Malta: What's Wrong With The Privacy Shield?

Last Updated: 10 October 2016
Article by Dr Christine Sammut

Most Popular Article in Malta, October 2016

The New Privacy Shield

On the 6th October 2015, the European Court of Justice (the 'ECJ'), in Maximilian Schrems vs Data Protection Commissioner,1 decided that the Safe Harbor Agreement2 a set of privacy and data protection principles made by the United States and later confirmed by the European Commission, and which governed the relationship of US' businesses and entities with EU based data, which had been in force since 2000 was no longer adequate to counter the advancements in privacy and data protection, which included the consequences of the Snowden revelations. The United States' public authorities regularly carried out secretive mass surveillance operations and this, together with huge amounts of personal data relating to millions of individuals connected to social media, were the major elements that brought about this decision which set the data protection field into a frenzy. The Court, in fact, found that social media sites and other digital operators do not provide customers with protection from state surveillance. While the decision itself was not a complete surprise, considering the Safe Harbor Agreement was 15 years old and thus did not cater for the humungous technological advancements made, experts had opined that such a decision would not be so forthcoming in the immediate but changes would take place gradually with the Commission at the helm. Yet, it was. Indeed, EU citizens and especially commercial entities in the US or holding data centres in the US, entered into a limbo wherein the Safe Harbor Agreement could no longer provide a basis for transfers of data to the US.

The above-mentioned decision meant that the EU and the US needed to negotiate a new agreement which addressed the inadequacies raised by the ECJ – and had to finalise it quickly. In February 2016, the draft adequacy decision known as the Privacy Shield3 was published by the European Commission. This Privacy Shield provided for further obligations for companies in the US in order to protect the personal data of EU individuals and further cooperation between the US authorities and their EU counterparts including data protection departments across the EU. This included written commitments from the US authorities stating that bulk collection of data transferred from the EU to the US should only occur under specific, and proportionate, conditions, and that indiscriminate mass surveillance of the data transferred should be prohibited while access to such data given to US public authorities should be limited and safeguarded. The Privacy Shield was welcomed by businesses, entities and public authorities alike. However, it was immediately recognised that this was not as revolutionary as it may have seemed at first glance.

Both the Article 29 Data Protection Working Party (the 'Working Party') and the European Data Protection Supervisor (the 'Supervisor') issued opinions on how the Privacy Shield would need to be improved in order to safeguard important European principles.

Fundamental Principles remain Unprotected

On 13th April 2016, the Working Party issued Opinion 01/2016 on the EU-US Privacy Shield draft adequacy decision.4 Following this, on the 30th May 2016, the European Data Protection Supervisor, Mr Giovanni Buttarelli also issued his Opinion on the EU-U.S. Privacy Shield draft adequacy decision.5 The Supervisor welcomed the improvements made to this new agreement in relation to the previous Safe Harbor Agreement. However, he stated that "progress compared to the earlier Safe Harbor Decision is not in itself sufficient. The correct benchmark is not a previously invalidated decision, since the adequacy decision is to be based on the current EU legal framework."6 The Working Party pointed out that the Privacy Shield needed to be consistent with all EU data protection regulations including the new Regulation (EU) 2016/679 (known as the 'General Data Protection Regulation'), which was yet to enter into force. Therefore, a review of the Privacy Shield within this context, in the future, was necessary according to the Working Party. This was also reiterated by the Supervisor.

The Working Party insisted that the Privacy Shield should ensure an essentially equivalent level of protection to that under EU legislation. Therefore, fundamental principles had to be clearly laid out. The Working Party mentioned the lack of a clear data retention principle, the lack of a prohibition of strictly automated processing decisions, and the lack of clear limitations to the purpose principle. The Supervisor also mentioned that provisions in relation to the right to access and right to object were to be better clarified. Importantly, the Supervisor noted that the rights of access, rectification or erasure concerning individuals' personal data were not fully addressed in the then-current draft of the Privacy Shield. The Privacy Shield stated that its basic principles may be limited to the extent necessary to meet national security, law enforcement or any public interest requirement. It further created limitations to the principles in case of regulation or case law creating conflicting obligations or explicit authorisations. This brought about questions of interpretation as to the limitations at play. The Supervisor advised that in all such cases, "the purposes for which exceptions are allowed and the requirement of a legal basis should be more precise".7 Otherwise, the limitations included would be a repeat of the limitations in the Safe Harbor Agreement which were deemed invalid since there was no clarification on such interferences by US authorities with regard to the rights of the persons whose data is transferred from the EU. It seemed that the Supervisor's major point of recommendation was for the EU to hold more supervision and monitoring and be able to enforce the fundamental principles of data protection in the US, notwithstanding the exemptions and exceptions integrated into the Privacy Shield.

