It is well known that the EU rules on personal data protection (set out in Directive 95/46/EC and implementing national law) are rather stringent when it comes to the transfer of personal data outside the European Economic Area (EEA), including the input of personal data originating in the EU on a server outside the EEA. Such transfers are, in principle, prohibited if the country to which the data is being sent does not offer an adequate level of protection. The US, India, Russia and South Korea all fall into this category.

Nevertheless, personal data can be transferred to such countries if, e.g., the  data subject has given his or her express consent or if the transfer is necessary to prepare or perform a contract with or in the interest of the data subject. In addition to these exceptional circumstances, which are often difficult to rely on in practice, EU national data protection authorities ("DPAs") can authorise the transfer of personal data to countries not deemed to offer an adequate level of protection if "the controller introduces adequate safeguards to protect the privacy and fundamental rights and freedoms of the data subjects". Such safeguards may in particular result from contractual clauses between the data controller and the entity outside the EU to which the data are being transferred. Reliance on standard clauses will speed up the authorisation process before the national DPA (in Luxembourg, the CNPD) and, in some countries (such as Belgium), no further authorisation is required.

While contractual clauses are generally sufficient to assuage privacy concerns in well-identified bilateral data flows between an EU and a non-EU entity, they may not suffice in the context of complex data transfers between multinationals. In order to ensure adequate data protection within multinational groups transferring personal data from the EU to third countries, the so-called Article 29 Working Group, a group composed of representatives of the European Commission, the data protection authorities of the EU, and all EU Member States, has developed the concept of binding corporate rules (BCRs). 

BCRs are internal rules of a multinational that define the group's global policy with regard to intra-group international transfers of personal data to, amongst others, group entities located in countries which do not offer an adequate level of protection. The rules must ensure that such data transfers are subject to equivalent protection as that afforded by the EU rules.  The BCRs must be approved by the DPAs of the EU Member States in which the group is active. This multijurisdictional approval process is facilitated by means of a single-counter mechanism, meaning the group must only file the application for approval with a single DPA in the EU. The choice of lead authority will depend on the location of the multinational group's EU headquarters or the group entity best positioned to oversee global data protection compliance. After a preliminary review of the draft BCRs, the lead DPA will submit the draft to the other DPAs for approval. This process is accelerated by means of a mutual recognition mechanism in place between most DPAs.

Once all necessary approvals have been obtained, the group can freely transfer personal data from one group entity to another, even to those located outside the EEA, without having to obtain an additional authorisation for each transfer.

ArcelorMittal's binding corporate rules

It should come as no surprise that the Luxembourg-based multinational steel group ArcelorMittal, which is present in 60 countries, chose to adopt BCRs. Since the group's EU headquarters are located in Luxembourg, the competent Luxembourg authority (the CNPD) was appointed lead DPA. After 18 months of discussions between the CNPD and ArcelorMittal, together with the DPAs of the 25 other European countries in which the ArcelorMittal group is present, the BCRs were approved earlier this year.

This was the second BCR approval procedure for the CNPD, which also acted as lead DPA for eBay's BCRs.

Looking ahead - taking full advantage of the BCRs

The advantages of BCRs for a multinational group far outweigh the somewhat lengthy approval process (18 months in the case of ArcelorMittal, which is not excessive given the total number of DPAs involved):

  • BCRs exempt the group from the need to obtain an individual authorisation for each intra-group data transfer and hence provide greater security and flexibility, while reducing administrative costs and saving time;
  • BCRs strengthen and harmonise the group's personal data protection policy and thus reduce the risks of non-compliance with national data protection legislation and sanctions liable to result from non-compliance;
  • BCRs send a clear message that the group protects personal data.

Since 1 January 2013, BCRs are available not only to multinational groups acting as personal data controllers (i.e., the entity determining the purposes and means of the processing) but also to groups acting as data processors (i.e., the entity processing data on behalf of and further to the instructions of the data controller). This is important for a country such as Luxembourg, which wishes to play a leading role in data processing activities such as electronic archiving.

BCRs are expressly mentioned in the European Commission's proposal for a new EU general data protection regulation, which will most certainly create greater awareness of this option and its advantages.

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.