Operating across the globe, expanding into a new territory or growing in existing countries might require your business to react to a changing legal and economic landscape. In this article we’re focusing on the changes many businesses will have to navigate as a result of Brexit and specifically, two business as usual issues – impacts on customer and supplier contracts, and data protection.
Customer and Supplier Contracts
One of the first steps to think about as Brexit gets closer is “how will my business be affected?”. Regardless of whether your supply chain or customers are confined within the UK or extend to or outside of the EU, each of your contracts will most likely contain clauses which rely upon EU influenced legislation in areas such as tax, staffing or data. You may also have clauses which apply to specific territories, with the “EU” used to define the extent of an obligation or restriction. These clauses need to be identified and analysed to determine the risk posed to such contracts by the UK leaving the EU.
Data protection law will change and is something an organisation will need to prepare for post Brexit. The good news is, due to the UK’s Data Protection Act 2018, a UK-specific version of the GDPR has already been put in place in the UK and therefore the preparations organisations have made to comply with GDPR will not go to waste.
However, if a “no-deal” Brexit occurs, the UK will become a non-EEA (non-European Economic Area) jurisdiction and will re-classify as a “third country” under the GDPR. As a result, the transfer of personal data from organisations from the EU to the UK will be subject to strict data transfer rules, as set out by the GDPR (Articles 44 to 50). Organisations will then need to put compliance mechanisms in place, such as International Data Transfer Agreements using the EU’s Standard Contractual Clauses.
Given the UK’s Data Protection Act 2018 is extremely similar to the provisions of the GDPR, we would expect that the UK would easily obtain an adequacy decision from the EU after applying. This would mean the UK would then be treated the same as countries like Canada, Switzerland and New Zealand. An adequacy decision provides confirmation that a country’s laws provide the same protection to personal data as the GDPR. As a result, the compliance burden when transferring data to these countries is much lower. To date, the European Commission has refused to start the adequacy decision process for the UK. If the UK agrees a deal with the EU, there will be a transitionary period during which international data transfers can continue on the same basis as before Brexit. We expect an adequacy decision could be made during the transitionary period (which is expected to end on 31 December 2020), meaning the impact would be minimal.
What should organisations be doing to get a head start? Revising your GDPR-affected policies and mapping your data flow would put you in pole position for Brexit day. By understanding where your data comes from and where it goes, your organisation can prepare for any changes post Brexit, whether that’s implementing a data processing agreement with organisations in the EU or adopting the stricter regimes of a third country in order to comply with GDPR.
If your organisation receives funding from EU grants, this is not the time to panic. Until the departure of the UK from the EU, the UK will remain a Member State and therefore we are still entitled to all the rights a Member State has in relation to funding. As of their notice of 8 August 2019, the UK Government is looking to agree a deal which will allow the UK to participate in the programmes currently financed by the EU Budget.
If no deal is struck, and the UK leaves without a deal, the UK Government has guaranteed EU projects agreed before Brexit . The guarantee covers the following:
- the full Multiannual Financial Framework allocation for structural and investment funds over the 2014-20 funding period, with payments to beneficiaries made up to the end of 2023
- the payment of awards where UK organisations successfully bid directly to the European Commission on a competitive basis while the UK remains in the EU, for the lifetime of the project
- the payment of awards under successful bids where UK organisations are able to participate as a third country in competitive grant programmes from Exit day until the end of 2020, for the lifetime of the project
- the current level of agricultural funding under CAP Pillar 1 until 2020
The UK’s decision to leave the EU has left businesses operating in the UK and Europe wondering what’s next. Completing a check list and reviewing key areas of business will help you to identify where changes need to be made and what action is required.
If you would like to discuss anything discussed above, please get in touch.
Declan Goodwin - Director, Solicitor, Head of Tech
Megan James - Trainee Solicitor
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