Understand Your Rights. Solve Your Legal Problems
The dispute between the European Commission and AstraZeneca (AZ) rumbles on following the Commission’s decision to commence legal action against AZ for alleged breaches of the COVID-19 vaccine supply contract. Commission spokesperson Stefan De Keersmaeker confirmed it was the Commission’s view that “the terms of the contract, or some terms of the contract, have not been respected, and the company has not been in a position to come up with a reliable strategy to ensure the timely delivery of doses.” In a statement issued on 26 April 2021, AZ noted that it “regrets” the Commission’s actions but remains resolute that it “will strongly defend itself in court”. The dispute has also put UK and EU relations under strain, especially after the EU triggered Article 16 of the Northern Ireland Protocol, although they were quick to make a U-turn after widespread condemnation of this action.
Who is right and who is wrong? Nicholas Scott and Jade Brooks of Blaser Mills Law offer some insights on this dispute, how it could have been avoided and what it might say about the current state of UK/EU relations.
The problem in brief
The Commission has stated on numerous occasions that (i) AZ has failed, in breach of contract, to deliver the contracted quantities of AZ’s COVID-19 vaccine and (ii) in order to cure this alleged breach, AZ must send doses manufactured in the UK to the continent to make up for the shortfall arising from production problems at AZ’s Dutch and Belgium plants. AZ denies this.
What has AZ actually agreed to do?
So far as material, the contract says that AZ will use its “Best Reasonable Efforts” to (i) manufacture the 300 million “Initial Europe Doses” and (ii) “deliver [redacted] quantities of vaccine to certain distribution hubs following EU marketing authorisation.”
‘Best Reasonable Efforts’ is defined in the agreement as:
“the activities and degree of effort that a company of a similar size with a similarly-sized infrastructure and similar resources as AstraZeneca would undertake or use in the development and manufacture of a Vaccine at the relevant stage of development or commercialisation having regard to the urgent need for a Vaccine to end a global pandemic which is resulting in serious public health issues, restrictions on personal freedoms and economic impact…” .
Further, ‘Initial Europe Doses’ is defined in the agreement as follows:
“AstraZeneca has committed to use its Best Reasonable Efforts… to build capacity to manufacture 300 million Doses of the Vaccine, at no profit and no loss to AstraZeneca, at the total cost currently estimated to be [redacted] Euros for distribution within the EU [redacted] (the “Initial Europe Doses”).”
What were AZ’s delivery obligations?
The Commission claims that the contract contains binding obligations to deliver the Initial Europe Doses, essentially on demand and as determined by the Commission. However, the contract’s drafting does not support this, referring instead to “Best Reasonable Efforts” to deliver [redacted] quantities of vaccine to certain distribution hubs following EU marketing authorisation.” As set out above, the definition of “Best Reasonable Efforts” makes no mention of delivery, referring only to “development and manufacture.”
In fact, the sections of the contract dealing with delivery state that the parties “shall work together to identify the final delivery schedule for such Doses”. This is the sort of drafting you might expect to find in a framework agreement, e.g. delivery of commodities, where a shipping schedule has to be agreed to cover a period of months or even years, in order to accommodate the parties’ commercial needs. It is not at all obvious how this drafting creates an absolute obligation to deliver whenever the Commission demands it.
Choice of Law: Belgian vs English Law – might the Commission have been better off with English Law?
We do not pose the question above to be tendentious, but in order to test whether the Commission’s choice of Belgian law worsened its position. The UK government contract is subject to English law, which takes the approach of holding the parties to the obligations created by the words used in their contract. Whereas, Belgian law, (in common with other civil law systems) will focus on whether the parties acted in good faith and tried their best to deliver the vaccines. That is a more nebulous standard of performance, the pitfalls of which can perhaps be more easily avoided through the more precise manner of drafting obligations seen in English law commercial agreements.
How can such disagreements be avoided in the future?
The Commission’s contract betrays a certain lack of commercial common sense because it does not appear to give the Commission a great many (if any) contractual levers to effectively police the contract. By contrast, the UK government’s contract with AZ states that if any third party tries to force or persuade AZ to take any steps that would hold up supply of vaccine doses, the UK government can terminate the contract and activate various penalty clauses. However, the Commission’s approach seems to have been to rely more on the broader civil law concept of good faith, rather than the English law approach of spelling out in the contract what should happen. That has been to the EU’s detriment.
What could the Commission expect as a remedy?
