European Union: The EU General Data Protection Regulation And Its Territorial Scope

Introduction

In recent years, data protection has become one of the core topics of policy for many jurisdictions. Being one of the forerunners of this trend, the European Commission of the European Union ("EU") put forward a proposal in 2012 for a comprehensive reform of data protection rules to increase users' control of their data and to cut costs for businesses; also known as the EU Data Protection Reform. By doing so, the European Commission aimed at facilitating the implementation of the Digital Single Market Strategy.

After four years of preparation and many discussions that followed, the EU Parliament finally approved the General Data Protection Regulation1 ("GDPR") on April 14th, 2016. Pursuant to Art. 99 of the GDPR, it shall enter into force on the twentieth day following that of its publication in the Official Journal of the EU, however apply from May 25th, 2018. Along with the GDPR, the EU has also approved the Directive (EU) 2016/6802 on the protection of natural persons with regard to the processing of personal data by competent authorities for the purposes of the prevention, investigation, detection or prosecution of criminal offences or the execution of criminal penalties, and on the free movement of such data. The Directive enters into force on May 5th, 2016 and EU Member States shall transpose it into their national laws by May 6th, 2018.

The GDPR replaces the Directive 95/46/EC, a comparison of which is provided in my previous article with the then-in force corresponding regulations under Turkish law3. This article aims to summarize the significant reforms introduced by the GDPR to EU data protection rules along with its applicability outside of the EU.

Significant Reforms Introduced by the GDPR

Primarily, the GDPR aims to reinforce the right to protection of personal data as foreseen under Art. 8(1) of the Charter of Fundamental Rights of the EU and Art. 16(1) of the Treaty on the Functioning of the European Union. In this regard, the common ground of the reforms introduced by the GDPR is that they are aimed at ensuring that the natural persons practice greater control over their personal data. Although not constitute an exhaustive list of all the reforms brought by the GDPR, some of the concepts and regulations adopted therein to ensure such greater control are summarized below:

  • Consent. The main criterion for processing personal data has been determined under Art. 6(1) of the GDPR as the consent of the data subject, the conditions of which are strengthened by the GDPR. Further, the Preamble of the GDPR4 states that consent should be given by a clear affirmative act establishing a freely given, specific, informed and unambiguous indication of the data subject's agreement to the processing of personal data relating to him or her, such as by a written statement, including by electronic means, or an oral statement. The exceptions for the consent requirement are laid down under Art. 6 of the GDPR.
  • Right to be Forgotten. Pursuant to Art. 17 of the GDPR, data subject has the right to be forgotten, which is defined as the right to obtain from the controller the erasure of personal data concerning him or her without undue delay and the data controller shall have the obligation to erase personal data without undue delay where one of the following grounds applies:

    1. the personal data are no longer necessary in relation to the purposes for which they were collected or otherwise processed;
    2. the data subject withdraws consent and where there is no other legal ground for the processing;
    3. the data subject objects to the processing and there are no overriding legitimate grounds for the processing,
    4. the personal data have been unlawfully processed;
    5. the personal data have to be erased for compliance with a legal obligation in EU or its Member State law to which the controller is subject;
    6. the personal data have been collected in relation to the offer of information society services.

The right to be forgotten was also accepted by the European Court of Justice ("ECJ") before the entry into force of the GDPR. In its Google v. Spain ruling of May 13th, 2014, ECJ found that " (...) even initially lawful processing of accurate data may, in the course of time, become incompatible with the Directive [95/46/EC] where those data are no longer necessary in the light of the purposes for which they were collected or processed. That is so in particular where they appear to be inadequate, irrelevant or no longer relevant, or excessive in relation to those purposes and in the light of the time that has elapsed. Therefore (...) the information and links concerned in the list of results must be erased. 5"

  • Right to Portability. Art. 18 of the GDPR introduces the right to portability, which is defined as the right to receive the personal data concerning him or her, which he or she has provided to a controller, in a structured, commonly used and machine-readable format and have the right to transmit those data to another controller without hindrance from the controller to which the personal data have been provided6.
  • Notification of Data Violations. Art. 33 of the GDPR foresees a notification obligation for data controllers given that the security of personal data is compromised. Accordingly, the controller shall without undue delay and, where feasible, not later than 72 hours after having become aware of it, notify the personal data breach to the supervisory authority, unless the personal data breach is unlikely to result in a risk to the rights and freedoms of natural persons. Further, the data processor shall also notify the data controller of any personal data breach without undue delay.
  • Privacy Impact Assessment (PIA). In accordance with Art. 35 of the GDPR, where a type of processing in particular using new technologies, and taking into account the nature, scope, context and purposes of the processing, is likely to result in a high risk to the rights and freedoms of natural persons, the controller shall, prior to the processing, carry out an assessment of the impact of the envisaged processing operations on the protection of personal data. Such instances are exemplified under Art. 35(3) as follows:

