Legal update October 2019

Below we’re reviewing the major legal changes in October that could affect your business.

Corporate

Legal privilege between a company and its lawyers survives dissolution of a company

The Court of Appeal has ruled this month that communications between a company and its lawyers attracting Legal Advice Privilege (‘LAP’) (communication between a lawyer and their client, made in connection with giving or receiving legal advice, and otherwise than for an iniquitous purpose) will continue to benefit from LAP unless and until it is waived, even surviving the dissolution of the company. This is even the case where the Crown has disclaimed all interest in the documents.

It is irrelevant for these purposes if no one can now waive the LAP, or if the Crown could have waived it but has not. In the case decided this month a group of investors brought a claim against a Cypriot company that had been dissolved and the claimants alleged were involved with fraud. The group wanted access to communications held by a law firm which had bought the law firm that had previously advised the Cypriot company before the Cypriot company was dissolved. The claimants were also claiming damages for deceit or negligence against the new law firm. It has been held though that insofar as any rights relating to the documents passed to the Crown as bona vacantia, when the company was dissolved, the Crown disclaimed all interest in the documents without asserting or waiving LAP and so any right to waive privilege was not exercised by the Crown disclaiming its interests. Therefore, LAP cannot be lost as a result of the company (or client’s) dissolution, or by Crown disclaimer. This meant that the documents sought by the investors were still subject to LAP unless waived by the client company (if it was restored to the company register). Also, LAP would not expire even if there was no legal possibility that the client could be restored to the register.

The investors argued that a right must belong to someone, and if there was no one to whom it could be said to belong (because they no longer existed as the company had dissolved), the right could not exist. This was rejected and instead it was ruled that to hold privilege was lost if there was no person entitled to assert it would “undermine the essential rationale for the very existence of legal advice privilege”. Lawyers must be able to assure their clients that communications covered by LAP will never be revealed unless the client consents to this. If there were an exception made for dissolved companies it was commented that this could be a slippery slope for other exemptions to be added, eroding LAP altogether.

Employment Law

Single body to enforce employment rights - BEIS consultation

The government’s Good Work Plan published in December 2018 proposed a single enforcement body for employment rights. Since the closure of the BEIS consultation on 6 October 2019 the responses of the Employment Lawyers Association (ELA) and Citizens Advice have been published.  

Both organisations seem generally supportive of the concept of a single enforcement body but have concerns about the following:

• Whether there would be adequate funding and resources and how long it might take to set up such a body.
• If the enforcement body works closely with other enforcement agencies (such as immigration and benefit fraud agencies) this could result in vulnerable workers feeling unable or unwilling to report a problem in case they jeopardise their other rights.
• Whether the single enforcement body would erode the skills and expertise built up over time in existing organisations, for example the ELA and Citizens Advice both recommended that the Equality and Human Rights Commission’s role is not interfered with, in respect of equality issues.

Another concern which has been raised by companies is that a more hard-line approach might be taken against companies breaching the National Minimum Wage (NMW), whether intentional or not, if responsibility is given to one agency.

Intellectual Property

Partnership agreement made between European Patent Office (EPO) and Malaysia

The EPO has for some time concentrated efforts on its EPO Reinforced Partnership programme, which seeks to establish and maintain deep and wide-ranging long-term partnerships with intellectual property offices around the world and especially in areas of emerging innovation. The aim is to further integrate and strengthen the global patent system by adding partner offices, increasing capacities, productivity and quality through EPO work products, tools and practices being more effectively used. The programme looks to provide support to partner offices so that localised services are improved and improves the system for applicants filing patents internationally via the EPO and the PCT.

Since the 1990s Europe and Malaysia have co-operated closely in the area of patents, but earlier this month a memorandum of understanding on reinforced partnership was signed between the EPO and Intellectual Property Corporation of Malaysia (MyIPO). This is the first intellectual property office in Southeast Asia to sign this advanced type of bilateral co-operation agreement with the EPO, and the fourth office worldwide. This arrangement means that the EPO and MyIPO will co-operate for five years to make their patent systems as efficient, user-friendly and predictable as possible for businesses from Europe and Malaysia. The EPO will particularly concentrate on supporting MyIPO in increasing efficiency, timeliness and quality in its patent grant process to better promote investment and technology transfer between Europe and Malaysia. As a group the ASEAN countries are the EU's third largest trading partner outside Europe (after the US and China), and so better access for European exporters to the dynamic ASEAN market is a priority for the EPO.

