A letter from the Brexit secretary to the prime minister was recently leaked, complaining that the European Commission had begun issuing notices about the UK’s departure from the EU, without taking into account that a transitional period and future trade deal might be negotiated. In other words, the EU was preparing for ‘no deal’, and warning stakeholders accordingly.
I will not focus here in detail on the politic aspects of the letter, such as that the Brexit Secretary was complaining about the EU taking the UK government’s own threats at face value, and that he admitted that his department had researched whether the UK could complain to the Court of Justice of the European Union about the EU’s actions, despite our government’s continuing scorn for foreign judges deciding UK-related matters.
I will rather focus on those three recent notices in this series from the European Commission, which will have the most effect on lawyers.
The most recent one, issued in the last few days, concerns itself with data protection. If you look, it does not assume that there will be no deal. Rather, it says the following (and all of the three notices have similar paragraphs):
‘In view of the considerable uncertainties, in particular concerning the content of a possible withdrawal agreement, all stakeholders processing personal data are reminded of legal repercussions, which need to be considered when the United Kingdom becomes a third country.’
It reminds stakeholders that there are strict requirements about data transfers to non-EU countries. Lawyers should in any case be familiar with these in relation to transfers to the US during the period a couple of years ago after Safe Harbour was struck down and before Privacy Shield was agreed. Regardless of the US, these are the rules which govern all current data transfers from an EU Member State to a non-EU country.
In respect of data which has been transferred before Brexit, the EU some months ago published a position paper as part of the Brexit negotiations on the use of data and protection of information obtained or processed before the withdrawal date.
We should take note of the new notice, in order to prepare ourselves. We will not automatically be saved from difficulty by the fact that our data regime will be closely aligned with that of the EU on departure, given that we are adopting the EU’s new data protection package. (The Data Protection Bill, which affects this, is currently making its way through the House of Lords. To comply with the EU deadline, it has to become law by 25 May 2018.)
We will regardless become a third country on leaving the EU. This is one of the vital areas of the future negotiations, particularly so for our government since it wants to remain part of the EU’s intelligence-sharing and crime-detection community, for which authorised data transfers are crucial.
The second notice of interest to lawyers was issued in the run-up to Christmas in the field of civil justice and private international law. It deals with subjects which have become familiar in the Brexit negotiations: recognition and enforcement of judgements, judicial cooperation in areas like the service of documents and taking of evidence, and specific EU procedures like the European Payment Order Procedure or the European Procedure for Small Claims. All these will cease to have effect for us on our giving up our membership of the EU, and the notice advises stakeholders again to prepare themselves accordingly.
On the same day, the Commission also issued the third notice of interest to lawyers (there have been others in other fields), this time on the effect of Brexit on company law. This notice may have the most severe economic impact on the UK, and will affect company lawyers greatly.
Essentially, Member States will no longer be obliged to recognise the legal personality and limited liability of companies which are incorporated in the UK, but have their central administration or their principal place of business in the EU27. ‘As a consequence, depending on the applicable national or international law rules, such companies might not have a legal standing in the EU and shareholders might be personally liable for the debts of the company.’
Other rules – for instance, on disclosure, incorporation, capital maintenance and alteration, cross-border mergers and compulsory disclosure of certain company information in business registers - will also no longer apply.
As our Brexit Secretary pointed out, these notices do not take account of what either the transitional arrangements or the future trade deal will include. Since these negotiations are not yet concluded, these details cannot by definition be included at this stage. But the notices give some indication of how much ground there is still to cover - just in these three areas of interest to lawyers.