Navigating Brexit: What Funds Should Be Sought As The Dust Begins To Soak | Proskauer – The capital commitment
Following Brexit, regulated businesses in the UK will already be grappling with the loss of passport and equivalency measures, as well as the need to navigate national regimes and relocate staff. As of today, EU companies operating in the UK have a temporary licensing scheme as the UK has defined its approach to equivalence, but it remains a one-way street and l The EU has made it clear that it will decide on its own approach in its own time. 2021 will begin to reveal the full extent of market fragmentation and its impact on liquidity. From 2021, EU law no longer applies to the UK (except where elements of it have been expressly incorporated into national law). We can therefore expect diverging approaches between the EU and the UK in terms of legislation and regulation, especially since the European Market Abuse Regulation (MAR) and the Directive on Financial Instruments Market (MiFID II) will be updated over the next few years. Funds can therefore expect an increase in the regulatory burden.
More fundamentally still, the basic EU-wide frameworks for the recognition of choice of court clauses and judgments, and for the service of judicial documents, no longer apply in the UK, so that funds operating or interacting with UK entities will need to change their approach. when contracting to ensure the most effective and efficient dispute resolution forum, and may even consider revising choices in existing contracts. EU courts will seek to seize a larger share, not only of markets and capital, but also of litigation, with a growing number of English-language commercial courts advertising their services. Arbitration is also likely to become more popular, as unlike decisions by national courts, the framework for cross-border enforceability of arbitral awards is unaffected by Brexit and EU law. The 1958 New York Convention has 166 signatory countries, including all EU countries and the United Kingdom. It already appears that companies are increasingly turning to international arbitration for cross-border disputes, drawn by the ability to keep disputes private and confidential, forum neutrality, finality of decisions and – more than ever – their international enforceability.
Learn more about our Top ten regulatory and litigation risks for private funds in 2021.