Category: EU-U.S. Privacy Shield

Advocate General releases opinion on the validity of SCCs in case of Third Country Transfers

19. December 2019

Today, Thursday 19 of December, the European Court of Justice’s (CJEU) Advocate General Henrik Saugmandsgaard Øe released his opinion on the validity of Standard Contractual Clauses (SCCs) in cases of personal data transfers to processors situated in third countries.

The background of the case, on which the opinion builds on, originates in the proceedings initiated by Mr. Maximillian Schrems, where he stepped up against Facebook’s business practice of transferring the personal data of its European subscribers to servers located in the United States. The case (Schrems I) led the CJEU on October 6, 2015, to invalidate the Safe Harbor arrangement, which up to that point governed data transfers between the EU and the U.S.A.

Following the ruling, Mr. Schrems decided to challenge the transfers performed on the basis of the EU SCCs, the alternative mechanism Facebook has chosen to rely on to legitimize its EU-U.S. data flows, on the basis of similar arguments to those raised in the Schrems I case. The Irish DPA brought proceedings before the Irish High Court, which referred 11 questions to the CJEU for a preliminary ruling, the Schrems II case.

In the newly published opinion, the Advocate General validates the established SCCs in case of a commercial transfer, despite the possibility of public authorities in the third country processing the personal data for national security reasons. Furthermore, the Advocate General states that the continuity of the high level of protection is not only guaranteed by the adequacy decision of the court, but just as well by the contractual safeguards which the exporter has in place that need to match that level of protection. Therefore, the SCCs represent a general mechanism applicable to transfers, no matter the third country and its adequacy of protection. In addition, and in light of the Charter, there is an obligation for the controller as well as the supervisory authority to suspend any third country transfer if, because of a conflict between the SCCs and the laws in the third country, the SCCs cannot be complied with.

In the end, the Advocate General also clarified that the EU-U.S. Privacy Shield decision of 12 July 2016 is not part of the current proceedings, since those only cover the SCCs under Decision 2010/87, taking the questions of the validity of the Privacy Shield off the table.

While the Advocate General’s opinion is not binding, it represents the suggestion of a legal solution for cases for which the CJEU is responsible. However, the CJEU’s decision on the matter is not expected until early 2020, setting the curiosity on the outcome of the case high.

Advocate General’s opinion on “Schrems II” is delayed

11. December 2019

The Court of Justice of the European Union (CJEU) Advocate General’s opinion in the case C-311/18 (‘Facebook Ireland and Schrems’) will be released on December 19, 2019. Originally, the CJEU announced that the opinion of the Advocate General in this case, Henrik Saugmandsgaard Øe, would be released on December 12, 2019. The CJEU did not provide a reason for this delay.

The prominent case deals with the complaint to the Irish Data Protection Commission (DPC) by privacy activist and lawyer Maximilian Schrems and the transfer of his personal data from Facebook Ireland Ltd. to Facebook Inc. in the U.S. under the European Commission’s controller-to-processor Standard Contractual Clauses (SCCs).

Perhaps, the most consequential question that the High Court of Ireland set before the CJEU is whether the transfers of personal data from the EU to the U.S. under the SCCs violate the rights of the individuals under Articles 7 and/or 8 of the Charter of Fundamental Rights of the European Union (Question No. 4). The decision of the CJEU in “Schrems II” will also have ramifications on the parallel case T-738/16 (‘La Quadrature du net and others’). The latter case poses the question whether the EU-U.S. Privacy Shield for data transfers from the EU to the U.S. protects the rights of EU individuals sufficiently. If it does not, the European Commission would face a “Safe Harbor”-déjà vu after approving of the new Privacy Shield in its adequacy decision from 2016.

The CJEU is not bound to the opinion of the Advocate General (AG), but in some cases, the AG’s opinion may be a weighty indicator of the CJEU’s final ruling. The final decision by the Court is expected in early 2020.

FTC reaches settlements with companies regarding Privacy Shield misrepresentations

10. December 2019

On December 3, 2019, the Federal Trade Commission (FTC) announced that it had reached settlements in four different cases of Privacy Shield misrepresentation. The FTC alleged that in particular Click Labs, Inc., Incentive Services, Inc., Global Data Vault, LLC, and TDARX, Inc. each falsely claimed to have participated in the framework agreements of the EU-US Privacy Shield. According to the FTC, Global Data and TDARX continued to claim participation in the EU-U.S. Privacy Shield upon expiration of their Privacy Shield certifications. Click Labs and Incentive Services have also erroneously claimed to participate in the Swiss-U.S. Privacy Shield Framework. In addition, Global Data and TDARX have violated the Privacy Shield Framework by failing to follow the annual review of whether statements about their privacy shield practices were accurate. Also, according to the complaints, they did not affirm that they would continue to apply Privacy Shield protection to personal information collected during participation in the program.

