Tag: Schrems II

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.

Swiss Data Protection Commissioner: “Swiss-U.S. Privacy Shield not providing adequate level of Data Protection”

28. September 2020

Following the recent ruling by the Court of Justice of the European Union (“CJEU”) the Swiss Data Protection Commissioner (“EDÖB”) published a statement concerning the level of Data Protection of Data Transfers under the Swiss-U.S. Privacy Shield. The “Schrems II” decision by the CJEU is not legally binding in the Switzerland because Switzerland is neither a EU nor a EEA country. But as the EDÖB and the Joint European Data Protection Authorities work closely together, the decision has first implications for Swiss data exporters.

In accordance with Swiss Data Protection law (Art. 7 VDSG), the Swiss Data Protection Commissioner maintains a publicly accessible list of countries assessing the level of Data Protection guaranteed by these countries. This list shall serve Swiss data exporters as a guidance for their data exporting activities and acts as a rebuttable presumption. EU and EEA countries have continuously been listed in the first column of the list because they are regarded to provide an adequate level of Data Protection. The U.S. has been listed in the second column as a country providing “adequate protection under certain conditions”, which meant a certification of U.S. data importers under the Swiss-U.S. Privacy Shield.

Subsequent to the CJEU ruling, the EDÖB decided to list the U.S. in the third column as a country providing “inadequate protection”, thereby also acting on his past annual reviews of the Swiss-U.S. Privacy Shield. In his reviews, the EDÖB already criticised that data subjects in Switzerland lack access to the courts in the U.S. on account of Data Protection violations and that the Ombudsman-mechanism is ineffective in this regard.

Lastly, the EDÖB pointed out that the Swiss-U.S. Privacy Shield remains in effect since there has not been a decision by Swiss courts comparable to the CJEU decision and that his assessment has the status of a recommendation. However, the EDÖB advises Swiss data exporters to always make a risk assessment when transferring Personal Data to countries with “inadequate protection” and possibly to apply technical measures (e.g. BYOK encryption) in order to protect the data from access by foreign intelligence services.

CJEU judges the EU-US Privacy Shield invalid

16. July 2020

On June 16th, 2020, the Court of Justice of the European Union (CJEU) has declared the invalidity of Decision 2016/1250, therefore rendering protection granted to data transfers under the EU-US Privacy Shield inadequate.

The background

The case originated in a complaint of Mr. Max Schrems against Facebook Ireland regarding the transfer of his personal data as a Facebook user to Facebook Inc., situated in the USA, for further processing. Mr. Schrems lodged a complaint with the Irish supervisory authority seeking to prohibit those transfers. He claimed that the law and practices in the United States do not offer sufficient protection against access by the public authorities to the data transferred to the USA. That complaint was rejected on the ground that, in Decision 2000/5205, the Safe Harbour Decision, the Commission had found that the United States ensured an adequate level of protection. In a judgment delivered on October 6th, 2015, the CJEU, to which the High Court of Ireland had referred questions for a preliminary ruling, declared that decision invalid, resulting in the Schrems I judgment.

Today’s judgement in the Schrems II case came from the request of the Irish High Court to Mr. Schrems to reformulate his initial complaint, seeing as the Safe Harbour Agreement had been deemed inadequate. In the following, Mr. Schrems reformulated his complaint, and claimed that the United States does not offer sufficient protection of data transferred to that country. He seeks the suspension of future transfers of his personal data from the EU to the United States, which Facebook Ireland now carries out pursuant to the Standard Contractual Clauses (SCCs) set out in the Annex to Decision 2010/87. After the initiation of those proceedings, the Commission adopted Decision 2016/1250 on the adequacy of the protection provided by the EU-U.S. Privacy Shield.

In its request for a preliminary ruling, the referring court asked the CJEU whether the GDPR applies to transfers of personal data pursuant to the SCCs, what level of protection is required by the GDPR in connection with such a transfer, and what obligations are incumbent on supervisory authorities in those circumstances. The High Court of Ireland also raised the question of the validity of both decisions,  Decision 2010/87 and  Decision 2016/1250.

Judgement in regard to SCCs

In its judgements, the CJEU has stated that it had, after examination of the SCCs in light of the Charter of Fundamental Rights, found nothing that affected the validity of the SCCs and Decision 2010/87.

With regards to the transfer of personal data to third countries, the CJEU claims that the requirements for such purposes set out by the GDPR concerning appropriate safeguards, enforceable rights and effective legal measures must be interpreted in such a way that data subjects whose personal data is transferred into a third country must be afforded a level of protection essentially similar to the level of protection granted within the European Union by the GDPR.

Data Protection Authorities must, unless an adequacy decision has been ruled by the Commission, be required to suspend or prohibit a transfer of personal data to a third country which does not meet these requirements.

