We are pleased to bring you the 2014 Summer Edition of the Hergüner Newsletter which is focused on information technology and data privacy against the backdrop of big data. For some the concept of big data may be new, yet big data transforms every part of our lives. Today when global economies are recovering from the past financial year, businesses are looking for new areas of growth, value and opportunity. More than ever, global economies and businesses are turning to big data for new innovations and new opportunities to turn big data into value, both economically and socially. While data has always had strategic value, the magnitude of big data available today, creates new challenges in how to access and process it to create a valuable and actionable new asset or benefit. In this sense, some refer to big data as being equivalent to oil and gold. Some believe that big data is like the Texas oil boom of the 20th Century, or the California San Francisco Gold Rush of the 1800s. Since big data is transformative, one is either going to be a part of the transformation through technology or will be left out as the speed of innovation is constantly evolving.
Big data is defined as data sets whose size is beyond the ability of regular database software tools to capture, store, manage and analyze. It is high volume and velocity data, and includes enormous sources of information from which one wants to get value. Depending on the sector, the definition of big data can change and depending upon what types of software tools are available and are being used to manage, analyze or use the data. Big data in many sectors can range from a few dozen terabytes to petabytes (thousands of terabytes).
With this in mind, private and public sector decision makers are trying to seize opportunities that data technologies provide. Opportunities may range from increasing one's customer base to reducing costs; providing better services, enabling increased shareholder participation through e-voting and e-meetings, increased employee productivity to the benefits of better decision making, having a more competitive edge and developing value for the company of tomorrow.
With the benefit of big data also come potential challenges and risks. For example, there is increasing importance for protecting personal data and privacy by countries and organizations, and how "personal data" is defined, how to treat anonymous data, whether to allow a right to be forgotten and the need to clarify pertinent jurisdictions and potential liabilities and risks associated among different parties. Such issues continue to grow, especially as policy makers look to develop new laws and regulations and make policy recommendations. Big data represents a major change in how today's businesses will turn into the company of tomorrow by successfully using big data to add value. Such transformative change may require a new mindset and capabilities. As many companies may be struggling to even know where to begin in becoming competent in big data, we are pleased to offer the Summer Edition of the Hergüner Newsletter as one step along the way in becoming big data savvy.
HOW TO SECURE INDEPENDENCE FOR A POTENTIAL DATA PROTECTION AUTHORITY: A QUESTION OF INSTITUTIONAL DESIGN
By Baran Alptürk
The primary piece of European legislation on data protection, Directive 95/46/EC (the "Directive"), instructs member states to set up independent authorities to administer local laws implementing its structure.1 The Directive stresses that these authorities must be completely independent.2 The European Court of Justice ("ECJ") has explained that complete independence is imperative to ensure that the regulatory agency can strike a true balance between the fundamental right to private life on the one hand and the interests requiring free movement of personal data on the other.3 The ECJ has also noted that independence is critical because different national authorities must cooperate with one another, and sometimes even act on the prompting of a different member state.4
The question of the independence of data protection agencies has come up fairly often before the European Court of Justice as of late, with the Court speaking out against infringements on data protectors' independence three times since 2010.5 These cases can be read to evaluate independence on two distinct levels, to which this article will refer as structural independence and operational independence. In essence, structural independence signifies independence from the political authority in decision making functions, whereas operational independence signifies independence from the rest of government in the agency's day-to-day operations. The ECJ has thus far been vigilant in defending national agencies' structural independence against potential encroachments, while recognizing that operational independence can be subjugated to other needs such as arrangements seeking efficiency in the operation of government.
As Turkey seeks to bring its data protection laws in line with Community law, it will need to establish a data protection agency that satisfies the ECJ's independence criteria. At first blush, it seems that the ECJ's approach to agency independence aligns well with the conceptualization of independent agencies in Turkish administrative law. This bodes well for Turkey, given that it will likely have a reliable blueprint on which to design its data protection authority. But Turkish administrative law does have certain facets that may be questionable under the framework set up by the ECJ, and any potential data protection regulatory agency will need to be designed with the ECJ's standards in mind if it is to truly live up to European standards.
