The powers of EU data protection authorities are significantly strengthened by the decision, allowing them to suspend some or all personal data flows into the United States in certain circumstances.
In Maximillian Schrems v. Data Protection Commissioner (case C-362/14), the European Court of Justice (ECJ) has ruled that the European Commission decision approving the Safe Harbor programme is invalid. Further, the ECJ ruled that EU data protection authorities do have powers to investigate complaints about the transfer of personal data outside Europe (whether by Safe Harbor-certified organisations or otherwise, but excluding countries deemed as having “adequate” data protection laws according to the EU). Finally, the ECJ ruled that data protection authorities can, where justified, suspend data transfers outside Europe until their investigations are completed.
According to the European Commission, the United States is a country with “inadequate” data protection laws. The European Commission and the US Department of Commerce, therefore, agreed in 2000 to a self-certification programme for US organisations that receive personal data from Europe. Pursuant to the self-certification programme, a US organisation receiving personal data from Europe must certify that it adhered to certain standards of data processing comparable with EU data protection laws such that the EU citizens’ personal data was treated as adequately as if their personal data had remained in Europe. The Safe Harbor programme is operated by the US Department of Commerce and enforced by the Federal Trade Commission. Over 4,000 organisations have current self-certifications of adherence to Safe Harbor principles.
Mr. Schrems complained in Irish legal proceedings that the Irish Data Protection Commissioner refused to investigate his complaint that the Safe Harbor programme failed to protect adequately personal data after its transfer to the US in light of revelations about the National Security Agency’s (NSA’s) PRISM programme. The question of whether EU data protection authorities have the power to investigate complaints about the Safe Harbor programme was referred to the ECJ. As described in our September 2015 LawFlash, Yves Bot, Advocate General at the ECJ, said in an opinion released on 23 September 2015 that the Safe Harbor programme does not currently do enough to protect EU citizens’ personal data because such data was transferred to US authorities in the course of “mass and indiscriminate surveillance and interception of such data” from Safe Harbor-certified organisations. Mr. Bot was of the opinion that the Irish Data Protection Commissioner, therefore, had the power to investigate complaints about Safe Harbor-certified organisations and, if there were “exceptional circumstances in which the suspension of specific data flows should be justified”, to suspend the data transfers pending the outcome of its investigation.
The ECJ followed Mr. Bot’s opinion and, further, declared that the European Commission’s decision to approve the Safe Harbor programme in 2000 was “invalid” on the basis that US laws fail to protect personal data transferred to US state authorities pursuant to derogations of “national security, public law or law enforcement requirements”. Furthermore, EU citizens do not have adequate rights of redress when their personal data protection rights are breached by US authorities.
In the last two years, the European Commission and various data protection working parties have discussed ways to improve the Safe Harbor programme and strengthen rights for EU citizens in cases where their personal data is transferred to the United States. Recently, the United States and European Union finalised a data protection umbrella agreement to provide minimum privacy protections for personal data transferred between EU and US authorities for law enforcement purposes. The umbrella agreement will provide certain protections to ensure that personal data is protected when exchanged between police and criminal justice authorities of the United States and the European Union. The umbrella agreement, however, does not apply to personal data shared with national security agencies.
The umbrella agreement also provides that EU citizens will have the right to seek judicial redress before US courts where US authorities deny access or rectification or unlawfully disclose their personal data. Currently, US citizens have the right to seek judicial redress in the European Union if their data—transferred for law enforcement purposes—is misused by EU law enforcement authorities. EU citizens, however, do not have corresponding rights of redress in the United States. A judicial redress bill has been introduced in the US House of Representatives; adoption of the bill would allow the United States and European Union to finalise the umbrella agreement.
The key findings of the ECJ decision are as follows (quotes indicate excerpts from the ruling itself):
Safe Harbor-certified organisations should note that there are other options to transfer personal data to the United States, including express consent and the use of Binding Corporate Rules or EU-approved model clause agreements. Organisations using Safe Harbor-certified vendors may wish to discuss these other options with their vendors. There is, however, a risk that this decision could affect these other options, as national security derogations are likely to override the protection of personal data regardless of how it is transferred, with the only exception being the specific and informed consent of an individual to the transfer of his or her personal data to governmental authorities for national security purposes.
The ECJ decision is likely to take the European Commission by surprise.
The powers of national data protection authorities are significantly strengthened by this decision. They could allow data protection authorities to suspend some or all personal data flows into the United States in serious circumstances and where there is a justifiable reason to do so. There is a risk that a data protection authority could order that the data transfers by an international organisation outside of Europe be suspended from that jurisdiction, whereas data transfers in other European jurisdictions are permitted. To mitigate this risk, the European Commission is entitled to issue EU-wide “adequacy decisions” for consistency purposes.
The European Commission has today announced that it intends to release guidance for Safe Harbor-certified companies within the next two weeks.
If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:
Izzet M. Sinan
W. Reece Hirsch
Mark L. Krotoski
Dr. Axel Spies