European Union: Not Forgotten: EU Data Protection Reform In The New European Parliamentary Landscape

Last Updated: October 28 2014
Article by Evan Flowers

Most Read Contributor in United States, October 2018

Much has changed in the digital world since 1995 when the EU's Data Protection Directive1 (the Directive) came into effect. An estimated 250 million Europeans now use the internet daily, and the monetisation of their internet usage information has become a highly lucrative industry. The value of European citizens' personal data could grow to an estimated €1 trillion annually by 2020,2 rapidly increasing the financial incentive to breach the prevailing patchwork of national data protection laws currently applied inconsistently across the 28 Member States. In the same 19-year period since the Directive came into effect, the composition of the European Parliament has also been transformed, particularly in the wake of the recent European "political earthquake" election results, with Eurosceptics now comprising a substantial portion of the European parliamentary ranks. Despite being passed in a plenary vote by the previous European Parliament in March 2014 and already being one of the most aggressively lobbied legislative reforms in EU history, the ongoing pan-European data protection reform process is shaping up to be another ideological battleground between those who believe in the ability of European institutions to provide cohesive and beneficial legislative solutions across the bloc, and those who view the supra-national European law-making machinery as broken and unable to advance the interests of the Member States. How this tension is ultimately resolved will have significant implications for citizens, multi-national business (particularly in the big data space), governments, regulators, and law enforcement and intelligence agencies.

Few would argue against reform of the current data protection regime. European citizens are demanding more consistent protection from the prevailing legal patchwork because the 1995 Directive is applied differently among the Member States. Corporations are also demanding legal certainty and a reduction in burdensome compliance costs arising from navigating the complex legal terrain. At the same time, European governments are renegotiating the existing US–EU Safe Harbour Agreements after their integrity was badly compromised by the NSA spying scandals. It is ironic that, at a time when the European Parliament now has new members actively lobbying against uniform European legislative solutions, "Europtimists" will be hoping that the successful implementation of these reforms will provide a timely pan-European marquee legislative solution. Such a Regulation, if constructed and implemented effectively, could reignite faith in the European legislative process and yield a competitive "safe data" advantage for European business. Conversely, as the clock ticks on the implementation of the reforms, there is also a danger that this episode will become yet another protracted and futile example of European bureaucratic failure—music to the ears of the new Eurosceptics in the parliamentary ranks.

Back (and forth) to the future

The debate is far from new. In early 2012, European legislators embarked upon the long and meandering road to reform. After the European Commission published its reform proposal on January 25, 2012, the European Commission Vice-President and EU Justice Commissioner, Viviane Reding, outlined the main substance of the reforms in a speech in March 2012.3 The centrepiece of the reforms was a Regulation4 that aimed to go beyond the powers of the existing 1995 Directive. The proposal also included an additional General Data Protection Directive applicable to law enforcement.5 After vociferous transatlantic lobbying and an animated and prolonged consultation process, including 350 draft amendments proposed in January 2013 by the Albrecht Report,6 the reforms received strong support from the European Parliament and the Regulation was unanimously passed at a plenary vote on both the architecture and fundamental principles of the Commission's proposals in March 2014 (621 votes in favour, 10 against, with 22 abstentions). The separate Directive on the functioning of the Data Protection Directive in a law enforcement context was also passed, but by a less impressive majority of 95 votes.

This strong result in the former Parliament sent an overwhelming message of support in favour of the main objectives of the reform, including, inter alia:

  • "one continent, one law";
  • a single "one-stop-shop" European supervisory authority on data protection;
  • reforms which would apply to all companies which operate in the European market, regardless of their place of establishment.

