European Union: Whose Law Is It Anyway? How Closely Aligned Is The Data Protection Directive With One-Stop-Shop?

The Google Spain case is most commonly recognised for introducing the 'right to be forgotten'. However, the judgment has had a more subtle but no less significant side effect. The case also extended the territorial application of EU data protection law to entities located outside the EU but which have some presence – like a marketing subsidiary – in Europe. Following Google Spain, certain EU data protection authorities ("DPAs") have taken an aggressive interpretation of this aspect to the case. DPAs have argued that Google Spain should be read as meaning that a pan-EU business should be simultaneously subject to the data protection laws of all EU Member States where it – or one of its affiliates – has a presence, even if that in-country affiliate has little to do with data processing. This has led to conflicting interpretations as to which national data protection law applies to a single set of processing activities under the Data Protection Directive. Helpfully, this past week has seen clarifying views provided at both national and EU level.

What does the Directive say?

Article 4 of the Directive sets down rules for determining if EU data protection law applies – and, if so, which Member State's law should apply – to the processing of personal data. The CJEU tested the bounds of this first question in its Google Spain decision, where it addressed the territorial reach of EU data protection law under Article 4. The CJEU found that an "inextricable link" existed between the Spanish and US entities, despite the fact that Google Spain did not actually process personal data related to Google Search. This permitted the CJEU to bridge a perceived "gap" in protection and apply EU (in that case, Spanish) data protection law to the US-based Google, Inc.

However, another significant rule flows from Article 4 – that addressing a 'conflict of laws' scenario. This applies to a situation where more than one Member State's national law has the potential to apply to a particular instance of data processing. Article 4(1)(a) states that:

"... when the same controller is established on the territory of several Member States, he must take the necessary measures to ensure that each of these establishments complies with the obligations laid down by the national law applicable ..."

What is the issue?

The precise intention behind this text has, over the past few years, served as an ever increasing point of contention in EU data protection law. One view is that the law of the Member State where the controller is principally established should apply, even where the controller is found to be established in other Member States. The competing view, however, is that each establishment of a controller must separately comply with the data protection rules of the Member State in which it is based.

A regulatory race

DPAs, in particular, have sought to leverage this language in order to re-regulate controllers that are already subject to another DPA's and Member State's oversight. Recently, the Article 29 Working Party ("WP29") – the collective body of DPAs – published an updated Opinion 08/2010 on applicable law in light of Google Spain.  In particular, WP29 changed its views on which Member State's data protection laws are to apply in cases where companies have several establishments across the EU. In the Opinion, WP29 admits that the "baselines provided by the Directive ... still provide a relatively high level of protection". However, it argues that, because there is not full harmonisation of data protection law, companies must comply with local laws of each Member State in which it has a presence to the extent that the EU headquarters carries out processing in the context of the relevant local entity. This is an about face from the original Opinion of WP29 on this topic which stated that the location of the EU headquarters or centre of operations determines the applicable law, despite the presence of commercial offices in other Member States.

Clarity provided

Last week, the Hamburg Administrative Court (the "Hamburg Court") handed down a decision, suspending an order of the Hamburg DPA which had challenged Facebook's 'real name' policy. The Hamburg DPA had argued that German national data protection law should apply to Facebook, and that users should be able to create profiles with pseudonymous (made-up) names. Despite Facebook's headquarters being located in Ireland, the Hamburg DPA tried to lean on the existence of Facebook Germany's offices as a means to apply German law. It is worth noting that the Hamburg DPA's case was based on a provision of German data protection law – the right to a pseudonymous online profile – that has no equivalent under EU or Irish rules.

When the Court analysed the matter of applicable law under Article 4(1), it concluded that German law was not applicable, despite the office of Facebook in Germany. The Hamburg Court first found that Facebook did have an establishment in an EU Member State (Ireland) and therefore a broad interpretation of the 'establishment test' was not justified. Distinguishing the CJEU's judgment in Google Spain, the Hamburg Court noted that there was no "gap" in protection to be bridged here but instead, there was a potential overlap of laws and regulation.

Where the controller has establishments in more than one Member State, the Hamburg Court indicated that the law of the state of the establishment with "the closest relationship" with the relevant data processing should be applicable. Given this, a case-by-case assessment must be undertaken. The Hamburg Court made it clear that if one of the establishments processes personal data as part of the activities of another primary establishment, then the data protection law of the Member State which hosts that primary establishment must apply. Because Facebook Ireland has the closest relationship with the relevant data processing, and not Facebook Germany, the Hamburg Court determined that German law was not applicable.

The Commission weighs in on inter-DPA cooperation

In parallel with the Hamburg Court's decision, the European Parliament recently published the European Commission's views on applicable data protection law. This arose in response to a German individual's petition to the Parliament on the handling of personal data by PayPal. One of his complaints was that the German regulatory authorities cannot supervise PayPal, which is headquartered in Luxembourg.

In its reply, the Commission said it was the role of national DPAs to address these issues. The Commission pointed to the Luxembourgish DPA as the competent regulator, given that the processing of the individual's data is carried out in the context of that establishment of the controller. This, again, supports the notion that the DPA of the Member State in which a controller's EU headquarters is based is most likely the competent regulator. Citing the Weltimmo case, the Commission added that the individual can submit a complaint to their local DPA, who in turn is obliged to cooperate with the competent DPA.

How do these decisions affect the interpretation of Article 4(1)?

This interpretation provided by the Hamburg Court is to be favoured because it is capable of avoiding a scenario in which cross border services must observe a multitude of different national data protection laws. At this point, it is worth remembering that the Data Protection Directive has two distinct purposes. First, it is designed to ensure an adequate level of protection of personal data. Second, it was intended to contribute to the building of the EU's Internal Market by removing a potential barrier to trade: overlapping and inconsistent national data protection rules that subject pan-EU businesses to re-regulation whenever they cross national borders.

The Hamburg Court found that there was no basis under EU law to justify the application of multiple data protection laws to the same processing activity – the Directive is intended to be uniform, Union-wide law, and it is both adequate and necessary that one instance of data processing is subject to the legal provisions of only one Member State. This significantly diverges from WP29's views that despite "relatively high level of protection" of the Directive's baseline, one must still comply with different national rules.

What does the future hold?

The most interesting facet of this debate is that the 'one-stop-shop' mechanism – which also addresses 'conflicts of law' scenarios – is a core component of the incoming data protection regime. The General Data Protection Regulation ("GDPR"), which is expected to formally replace the Directive in a little over 2 years' time, more closely reflects the views of the Commission and the Hamburg Court.

In essence, one-stop-shop seeks to regulate a company in the Member State where its EU headquarters or centre of control is based. That Member State's DPA is the "lead DPA". Other DPAs can act as "concerned" DPAs to the extent that the controller's activities affect individuals in their respective Member States.

Despite divergent views arising at DPA level, it appears that both national courts and EU institutions maintain a more pragmatic approach in relation to this conflict of laws issue. In any event, it is clear that the dual intentions of the Directive have sometimes been overlooked by DPAs when seeking to apply their own national law. It will be interesting to see whether DPAs modify their approach in light of these recent views. 

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.

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
 
In association with
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
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.