United States: EU's Highest Court Declares EU-US "Safe Harbor" Data Transfer Framework Invalid

In a landmark decision issued yesterday, the European Court of Justice -- the highest court in the European Union -- struck down the "Safe Harbor" data transfer agreement between the EU and the United States. Since 2000, thousands of companies have relied on Safe Harbor to transfer personal data from the EU to the U.S. The Court's decision in Maximilian Schrems v. Data Protection Commissioner (Case C-362/14) has wide-reaching implications for companies and organizations using Safe Harbor as a basis for their data transfer to the United States.

EU-US Safe Harbor Framework

Historically, the U.S. and EU have taken different approaches to privacy and data protection. In addition to a patchwork of various state laws on the topic, the U.S. utilizes a sectoral approach, relying on a series of industryspecific legislation, as well as regulatory enforcement by various federal agencies. The EU, on the other hand, has implemented comprehensive legislation that is applicable across the EU, regardless of the particular industry or entity. The EU's comprehensive privacy legislation, Directive 95/46/EC (the "EU Data Protection Directive"), which became effective on Oct. 25, 1998, prohibits the transfer of personal data outside of the EU unless there is an "adequate level of protection of the data."

In 2000, in response to the EU Data Protection Directive, the EU and the U.S. negotiated a "Safe Harbor" agreement that allowed companies to transfer data between the EU and the U.S. by self-certifying that the company's personal data practices adhered to seven "principles" of Safe Harbor: notice, choice, onward transfer, security, data integrity, access and enforcement. Under Safe Harbor, companies were free to transfer personal data from the EU to U.S.- based computer servers without running afoul of the EU Data Protection Directive and European privacy laws.

For the past few years, the EU and the U.S. have been negotiating amendments to Safe Harbor, but the amendments have yet to be finalized.

The Court's Decision

The European Court of Justice's Schrems ruling issued yesterday stemmed from a lawsuit filed by Max Schrems, an Austrian law student, who argued that the Irish Data Protection Commissioner failed to protect him from mass surveillance by the U.S. National Security Agency (NSA). Schrems argued that, since Facebook stores most of its customer data in the U.S. and transfers personal data to the NSA as part of the NSA's "PRISM" program, his personal data was not sufficiently protected under the EU Data Protection Directive. The Court of Justice was asked to rule on whether national data privacy regulators could unilaterally suspend the Safe Harbor framework.

The Court of Justice expressed two primary concerns with the Safe Harbor framework. The first concern addressed U.S. mass surveillance efforts. As the Court explained, "national security, public interest and law enforcement requirements of the United States prevail over the safe harbour scheme, so that United States undertakings are bound to disregard, without limitation, the protective rules laid down by that scheme where they conflict with such requirements." The Court also wrote that "[l]egislation permitting the public authorities to have access on a generalized basis to the content of electronic communications must be regarded as compromising the essence of the fundamental right to respect for private life." The Court further noted that there did not appear to be "rules intended to limit any such interference or to the existence of effective legal protection against the interference."

The Court next focused on the lack of legal redress available to individuals affected by violations of Safe Harbor. The Court noted that Safe Harbor failed to provide "any possibility for an individual to pursue legal remedies in order to have access to personal data relating to him, or to obtain the rectification or erasure of such data" and that such failure "compromises the essence of the fundamental right to effective judicial protection."

Ultimately, the Court ruled that Safe Harbor could not usurp the right of each EU member state's data protection authority to examine whether a transfer of data complies with EU privacy rules. The Court stated that it was now up to the Irish data protection authority to decide whether to suspend the transfer of data from Facebook's European subscribers to the U.S.

The European Court of Justice's ruling in Schrems threatens to disrupt the more than 4,000 European and American companies certified under Safe Harbor, as well as numerous existing business arrangements between the EU and the U.S., including trade in advertising, cloud services and myriad other fields. In practical terms, 28 different EU data protection agencies may now need to weigh in on the legality of a company's data transfer outside of the EU. The Schrems decision will likely lead to an increase in data being hosted and stored on European servers, and revisions to corporate data transfer contracts and other agreements. Although time-consuming, multinational companies may also consider adopting Binding Corporate Rules for intragroup transfers, which require approval by the relevant data protection authorities. While the full extent of the impact of yesterday's ruling has yet to be ascertained, the decision highlights some of the fundamental conflicts between EU and U.S. privacy and data protection laws, and will no doubt put pressure on the ongoing negotiations between the EU and the U.S. to amend Safe Harbor.

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
Similar Articles
Relevancy Powered by MondaqAI
Lewis Brisbois Bisgaard & Smith LLP
Ogletree, Deakins, Nash, Smoak & Stewart
Moritt, Hock & Hamroff LLP
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Lewis Brisbois Bisgaard & Smith LLP
Ogletree, Deakins, Nash, Smoak & Stewart
Moritt, Hock & Hamroff LLP
Related Articles
 
Related Video
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 youíve 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
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaqís use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributorís own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaqís Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaqís Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaqís right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions