Originally set for March, Brexit has been delayed by three months after the United Kingdom’s parliament overwhelming voted for an extension rather than attempting to leave the EU without a solid plan. As of the time of this magazine going to print, however, the plan worryingly lacked any specifics, making it an uncertain time for, among others, UK organisations operating in overseas markets.
Among this group are UK-headquartered law firms operating in Korea, which were able to establish an agreement under the EU-South Korea free trade agreement. They now face an uncertain future.
There are currently five UK-headquartered firms in the market: Linklaters, Herbert Smith Freehills, Clifford Chance, Stephenson Harwood and Allen & Overy.
Last month, HSF, one of the largest foreign law firms in Korea with eight lawyers and two partners working in Seoul, became the first firm to take concrete action. HSF deregistered in preparation to reregister its practice under its Australian headquarters to operate under the Australia-South Korea FTA.
This approach is something of an anomaly in the market and is only made possible due to the fact the firm is the product of a merger between UK firm Herbert Smith and Australian firm Freehills.
With this option not open to other firms, they are staying tight-lipped about their next steps. Clifford Chance told Asian Legal Business that Korea remains an important market and reinforced its commitment to continue “to support our Korean clients”.
“We continue to monitor developments carefully as the final outcome of the exit and of trade relations between UK and Korea become clearer,” the spokesperson said. A Linklaters partner in the firm’s Korea office said he was unable to comment on the matter.
RANGE OF SCENARIOS
The EU-South Korea FTA, which was provisionally applied since 2011 and formally ratified in 2015, allows firms headquartered in Europe to operate and establish practices in South Korea, although they are still restricted in some facets, including in the type of work they can carry out.
But this arrangement is unlikely to continue for UK-headquartered firms after Brexit. While the UK is expected to formalize its own trade agreement with Korea, this will almost definitely result in a delay, which could be crippling for some practices.
While South Korea’s Ministry of Trade, Industry and Energy met with UK officials in January to discuss a Korea-UK FTA, according to local media, in February Greg Clark, Britain’s minister for business, energy and industrial strategy said the UK was unlikely to reach trade agreements with Japan and South Korea prior to the original March 29 deadline, Bloomberg reported.
A spokesperson for the UK Embassy in Korea told Asian Legal Business that avoiding disruption to global trading relationships as the UK leaves the European Union was a “priority,” adding that while “the best way to do this is to leave with a deal,” they would continue to plan for a range of scenarios.
“The government recently issued guidance for a no-deal scenario, in which we were clear that if the UK leaves the EU without a deal, some agreements may not be concluded in time and therefore would not be in place for exit day,” the spokesperson said, adding that businesses should familiarise themselves with the EU Exit guidance available on the gov.uk website in order to “understand how to prepare if the continuity of some preferential arrangements are not in place by exit day”.
Mike McClure, chief representative of the Seoul office at Herbert Smith Freehills, said that Brexit has created a mood of uncertainty not just for law firms, but also for many industries operating in the market. That said, many remain hopeful that “some form of trade agreement will be in place,” adding that this would offer new opportunities for Korean exporters and constructors.
“Korean companies with significant trade with the UK are making plans to manage any immediate Brexit impact – but the mood in the market is still hopeful that there will some form of trade agreement in place to maintain something close to the status quo,” McClure added.
To contact the editorial team, please email ALBEditor@thomsonreuters.com.