European Union: Data Protection: Safe Harbour – What Next?

Last Updated: 20 October 2015
Article by Rob Corbet
Most Read Contributor in Ireland, October 2018

In this briefing we look at the recent Court of Justice decision to invalidate the Safe Harbour and we examine the implications of this decision in light of other recent data protection cases and in light of the progress being made in finalising the proposed new EU Data Protection Regulation.

SAFE HARBOUR DECLARED INVALID

Background

As has been widely reported, the Court of Justice of the EU determined on 6 October 2015 that the European Commission Decision underpinning the Safe Harbour (2000/520/EC) was invalid. The Court's decision comes on foot of a referral from the Irish High Court arising from a complaint made by an Austrian Student, Maximillian Schrems. Mr Schrems complained to the former Irish Data Protection Commissioner (DPC), Billy Hawkes, that Facebook Ireland's data transfers to Facebook Inc in the US were not compliant with EU data protection laws. Mr. Schrems' concerns appeared to be based principally on the grounds that his data could be subject to mass and indiscriminate surveillance by the National Security Agency in the United States in light of the Edward Snowden revelations. As the transfers were subject to Facebook's Safe Harbour certification, and on the basis that Safe Harbour was one of the basis approved by the EU Commission under the Data Protection Directive to validate such transfers, the DPC had rejected Mr Schrems' complaint. He appealed this decision to the Irish High Court who in turn referred the matter to the CJEU.

Grounds for the CJEU Decision

The CJEU decision to invalidate the Safe Harbour regime was made on two technical grounds. First, the Commission Decision approving the Safe Harbour was invalid as it failed to sufficiently examine the data protection standards in the US to ensure, by reason of US domestic law or its international commitments, a level of protection of fundamental rights which were equivalent to those guaranteed in the EU. Secondly the Decision potentially deprived data subjects of their rights of access to Data Protection Supervisory authority to exercise independent oversight of data controllers within their jurisdiction.

These may seem to be rather technical reasons for reaching such a drastic decision. From a US perspective in particular, the decision may seem perplexing in that one organ of the EU, the CJEU, has now overruled another organ, the EU Commission, in relation to an issue that was already under review in light of the Snowden revelations.

However, the decision is not that surprising in the context of an increasing body of caselaw which has elevated data protection and privacy rights towards the upper end of the spectrum of legally protected "fundamental" rights. When read in that context, it is perhaps less surprising that EU authorities have applied a strict interpretation to the standards of data protection that they require to be applied to the data of EU citizens, regardless of whether the processing takes place in the EU or in the United States.

ANOTHER CONSEQUENCE OF PRIVACY AS A FUNDAMENTAL RIGHT

The decision again stresses that the right to protection of personal data is "guaranteed" by the Charter of Fundamental Rights of the European Union (the "Charter") and that the Data Protection Directive (95/46/EC) and the roles of national supervisory authorities in protecting this right are to be applied in light of the Charter.

The Schrems case follows hot on the heels of two other important data protection decisions that have been issued in recent years i.e. the decisions of the CJEU in the Google Spain 'right to be forgotten' case,1 and secondly, on the illegality of the laws obliging telecommunications companies to retain all communications traffic data for a period of 2 years (another case prompted by a reference from the Irish Authorities who are vested with the High Court)2. Both of these judgments referred extensively to the Charter in support of the court's decision.

The Schrems case confirms the roles of Articles 7 and 8 of the Charter in the context of data protection and privacy rights. Part of this application means that the concepts of necessity, proportionality and transparency will be particularly important principles for data protection compliance going forward with the CJEU, again reiterating that "above all, protection of the fundamental right to respect for private life at EU level requires derogations and limitations in relation to the protection of personal data to apply only in so far as is strictly necessary". This will provide a strong basis for individual data subjects to litigate under EU data protection and human rights laws to protect their data protection rights, regardless of the location of the processing.

This in turn will add to the compliance burden on businesses that are already looking to revise their procedures in anticipation of a stricter regime that will likely apply once the General Data Protection Regulation is finalised and comes into force (see further below).

IMMEDIATE CONSEQUENCES

The Decision has immediate consequences for the over 4,000 companies who have self-certified under the Safe Harbour regime and to all of their customers and other contractors who have relied on that certification to legitimise transfers of personal data to the US. However, it has already been acknowledged by the Commission that it will take some time for companies to adapt to the CJEU decision. In addition, further guidance is expected to emerge from the DPC, the Commission and the EU's Article 29 Working Party in the coming weeks and months. The Irish High Court is also due to adjudicate on the case when it considers the CJEU decision again on 20 October 2015.