Commission v. Germany
Directive 95/46/EC aims merely to create a framework for independence, and does not specify any details with respect to how such independence is to be attained. The ECJ has begun to fill in these details in a series of decisions on this point. The first decision of the ECJ in regard of the independence of data protection agencies, Commission v. Germany, evaluated whether the structure in which data protection regulators set up at the Länder level were made subject to State scrutiny was compatible with the requirements of the Directive. Being that it was the first major case in this regard, the decision remained at a relatively high level of abstraction, mainly considering the question of whether Community law can impose on member states the requirement to set up independent agencies at all.
The decision focused mostly on structural independence; it established that the standard against which to measure independence was whether the regulator was sufficiently independent as to be "free from external influence,"6 where this "independence preclude[d] not only any influence exercised by the supervised bodies, but also any directions or any other external influence, whether direct or indirect, which could call into question the performance by those authorities of their task consisting of establishing a fair balance between the protection of the right to private life and the free movement of personal data" (emphasis added).7
The ECJ was not absolutist in its insistence on independence however; it considered Germany's objection that a completely independent entity would violate the principle of accountability in government. The ECJ allowed that in order to secure democratic accountability it may be permissible (i) for Parliament or the government to appoint the data protection authority; and (ii) for the Parliament to define the powers of the authority.8 The decision also noted that (iii) it may be permissible for the Parliament to require the data protection authority to report on its activities to the Parliament.9 Nevertheless, in its holding the ECJ found that having the State supervise data protection regulators set up at the Länder level did indeed violate the Directive's requirement of complete independence.
The significance of the holding in Commission v. Germany was that it pronounced that subject to the limitations just discussed, data protection agencies also had to be free from oversight within an administering state's internal review mechanisms, this limitation of course excluding judicial review, which is permitted explicitly in Article 28(3) of the Directive.
Commission v. Austria
In Commission v. Austria the ECJ considered the validity of Austria's scheme whereby the managing member of the data protection agency (the Datenschutzkommission or the "DSK") always had to be a member of the Federal government, and the DSK's staff was placed under the authority of the Federal Chancellery. This case presented a rather more complicated fact pattern than in Commission v. Germany, and allowed the court to consider independence on both a structural and an operational level.
At the structural level, the court held that the requirement that the managing member, who ran the day-to-day activities of the DSK, had to be a Federal official meant that he or she would be subject to the Federal chain of command through his/her other appointment, which could bring the influence of the Federal government to bear on the DSK, however indirectly. The court found that this link to the Federal government violated the standard, set in Commission v. Germany, that the regulator "remain above all suspicion of partiality."10 The court also noted in dicta that it was the fact of the managing member's continuing relationship with the Federal government that created the problem, and that the fact that the member was appointed by the Federal government was not necessarily problematic in and of itself.11
On the operational side, the court found that the DSK's sharing of staff with the Federal Chancellery also threatened its independence. The court found that it was not a problem that the DSK did not have an independent budget; in fact, the court found that member states can "provide that, from the point of view of budgetary law, the supervisory authorities are to come under a specified ministerial department."12 However, Austria's practice of having DSK share its staff with another Federal Chancellery threatened its independence, especially given the fact that the Chancellery itself was to be subject to oversight by the DSK.13
Finally, the court also held that the Federal Chancellor's unconditional authority to be informed at all times of all aspects of the work of the DSK was too broad, threatening at least the perception of the DSK's complete independence, and therefore violated the standard of Commission v. Germany.
The significance of Commission v. Austria was that it held that the fact that members of a data protection agency were not bound by the instructions of any kind was a necessary but not a sufficient condition of complete independence. The court held that, in addition to being free from instructions, a completely independent data protection agency also had to be free from all indirect influence or the perception thereof, which, as this case showed, could be imposed or created through shared staff or a director holding a joint appointment with another government department.
To summarize, the decisions of the European Court of Justice taken thus far suggest on the structural side that the members of the regulatory agency may be appointed by the political authority, and that the political authority may define the bounds of the regulator's authority. Further, the political authority may require the regulator to report to it in regular intervals. But the regulatory agency's members may not retain cross-appointments in a government agency that is subject to hierarchical internal governance. On the operational side, the regulator need not have an independent budget, but its staff must not be under the supervision or joint control of another agency that is within the government.
Alignment with Turkish Law
The framework described in the ECJ decisions noted above generally aligns with the structure of Turkish independent administrative agencies, which have proliferated as the government has ceded control over certain sectors of the economy. However, Turkish administrative law has imposed certain properties over these agencies which may be questionable when reviewed against the ECJ's criteria for independence.
The most suspect feature of Turkish independent administrative agencies' sui generis setup in respect of the ECJ's understanding of independence is the concept that Turkish independent agencies are generally set up to be "affiliated with" (ilişkili) with a ministry of government. This is a special kind of relationship which is meant to emphasize that the agencies' activity is not subject to oversight by governmental departments.14 There is an ongoing debate in Turkish law as to the contours of this relationship.15 At a minimum, and beyond controversy at any rate, is that being affiliated with a ministry reaffirms that Turkish independent agencies are integrated within the government to some degree, in line with the principle of unitary government (idarenin bütünlüğü ilkesi). Given the stringent operational independence standard of the ECJ, and the uncertainty concerning the limits of this relationship even in domestic Turkish law, it is not unthinkable that a potential Turkish data protection agency that is in an "affiliated relationship" with a government ministry could be in breach of the ECJ's standards for the principle of independence.
It is also generally accepted that the affiliation relationship entitles the ministry with which the agency is affiliated to file suit on behalf of the agency and to move the government accounting office into action on its behalf.16 Granting a ministry of the government the former right, namely the right to file suit on behalf of an independent agency, may directly contradict Art. 28(3) of the Directive, which requires independent data protection agencies to be endowed with "the power to engage in legal proceedings where the national provisions adopted pursuant to this Directive have been violated or to bring these violations to the attention of the judicial authorities."
Another very important factor to keep in mind when evaluating the independence of the data protection agency would be to ensure that the agency is authorized to enact regulations under its own power. Art. 124 of the Turkish Constitution authorizes independent agencies qua public entities to issue regulations. However, the organic acts for some regulatory agencies stipulate that the Council of Ministers must issue regulations on their behalf. This kind of an explicit mechanism of governmental approval would surely contravene the ECJ's standard for independence, where even the threat of tacit alignment with government is considered sufficient to breach the promise of independence.
To summarize, the independent agency structure envisioned by the ECJ's recent decisions in respect of data protection agency designs in European Union member states generally aligns with the understanding of independent agencies already in place in Turkey. However, the ECJ has been very stringent in its insistence on complete independence, holding that even the perception of government influence on the data protection agency is enough to violate the independence requirement. Turkish administrative law contains many subtle mechanisms that may be interpreted as vehicles through which the government may exert influence on independent agencies. Given the unbending stand of the ECJ on behalf of independence at least with respect to data protection agencies as of late, Turkey will need to be very careful to shield its data protection regulator from such influences if it hopes to meet ECJ's very high standards in this regard.
1. Directive 95/46/EC, Art. 28(1).
2. Id. ("These authorities shall act with complete independence in exercising the functions entrusted to them.")
3. Case C-518/07, Commission v. Germany, EU:C:2010:125, paragraph 24.
5. See Case C-288/12, Commission v. Hungary, EU:C:2014:237; Case C-614/10, Commission v. Austria EU:C:2012:631; Commission v. Germany, EU:C:2010:125.
6. Commission v. Germany, paragraph 30.
8. Commission v. Germany, paragraph 44.
9. Id. at paragraph 45.
10. Commission v. Austria at paragraph 52.
11. Id. at paragraph 55.
12. Id. at paragraph 58.
13. Id. at paragraph 61.
14. See Gözübüyük and Tan, İdare Hukuku: Genel Esaslar (2013) p. 315.
15. Being "affiliated with" is thought to be different from being "related to" (ilgili) a ministry. Chambers of different functionality within the Council of State have interpreted this relationship differently, with the 1st Chamber holding that being affiliated with a ministry is the same thing as being "related to" that ministry, Danıştay 1.D; 24.10.2002, E.2002/156 - K. 2002/167, and the General Assembly of Administrative Law Chambers (İdari Dava Daireleri Genel Kurulu) has held that there is a material difference, the former connoting greater independence. Danıştay İDDK, 10.03.2005, E.2005/74 - K. 2005/68. See also Gözübüyük, p. 315 nn. 322- 23 and accompanying text.
16. Gözübüyük, p. 316, n. 325 (citing A. Ulusay, Bağımsız İdari Kurumlar, Danıştay Dergisi 100, p. 15 et seq.)
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.