What Will Be the Biggest Legal Challenges for Universities in 2022?
We explore the possible challenges facing your Higher Education institution this year and how you can be best prepared for them.
Freedom of Expression and Academic Freedom
The impending implementation of the Freedom of Speech Act amidst widespread media coverage of disputes between academics and students – about issues such as transphobia, antisemitism and Islamophobia – suggests challenging times ahead, with freedom of expression and academic freedom priority issues for universities in 2022.
These issues can be complex, sensitive and extremely difficult to manage. Long-established legal duties will be extended, including a broadening of the protection provided by academic freedom and an expectation of greater proactivity in ensuring freedom of speech within the law.
The OfS will have an extended regulatory remit, set to include complaints about freedom of speech and academic freedom. How this will be reconciled with the jurisdiction of the OIA, which has expressed concern about concurrent regulation, remains to be seen. In the meantime, universities should review and update their freedom of speech codes of practice and consider how complaints will be handled internally.
Subsidy Control Bill
Many universities receive grants for research and development (R&D), capital projects and innovation hubs. Structuring grants to comply with subsidy control rules is important to protect against the risk of clawback and avoid time-consuming and painstaking audits.
The interim subsidy control regime put in place by the UK-EU Trade and Cooperation Agreement has been difficult to navigate in the absence of guidance on how R&D will be treated. While the previous EU state aid regime had drawbacks in terms of rigidity, it provided block exemptions for R&D and research infrastructure. Universities also benefitted from clear guidance on when they fell outside the scope of state aid rules and when they might be subject to them.
The new Subsidy Control Bill is making its way through parliament and is expected to become law in 2022. It will implement a domestic subsidy control system which the Government wants to be more flexible and less bureaucratic. It has also indicated that it wants to enable strategic interventions in its priority areas, including R&D, which is good news for universities.
The hope is that R&D will be categorised as a streamlined subsidy, which will mean a simpler and faster route to demonstrating compliance. Universities should review areas where subsidies may be a potential issue, carry out subsidy control assessments and update policies to take account of the new regime.
National Security & Investment Act
The National Security & Investment Act 2021 obliges UK universities to consider risks to national security when transferring ownership of spin-out companies, intellectual property, land, or moveable property.
Although the term ‘national security’ is undefined, the Department for Business, Energy & Industrial Strategy (BEIS) has listed 17 sensitive areas of the economy – including advanced materials, robotics, quantum technologies, artificial intelligence and synthetic biology – many of which are researched intensely by universities.
If a university transfers a business entity involved in one of these areas, the acquirer will have to give advance notification to BEIS; failure to notify a qualifying acquisition could render the deal void. When transferring an asset, voluntary advance notification should be considered.
Whilst universities will not be responsible for notifying BEIS, they will need to comply with its requests for information and also with any remedial orders that it issues. Handling this legislation is primarily a matter of compliance for universities and they should concentrate on ‘trigger events’: a transfer of control of an entity or an asset that touches one of the 17 sensitive areas.
BEIS has published useful guidance for the Higher Education sector on the application of this new legislation, in particular on funding students, research funding agreements and sponsorships, research centres, spin-out companies and subsidiaries and donations.
This article was originally published in University Business.