ALTERNATIVES TO SAFE HARBOUR

In that context, clients should take a moment to consider the consequences of the decision in relation to their own particular data arrangements before rushing to judgment. For example, there are a number of avenues which companies may explore as alternatives to the Safe Harbour:

  • Consent or Contract Performance

Section 11 of the Irish Data Protection Acts 1988 and 2003 (which transposes Article 26 of the Data Protection Directive) enumerates a number of situations in which data may be lawfully transferred to countries outside of the EEA. For example, a transfer of personal data outside of the EEA will be lawful if the data subject has given his or her consent to the transfer. Similarly, the transfer of personal data outside the EEA will be lawful if the transfer is necessary for the performance of a contract between the data subject and the data controller or, on instruction of the data subject, for progression towards entering into such a contract. While these grounds have been strictly interpreted, they may be helpful for some companies who previously utilised Safe Harbour.

  • Binding Corporate Rules

Another, more systematic approach to ensuring lawful transfer of data outside the EEA, may be for a company to consider implementing Binding Corporate Rules ("BCRs") thus allowing for the lawful transfer of data between related companies. In practice, the implementation of BCRs is complex and time consuming so this option does not provide a "quick fix" and in any event it does not legitimise transfers of data to unrelated suppliers or contractors in the US.

  • Model Clauses

In many cases, the most pragmatic and efficient approach for companies to ensure lawful transfer of data outside the EEA, is to enter into so-called "Model Clauses" as approved by the European Commission. The Model Clauses are template data processing agreements which have been published in an approved form by the European Commission to allow the lawful transfer of personal data from EEA countries to countries outside the EEA, including the United States. While the European Commission has issued a series of Model Clauses over the years, they do not cater for every possibility. For example, companies cannot currently use model clauses for transfers from a data processor to a sub-processor. The loss of safe harbour is particularly problematic for those type of arrangements.

SAFE HARBOUR MARK II?

In light of the CJEU decision, the European Commission and the US Department of Commerce are under increased pressure to propose a viable alternative to the Safe Harbour. The EU and the US had already been negotiating a replacement for Safe Harbour prior to the Schrems decision but these negotiations had stalled. Among the reported sticking points was the scope of application of exemptions to allow national security services to process European citizen's data, the very issue that drove the CJEU to declare the Safe Harbour decision invalid.

Any future EU/US agreement on Safe Harbour's successor may be more likely to emerge from a political deal to be struck between Brussels and Washington, perhaps under the aegis of the Transatlantic Trade and Investment Partnership (TTIP) which is currently being finalised.

For its part, the EU's Article 29 Working Party has convened an extraordinary plenary meeting to discuss the Schrems judgement and it will be interesting to see if a consensus view emerges from those discussions as to how companies should respond to the judgment. The initial reaction of most national supervisory authorities in Europe to the decision has been to welcome the judgment and confirm their discomfort at US surveillance laws but there has to date been relatively little in the way of practical guidance to companies as to how they can adapt to alternative solutions.

WHAT ABOUT THE PROPOSED DATA PROTECTION REGULATION?

For almost four years now, the EU has been trying to progress a wholesale reform of the current Data Protection Directive 95/46/EC with a proposal for a Regulation on the protection of individuals with regard to the processing of personal data and on the free movement of such data ("GDPR") along with a separate proposal for a Directive on the protection of individuals with regard to the processing of personal data by competent authorities for the purposes of prevention, investigation, detection or prosecution of criminal offences or the execution of criminal penalties, and the free movement of such data.

Progress on the GDPR has been painfully slow but it does now seem that there is sufficient momentum to finalise the text by early 2016 as trilogue negotiations to finalise a single text between the Commission, Parliament and Council are reported to be making rapid progress. However, with a two-year transition period between publication and legal effect, it is unlikely that the GDPR will be in force before 2018.

While the GDPR already includes detailed provisions governing jurisdiction and data transfers, the lack of an agreed text and the protracted timeline for implementation do not offer any immediate solutions to companies impacted by the Safe Harbour decision.

CONCLUSION

The CJEU Safe Harbour decision is effective immediately and therefore clients should review their existing data flows and how they might be impacted by the decision (both in terms of their internal data flows and those to their suppliers and contractors). Data protection supervisory authorities are unlikely to move to immediate enforcement action where companies can show that they have commenced a process to address the consequences for them of the decision. Accordingly. we are advising clients to take a calm and considered view of their current arrangements and to take advice on what remedial actions offer the best fit for them in the context of the emerging guidance.

1 Judgment in Case C-131/12, Google Spain SL, Google Inc. v Agencia Española de Protección de Datos, Mario Costeja González

2 Judgment in Joined Cases C-293/12 and C-594/12 Digital Rights Ireland and Seitlinger and Others

This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions