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2016-06-30 07:58

Brexit from the online world perspective

Brexit from the online world perspective

Brexit represents both a fact and an obstacle for all EU businesses – especially if they have been operating on the British market or working in cooperation with British suppliers. Unfortunately, the online industry is no exception. Małgorzata Jankowska-Blank from Gemius writes about Brexit from the online world perspective.

Although it is currently hard to predict how the model of cooperation between the United Kingdom and the European Union will be brought in as a result of the negotiation of the exit terms, it is possible to identify a number of the most important consequences, quite apart from the purely economic outcomes, that will affect all EU businesses, including those operating in the digital market.

Your Single Digital Market

A number of initiatives currently being developed by the European Commission, known jointly as the ‘Digital Single Market’, which should make it much easier for businesses from the EU to compete in the digital market with non-European players, will no longer apply to the UK. But the UK is where many companies have their European offices, the British market itself being of key importance for European businesses. Especially due to the expenditure ratio for online advertising.

Contracts

The greatest risk will concern the long-term contracts regulating cooperation between businesses from the EU and their UK-based contractors. At the very least, contracts related to data processing, analytical, or advertising services provided by British companies or for the British market will have to be checked for their compliance with the applicable law, which may be subject to change. That means additional costs – especially during the period of uncertainty, before the specifics of the exit are established. It will be worth following the rules, especially for products or services being delivered directly to the British consumer. In terms of purely practical problems – for commercial contracts, issues related to exchange rates will also be important. If the currency of the contract is euros, and the contract is for the provision of services for two markets, one of them being the UK, then it gets interesting. Negotiated contracts will have to contain ‘conversion’ clauses or provide an option to terminate the contract in the event that it becomes unprofitable. With regard to contracts that are already concluded or ongoing, lawyers also face the fundamental question of whether Brexit can be considered as force majeure. It might seem unlikely; still, with it being quite common for contractual clauses to recognise government actions, for example, as acts of force majeure, the answer is not clear. At the moment, these would appear to be the kind of scenarios where one of the parties, relying on force majeure, will want to get out of the contract.

Personal data

The issue of use of personal data presents an interesting scenario. It is worth noting that the EU General Data Protection Regulation (GDPR) will enter into force on 25 May 2018. It seems highly likely that the regulation will also apply in the UK, since there isn’t enough time for the country to exit the EU before it enters into force. However, after leaving the EU, it may be that the UK, being considered a third country, with all the associated consequences, has no legal act to regulate the processing of personal data at the level guaranteed by GDPR, or that the level of protection is insufficient. In terms of offering goods and services to EU citizens, or even monitoring their behaviour, businesses from the UK or those with UK offices from which they previously served the European market will have to meet the requirements of GDPR. On the other hand, European businesses transmitting personal data to entities based in the UK will be subject to regulations concerning the transfer of personal data to a third country. Most probably, the European Commission will accept by way of a formal decision that the United Kingdom ensures an adequate level of data protection, but until then, the transfer of data to the UK will require the use of additional security measures, e.g. binding corporate rules or model contractual clauses.

Litigation, adjudication

Not every cooperation goes perfectly. Mutual recognition and enforcement of adjudications in the EU member states makes it much easier to pursue claims, including debts owed to businesses. The UK being outside the EU means it will be outside this mechanism, so EU businesses will once again be subject to higher costs right from the start. In light of the above, it seems that arbitration may gain importance as an alternative means of dispute settlement.

Intellectual property

Naturally, the law on intellectual property in the UK is currently based on EU law. However, the direction in which it may develop in the future is a mystery. European businesses will have to apply separately for the protection of trademarks, patents and industrial designs in the UK. The uniform procedures that were created for the EU will no longer apply to the UK.

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Type of Content

opinion

Author:

Małgorzata Jankowska-Blank

Head of the Legal Department at Gemius

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