Category: European Court of Justice

EU Commission publishes Draft Adequacy Decision for South Korea

25. June 2021

On 16 June 2021, the European Commission published the draft adequacy decision for South Korea and transmitted it to the European Data Protection Board (EDPB) for consultation. Thus, the Commission launched the formal procedure towards the adoption of the adequacy decision. In 2017, the Commission announced to prioritise discussions on possible adequacy decisions with important trading partners in East and South-East Asia, starting with Japan and South Korea. The adequacy decision for Japan was already adopted in 2019.

In the past, the Commission diligently reviewed South Korea’s law and practices with regards to data protection. In the course of ongoing negotiations with South Korea, the investigative and enforcement powers of the Korean data protection supervisory authority “PIPC” were strengthened, among other things. After the EDPB has given its opinion, the adequacy decision will need to be approved by a committee composed of representatives of the EU Member States.

The decision of an adequate level of protection pursuant to Art. 45 of the General Data Protection Regulation (GDPR) by the Commission is one of the possibilities to transfer personal data from the EU to a third-country in a GDPR-compliant manner. The adequacy decision will serve as an important addition to the free trade agreement and a strengthening of cooperation between the EU and South Korea. Věra Jourová, the Commission’s Vice-President for Values and Transparency, expressed after launching the formal procedure:

“This agreement with the Republic of Korea will improve the protection of personal data for our citizens and support business in dynamic trade relations. It is also a sign of an increasing convergence of data protection legislation around the world. In the digitalised economy, free and safe data flows are not a luxury, but a necessity.”

Especially in light of the Schrems II decision of the Court of Justice of the European Union, the adequacy decision for South Korea will be an invaluable asset for European and South Korean companies conducting business with each other.

CJEU ruling on One-Stop-Shop mechanism

On June 15th, 2021, the Court of Justice of the European Union (CJEU) ruled that “under certain conditions, a national supervisory authority may exercise its power to bring any alleged infringement of the GDPR before a court of a member state, even though that authority is not the lead supervisory authority”. It grants each supervisory authority the power to bring matters within its supervisory area before the courts. If a non-lead supervisory authority wishes to bring cross-border cases to court, it can do so under the so-called emergency procedure under Article 66 of the GDPR.

The General Data Protection Regulation (GDPR) provides that the data protection authority of the country in which a company has its principal place of business in the EU has primary jurisdiction for cross-border proceedings against such companies (the so-called one-stop-shop principle). Facebook and a number of other international companies have their EU headquarters in Ireland. The Irish data protection authority has been criticised several times for dragging out numerous important cases against tech companies. The CJEU’s ruling is likely to lead to more enforcement proceedings by local data protection authorities.

In 2015 – before the GDPR came into force – the Belgian data protection authority filed a lawsuit in Belgian courts against Facebook’s collection of personal data via hidden tracking tools. These tracking tools even tracked users without Facebook accounts. After the GDPR came into force, Facebook argued that lawsuits against data protection violations could only be filed in Ireland. A court of appeal in Brussels then referred the question to the ECJ as to whether proceedings against Facebook were admissible in Belgium. This has now been confirmed by the ECJ. The Belgian court is now free to make a final decision (please see our blog post).

The CJEU has now ruled that, in principle, the lead data protection authority is responsible for prosecuting alleged GDPR violations if they involve cross-border data processing. The data processing must therefore take place in more than one Member State or have an impact on individuals in several member states. However, it is also specified that the “one-stop-shop” principle of the GDPR obliges the lead authority to cooperate closely with the respective local supervisory authority concerned. In addition, local data protection authorities may also have jurisdiction pursuant to Art. 56 (2) and Art. 66 GDPR. According to the CJEU, if the respective requirements of these provisions are met, a local supervisory authority may also initiate legal proceedings. The CJEU has clarified that actions by non-lead data protection authorities can still be upheld if they are based on the Data Protection Directive, the predecessor of the GDPR.

