Libor replacements might not be valid in EU, Commission official says MLex

  • Financial indexes intended to replace the London Interbank Offered Rate, or Libor, might end up unauthorized for use in the EU, a European Commission official has said, as lawmakers consider whether to put controversial rules controlling foreign benchmarks on hold. 
  • The commission is pushing for emergency powers to switch over trillions in loan and mortgage contracts that reference the soon-to-be-defunct rate.
  • The UK’s Financial Conduct Authority has warned market players their financial contracts must include provision for a fallback option to replace any mention of Libor, which is due to be phased out by end-2021 after a number of manipulation scandals.
  • Central bank-led working groups are working to define replacement measures of interbank lending to which loan contracts could be pegged after then — ideally based on real-life transactions rather than surveys of panels of banks. 
  • The prospect of the UK benchmark rules being deemed equivalent to the EU’s appear to be dimming as Brexit talks become increasingly fractious. That would mean the administrators of the sterling Libor successor, Sonia, would need to register it with the bloc’s securities market watchdog, or be endorsed by an EU entity, to be usable by EU financial institutions.

Northern Irish companies left defenseless to dumping post-Brexit, experts warn – MLex

  • Northern Irish companies could face competition from unfairly priced imports after Brexit with nobody to turn to for help, legal experts warned British lawmakers today.
  • As of Jan. 1, Northern Ireland will have one foot in each of the EU’s and UK’s customs regimes, leaving it in a “particularly fiddly” situation when it comes to trade defense, which “needs to be negotiated,” Lorand Bartels of law firm Linklaters told Parliament’s International Trade Committee today.
  • “The way that looks to me is the EU trade remedies regime will continue to apply in Northern Ireland as long as the protocol does,” James Kane from the Institute for Government told the hearing, referring to the Withdrawal Agreement’s specific arrangements for Northern Ireland.
  • This could spell trouble for Northern Irish companies seeking protection from unfairly priced or subsidized imports. “You could have a situation where … Northern Irish companies can’t complain to the European Commission because they’re not in the Union industry,” Kane said.
  • “They would be able to complain to the [UK] trade remedies authority, but the trade remedies authority wouldn’t be able to recommend an antidumping duty that would actually apply to them because the customs duties that apply to Northern Ireland would be those provided by the EU.”
  • This could also have an impact on considerations that UK investigators have to make for trade-defense cases. For example, for UK companies to bring a complaint to the trade remedies authority it must first represent a certain market share.

UK internal market laws to be used only if talks turn sour, says justice minister – MLex

  • The UK government’s draft laws that violate parts of the Brexit divorce agreement, including over customs arrangements and state aid governance, would only be used if “bad faith” was shown by EU negotiators, justice minister Robert Buckland told UK lawmakers today.
  • Buckland also told Parliament’s Constitution Committee that the UK government needed the safeguard of the Internal Market Bill as these are “extraordinary times” calling for “extraordinary measures.”
  • Buckland admitted the legislation was planned and agreed knowing that it could permit a breach of international law.
  • “Whilst it is right to say that the coming into force of these particular provisions create a conflict […] the reasons for that are all important,” he said, adding that they would only be implemented if “bad faith” was shown by EU negotiators, leading to a “negative effect” on the UK’s internal market.
  • The UK government has argued that the bill is a necessary safeguard should trade talks fail. It has argued that the UK’s four nations must operate with regulatory alignment for trade across the UK’s internal market that will be, from the start of next year, no longer subject to the EU rulebook.

Internal market bill fuels anger within UK legal profession – FT

  • The internal market bill, and the stance on it taken by Mr Buckland and Suella Braverman, the attorney-general, are fuelling growing anger within the legal profession. Many lawyers see the legislation as a direct challenge to the rule of law and a threat to Britain’s reputation, and are horrified that the senior government legal figures are supporting it.
  • Two former presidents of the Supreme Court have taken the unusual step of voicing their concerns as part of what has become a very vociferous campaign by the legal profession, which sees itself as under attack from a government that has accused judges and lawyers of becoming too activist.
  • Speaking at a webinar hosted by the International Bar Association, Lord Neuberger suggested that part of the bill would introduce regulations that it would appear the courts would not be entitled to review. He said that once the right to challenge the government in court was removed: “you are in a dictatorship” and “it is the beginning, it can be feared, of going down a very slippery slope”.
  • Mr Sands said the new Brexit legislation would make it more difficult for the UK to criticise other countries for human rights abuses, adding that it could erode the trust needed to negotiate global trade treaties and, more broadly, “damages the reputation of the British legal community”.

European businesses urge UK trade deal to avoid ‘brutal split’ – FT

  • Three leading European business organisations urged EU leaders to strive for a trade deal with the UK rather than permitting a “brutal split” between the economies as talks remain stalled on a number of fronts, including the politically divisive topic of fishing rights. 
  • In a joint statement issued on the eve of a crucial EU summit on Brexit, German, Italian and French business associations on Wednesday warned that a no-deal outcome was a real threat that would trigger “cascading consequences” including tariffs, delays and blockages.
  • The presidents of Germany’s BDI, Italy’s Confindustria, and France’s Medef called on the bloc’s leaders to “explore all possible options to reach a solution which ensures smooth trade conditions, while maintaining the conditions for fair competition between the Union and its British partner”. 
  • France and seven other coastal nations are insisting the EU safeguard fishing rights similar to those the bloc enjoys now, something the UK has rejected as an affront to the entire rationale of Brexit. But a senior German government official on Wednesday insisted that the EU did have room for manoeuvre, saying that “nothing is insoluble” in the negotiations with Britain.

Jessica's practice focuses on international trade and anti-bribery work, encompassing customs, export control and sanctions matters. Jessica's trade work includes advising international clients on fast-moving and evolving EU and UN sanctions, notably in respect of Iran and Russia, and on compliance with UK and EU export controls. Her trade experience also includes advising on tariff classification and customs valuations. Jessica's anti-bribery experience includes assisting with investigations, and advising clients on compliance with anti-bribery laws. Jessica has also taken a lead role in monitoring Brexit-related developments; analysing how they will affect the UK's trading position generally, and clients' businesses specifically. She has helped clients begin to conduct risk assessments of how Brexit will impact their businesses, and has assisted them in developing tailored Brexit strategies. Jessica also presents at various seminars, webinars, and conferences on the complexities of Brexit. Jessica advises global clients on complex issues arising from international transactions and works with clients across a number of sectors including pharmaceuticals, defence, finance, aviation, energy, and telecommunications. Jessica has also worked previously in Paris, and is fluent in French.

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