction or forum.