On Feb. 2, European and American officials announced they had met their deadline to come up with a new framework for transatlantic legal data transfer between the United States and Europe — a new "EU-U.S. Privacy Shield."
Ever since the Oct. 6, 2015 European Court of Justice ruling in Schrems v. Data Protection Commissioner invalidated the
old Safe Harbor framework, data transfers between Europe and the
U.S. were essentially deemed unlawful unless made subject to other
mechanisms, including model form data transfer agreements or
binding corporate rules.
In that case, Max Schrems, a Facebook user and plucky law student,
initiated a complaint after discovering that Facebook's Irish
subsidiary transferred personal information of users to servers
that were located in the U.S. without ensuring an adequate level of
protection for such data.
For the 4,465 multinational companies that relied on the U.S.-EU
Safe Harbor list, the Schrems decision was a nasty shock.
It woke the world to the realization that, following Edward
Snowden's revelations regarding U.S. surveillance and the
collection and transfer of personal information by the National
Security Agency through its Prism Program, European data protection
authorities were not going to sit idly by and allow transfers of
data outside of Europe (in this instance, Ireland) to territories
they deemed did not have adequate data protection laws.
Negotiations to replace Safe Harbor began quickly after the
decision and the Article 29 Working Party (composed of
representatives from the data protection authority of each EU
member state, the European Data Protection Supervisor, and the
European Commission) set an ambitious deadline to replace the
framework. They wanted it in place before individual data
protection authorities could begin enforcing their rights to block
individual data transfers outside the EU to countries whom they
consider to provide inadequate data protection.
The new EU-U.S. Privacy Shield will include the following:
Strong obligations on companies handling Europeans' personal data and robust enforcement
U.S. companies wishing to import personal data from Europe will
need to commit to robust obligations on how personal data is
processed and individual rights are guaranteed. The U.S. Department
of Commerce will monitor that companies publish their commitments,
which makes them enforceable under U.S. law by the U.S. Federal
Trade Commission.
Additionally, any company handling human resources data from Europe
has to commit to comply with decisions by European data protection
authorities.
Clear safeguards and transparency obligations on U.S. government access
For the first time, the U.S. has given the EU written assurances
that the access of public authorities for law enforcement and
national security will be subject to clear limitations, safeguards,
and oversight mechanisms. These exceptions must be proportionate
and used only to the extent necessary.
The U.S. will no longer engage in "indiscriminate mass
surveillance" on the personal data transferred to America
under the new arrangement. The parties will engage in an annual
joint review to regularly monitor the functioning of the
arrangement, which will also include the issue of national security
access.
The European Commission and the U.S. Department of Commerce will
conduct the review and invite national intelligence experts from
the U.S. and European data protection authorities to attend it.
Effective protection of EU citizens' rights with several redress possibilities
Any EU citizen who feels his or her data has been misused under
the new arrangement will have several redress possibilities.
Companies have deadlines to reply to complaints. European DPAs can
refer complaints to the Department of Commerce and the Federal
Trade Commission.
In addition, alternative dispute resolution will be free of charge.
On the American side, a new ombudsperson will be created to handle
complaints on possible access by national intelligence
authorities.
The U.S. Department of Commerce's own fact sheet on the Privacy Shield was quick to praise the
initiative, saying the EU-U.S. Privacy Shield significantly
improves commercial oversight and enhances privacy protections,
noting:
- The Department of Commerce will step in directly and use best efforts to resolve referred complaints, including by dedicating a special team with significant new resources to supervise compliance with the Privacy Shield.
- The Privacy Shield adds an important new avenue to supplement the others. Companies now will commit to participate in arbitration as a matter of last resort to ensure that EU individuals who still have concerns will have the opportunity to seek legal remedies.
- The Privacy Shield includes new contractual privacy protections and oversight for data transferred by participating companies to third parties or processed by those companies' agents to improve accountability and ensure a continuity of protection.