The CJEU holds that the SCCs are still effective mechanisms that make it possible to ensure compliance with a level of protection required by the European Union. In that regard the CJEU points out that this imposes an obligation on the data exporter and the recipient of the data to verify, prior to any transfer, whether that level of protection is respected in the third country concerned, and to suspend the transfer of the personal data if it is not.

Judgement in regard to the EU-US Privacy Shield

The CJEU, after thorough examination, concluded that the EU-US Privacy Shield is not adequate protection for transfers to the USA.

This result comes from the fact that the far-reaching US surveillance laws are in conflict with EU fundamental rights. The USA limits most of its protections of personal data from governmental surveillance to US citizen, but does not extend that protection to the personal data of citizens of other countries.

In essence, the limitations on the protection of personal data arising from the domestic law of the USA on the access and use by US public authorities of such data transferred from the European Union are not restricted in a way that satisfies requirements that are equivalent to those required under EU law, which were mentioned in regards to SCCs above. By the principle of proportionality, the surveillance programmes based on those provisions are not limited to what is strictly necessary.

Unless an empowerment and independence of the Ombudsperson takes place, which would give the competence to adopt decisions which are binding on US intelligence services, there are no substantial cause of actions for data subjects before a body which gives legal guarantees in the way that is required by European law for transfers to be equivalent in protection.

Assessment

Overall, the CJEU states that necessary data transfers are still able to continue under Article 49 of the GDPR. However, the provision’s interpretation is restrictive, leaving most companies with data transfers to the USA which are now considered illegal.

Due to the requirements of adequate protection even when relying on the validated SCCs, transfers under such circumstances may also be found unlawful due to the local intelligence laws in the USA, which do not uphold the requirements necessary by European law.

Overall, it is a clear statement of the necessity of reforms of the US intelligence laws, which have to create adequate protections to be able to guarantee the same level of data protection as the European Union, if they want to continue data trades and data transfers necessary for processing.

What does this mean for you?

  • If your business has a EU-US Privacy Shield certification, and uses such for legitimization of data transfers within a group of companies, you should push towards the use of the European Standard Contractual Clauses within that corporate group.
  • If you are employing service providers which rely on the EU-US Privacy Shield certification, you should also push for the use of Standard Contractual Clauses, or base the data transfer on a different solution for an adequate level of data protection.

Transatlantic Data Transfers in light of the Two Year Anniversary of GDPR Application

7. July 2020

In the last two years since the General Data Protection Regulation (GDPR) came into effect on May 25, 2018, it has received an overall positive feedback and structured the data protection culture not only in the European Union, but has set an example for international privacy standards.

However, especially from the American side of the world, criticism has been constant. Different principles are a prerequisite for different opinions and priorities, and the effort to bring European data protection standards and American personal data business together has been a challenge on both sides.

One of the main criticisms coming from the US government is the increasing obstacles the GDPR poses in case of cybercrime investigations and law enforcement. Not only the restrictive implications of the GDPR are an issue, but also the divergent interpretations due to national adaptations of the GDPR are seen as a problem by government officials.

In the cases of cybercrime, the main issue for the US critics is the now less effective database of domain name owners, WHOIS. The online directory, which was created in the 1970s, is an important tool for law enforcement combatting cybercrime. Before the GDPR came into effect in 2018, the request for information on domain owners was straightforward. Now, due to the restrictions of the GDPR, this process has been made long and tedious.

But fighting cybercrime is not the only tension between the EU and the USA concerning data protection. In a judgement in the Schrems II case, expected for July 16, 2020, the European Court of Justice (ECJ) is expected to take a stance on transatlantic data transfers and the current Privacy Shield, which is the basis for the EU-US dataflows under adequate data protection standards. If the Privacy Shield is deemed insufficient protection, it will have a major effect on EU-US business transactions.

However, these are issues that the European Commission (EC) is very aware of. In their communication concerning the two-year review of the GDPR, the Commission stated that they are planning to balance out diverging and fragmented interpretations of the GDPR on national levels and find a common data protection culture within Europe.

In addition, the restrictions the GDPR poses to law enforcement are another point the European Commission knows it needs to fix. The plan for the future is a bilateral and multilateral framework that can allow for simple requests to share data for law enforcement purposes and avoid conflicts of law, while keeping data protection safeguards intact.

The upcoming judgement of the ECJ is seen with watchful eyes by the Commission, and will be incorporated in their upcoming adequacy decisions and re-evaluations, as well as their development of a modern international transfer toolbox, which includes a modernized version of the standard contractual clauses.

Overall, the two-year mark of the existence of the GDPR is seen more as a success, despite the clear areas for future improvement. One of the big challenges in transatlantic data transfers ahead is without a doubt the outcome of the judgement in the Schrems case in mid-July, the implications of which are, at this point in time, not yet able to be defined.

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.