Severance / Regulatory Intervention
- How would your severance or regulatory intervention (or "change in law") clause operate in the event of Brexit?
- Are there any obligations that are currently prohibited under EU law that you would wish to impose following Brexit?
- Are there any EU laws that you would wish to retain by virtue of contractual agreement, even if they no longer apply in the UK post-Brexit?
Specific Points to consider
- Severance or regulatory intervention clauses typically operate so as to strike out a particular clause from a contract which would otherwise be considered to be illegal, invalid or unenforceable as a result of a change in law or adverse finding of a court or other regulatory/administrative body of competent jurisdiction.
- One would not typically be able to rely on a regulatory intervention clause in order to impose (or re-impose) an obligation that is not permitted under EU law, but may now become permissible following Brexit. For example, restrictions on 'passive' sales between EU Member States are generally prohibited under EU law, but could potentially become permissible in certain circumstances as between the UK and the remaining EU Member States post-Brexit. However, specific wording would be required to impose such a restriction post-Brexit.
- Are there some EU laws that the parties would wish to retain by virtue of contractual agreement between them, even if they no longer apply in the UK post-Brexit (or there is a risk they may not apply post-Brexit)? If so, this may need to be agreed expressly in the contract. An example of this could be that a supplier's product will continue to comply with European safety laws, even if those laws ceased to apply within the UK.