After the EU: highlighting some key changes for our industry

Sheena Sood, Partner at Beale & Co Solicitors, international construction and insurance law specialists, summarises some of the key changes affecting construction and wider engineering services following the UK’s transition away from EU Rules on January 1 2021.  
 

Goods and Standards

To great fanfare, the newly signed Trade and Cooperation Agreement TDA means there are indeed no tariffs or quotas on goods exported to or imported from the EU - where those goods meet the relevant rules of origin (which limits the percentage of goods that can be made outside of the country of origin). However, the free movement of goods ended on 1 January 2021 and there will now be custom checks and other border controls. 

The additional cost and delays involved in restrictions on product origin, double-certification and border checks will need to be factored into the pricing and programming of projects. This is also likely to have significant impact on ‘just-in-time’ procurement, which could slow down progression on construction projects and add to costs.

In addition, up to the end of 2020, the safety and quality of construction goods (including materials and products) was controlled by EU regulations, specifically the CE mark. CE marked products will still be allowed in the UK market until 1 January 2022, when the UK aims to end recognition of the CE mark (note that different rules apply to goods imported to/exported from Northern Ireland). A UK marking system will be introduced for products for the UK market, requiring conformity assessment by a UK-recognised approved body. It is hoped that UK Conformity Assessed (UKCA) marking will align closely to the CE marking system, ensuring that goods pass the equivalent CE standard without requiring further testing. However, without mutual recognition of standards, the industry will need to repeatedly seek certification for products for use in EU states.

Labour and Services 

Freedom of movement between the UK and the EU also ended on 1 January 2021. Now, anyone wishing to come to work in the UK will be subject to a ‘points based’ application system. This is designed to attract ‘skilled workers’ with skill level thresholds of RQF 3-5 (A-level or equivalent). This will include engineers and trades such as electricians but excludes some other roles such as general labourers and some plant operators. 

An applicant will need to produce evidence of a job offer at the required skill level that meets a new minimum salary threshold. Even if the criteria are met, the ongoing sponsorship costs to bring workers to the UK may be costly or even prohibitive for some employers.

Importantly, there is no mutual recognition of professional qualifications under the TCA, and the Mutual Recognition of Professional Qualifications (MRPQ) Directive no longer applies. Engineers and others holding UK professional qualifications cannot automatically use that qualification to work in an EU member state and likewise there is no automatic recognition of professional qualifications achieved outside the UK. 

Whilst not achieved by 1 January 2021 the intention is however for the UK/EU to agree mutual arrangements for the recognition of professional qualifications covering the UK and all 27 EU Member States – much like what was in place pre-Brexit.

Although visas will not be required for most business travel across the EU for short stays of up to 90 days in a 180-day period, work visas will be required for those intending to work for a longer period of time. Rules will differ by state so the entry requirements should be checked prior to entry to any EU country for business reasons. 

Public Procurement

The UK now has a separate and independent procurement regime. From 1 January 2021 contracting authorities are no longer be obliged to publish notices in the Official Journal of the European Union (OJEU). Instead, a new UK ‘Find a Tender’ e-notification system will be used. 

The TDA provides for a framework of rules for trade in public procurement based on the WTO Government Procurement Agreement (GPA). The GPA commits members to open up their public procurement markets to contractors from other member countries. As a result, UK businesses will still be able to compete for public contracts across the EU although on a more limited basis than before. UK businesses may also continue tendering for public contracts in other GPA member countries, such as the USA, in accordance with GPA rules. 

The UK and EU have also agreed an extension of market access coverage beyond the GPA, which includes: the gas and heat distribution sector; private utilities that act as a monopoly; and a range of additional services, including telecoms. This will provide UK businesses with additional opportunities and will mean more competition for UK public sector contracts. 

Dispute Resolution

The UK had planned to accede to the Lugano Convention 2007, the preferred regime for government questions of jurisdiction and the enforcement of judgments with EU countries after the end on the transition period. Jurisdiction and enforcement will now be determined by common law and The Hague Convention 2005. The Hague Convention requires the court designated in an exclusive jurisdiction clause to hear the case and prevents courts of other contracting states hearing parallel proceedings. It will also provide some level of protection regarding enforcement, as it generally requires any judgment granted by the court specified in an exclusive jurisdiction clause to be recognised and enforced in other member states. As a result, parties may wish to consider the inclusion of exclusive jurisdiction clauses in their contracts.

Legal advice should be obtained regarding dispute resolution clauses in new contracts with EU entities or concerning projects in the EU. Local law advice may be needed on issues such as ease of enforcing UK judgments in another country where the other party’s assets are located. This is also the case regarding yet to be enforced judgments that contractors may have against parties in EU member states. 

Those with concerns about enforcement post-1 January 2021 may wish to consider contractual arbitration clauses. Enforceability of arbitral awards under the New York Convention is unaffected by Brexit and this may therefore represent a relatively low-risk option. 

Data Protection 

Finally, on data protection, the EU/UK also agreed to a six-month transition allowing the continued free flow of personal data from the EU and EEA EFTA States. This means that until 1 July 2021 transfers of personal data from the EU to the UK will be permitted and not treated as transfers of data from the EU to a third country. This bridging solution effectively extends the 2020 transition period, subject to the UK not making material changes to its existing data protection laws. In addition, the UK has, on a transitional basis, deemed EU member states to be adequate for data flows from the UK.

The EU/UK are now working on making ‘findings of adequacy’ in relation to each other’s data protection regimes. This should be straightforward from the UK’s perspective in relation to the EU, but the TDA does not guarantee an EU finding of adequacy regarding the UK. 

An adequacy decision is a finding of the European Commission under Article 45 of the GDPR that a third country has an adequate level of data protection. It is a unilateral decision of the EU, and the effect of an adequacy decision is that personal data can be sent from a member state to a third country without any further safeguards being necessary. 

Updated links and information on the newly introduced post-EU changes are available at: www.eca.co.uk/brexit

More information about Beale & Co Solicitors is at: beale-law.com/