Whilst the parliamentary game of “deal or no-deal” rages on, we thought it would be useful to consider what the Prime Minister’s proposed deal with the EU might mean for the tech industry – as far as we can tell at the moment.

On the 14th November 2018 UK and EU negotiators produced the technical agreement between the UK and the EU in relation to the UK’s withdrawal from the EU (the “Withdrawal Agreement”). Alongside this was published the agreed framework for the future relationship between the UK and the EU (the “Political Declaration”). In this article we outline the potential impacts of the Withdrawal Agreement and Political Declaration on the technology industry and what this could mean for your business.

The Withdrawal Agreement provides for a transition period commencing on the 30th March 2019 and lasting until the 31st December 2019. The good news is that during this period that status quo will largely remain unchanged. There is the option to extend the transition period for an originally unspecified period. However, this has now been updated to “up to one or two years” i.e. 2022 at the latest.

If there is no extension to the transition period, then a backstop consisting of “a single customs territory between the (European) Union and the United Kingdom” will be triggered.

Freedom of Movement

A key question for the technology industry will be the impact of the Withdrawal Agreement on the ability to recruit and retain talent from across the EU.

Under the Withdrawal Agreement citizen rights are broadly unchanged from the initial draft which came out in March. EU citizens currently based in the UK will retain their residency and security rights after Brexit. However free movement ends at the end of the transition period, unless the UK and EU decide to sign a separate treaty on free movement, as part of the future relationship.

Data Protection

The tech industry is still getting to grips with the implementation of the General Data Protection Regulation (“GDPR”) back in May. Therefore, a key question will be how personal data will be regulated going forward.

During the transition period the GDPR and related EU privacy laws (e.g. the Electronic Communications (ePrivacy) Directive the upcoming ePrivacy Regulation) will continue to apply to the UK.

After the transition period the UK will be considered as a “third country” under GDPR.  There are restrictions on transfers to such third countries which are not clearly defined but are generally assumed to mean countries outside the EEA.

Personal data may only be transferred to third countries if the European Commission provides an adequacy decision in relation to such a county. Otherwise certain safeguards must be adopted in relation to the transfer or a specific derogation can be relied upon.

Although there is no guarantee the UK will receive a finding of adequacy, the Political Declaration has stated that the EU will “endeavour” to adopt an adequacy decision in relation to the UK by the end of the transition period. However even if the UK receives an adequacy decision there is nothing to stop it being repealed by the EU at a later date following a subsequent review.

Law/ Jurisdiction

Another major issue to consider for the tech industry will be the jurisdiction of the Court of Justice of the European Union (“CJEU”) and extent to which the UK will have to follow EU laws and regulations.

• Article 127 of the Withdrawal Agreement provides that EU Law will be applicable in the UK during the transition period. The UK will also remain within the EU Customs Union, single market and the CJEU during this period. However, the UK will not have a say and will not take part in EU law-making.
• Under Article 89 of the Withdrawal Agreement, the CJEU will have jurisdiction for cases sent from UK courts before the end of the transition period. After this point UK can only send the CJEU cases in limited instances.
• If the European Commission considers that the UK has failed to fulfil an obligation under the Treaties or under the transition provisions set out in Part 4 of the Withdrawal Agreement before the end of the transition period, it can bring the matter before the CJEU within four years after the end of the transition period.
• Furthermore, Under Article 87, if the UK fails to comply with an administrative decision of an EU institution, body, office or agency under Article 95(1), the European Commission can bring the matter before the CJEU within four years of the decision date.

Therefore, after the transition period any CJEU ruling will no longer have direct effect. However, the CJEU will have an indirect influence for a number of years.

Next steps

EU leaders have already approved the Withdrawal Agreement and Parliament are expected to hold a vote in the coming days and/or weeks. If the Withdrawal Agreement is voted down, then the UK could crash out of the EU on 29 March 2019. Therefore, tech businesses should continue to monitor the situation closely and prepare for a ‘no deal’ scenario as far as they are able. What is clear, however, is that whatever form Brexit takes, if the UK tech industry is to continue business in the EU, then logically many aspects of that business – from data to payments to hardware and intellectual property – will have to adapt to and therefore at some level be influenced by the path that EU law takes in the future.

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