UK: Understanding the full impact of Brexit on UK: EU data flows

While a range of outcomes, including a departure under the terms of the current Withdrawal Agreement, remains possible, it is important for businesses to plan for a no-deal Brexit, in which the UK leaves the EU without a withdrawal agreement or other deal. Here we look at the potential impact of a no-deal Brexit and the adoption of the Withdrawal Agreement on data protection compliance.

Sections 1-4 consider the position in a no-deal Brexit scenario, while section 5 looks at the position in a deal scenario, where the UK leaves on the basis of the EU/UK Withdrawal Agreement.

  1. Legal framework

UK data protection law is governed by the General Data Protection Regulation (GDPR), which came into effect across all EU member states (including the UK) on 25 May 2018, and creates a harmonised legal framework regulating the way in which personal data is collected, used and shared throughout the EU.

Should the UK leave the EU, the GDPR will cease to have direct effect in the UK. However, as the UK is committed to maintaining an equivalent data protection regime, a UK version of the GDPR will effectively apply following the departure date (exit-day).

  • This is achieved through the European Union (Withdrawal) Act 2018, which incorporates the body of EU law (including the GDPR) as it exists on exit-day, into UK law thereafter (UK GDPR).
  • A Statutory Instrument will apply necessary changes to the GDPR to make it relevant to the UK following departure from the EU – for example to remove references to cross-border data transfers with other Member States and participation in EU wide-institutions such as the EDPB.
  • These changes can be found within the Data Protection, Privacy and Electronic Communications (Amendments etc) (EU Exit) Regulations 2019.
  • The Data Protection Act 2018 will remain in place alongside the GDPR as supplementary legislation.
  • The Privacy and Electronic Communications (EC Directive) Regulations 2003 will remain in place, but references to the GDPR will automatically become references to the UK GDPR.
  1. Data transfers

The GDPR imposes restrictions on the transfer of personal data to a ‘third country’.

The UK Government has stipulated that following Brexit it does not intend to apply these restrictions on transfers of personal data from the UK to the EEA. Therefore, UK organisations will continue to be able to send personal data to organisations in the EEA. UK organisations will also be able to continue to rely on the EU/US Privacy Shield scheme to send personal data to registered entities in the US, but only where the US entity has updated its privacy notice to expressly extend protection to transfers from the UK. These are intended to be temporary measures, and in time the UK is expected to conduct its own adequacy assessments (including of EU member states). However, in the interim they offer welcome continuity and certainty.

The EU has not, however, granted similar modification in respect of transfers to the UK. Following Brexit, transfers of personal data from the EEA to the UK will be restricted. This will have a major impact on any organisation that routinely transfers personal data from the EU to the UK (including UK-based organisations providing services to customers in the EU).

  • Impacted organisations will need to adopt specific legal safeguards to support the lawful transfer of personal data to the UK, consistent with the requirements in Chapter V of the GDPR.
  • For many organisations the best approach will be to adopt the Standard Contractual Clauses (SCCs) which have been approved by the EU as a legal basis to safeguard the transfer of personal data to third countries.
  • It is important to apply the SCCs correctly to ensure impacted data flows are validly protected and organisations may find the toolwhich the ICO has developed for this helpful.
  • In the case of routine data transfers within a group of organisations, it may make sense to embed SCCs within an overarching data transfer agreement which regulates all intra-groud data transfers.
  • It is important to be aware that SCCs cannot be used to safeguard all transfers – for example SCCs do not exist for transfers between an EU-based processor and a UK-based controller (ie where a UK controller hosts personal data with an EU processor). This is a known area of risk to regulators, which impacted organisations may decide to ‘risk manage’ where data repatriation is not a realistic options.

The UK hopes to secure an ‘adequacy’ finding from the EU that will obviate the need for SCCs or other specific safeguards between the UK and the EU. The EU has indicated it’s prepared to consider this, but not until the UK has formally left the EU. An adequacy decision is unlikely within the first 12 months following exit-day.