It is understood that the Commission has waived its rights to sue AZ for any delay in delivery. The Commission could terminate the contract for a material breach, but this would not result in delivery of any vaccine doses, so it would seem self-defeating. Equally, it seems relatively unlikely that a court would order specific performance of the contract, as this would require diversion of doses from other countries, which would likely be prevented by some form of export control in those other countries.
Despite the recent legal action the Commission has launched against AZ, it seems fairly unlikely that it will actually result in delivery of more vaccine doses. As such, you have to question the merit of it.
Did the EU go too far in invoking Article 16?
Northern Ireland’s first minister, Arlene Foster, branded the triggering of Article 16 “an incredible act of hostility”. The Commission has acknowledged that it went too far, with the President of the Commission, Ursula von der Leyen, stating that “mistakes were made in the process leading up the decision to invoke Article 16, I deeply regret that”. Michel Barnier, the EU’s chief Brexit negotiator, has since stressed the need to ensure that we are “preserving the spirit of co-operation” between the EU and the UK and has called for the EU to step back from a dispute with the UK over AZ vaccines.
However, the AZ row is invariably linked to the other key issues that have impacted the UK-EU relationship recently - Brexit and trade. Clearly this remains a developing picture, but the fact that the Commission is suing AZ and has dialled down the rhetoric about export controls on vaccines might suggest an element of rapprochement between the Commission and the UK in these unprecedented times.
Nick Scott, Partner
Jade Brooks, Associate
Blaser Mills Law
Address: 107 Cheapside, London, EC2V 6DN
Tel: +44 (0) 203 814 2020
Email: nxs@blasermills.co.uk
Blaser Mills Law is full-service law firm based in London and the South East, offering a comprehensive range of legal services to businesses and private individuals. We act for blue-chip companies as well as SMEs, entrepreneurs and not-for-profit organisations.
Nicholas Scott is a highly experienced litigator recommended in the UK Legal 500 as “outstanding” and who has “tremendous knowledge and experience…always available and responds to challenges in a calm, decisive and unphased manner.” Specialising in complex high value commercial disputes – typically with a significant international element – he represents clients in both High Court litigation and arbitration (LCIA, ICC, AAA, LME, WIPO) and also has extensive experience of alternative dispute resolution including mediation, early neutral evaluation and adjudication. Nick was a key member of the Defence team awarded “Dispute Resolution Team of the Year” at the 2014 Legal Business Awards and “Litigation Team of the Year” at the 2014 Lawyer Awards.
Jade Brooks is an Associate in the Blaser Mills Dispute Resolution team. She specialises in all aspects of Commercial and Civil Litigation. Jade is recommended in the Legal 500 and was a finalist for Junior Lawyer of the Year in the Law Society Legal Excellence Awards 2018.
The European Parliament has backed the Brexit trade and security deal, a key step in ensuring that tariff- and quota-free trade between the UK and EU continues.
The Trade and Co-operation Agreement (TCA), which has been operating provisionally since January, was approved with 660 MEPs in favour and 5 against, with 32 abstentions. However, in an accompanying resolution the chamber described the 23 June 2016 Brexit referendum result as a “historic mistake”.
Lord Frost, the UK’s chief negotiator, said that the vote “brings certainty and allows us to focus on the future”.
Michel Barnier, Lord Frost’s opposite number in the Brexit negotiations, was less enthusiastic. "This is a divorce. It is a warning, Brexit. It's a failure of the European Union and we have to learn lessons from it," he told the European Parliament.
The deal does not address all the tensions that remain in the wake of Brexit. Northern Ireland trade remains covered under a separate protocol defining it as part of the EU’s single market, meaning that goods shipped to the country from the UK must undergo Eu checks.
While the TCA covers trade in goods between the UK and the Eu, it does not cover services – which make up the bulk of the UK economy. Other areas not covered by the TCA include foreign policy, financial services and student exchanges.
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The UK’s exit from the EU at the start of the year prompted a record loss in trade between the two blocs, with UK exports to the continent falling by 40.7% and imports falling by 28.8% in January. Though trade volumes have since increased, they remain below pre-Brexit levels.
Global law firm Hogan Lovells is opening a branch in Dublin, the firm announced on Tuesday.
The office will be the firm’s 17th to open in Europe and will initially focus on financial regulatory and antitrust work. A number of the firm’s London-based lawyers, who specialise in these practice areas, will relocate to the Dublin office.
“Putting clients at the centre of everything we do is a strategic priority for the firm, and having a presence in Dublin is about doing just that,” said Christopher Hutton, Hogan Lovells’ new Dublin office managing partner, in a statement. “Hogan Lovells opening an office there is welcomed by our existing clients, and also presents new opportunities. I am excited to head up the firm’s new offering in Ireland.”
The firm has not ruled out the possibility of offering training contracts or the opportunity for trainees to be seconded to its new Dublin office.
Hogan Lovells is the latest firm to open an office in Dublin following Brexit. Ashurst launched in the Irish capital earlier this month, while Dentons did so last September.
Prior to Brexit, international firms that maintained major offices in London would serve Irish clients from the UK. Circumstances changed last November when the Law Society of Ireland ruled that English- and Welsh-qualified solicitors who had previously gained admission to the Irish roll would be required to have a physical base in Ireland to maintain their EU practice rights there.
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Aside from the aforementioned firms, Dechert, DLA Piper, Fieldfisher and Pinsent Masons have all opened offices in Dublin following the Brexit referendum. It is likely that other international firms will soon do the same to continue to practice in Europe.
You’d be forgiven for assuming a global pandemic counts as a force majeure, but this isn’t necessarily the case: not a single reported case law or English law authority exists on the operation of force majeure clauses in the context of epidemics or pandemics. Not that a well-drafted force majeure clause can’t be relied upon, but the specific application in the UK of force majeure in the context of a pandemic is new and untested legal ground.
So, what exactly is a force majeure event? The starting point to determine this is the contract itself. If a force majeure clause is well drafted it will clearly spell what has been agreed between all parties that will constitute a ‘force majeure’. Typically, this will include ‘fire’, ‘flood’, ‘diseases’ and, notably, ‘pandemic’. Contracts also commonly use a form of catch all wording such as an ‘event beyond a party’s reasonable control’.
In the context of COVID-19, any references to ‘disease’ or ‘pandemic’ will be most likely to help if one party is seeking to rely on the force majeure clause. However, many clauses are far more limited in scope, for example, clauses that solely refer to an ‘Act of God’. Is COVID-19 an ‘Act of God’? Or is it an ‘event beyond a party’s reasonable control’?
Without a statutory or common-law definition of force majeure, it’s vital to interpret the contractual clause carefully to assess whether the current pandemic together with the rules and regulations surrounding it amount to a force majeure event. Scrutinised closely by the courts, force majeure clauses are generally understood to amount to events or circumstances beyond the reasonable control of a contracting party or both parties, rendering performance of the contract impossible.
For example, if a pandemic’s impact makes trading conditions more economically challenging as materials for supply and manufacture of goods are more expensive, this is unlikely to count as force majeure event. Commercial conditions are undoubtedly tougher, but this in itself doesn’t make performance impossible. The affected party may be paying more for materials, but their ability to perform the contract is not compromised. The ‘event’ in question must be the operative cause making it physically or legally impossible for one or more parties to fulfil their contractual obligations.
f an ‘event’ does make performance of the contract impossible, a contracting party can usually rely on the force majeure clause. If established, force majeure may allow for the suspension or cancellation of the affected party’s contractual obligations.
If an ‘event’ does make performance of the contract impossible, a contracting party can usually rely on the force majeure clause. If established, force majeure may allow for the suspension or cancellation of the affected party’s contractual obligations.
So, what do business owners do if their contract doesn't contain a force majeure clause or the clause doesn’t apply in the particular facts of their case? Here, businesses could look to the ‘doctrine of frustration’.
Cases on frustration have not traditionally come before the English courts with any great regularity, but recent circumstances – such as Brexit and COVID-19 – could see it being used more often. Be warned, though: if a contract contains a force majeure clause you may not be able to rely on the ‘doctrine of frustration’, because you can’t automatically substitute one concept for another.
Frustration is a common law concept meaning that in order to rely on it, a party need not point to a specific term of the contract; it exists wholly outside the four corners of an agreement and can be relied on provided that the party seeking to do so can make up the key elements of the doctrine. If established, frustration automatically brings the contract to an end without any requirement to give notice or take any particular steps. However, this doesn’t mean the contract was invalid from the outset. A contract is held to be ‘frustrated’ when an unforeseen event occurs after the date of the contract that is outside the party’s control and, essentially, makes it impossible for a party to perform their contractual obligations, or means that performing the contract would be so radically different to what was originally agreed that it becomes unfair to hold the parties to their original agreement.
It’s unclear at this stage whether COVID-19 will be seen as an event of ‘frustration’, and there are no English authorities on whether a pandemic will give rise to ‘frustration’. There’s bound to be judicial sympathy for parties severely impacted by the pandemic, but that doesn’t mean the pandemic will necessarily give rise to an event of ‘frustration’ in the majority of cases.
‘Unprecedented’ is a word we often use, but pandemics are not as unusual as many would think: COVID-19 isn’t the first pandemic we've seen since the Millennium – as recently as 2000 the World Health Organisation declared the H1N1 virus a pandemic. The courts, no doubt wary of opening the floodgates, will probably continue their fairly restrictive approach to finding that cases have been frustrated by external events, and we must all watch carefully how they deal with these vital issues as events unfold.
John Warchus, Partner & Head of Commercial & Technology Group at law firm Moore Barlow
31 December 2020, did not only mark the end of 2020, which has been a year like no other, it also marked the end of the Brexit transition period.
In terms of changes to the employment law landscape, from 1 January 2021, any legislative changes are unlikely to come immediately and the scope of any deregulation may be limited by level playing field provisions included as part of any trade deal with the EU. The changes to retained ECJ case law are also likely to take time since cases will first need to reach the appellate court level for any departure to happen. From an immigration perspective, the changes are going to be more immediate as on 1 January 2021 the new points based system will be implemented for new arrivals from the EU, EEA and Switzerland.
There are a number of things that employers can do to prepare which include:
The Government scrapped its plans to introduce its widely-criticised Job Support Scheme and announced that the Coronavirus Job Retention Scheme (CJRS) (the ‘furlough’ scheme) will be extended and run until 31 March 2021, with a review to take place in January 2021. Employers should continue to watch this space for further developments but inevitably will have to consider whether or not they will make redundancies when the scheme ends.
The roll out of the vaccine means that there is a light at the end of the tunnel for businesses but in many cases, the damage has already been done. Employers should remain alive to any collective redundancy consultation deadlines ahead of the scheme ending and ensure that if they intend to make 20 or more redundancies within one establishment in 90 days or less, they start the consultation process as soon as the redundancies are contemplated and in any event no later than 30 days before the first dismissal takes effect – and if that number is 100 or more, they will have to do so 45 days ahead and notify the Secretary of State in writing.
Another matter directors should be alive to is the wrongful trading provisions which impose personal liability on directors found to have over-traded while a company was insolvent – and if found liable, directors can be ordered to contribute to the assets of the company. When a director concludes (or should have concluded) that there is no reasonable prospect of the company avoiding an insolvent liquidation or administration, they have a duty to minimise potential loss to the company’s creditors.
In March this year, the Government suspended wrongful trading provisions so that directors could continue to trade through their companies without concern that they would be personally liable. This suspension ended on 30 September 2020. Directors are therefore advised to act with utmost caution and keep matters under continual review. In particular, it is prudent to:
Employers are likely to remain subject to the same considerations in terms of asking employees to return to work while the threat of the pandemic is ongoing – in relation to individuals who refuse to or cannot work for health reasons, these can be split into four categories:
a. Clinically extremely vulnerable individuals as defined in the Government guidance.
b. Higher risk individuals as defined in Government guidance.
c. Individuals who live with or care for clinically extremely vulnerable or higher risk individuals.
d. Individuals who are not clinically vulnerable or at higher risk but are simply worried about catching the coronavirus or passing it onto others.
In relation to the first category of individuals, there are clearly health and safety and whistleblowing and/or discrimination concerns that employer and directors should be alive to (in particular directors can be criminally responsible for health and safety failures). As vaccines continue to be rolled out, there is also debate whether employers could make it compulsory for employees to take the vaccine.
In relation to asking the second category of individuals to return to the office after the dangers of the pandemic have passed, employers should be sensitive that if the individual has shown they can work from home effectively and the purpose for them to be in the office is to be monitored or due to a lack of trust this may undermine the duty of trust and confidence owed by the employer to the employee. The best way to approach such conversation would be to ask the individual what they would like to do and explain the purpose behind why they are required to be in the office.
Employers should also be alive to the possibility that the individual could make a statutory flexible working request in relation to homeworking whether for permanent homeworking or working part at home and part in the office. Again, if the individual has shown that they can work from home effectively and has proven their productivity and commitment over an extended period of time, employers will be in a difficult position to refuse that individual’s flexible working request if it is framed in reasonable terms.
Employers may wish to start considering what the future of working will look like more generally. The pandemic has certainly accelerated the trends with regard to flexible and home working and has given employers the opportunity to evaluate the purpose of the office space and the use of new technologies to enable remote working.
There is also a question of what benefits will look like in the future – the current popular benefits such as season ticket loan, cycle to work scheme and so on may be out of touch with the future workplace. Would salaries be lower or higher on the basis the individuals do not have to commute as often and/or the employer saves cost by not renting as big an office space? The change in approach to these will no doubt begin to emerge as we come closer to tackling the pandemic and returning to what will inevitably be a different normal.
By Aleksandra Traczyk, Solicitor at Winckworth Sherwood
We all know 2020 made an impact – and as we look at the year ahead, there are a few repercussions of the incredible strain placed on businesses that are likely to come into the limelight as a result. While there are some global trends in litigation – like litigation funding and class actions - some Scottish specific trends are also worth highlighting. With that in mind, here are the five key things for litigators to watch in the year ahead:
Inevitably a lot of the work done by litigators over the last year has been in relation to frustration of contracts. Frustration is, by and large, the same north and south of the border and over time the rules in each jurisdiction have gradually become more aligned. The most striking example of that is in relation to leases. In England, it used to be the case that leases were considered to be a special category of contract due to the property rights created by them. In Scotland, despite property rights also being created, that was never the case. Leases were just another contract capable of being frustrated. The English courts have, for some time now, accepted that leases can be frustrated but there are no examples of them putting that into action. In Scotland, successful frustration arguments are few and far between. In the year ahead, we can expect more arguments being made that leases ought to be brought to an end. Whether these arguments will be successful is quite another thing.
We have been warned about a flood of insolvencies for some time now and, no doubt, the failure of major businesses can have a trickle-down impact on a multitude of smaller business partners. However, the government protections in this area remain strong with the protections against winding up petitions and statutory demands being continued until March 2021 and with the extended moratorium and the restructuring plans firmly in place. Much in this area may depend on how the government deals with repayment of loans or the end of furlough. Much will also, of course, depend on how fast restrictions are eased and how quickly sectors of the economy recover. The statistics indicate that insolvencies were down 43 per cent in 2020 on where they were in 2019. That suggests that the measures in place have propped up both companies failing as a consequence of the pandemic and companies which were failing anyway. It is perhaps the latter which will be first to go to the wall when the protections end.
One of the key changes to Scots law in 2020 has been the introduction of success fee agreements allowing solicitors to share in the spoils of the litigation rather than charging a fee in the usual way. Success fees, in the form of damages based agreements or conditional fee agreements, have traditionally been regarded in Scotland as pacta de quota litis (which is similar to the concept of champerty in England) and accordingly unlawful. Scots lawyers are yet to take full advantage of their ability to charge in this way and the benefits to business are very significant. Small and medium sized businesses already write off millions of pounds of bad debt every year because of a reluctance to incur the legal costs involved in pursuing that debt. The pandemic may leave many businesses with legitimate claims and little money to pursue these claims, so 2021 may well be the year that success fee agreements come into their own.
At the moment, one of the most difficult technical issues in Scots law is prescription of claims due to the passage of time. The Supreme Court has, in recent years, done its best to clarify matters but largely without success. There is now a slightly unsatisfactory position where we have conflicting judicial decisions on the issues arising out of the interpretation of section 11(3) of the Prescription & Limitation (Scotland) Act 1973 relating to awareness of loss. It is fair to say that all Scots lawyers are praying for some more clarity in this area. Some of the existing problems foreshadowed by these cases may be cured by the introduction of the Prescription (Scotland) Act 2018 – but perhaps not all.
Some Scots law trends are reflected across the whole UK. As we exit the European Union, we reflect on the constitutional implications of the process itself and the supervisory powers of our courts. The rule of law has its limits but what these should be will be a major topic for discussion in 2021. In July 2020, the UK government launched an independent review of administrative law looking at questions such as - whether the terms of judicial review should be written into law; what grounds and remedies should be available against the government and, most importantly, whether certain decisions by the executive should be decided on at all by judges. The last of these questions will not be easily decided and the constitutional implications for Scotland and the UK will be significant no matter what decision is reached.
Richard McMeeken is a partner and solicitor advocate in the litigation team at independent Scottish law firm, Morton Fraser.
Brexit
A word that will trigger us all: for either good or bad reasons. After four years, the UK finally left the EU and by the end of 2020, the transition period ended and Britain went its own way. But what does this mean?
On December 24th the sides agreed on a trade deal, which will inevitably leave doing business with EU states a little tougher than before. Work visas will be required for those delivering a service (auditing accounts, performing concerts or working as a chef, for example), and those staying for business for longer than 90 days. There will no longer be automatic recognition of professional qualifications - people will need to check each country's rules to make sure their qualifications are still recognised. With each country having its own rules and regulations, things may become tricky. Whilst some (including myself) may mourn over the death of free roaming in EU countries, businesses have bigger problems at hand, one of them being: more paperwork. Even though it has been agreed that there will be no taxes on each other's goods when they cross the UK and EU borders and no limits on the amount of things that can be traded, traders in England, Wales and Scotland will now have to make customs declarations (similar to when dealing with countries elsewhere in the world). Some products, including plants, live animals and some foods, will also now need special licences and certificates. Other products will have to be labelled in specific ways, requiring businesses to be more diligent when trading.
Will the UK become a laughing stock based on the Prime Ministers handling of COVID, or will Britain’s economy eventually flourish with these new trade (and other) regulations? Only time will tell.
Brexit will bring forth many changes, but one of the selling points for Britain’s divorce from the EU was due to wanting more power and freedom to allow the UK to steer the ship in the direction it wanted to go in. So, even though trade with the EU will become trickier, the UK is free to negotiate its own trade deals with other countries, like the US.
Despite the changes many aren’t fond of and will see as an inconvenience, independent Britain also has a lot going for it, bringing a little light into the mysterious tunnel of unknown circumstances. The UK’s membership of nato, the G7, the G20, the Commonwealth, and UN Security Council all bring influence. The country now has more freedom to try to sway the world in ways that suit British interests, whether on trade, climate change or democracy and only time will tell if Boris’ reign as Prime Minister will influence the world; will the UK become a laughing stock based on the Prime Ministers handling of COVID, or will Britain’s economy eventually flourish with these new trade (and other) regulations? Only time will tell.
U.S. Presidential Transition
A good chunk of the world let out a deep sigh of relief when Joe Biden won the US presidential election. It was a long battle, with Trump crying ‘fraud’ and ‘stop the count’, but results - after recounts - eventually showed Biden will be the next President of the United States. What does this mean for the U.S and the world?
With the U.S. nation becoming more polarised and divided when addressing race, equality and trust in authorities (reminder: ‘fake news’), Biden has quite a challenge of cleaning up Trump’s mess.
On the other side of the coin from Trump’s ‘America First’ stance, Biden has a more traditional take on America's role and interests; a stance that has been grounded in international institutions established after World War Two, and based on shared western democratic values. Changes could possibly include: returning to the World Health Organisation, thus changing response towards COVID; rejoining the Paris Climate Agreement and making climate change a priority by promoting an ambitious $2 trillion dollar plan to achieve goals for cutting emissions; reconciling relations with Iran and rejoin the Joint Comprehensive Plan of Action (JCPOA) - a plan which Trump called the “worst deal ever”, consequently pulling America out of it in 2018 imposing various sanctions on Iran. If Iran returns to compliance, Biden will lift the sanctions, which Javad Zarif, Iran’s Foreign Minister supported, with: “We too can immediately return to our full commitments in the accord.”.
With the U.S. nation becoming more polarised and divided when addressing race, equality and trust in authorities (reminder: ‘fake news’), Biden has quite a challenge of cleaning up Trump’s mess. Trump has, as succinctly said on The Economist, “compared intelligence agencies to Nazis, rubbished intelligence that displeased him and replaced professionals with unqualified sycophants” and Biden will now have to not only clean up Trump’s damage but also reform national intelligence by ensuring the directors of national intelligence actually have the relevant experience to advise their country’s leader.
In general, Biden is more receptive to issues that U.S citizens are concerned about: from his "build back" programme which will create business support for minorities through a $30bn investment fund to tackle institutionalised racism, to repairing broken relationships with US allies and promising to reverse Trump policies that separate parents from their children at the US-Mexican border. Such changes may not be easy, however, with the potential of Biden facing opposition due to some being quite sceptical about his plans, but we can hope big reforms will happen.
Our changes in response towards technology will influence the regulations at hand.
