Brexit and Arbitration. Lucia Raimanova 24 February 2017, Vienna

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1 Brexit and Arbitration Lucia Raimanova 24 February 2017, Vienna Allen & Overy 2017

2 (Br)exit Allen & Overy

3 Agenda 1. Where are we now? 2. What kind of exit? 3. Impact on commercial arbitration 4. Impact on investment arbitration Allen & Overy

4 Where are we now? Summary of the current state of Brexit 1 The Supreme Court has confirmed that the UK Government cannot trigger the formal process of leaving the EU without an Act of Parliament 2 Article 50(1) of the TEU provides that [a]ny Member State may decide to withdraw from the Union in accordance with its own constitutional requirements 3 House of Commons already passed the EU (Notification of Withdrawal) Bill; House of Lords debating 4 Intention of the UK Government to serve the Article 50 notice by the end of March 2017 Allen & Overy

5 What kind of exit? Salient points of the Government s White Paper 1 The Great Repeal Bill 2 Dispute resolution between the UK and the EU 3 Free trade agreement and a new customs agreement between the UK and the EU 4 New trade agreements with other countries Allen & Overy

6 Commercial arbitration (1) Non-EU parties Brexit unlikely to impact London as the seat of the arbitration for non-eu parties Devaluation of sterling may render arbitration in London more attractive as cost reduces Factors that may have a dampening effect on London-seated arbitration uncertainty caused by Brexit broader threat to English law increased competition in dispute resolution services potentially diminished prominence of London as a financial centre to the extent arbitration used Allen & Overy

7 Commercial arbitration (2) EU parties EU parties only difference in perception by EU parties likely to impact choice of seat among EU parties to the extent arbitration used and London seat chosen practicalities such as restrictions on free movement of people and visa requirements potential boost for regional arbitration centres EU party / non EU party (including the UK post Brexit) choice of seat likely to depend on the parties bargaining power more common to provide for a different law to govern the arbitration agreement and the rest of the agreement in sophisticated transactions? arbitration between EU and UK parties potentially more attractive if Brussels regime not adequately replaced (cf NYC unaffected) Allen & Overy

8 Investment treaty arbitration (1) Intra-EU investment agreements Current situation around 200 intra-eu BITs (UK has 12 plus the ECT) 18 out of 67 known cases involving a UK investor against another EU MS clash between the EC/certain MS and investment treaty tribunals CJEU to rule on the compatibility of arbitration under intra-eu BITs with EU law special status of the Energy Charter Treaty? Post-Brexit UK intra-eu BITs to become extra-eu BITs the White Paper suggests that UK intra-eu BITs may be subsumed in a new UK/EU free trade agreement potential increase in structuring investments to the EU through the UK Allen & Overy

9 Investment treaty arbitration (2) External investment or free trade agreements The White Paper envisages a new FTA with the EU EU IIAs and FTAs (e.g. EU-Korea FTA etc.) Affected by Brexit UK to negotiate replacement FTAs/IIAs with certain of these countries after Brexit UK s bargaining power UK subsisting extra-eu IIAs over 90 IIAs with third States Brexit no effect may be renegotiated or subsumed in new IIAs/FTAs Allen & Overy

10 Questions or comments? These are presentation slides only. The information within these slides does not constitute definitive advice and should not be used as the basis for giving definitive advice without checking the primary sources. Allen & Overy means Allen & Overy LLP and/or its affiliated undertakings. The term partner is used to refer to a member of Allen & Overy LLP or an employee or consultant with equivalent standing and qualifications or an individual with equivalent status in one of Allen & Overy LLP s affiliated undertakings. Allen & Overy BT: