Tuesday, 29 August 2017

How Frankfurt could benefit from Brexit: WHU-Otto Beisheim School of Management Study

Jane Lambert

Frankfurt Main Finance, an organization consisting of the Hesse state government, the local authorities of Frankfurt and Eschborn, Germany's leading banks, major financial institutions from other countries, international law firms and other businesses, has commissioned WHU-Otto Beisheim School of Management, one of the world's leading business schools to assess the economic benefits of Brexit for Frankfurt am Main and its surrounding region. In Brexit brings up to 88 thousand new jobs in the Rhine-Main region 28 Aug 2017 Sabine Knöß interviews Professor Lutz Johanning and Moritz C. Noll of the Business School's Capital Market Research department who carried out that work.

Those academics concluded, on the most optimistic case, that if 10,000 new banking jobs are created in the banking sector over the next 4 years they will lead to the creation of 88,000 new jobs in the Frankfurt Main conurbation as a whole. Most of those jobs will be in the support sectors needed to accommodate an extra 10,000 bankers. Even on a conservative estimate, they calculate that there are likely to be nearly 36,000 new jobs in the conurbation.

Noll explained their methodology as  follows:
"We extrapolated the existing statistical data on the employment market in Frankfurt and the region into the future with the help of an empirical model, taking the effects of the Brexit into account. To ascertain and arrive at meaningful figures for the purposes of further planning, we placed a high priority on two factors. Firstly, a valid data basis has been very important for us. Our study is therefore based on employment market data from the German Federal Employment Agency (BA) covering the past nine years. Secondly, we looked for statistical models that have already been effectively applied in the scientific community."
The interview does not state how the total of 10,000 banking jobs has been computed though there will undoubtedly be some as a number of banks have already announced an intention to transfer some of their operations from London to Frankfurt.

Frankfurt is not the only financial centre in Europe that hopes to benefit from Brexit. Amsterdam, Dublin, Madrid and Paris are also competing for the business that London could lose and all have their own unique attractions. Dubin is capital of the largest English speaking common law country remaining in the EU with close links to the United States and Commonwealth and Amsterdam, Madrid and Paris have similar cultural attractions to London.  From an IP perspective, Frankfurt has many advantages. It is thought to be easier to obtain patents for software implemented inventions than the UK and its courts are considered to be claimant friendly (see the IPO's report Building the Evidence Base on the Performance of the UK Patent System which I mentioned in my article of 26 Aug 2017). That should benefit fintech companies in the region.

Should anyone wish to discuss this article or the legal consequences of Brexit generally, call me on +44 (0)20 7404 5252 during normal office hours or send me a message on my contact form.

Saturday, 26 August 2017

New Position Papers from DxEU

Jane Lambert

Mr David Davis and his civil servants have been busy. While everyone else in England and Wales has been looking forward to the late summer bank holiday they have been preparing for the third round of talks with the Commission's Art 50 Task Force on 28 Aug 2017 (the programme for which is here). They have also produced a number of position papers and future partnership papers on data protection, enforcement and dispute resolutioncross-border civil judicial cooperation and future customs arrangements even though none of those "future partnership issues" is yet on the table.

The most interesting of the "future partnership" position papers is the enforcement and dispute resolution position paper which I discussed in HMG's Enforcement and Dispute Resolution Position Paper 23 Aug 2017 and the data protection paper which I discussed in HMG's Exchange and Protection of Personal Data Position Paper in my Data Protection blog today.

The enforcement and dispute resolution position paper has given rise to a lot of comment much of it uninformed because of the inclusion of the adjective direct in the first line of the paper.  The sentence reads:
"In leaving the European Union, we will bring about an end to the direct jurisdiction of the Court of Justice of the European Union (CJEU)."
The Court of Justice determines disputes that arise under the EU treaties which cease to apply to automatically under art 50 (3) of the Treaty of European Union or the coming into force of a withdrawal agreement whichever happens first. In that sense, the jurisdiction of the Court of Justice will end. It will no longer be possible for the Commission to take infringement proceedings against our government for failing to implement a directive or for an English court to refer an issue of Union law that arises in English litigation to the Court under art 267 of the Treaty on the Functioning of the European Union.  But the Court will continue to influence our law for many years to come and perhaps indefinitely by virtue of the incorporation of EU legislation and case law into our national law under the provisions of the European Union (Withdrawal) Bill. Moreover, as clause 6 (2)  of the Bill permits courts in the UK to have regard to decisions of the Court of Justice after we leave the Union its decisions will continue to have considerable persuasive authority indefinitely.

I criticized the position paper but on the grounds that it guarantees no rights for citizens including those of our own country to take proceedings against our government if they suffer loss or damage by reason of its failure to implement an obligation under any withdrawal agreement that we may make with the remaining member states or of any derogation that it may make from such agreement. To my mind, that is much more fundamental.

The data protection paper is much more sensible. We need to ensure the unrestricted flow of personal data between Britain and the UK if our service industries are to continue to do business in Europe. The same is, of course, true of the service industries of the remaining member states. The difference is that they could survive disruption much better than us because they could still do business freely with each other.  The financial services industries in say Frankfurt, Paris, Amsterdam, Dublin and Madrid might even do well if it became more difficult to exchange data with London. The European negotiators almost certainly know that and will be no hurry to do any favours for us unless and until they see some concessions on the issues that matter to them.

Should anyone wish to discuss this article or Brexit in general, call my chambers on +44 (0)20 7404 5252 during normal office hours or send me a message on my contact form.

Wednesday, 23 August 2017

HMG's Enforcement and Dispute Resolution Position Paper

Author Furfur
Licence Creative Commons Attribution Share Alike 4.0 International

Jane Lambert

Earlier today HM Government published the position paper Enforcement and dispute resolution. It adds to the fears that I expressed in Dispute Resolution: A Potential Deal Breaker? 8 Aug 2017 that dispute resolution could lead to our crashing out of the European Union at the end of March 2019 without any kind of withdrawal agreement and without any immediate prospect of a free trade agreement with our largest trading partner.

The problem with the position paper is that governments resile from or fail to implement international agreements. I like to think that HMG is a better global citizen than most governments but it is susceptible to domestic political pressures like any other democracy and it is not impossible to anticipate a situation where Parliament would enact legislation that would be incompatible with the terms of the withdrawal agreement. And then what?

At present, it is possible for citizens of a member state to sue their national government for damages if it fails to implement Union legislation (see C-479/93 Andrea Francovich v Italian Republic [1995] ECR I-3843) and the courts of this country have power even to disallow provisions of British statutes if and in so far as they are incompatible with a treaty obligation (see R v Secretary of State for Transport (ex parte Factortame Ltd. and others [1990] 3 CMLR 375, [1991] 1 All ER 70, (1991) 3 Admin LR 333, [1991] 1 Lloyd's Rep 10, [1990] UKHL 13, [1990] 3 WLR 818, [1991] 1 AC 603, [1991] AC 603).

If and when we leave the European Union those rights of action evaporate.  Para 17 of the position paper offers instead rights of redress under national law:
"When it implements these agreements in its domestic law, the UK will also as appropriate provide for an effective means for individuals to enforce rights under the agreements, and challenge decisions of the competent authorities concerning those rights. The exact means of redress will depend on the nature of the dispute, and the approach taken to disputes of that nature in UK legal systems. However, in each case the mechanism will be effective and meaningful, in accordance with the normal principles of administrative law."
That position is amplified by para 22:
"The UK’s position is that where the Withdrawal Agreement or future relationship agreements between the UK and the EU are intended to give rise to rights or obligations for individuals and businesses operating within the UK then, where appropriate, these will be given effect in UK law. Those rights or obligations will be enforced by the UK courts and ultimately by the UK Supreme Court. UK individuals and businesses operating within the EU should similarly be provided with means to enforce their rights and obligations within the EU’s legal order and through the courts of the remaining 27 Member States."
The one-sidedness of that position is clear from the next paragraph:
"This means, in both the UK and the EU, individuals and businesses will be able to enforce rights and obligations within the internal legal orders of the UK and the EU respectively, including through access to the highest courts within those legal orders. This would be the case in respect of both the Withdrawal Agreement, including an agreement on citizens’ rights, and the future partnership."
If for example, the Hungarian government passed legislation incompatible with the withdrawal agreement a British business or individual could sue for compensation under Francovich or seek an injunction suspending the Hungarian statute under Factortame.  If the Hungarian courts failed to apply the withdrawal agreement the Court of Justice of the European Union would put them right. If the British Parliament did the same the courts of the United Kingdom would have no choice but to give effect to that statute.

None of the dispute resolution proposals in paras 30 to 39 offers any comfort to an EU or even a British citizen in dispute with HMG.  Although the courts had started to retreat from the position of the House of Lords in Livesidge v Anderson  [1942] AC 206, [1941] UKHL 1, [1941] 3 All ER 338 that decision has never been overruled or reversed by statute.

Should anyone wish to discuss the position paper or any aspect of the Brexit negotiations, he or she should call me on +44 (0)20 7404 5252 during office hours or send me a message through my contact form.