As part of the proposed settlements, each of the companies is prohibited from misrepresenting its participation in the EU-U.S. Privacy Shield Framework or any other privacy or data security program sponsored by any government or self-regulatory or standard-setting organization. In addition, Global Data Vault and TDARX are required to continue to apply Privacy Shield protection to personal information collected during participation in the program. Otherwise, they are required to return or delete such information.

The EU-U.S. and Swiss-U.S. Privacy Shield Frameworks allow companies to legally transfer personal data from the EU or Switzerland to the USA. Since the framework was established in 2016, the FTC has initiated a total of 21 enforcement measures in connection with the Privacy Shield.

A description of the consent agreements is published in the Federal Register and publicly commented on for 30 days. The FTC will then decide whether the proposed consent orders are final.

European Commission releases third annual Privacy Shield Review report

25. October 2019

The European Commission has released a report on the E.U.-U.S. Privacy Shield, which represents the third annual report on the performance of the supranational Agreement, after it came into effect in July 2016. The discussions on the review were launched on 12 September 2019 by Commissioner for Justice, Consumers and Gender Equality Věra Jourová, with the U.S. Secretary of Commerce Wilbur Ross in Washington, DC.

The Privacy Shield protects the fundamental rights of anyone in the European Union whose personal data is transferred to certified companies in the United States for commercial purposes and brings legal clarity for businesses relying on transatlantic data transfer. The European Commission is commited to review the Agreement on an annual basis to ensure that the level of protection certified under the Privacy Shield continues to be at an adequate level.

This year’s report validates the continuous adequacy of the protection for personal data transferred to certified companies in the U.S. from the Europan Union under the Privacy Shield. Since the Framework was implemented, about 5000 companies have registered with the Privacy Shield. The EU Commissioner for Justice, Consumers and Gender Equality stated that “the Privacy Shield has become a success story. The annual review is an important health check for its functioning“.

The improvements compared to the last annual review in 2018 include the U.S. Department of Commerce’s efforts to ensure necessary oversight in a systematic manner. This is done by monthly checks with samply companies that are certified unter the Privacy Shield. Furthermore, an increasing number of European Citizens are making use of their rights under the Framework, and the resulting response mechanisms are functioning well.

The biggest criticism the European Commission has stated came in the form of the recommendation of firm steps to ensure a better process in the (re)certification process under the Privacy Shield. The time of the (re)certification process allows companies to get recertified within three months after their certification has run out, which can lead to a lack of transparency and confusion, since those companies will still be listed in the registry. A shorter time frame has been proposed by the European Commission to guarantee a higher level of security.

Overall, the third annual review has been seen as a success in the cooperation between the two sides, and both the U.S. and the European officials agree that there is a need for strong and credible enforcement of privacy rules to protect the respective citizens and ensure trust in the digital economy.

Hearing on the legal challenge of SCC and US-EU Privacy Shield before CJEU

17. July 2019

On Tuesday last week, the European Court of Justice (CJEU) held the hearing on case 311/18, commonly known as “Schrems II”, following a complaint to the Irish Data Protection Commission (DPC) by Maximilian Schrems about the transfer of his personal data from Facebook Ireland to Facebook in the U.S. The case deals with two consecutive questions. The initial question refers to whether U.S. law, the Foreign Intelligence Service Act (FISA), that consists a legal ground for national security agencies to access the personal data of citizens of the European Union (EU) violates EU data protection laws. If confirmed, this would raise the second question namely whether current legal data transfer mechanisms could be invalid (we already reported on the backgrounds).

If both, the US-EU Privacy Shield and the EU Standard Contractual Clauses (SCCs) as currently primeraly used transfer mechanisms, were ruled invalid, businesses would probably have to deal with a complex and diffucult scenario. As Gabriela Zanfir-Fortuna, senior counsel at Future of Privacy Forum said, the hearing would have had a particularly higher impact than the first Schrems/EU-US Safe Harbor case, because this time it could affect not only data transfers from the EU to the U.S., but from the EU to all countries around the world where international data transfers are based on the SCCs.

This is what also Facebook lawyer, Paul Gallagher, argued. He told the CJEU that if SCCs were hold invalid, “the effect on trade would be immense.” He added that not all U.S. companies would be covered by FISA – that would allow them to provide the law enforcement agencies with EU personal data. In particular, Facebook could not be hold responsible for unduly handing personal data over to national security agencies, as there was no evidence of that.

Eileen Barrington, lawyer of the US government assured, of course, by referring to a “hypothetical scenario” in which the US would tap data streams from a cable in the Atlantic, it was not about “undirected” mass surveillance. But about “targeted” collection of data – a lesson that would have been learned from the Snowden revelations according to which the US wanted to regain the trust of Europeans. Only suspicious material would be filtered out using particular selectors. She also had a message for the European feeling of security: “It has been proven that there is an essential benefit to the signal intelligence of the USA – for the security of American as well as EU citizens”.