The EU consumer association BEUC called the ruling a positive development. BEUC Director General Monique Goyens said:

Most Big Tech companies are based in Ireland, and it should not be up to that country’s authority alone to protect 500 million consumers in the EU.

While Facebook’s associate general counsel Jack Gilbert said:

We are pleased that the CJEU has upheld the value and principles of the one-stop-shop mechanism, and highlighted its importance in ensuring the efficient and consistent application of GDPR across the EU.

Portuguese DPA Orders Suspension of U.S. Data Transfers by National Institute of Statistics

29. April 2021

On April 27, 2021, the Portuguese Data Protection Authority “Comissão Nacional de Proteção de Dados” (CNPD) ordered the National Institute of Statistics (INE) to suspend any international data transfers of personal data to the U.S., as well as other countries without an adequate level of protection, within 12 hours.

The INE collects different kinds of data from Portuguese residents from 2021 Census surveys and transfers it to Cloudfare, Inc. (Cloudfare), a service provider in the U.S. that assists the surveys’ operation. EU Standard Contractual Clauses (SCCs) are in place with the U.S. service provider to legitimize the data transfers.

Due to receiving a lot of complaints, the CNPD started an investigation into the INE’s data transfers to third countries outside of the EU. In the course of the investigation, the CNDP concluded that Cloudfare is directly subject to U.S. surveillance laws, such as FISA 702, for national security purposes. These kinds of U.S. surveillance laws impose a legal obligation on companies like Cloudfare to give unrestricted access to personal data of its customers and users to U.S. public authorities without informing the data subjects.

In its decision to suspend any international data transfers of the INE, the CNPD referred to the Schrems II ruling of the Court of Justice of the European Union. Accordingly, the CNPD is if the opinion that personal data transferred to the U.S. by the INE was not afforded a level of data protection essentially equivalent to that guaranteed under EU law, as further safeguards have to be put in place to guarantee requirements that are essentially equivalent to those required under EU law by the principle of proportionality. Due to the lack of further safeguards, the surveillance by the U.S. authorities are not limited to what is strictly necessary, and therefore the SCCs alone do not offer adequate protection.

The CNPD also highlighted that, according to the Schrems II ruling, data protection authorities are obliged to suspend or prohibit data transfers, even when those transfers are based on the European Commission’s SCCs, if there are no guarantees that these can be complied with in the recipient country. As Cloudfare is also receiving a fair amount of sensitive data n relation to its services for the INE, it influenced the CNDP’s decision to suspend the transfers.

French Government seeks to disregard CJEU data retention of surveillance data ruling

9. March 2021

On March 3rd, POLITICO reported that the French government seeks to bypass the Court of Justice of the European Union’s (CJEU) ruling on limiting member states’ surveillance activities of phone and internet data, stating governments can only retain mass amounts of data when facing a “serious threat to national security”.

According to POLITICO, the French government has requested the country’s highest administrative court, the Council of State, to not follow the CJEU’s ruling in the matter.

Last year in October, the CJEU ruled that several national data retention rules were not compliant with EU law. This ruling included retention times set forth by the French government in matters of national security.

The French case in question opposes the government against digital rights NGOs La Quadrature du Net and Privacy International. After the CJEU’s ruling, it is now in the hands of the Council of State in France, which will have to decide on the matter.

A hearing date has not yet been decided, however POLITICO sources state that the French government is trying to bypass the CJEU’s ruling by presenting the argument of the ruling going against the country’s “constitutional identity”. This argument, first used back in 2006, is seldomly used, however can be referred to in order to avoid applying EU law at national level.

In addition, the French government accuses the CJEU to have ruled out of its competence, as matters of national security remain solely part of national competence.

The French government did not want to comment on the ongoing process, however has had a history of refusing to adopt EU court rulings into national law.

CJEU Advocate General’s opinion on GDPR’s One-Stop-Shop mechanism

26. January 2021

On January 13, 2021, the Advocate General (“AG”) of the Court of Justice of the European Union (“CJEU”) published an opinion in the case of Facebook Ireland Limited, Facebook INC, Facebook Belgium BVBA v the Belgian Data Protection Authority “Gegevensbeschermingsautoriteit” (“Belgian DPA”), addressing the General Data Protection Regulation’s (“GDPR”) One-Stop-Shop mechanism.

In 2015, the Belgian DPA initiated several legal proceedings against Facebook Group members in local courts. The allegation was that Facebook placed cookies on devices of Belgian users without their consent, thereby collecting data in an excessive manner. Facebook argued that with the GDPR becoming applicable in 2018, the Belgian DPA lost its competence to continue the legal proceedings, as Facebook’s lead supervisory authority under the GDPR is the Irish Data Protection Commission. The Belgian Court of Appeal referred several questions to the CJEU, including whether the GDPR’s One-Stop-Shop regime prevented national DPA’s from initiating proceedings in the national courts when it is not the lead DPA.

The AG responded that, in his opinion, the lead DPA has the general jurisdiction over cross-border data processing, while a national DPA may exceptionally bring proceedings before its own national courts. The national DPA’s right is subject to the One-Stop-Shop regime and cooperation and consistency mechanism of the GDPR. Thus, each national DPA has the competence to initiate proceedings against possible infringements affecting its territory, the significant regulatory role of the lead DPA limits this competence with respect to cross-border data processing.

One of the concerns expressed by the Belgian DPA was the risk of insufficient enforcement if only lead DPA’s may act against organizations that do not comply with the GDPR. In this regard, the GA emphasizes that Art. 61 GDPR specifically provides for appropriate mechanisms to address such concerns. National DPA’s have the possibility to ask the lead DPA for assistance in investigations, and if such assistance is not provided, the national DPA concerned may take action itself.

In certain circumstances, the AG sees the possibility for national DPAs not acting as lead DPA to initiate proceedings before their national court, if

  • the DPA is acting outside of the material scope of the GDPR; e.g., because the processing does not involve personal data;
  • cross-border data processing is carried out by public authorities, in the public interest, or to comply with legal obligations;
  • the processor is not established in the EU;
  • there is an urgent need to act to protect the rights and freedoms of data subjects (Art. 66 GDPR);
  • the lead DPA has decided not to process a case.

With regards to data subjects, the AG notes that data subjects can bring action against any controller or processor before the court of their Member State and may file a complaint with their Member State’s DPA, regardless of which Member State’s DPA is the lead DPA.

The AG’s opinion is not legally binding on the CJEU, although the CJEU will take it into account. A final judgment of the CJEU is expected in the coming months. Thereafter, the Belgian Court of Appeal will have to decide its case in accordance with the CJEU’s judgment. The CJEU’s decision will most likely have a lasting impact on the division of roles between lead DPAs and other national DPAs, as well as on the ability of national DPAs to take enforcement actions into their own hands.

EDPS considers Privacy Shield replacement unlikely for a while

18. December 2020

The data transfer agreements between the EU and the USA, namely Safe Harbor and its successor Privacy Shield, have suffered a hard fate for years. Both have been declared invalid by the European Court of Justice (CJEU) in the course of proceedings initiated by Austrian lawyer and privacy activist Max Schrems against Facebook. In either case, the court came to the conclusion that the agreements did not meet the requirements to guarantee equivalent data protection standards and thus violated Europeans’ fundamental rights due to data transfer to US law enforcement agencies enabled by US surveillance laws.

The judgement marking the end of the EU-US Privacy Shield (“Schrems II”) has a huge impact on EU companies doing business with the USA, which are now expected to rely on Standard Contractual Clauses (SCCs). However, the CJEU tightened the requirements for the SCCs. When using them in the future, companies have to determine whether there is an adequate level of data protection in the third country. Therefore, in particular cases, there may need to be taken additional measures to ensure a level of protection that is essentially the same as in the EU.

Despite this, companies were hoping for a new transatlantic data transfer pact. Though, the European Data Protection Supervisor (EDPS) Wojciech Wiewiórowski expressed doubts on an agreement in the near future:

I don’t expect a new solution instead of Privacy Shield in the space of weeks, and probably not even months, and so we have to be ready that the system without a Privacy Shield like solution will last for a while.

He justified his skepticism with the incoming Biden administration, since it may have other priorities than possible changes in the American national security laws. An agreement upon a new data transfer mechanism would admittedly depend on leveling US national security laws with EU fundamental rights.

With that in mind, the EU does not remain inactive. It is also trying to devise different ways to maintain its data transfers with the rest of the world. In this regard, the EDPS appreciated European Commission’s proposed revisions to SCCs, which take into consideration the provisions laid down in CJEU’s judgement “Schrems II”.

The proposed Standard Contractual Clauses look very promising and they are already introducing many thoughts given by the data protection authorities.

The Controversy around the Council of the European Union’s Declaration on End-to-End Encryption

27. November 2020

In the course of November 2020, the Council of the European Union issued several draft versions of a joint declaration with the working title “Security through encryption and security despite encryption”. The drafts were initially intended only for internal purposes, but leaked and first published by the Austrian brodcasting network “Österreichischer Rundfunk” (“ORF”) in an article by journalist Erich Möchel. Since then, the matter has sparked widespread public interest and media attention.

The controversy around the declaration arose when the ORF commentator Möchel presented further information from unknown sources that “compentent authorities” shall be given “exceptional access” to the end-to-end encryption of communications. This would mean that communications service providers like WhatsApp, Signal etc. would be obliged to allow a backdoor and create a general key to encrypted communications which they would deposit with public authorities. From comparing the version of the declaration from 6 November 2020 with the previous version from 21 October 2020, he highlighted that in the previous version it states that additional practical powers shall be given to “law enforcement and judicial authorities”, whereas in the more recent version, the powers shall be given to “competent authorities in the area of security and criminal justice”. He adds that the new broader wording would include European intelligence agencies as well and allow them to undermine end-to-end encryption. Furthermore, he also indicated that plans to restrict end-to-end encyption in Western countries are not new, but originally proposed by the “Five Eyes” intelligence alliance of the United States, Canada, United Kingdom, Australia and New Zealand.

As a result of the ORF article, the supposed plans to restrict or ban end-to-end encryption have been widely criticised by Politicians, Journalists, and NGOs stating that any backdoors to end-to-end encryption would render any secure encryption impossible.

However, while it can be verified that the “Five Eyes” propose the creation of general keys to access end-to-end encrypted communications, similar plans for the EU cannot be clearly deduced from the EU Council’s declaration at hand. The declaration itself recognises end-to-end encryption as highly beneficial to protect governments, critical infrastructures, civil society, citizens and industry by ensuring privacy, confidentiality and data integrity of communications and personal data. Moreover, it mentions that EU data protection authorities have identified it as an important tool in light of the Schrems II decision of the CJEU. At the same time, the Council’s declaration illustrates that end-to-end encryption poses large challenges for criminal investigations when gathering evidencein cases of cyber crime, making it at times “practically impossible”. Lastly, the Council calls for an open, unbiased and active discussion with the tech industry, research and academia in order to achieve a better balance between “security through encryption and security despite encryption”.

Möchel’s sources for EU plans to ban end-to-end encryption through general keys remain unknown and unverifiable. Despite general concerns for overarching surveillance powers of governments, the public can only approach the controversy around the EU Council’s declaration with due objectivity and remain observant on whether or how the EU will regulate end-to-end encryption and find the right balance between the privacy rights of European citizens and the public security and criminal justice interests of governments.

Microsoft reacts on EDPB’s data transfer recommendations

24. November 2020

Microsoft (“MS”) is among the first companies to react to the European Data Protection Board’s data transfer recommendations (please see our article), as the tech giant announced in a blog post on November 19th. MS calls these additional safeguards “Defending Your Data” and will immediately start implementing them in contracts with public sector and enterprise customers.

