Brexit and UK legislation – public procurement and e-commerce

Itohan Odekunle highlights the impact Brexit is having on the UK statute book with a particular focus on public procurement and e-commerce.

One inevitable consequence of Brexit (whatever form it takes) is the sheer volume of legislative amendment which it will invariably trigger. For over 50 years, UK law has been largely shaped by European Union (EU) legislation and decisions, all of which will need to be unravelled. As the formal date of the UK’s withdrawal from the EU draws nearer, i.e. 11pm on 29 March 2019 - unless it is extended (Exit Day), the Government is working to churn out amendments to existing legislation that will enable us to have a cohesive body of laws on Exit Day.

On 26 July 2018, the European Union (Withdrawal) Act 2018 (EUWA) received royal assent. EUWA is the key legislation enacted by the Government to avert the legislative quagmire that would otherwise have been caused by Brexit. It gives UK Ministers powers to create Statutory Instruments (SIs) to help with a range of legal issues caused by Brexit. In particular, it enables parliament to address deficiencies in retained EU influenced laws that may occur following Exit Day, and to ensure that the UK’s statute book contains legislation that is operable.

In the last few months, we have seen a steady stream of SIs covering sectors such as agriculture, climate control, data protection, and public procurement. The majority of these will not come into effect until Exit Day. The bulk of the amendments introduced by the SIs are simply to enable existing legislation to continue to be coherent following Exit Day and address references to EU institutions and legislation. However, the impact of these SIs should not be underestimated as they invariably bring change and new processes which cannot be ignored by industry and practitioners in the relevant sectors. Two examples within the commercial sector are set out below:

Public Procurement

The Public Procurement (Amendment etc.) (EU Exit) Regulations 2019 (the Procurement Regs) amend existing public procurement legislation. The main changes brought by the Procurement Regs are:

  • To replace the requirement to send notices for publication in OJEU with the requirement to submit notices to a new UK e-notification service. This means that following Exit Day, new procurement opportunities in the UK will no longer need to be advertised via an OJEU notice. Contracting authorities will need to get to grips with a new form and a new system of publishing notices (subject of course to any transition arrangements agreed with the EU post Exit Day).
  •  To revoke various EU Regulations and Decisions e.g. the regulations governing the Common Procurement Vocabulary codes. The Minister for the Cabinet Office will be responsible for variations to the CPV codes going forward.
  •  To remove the specific right for contracting authorities to reject an abnormally low tender on the basis that the tenderer has obtained State Aid and is unable to prove that the aid in question was compatible with the internal market, i.e. an accepted practice within the EU. A new UK State Aid regime will be implemented following Exit Day and as it would be inappropriate for economic operators established in the UK to be required to demonstrate that aid provided by the UK Government was compatible with operators situated elsewhere in the EU.

The notes with the SI state that there are some deficiencies in UK procurement legislation that have not been resolved by the SI, but gives no examples or plans for resolution. Any further reviews and amendments will potentially depend upon whether the UK ends up with a no-deal or a negotiated exit.

E-commerce

The Draft Electronic Commerce (Amendment etc.) (EU Exit) Regulations 2019 amend the regulation of online service providers operating and/or established in the UK. The key amendment these Regulations introduce is the change to the reciprocal ‘country of origin principle’ between the UK and the EU, of which there are currently two strands.

The first principle, which is the application of UK requirements to UK providers of Information Society Services (ISS) when providing ISS in the European Economic Area (EEA) will no longer apply. However these Regulations leave in place the second element of the country of origin principle, which is that non-UK ISS providers providing services to customers in the UK are exempt from UK law, on the basis that they are subject to the laws of their own EEA state (though it is possible to derogate from this position e.g. for public policy reasons).

This imbalance in the draft SI exists because EUWA powers cannot be used to create a new criminal offence for which an individual is capable of being sentenced to imprisonment for more than two years. It was decided that revoking the second principle is likely to create a criminal offence within the meaning of EUWA, namely that non-UK based ISS providers could inadvertently fall foul of UK legislation and this could constitute a criminal offence. It is expected that once the final details of Brexit are clearer, further legislative amendments will be made to address the imbalance caused by only revoking one element of the country of origin principle.

Whilst the draft SIs issued to date are not designed to be a full-scale redraft of the law, it is clear that following Exit Day a lot of practicalities will change in how many sectors of the UK are governed, with more sweeping reforms likely to follow. Businesses, public authorities and the third sector will need to familiarise themselves with the proposed changes and put measures in place to adapt their operations to accommodate these changes before Exit Day.

If you have any questions or would like to know more about our update, please contact Itohan Odekunle (Solicitor), on 0113 213 4046, or itohan.odekunle@weightmans.com. The Weightmans commercial team advises a wide range of clients from various sectors, with particular expertise in IT, software, e-commerce, manufacturing and retail.

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