Germany: German DPAs Add Further Pressure To EU-US Data Transfers

Yesterday, German federal and state (Länder) data protection authorities ("DPAs") issued a Position Paper following the recent Court of Justice of the European Union ("CJEU") ruling that struck down the EU-US Safe Harbor Framework. Read an unofficial translation of the German Position Paper here.

Unfortunately, the Position Paper does little to relieve the pressure many organisations are now facing in relation to their cross-Atlantic data transfer mechanisms, particularly those used to transfer data from Germany to the United States.1

The main points from the German Position Paper are as follows:

  1. Consistent with the CJEU decision, no data transfer is permitted on the basis of the EU-US Safe Harbor Framework. The German DPAs will prohibit data transfers which they become aware of that are exclusively based on Safe Harbor.
  2. In light of the CJEU's judgment – which was based largely on concerns over U.S. governmental surveillance – other transfer mechanisms such as EU Model Clauses or binding corporate rules ("BCR") have been called into question.
  3. EU Member States such as Germany may independently, and irrespective of any EU Commission decision, review and assess the level of data protection afforded in any country outside of the European Economic Area.
  4. The German DPAs will assess the legality of data transfers based on EU Model Clauses on the basis of the principles formulated by the CJEU in its Safe Harbor judgement. In this respect, the DPAs make reference to recitals 94 and 95 of the judgement, and indicate particular concern with data protection regimes that: (a) permit government authorities generalised access to the content of electronic communications; and (b) do not provide an individual with the legal right to access his or her personal data, or to revise or erase such data.
  5. The DPAs stress the importance of their data privacy and security guidelines on cloud computing, which were issued in October 2014.
  6. The DPAs will not grant any new authorisations for data transfers to the U.S. on the basis of BCRs for the time being.

Individual consent may be used as a mechanism for data transfers from Germany to the US, but not where data is transmitted repeatedly, on a large scale or as a routine procedure. Consent for transfers of employee data will only be acceptable in exceptional cases.

Key takeaways from the Position Paper are:

  1. Safe Harbor Enforcement.  The German DPAs will enforce the CJEU judgment prohibiting Safe Harbor data transfers, and companies are on notice that - investigations may commence immediately.
  2. Data transfer as "necessary for the performance of the contract."  While reference is made in the Position Paper to transfers on the basis of consent, Model Clauses, BCRs and Safe Harbor, the DPAs do not discuss whether other permitted transfer mechanisms under the EU Data Protection Directive remain viable. For example, it does not address the legality of transfers that are necessary for the performance of a contract with the data subject.  While this exception applies only in limited circumstances, it may be an important mechanism for core operations that companies undertake for their customers and consumers.
  3. Validity of Existing Approved BCRs. Although the DPAs have stated that they will not grant new authorisations for data transfers to the U.S. based on BCRs, this does not necessarily mean that the DPAs will interfere with data transfers that are based on existing BCRs or for that matter on data transfer agreements that have already been approved.
  4. Adequacy of Model Clauses. Companies should keep in mind that in Germany, data transfers based on EU Model Clauses do not require DPA approval. EU Model Clauses can therefore still be used. However, it is likely that any German DPA investigation into Model Clause-based transfers will take a strict approach to assessing the adequacy of protection they provide with a specific focus on the type of data transferred and the access to such data by foreign governmental authorities.
  5. Cloud Computing Guidance. Companies should analyse the specific guidelines for cloud computing which the German DPAs issued last year. The guidelines set forth specific requirements for cloud services, and incorporate technical data security and contractual provisions that go beyond the level of protection provided by standard EU Model Clauses. The guidelines are available in German here.

What to do now?

Companies are understandably alarmed by the bleak assessment of current data transfer mechanisms outlined by the German DPAs.  We nonetheless advise organisations to proceed methodically, and to closely monitor for further guidance from other data protection and governmental authorities. For example, the European Commission confirmed yesterday that it will soon issue guidance on international data transfers following the CJEU decision and that it is confident good progress will be made on a new agreement for transatlantic data flows by mid-November. Read the European Commission's press release here.

Therefore, apart from data transfers based on Safe Harbor (which, according to both the German DPAs and also the Article 29 Working Group, require immediate remediation), a pragmatic approach based on preparedness is most sensible:

  • Following the original Safe Harbor decision of the CJEU, many organisations have initiated data mapping exercises to understand what data they are transferring to the US, to whom and why. This still remains the most reasonable action in the immediate term. Understanding your data flows will ensure that you are able to respond appropriately to further developments in this area.
  • Design potential disclosure-and-choice mechanisms that make as strong a case as possible for notice and consent; and as applicable, draft template agreements based on/incorporating the EU Model Clauses and deploy them after discussing with customers the pros/cons and associated regulatory risks.

While both consent and Model Clause mechanisms are still subject to regulatory scrutiny in light of the Position Paper and the Article 29 Working Party's recent statement, it makes good sense to prepare these items for quick deployment.  And it is also worth remembering that the Article 29 Working Party, which is a representative body of all EU data protection authorities including those in Germany, has signalled that authorities will likely wait until the end of January 2016 to flex their enforcement powers.

Read more about some of the practical suggestions we made previously for responding to the CJEU decision here.

We will continue to follow developments on the EU-US trans-Atlantic data transfer pact as details become available.  Please check back for continued coverage.


1 Some German data protection authorities published statements which are even more extreme, for example, denying the feasibility of any data transfers to the US or requiring a company to seek explicit approval for any data transfers to the US. However, the views of these authorities can, in this respect, be considered not in line with the general view of German DPAs as set out in the Position Paper.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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