What you need to know
On 24 January 2019, the Irish Government published the general scheme of the 'Miscellaneous Provisions (Withdrawal of the United Kingdom from the European Union on 29 March 2019) Bill 2019' (the "Scheme") which will be enacted in the event that the United Kingdom leaves the European Union without having ratified a Withdrawal Agreement ("no-deal" Brexit) and becomes a 'third country' outside the single market and customs union.
The Scheme proposes the primary legislative measures that the Irish Government believes are required to ensure an orderly "no-deal" Brexit scenario. The focus of the Scheme is to protect the citizens of Ireland and to support the economy, enterprise and jobs – particularly in those key economic sectors that would be most affected by a "no-deal" scenario.
In November 2018, the European Commission published its 'Contingency Action Plan' which called on Member States to enact legislation that would mitigate certain identified risks associated with a "no-deal" Brexit. The Scheme responds to this request by the Commission and is part of a larger co-ordinated response by EU Member States, many of which are adopting similar provisions to those contained in this Scheme.
What is in the Scheme?
The Scheme contains 17 Parts that have been prepared by nine Ministers in relation to their areas of competence.
The measures contained in the Scheme are not final and parts may be updated or adjusted further in light of ongoing developments, particularly with respect to other EU legislative measures and other actions taken by EU Member States. The purpose of publishing the Scheme in advance of the finalised text of the Bill is to provide an opportunity for relevant stakeholders to scrutinise the legislative proposals contained in the Scheme before the Bill is debated in the Oireachtas.
Many of the proposals in the Scheme facilitate the maintenance of the current status quo of various regimes by replacing or extending existing legislation that will no longer apply if the UK exits the EU in a "no-deal" scenario.
The following provides a brief summary of some of the key provisions contained in the Scheme:
Part 2 of the Scheme deals with the maintenance of existing healthcare arrangements between the UK and Ireland. Currently, the EU Cross-Border Directive allows for the reimbursement of the cost of treatment and dictates how patients can access treatment in other EU/EEA States however, this Directive would not be applicable to the UK in the event of a no-deal Brexit. Amendments to legislation are proposed to enable the HSE to facilitate an Irish patient's access to treatment in the UK where that treatment is not available in Ireland. The Treatment Abroad Scheme currently enables Irish citizens, suffering from rare diseases or who require organ transplant, to be treated as public patients in an EU/EEA Member State and Switzerland. In addition, the Scheme also outlines amendments enabling the HSE to reimburse a person the cost of healthcare provided in the UK where that treatment is among the available benefits in Ireland.
Supports for business:
Mindful of the Government's aim to support the economy, enterprise and jobs in a "no-deal" scenario, Part 3 of the Scheme proposes to give additional powers to Enterprise Ireland to further assist businesses through investment, loans and RD&I grants. Of particular interest is the proposal to give Enterprise Ireland the power to provide non-convertible loans (i.e. not convertible into shares in the company) to their client companies as an instrument of enterprise development support. In addition, Enterprise Ireland will be allowed to subscribe for convertible loan notes in client companies.
Part 4 of the Scheme proposes to give the Commission for the Regulation of Utilities ("CRU") the power to unilaterally modify electricity licence conditions without licence holders having any recourse to an Appeal Panel constituted under the Electricity Regulation Act 1999. The rationale for the provision is to enable the CRU to facilitate the operation of the Single Electricity Market in compliance with EU law while minimising the risk of delays associated with the Appeal Panel process.
Part 6 of the Scheme proposes a series of amendments to existing taxation legislation to ensure continuity for existing beneficiaries of certain taxation measures in the event that the UK is no longer an EU Member State or an EEA State. The Scheme proposes to extend relevant legislative definitions to include the UK in order to maintain the status quo in the immediate future for tax payers.
Part 7 of the Scheme supports the European Commission's temporary and conditional equivalence decision for UK-based central securities depositories (CSDs) which enables CREST, the UK-based electronic settlement system, to continue to facilitate Euronext, Ireland's Stock Exchange. The Scheme proposes to protect payments and transfers of securities made by Irish participants in relevant third country domiciled settlement systems, such as CREST, by empowering the Minister for Finance to 'designate' a 'third country system' for the purposes of the Settlement Finality Regulations. This will extend the protections of the Regulations to Irish firms using settlement or payments systems in a designated third country, such as the UK.
Part 8 of the Scheme provides for national measures to ensure the continuity of existing insurance contracts with Irish policyholders by UK and Gibraltar based entities. View our more detailed article on the Scheme's implications for the insurance industry here.
Part 12 ensures employees of a UK-based entity remain entitled to receive payments under the Insolvency Payments Scheme if their employer becomes insolvent under UK law.
When will the Scheme be enacted?
The Scheme is expected to be finalised and published as the Withdrawal Bill on 22 February 2019. The Government intends for the Bill to move quickly through both houses of the Oireachtas.
Each part of the Bill may be commenced by statutory instrument by the relevant Minister.
The Scheme is part of a broader EU-wide plan to co-ordinate and legislate for a manageable Brexit and the heads of Scheme demonstrate the Irish Government's commitment to ensuring that the negative impacts from Brexit, regardless of how it is achieved, are mitigated to the greatest extent possible.
Whilst the nature and timing of Brexit remains uncertain the Scheme is an essential component of the Irish Government's contingency planning for a "no-deal" scenario. If neither a Withdrawal Agreement nor a time extension to delay the United Kingdom's impending departure from the EU is agreed between now and 29 March 2019, then the Irish Government proposes that the Withdrawal Bill will become law. William Fry will provide a detailed and sector-specific analysis on the Withdrawal Bill upon its publication in late February 2019 if it becomes necessary for it to be progressed.