  1. Dual regulatory exposure

If an organisation has processing activities in both the EU and UK, or is targeting customers or monitoring individuals in the EU from the UK (or vice versa), following Brexit it is likely that the organisation will be subject to regulatory responsibilities under both the EU and UK versions of the GDPR. This is due to the extra-territorial scope of the GDPR in Article 3. Depending on the circumstances, this may result in additional compliance requirements to:

  • Appoint a separate data protection office (DPO) for both the UK and EU;
  • Nominate a new lead supervisory authority in the EU as well as registering with the ICO for processing activities in the UK;
  • Appoint a local representative in the EU/UK, where you are processing data from outside the jurisdiction; and
  • Manage potential exposure to sanctions/fines under both the EU and UK regulatory enforcement regime, i.e. risk of double jeopardy for any infringement.
  1. Other actions to take

Be sure that all references in governance records, contracts and transparency notices to the EU/EEA are updated to reflect the post-Brexit position of the UK being outside the EU. This may require changes to:

  • Records of processing activities, insofar as these are impacted by Brexit;
  • Privacy Notices, which should refer to any data transfers to ‘third countries’ as we as include correct details of any DPO, local representative and/or lead supervisory authority;
  • Data Protection Impact Assessments (DPIA), which may need to be updated if they refer to a transfer which becomes a transfer to a ‘third country’ on exit-date; and
  • Contracts with third parties, if they include specific reference to the GDPR, EEA or anticipate a data transfer between the EU and the UK.
  1. Position under the Withdrawal Agreement

The UK and EU have negotiated the Withdrawal Agreement as a basis for securing a smooth transition in the immediate aftermath of the UK’s formal departure from the EU. The Agreement provides for a transition period until 31 December 2020 (unless extended) during which the UK will remain subject to all EU laws (other than those expressly excluded within the Withdrawal Agreement).

There are important provisions within the Withdrawal Agreement in relation to data protection which mitigate the impact of the issues referred to in the earlier part of this note:

  • The GDPR and related EU privacy laws (such as the Electronic Communications (EC Privacy) Regulations) will continue to apply to the UK during the transition period. There will be no immediate change in UK data protection law on exit-day;
  • The UK must continue to interpret and apply the GDPR and related EU laws consistent with wider EU legal principles. The UK courts will continue to apply decisions of the Court of Justice of the European Union (CJEU) and changes in EU law through the transition period;
  • The CJEU will continue to have jurisdiction in the UK and decisions on the GDPR may be referred to the CJEU during the transition period;
  • All references in EU law to ‘Member States’ and competent authorities of Member States are to be understood as including the United Kingdom and its competent authorities during the transition period. Importantly this means the UK will continue to be treated as a Member State for the purposes of the GDPR and so not be subject to the restrictions on data transfers to a ‘third country’ under Chapter V during the transition period. In addition, the ICO will continue to be treated as a relevant supervisory authority, and be able to maintain its role in the one-stop shop arrangements for cross-border transfers;
  • This is supported by principles in the Withdrawal Agreement that EU Member States must continue to apply GDPR in a way which does not discriminate against the UK;
  • The UK will however be restricted from participation in EU decision-making and governance bodies / offices. This makes it likely that the ICO’s role in the EDPB will be reduced to attendance in an observer capacity only; and
  • The GDPR will continue to apply within the UK as EU law after the transition period, insofar as any EU originating personal data continue to be processed within the UK post-transition, where the relevant data commenced before the end of the transition. This protective provision will fall away if the UK secures an EU adequacy decision at any time. This creates a backstop to protect EU residents’ privacy rights to ensure that EU resident data collected within the UK during transition does not lose GDPR protection just because transition ends. It is expected to be superseded by the UK securing an adequacy decision.

The Withdrawal Agreement also deals with the terms on which the UK will operate alongside the EU during the transition period. Although this is set out in a high level non-binding joint declaration, this joint declaration includes some clear positions of intent in relation to the free flow of personal data:

  1. A commitment by the EC to commence an adequacy assessment for the UK, with an ambition to adopt an adequacy decision by the end of the transition period. Securing an adequacy decision will be integral to supporting a free flow of personal data between the EU and the UK once the transition period comes to an end and avoiding the backstop noted above.
  2. High level principles to:
    • secure co-operation between data regulators;
    • facilitate electronic commerce and cross-border data flows; and
    • develop reciprocal arrangements for PNR data, DNA, fingerprint and vehicle registration data processing.

The Withdrawal Agreement provides a basis of regulatory certainty for a period of at least 20 months after the exit-date, effectively guaranteeing legal consistency in data protection laws and the free flow of data throughout that period. However, it comes with a considerable health warning, as the Withdrawal Agreement has been rejected on three separate occasions by the UK Parliament. If not ratified before the exit-date, the UK will leave the EU without any transitional arrangements in place.

  1. Further guidance

The European Data Protection Board (EDPB)Information Commissioner’s Office (ICO), and the UK Government (Department for Digital, Culture, Media and Sport (DCMS)) have all issued guidance on managing the impact of Brexit on data protection. We strongly recommend referring to these resources and any updates as the Brexit process continues.

For further information please contact Andrew Dyson (Partner, UK) or James Clark (Senior Associate, UK), or visit DLA Piper’s ‘Brexit: How can we help pages.

Download the GDPR Brexit flowchart.