The crucial factor for the outcome of the proceedings is likely to be how valid the CJEU considers the availability of legal remedies to EU data subjects. Throughout the hearing, there were serious doubts about this. The monitoring of non-US citizens data is essentially based on a presidential directive and an executive order, i.e. government orders and not on formal laws. However, EU citizens will be none the wiser, as particularly, referring to many critisists’ conlusion, they do not know whether they will be actually surveilled or not. It remains the issue regarding the independence of the ombudsperson which the US has committed itself to establish in the Privacy Shield Agreement. Of course, he or she may be independent in terms of the intelligence agencies, but most likely not of the government.

However, Henrik Saugmandsgaard Øe, the Advocate General responsible for the case, intends to present his proposal, which is not binding on the Judges, on December 12th. The court’s decision is then expected in early 2020. Referring to CJEU judge and judge-rapporteur in the case, Thomas von Danwitz, the digital services and networking would be considerably compromised, anyways, if the CJEU would declare the current content of the SCC ineffective.

 

 

EU-US Privacy Shield and SCCs facing legal challenge before the EU High Courts

3. July 2019

Privacy Shield, established between the European Union (EU) and the United States of America (US) as a replacement of the fallen Safe Harbor agreement, has been under scrutiny from the moment it entered into effect. Based on the original claims by Max Schrems in regards to Safe Harbor (C-362/14), the EU-US data transfer agreement has been challenged in two cases, one of which will be heard by the Court of Justice of the European Union (CJEU) in early July.

In this case, as in 2015, Mr. Schrems bases his claims elementally on the same principles. The contention is the unrestricted access of US agencies to European’s personal data. Succeeding hearings in 2017, the Irish High Court found and raised 11 questions in regards to the adequacy of the level of protection to the CJEU. The hearing before the CJEU is scheduled for July 9th. The second case, originally planned to be heard on July 1st and 2nd, has been brought to the General Court of the European Union by the French digital rights group La Quadrature du Net in conjunction with the French Data Net and Fédération FDN. Their concerns revolve around the inadequacy of the level of protection given by the Privacy Shield and its mechanisms.
This hearing, however, has been cancelled by the General Court of the EU only days prior to its date, which was announced by La Quadrature du Net through tweet.

Despite the criticism of the agreement, the European Commission has noted improvements to the level of security of the Privacy Shield in their second review of the agreement dating from December 2018. The US Senate confirmed Keith Krach as Under Secretary for Economic Growth, Energy and Environment, with his duties to include being the permanent ombudsman in regards to the Privacy Shield and the EU data protection, on June 20th 2019.

As it is, both cases are apt to worry companies that rely on being certified by the Privacy Shield or the use of SCCs. With the uncertainty that comes with these questions, DPOs will be looking for new ways to ensure the data flow between Europe and the US. The European Commission stated that it wants to make it easier for companies in the future to comply with data transfers under the GDPR. It plans to update the SCCs to the requirements of the GDPR, providing a contractual mechanism for international transfers. Nonetheless, it is unclear when those updates are happening, and they may be subject to legal challenge based on the future Schrems ruling.

FTC takes action against companies claiming to participate in EU-U.S. Privacy Shield and other international privacy agreements

24. June 2019

The Federal Trade Commission (FTC) announced that it had taken action against several companies that pretended to be compliant with the EU-U.S. Privacy Shield and other international privacy agreements.

According to the FTC, SecureTest, Inc., a background screening company, has falsely claimed on its website to have participated in the EU-U.S. Privacy Shield and Swiss-U.S. Privacy Shield. These framework agreements allow companies to transfer consumer data from member states of the European Union and Switzerland to the United States in accordance with EU or Swiss law.

In September 2017, the company applied to the U.S. Department of Commerce for Privacy Shield certification. However, it did not take the necessary steps to be certified as compliant with the framework agreements.

Following the FTC’s complaint, the FTC and SecureTest, Inc. have proposed a settlement agreement. This proposal includes a prohibition for SecureTest to misrepresent its participation in any privacy or security program sponsored by any government or self-regulatory or standardization organization. The proposed agreement will be published in the Federal Register and subject to public comment for 30 days. Afterwards the FTC will make a determination regarding whether to make the proposed consent order final.

The FTC has also sent warning letters to 13 companies that falsely claimed to participate in the U.S.-EU Safe Harbor and the U.S.-Swiss Safe Harbor frameworks, which were replaced in 2016 by the EU-U.S. Privacy Shield and Swiss-U.S. Privacy Shield frameworks. The FTC asked companies to remove from their websites, privacy policies or other public documents any statements claiming to participate in a safe harbor agreement. If the companies fail to take action within 30 days, the FTC warned that it would take appropriate legal action.

