On Thursday, 23 June, the British electorate voted to leave the European Union (EU).
The constitutional relationship of Guernsey and Jersey (British Crown Dependencies) and the BVI and Cayman Islands (British Overseas Territories) with the UK will not be affected by the referendum result and market access for their financial services in the UK is likely to become easier once unfettered by EU rules. Nor is it envisaged that Brexit will impact on existing EU market access rights for financial services. These rights are typically gained through EU legislation providing for ‘third country’ access in respect of which the Islands demonstrate equivalent standards.
Our Brexit Advisory Group, comprising specialist lawyers from each of our jurisdictions and practice groups, is monitoring developments closely and is in regular contact with Government and industry bodies in each of our jurisdictions. Members of the Group are available to advise on the specific legal and regulatory implications of Brexit for businesses and structures in the BVI, Cayman Islands, Guernsey and Jersey. You can access the Group through your usual Mourant Ozannes contact.
The current constitutional relationship of the Islands with the EU is summarised below.
Guernsey & Jersey
The position of the Channel Islands is subtle. Guernsey and Jersey are not part of the EU. They neither contribute to, nor directly receive anything from, the funds of the EU. The Islands’ relationship to the EU is governed by Protocol 3 to the UK’s treaty of accession to the EEC, as it then was, such that the Islands are within the EU Customs Union for goods and agricultural products. The Islands are required to treat all natural and legal persons of the EU in the same way, but are not bound by EU free movement rules.
In the context of financial services, which fall outside of the formal Protocol 3 relationship, Guernsey and Jersey are treated as “third country” jurisdictions outside of the EU and neither is a European Economic Area country. To the extent that they wish to, they implement appropriate EU legislation. They are not part of the single market in financial services and negotiate market access on a case by case basis.
There is a significant and long standing symbiotic relationship between London and the Channel Islands. Both jurisdictions are already taking steps to maintain and deepen their strong connection with City businesses during the process of realignment which is now underway.
BVI & the Cayman Islands
Neither the BVI nor the Cayman Islands are members of the EU and EU law does not apply automatically to these territories, so there will be no immediate change following the referendum result.
Both Cayman and BVI are linked to the EU due to their status as British Overseas Territories. As such, both jurisdictions are members of the Association of the Overseas Countries and Territories (OCTs) of the European Union, the purpose of which is to promote sustainable economic and human development of the OCTs through cooperation with the EU, as well as with regional and global partners. In the future, the Cayman Islands and BVI may wish to develop direct relationships with the EU to retain EU funding opportunities currently made available to Caribbean OCTs.