Thursday, 10 August 2017

What will happen to the GDPR in the United Kingdom after Brexit?

Standard YouTube Licence

Jane Lambert

Art 50 (3) of the Treaty of European Union provides:
"The Treaties shall cease to apply to the State in question from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification referred to in paragraph 2, unless the European Council, in agreement with the Member State concerned, unanimously decides to extend this period."
When the treaties cease to apply to the United Kingdom, all the directives and regulations that will have been made under them will fall away too. That need not matter so far as the directives are concerned since they will have been implemented by United Kingdom enactments that remain in force indefinitely, but regulations are different in that they take effect independently. That is why clause 3 (1) of the European Union (Withdrawal) Bill is intended to incorporate all regulations into English and Weksh or, as the case may be, Scottish or Northern Irish law.

The General Data Protection Regulation (Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation) (Text with EEA relevance) will automatically come into force on 25 May 2018 and will remain part of our law until Brexit day. Then it will cease to apply unless it is preserved by national legislation.

When I wrote what is now Chapter 10 of Helen Tse's Doing Business after Brexit towards the end of last year, I expected the GDPR to be preserved by what we then called the "Great Repeal Bill." The Department for Culture Media and Sport's Statement of Intent of 7 Aug 2017 reveals a different approach. The GDPR will be superseded by the provisions of a new Data Protection Bill at least part of which will come into force on Brexit day.

No draft of the bill has yet been published but a press release dated 7 Aug 2017 announces that the new statute will:
  • "Make it simpler to withdraw consent for the use of personal data
  • Allow people to ask for their personal data held by companies to be erased
  • Enable parents and guardians to give consent for their child’s data to be used
  • Require ‘explicit’ consent to be necessary for processing sensitive personal data
  • Expand the definition of ‘personal data’ to include IP addresses, internet cookies and DNA
  • Update and strengthen data protection law to reflect the changing nature and scope of the digital economy
  • Make it easier and free for individuals to require an organisation to disclose the personal data it holds on them
  • Make it easier for customers to move data between service providers."
The press release also announces new criminal offences to deter organizations from either intentionally or recklessly creating situations where someone could be identified from anonymized data.

As Chapter 3 of the Statement of Intent indicates, many of those provisions will have been introduced by the GDPR but not all of them. The new bill will contain extra provisions such as one conferring on data subjects a power "to require social media platforms to, on request, delete information held about them at the age of 18" (see page 14 of the Statement).

This Bill will affect everyone whose records are held on computer and indeed everyone who holds and processes such records though there will be some industries that are particularly affected such as fintech and healthcare. I will keep an eye on the legislation for them.

It was my job to follow this topic long before we had such legislation in this country my first instructions being to advise on the consequences of the Austrian data protection statute for businesses here which I would have received in 1982 or 1983. I attended the first conferences on trans-border data flows which were organized by the International Bar Association in Toronto and the International Telecommunications Union in Geneva in 1983. I contributed the first chapters on data protection to Butterworths' Atkin's Court Forms and Encyclopedia of Forms and Precedents in 1984 for which I  interviewed the first data protection registrar, Eric Howe, at Water Lane in Wilmslow. I have continued to receive instructions on data protection and related areas of the law ever since.

I am compiling links to everything that I have written on the topic for a new blog to be known as NIPC Data Protection which, like this one, will be integrated with NIPC Law and NIPC News. I will tweet about important developments from my @nipclaw account and post them to Linkedin and Facebook.  Should anyone wish to discuss this article or data protection, privacy or trans-border data flow in general, he or she should call me on +44 (0)20 7404 5252 during office hours or send me a message through my contact form.

Tuesday, 8 August 2017

Dispute Resolution: A Potential Deal Breaker?

Author Cédric Puisney 

Licence Creative Commons Attribution 2.0 Generic  

Jane Lambert

On 20 July 2017 negotiators for the British government and the Commission published a joint technical note on the comparison between the British and EU positions on citizens' rights.  It is drawn up rather like a Scott schedule with 5 columns:
  • Topic
  • Detail
  • EU Position
  • UK Position
  • Issue.
The "Issue" column is colour coded, green indicating convergence, red divergence and yellow where further discussion is required to deepen understanding.

There is an encouraging amount of green in the right-hand column but the red reveals fundamental differences of approach between the two sides.  Take "Individual enforcement of rights" on page 4, for example.  The EU position is that the provisions of any agreement for the withdrawal of the UK from the EU ("the withdrawal agreement") that give rights to citizens of the remaining EU member states shall be directly enforceable by those citizens without regard to any statute that may implement the withdrawal agreement. The British position, on the other hand, is that any rights that may be granted to those citizens will depend on a British statute though a court in the UK may have regard to the withdrawal agreement to determine legislative intent.  

