Debunking Legal Jargon for Trade & Export Finance and Related Regulation

Written by Matilda Johnson and Jacqueline Cook

In this blog, we take a look at some new jargon and key terms that you might come across in your transactions or industry discussions in the coming months.

Trade & Export Finance

Uniform Rules for Transferable Electronic Payment Obligations (URTEPO)

URTEPO is published by the International Trade and Forfaiting Association (ITFA) and aims to provide the trade and forfaiting industry with a robust framework within which to operate with confidence and enable the modernisation of the traditional forfaiting market. URTEPO allows for the payment obligation in question to be created by any means possible, so long as it is digital and transferable. The rules are compatible with the principles behind new legislation in this area, including the UK’s Electronic Trade Documents Act 2023 (ETDA).

OTSI

The establishment of the new Office of Trade Sanctions Implementation (OTSI) was announced in December 2023 and is expected to launch in the first half of 2024 under the auspices of the Department for Business and Trade (DBT). It will reinforce existing work the UK Government is doing to ensure UK trade sanctions are adhered to. It will be responsible for the implementation, investigation and civil enforcement of new and existing UK trade sanctions, with additional powers to escalate sanctions violations to HMRC where appropriate for the purpose of criminal enforcement. The introduction of comprehensive trade sanctions against Russia over the last year or so has justified the creation of a new office and signals the UK Government’s desire to clamp down on trade sanctions violations and evasions.

Be aware that OTSI is not to be confused with OFSI – the Office for Financial Sanctions Implementations - which is already in existence and was established some time ago through the UK’s HM Treasury for the implementation of ‘financial’ sanctions.

Regulatory

Assimilated law and the Retained EU Law (Revocation and Reform) Act 2023 (REULRRA)

The REULRRA which received Royal Assent on 29 June 2023 and came into force on 1 January 2024 makes significant changes to what had been referred to as “retained EU law” in the UK. Here are some of the key changes to be aware of:

• Retained EU law is now called “assimilated law”. This legislation relabels retained EU law which is already part of domestic law which had derived from EU legislation.
• Certain legislative instruments of EU-related origin have been revoked. However, the effect of those instruments to onshore certain EU-derived legislation has not been revoked. Other provisions of assimilated law will remain in place but are subject to revocation, replacement, restatement or updates at various dates.
• The modified principle of supremacy of EU law and the retained general principles of EU law have been repealed. In practice, this means that the UK courts will no longer give priority to EU law over conflicting UK law and will no longer need to interpret such assimilated law in accordance with EU equivalent law.
• The REULRRA permits the Supreme Court and the Court of Appeal to depart from their own retained domestic case law where it appears ‘right to do so’. The lower courts can now refer points of retained EU and UK case law to the higher courts.

It is important take care when dealing with acts or events that occurred before the end of 2023, as the original European Union (Withdrawal) Act 2018, as amended by the European Union (Withdrawal Agreement) Act 2020, provisions may still apply and may still be enforceable in certain circumstances.

Financial Services and Markets Act 2023 (FSMA 2023)

FSMA 2023 received Royal Assent on 29 June 2023, however it has had phased implementation, with some provisions taking effect on 11 July 2023, some on 29 August 2023 and some on 1 January 2024. Other provisions are to take effect at a later date to be determined as, on the whole, the financial service and regulatory regimes are being reformed on a topic by topic basis.

FSMA 2023 will usher in some of the most significant regulatory reforms for the financial services industry in recent years and aims to implement the outcomes of the UK Government’s Financial Services Future Regulatory Framework Review (FRF Review) and of the regime for central counterparties (CCPs). FSMA 2023 also sets out new secondary objectives for the Financial Conduct Authority and Prudential Regulatory Authority, as well as enhanced scrutiny and accountability for the regulators and HM Treasury.

Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (Hague 2019)

On 12 January 2024, the UK joined Hague 2019 following a consultation ending in November 2023. Hague 2019 is designed to provide a global framework of common rules to facilitate the recognition and enforcement of judgments from one jurisdiction to another in the absence of exclusive jurisdiction clauses. Hague 2019 will come into force in the UK 12 months after ratification and will apply only to judgments given in proceedings commenced after that date. This means judgments made in UK courts in relation to cross-country disputes will be recognised and enforced in the courts of other nations who have joined the Convention. At the time of writing, the Hague 2019 has been ratified by the EU, Ukraine and Uruguay.

Economic Crime and Corporate Transparency Act 2023 (ECCTA)

The ECCTA makes numerous changes to the powers of Companies House and the role of the Registrar, as well as implementing measures to tackle corporate crime and prevent the abuse of corporate structures. In March 2024, various changes will be introduced to Companies House, including greater powers for the Registrar to query, scrutinise, and reject information, including stronger checks on company names and new rules for registered addresses, together with various new obligations for companies to submit and verify information.

ECCTA also introduces a new strict liability corporate offence of failure to prevent fraud and expands the scope of the identity doctrine for economic crime offences. However, these reforms, and others, are not expected to come into force until 2025.

For further information on any of the points referred to above, please contact Ellis Lawson, Jacqueline Cook, Matilda Johnson or your usual contact at the firm.

The material on this site is for general information only and is not legal advice. No liability is accepted for any loss or damage which may result from reliance on it. Always consult a qualified lawyer about a specific legal problem.