United States: Privacy Shield Takes Another Step Forward

Roughly three weeks ago EU and U.S. negotiators announced that they had reached agreement on a replacement for the Safe Harbor mechanism for compliance with European regulations on transfers of personal information to the United States. More than 4,000 U.S. businesses were reliant on Safe Harbor to allow them to receive data from Europe on EU-based customers and employees when, in October 2015, it was invalidated by the EU Court of Justice, creating great risk for the businesses that had relied on it. As we reported here, representatives of the U.S. and the EU had already missed the deadline set by European privacy regulators to satisfactorily replace Safe Harbor or see the flow of data to the U.S. cease when a deal was struck even as the deadline in fact passed. The trouble with the February agreement was that the negotiators had nothing to show the regulators beyond an outline of the principles underpinning the deal.

The European regulators' body, known as the Article 29 Working Party ("Working Party"), with which the European Commission ("Commission") must consult on data protection matters, adopted a "wait and see" attitude after the Privacy Shield announcement. However, to avoid a data flow interruption, the Working Party gave U.S. and EU officials an end of February deadline to disclose the details of the Privacy Shield for its review.

On the last day of February, just within the deadline set by the Working Party, the European Commission released the details of the Privacy   Shield agreement announced four weeks earlier. Accompanying that text was a draft decision of the Commission declaring that the Privacy Shield will provide adequate protection to the privacy rights of EU citizens whose private information will be transferred to the U.S. under its terms. A decision with respect to the adequacy of a data protection mechanism by the Commission is a predicate under the Data Protection Directive to the lawful transfer of personal data outside the EU.

Simultaneous with the Commission's release of the details of the agreement reached in early February, the U.S. Secretary of Commerce released a set of written commitments signed by the heads of agencies that will have responsibility to enforce the Privacy Shield. This served to underscore the U.S. government's intent to meet the concerns that prompted the EU Court of Justice to invalidate the Safe Harbor accord, including practices of the U.S. intelligence community. Among these materials are letters containing specific representations from the Federal Trade Commission, the Department of Transportation, the International Trade Administration, the Departments of Justice and State, and the Director of National Intelligence. Clearly, the production of these commitments were intended to meet and neutralize opposition to and suspicion of the pact from those who characterized it as a warmed over version of Safe Harbor from the outset, and doubted the intention of the U.S. government to enforce it any more rigorously than it enforced Safe Harbor.

Indeed, the resemblance of the Privacy Shield framework to the Safe Harbor principles is unmistakable, but largely unavoidable; after all, both require adherence to the same core set of principles that comprise the EU Data Protection Directive. Thus, much like Safe Harbor, the Privacy Shield is predicated on self-certification by a business to comply with a set of seven privacy principles. These principles include consumer notice; choice; accountability for the consequences of onward transfer; security; data integrity and limitation of the purposes for which the data is used; access; and recourse, enforcement, and liability. It also contains a so-called "supplemental" set of principles that deal with a broad range of issues, including the handling of "sensitive" data (e.g., health, religious, political and similar information), secondary liability of Internet service providers and telecommunications companies, and the role of data protection authorities.

Resemblance to the Safe Harbor doesn't end with the principles, however. Like the former program, the Privacy Shield program would be administered by the U.S. Department of Commerce, and primary enforcement authority in the United States would reside with the FTC. As noted, the Privacy Shield also is based on self-certification, and businesses would be required to re-certify every year, as was supposed to be the case under Safe Harbor. Addressing a major criticism, U.S. authorities promise this time to more diligently monitor the re-certification process, which some businesses that signed on to Safe Harbor were found to have ignored.

Importantly, the Privacy Shield tackles head-on another of the criticisms leveled by the EU Court at the Safe Harbor agreement: redress for violations of the principles. It proposes to provide EU citizens with several options for seeking remedies, including via alternative dispute resolution that must be offered free of charge as a condition to signing on to the Privacy Shield. It also allows EU citizens to obtain the assistance of the FTC and/or their national data protection authority ("DPA") to seek redress. The agreement ambitiously requires covered businesses to resolve complaints they receive from EU citizens within 45 days.

The proposed Privacy Shield reserved special attention to the concerns expressed by the EU Court of Justice and the Working Party over the threat to privacy rights of EU citizens posed by intelligence agency practices, including providing a specific enforcement mechanism for alleged breaches in the name of national security. The proposal promised the appointment of an ombudsman who would be independent of the intelligence agencies to whom complaints about intelligence oversteps could be directed. (U.S. Under Secretary of State Catherine Novelli was just named as the ombudsman.) In addition, the mechanism contains limitations on access by national security agencies.

As was the case under Safe Harbor, the FTC will be primarily responsible for enforcement of the Privacy Shield, should it be approved. However, national DPAs in the EU also are given an enforcement role under the program – particularly with regard to human resources data of EU citizens that is to be transferred to the United States. American businesses signing on to the Privacy Shield will be required to agree to cooperate–– and even comply––with the direction of national DPAs should an employee complain to his/her DPA about HR data collected in connection with employment. Businesses also may submit to the oversight authority of a national DPA on a voluntary basis.

Another new term that was added to strengthen the monitoring and enforcement of compliance is a requirement for a joint annual review of the functioning of the Privacy Shield by U.S. and EU designees, with the participation of national security experts. Each annual review is expected to yield a publicly available report, obviously intended to create transparency to allay the concerns of a dubious European public.

While the newly released details of the Privacy Shield and the ancillary commitments of agency heads are a well-choreographed articulation of a sincere effort by the U.S. government to meet European privacy concerns, whether it will be sufficient to overcome the worries based on the disclosures of NSA surveillance and the perception that Safe Harbor was an empty letter remains to be seen. It is fair to say that the Privacy Shield would toughen monitoring and enforcement; expand remedies and their availability; and create more specific obligations – all assuming that the agencies mean what they say and that certifying businesses do as well. In the meantime, the Working Party will assess the Privacy Shield and present its non-binding opinion, which is expected in mid-April. After that the proposal and the draft adequacy decision can be formally approved (or modified) by the appropriate EU agencies.

Until the EU takes final action, U.S. businesses that certified to the Safe Harbor should continue to comply with that scheme in the interim. While the Working Party has said that it will refrain from taking action against companies that are compliant with Safe Harbor during its review of the Privacy Shield, it observed that national DPAs are free to deem such businesses non-compliant as a matter of national policy. It also would be prudent to look forward and determine how substitution of the Privacy Shield's provisions for the Safe Harbor's will affect businesses that are presently certified to 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
 
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.