Digital Services

The European Union Treaties and EU legislation provide the strongest guaranteed rights for EU established businesses to provide digital services to  anywhere e in the European Union. Under those rules an Irish established business may provide digital services thoughout the EU with  no further regulatory requirements in almost all cases.

In addition to the right to take court action, the EU Commission’s general powers of enforcement and activism mean in effect that most barriers to trade have been removed. After Brexit, UK established businesses will know longer enjoy these protections

In the area of digital services the information Society directive goes further than the standard EU Treaty rules by expressly prohibiting states from applying requirements in relation to authorisation or to the equivalent effect. It covers requirements to have particular qualifications authorisations. It  covers requirements in relation to the behaviour and conduct of the trader the quality and content of the service, advertising, contracts and legal liability.

The Directive provides that information society services are to be regulated in the state in which the trader / business is established.  States may not, for reasons falling within the “coordinated field”, restrict the freedom to provide information services from another state. The co-ordinated field covers legal requirements applicable to the information society service provider, regardless of whether they are general or are specifically designated.

Each EU state must ensure that information society services provided by a service provider within its state, comply with its own internal laws relating to the services.  This covers requirements laid down in the member state applicable to information society services. These are the requirements that a service provider has to comply with in respect of the taking up of the activity of an information society service.

Limited exceptions only apply. They must be specifically narrowly related to demonstrable restrictions and justifications in the area of criminal liability health national security defence protection of minors or incitement to hatred. States may not simply adopt such rules must notify them to the commission who will carefully scrutinise them.

Information society services covers digital services. There is an older expression any services normally provided for remuneration at a distance by electronic means at the request of the recipient.

The EU rules in the area of electronic services are standardised provide for common information which must be provided on a website in the context of the provision of digital services and in relation to e-commerce generally. There are strong mechanisms by which member states must revise these common standards.

Prior to Brexit the EU produced a number of proposals for further regulation in the area of the digital single market under its digital single market strategy. It outlines 16 initiatives to update the single market and promote digital trade.This included initiatives on

  • Free flow of data
  • cybersecurity
  • e privacy
  • setting ICT standards
  • intellectual property

The bulk of the new provisions are under negotiation.

Digital service providers within the EU enjoy a single common system of data protection. Therefore data lawfully gathered in one state may generally move freely within the EU backed subject to the required consents which would be applicable generally. In the case of data movement across borders in the absence of the EU recognition of the adequacy of the UK system of data protection movements of data may not take place in right of the EU without specific contractual provisions which give guaranteed rights for the data subject (the person about whom the data is concerned) against third-party holders of the data.

In a standard trade agreement without there being a common court to which the parties to the trade agreement are bound, there are sometimes clauses which allow some degree of freedom to provide services. It should be said that even such agreements are relatively rare and a recent development only.

In contrast to the case of goods free trade agreements for services are usually limited, even where they exist. A trade agreement might or might not make provision for freedom to provide services in some sectors. Usually the right is limited and falls way short of the kind of rights that exist under EU Treaties. It may be limited to some sectors. The rights may be subject to conditions, even where it is provided for.

Further, even if a trade agreement provides for freedom to provide services, the normal arrangement is that breach of this right does not give a private trader any direct right against the foreign government. Instead what the trader can do is complain to his government (in this case the EU) who might ultimately, often only after many years if there is found to be a breach, retaliate by putting in place an equal restriction on the other side e.g. for incoming UK service providers. There is a procedure for reference of these type of disputes between states to UN disputes and arbitration bodies which can literally take years to achieve an outcome.

The point here is that unless the agreement between the EU and UK creates something like the EU with a single overall court conferring private rights on traders to challenge other governments, the likelihood is that you would have no effective come back or remedy if the UK government or some other governmental or trade body, was to place restrictions on your providing digital services into the UK.

It seems unlikely that the UK and EU will enter a trade agreement with a single overall court to which traders can make private claims of this nature against the other government. This would simply resemble the current EU. The UK has made a big play of not being under the EU Court of Justice or subject to its jurisdiction to override British rules and laws.

Therefore, it is likely that any trade dispute mechanism will be at the state to state level. This means that you will not have the assurance in perpetuity as you would have if the UK was in the EU that the UK must allow you to provide digital services to UK customers from Ireland without restriction.