Brexit and SaaS
SaaS suppliers and SaaS customers wondering about the business implications of a Brexit and how to prepare for this should be aware of the following. Despite the result of the referendum in the UK indicating that the UK will leave the European Union (EU), currently this has no legal consequence or effect upon the business operations of SaaS suppliers or SaaS customers.
When will the UK leave the EU
No Member State has ever left the European Union, so although there is a process set out in Article 50 of the EU Treaty for leaving, the process of withdrawal is new and untested. In any event, under the Article 50 process, the UK has to give official notice to the European Union of its intention to leave the EU, before the process starts. Once notice is given, the UK has 2 years to negotiate the terms of its exit. If there is no agreement at the end of the 2 year period, the EU treaties will automatically cease to apply – unless all Member States agree to extend the 2 year period.
To date the UK government has indicated that they have no intention of giving an Article 50 notice before September 2016 at the earliest. It is therefore highly likely that negotiating the UK’s leaving terms will take some time, many months or even years.
How should SaaS Suppliers and Customers prepare for a Brexit
For the time being SaaS suppliers and customers should watch developments in relation to the UK giving notice under Article 50. SaaS suppliers should be aware that even after the notice is given, the UK will continue to be a member of the EU and subject to EU law until the date that the UK actually leaves the EU. For example, the New EU Data Protection Regulation (“GDPR“) will automatically become law in the UK in 2018 and will apply to SaaS suppliers and customers.
Further updates will be published on this site from time to time once the UK’s position on serving an Article 50 notice becomes clearer.
Irene Bodle is an IT lawyer specialising in SaaS, with over 14 years experience in dealing with SaaS, cloud computing and IT law issues. If you require assistance with any SaaS agreements, cloud computing concerns or any other IT legal issues please contact me at:
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