The Parliament also approved the use of sanctions of up to €100 million or 5 per cent of worldwide turnover for violation of the Regulation. Furthermore, the vote also passed a controversial provision clarifying and bolstering the "right to be forgotten/right to erasure" aiming to enhance citizens' (particularly teenagers') right to control their online privacy and identity. This provision would make it easier for an individual to demand the deletion or removal of information stored by data controllers, (including internet search engines), if there is no legitimate reason for keeping it. This right already existed under certain circumstances under the 1995 Directive and was recently affirmed by the European Court of Justice in May this year.7 While the new proposal and recent judgment make it clear that this is not an absolute right, and carve-outs have been made to avoid encroachment on freedom of expression and freedom of information, these concepts go to the very heart of democracies in Member States and have provided fertile ground for domestic attack by activist Eurosceptics.8

Analysis paralysis

European heads of state and government have already agreed to a "timely" adoption of the new data protection legislation at a summit in October 20139 as part of the delivery of the Digital Single Market by 2015. Despite this commitment and the strong symbolic support from the old Parliament, this timeline is far from watertight, as the European Council of Ministers must now approve the final text of the Regulation on behalf of the Member States using the ordinary legislative procedure (co-decision). Further dialogue with the new European Parliament will be necessary before the final wording is agreed, which is sure to add another layer of controversy and complexity to the process. The current Eurosceptic ranks are somewhat amorphous and divided between left and right. Precisely how they will vote remains a matter of conjecture. Right-wing anti-EU parties performed well in the United Kingdom, France and Denmark in the May 2014 election, and include Nigel Farage's Europeans for Freedom and Democracy Party (EFD) which currently has 48 MEPs (6.4 per cent of seats) and the European Conservatives and Reformists (ECR) led by Britain's Tories, which has 70 MEPs (9.3 per cent of seats). Given that pro-European mainstream parties still hold a two-thirds majority and the strength of the original plenary vote on the reform package, there is little chance of its progress being reversed by megaphone diplomacy from these newly elected minority voices within the new Parliament. However, given the unpredictable schisms that often develop in the major parties on issues of national security, civil liberties and international trade, the new parliamentary landscape is sure to give rise to strange political bedfellows on certain issues. When combined with a hardening stance against European regulation in some powerful Member States, there could still be some surprises in store over the final wording and implementation of the reform package as the EU Council of Ministers is yet to agree on its final provisions. At its last meeting on Justice and Home Affairs in Luxembourg in June 2014, the EU Council reached a vague consensus on sections of the draft regulation, including the "one-stop-shop" principle; however, the Presidency rather unhelpfully indicated that agreement had only been reached on the understanding that "nothing is agreed until everything is agreed",10 and certain provisions were still under review. This could jeopardise completion of the reforms by 2015 as originally agreed.

Collateral damage

How the new Parliament reacts to the final EU Council text remains to be seen, and that reaction may also have an indirect impact upon the EU–US Data Protection Umbrella Agreement and the resolution of the "13 Point" Safe Harbour negotiations underway between the United States and EU. Pro-reformers argue that any delay will be bad news for businesses already bleeding vast amounts in data compliance costs as they try to avoid falling foul of 28 domestic variations of the current Directive; opponents in the Eurosceptic ranks cite a UK government "impact assessment" that estimates that the cost of the new reforms in the United Kingdom could reach £360 million.11 The Dutch Government has estimated the implementation cost to employers at £1.2 billion.12 Supporters argue that the benefits of a streamlined new system will far outweigh these costs for firms with cross-border operations. But justifying high implementation costs for smaller employers is a provocative topic, with euro zone unemployment at unsustainably high levels. Britain, the Netherlands and Belgium have all voiced concerns against imposing unwanted regulation and costs on small and medium-sized businesses,13 which are unlikely to enjoy the benefits that will flow to larger entities looking to save compliance costs in multiple jurisdictions. The UK Justice Secretary and Conservative Eurosceptic, Lord Chancellor Chris Grayling, has publicly stated that it is "not a good idea to sign off on an incomplete, important part of an agreement", citing "differences and concerns" with the current state of the text.14 He has also accused Brussels officials advocating stronger data regulation of "not living in the real world" and being "caught up in a dogma that says the solution to every problem is more European regulation".15 The extent to which these laws are applied will also have huge ramifications on the operation of internet search engines across different jurisdictions. Domestic voices in England are already warning against Europe imposing a compromised and impoverished version of the internet bound by censorship that does not apply to browsers in other parts of the world. Furthermore, the potential for powerful individuals, companies, and lobby groups to use these provisions to rewrite their own internet legacy using law drafted by a large, "faceless" European bureaucracy is sure to garner headlines16 as the Council further considers the legislation and final dialogue with the new Parliament commences.

