The Situation: The United Kingdom is due to leave the European Union ("EU") on 31 October 2019. Negotiations between member states of the EU excluding the United Kingdom ("EU27") and the United Kingdom are ongoing, but it is not clear whether there will be an agreed departure or a "no deal" Brexit.
The Result: Businesses need to consider how a "no deal" Brexit would affect data transfers that they make between the EU and the United Kingdom and their data protection compliance arrangements.
Looking Ahead: Companies should take steps to mitigate possible disruption to data transfers caused by a "no deal" Brexit. They should also confirm that data transfers from non-European Economic Area ("EEA") countries to the United Kingdom remain lawful; that, where data transfers are made from the United Kingdom under the EU-U.S. and Swiss-U.S. Privacy Shield, the recipient has updated its compliance statement to reflect this; and whether they need to appoint a data protection representative in the United Kingdom and/or the EU.
After Brexit, the EU will treat the United Kingdom as a "third country". The General Data Protection Regulation ("GDPR") prevents EU entities from transferring personal data to third countries. Unless the EU Commission has granted an "adequacy decision" (establishing that the data protection regime of the destination is "essentially equivalent" to that of the EU), the parties use an approved data transfer mechanism, or an exception under the GDPR applies. On Brexit, the United Kingdom will adopt provisions equivalent to the GDPR as part of its withdrawal legislation, and similar restrictions will apply to data transfers from the United Kingdom to the EU.
The UK government's position is to maintain a close alignment after Brexit with EU data protection laws and seek an adequacy decision from the EU. However, the EU Commission has made it clear that an adequacy decision would only apply as part of an agreed departure from the EU and not a "no deal" Brexit. If there is a "no deal" Brexit, then there will be no interim period during which existing arrangements would continue while the United Kingdom sought an adequacy decision. The EU Commission has to conduct reviews of the 13 existing adequacy decisions by June 2020, and it remains to be seen if the United Kingdom would have any priority.
If there is a "no deal" Brexit, businesses will need to put arrangements in place to ensure that transfers of data between the EU and the United Kingdom continue to be lawful. For transfers from the EU to the United Kingdom, the EU Commission has said that EU companies must rely on the transfer mechanisms currently available under the GDPR. The most practical option will often be to use a data transfer agreement based on the EU Standard Contractual Clauses. The United Kingdom has said that UK companies can continue to send personal data from the United Kingdom to the EU after a "no deal" Brexit, given the close alignment of data protection rules, but that this position will be kept under review. The United Kingdom has also said that it will recognise existing EU adequacy decisions and accept the use of the EU Standard Contractual Clauses and Binding Corporate Rules after Brexit.
Data transfers from non-EEA countries to the United Kingdom will need to comply with the data protection rules of those countries. Where a country has an existing EU adequacy decision, it is likely to have rules restricting data transfers to third counties (which would, after Brexit, include the United Kingdom). The United Kingdom is working with these countries to make specific arrangements, and the position should be checked for each of them.
Modified arrangements will apply for transfers from the United Kingdom to the United States made under the EU-U.S. and Swiss-U.S. Privacy Shield. After a "no deal" Brexit, these transfers can continue to be made, provided that the recipient has updated its public commitment to comply with the EU-U.S. and Swiss-U.S. Privacy Shield to include transfers from the United Kingdom.
Businesses that consolidate personal data from EU jurisdictions before transferring it to another country should consider whether these arrangements remain valid and whether they should deal with UK-originated data separately after any "no deal" Brexit.
Other Compliance Steps
The GDPR has extraterritorial scope and applies to non-EU based companies that sell into the EU or monitor individuals located in the EU. These companies, which post-Brexit will include UK companies, must appoint an EU representative unless their processing of personal data is occasional, does not include large scale special categories of personal data and is low risk. Post-Brexit, the United Kingdom will have equivalent provisions for non-UK companies, including EU companies, that process data to sell into the United Kingdom or monitor UK-located individuals. Businesses should assess if either requirement means that they must appoint an EU or UK representative. If this is the case, then the representative needs to have a written mandate, and their appointment should be set out in applicable privacy policies.
Where businesses in the United Kingdom carry out cross border processing in the EU27 and the UK Information Commission's Office is its lead data protection regulatory authority, it should consider which EU authority will take on this role after Brexit.