What To Look Out For In 2023: Legal Trends & New Legislation
Key Contact: Declan Goodwin
Author: Adam Munn
Now that the Christmas festivities are over and the New Year is underway, we take a look at some of the key legal trends which we expect to affect businesses during the course of this year.
The UK GDPR and the Data Protection Act 2018 will continue to be in the spotlight for reform. In 2022, we saw Boris Johnson’s Government introduce the Data Protection and Digital Information Bill (DPDI Bill) but its progress through Parliament was stalled following his resignation (you can read our article on the DPDI Bill here).
Despite the reshuffling at Number 10, the UK Government remains keen to make things simpler for businesses and has since announced plans to replace the UK GDPR with a new British data protection system. We will be keeping track of any UK Government plans announced during this year. However, given that the UK Government will want to retain its adequacy status under the EU GDPR, the extent of any reforms (whether amending the UK GDPR or replacing it entirely) are likely to be restricted.
Turning our attention to international data transfers, 2023 should also bring about further progress toward a data adequacy agreement between the US and the UK. At present, organisations transferring personal data from the UK to the US have to use transfer tools such as international data transfer agreements and risk assessments which can be both costly and time-consuming. A data adequacy agreement will address this issue by allowing organisations to transfer personal data from the UK to the US more freely without the need to rely on such agreements and assessments.
It is also worth noting that ICO is due to release its guidance on the use of its international data transfer agreements, therefore making them easier to navigate.
For further information on the ICO’s international data transfer agreements, please click here.
As a result of the cost-of-living crisis and general economic uncertainty, we expect organisations will take this as an opportunity to carefully review their existing agreements, with a particular focus on the following provisions:
- Price variation– many suppliers will be checking to see if there are any express provisions within their customer agreements, enabling them to increase their prices to reflect inflation. In the absence of any express right, suppliers will likely need to re-negotiate any variation of their fees;
- Interest for late payment– default interest clauses typically apply an increased rate against a base rate. Given the rise in interest rates, such clauses may benefit from being reviewed and updated; and
- Termination rights – suppliers may want to review their customer agreements to check whether they contain effective termination provisions (e.g. termination for convenience provisions) should the agreement become unprofitable or the supplier needs a swift exit due to a change in circumstances.
The UK Government is expected to publish the Digital Markets, Competition and Consumer Bill (the Bill) by spring 2023. In relation to consumer law, the Bill intends to significantly increase the CMA’s enforcement powers by enabling it to decide whether consumer law has been breached or not without needing to go to court. Where the CMA has determined a business has breached consumer law, it will also be entitled to issue fines of up to 10% of a business’ global annual turnover.
The Bill will also bring about reforms intended to tighten up the law on fake reviews and subscription contracts, as detailed below:
- subscription contracts – businesses will be required to provide consumers with more information prior to them entering into the subscription agreement and will also be required to make it easier for a consumer to opt out of the subscription agreement. For example, businesses will be required to send reminders to consumers before the contract “rolls over” into a new term; and
- fake reviews – we expect the Government to tackle fake reviews by prohibiting companies from commissioning fake reviews or hosting consumer reviews without making reasonable and proportionate checks that they are genuine.
The Bill will provide further details on these changes. However, further guidance will likely be required by the CMA e.g. guidance on what additional information should be provided to a consumer pre-contract and what constitutes “reasonable and proportionate checks” for the purposes of verifying reviews. In addition to keeping an eye out for any revised CMA guidance, businesses should also consider reviewing and updating their approach to sales and marketing to ensure they will be able to comply with the proposed new requirements.
The UK Government is seeking to replace the EU’s Procurement Regulations 2015 with a British version, which is simpler and more flexible. Secondary legislation will be required to bring some of the elements of the Bill into effect. The UK Government has advised that the new regime is likely to come into force in late 2023.
In addition to the UK Procurement Bill, Welsh contracting authorities will also need to keep an eye out for the introduction of the Social Partnership and Public Procurement (Wales) bill. Welsh contracting authorities will be required to implement the duties set out in this Bill along with those contained in the UK Procurement Bill.
Environmental, Social, and Governance (ESG)
Following on from 2022, ESG and sustainability initiatives in the supply chain will continue to be hot topics for businesses. The European Commission has proposed a Corporate Social Due Diligence Directive which if adopted, will require businesses in the EU to establish risk management systems to identify risks of human rights violations and damage to the environment. In addition, businesses will also be required to seek contractual assurances from their suppliers that they will comply with any action plans introduced to prevent human rights and environmental impacts.
Although the UK has since left the EU, UK-based businesses may still be caught by this Directive if they operate directly in EU markets or if they are in the supply chain of a business caught by the Directive.
For further information and assistance, please contact our Commercial and Technology Team.