The FTC also sent warning letters with the same request to two companies that falsely claimed in their privacy policies that they were participants in the Asia-Pacific Economic Cooperation (APEC) Cross-Border Privacy Rules (CBPR) system. The APEC CBPR system is an initiative to improve the protection of consumer data moving between APEC member countries through a voluntary but enforceable code of conduct implemented by participating companies. To become a certified participant, a designated third party, known as an APEC-approved Accountability Agent, must verify and confirm that the company meets the requirements of the CBPR program.

WP29 releases opinion on joint review of Privacy Shield

11. December 2017

The Working Party 29 (WP29),  an independent European advisory body on data protection and privacy, has evaluated the Privacy Shield agreement  (framework for transatlantic exchanges of personal data for commercial purposes between the European Union and the United States, see also our report on One year of Privacy Shield).

In its joint review, the WP29 focusses on the assessment of commercial aspects and governmental access to personal data for national security purposes.

Though acknowledging progress, the WP29 still finds unresolved issues on both sides.

It criticizes the lack of guidance and clear information on the principles of the Privacy Shield, especially with regards to onward transfers, the rights of the data subject and remedies.

The US authorities are further requested to clearly distinguish the status of data processors from that of data controllers.

Another important issue to be tackled is the handling of Human Resource (HR)  data and the rules governing automated-decision making and profiling.

Also, the process of self-certification for companies requires improvement.

In terms of access by public authorities, the WP 29 concludes that the US government has made effort to become more transparent.

However, some of the main concerns still are to be resolved by May 25th, 2018.

The WP 29 calls for further evidence or legally binding commitments to confirm non-discrimination and the fact that authorities don’t get access on a generalized basis to data transferred to the USA from the EU.

Aside from these matters, an Ombudsperson still needs to be appointed and her/his exact powers need to be specified. According to the WP 29, the existing powers to remedy non-compliance are not sufficient.

In case no remedy is brought to these concerns in the given time frames, the members of WP29 will take appropriate action, including bringing the Privacy Shield Adequacy decision to national courts for them to make a reference to the Court of Justice of the European Union (CJEU) for a preliminary ruling.

One year Privacy Shield

7. November 2017

The EU-US Privacy Shield is intended to protect the data of EU citizens from the US scouting device. Critics, however, have serious doubts as to whether this is currently the case. The transatlantic data package has been in operation for over a year and has now undergone a first review. The Privacy Shield is the successor to the Safe Harbor Agreement, which was repealed in a sensational ruling by the European Court of Justice.

The purpose of the Privacy Shield is to achieve a similar level of data protection in the US as in the EU, so that the data of the EU citizens in the US are just as protected as here on land. In particular, it should be achieved:

the data should be safe from excessive mass surveillance by US authorities (eg the NSA),
an ombudsperson established in the State Department that EU citizens can contact directly,
no indefinite storage of personal data of EU citizens by companies.

2400 companies have been certified for the Privacy Shield since its introduction. These include industry giants like Amazon, Tesla, Facebook and Google. Therefore, the importance of the Privacy Shield as a data protection regulation can not be denied. In addition to the certification remain as a legal basis only standard contractual clauses.

The first review shows, however, that the Privacy Shield is still controversial and the central demands, such as the Ombudsman, have not yet been implemented by the US government. In addition, US President Trump has already shortly after taking office, the privacy of non-Americans by way of a decree.

Nevertheless, responsible EU Justice Commissioner Vera Journová is not dissatisfied with the first year. While it is warned that the Ombudsperson should be appointed as soon as possible, she is confident that the US is now taking the concerns of Europeans seriously.

However, critics continue to complain that too little is done to enforce existing claims and that the Privacy Shield does not meet the requirements set out in the Safe Harbor ruling.

European Union’s justice commissioner Jourová threatens to suspend Privacy Shield

6. March 2017

Vera Jourová, the European Union’s justice commissioner, is willing to suspend Privacy Shield in case the Trump administration budges from the result of the negotiation between the Obama administration and the European Union.

The Privacy Shield pact was meant to replace the Safe Harbor decision of the European Commission that was overturned in October 2015 by the European Court of Justice (ECJ). The pact’s purpose is to enable the transfer of EU citizens’ personal data to the US while ensuring the protection of those data.

Concerns about the effectiveness of the Privacy Shield came up as President Trump passed an executive order in January 2017 saying “agencies shall, to the extent consistent with applicable law, ensure that their privacy policies exclude persons who are not United States citizens or lawful permanent residents from the protections of the Privacy Act regarding personally identifiable information.”

Although the US Department of Justice already affirmed the US’s commitment to the Privacy Shield, Jourová stays sceptical and wants to keep an eye on the US government’s stance. In case EU citizens’ personal data are not safe in the US Jourová will not hesitate to suspend the pact.

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