Technology Update Q4 2009
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The Digital Economy Bill, which sets out the wide-ranging measures contained in the Digital Britain Report, was announced in the Queen's Speech and has now received its first and second readings. Whether the Bill completes its legislative journey before next year's general election remains to be seen. The key provisions are outlined below.
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From 1 January 2010, the place of supply rules for VAT purposes will change for business-to-business ("B2B") cross-border services. This change spells a greater VAT compliance burden for many businesses receiving outsourcing services from abroad; it will also result in an actual VAT cost for exempt (or partially exempt) businesses (such as banks, insurance companies and other financial services providers) that have outsourced certain administrative or management functions outside of the EU which have, until now, been outside the scope of VAT. In certain circumstances, restructuring of outsourcing arrangements may help to mitigate the impact of these changes.
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The concept of a service provision change was introduced by TUPE 2006 and tribunals are likely to be keen to find that it applies to most outsourcing scenarios. However, the Employment Appeal Tribunal's recent decision in OCS Group UK Ltd -v- Jones and others is an example of where the activities carried out before and after the alleged transfer were sufficiently different to rule out a service provision change when a contract for the provision of catering services moved from one contractor to another.
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A recent ruling by the Technology and Construction Court ("TCC") highlights some important considerations for drafting dispute resolution mechanisms. These include the interplay between different types of procedure and their impact on a party's termination rights. The courts will generally give effect to clearly drafted dispute resolution mechanisms - so parties need to give careful thought to the impact such clauses will have.
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Internet communications company Skype recently succeeded in obtaining an anti-suit injunction to block parallel US proceedings against it in an ongoing software dispute. The case illustrates the circumstances in which an English court will uphold an exclusive jurisdiction clause and prevent parties from "wriggling out" of their agreement in order to benefit from potential juridical advantages in other forums.
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Agreement has been reached between EU institutions on the introduction of rules on, among other things, use of website cookies and reporting data security breaches. The requirements form part of the wide-ranging EU telecoms package. The cookie related requirements will apply to all websites. For now, the breach notification requirements will only apply to providers of electronic communications services, but the Commission has committed to extending the breach notification regime to all organisations which process personal data, such as online retailers and banks, as a matter of priority. We summarise the key practical changes for businesses.
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Two recent developments raise the stakes for all organisations handling personal data. The Government is proposing fines of up to £500,000 for serious breaches of the Data Protection Act 1998, with discretion for the Information Commissioner's Office to assess the actual level of fines imposed on a case by case basis. The consultation period ends on 21 December, and the new fines could be in force by April 2010. Meanwhile, new powers giving the ICO power to audit private and public sector organisations have reached the statute book.
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The Public Contracts (Amendment) Regulations 2009 come into force on 20 December introducing two important new remedies for bidders wishing to challenge the award of public and utilities contracts. This bolstering of bidders' rights is widely expected to result in more complaints and legal challenges against public sector procurements.
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The European Commission has adopted a decision setting out the technical, procedural and legal specifications needed to launch the European Electronic Toll Service (EETS). The EETS will enable private and commercial road users to pay tolls easily throughout the European Union using only one, interoperable technical device and subscribing to only one contract with a service provider. Olswang LLP's Berlin office advised the German federal government in relation to the project.
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The information contained in this update is intended as a general review of the subjects featured and detailed specialist advice should always be taken before taking or refraining from taking any action.
