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The implications of a 'Hard' Brexit

brexit
Will we witness a 'hard' exit from the EU? Or will Britain go softly, softly?
 
Now seems to be the time to get thoughtful about the potential implications of the UK voting to leave the EU.  There could be significant repercussions for the way in which commercial counterparties within the European Union choose to contract with each other and for their ability to resolve international disputes. 


In January 2017, the House of Lords’ EU Justice Sub-Committee will hear evidence from two senior UK Judges on the significance of EU legislation designed to facilitate cross-border civil disputes.  However, it cannot be avoided that there is the smell of uncertainty about the detail of the consequences for us for ending the UK/EU relationship, if it ends hard.

For Contracts

At present, EU legislation protects parties’ abilities to choose what governing law there should be for their contractual relationships and the ability to choose forms a fundamental freedom offered by English law.

The current EU framework applicable to contractual and non-contractual obligations is enshrined in the Rome I and Rome II Regulations, respectively. 

It is not beyond the realms of possibility that a decision could be taken to leave the rules as set out in the above regulations intact after Brexit.  A possible consequence being that the English Courts would be the final arbiter of how the rules are applied - ultimately a job reserved for the European Court of Justice as things stand.  If that were to happen, then nothing immediate would change, but it is possible that the interpretation of the two regulations could start to differ between the UK and the remaining EU member states over time. 

If the Rome I and Rome II Regulations were no longer to apply following Brexit, then it is possible that the UK would revert back to the rules in force before those regulations became law.  As such, in regards to contractual obligations, the Rome Convention; which applied to the law governing contracts made between April 1991 and 17 December 2009 could apply, which, of itself, would not materially alter the present position as we know it. However, in regard to non-contractual obligations, the Private International Law (Miscellaneous Provisions) Act 1995 - which is a regime which is unlike to Rome II - could operate so that the parties would not have an express right to choose the law applicable to non-contractual relations between them. 

However, it’s anticipated that when the UK eventually leaves the EU, the courts of EU member states will continue to respect the parties’ choice as to governing law as before; so that on choosing English law the parties to a contract will still enjoy an application of the rules set out in Rome I and II.

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Removing a director from office - company law

EdwardG
Edward Garston, company law expert explains how to remove a director and how a director may automatically lose his position.

Relationships in business can break down and companies often need to take a different direction necessitating a change in management, especially if one of the directors is not acting in a way that promotes the success of the company.  

Before considering what route to take, you must always ensure that your reason for removing the director is fair, or you could find yourself facing an employment tribunal claim for wrongful dismissal and a hefty compensation pay out.

How many directors should there be?

A private company must have at least one director and a public company must have at least two at all times. There is no legal maximum number of directors, but all directors must be over 16 years old.

Special considerations where a director is also a shareholder

Where the director being removed is also a shareholder, removal from office will not usually affect their shareholding and voting rights. In small private companies, where a director is often a shareholder, it is advisable to hold negotiations for the purchase of the ex-director’s shares. Alternately, it may be wise to insert a clause into the articles of association that a shareholder who ceases to be a director is deemed to have given the company a transfer notice in respect of his shares.

Removal by ordinary resolution

A director can be removed by an ordinary resolution of a general meeting under section 168 of the Companies Act 2006. The director can be removed before their period of office has expired, regardless of any other agreement to the contrary.

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Implications of filing a late Defence

court
File a Defence late and the chances are you will face judgment being entered against you.

The case of Billington –v- Davies and another [2016] EWHC 1919 [CH] heard in the High Court, considered an application by a Claimant for default judgment where the Defendants Defence was filed at Court after the deadline set for filing.

In considering whether to give default judgment, the key question for the Court is whether or not the Defence has been filed, rather than the mertis of the defence. There are strict time limits for acknowledging service and filing a Defence which are calculated by reference to service of the Claimant’s Particulars of Claim on the Defendant. Within 14 days after service of Particulars of Claim, a Defendant must have filed either an Acknowledgment of Service or a Defence. If neither is filed after 14 days, default judgment can be entered. If an Acknowledgment of Service is filed, a Defendant must file a Defence within 28 days after service on him of the Particulars of Claim. If no Defence is filed within that deadline default judgment can be entered.

In Billington the First Defendant did not file a Defence until the day before the Hearing of the Claimant’s application for judgment in default. It was argued that it was a pre-condition for obtaining default judgment that a Defence must not have been filed; the implication being that even a late Defence would be enough to scupper a successful application for default judgment. Deputy Master Pickering rejected this argument. In his judgment, the reference to a Defence in the CPR “was to a Defence which had either been served within time, or in respect of which an extension had been granted”. In the absence of either in this case, the Court considered the significance of a note contained in the White Book (the rule book on civil procedures), which stated that filing a Defence late would prevent a Claimant obtaining default judgment. It was held by the Court that this note was essentially wrong.

It was found that neither the Defendant’s lack of funding, nor the existence of negotiations between the parties existing prior to the application for default judgment, were good reasons for delaying filing a Defence. The Deputy Master found that this was not an appropriate case where he should exercise his discretion to extend time.

A useful reminder

This case serves as a useful reminder for all those served with Claim Forms on the perils of ignoring the time limits for filing a Defence. Anyone served with a Claim Form and/or Particulars of Claim by a Claimant, should seek legal advice as quickly as they can to avoid filing and serving documents late and/or pleading facts which are unhelpful or not accurate or comprehensive enough for both the Court and the other side to understand the essential facts in the case.

MORE INFORMATION 

If you have been served with Claim Forms and require advice on filing a Defence, please call on 01708 229444.
 
The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. Specific legal advice should be taken on each individual matter. This article is based on the law as at October 2016.

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