In light of the Schrems II ruling by the Court of Justice of the European Union (“CJEU”) on June 16th, the EDPB issued recommendations on how to transfer data into non-EEA countries in accordance with the GDPR on November 17th (please see our article). The recommendations lay out a six-step plan on how to assess whether a data transfer is up to GDPR standards or not. These steps include mapping all data transfer, assessing a third countries legislation, assessing the tool used for transferring data and adding supplementary measures to that tool. Among the latter is a list of technical, organizational, and contractual measures to be implemented to ensure the effectiveness of the tool.

Julie Brill, Corporate Vice President for Global Privacy and Regulatory Affairs and Chief Privacy Officer at Microsoft, issued the statement in which she declares MS to be the first company responding to the EDPB’s guidance. These safeguards include an obligation for MS to challenge all government requests for public sector or enterprise customer data, where it has a lawful basis for doing so; to try and redirect data requests; and to notify the customer promptly if legally allowed, about any data request by an authority, concerning that customer. This was one of the main ETDB recommendations and also included in a draft for new Standard Contractual Clauses published by the European Commission on November 12th. MS announces to monetary compensate customers, whose personal data has to be disclosed in response to government requests.  These changes are additions to the SCC’s MS is using ever since Schrems II. Which include (as MS states) data encrypted to a high standard during transition and storage, transparency regarding government access requests to data (“U.S. National Security Orders Report” dating back to 2011; “Law Enforcement Requests Report“) .

Recently European authorities have been criticizing MS and especially its Microsoft 365 (“MS 365”) (formerly Office 365) tools for not being GDPR compliant. In July 2019 the Ministry of Justice in the Netherlands issued a Data Protection Impact Assessment (DPIA), warning authorities not to use Office 365 ProPlus, Windows 10 Enterprise, as well as Office Online and Mobile, since they do not comply with GDPR standards. The European Data Protection Supervisor issued a warning in July 2020 stating that the use of MS 365 by EU authorities and contracts between EU institutions and MS do not comply with the GDPR. Also, the German Data Security Congress (“GDSC”) issued a statement in October, in which it declared MS 365 as not being compliant with the GDPR. The GDSC is a board made up of the regional data security authorities of all 16 german states and the national data security authority. This declaration was reached by a narrow vote of 9 to 8. Some of the 8 regional authorities later even issued a press release explaining why they voted against the declaration. They criticized a missing involvement and hearing of MS during the process, the GDSC’s use of MS’ Online Service Terms and Data Processing Addendum dating back to January 2020 and the declaration for being too undifferentiated.

Some of the German data protection authorities opposing the GDSC’s statement were quick in welcoming the new developments in a joint press release. Although, they stress that the main issues in data transfer from the EU to the U.S. still were not solved. Especially the CJEU main reserves regarding the mass monitoring of data streams by U.S. intelligence agencies (such as the NSA) are hard to prevent and make up for. Still, they announced the GDSC would resume its talks with MS before the end of 2020.

This quick reaction to the EDPB recommendations should bring some ease into the discussion surrounding MS’ GDPR compliance. It will most likely help MS case, especially with the German authorities, and might even lead to a prompt resolution in a conflict regarding tools that are omnipresent at workplaces all over the globe.

European Commission issues draft on Standard Contractual Clauses

18. November 2020

A day after the European Data Protection Board (EDPB) issued its recommendations on supplementary measures, on November 12th the European Commission issued a draft on implementing new Standard Contractual Clauses (SCCs) for data transfers to non-EU countries (third countries). The draft is open for feedback until December 10th, 2020, and includes a 12-month transition period during which companies are to implement the new SCCs. These SCCs are supposed to assist controllers and processors in transferring personal data from an EU-country to a third-country, implementing measures that guarantee GDPR-standards and regarding the Court of Justice of the European Union’s (CJEU) “Schrems II” ruling.

The Annex includes modular clauses suitable for four different scenarios of data transfer. These scenarios are: (1) Controller-to-controller-transfer; (2) Controller-to-processor-transfer; (3) Processor-processor-transfer; (4) Processor-to-controller-transfer. Newly implemented in these SCCs are the latter two scenarios. Since the clauses in the Annex are modular, they can be mixed and matched into a contract fitting the situation at hand. Furthermore, more than two parties can adhere to the SCC and the modular approach even allows for additional parties to accede later on.

