European Union: Brexit And Data Protection

Last Updated: 26 October 2018
Article by Monika Sobiecki

As over half a million people marched to Westminster this weekend for a People's Vote – a demand for a second referendum on the eventual Brexit deal – this put me in mind of one essential similarity between the UK referendum-hopefuls (on the one hand) and global Data Protection Officers (on the other): A desire for control over the direction of events following the 29 March 2019. Less than 6 months away from "Brexit Day", two questions asked daily by our global clients are: How will Brexit affect data transfers to and from the UK? And how best should we prepare?

A Brexit deal is essentially uncertain – ironically for the demonstrators, that uncertainty is only likely to be exacerbated in the short term by any prospect of a further referendum. A transition period covering data flows is similarly moot. The prospect of an adequacy decision is months or even years away, if the pace of progress in the European Commission's dealings with Japan and South Korea is anything to judge by.

Therefore, rather than crystal-ball gazing at more attractive alternatives, the only sensible approach, in my view, is to prepare now for the absence of a deal on data transfers – the so-called "Hard Brexit" scenario. A "Hard Brexit" for data privacy means the UK becoming, as of the later of 29 March 2019 or the end of a transition period which covers data flows, a "third country" within the meaning of GDPR.

The practical preparations required would include the following:-

  • Territorial Scope Assessment – a global business will already be familiar with exploring whether their non-EEA establishments are caught by Article 3(2) GDPR. A UK establishment will now have to ask themselves the same questions: (i) Are we offering goods or services to data subjects in the EEA? (ii) Are we monitoring the behaviour of data subjects, as far as their behaviour takes place in the EEA?
  • Accountability – if the answer to the territorial scope assessment above is "yes", then this should be acted upon by the UK establishment. However, if GDPR compliance programmes have been completed, then the UK establishment will be in a strong starting position. The assessment should be documented internally for the benefit of supervisory authorities in the affected Member States. It may also be beneficial for clarity to split away the UK Article 30 Records of Processing caught within extra-territorial scope of GDPR.
  • Appoint a Representative – the UK establishment should, subject to the exceptions in Art 27(2) applying, appoint a representative in writing in one of the Member States affected by the UK establishment's processing activities. For a business with multiple EEA establishments, another existing establishment may suffice.
  • Data Exports – in the absence of an adequacy decision, for organisations caught by GDPR, one of the safeguards in Article 46 GDPR must be selected for any data transfers to the UK. In many cases these will be the standard contractual clauses approved by the European Commission, although businesses who have Binding Corporate Rules in place may continue to rely on BCRs. Addressing Brexit issues will involve e.g. the review of intra-group agreements governing data transfers to re-badge UK establishments as Data Importers and processor contracts with vendors to ensure that adequate safeguards are in place.
  • Privacy Notices – privacy notices need to set out (where applicable) the fact that a controller intends to transfer personal data to a recipient in a third country as well as the safeguards which are in place. For organisations caught by GDPR, once the "data exports" task above has been completed, a minor redraft of privacy notices to capture the new additional information will need to be completed.
  • Main Establishment – for an organisation caught by GDPR to benefit from the One-Stop-Shop, the "main establishment" will have to be based in a Member State. Where the "main establishment" is currently in the UK, a defensible case may have to be built for why another establishment should be re-designated as the "main establishment" post-Brexit. In some circumstances, it may be that decision-making functions and resources will have to be shifted out of the UK to another establishment.
  • Reliance on Union or Member State Law – in certain circumstances, the GDPR makes provision for legal bases which align to Union or Member State Law. For example, in order to rely upon Article 6(c) or (e) GDPR as a basis for lawful processing. Where processing involves UK establishments they will not be able to claim reliance on UK laws in relation to processing which is caught by extra-territorial scope of GDPR in the same way that a US entity would not be able to rely upon US law. This may involve some creative re-thinking or risk decisions. If anyone is able to solve what I will euphemistically call the "Article 10" dilemma, I welcome answers on a (non-literal) postcard!

For UK establishments, the GDPR will be incorporated into UK law on 29 March 2019 as a result of the European Union (Withdrawal) Act 2018. Therefore, the story will be otherwise largely one of continuity in terms of other areas of the law, including data subject rights, controller and processor obligations and data export arrangements, save for any provisions relating to EDPB and One-Stop-Shop. Which leads me onto...

A Better Alternative for Data Privacy in the UK?

Rather than seek adequacy (or even, adequacy+), there may be a more attractive model for the continuing relationship of the UK with the EU in respect of data transfers.

By result of a Joint Committee Decision (JCD), the GDPR entered into force in the EEA EFTA States of Iceland, Liechtenstein and Norway on 20 July 2018. This enables the supervisory authorities of the EFTA States to participate fully in the one-stop-shop, the consistency mechanism and the European Data Protection Board (EDPB), save for the fact that they are not able to vote or stand for election as chair or deputy chair of the EDPB.

In the event that the UK became an EEA EFTA State, this would (i) enable the UK ICO to remain part of the consistency mechanism and the one-stop-shop (ii) enable the UK ICO, which is well-resourced and has a wealth of experience, to continue to approve and monitor Binding Corporate Rules and have a limited participatory role in the EDPB and, crucially, (iii) avoid all of the legal issues outlined above. From the perspective of data transfers, could this be the best possible ready-beaten path, save for full membership of the EU?

Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries. www.dentons.com.

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