Cyber Space & Tech Power
I could take this time to discuss the impact of COVID and the economy, but we are all most likely aware. From remote working to crashing markets, we all lived through the pandemic together and are conscious of the impact it has had, especially in relation to technology advancement. The past year has accelerated the adoption of many technological behaviours, from Zoom meetings to increased online shopping causing the demise of the once loved high street, causing tech usage to accelerate more than predicted. Things may return to the old ‘normal’ for some once the pandemic is more under control, but it is safe to say tech has been happily embraced and will remain to be a big part of businesses and everyday life in the years ahead. And I am not just talking about connecting to Teams to keep your company up to date - that comes with risks and perhaps more needs to be done to curtail the average hacker attacking the average company. But, as the world has rapidly increased its tech usage in all areas, from defence to transport, cyber attacks become more of a problem. In 2011 Leon Panetta, America’s secretary of defence at the time, commented that “the next Pearl Harbour…could very well be a cyber-attack”. Sounds ridiculous almost, especially when she compared it to the likeness of 9/11. But last year we saw a cyber attack that shut down the computers of a hospital in Düsseldorf, which left a woman needing urgent surgery sadly dying after being transferred to another city. Hackers have also repeatedly demonstrated the ability to seize control of cars that have internet connection, leaving its passengers vulnerable. So, it is not hyperbole to say a cyber attack can be deadly. It very well can be.
Our changes in response towards technology will influence the regulations at hand. On a less murderous scale (I hope), we can look at the reaction towards BigTech. I addressed late last year, on how BigTech is now seen to have too much power, thus causing Lawmakers to analyse and decide how to tackle this, especially for the betterment of BigTech users and other competing, smaller tech companies. With Google promoting Google’s products over others and Facebook purchasing companies they see as competition, we look towards 2021 with curiosity on how Lawmakers may try to take back power or level the playing field, at least. It may take longer than one year, of course, as with anything that has been mentioned in this article, but we can look to hope that some changes that are coming our way will set a more progressive, positive year(s) ahead. Anything will be better than 2020, right? We hope so.
Facebook will shift its entire UK user base into user agreements with its corporate headquarters in California, ending its current relationship with Facebook’s Irish unit and placing them out of reach of European privacy laws.
The move was initially reported by sources speaking with Reuters, with Facebook later confirming the details.
“Like other companies, Facebook has had to make changes to respond to Brexit and will be transferring legal responsibilities and obligations for UK users from Facebook Ireland to Facebook Inc,” the company’s UK arm said. “There will be no change to the privacy controls or the services Facebook offers to people in the UK.”
UK users will continue to be subject to UK privacy law, which currently mirrors the European Union’s General Data Protection Regulation (GDPR), though it will no longer be governed by Facebook’s office in Dublin. The move comes on the heels of the EU’s announcement of stricter regulations for tech “gatekeepers” and how they handle data.
EU privacy law is currently among the world’s strictest, giving users a greater degree of control over what how much of their data they allow companies to access. US law favours the platforms themselves to a greater extent, with the 2018 US Cloud Act having made it easier for the US government to share companies’ data with UK law enforcement.
While the US government has recently launched antitrust lawsuits against big tech companies, lobbyists in the industry expect that incoming tech regulations will be more favourable to tech giants than those currently levied by the UK and EU.
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The UK is also introducing new measures calling for heavy fines on social media platforms that fail to adequately curb harmful content, with the potential to block such platforms from being accessed in the UK if they refuse to comply.
The UK government said on Tuesday that it would drop clauses in legislation that breached the Brexit Withdrawal Agreement after reaching a deal with the European Union on future management of the Ireland-Northern Ireland border.
Cabinet Minister Michael Gove announced that he and European Commission Vice-President Maroš Šefčovič had come to “agreement in principle on all issues, in particular with regard to the Protocol on Ireland and Northern Ireland”.
The Withdrawal Agreement, which the UK and EU signed in January, included a protocol that would keep Northern Ireland as part of the EU’s single market and customs union at the end of the Brexit transition, which was intended to prevent the return to a hard border with the Republic of Ireland and the possibility of renewed sectarian violence.
The draft Internal Market Bill released by the UK in September contradicted this arrangement by allowing for the UK to make all decisions relating to declarations of goods and customs arrangements in Northern Ireland. Northern Ireland Secretary Brandon Lewis admitted at the time that the clauses would break international law “in a specific and limited way”.
While separate to wider trade negotiations, the removal of the controversial Internal Market Bill clauses in the new agreement removes a significant point of contention between the UK and EU. The European Commission had previously issued a legal challenge against the UK over its refusal to alter the legislation, which it called “a breach of the obligation of good faith”.
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Amanda Pinto QC, Chair of the Bar Council, said the organisation was pleased by the government’s U-turn, but added that it should not have been necessary. “We are disappointed that the initiative was ever adopted, but this course of action should demonstrate to all – including our potential trade partners – that Britain holds itself to the rule of law,” she said.
Ongoing trade talks between the UK and EU have yet to find a solution for managing almost $1 trillion of annual trade. The temporary arrangements that currently exist will expire at the end of the year.
