United States: Companies Face Uncertainty As Privacy Shield Encounters New Hurdles

The Privacy Shield, proposed this past February and greeted with cautious optimism by European and U.S. regulators alike as a more robust "replacement" for the invalidated Safe Harbor framework, appears to be suffering death by a thousand paper cuts. Today's European Parliament resolution (the "Resolution") delivered the latest blow. The Resolution recommends that the European Commission continue to negotiate the terms of the Privacy Shield with U.S. officials to address certain "deficiencies." Although the Resolution is non-binding, it is highly influential. Parliament's major concerns include:

  • U.S. government surveillance. Parliament does not believe that the Privacy Shield adequately addresses the ability of U.S. law enforcement to access personal data transferred from the EU.
  • Bulk data collection. Parliament is concerned that the Privacy Shield will not prevent bulk data collection that may violate the "necessity" and "proportionality" requirements set forth in the EU Charter of Fundamental Rights.
  • U.S. Ombudsperson. The Privacy Shield calls for the appointment of a U.S. Ombudsperson who would work closely with the U.S. State Department and other agencies to coordinate responses to complaints regarding the U.S. government's use of EU citizens' personal data. Parliament welcomes the establishment of this role, but it does not believe the position will be "sufficiently independent" or "vested with adequate powers to effectively exercise and enforce its duty."
  • Recourse. In addition to the appointment of a U.S. Ombudsperson, the Privacy Shield contemplates a system of binding arbitration for complaints and disputes. An arbitrator would be selected from a pool of 20 arbitrators designated by the U.S. Department of Commerce and the European Commission. Arbitrators would have the authority to provide individual-specific, nonmonetary equitable relief to complainants. Parliament finds these recourse mechanisms to be too complex and has urged the Commission and U.S. regulators to make the process more "user-friendly and effective."
  • Periodic reviews. Parliament also called on the Commission to conduct periodic "robust reviews" of the Privacy Shield adequacy decision, particularly in light of the recently passed General Data Protection Regulation, which takes effect in May 2018 and will impose significant new data privacy and security requirements on U.S. companies doing business in Europe.

Parliament's Resolution comes on the heels of a number of similar concerns voiced by other European regulatory bodies, including:

  • Article 29 Working Party (WP29). On April 13, the WP29, an influential group of European data protection authorities (DPAs), issued a nonbinding opinion criticizing certain elements of the Privacy Shield. Today's Resolution expresses Parliament's support for that opinion, calling on the Commission to "implement fully" the WP29's recommendations. For more analysis of the WP29's opinion, see our previous post.
  • Article 31 Committee. At a May 19 meeting, the Article 31 Committee – composed of EU member state representatives with veto power – announced that it could not reach an agreement on the adequacy of the Privacy Shield, stating that the Committee needed more time to review and reach a consensus.
  • European Data Protection Supervisor (EDPS). This past Tuesday (May 24), EDPS Givoanni Buttarelli announced that he will issue an opinion on May 30 listing his "serious concerns" with the Privacy Shield. Signaling that his opinion will be "in full synergy" with the WP29 opinion, Buttarelli distinguished his view as more "future-oriented" and concerned with the Privacy Shield's impact on other legal instruments. Referencing the recently passed GDPR, Buttarelli emphasized that "we cannot ask companies to change their privacy policies every year" and underscored his focus on "potential solutions" that companies of all sizes can implement to cover their transatlantic data transfers. Recognizing that large companies such as Google, Facebook and Amazon can rely on binding corporate rules (BCRs) and model clauses, Buttarelli insisted that many hundreds of smaller companies need a better solution.

With the Privacy Shield in limbo, the alternative data transfer mechanisms available to companies may be dwindling. Just yesterday, on May 25, it was reported that the Irish Data Protection Commissioner (DPC) plans to refer to the Court of Justice of the European Union (CJEU) a case concerning the validity of Facebook's use of model clauses as an alternative transatlantic data transfer mechanism. This follows the Irish DPC's referral of the landmark Schrems case to the CJEU, which resulted in last year's CJEU opinion invalidating the Safe Harbor framework. As in the Schrems case, at issue is the potential for U.S. government surveillance of European citizens' personal data, which, it is argued, is not prevented by model clauses.

If the case is referred to the CJEU and model clauses also are found to be invalid, in the absence of the Privacy Shield or other new framework, many companies may have no practical alternative for transferring personal data from the EU to the U.S. in a lawful manner. The remaining established transfer mechanism, BCRs, can be very time-consuming and costly to implement and apply only to transfers of data within a corporate group. The Irish DPC's announcement echoes similar concerns brought last October by a group of German DPAs who called into question the validity of both model clauses and BCRs, as well as signaled their intent to audit personal data transfers based on model clauses.

We will continue to report and provide analysis on the ever-evolving transatlantic data transfer landscape. Please see our previous posts on the Privacy Shield, the invalidation of the Safe Harbor framework, and model clauses for more background information.

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.

In association with
Related Video
Up-coming Events Search
Font Size:
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
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
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.


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.


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.


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.


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.


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.


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.