Worldwide: Global Data & Privacy Update - May 2016

Welcome to the May Global Data & Privacy Update. This update is dedicated to covering the latest legislative developments affecting the way data is managed and protected, as well as reporting on the most recent news governing data breaches and industry developments.

European data protection reforms in force from 25 May 2018

The General Data Protection Regulation (GDPR) will apply from 25 May 2018 following publication in the Official Journal of the European Union.

Click here for a copy of the legal text.

Digital is the 'new oil' and the 'new asbestos'

Last week Christopher Graham, the current Information Commissioner, delivered the message that organisations should start preparing for GDPR compliance as soon as possible.

The Information Commissioner explained that the introduction of fines of up to €20million, or 4% of worldwide turnover under the GDPR, compliance should now be a Board level issue for all companies and data protection compliance should be on the risk register of all organisations, commercial or otherwise.

The ICO is giving a clear message that, whilst organisations should take the opportunities that the current digital era provides, they must do so in line with the GDPR or else face the consequences of enforcement; and organisations should start planning now to ensure compliance before 2018.

"It's been said that we thought digital was the 'new oil' and then we discovered that it is also the 'new asbestos'. Privacy is about managing the threats as well as the opportunities," he said.

A new Information Commissioner is approved

The Culture, Media and Sport select committee has approved Elizabeth Denham, British Columbia's current Privacy Commissioner, as the new Information Commissioner following a pre-appointment hearing on 27 April.

Subject to final approval from Her Majesty The Queen, Elizabeth Denham will take over from incumbent Christopher Graham in Summer 2016.

Ms Denham has already aligned herself with Christopher Graham's message regarding managing threats and opportunities stating that "We must ensure access to information while maintaining high standards of data protection".

The Article 29 Working Party urges EU-US Privacy Shield revisions

The EU-US Privacy Shield has been rejected by the Article 29 Working Party (A29WP), the independent advisory body made up of representatives from all the EU data protection authorities. The agreement was intended to replace the Safe Harbour scheme, which was held to be invalid by the Court of Justice of the European Union in the Schrems decision in October 2015; however it now looks in doubt with negotiations set to continue to address the concerns of A29WP.

Following the European Commission's publication of the EU-US Privacy Shield documents in February, the A29WP carried out an assessment of the documents and urged the European Commission to address its concerns relating to the safeguarding of EU citizens' personal data.

On 13 April 2016, the A29WP published its opinion and highlighted its "strong concerns" with the present documents, including:

  • The overall lack of clarity - the A29WP noted that the EU-US Privacy Shield is constituted by a number of documents and therefore the protection it seeks to guarantee to EU citizens on data protection is unclear and at times inconsistent.
  • Data retention - the A29WP noted that US organisations are not obliged to delete data if it is no longer necessary.
  • US bulk collection of massive and indiscriminate data - the A29WP has long maintained that massive and indiscriminate surveillance bulk data collection cannot be considered proportionate and necessary. The A29WP believe that the current EU-US Privacy Shield does not provide sufficiently clear details to exclude such data collection. This is of particular concern to the A29WP, given the trend to collect ever more data on a massive and indiscriminate scale in relation to terrorism.
  • Independence of the Ombudsperson - the A29WP believes that the newly created Ombudsperson is not sufficiently independent and not vested with adequate powers to effectively exercise its duty. In addition, it does not guarantee a satisfactory remedy in case of disagreement.
  • Complex redress mechanisms – the A29WP noted the additional redress mechanisms available to individuals to exercise their rights under the Privacy Shield. However, it noted that the mechanisms may prove too complex and therefore ineffective.

The opinion was limited to looking at the EU-US Privacy Shield's compliance with current data protection law (Directive 95/46/EC) as opposed to the recently adopted GDPR. The A29WP recommends that a review of Privacy Shield take place in 2018 after the GDPR enters into force.

The A29WP recommendations are non-binding, but should be influential as the advisory body can suspend data transfers.

European Commission launches public consultation to update ePrivacy Directive

On 12 April 2016, the European Commission launched a public consultation on revising the ePrivacy Directive (2002/58/EC). The ePrivacy Directive was last updated in 2009 to provide enhanced rights to consumers, such as introducing requirements on personal data breaches. The consultation seeks to review the ePrivacy Directive so that the rules take account of recent technological changes in electronic communication, for example the spread of internet-based communication services, as well as the GDPR. The consultation is open for submissions now and closes on 5 July 2016.

Click here to respond to the consultation.

Turkey's first dedicated data protection laws enter into force

The first dedicated data protection law in Turkey entered into force on 7 April 2016. The legislation is based on the current data protection laws in force in the European Union. It establishes a Data Protection Authority in Turkey that will supervise the implementation of the law. There is a transition period for certain provisions so that companies have time to review compliance with the new law. For example, the rules on cross border transfers of personal data will not come into effect until 7 October 2016. Noncompliance with the new law may result in a fine of up to one million Turkish Liras (equivalent to €300,000) and a custodial sentence of between 1 and 4 years.

Singapore takes action against 11 organisations for breach of data protection rules

The Personal Data Protection Commission (PDPC) has announced that it has taken action against 11 organisations for breach of Singapore's data protection rules. This includes issuing 4 organisations with monetary fines and 6 others with warnings. One of the organisations was K Box Entertainment Group Pte Ltd, a karaoke chain, who was fined $50,000 for not putting in place sufficient security measures to protect the personal data of 317,000 individuals, for inadequate data protection policies and the absence of a Data Protection Officer. Its data intermediary, Finantech Holdings, was also fined $10,000.

It is the first time the PDPC has released decisions on breaches and may indicate future enforcement actions. This follows Singapore's Personal Data Protection Act which came into force in July 2014.

Click here to view the enforcement cases.

US Appeal Court decision signals Commercial General Liability policies coverage issue

On 11 April 2016, the United States Fourth Circuit Court of Appeal provided a non-binding unpublished opinion that a Commercial General Liability (CGL) insurance policy may provide coverage for data breach liability. The court in Travelers Indemnity Company of America v Portal Healthcare Solutions, LLC, No. 14-1944 affirmed the Virginia District court's ruling in that the insurer must defend the insured in a class action claim relating to an alleged medical records data breach. The claimants allege that the insured, a medical records company, negligently failed to secure medical records so that they were publicly available on its website for a period of time.

This decision is unlikely to impact on more recent CGL policies given the trend to specifically exclude "electronic data" and the rise in cyber insurance policies covering such liability. However, it may affect older CLG policies that do not contain the exclusion.

Global Data & Privacy Update - May 2016

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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