European Union: Privacy Shield – A Shield Worth Having?

By Jonathan S. Millard, Tyler G. Newby​ and Heidi Liu*

Earlier this week, the European Commission voted to formally approve the Privacy Shield—a set of principles agreed between the E.U. and the U.S. to enable certified U.S. companies to receive and process personal data from the E.U. The finalization of the Privacy Shield has followed months of political and regulatory wrangling over its terms, with previous drafts being subject to criticism from an array of concerned parties, which ultimately delayed the Privacy Shield's original June 2016 implementation target. Now that we have the new and improved version, we take a look at some of the key changes made to the previous proposal and consider what U.S. companies should be thinking about when weighing up their options to facilitate trans-border data flows.

Key Changes

Government Snooping—One key change is a commitment from the White House regarding bulk collection of data sent from the E.U. to the U.S. A key driver behind the court case that ultimately led to the downfall of the Safe Harbor regime was the almost unfettered right of the U.S. government to collect personal data of E.U. citizens en masse. On the face of the framework, the U.S. appears to have made significant promises in this area, where only targeted (rather than indiscriminate) collection is permitted other than in exceptional circumstances, and there are checks in place regarding the amount and purpose of data collection. The reality of what this means remains to be seen.

Redress Mechanisms—Each potential avenue of individual redress is more clearly delineated in the final version. Obligations are placed on Privacy Shield organizations to establish free complaints procedures and individuals can also bring complaints to the FTC (in the U.S.) or DPAs (in the E.U.). In addition, the Ombudsperson's role has been strengthened with a view to ensure legitimate policing—stronger language has been introduced emphasizing his or her independence, ability to obtain necessary information and overall cooperation from intelligence agencies.

Onward Transfers of Data—If a U.S. entity wishes to transfer E.U. personal data to a third party (effectively, a subcontractor or subprocessor), there must be a contract in place with the third party that imposes the same level of protection required by the Privacy Shield Principles. It is unclear how this will play out in practice as there is no guidance as to how this must be achieved, so there will likely be the same "shades of grey" facing companies as there are when trying to flow down provisions of the Model Contract Clauses to subprocessors. There is a mechanism in place to deal with subprocessing contracts that are already in force, but this is still likely to be an area that will cause the confusion in the short term.

Data Retention—To address concerns surrounding the ability of U.S. companies to indefinitely retain personal data, an express obligation has been introduced to delete data once it is no longer relevant for the purpose for which it was collected. Companies will have to consider the practicalities of this from a technical perspective.

How do I sign up?

Any U.S. organization that is under the jurisdiction of either the Federal Trade Commission or the Department of Transportation can self-certify on the Privacy Shield website of the Department of Commerce from August 1, 2016 onwards. In doing so, it must conform to the core principles set out in the Privacy Shield including notice, data integrity, security, access, resource and accountability, each as described in more detail in the Privacy Shield documentation. Following this, the Department of Commerce will review the self-certification form in order to confirm that required information has been provided and that it addresses all the Privacy Shield requirements. If so, the Department of Commerce will list the relevant entity (and any certifying affiliates) on its Privacy Shield List.

While self-certification may seem a relatively painless operation (the very reason that Safe Harbor was subject to so much skepticism in Europe), ensuring that a flexible but robust compliance procedure is put in place will be the challenging part. In the U.S., the Department of Commerce and Federal Trade Commission will be primarily responsible for monitoring and enforcing compliance, and the DPAs will continue to chase down those who abuse the system from the E.U. For noncompliance, businesses may be required to return or delete personal data, certification may be revoked, and under E.U. law, transfers without the correct mechanism in place to legitimize those transfers may be subject to fines.

Should I sign up?

While usual business considerations are likely to factor into this decision (How much will it cost? How hard is it to maintain? Will it increase revenue or create efficiencies?), the single biggest dark cloud hanging over the Privacy Shield is the likelihood that it will be challenged in the E.U. courts and the possibility it will suffer the same fate as its Safe Harbor predecessor—invalidation. Four countries abstained from last Friday's vote, implying skepticism at the highest level. The Article 29 Working Party, which was heavily critical of the previous draft, is soon to pass judgment on the final version and it is hard to predict which way that will go. Privacy advocates continue to be active in this area, and it is highly likely that somebody somewhere will challenge the Privacy Shield.

To put this risk into context, since the invalidation of the Safe Harbor regime, many U.S. companies have been scrambling to put in place Model Contract Clauses to plug the void left by the Safe Harbor. This has often necessitated a wholesale audit of data flows to ensure compliance with the Model Contract Clauses, including, for example, ensuring that all obligations of those clauses are flowed down to all subprocessors. The entire supply chain, from end to end, has begrudgingly had to accept the Model Contract Clauses and the increase in risk that they bring. Therefore, in order to successfully comply with the obligations of the Privacy Shield, it is likely that U.S. companies will have to go through the exact same process—something that will need to be considered carefully in view of the risks involved.

In yet another twist to the saga, Model Contract Clauses are now subject to legal challenge in the E.U., so their future is hanging in the balance even more so. We are therefore left in the impossible position of choosing between, on the one hand, a Privacy Shield, which may be subject to legal challenge and is likely to require significant attention to ensure compliance, and on the other, Model Contract Clauses, which are subject to legal challenge but are likely to be more familiar to companies at present. It may be that other methods of legitimizing transfers, like binding corporate rules or independent assessments of adequacy move more into the spotlight.

For those who want to be conservative, or perhaps prudent, a dual approach of Model Contract Clauses and the Privacy Shield may be the best approach. For those with less time and/or resources that are currently complying with the Model Contract Clauses, an option would be to monitor the developments with regard to both the legal challenge to the Model Contract Clauses and the impending opinion of the Article 29 Working Group on the Privacy Shield, with a view to transitioning to the Privacy Shield expediently, if it looks like that is the safer bet. On a practical note, E.U. DPAs have been relatively uniform in permitting an enforcement grace period following the Safe Harbor invalidation, so one would hope that the same would apply to any invalidation of the Model Contract Clauses.

*Heidi Liu is a Summer Associate in Fenwick's Litigation Group.

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

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
17 Oct 2017, Conference, California, United States

Women are a more powerful presence in business than ever, as entrepreneurs and corporate leaders. Join us for a half-day packed with real-worl​d know-how, firsthand experiences and an in-depth look at the entrepreneurial climate today – all designed to help entrepreneurial women take their businesses (and their careers) to the next level.​​

17 Oct 2017, Seminar, California, United States

Ivy Associates presents the annual All Hands Meeting in coordination with the Silicon Valley Association of General Counsel, an association of chief legal officers from more than one hundred leading technology and life science companies.​

17 Oct 2017, Seminar, California, United States

TEDx Wilmington is holding the first TEDx Salon dedicated to ideas worth spreading in transportation on Tuesday, October 17, 2017 in Wilmington, Delaware.

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 (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

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’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 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

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

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

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