Conclusion

Despite the significant and irreversible progress that has been made in the construction of the legal framework for the data protection reforms, the process will continue to attract scrutiny and debate from the full spectrum of European protagonists. While agreement has already been reached by the European Parliament on the need for reform for the first time in a generation, the shifting electoral sands could once again serve to frustrate even the most intrepid supporters of the Regulation. If knowledge is indeed power, in the digital age one could argue that data and power have become synonymous. Exactly who wields ultimate power over Europe's data debate in the current legislative maelstrom is still unclear. Regardless of the consequences of the recent election results, it is to be hoped that the painstaking consultation process to date has earned these data protection proposals the right not to be forgotten.

Footnotes

1 Directive 95/46 on the protection of individuals with regard to the processing of personal data and on the free movement of such data [1995] OJ L281/31.

2 Boston Consulting Group study, cited in European Commission Memo—14-60_EN, "Data Protection Day 2014: Full Speed on EU Data Protection Reform" (January 27, 2014), http://europa.eu/rapid/press-release_MEMO-14-60_en.htm[Accessed August 4, 2014].

3 Viviane Reding, SPEECH/12/200, March 20, 2012, http://europa.eu/rapid/press-release_SPEECH-12-200_en.htm[Accessed August 4, 2014].

4 Proposal for a Regulation of the European Parliament and of the Council on the protection of individuals with regard to the processing of personal data and on the free movement of such data (General Data Protection Regulation) COM(2012) 11 final, http://ec.europa.eu/justice/data-protection/document/review2012/com_2012_11_en.pdf[Accessed August 4, 2014].

5 Proposal for a Directive of the European Parliament and of the Council on the protection of individuals with regard to the processing of personal data by competent authorities for the purposes of prevention, investigation, detection and prosecution of criminal offences or the execution of criminal penalties and the free movement of such data COM(2012) 10 final, http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2012:0010:FIN:EN:PDF[Accessed August 4, 2014].

6 Parliament's committee on civil liberties, justice and home affairs (LIBE Committee). LIBE draft report 2012/0011 (COD). December 17, 2012 (12 PVLR 65, 1/14/13), http://www.europarl.europa.eu/meetdocs/2009_2014/documents/libe/pr/922/922387/922387en.pdf[Accessed August 4, 2014].

7 Google Spain SL v Agencia Espanola de Proteccion de Datos (C-131/12) [2014] E.C.D.R. 16 (May 13, 2014).

8 "Only the powerful will benefit from the 'right to be forgotten': The European search engine ruling weakens our democratic foundations and could lead to our history being rewritten", Guardian, May 18, 2014.

9 European Council, October 24–25, 2013, Conclusions, EUCO 169/13 (CO EUR 13 CONCL 7), http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/139197.pdf[Accessed August 4, 2014].

10 Council of the European Union, 3319th Council Meeting—Luxembourg, June 5–6, 2014, Justice and Home Affairs Press Release 10578/14 (OR. En) Presse 328 PR CO 31, p.18, http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/jha/143119.pdf[Accessed August 4, 2014].

11 "Proposal for an EU Data Protection Regulation", UK Ministry of Justice Impact Assessment (November 22, 2012), https://consult.justice.gov.uk/digital-communications/data-protection-proposals-cfe/results/eu-data-protection-reg-impact-assessment.pdf[Accessed August 4, 2014].

12 See "Chris Grayling attacks EU jobs madness", Daily Telegraph, June 8, 2013.

13 "Chris Grayling attacks EU jobs madness", Daily Telegraph, June 8, 2013, p.12.

14 See "EU ministers press to delay decision on data transfers", Mlex, June 6, 2014.

15 "Chris Grayling attacks EU jobs madness", Daily Telegraph, June 8, 2013, p.12.

16 "Only the powerful will benefit from the 'right to be forgotten'", Guardian, May 18, 2014.

Originally published [2014] Int.T.L.R., Issue 4 © 2014 Thomson Reuters (Professional) UK Limited and Contributors

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