This note addresses the possible legal impact of Brexit on the chemicals sector. It is one of a series of GTM Alerts designed to assist businesses in identifying the legal issues to consider and address in response to the UK’s referendum vote of 23 June 2016 to withdraw from the European Union. While Brexit has the potential to impact significantly upon the regulatory environment within which companies in the chemical sector operate, it is too early to determine with any certainty the precise nature of that impact. It is important to note, however, that the UK will remain a member of the EU, and all existing and future EU laws will apply in the UK, until the date of the UK’s exit. UK-established companies will continue to be subject to EU law at least until the UK’s formal withdrawal from the EU is complete. This will take some time, for the reasons set out below.
The Implementation of the Brexit Result
There is presently little doubt that the UK will eventually exit the EU. The referendum result itself was only advisory – it produced a political, as opposed to legal, obligation for the UK to leave the EU – but it seems clear that the UK government continues to be committed to honouring the wishes of the British electorate. Before exiting, the UK needs to go through the exit procedure set out in Article 50 of the Treaty on European Union, starting with notification to the European Council of its decision to leave the EU. The new UK Prime Minister, Theresa May, appointed on 13 July 2016, has clearly stated that, while “Brexit means Brexit,” there should be no rush to serve the Article 50 notification. She and David Davis, the Secretary of State for the new government department in charge of managing Brexit, have supported the view that notification should not take place before the end of 2016. The situation remains fluid, with the EU institutions and the remaining 27 EU Member States increasing the pressure for formal negotiations to commence swiftly. However, it is likely that notification will be delayed for some time to allow consideration of the UK’s preferred exit terms and model for its future relationship with the EU, and also to resolve three court actions aimed at ensuring that the government does not serve the Article 50 notification without first giving Parliament the opportunity to vote on it.