The problem for the 27 remaining member states is that governments do not always perform their treaty obligations. That may be because of a genuine difference of view on the interpretation of the treaty or it may be because domestic political pressures make it impossible for a government to honour its international obligations. Her Majesty's Government may be no worse in that regard than the governments of most other countries.  Indeed, we like to think that ours is somewhat better but we have been called "Perfidious Albion" in the past and possibly for a reason.

The difficulty can best be appreciated by an example. Suppose a Polish worker in Lincolnshire is denied a benefit to which he or she believes he or she is entitled.  Right now, he or she can appeal to an administrative tribunal which has to apply the law as set out in the EU legislation in accordance with the judgments of the Court of Justice of the European Union ("the CJEU"). Should a point of law arise upon which there is no guidance from the CJEU the tribunal of last resort has a duty to refer the issue to the CJEU for a preliminary ruling under art 267 of the Treaty on the Functioning of the European Union. The EU negotiators want something like that to continue after Brexit but the British contend that the worker's rights have to depend entirely on the wording of the statute possibly as interpreted by previous judgments of the English courts. If the worker believes that the Act fails to implement the terms of the withdrawal agreement, the most he or she could do would be to ask his or her government to intercede with the British government diplomatically. The Polish foreign ministry might or might not accept its citizen's request but, even if it did, it could take years to persuade the British government to change the law, Moreover, any such change would be of no immediate, practical use to the unfortunate Polish worker.

As the Commission's negotiators will have anticipated that sort of difficulty, they are unlikely to recommend a withdrawal agreement that leaves EU citizens in the UK without an effective remedy. It follows that unless the two sides can agree what that remedy should be before 29 March 2019, there can be no withdrawal agreement when the treaties cease to apply to us pursuant to art 50 (3) of the Treaty of European Union. That is no doubt why the Bar Council's Working Group on Brexit described dispute resolution as a "potential deal breaker" at para 4 of Paper 10 of the 3rd edition of The Brexit Papers. When the treaties fall away all sorts of commercial and administrative arrangements that we have made with our largest and closest trading partner over most of the last half century fall away with them with alarming consequences for us, the rest of Europe and, indeed, the rest of the world. 

The problem arises because our government announced at para 2 of its white paper, The United Kingdom’s exit from, and new partnership with, the European Union:
"We will take control of our own affairs, as those who voted in their millions to leave the EU demanded we must, and bring an end to the jurisdiction in the UK of the Court of Justice of the European Union (CJEU)."
It added at 2.3:
"The Court of Justice of the European Union (CJEU) is the EU’s ultimate arbiter on matters of EU law. As a supranational court, it aims to provide both consistent interpretation and enforcement of EU law across all 28 Member States and a clear process for dispute resolution when disagreements arise. The CJEU is amongst the most powerful of supranational courts due to the principles of primacy and direct effect in EU law. We will bring an end to the jurisdiction of the CJEU in the UK. We will of course continue to honour our international commitments and follow international law"
To its credit, the government did acknowledge at 2.4 that "ensuring a fair and equitable implementation of our future relationship with the EU requires provision for dispute resolution" and suggested several dispute resolution models between paras 2.5 and 2.8 and Annex A.  The Bar Council Working Group has considered and commented on those models between paras 20 and 27 of Paper 10. Those models were also discussed at the Institute for Government seminar, Brexit, dispute resolution and the European Court of Justice on 24 July 2017. I would urge all my readers to watch Raphael Hogarth's presentation and the video of the discussion, both of which are available on YouTube.

At paragraph 2.9 of its white paper, our government says "the UK will seek to agree a new approach to interpretation and dispute resolution with the EU" and adds at 2.10:
"The actual form of dispute resolution in a future relationship with the EU will be a matter for negotiations between the UK and the EU, and we should not be constrained by precedent. Different dispute resolution mechanisms could apply to different agreements, depending on how the new relationship with the EU is structured. Any arrangements must be ones that respect UK sovereignty, protect the role of our courts and maximise legal certainty, including for businesses, consumers, workers and other citizens."
The problem with that from the European point of view is that treaties are part of the remaining states' legal order.  Any withdrawal agreement that the remaining member states make with us will be just as much part of EU law as any other.  As the white paper, acknowledges, the CJEU is "the EU’s ultimate arbiter on matters of EU law." Prof. Catherine Barnard says in Issues concerning the Court of Justice that workarounds such as hybrid courts consisting of judges from the CJEU and other states have been considered before and have had to be abandoned as incompatible with EU law.

