United States: UPDATE: Is Safe Harbor Still Safe? The European Court Of Justice Answers With A Resounding "No"

On September 28, 2015, we released a client alert noting that European Commission Decision 2000/520, known as the "Safe Harbor" for U.S. companies handling the private data of EU citizens, was under attack in the advisory opinion issued by Advocate General Yves Bot of the European Union Court of Justice in the case of Schrems v. Data Protection Commissioner.

On October 6, 2015, in a decision with far-reaching implications, the EU Court of Justice  adopted Advocate General Bot's opinion, holding that the Safe Harbor program does not provide adequate protection for data transfers from the European Economic Area (EEA) to the United States.  Simply put, the Safe Harbor program is now invalid and does not alter the responsibility of member states to assess the transfer of EU citizens' private data to the United States.

In applying this oversight standard, the Court determined that the Safe Harbor program, being primarily a self-certification process taken by U.S. companies, does not offer adequate privacy protection to EU citizens, especially due to the fact that U.S. public agencies are not required to comply with it. The Court concluded that the Safe Harbor program is incompatible with enabling Directive 95/46/EC, and is therefore invalid because it  allows U.S. national security, public interest and law enforcement requirements to have primacy over EU citizens' privacy.

Although the Court held the Safe Harbor program invalid, it noted that the requirements of Directive 95/46/EC, under which Safe Harbor was devised, account for the fact that some third-party countries might use different means of security than those used in the European Union. The Court ruled that security practices in third-party countries should be assessed in light of the privacy rules of that country resulting from its domestic laws, international commitments and compliance practices. So long as the third-party country's security measures result in providing the same level of protection of the fundamental right of privacy as provided in the European Union, then they may be deemed adequate.

It is important to remember that the Schrems suit was initiated in light of the concerns brought forth by Edward Snowden (an American computer professional, former CIA employee and former government contractor who leaked classified information from the U.S. National Security Agency in 2013) regarding warrantless investigation of the private data of Facebook users by the U.S. National Security Agency (NSA). The Court found that this level of access by U.S. public agencies to the private data of EU citizens is incompatible with the purposes for which the data was transferred and beyond what was necessary and proportionate to the protection of national security.

The Schrems decision has been met with vigorous debate in the European Union over its implications and the future of U.S.-EU trade relations. On October 14, 2015, European Commissioner Vĕra Jourová opened up debate before the European Parliament with assurances that the Schrems decision will not result in fragmented member-state privacy policies and practices. Despite Commissioner Jourová's assurances, many members of Parliament voiced skepticism about the United States' respect for private data and the fundamental rights of EU citizens in light of the Snowden revelations. A common theme in the debate of October 14 emerged – namely, that the United States needs to do more to assure that EU citizens are protected against the mass collection of private data by the U.S. intelligence community. The skepticism of many members of the European Parliament suggests that a consensus on how best to move forward is still far away.

Commissioner Jourová attempted to assuage the concerns of many members of Parliament by referring to portions of the USA Freedom Act and the Judicial Redress Bill as indications that U.S. privacy law was moving in the right direction. The USA Freedom Act, enacted June 2, 2015, contains provisions that limit the bulk collection of telecommunications data. The Judicial Redress Act of 2015, currently working its way through Congress, extends many of the benefits of the Privacy Act of 1974 to EU citizens. While this legislation is a step in the right direction, the Schrems decision will undoubtedly put further pressure on Congress to pass stronger federal privacy legislation that is mindful of trade relations with the European Union and other world powers.

This decision will likely have tremendous consequences for the cross-border trade in data between U.S. companies and EU citizens for years to come. No longer will U.S. companies be able to rely on Safe Harbor program participation and self-certification as a layer of protection when handling the data of EU citizens. While Commissioner Christopher Graham of the UK's Information Commissioner's Office (ICO) suggested on October 8, 2015, that organizations keep calm and not panic regarding the Schrems decision, he also recognized the significance of the decision. At least in the United Kingdom, Commissioner Graham advises that the ICO does not intend to be "knee-jerking into sudden enforcement of a new arrangement." In his comments, Commissioner Graham reminded companies that there are still standard contractual clauses and Binding Corporate Rules (BCRs) that companies may be able to use to ensure the appropriate handling of private data. Nevertheless, in light of the debate of October 14, it is clear that the final word has not yet been spoken on this matter of great international import.

In a move that provides some short-term clarity to U.S. companies doing business in the European Union, the EU Article 29 Working Party on the Protection of Individuals released a statement  on October 16, 2015, that provides guidance on the Schrems decision. In its statement, the Working Party announced a grace period until the end of January 2016, during which time Standard Contractual Clauses and BCRs could still be used to facilitate the transfer of private data to the United States.  Acknowledging the need for clear rules applicable across the European Union, the Working Party made it clear that it is "absolutely essential to have a robust, collective and common position on the implementation of the judgment."  The Working Party acknowledged that the United States' "massive and indiscriminate surveillance [was] a key element of the Court's analysis," but called on the European Union and its member states to open dialogue with their U.S. counterparts to develop legal and technical solutions that develop EU citizens' fundamental rights. This dialogue could include negotiation of a new Safe Harbor agreement or an intergovernmental agreement that takes into account governmental access needs, but also provides for transparency, proportionality and a redress mechanism. In the event that no solution is put in place by the end of the grace period, the Working Party has indicated that member-state data protection authorities would be committed to taking all necessary and appropriate actions, including coordinated enforcement actions, to carry out the judgment in Schrems.

Data privacy continues to be a quickly evolving landscape. The only certainty provided by the new EU invalidation of Safe Harbor is that there will be more uncertainty in the short term for companies that wish to hold or process the personal information of EU citizens.

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
Womble Bond Dickinson
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Womble Bond Dickinson
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 you’ve 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 Mondaq’s 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 Contributor’s 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.

Mondaq’s 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 Mondaq’s 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 Mondaq’s 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