    1. a systematic and extensive evaluation of personal aspects relating to natural persons which is based on automated processing, including profiling, and on which decisions are based that produce legal effects concerning the natural person or similarly significantly affect the natural person;
    2. processing on a large scale of special categories of data or of personal data relating to criminal convictions and offences; or
    3. a systematic monitoring of a publicly accessible area on a large scale.
  • Data Protection Officers (DPOs). As per Art. 37 of the GDPR, the data controller and processor shall designate a data protection officer in any case where:

    1. the processing is carried out by a public authority or body, except for courts acting in their judicial capacity;
    2. the core activities of the controller or the processor consist of processing operations which, by virtue of their nature, their scope and/or their purposes, require regular and systematic monitoring of data subjects on a large scale; or
    3. the core activities of the controller or the processor consist of processing on a large scale of special categories of data and personal data relating to criminal convictions and offences.
  • Transfer of Data Outside of the EU. 45(3) of the GDPR allows the Commission to decide that a third country, a territory or one or more specified sectors within a third country, or an international organization ensures an adequate level of protection. In the absence of such a decision, as per Art. 46 GDPR, a controller or processor may transfer personal data to a third country or an international organization only if the controller or processor has provided appropriate safeguards, and on condition that enforceable data subject rights and effective legal remedies for data subjects are available.
  • The One-Stop-Shop Mechanism. The one-stop-shop mechanism means that even though data controller or processor is located in various Member States, or if the activities of a single establishment of a controller or processor in the EU substantially affect data subjects in more than one Member State, the supervisory authority of the Member State where the entity has its "main establishment" will act as the lead authority for all data processing activities that have an impact throughout the EU7. The rules on the lead supervisory authority and the one-stop-shop mechanism should not apply where the processing is carried out by public authorities or private bodies in the public interest8.
  • Administrative Fines and Remedies. 83 of the GDPR regulates the administrative fines to be imposed on data controllers and processors, which go up to 20 million EUR, or in the case of entities, up to 4% of annual worldwide turnover of the previous financial year, whichever amount is higher. Furthermore, Art. 82 grants the right to claim compensation to any person who suffered material or non-material damage.

The Territorial Scope of the GDPR

The biggest and most important change introduced by the GDPR is its territorial application, laid down under Art. 3 of the GDPR which reads:

  1. This Regulation applies to the processing of personal data in the context of the activities of an establishment of a controller or a processor in the Union, regardless of whether the processing takes place in the Union or not.
  2. This Regulation applies to the processing of personal data of data subjects who are in the Union by a controller or processor not established in the Union, where the processing activities are related to:

    1. the offering of goods or services, irrespective of whether a payment of the data subject is required, to such data subjects in the Union; or
    2. the monitoring of their behaviour as far as their behaviour takes place within the Union.
  3. This Regulation applies to the processing of personal data by a controller not established in the Union, but in a place where Member State law applies by virtue of public international law.

To summarize, the GDPR applies when (i) data controllers and processors are located in the EU, whether or not the processing takes place in the EU; (ii) data controllers and processors are located anywhere in the world, for the processing of personal data of subject located within the EU for the activities of offering goods or services, or monitoring behavior taking place in the EU; (iii) a Member State national law is applicable to the case. Consequently, all providers of goods and services with a customer base in the EU or any website or mobile application that utilizes mechanisms of online behavioral advertising shall be subject to the GDPR.

Conclusion

The GDPR introduced many reforms to enhance and ensure the personal rights and freedoms of the data subjects within the EU by granting them further control over their personal data. When considered with the extraterritoriality of the GDPR, this means that many companies all over the world which may fall within GDPR's territorial scope, needs to become and stay compliant with the detailed regulations introduced by the GDPR.

Footnotes

[1] For the full text, please see: (http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:OJ.L_.2016.119.01.0001.01.ENG&toc=OJ:L:2016:119:TOC)

[2] For the full text, please see: (http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:OJ.L_.2016.119.01.0089.01.ENG&toc=OJ:L:2016:119:TOC)

[3] Uludere, Eda. Personal Data Protection under Turkish and European Legislation, Erdem&Erdem Newsletter, December 2015.

[4] Please see, the Preamble of the GDPR, § 32.

[5] Case C 131/12, Google v. Spain, Judgment of the Grand Chamber, § 93-94.

[6] Díaz Díaz, Efrén. The new European Union General Regulation on Data Protection and the Legal Consequences for Institutions, Church, Communication and Culture, 2016 1:1, p. 224.

[7] Gilbert, Francoise. EU General Data Protection Regulation: What Impact on Businesses Established Outside the European Union, Journal of Internet Law, May 2016, p. 5.

[8] Please see, the Preamble of the GDPR, § 128.

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