Privacy Shield Declared Invalid by CJEU

The CJEU yesterday handed down its long-awaited decision on questions put to it regarding Data Protection Commissioner v Facebook Ireland and Maximillian Schrems (C-311/18) (Schrems 2).

It found that the transfer mechanism used to permit data transfers to the US under the EU-US Privacy Shield is invalid.

It also found that the use of standard contractual clauses, another mechanism used to permit transfers to countries outside the EEA, remains lawful, subject to assessments being conducted of the level of protection afforded in the recipient country.

For those that have been following the Schrems 2 case, its conclusion concerning the validity of Privacy Shield may have come as a bit of surprise.

The A-G’s advisory opinion to the Court on the Schrems 2 case issued in December 2019 did not specifically address the adequacy of the Privacy Shield regime, but focussed on questions concerning the standard contractual clauses.

Privacy Shield

The EU-US Privacy Shield was a compliance regime adopted by the EU in 2016 as an “adequacy decision” under Article 45 of the General Data Protection Regulation (GDPR). This framework enabled EU organisations to transfer data to the US but only to US organisations which were registered with Privacy Shield.

The CJEU determined that certain domestic US laws which allowed surveillance by U.S intelligence services (including the Foreign Intelligence Surveillance Act, Executive Order 12333 and Presidential Policy Directive 28) did not provide for the required limits on the powers granted to intelligence agencies and non-US individuals would not have a right of redress in US courts for any  interference with their personal data. As a result, the Privacy Shield regime could not be sustained, and the previous decision made in 2016 was declared invalid.

Standard Contractual Clauses

Entry into the EU’s standard contractual clauses is not in and of itself enough to ensure that a transfer outside the EEA will be lawful.

Controllers that use SCCs must also ensure that:

• they “take measures to compensate for the lack of data protection in a third country”;
• there are safeguards ; and
• there exists enforceable rights and effective remedies for the data subject (Article 46 (1)).

In light of the CJEU’s findings on the US laws discussed above, it is highly doubtful that the SCC’s can continue to be used as a lawful way of transferring personal data to the US.

What this means

Neither the Privacy Shield framework or potentially the SCCs should be relied upon to permit transfers of personal data to the US.

Apart from very limited circumstances permitted by Article 49 of the GDPR (such as where explicit consent is obtained for specified transfers or for “occasional” transfers necessary for implementation of pre-contractual measures or for performance of a contract) it now appears the majority of transfers from the EEA to US could be unlawful.

Organisations will be in a state of legal limbo until the EU introduces an alternative scheme or approves other measures to allow the continued lawful transfer of personal data to the US.

It remains to be seen what guidance supervisory authorities release to address the legal vacuum.

The ICO has already delivered a very short press statement last night stating that it is currently considering the judgment and that it stands ready to support UK organisations to ensure global data flows can continue and personal data is protected.

Our Privacy and Data Protection Team can provide advice and review of your organisation’s current methods of compliance and provide practical advice concerning what steps should be taken.