Alexander Edwards, partner at Rosling King LLP, offers Lawyer Monthly his advice for EU businesses on coping with changing data regulations.
The 21st century is set to be defined by data. As power shifts from Wall Street to Silicon Valley, the cataclysmic growth of both information and communications technology has created a world in which data exists as the most valuable commodity. This necessitates myriad legal, economic and political frameworks that safeguards how it is used.
In the EU, General Data Protection Regulation (GDPR) was implemented in 2018 to protect and regulate the transfer of personal data throughout the European Economic Area (EEA). It also governs the transfer of data outside the EEA and can grant a decision of adequacy in relation to a third country.
With regards to the transfer of personal data to the US, an adequacy arrangement was in place that recognised the US’ Privacy Shield framework. A recent judgement by the European Court of Justice (ECJ) however has effectively removed adequacy status for the Privacy Shield and has brought considerable uncertainty to data transfer between the US and EU. It is vital, therefore, that EU and British companies stay alert when it comes to transatlantic data transfers.
The Privacy Shield Framework, approved and adopted in July 2016, placed requirements on US companies to protect personal data and provide redress mechanisms for data subjects.
That was 2016. Fast-forward to 2020 and the ECJ judgement handed down in July, known as the Schrems II case, the Privacy Shield Framework is no longer a valid mechanism by which to transfer personal data out of the EEA and into the US.
Behind the decision lay the central concern that, under US domestic law, US public authorities are able to access personal data transferred from the EU to the US for national security purposes. This, according to the ECJ, is a limitation on the protection of personal data and fails to meet the standards and protections afforded by EU law. Furthermore, US legislation fails to grant data subjects actionable rights against US authorities before the courts.
The Privacy Shield Framework placed requirements on US companies to protect personal data and provide redress mechanisms for data subjects.
In addition, the ECJ held that while the standard contractual clauses mechanism was valid to allow transfers of personal data out of the EU, in practice, they may still not constitute a lawful basis to transfer personal data to the US. This is because data exporters will need to demonstrate that data transferred to the US under the Standard Contractual Clauses (SCC) mechanism would still be afforded equivalent levels of protection. Guidance as to how companies can do this is yet to be released but companies are advised by the ICO to conduct a risk assessment as to whether SCCs provide enough protection.
Given its far-reaching implications, the impact of this judgment is potentially a huge issue for both US and EU companies and could hamper EU – US data flows. As outlined by the Information Commissioner’s Office (ICO), “international data transfers that are so vital for the global economy [may] suddenly become open to question”. The European Commission and European Data Protection Board (EDPB) are now working to formulate more comprehensive guidance on extra measures which may need to be taken when transferring data to the US.
The decision does not have a grace period, meaning that the Privacy Shield was invalidated from the date of the judgement, which was 16 July 2020. Any transfers subsequent to this date which rely on the Privacy Shield framework are, thus, illegal.
The decision made is likely to result in many companies facing a large amount of administration and legal costs in reviewing existing contracts, drawing up new contracts with suppliers or amending existing contracts to ensure that appropriate safeguards are in place.
Given its far-reaching implications, the impact of this judgment is potentially a huge issue for both US and EU companies and could hamper EU – US data flows.
If you are concerned that the invalidation of the Privacy Shield Framework may affect your business, you should take the following steps:
With Brexit on the horizon, the UK will become a third country on 1 January 2021 in the eyes of GDPR. As such, the UK will be looking for an adequacy decision from the European Commission to enable the continued smooth transfer of personal data to and from the EU. However, the Schrems II decision highlights that any such decision could be challenged in the future, which will doubtless cause further headaches for companies and serve only to hinder EU-UK data flows going forward.
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Understandably, this would be a huge blow to economic activity at a time when countries are trying to overcome the effects of COVID-19. While the ICO has pledged to “continue to provide practical and pragmatic advice and support” as well as apply “a risk-based and proportionate approach”, companies should remain alive to the risks and their obligations under GDPR should they transfer personal data to the US.
It is vital that companies continue to review and consider guidance and advice as it becomes available and look to react promptly to any recommendations or requirements in such guidance. With Brexit also looking to impact data flows between the EU and the UK from 1 January, companies should start to take a proactive approach to evaluate how the Schrems II decision could impact them and ensure that they have a clear picture of what data flows they have.
Whether or not an agreement will be reached to replace Privacy Shield with another form of third country data transfer mechanism remains to be seen. However, given the central concerns of the ECJ with US domestic law and its protection of personal data, it seems unlikely that a replacement will be achieved any time soon.
