SaaS Agreements – Brexit – EU Data Transfers to the UK after Brexit

Under EU and UK data protection laws, UK SaaS suppliers are lawfully permitted to transfer personal data of SaaS customers located in the EU to any country within the EEA. From the 30th of March 2019, when the UK leaves the EU (“Brexit Date”), the UK will no longer be part of the EEA and will become a “third country” for data protection purposes, just like the USA.

The European Commission recently confirmed in a Notice that on the Brexit Date, UK based SaaS suppliers can no longer lawfully transfer personal data of SaaS customers located in the EU (i.e. in France, Germany, Spain etc.) to the UK,

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SaaS Agreements – Brexit – EU Data Transfers

Once the UK leaves the EU, the UK will no longer be a member of the EEA. UK SaaS suppliers will no longer be lawfully permitted to continue to transfer personal data of EU SaaS customers to the UK unless the UK government, or alternatively SaaS suppliers themselves, put in place measures to make the transfer legal under EU data protection laws.

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SaaS Agreements – Data Protection – Amending EU Model Clauses

SaaS suppliers and SaaS customers are increasingly relying upon the use of EU model clauses to enable them to lawfully export personal data outside of the EEA following the invalidity of Safe Harbor in 2016 and the current implementation of the EU-US Privacy Shield (which replaces Safe Harbor). SaaS customers often try to amend the terms of the EU model clauses when negotiating the SaaS agreement with the SaaS supplier. This can result in the EU model clauses being invalid as they do not provide adequate protection for the data transfer.

SaaS suppliers should therefore be aware of the risks of agreeing to any changes to EU model clause and know which changes are, and are not, permitted to ensure that they are not in breach of data protection laws.

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SaaS Agreements – Data Protection – Privacy Shield Update

Similar to the rules under the Safe Harbor scheme, SaaS customer and SaaS suppliers need to self-certify their compliance with the principles of the Privacy Shield. The following are the core principles which must be adhered to.
Core Principles

Notice must be given to data subjects about specific issues;
Choice to opt out of disclosure of data to third parties;
Accountability for onward transfer to third parties;

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SaaS Agreements – Data Protection – Privacy Shield Approved

EU data protection law prohibits SaaS suppliers and SaaS customers from transferring personal data to countries or territories outside the EEA unless they are considered to provide adequate protection. Below is a summary of the current position following the recent announcement that the EU-US Privacy Shield has been adopted by the EU Commission and will now replace Safe Harbor.

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SaaS Agreements – Data Protection – EU US Privacy Shield

A new privacy agreement called the Privacy Shield has been agreed by the US and EU to replace the safe harbour scheme. The Privacy Shield is based upon safe harbour but has additional protections, particularly with regard to public authority access to personal data. The Privacy Shield must now be reviewed by the European Commission before it can be relied upon and adopted by SaaS suppliers or customers. The European Commission is currently assessing whether or not the Privacy Shield provides adequate protection in accordance with EU data protection laws. This process is expected to take up to 3 months.

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