The same announcement regarding the Privacy Shield confirmed that
Andrus Ansip, vice president for the digital single market on the
European Commission, and Vera Jourová, commissioner for
justice, consumers, and gender equality at the EU, would prepare a
draft "adequacy decision" in the coming weeks, which
could then be adopted by the European Commission after obtaining
the advice of the Article 29 Working Party and after consulting a
committee composed of representatives of the member states.
In the meantime, the U.S. would begin to put into place the new
framework, monitoring mechanisms and the new ombudsperson discussed
above.
The new Privacy Shield rules are not in force yet and clearly much
remains to be done.
For one thing, there is some doubt whether the European Commission
can actually put this framework in place without the
approval/blessing of the various local data protection regulators.
While the Article 29 Working Party said on Feb. 3 that it will not
be taking enforcement action against companies that are using
alternative transfer protocols following the invalidation of Safe
Harbor, companies relying on that framework do not have that
certainty and remain vulnerable.
In addition to his original complaint, Max Schrems has also
initiated additional complaints in Germany, Belgium, and Ireland.
In the meantime, the Privacy Shield announcement was too late to
save Facebook in France.
Giving credence to the power of local data protection authorities,
on Jan. 26, the Commission Nationale de l'Informatique et des
Libertés, the French data protection authority, issued a
formal notice to Facebook Inc. and Facebook Ireland Ltd. to comply
with the French Data Protection Act within three months or face
possible referral to its select committee, which could then choose
to pursue sanctions against the company, including fines.
Following a detailed investigation of Facebook's data
collection practices, the CNIL had issued Decision 20016-007, which found
Facebook's behaviour in violation of several key tenets of
French data protection law, including:
- Collecting, without prior information, data concerning the browsing activity of Internet users who do not have a Facebook account, without informing Internet users that it sets a cookie on their terminal when they visit a Facebook public page (e.g., page of a public event or of a friend). This cookie transmits to Facebook information relating to third-party web sites offering Facebook plug-ins (e.g., Like button) that are visited by Internet users;
- Collecting data concerning the sexual orientation and the religious and political views without the explicit consent of account holders and not informing users on sign-up regarding their rights and processing of their personal data;
- Setting cookies that have an advertising purpose without properly informing and obtaining the consent of Internet users;
- Compiling all the information Facebook has on account holders to display targeted advertising (information provided by the Internet users themselves, collected by the web site and by other companies of the group, and transmitted by commercial partners). However, the company provides no tools for account holders to prevent such compilation, which, according to the CNIL, violates their fundamental rights and interests, including their right to respect for private life; and
- Transferring personal data to the United States on the basis of Safe Harbor, even though the Court of Justice of the European Union declared invalid such transfers in its Oct. 6, 2015 ruling. Facebook claims it is not, in fact, using Safe Harbor to transfer data — pointing to prior comments it made last year, in which it said: "Facebook, like many thousands of European companies, relies on a number of the methods prescribed by EU law to legally transfer data to the U.S. from Europe, aside from Safe Harbor.")
The CNIL stated that it made its formal notice against Facebook
public due to the seriousness of the violations and the number of
individuals using Facebook — it has more than 30 million
users in France.
The CNIL decision followed the creation of a working group set up
in March 2015 by the Article 29 Working Party composed of the five
data protection authorities (France, Belgium, The Netherlands,
Spain, and Germany) that decided to investigate Facebook after it
had amended its privacy policy. The CNIL also noted that similar
investigations conducted by the Belgian, German, Spanish, and Dutch
data protection authorities are ongoing at the national level and
within an international administrative co-operation
framework.
The European Commission hopes to have the new Privacy Shield in
place within three months. In the meantime, companies that relied
on Safe Harbor — either through their own registration and
self-certification with the U.S. Department of Commerce or relying
on the registration and self-certification of their subcontractors
— may find themselves subject to investigation and
prosecution by European DPAs.
Stay tuned for more information.
Originally published in Canadian Lawyer Online - IT Girl Column
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