Looking at the other matters being discussed by the negotiating teams, the sort of problems that I have envisaged for the Polish worker could apply to a resident of Dundalk who wants to keep his or her job in Newry or the computation of the amounts that the British government may agree to pay under any withdrawal agreement. Similar problems will occur if we want to continue to participate in Euratom, the European Medicines Agency or indeed the Unified Patent Agreement as art 20 obliges the Unified Patent Court to apply EU law in its entirety and to respect its primacy.

It seems to me that the positions of the British and EU negotiators are incompatible and irreconcilable. If I understand their arguments correctly it would seem that the Bar Council's Brexit Working Party and Prof. Barnard would agree with me. It is very depressing - rather like watching two crowded passenger trains steaming towards each other at full speed on the same stretch of track. A crash can be averted only if one side or the other gives way.  Since it would be impossible for the EU to give way without dismantling a legal order that has subsisted in one form or another since the establishment of the European Coal and Steel Community in 1952 I can't see how any concessions can possibly come from them.

Should any of my readers wish to discuss this article or the legal consequences of Brexit generally, they should call me on +44 (0)20 7404 5252 during office hours or send me a message through my contact form.

Saturday, 5 August 2017

Brexit Briefing - July 2017 - The Division of the Spoils

Jane Lambert

A bittersweet moment though, as with most things to do with Brexit, more bitter than sweet.

London is home to two important EU agencies, namely the European Medicines Agency and the European Banking Authority which we attracted to our capital in the face of stiff competition from the governments of other member states.  They employ a lot of local people, provide business for many local firms that employ a whole lot more and do some very useful work.

Because of HMG's determination to carry into effect the decision of a plurality of voters in last year's referendum, those institutions have to move. A decision on the procedure for relocation of EU agencies currently located in the UK was taken by the Council on the 22 June 2017. This is a four step process:
  • Offers to host the institutions had to be submitted by 31 July 2017;
  • The Commission will assess the offers and report on 30 Sept 2017;
  • There will be a debate in October and a vote in November.
Considering that it took 7 years to bring the EMA to London it is all very sad.

According to the Commission's press release of 1 Aug 2017, the following cities have offered to host the EMA:
  • Amsterdam (The Netherlands)
  • Athens (Greece)
  • Barcelona (Spain)
  • Bonn (Germany)
  • Bratislava (Slovakia)
  • Brussels (Belgium)
  • Bucharest (Romania)
  • Copenhagen (Denmark)
  • Dublin (Ireland)
  • Helsinki (Finland)
  • Lille (France)
  • Milan (Italy)
  • Porto (Portugal)
  • Sofia (Bulgaria)
  • Stockholm (Sweden)
  • Malta (Malta)
  • Vienna (Austria)
  • Warsaw (Poland)
  • Zagreb (Croatia).
Some 8 cities have offered to host the Banking Authority:
  • Brussels (Belgium)
  • Dublin (Ireland)
  • Frankfurt (Germany)
  • Paris (France)
  • Prague (Czech Republic)
  • Luxembourg-City (Luxembourg)
  • Vienna (Austria)
  • Warsaw (Poland).
Another institution that seems likely to move whether we can find a way to remain party to the Unified Patent Court Agreement or not is the Central Division of the Unified Patent Court even though it is all fitted out and ready for the first case (see Alan Johnson Relocation of London section of UPC central division after Brexit? 13 July 2017 Bristows UPC website). This is even more sad because no country stands to benefit more from the UPC than ours. I suppose the Lord Chancellor will find a new use for the Aldgate Tower suite if the UPC does have to move but it is a shame nevertheless. I had been looking forward to receiving a brief to appear before that court.

"So where's the sugar?" I hear you say. "You said that this was bittersweet."

Well, I guess there are two teaspoonfuls.  First, the launch of this Brexit blog which assembles all my previous writings and resources in one place.  Secondly, Helen Tse's book on Doing Business after Brexit to which I have contributed the chapter on intellectual property and data protection will appear on the 17 Aug 2017, Clarke Whitehill are holding a reception by Pro Manchester to launch the book on 20 Sept 2017.

If anyone wishes to discuss this briefing or Brexit in general, call me on +44 (0)20 7404 5252 during office hours or get in touch through my contact form.

European Council Decision of 11 April 2019 extending the Period under art 50 (3) of the Treaty of European Union to 31 Oct 2019

Donald Tusk Author   Platformy Obywatelskiej Licence Creative Commons Attribution-Share Alike 2.0 Source Wikipedia European Council...