The EPO President referred to Malaysia as ‘one of the most advanced IP offices in the dynamic ASEAN region’, and expects this new partnership to ‘improve patent-related services for both local innovators and European companies, not just in Malaysia but in the wider region, thereby further strengthening the global patent system, which is one of our strategic objectives for the coming years’. The Director General of MyIPO said that ‘our commitment in optimising our delivery system remains the utmost priority despite the current challenges of the new emerging technologies in this era of 4^th Industrial Revolution. With the reputation and credibility of the EPO, I am of the firmest belief that this continued co-operation will be successful in achieving a high standard patent examination system that meets global requirements for mutual prosperity‘. Time will tell as to how successful this partnership will be in achieving its aims and as to the impact, if any, on the UK, but it is hopeful that partnerships like this should bring countries closer together to ease the patent process where there is an international dimension.

Data Protection

Right to be forgotten still limited to EU 

The Court of Justice of the European Union (CJEU) has adopted a decision on the geographical scope of the right to erasure under the GDPR.  It was decided that Google does not have to remove (de-reference) search results displayed on all the search engine’s versions, it is sufficient that search results are deleted from the search engine’s EU versions and take measures to discourage internet users from gaining access to links on versions of that search engine outside the EU.

This followed from the French Supervisory Authority (CNIL) imposing a fine of €100,000 on Google in March 2016 for not de-referencing a website from its search results on all Google search engine versions.  The search engine appealed the decision before the French courts, which led to a referral to the CJEU. Google had merely removed the links in question from the results displayed following a search performed on the domain names corresponding to the versions of its search engine in EU member states, but CNIL argued that that was insufficient.

In the previous case of Google Spain, Google was ordered to remove from a list of results a search made on the basis of a person's name, links to web pages published by third parties and containing information relating to that person, also in a case where that name or information was not erased beforehand or simultaneously from those web pages, or publication was lawful and data subjects could assert their right to de-referencing against a search engine operator based in the EU where activities involved the processing of personal data concerning those data subjects, whether that processing took place in the EU or not. In that case the ECJ held that the processing of personal data was carried out in the context of the activities of an establishment of the controller on the territory of a member state. In this case Google had set up Google Spain as a subsidiary, in Spain, intending to promote and sell advertising space offered by that search engine and directed towards the inhabitants of that Member State. In this most recent case, the situation was the same, Google Inc.'s establishment in French territory is such a subsidiary carrying out activities directed at individuals in that Member State and so fell within the scope of the EU legislation on the protection of personal data.

The decision of the CJEU in this most recent case was that there was no obligation under EU law for a search engine operator promising to de-reference following an injunction, to de-reference on all versions of the search engine. Part of the rationale for this is that there is no reason to believe that EU lawmakers would have intended for data subject rights, such as the right to erasure, to apply beyond the EU. Further, whilst global de-referencing would offer a high level of data protection for data subjects in the EU this must be balanced against the fact that third states outside the EU do not necessary recognise the right to de-referencing or they may have a different approach to that right. In addition, the right to the protection of personal data was not an absolute right but must be balanced against other fundamental rights, in accordance with the principle of proportionality. It should be considered whether global de-referencing in the specific case is a disproportionate interference with the rights to freedom of expression and access to information.

As for the argument that non-EU versions of the search engine may still be accessible in the EU through technologies that disguise the location of the search engine user, the court did make clear that the search engine should use measures which ‘effectively prevent or, at the very least, seriously discourage an internet user conducting a search from one of the Member States on the basis of a data subject’s name from gaining access, via the list of results displayed following that search, to the links which are the subject of that request’.  Whether ‘geo-blocking’ is sufficient has not yet been tested, and the referring court in the particular case would need to see whether in the circumstances the measures taken by the search engine was sufficient.

As already mentioned, the right to erasure is weighed against other rights in the EU Member States, but to ensure there is consistency Supervisory Authorities should follow the cooperation procedure under the GDPR ‘to adopt, where appropriate, a de-referencing decision which covers all searches conducted from the territory of the Union on the basis of that data subject’s name’.  This means the CNIL should not on its own require de-referencing of search results across all the search engine’s EU versions. However, the CJEU also made clear that EU law does not prohibit a Supervisory Authority of a Member State ordering a search engine to de-reference search results from all versions of its search engine worldwide after weighing up a data subject’s right to privacy and protection of personal data concerning the individual on one hand, and on the other hand the right to freedom of information.  This means that the CNIL could still decide the relevant search results must be de-referenced on all versions of the search engine on the basis of French fundamental rights standards, but not on the basis of the GDPR.

Although this ruling is positive for Google and other operators of online services, careful consideration will now need to be given to limiting access in the EU to links available outside the EU to satisfy the courts of Member States. On the other side of the coin, this ruling is a blow to individuals in that managing reputation globally will be more difficult if the right of erasure is limited in territorial scope to just the EU.