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.