The Impact Of Brexit On Shipping

A much talked about topic these days is the exit of Britain from the European Union (EU). The European Union is made up of 28 member states and on June 23rd 2016, the people of Britain voted for the exit of Britain (also referred as “BREXIT”) from the European Union, after being with EU for almost 43 years.Since the finality of the process of exiting the EU, will take about 2 year; this is the perfect time for individuals and companies engaged in the shipping industry to have a better understanding of the “Impact of BREXIT”.

A number of major hubs of the shipping industry lie within the European Union, namely Rotterdam, Hamburg, Antwerp, and Piraeus; the world’s largest Container / Passenger Ports. As aforesaid the European Union consisted of 43 member states and these member states were exempted from taxes or duty while trading with the member states that are within the European Economic Area.. However, with the exit of Britain from the European Union, it is not clear, whether these trade exemptions would still be applicable with regard to the UK.

Further, the Contracts / Agreements have already been entered into by the Companies in the UK, with Companies in the European Union may now have to be amended. . For example, Shipping Contracts, that allow for trading within certain geographical areas in the EU, should now specifically define, if this area in the EU includes, the UK or not. Since the Contracts/Agreements are binding on the parties to it, there is a need to be vigilant while amending these Contracts/Agreements so as to avoid any confusion or ambiguity that would arise in the future.

In the past, when disputes arose, and the concerned parties approached the Courts, they were prohibited from conducting parallel proceedings in the Courts of more than one European Union member state. This rule was applicable to proceedings that were initiated on the same issue concerning the dispute. This is based on the legal principle of “Res Sub-judice”, which in Latin means ‘under judgment’. It denotes that a matter or case is being considered by court or judge; when two or more cases are filed between the same parties on the same subject matter, the competent court has power to stay proceeding. However, with the exit of Britain from the European Union, it is not clear, whether Britain would elect to apply the Res Sub-judice rule to the parties, with regard to disputes both within and outside the European Union In order to avoid any such ambiguity in the future, it is advisable to have a clear mention of the Jurisdiction Clause, in all legal documents.

Conclusion:

As stated before, the process of Britain’s exit, is currently only on paper and would take a minimum of two years, to come into effect, hence these two years can be prudently utilised to understand the two “W’s” – “WHO” & “WHAT” shall be affected with the exit of Britain? We can further apprise ourselves of the legal implications and take possible and necessary steps to overcome the impact.