The potential of government access to personal data is distinctly addressed, since this was a main issue following the “Schrems II” ruling. Potential concerns are met by implementing clauses that address how the data importer must react when laws of the third country impinge on his ability to comply with the contract, especially the SCCs, and how he must react in case of government interference.  Said measures include notifying the data exporter and the data subject of any government interference, such as legally binding requests of access to personal data, and, if possible, sharing further information on these requests on a regular basis, documenting them and challenging them legally. Termination clauses have been added, in case the data importer cannot comply further, e.g. because of changes in the third country’s law.

Further clauses regard matters such as data security, transparency, accuracy and onwards transfer of personal data, which represent issues that have all been tackled in the older SCCs, but are to be updated now.

First judicial application of Schrems II in France

20. October 2020

France’s highest administrative court (Conseil d’État) issued a summary judgment that rejected a request for the suspension of France’s centralized health data platform – Health Data Hub (HDH) – on October 13th, 2020. The Conseil d’État further recognized that there is a risk of U.S. intelligence services requesting the data and called for additional guarantees.

For background, France’s HDH is a data hub supposed to consolidate all health data of people receiving medical care in France in order to facilitate data sharing and promote medical research. The French Government initially chose to partner with Microsoft and its cloud platform Azure. On April 15th, 2020, the HDH signed a contract with Microsoft’s Irish affiliate to host the health data in data centers in the EU. On September 28th, 2020, several associations, unions and individual applicants appealed to the summary proceedings judge of the Conseil d’État, asking for the suspension of the processing of health data related to the COVID-19 pandemic in the HDH. The worry was that the hosting of data by a company which is subject to U.S. laws entails data protection risks due to the potential surveillance done under U.S. national surveillance laws, as has been presented and highlighted in the Schrems II case.

On October 8th, 2020, the Commission Nationale de l’Informatique et Libertées (CNIL) submitted comments on the summary proceeding before the Conseil d’État. The CNIL considered that, despite all of the technical measures implemented by Microsoft (including data encryption), Microsoft could still be able to access the data it processes on behalf of the HDH and could be subject, in theory, to requests from U.S. intelligence services under FISA (or even EO 12333) that would require Microsoft to transfer personal data stored and processed in the EU.
Further, the CNIL recognized that the Court of Justice of the European Union (CJEU) in the Schrems II case only examined the situation where an operator transfers, on its own initiative, personal data to the U.S. However, according to the CNIL, the reasons for the CJEU’s decision also require examining the lawfulness of a situation in which an operator processes personal data in the EU but faces the possibility of having to transfer the data following an administrative or judicial order or request from U.S. intelligence services, which was not clearly stated in the Schrems II ruling. In that case, the CNIL considered that U.S. laws (FISA and EO 12333) also apply to personal data stored outside of the U.S.

In the decision of the Conseil d’État, it agreed with the CNIL that it cannot be totally discounted that U.S. public authorities could request Microsoft and its Irish affiliate to access some of the data held in the HDH. However, the summary proceedings judge did not consider the CJEU’s ruling in the Schrems II case to also require examination of the conditions under which personal data may be processed in the EU by U.S. companies or their affiliates as data processors. EU law does not prohibit subcontracting U.S. companies to process personal data in the EU. In addition, the Conseil d’État considered the violation of the GDPR in this case was purely hypothetical because it presupposes that U.S. authorities are interested in accessing the health data held in the HDH. Further, the summary proceedings judge noted that the health data is pseudonymized before being shared within the HDH, and is then further encrypted by Microsoft.

In the end, the judge highlighted that, in light of the COVID-19 pandemic, there is an important public interest in continuing the processing of health data as enabled by the HDH. The conclusion reached by the Conseil d’ètat was that there is no adequate justification for suspending the data processing activities conducted by the HDH, but the judge ordered the HDH to work with Microsoft to further strengthen privacy rights.

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