WF_Brexit

Projects & Construction – Top 5 Issues (Jan 2021)

The EU-UK Trade and Co-Operation Agreement agreed between the EU and UK Government in late December 2020 (the "Agreement") to manage the implications of Brexit will have a significant impact on the projects and construction sector.  The key legal issues for projects and construction being impacted by the Agreement are as follows:

  1. Changes in laws and regulation – Certain EU and Irish laws applying to projects and constructions in Ireland now differ so that there is no longer equivalence under UK law. In particular see section 3 below on construction standards. The implications for existing projects under the "changes in law" provisions in existing bespoke and standard industry form construction, public sector and PPP contracts need to be carefully reviewed. Contract drafting and negotiation in connection with future works and services agreements will need to carefully consider risk allocation for changes in law arising from Brexit.   
  2. New or increased tariffs, taxes or import duties and currency fluctuations impacting  construction materials, equipment and specialist design services - changes in tariffs or requirements relating to customs, fluctuations in currency, changes in taxes affecting construction materials, equipment and/or specialist design services will create increased costs and delays for construction projects in Ireland. Contract drafting needs to address who will bear such additional costs.

    Since 1 January 2021, while there will be no tariffs or quotas on the movement of goods between the UK and Ireland, all customs controls and formalities required under EU law (and in particular the Union Customs Code), including entry and exit summary declarations, will apply to all goods entering the customs territory of Ireland from the UK, or leaving Ireland to the UK. Only 'originating' goods satisfying are able to benefit from the Agreement, as set out in detail.

    This does not concern trade in goods between the Ireland and Northern Ireland, where the Withdrawal Agreement/Protocol on Ireland and Northern Ireland will apply, meaning there are no controls on goods crossing between the border between Ireland and Northern Ireland. However, there are controls on goods moving between Northern Ireland and the UK.

    However, there has been much media reporting in Ireland and the UK throughout January 2021 on delays at customs and ports where correct declarations are not available, when importing or exporting construction related goods or materials, and this will create construction projects delays where not managed.
  3. Risk of Irish and UK construction industry standards diverging – Irish construction industry standards have been closely aligned with the UK in many respects. This is because both jurisdictions had implemented EU-wide standards and adopted similar standards to each other. Ireland and the UK now have separate regulatory regimes since 1 January 2021. The Agreement does not provide for mutual recognition of products or standards. As of 1 January 2021, all products exported from Ireland to the UK will have to comply with UK technical regulations and will be subject to any applicable regulatory compliance checks and controls. Similarly, all products imported from the UK to Ireland will need to comply with EU technical regulations and will be subject to all applicable regulatory compliance obligations, checks and controls for safety, health and other public policy purposes.  Examples of construction industry standards already diverging include CE marks and recognition of professional qualifications.

    CE marks
    Ireland and the UK had adopted the EU Construction Products Regulation (EU) No 305/2011 (CPR) which laid down harmonised rules for marketing of construction products in the EU. The CPR creates greater certainty in the quality and safety of construction product standards. Under the CPR, CE marking is mandatory for all construction products placed on the market in the EEA and covered by a harmonised European product standard. This has now become a requirement of the Irish building control regime.

    There will no longer be a single "CE" mark used across the UK and the EU/Ireland. The EU will be using CE marks, the UK will be using a UK Conformity Assessed Mark (UKCA mark). Northern Ireland will be using a UKNI conformity assessment mark which is additional to the CE mark in some instances. This means the products have undergone a mandatory third-party conformity assessment by a body based in the UK.  However, the UKCA will not be recognised for products exported to Ireland and any goods imported from the UK must still meet the CE criteria and carry the CE mark.

    On 19 January 2021 the UK government announced its intention to establish a new regulator for construction products to ensure greater product safety, particularly in residential construction. There are no firm details yet available on the regulator, including on the timing of its inception, and how it will affect industry obligations relating to construction products.
  4. Recognition of Professional Qualifications - The system of mutual recognition of professional qualifications, such as those applying to architects, within the EU no longer applies. As of 1 January, as a general rule, UK nationals, irrespective of where they acquired their qualifications, and EU citizens with qualifications acquired in the United Kingdom will need to have their qualifications recognised in Ireland on the basis of existing Irish rules applicable to the qualifications of third-country nationals as of the end of the transition period where practising in Ireland. The Agreement foresees a mechanism whereby the EU and the UK may later agree, on a case-by-case basis and for specific professions, on additional arrangements for the mutual recognition of certain professional qualifications.
  5. Availability of Key Personnel and Labour – Restrictions in movement of people which is Brexit related could have implications for availability of key personnel and labour, particularly in the context of projects with workforces comprising personnel from both Ireland and the UK. The Agreement does not address this concern. Irish companies deploying their staff to the UK, and equally UK business deploying staff to Ireland will need to check their staff have the required visas or work permits before commencing work.

Contact:

Cassandra_Byrne_Brexit
  

Jarleth_Heneghan_Brexit

Cassandra Byrne
Consultant

Email Cassandra
+353 639 5206

 

Jarleth Heneghan
Partner

Email Jarleth
+353 639 5252