Summary and implications

In a landmark judgment on 13 May 2014, the Court of Justice of the European Union (the Court) ruled that an individual has the "right to be forgotten" under the Data Protection Directive 95/46/EC (the Directive). The Court held that, in certain circumstances, search engines such as Google will be obliged to remove from their search results links to webpages which contain "inadequate, irrelevant or no longer relevant or excessive" information about individuals.

The case has attracted worldwide attention because of its ramifications for Google and other search engines. However, what has attracted relatively little attention are the wider implications for business generally. In summary, this ruling is not just relevant for search engines. Its implications for our understanding of the territorial scope of the Directive and our understanding of individuals' rights under the Directive will be relevant to all types of business – including real estate businesses.

What was the case about?

The dispute dates back to 1998 when a Spanish newspaper published details of the financial difficulties of a Mr Mario Costejo Gonzalez (Mr Gonzalez). In particular, the newspaper mentioned Mr Gonzalez's name in relation to a real estate auction for the recovery of debts. The article was placed on the newspaper's web site and indexed by Google's search engine. In 2009 Mr Gonzalez asked the newspaper to remove the article. After the newspaper refused to do so, Mr Gonzalez asked Google to remove the publication from its search engine results, which Google also refused to do.

In March 2010, Mr Gonzalez lodged a complaint against both the newspaper and Google with the Spanish data protection authority, the Agencia Espanola de Proteccion de Datos (AEPD). In July 2010, the AEPD rejected the complaint relating to the Spanish newspaper. The AEPD found that the newspaper was legally justified in publishing the auction. However, the AEPD upheld the complaint against Google and ordered that the publication's link to the search engine be removed.

Both Google's Spanish company (Google Spain) and its US company (Google Inc.) appealed against the AEPD decision to the Spanish national court, the Audiencia Nacional (the Spanish Court). The Spanish Court stayed the proceedings and referred its legal questions to the Court for a ruling.

What was the Court asked to rule on?

In brief, the Court was asked to rule on the following three important legal questions.

  1. Does the Directive apply to search engines such as Google (i.e. is a search engine a data controller)?
  2. Does the Directive apply to Google Spain (even though the data processing servers are based in the US)?
  3. Does an individual have a right under the Directive to request data be removed from accessibility by a search engine (i.e. does the Directive contain a "right to be forgotten")?

Does the Directive apply to search engines?

The Court ruled that the activities of a search engine "must be classified as 'processing of personal data'" as defined under the Directive. The Court also ruled that, in respect of that processing, a search engine is the "data controller" (i.e. the legal entity that determines the manner and purposes of the processing of personal data). This is important as this means that a search engine is legally responsible for its processing being compliant with the Directive (as implemented in the applicable Member State's law) provided that such processing comes within the Directive's territorial scope.

Does the Directive apply to Google Spain (given that the data processing servers are based in the US)?

The Directive's territorial scope is limited to "processing ...carried out in the context of the activities of an establishment of the [data] controller on the territory of the Member State" (our underlining). The recitals to the Directive clarify that "establishment on the territory of a Member State implies the effective and real exercise of activity through stable arrangements" and that "the legal form of such an establishment, whether simply [a] branch or a subsidiary with a legal personality, is not the determining factor".

Both Google Spain and Google Inc. argued that the processing of personal data by the Google search engine is carried out "exclusively" by Google Inc. in the US and, therefore, not subject to the Directive. They argued that Google Spain's role was limited to providing support to the Google group's advertising activity.

The Court disagreed. The Court found that Google Inc.'s processing of personal data is being carried out "in the context of the activities of Google Spain". This is because Google Spain promotes and sells advertising space offered by Google Inc. The Court noted that the activities of the two entities are "inextricably linked".

Does the Directive contain a "right to be forgotten"?

This is the question that will have most direct relevance to U.K. based real estate companies. The Court found that the Directive already contains the principle commonly known as the "right to be forgotten". Under the Directive, data controllers have an obligation to process personal data fairly and lawfully and individuals have a right to obtain from the data controller, "the rectification, erasure or blocking of data the processing of which does not comply with the provisions of the Directive".

The Court further ruled that an individual could exercise this right without having to demonstrate that the inclusion of the information in question caused prejudice to the data subject. This ruling is both important and hugely controversial. A similar express right to be forgotten in the draft General Data Protection Regulation (the Regulation), which is expected to replace the Directive, has been the subject of intense lobbying by business.

What are the wider implications for the case?

Firstly, the ruling has broadened our understanding of the territorial scope of the Directive. This will have important implications for international businesses and organisations that set up branches or companies in an EU Member State but consider that their processing is carried out outside of the EU. We would encourage data controllers who consider that they might be in this situation to seek legal advice on this point.

Secondly, the ruling has clarified that the Directive already contains a "right to be forgotten". Although this particular ruling relates to that right in the context of a search engine, this interpretation of the Directive with respect to individuals' rights is, arguably, applicable to all data controllers. Fortunately, this issue has received little media attention and we would certainly not recommend amending non-search engine privacy policies or procedures to reflect this development. However, we would advise in-house lawyers to watch out for any such requests and respond to them on a case by case basis. For real estate companies, these types of requests may come from former employees or contractors or any other contact (such as an individual at a client or former client) who may request that their personal data is removed. Whilst it is too early to predict how this right will be exercised, these types of request may be used, like data subject requests, as an additional "weapon" in any dispute with your business.

What is particularly worrying is that this new right to be forgotten has been found to exist by a court without any democratic discussion about its wider policy implications. There are widespread concerns about how this right will be interpreted and implemented. Firstly, is this right even feasible in today's digital age? Whilst the Court recognizes that this is not an absolute right, the Court's wording does set a high bar for data controllers. The Court's ruling states "the controller must take every reasonable step to ensure that data which do not meet the requirements of that provision are erased or rectified" (our underlining). What will this mean in practice? Secondly, there our concerns about how this right will be balanced against other parties' legitimate interests. Many businesses rely on retaining a history of personal data for important legitimate interest purposes such as anti-money laundering purposes. How conflicts between these competing interests will be balanced will be keenly awaited. As the Information Commissioner's Office (the UK data protection authority) noted in its response to the Court's ruling: "This is the beginning, not the end".

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.