On Wednesday 27 March 2019 the indicative voting on eight alternative Brexit options by the House of Commons took place. However, none of the motions gained a majority. This Monday, 1 April 2019, the House of Commons will debate further to come up with a solution that hopefully will gain a majority on an approach. Therefore the question on when and how the Brexit occur still remains.
No matter how the Brexit takes place, the fact is that after the Brexit the United Kingdom (UK) will be a ‘third country’ as opposed to the European Union (EU). Since it is doubtful that the EU and the UK will reach an agreement at short notice, it is important that member states of the EU prevent companies from running into unforeseen problems with unacceptable and irreversible consequences.
A lot of member states, among which the Netherlands, have already taken action in this regard. In our tenth Brexit-blog we will focus on the arrangements that the Netherlands have taken in preparation for the Brexit.
The Dutch Consolidation Act Brexit
On 16 November 2018 the Dutch Minister of Foreign Affairs submitted the legislative proposal regarding the Consolidation Act Brexit (Consolidation Act) in the Dutch Parliament. The proposal was subsequently adopted on 26 March 2019 by the Senate. The entry into force of the Consolidation Act is not yet announced (and will probably depend on the outcome of the Brexit-developments).
The Consolidation Act contains the necessary adjustments of the Dutch legal and regulatory framework in view of the Brexit. De Consolidation Act covers two sorts of amendments; foreseeable amendments that have to be made regardless of the course of the Brexit and an amendment intended to overcome the unforeseen problems of the Brexit as good as possible.
Necessary amendments regardless the course of the Brexit
The Consolidation Act specifies a number of acts that must be amended in view of the Brexit, such as the Companies Formally Registered Abroad Act (Wet op de formeel buitenlandse vennootschappen), the Road traffic act 1994 (Wegenverkeerswet), the Electricity Act 1998 (Electriciteitswet) and Gas Act (Gaswet). The Consolidation Act sets out a transitional period in which companies and citizens can comply with the changed legal obligations under Dutch law. Companies that will be affected by the Consolidation Act are for example companies from the UK that conduct (almost) all their business in the Netherlands and have no actual connection with the UK. The Consolidation Act states that these companies must register in the Dutch trade register and draw up an annual account and a director’s report. The annual account must be made public by filing it with the Dutch trade register.
A change of a different sort concerns the validity of driver’s licenses, certificates of competence and other national certificates (relevant for truck drivers). Until fifteen months after the Brexit, drivers can request to change their driver’s license issued by the authorities of the UK for a driver’s license issued by the authorities of a member state. This is to prevent that all driver’s licenses of truck drivers become invalid after the Brexit (with huge logistic problems as a consequence). Furthermore the Consolidation Act provides for the amendments of laws and regulations regarding the functioning and exploitation of gas- and electricity grids that exceed the national borders. Finally, the Consolidation Act establishes transitional law for social security laws, the Long-Term Care Act (Wet langdurige zorg) and the Healthcare Insurance Act (Zorgverzekeringswet).
Amendment for unforeseen problems
Article X of the Consolidation Act states that if an unforeseen problem occurs, the minister who is responsibility for the problem in question is authorized to make statutory provisions for a period of six months until after the Brexit. The purpose of the statutory provisions must be to decrease unacceptable consequences of the Brexit as much as possible. Further, the statutory provisions must be necessary for the implementation of a binding EU-legal act or to prevent unacceptable and irreversible consequences.
For the application of article X, firstly a particular urgency is required. This is the case if unacceptable and irreversible consequences will occur if no prompt (legislative) measures are taken. An ‘irreversible’ consequence means that the consequence cannot be undone afterwards. The government refers for example to perishable products that become unusable or live cattle in at the border. Another example of an irreversible consequence is when an unexpected legal question remains unanswered in the course of a business decision which leads to an unwanted shift of trade flows or the reverse of the production capacity (which could be relevant for medicinal supplies). Whether the consequences are unacceptable requires a balanced weighing of interests and is a matter of political choice. Further, a consequence must be necessary, which is the case if there are no alternatives to prevent it from occurring. Finally, before a statutory provision can be made, the relevant interests must always be weighed.
In concrete terms, the statutory provisions as established by article X are either a governmental decree (Algemene Maatregel van Bestuur) or a ministerial order (ministeriële regeling). The government can generally adopt a governmental decree without submitting it for approval to the House of Representatives (Tweede Kamer) and Senate (Eerste Kamer). This applies also to the adoption of ministerial orders, which are adopted by an individual minister. By using these types of statutory provisions, acute problems can be addressed a lot faster than if the parliamentary procedure would be applied. In doing so, problems will hopefully be prevented or resolved.
We cannot escape the fact that the consequences of the Brexit are legally uncertain and unpredictable, probably accompanied by a lot of unforeseen practical problems. Article X of the Consolidation Act finds a solution in this respect by which – hopefully – if necessary notwithstanding a higher Act – urgently needed arrangements can be made.
With regard to the Consolidation Act we advise companies to prepare themselves by identifying possible problems and respond to those in advance if possible.