The Supervisor raised a particular point regarding journalistic material and stated that there was an obligation to balance the right of freedom of expression with the rights of privacy and data protection as a fundamental principle of law, and therefore, a general exemption relating to such processing should be changed into specific derogations, when needed. After all, this was a significant point in the Court's decision which rendered the original Safe Harbor Agreement invalid.

The Supervisor also recommended that the Ombudsman established pursuant to the Privacy Shield should be able to act independently from any authority and required further serious commitments from the US that any requests, decisions and recommendations given by the Ombudsman would be effectively respected and implemented by the bodies concerned. The concern here was that without clear provisions entailing such effective implementation, the Ombudsman would become a mere figurehead. The Working Party also insisted that the remedies included for EU citizens were as unclear and complex as to possibly prove ineffective and unusable.

The Way Forward

Vital aspects such as fundamental principles and redress were tackled by both authorities' reports and surely, such elements needed to be taken into consideration by the Commission.

The EU-US Privacy Shield, however, was officially ratified on the 12th July 2016. It entered into force in the EU on the same date. It seems that commercial interests of both the EU and the US made the process of finalisation quicker and not much time for assessment was allowed. This final Privacy Shield, as approved, had been further revised. The fundamental purpose limitation principle was further clarified and now states that business entities may not process the personal data in a way that is incompatible with the purpose for which that data was collected initially. In fact, the data may only be retained as long as the purpose for which it was collected subsists. This is further in line with EU data protection legislation. The final Privacy Shield was also amended with regard to transfers of EU personal data to third countries in that it was sought to protect EU personal data from being indiscriminately processed without regulation once outside the direct scope of the Privacy Shield. The Commission has also potentially increased the responsibility of national data protection authorities, following the advice of the Working Party and the Supervisor. In fact, such national authorities may have a role in pursuing breaches and complaints. However, this role is very limited and is only highlighted as a potential use. The national authorities, for example, have the power to oversee processing of data if the entity has voluntarily submitted itself to such oversight. This brings about doubts as to how convenient and practical it shall be and if it will be used at all and to which extent.

Other aspects also still remain in doubt. The position of the Ombudsman is not sufficiently clarified and in any case the Ombudsman only deals with enforcement regarding public intelligence authorities. Additionally, its independence and effective redress capability are still questionable. Furthermore, the Privacy Shield still does not furnish EU citizens with protection or even readily available redress mechanisms against the Ombudsman's decisions on automated processing.

Therefore, although a lot of advancements have been made in order to make the Privacy Shield better and in accordance with the updated EU fundamental data protection principles, the result is not completely satisfactory. Issues of automated processing and indiscriminate surveillance and access by US public authorities still remain unclear and further public knowledge of data protection violations may interfere with such efforts being made by the EU and the US authorities. While US companies started collecting and processing data under the Privacy Shield as from 1st August 2016, all parties must remain vigilant as risks are still inherent to the Privacy Shield itself, the elements of protection it covers and their extent. It is clear that European authorities have no intentions of quieting down. The French Commission Nationale de l'Informatique et des Libertés, for example, issued a decision on the 20th July 2016 wherein it ordered Microsoft to stop collecting excessive data from its EU citizen users, such as tracking the browsing of users for marketing and advertising purposes without the users' consent, within a three-month timeframe. This kind of decision is not a one-off and several US companies have had their procedures analysed and criticised for data protection violations against EU citizens, by judges, authorities and watch dogs alike. It remains to be seen how this will continue following the Privacy Shield's entry into force.

The users' adherence to the data protection principles under the Privacy Shield will have to be assessed in the future years. It must be noted that such entities might consider abiding by general EU data protection concepts and principles in the event of lack of clarity of same in the Privacy Shield. EU authorities' will continue their monitoring, and nothing excludes the ECJ from issuing another decision which might disavow the Privacy Shield in the future. It has been strongly suggested, after all, that certain aspects of the Privacy Shield remain dubious.

Footnotes

1 http://curia.europa.eu/juris/document/document.jsf?docid=169195&doclang=en

2 Commission Decision 2000/520/EC, of July 26, 2000 Pursuant to Directive 95/46/EC of the European Parliament and of the Council on the Adequacy of the Protect Provided by the Safe Harbor Privacy Principles and Related Frequently Asked Questions Issued by the U.S. Department of Commerce, 2000

3 http://ec.europa.eu/justice/newsroom/data-protection/news/160229_en.htm

4 http://ec.europa.eu/justice/data-protection/article-29/documentation/opinion-recommendation/files/2016/wp238_en.pdf

5 https://secure.edps.europa.eu/EDPSWEB/webdav/site/mySite/shared/Documents/Consultation/Opinions/2016/16-05-30_Privacy_Shield_EN.pdf

6 Ibid. Page 6.

7 Ibid. Page 7-8

The content of this article is intended to provide a general guide to the subject matter and should in no way be construed as advice. 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
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

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.