European Union: EU Safe Harbor Ruling – Trends And Courses Of Action

Background

On October 6, 2015, the Court of Justice of the European Union ("CJEU") invalidated a decision by the European Commission that recognized the adequacy of a self-certification scheme for United States based companies for the purpose of allowing businesses to transfer personal data from the European Union to the U.S. (Case C-362/14). The invalidated European Commission decision is one of only 12 adequacy decisions adopted by the European Commission, and is generally known as Safe Harbor.

We sent an earlier eAlert on the CJEU judgment in the Schrems case in October.

As a result of the Schrems judgment, businesses may no longer transfer personal data from the European Union to the United States relying on the EU Safe Harbor decision. On November 6, the European Commission issued a Communication to the European Parliament. The Communication followed on the heels of a number of public statements by the European Commission, the Article 29 Data Protection Working Party, which is comprised of the data protection agencies of all the European member states, the U.S. Secretary of Commerce, and by an increasingly discordant number of national and local data protection agencies in the European Union, which were prompted by the Schrems judgment.

In its Communication, the European Commission reasserted its desire to negotiate a new framework for transatlantic data transfers of personal data with the United States. This would allow the European Commission to adopt a new safe harbor decision after finding that the U.S. may adequately protect personal data where U.S. data importers adhere to the new framework negotiated by the United States and the European Commission. The Commission hopes to conclude the discussions with the United States and achieve its objective within three months.

In the meantime, the European Commission invites businesses transferring personal data from the European Union to the United States to cooperate with the national data protection agencies in the European Union, while the European Commission works with the Article 29 Data Protection Working Group to ensure a uniform application of European data protection law. The adequacy of the data protection measures put into place by businesses would thus be controlled by the national and local data protection agencies in the European Union.

The Role of National Data Protection Agencies in the EU

Of practical importance is the European Commission's insistence that the national data protection agencies have the power to investigate and enforce European data protection rules, and that they will continue to be able to do so even if and when the European Commission reaches an agreement with the U.S. on a new framework for transatlantic data transfers of personal data and issues a new adequacy decision for the United States.

If and when the European Commission were to adopt a new safe harbor decision, the principal limitation of the various data protection agencies' power would be that in order to act against a violation of a personal data right by a business transferring such personal data to the United States, the local or national data protection agency would first have to take the issue to court and the court would have to ask the CJEU, which has exclusive jurisdiction to invalidate a European Commission decision, to declare the new safe harbor decision invalid.

According to both the European Commission and the Article 29 Data Protection Working Party, until a new safe harbor decision is issued by the European Commission, it is up to businesses transferring personal data from the European Union to the United States to mitigate possible legal risks, by putting into place standard contract clauses or binding corporate rules between the businesses transferring the data.

Standard contract clauses as approved by the European Commission must be used unchanged. They are in principle binding on national authorities such as the various national data protection agencies. Using such clauses does not require prior authorization from the national data protection agencies in most EU member states. Where a member state requires notification and/or preauthorization, the authorization is in principle automatically granted once the data protection agency has verified that no changes have been made to the standard contractual clauses.

Further Scrutiny of Standard Contractual Clauses and Corporate Rules

Both the standard contractual clauses and the binding corporate rules solutions are subject to further scrutiny as to their adequacy by the Article 29 Data Protection Working Party, which has stated publicly that it is reviewing these, and by the various national data protection agencies. A number of these data protection agencies, notably in Germany, have already stated publicly that they do not consider standard contract clauses or binding corporate rules to provide for an adequate level of protection, allowing the transfer of personal data to the United States, and that they will not approve new binding corporate rules pending the deadline set by the European Commission to negotiate a new safe harbor.

In this context, the recent CJEU judgment in the Weltimmo case (Case C-230/14) widened the definition of establishment, for the purpose of being subject to the data protection laws in a European Union member state, to cover any real and effective activity -- even a minimal one -- exercised in that member state through stable arrangements.

This decision effectively erodes the one-stop-shop approach of a single national data protection agency supervising all the personal data transfer activity of a business from the European Union to the United States. Under the Weltimmo judgment, where a business regularly addresses the public in any given member state, it will from now on likely be subject to that member state's data protection agency's supervision as well.

Other solutions based on exemptions from the blanket prohibition of transfers of personal data to countries that the European Union considers do not provide adequate levels of protection of personal data (this includes all but 11 of the countries in the world) have already been interpreted so narrowly, notably by the Article 29 Data Protection Working Party, that they could at best only justify transfers in highly specific situations.

The Situation Continues to Evolve

At present, we recommend as good practice that companies ensure that all of their data processing and transfers in and from the European Union are covered by standard contractual clauses or approved binding corporate rules, and are adequately documented, before the looming deadline at the end of January 2016, at which date investigation and enforcement actions by national data protection agencies, sometimes under the pressure of class actions, appear likely.

We will continue to monitor and report on developments regarding the transfer of personal data from the European Union to the United States, in transactional settings and also in litigation, which an area where the requirements of e-discovery rules and practice create particular issues and conflicts with EU data protection laws, and to advise on and implement solutions.

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
 
In association with
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
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.