Tag: privacy shield

International Transfers Breach Results in Record GDPR Fine for Meta

Personal data transfers between the EU and US is an ongoing legal and political saga. The latest development is yesterday’s largest ever GDPR fine of €1.2bn (£1bn) issued by Ireland’s Data Protection Commission (DPC) to Facebook’s owner, Meta Ireland. The DPC ruled that Meta infringed Article 46 of the EU GDPR in the way it transferred personal data of its users from Europe to the US. 

The Law 

Chapter 5 of the EU GDPR mirrors the international transfer arrangements of the UK GDPR. There is a general prohibition on organisations transferring personal data to a country outside the EU, unless they ensure that data subjects’ rights are protected. This means that, if there is no adequacy decision in respect of the receiving country, one of the safeguards set out in Article 46 must be built into the arrangement. These include standard contractual clauses (SCCs) and binding corporate rules.
The former need to be included in a contract between the parties (data exporter and importer) and impose certain data protection obligations on both. 

The Problem with US Transfers 

In 2020, in a case commonly known as “Schrems II, the European Court of Justice (ECJ) concluded that organisations that transfer personal data to the US can no longer rely on the Privacy Shield Framework as a legal mechanism to ensure GDPR compliance. They must consider using the Article 49 derogations or SCCs. If using the latter, whether for transfers to the US or other countries, the ECJ placed the onus on the data exporters to make a complex assessment about the recipient country’s data protection and surveillance legislation, and to put in place “additional supplementary measures” to those included in the SCCs. The problem with the US is that it has stringent surveillance laws which give law enforcement agencies access to personal data without adequate safeguards (according to the ECJ in Schrems). Therefore any additional measures must address this possibility and build in safeguards to protect data subjects. 

In the light of the above, the new EU SCCs were published in June 2021.
The European Data Protection Board has also published its guidance on the aforementioned required assessment entitled “Recommendations 01/2020 on measures that supplement transfer tools to ensure compliance with the EU level of protection of personal data”. Meta’s use of the new EU SCC’s and its “additional supplementary measures” were the focus of the DPC’s attention when issuing its decision. 

The Decision 

The DPC ruled that Meta infringed Article 46(1) of GDPR when it continued to transfer personal data from the EU/EEA to the US following the ECJ’s ruling in Schrems II. It found that the measures used by Meta did not address the risks to the fundamental rights and freedoms of data subjects that were identified in Schrems; namely the risk of access to the data by US law enforcement.  

The DPC ruled that Meta should: 

  1. Suspend any future transfer of personal data to the US within five months of the date of the DPC’s decision; 
  1. Pay an administrative fine of €1.2 billion; and, 
  1. Bring its processing operations in line with the requirements of GDPR, within five months of the date of the DPC’s decision, by ceasing the unlawful processing, including storage, in the US of personal data of EEA users transferred in violation of GDPR. 

Meta has said that it will appeal the decision and seek a stay of the ruling, before the Irish courts.  Its President of Global Affairs, Sir Nick Clegg, said:  

“We are therefore disappointed to have been singled out when using the same legal mechanism as thousands of other companies looking to provide services in Europe. 

“This decision is flawed, unjustified and sets a dangerous precedent for the countless other companies transferring data between the EU and US.” 

The Future of US Transfers 

The Information Commissioner’s Office told the BBC that the decision “does not apply in the UK” but said it had “noted the decision and will review the details in due course”. The wider legal ramifications on data transfers from the UK to the US can’t be ignored. 

Personal data transfers are also a live issue for most UK Data Controllers including public authorities. Whether using an online meeting app, cloud storage solution or a simple text messaging service, all often involve a transfer of personal data to the US. A new  UK international data transfer agreement (IDTA) came into force on 21st March 2022 but it still requires a Transfer Risk Assessment  as well as supplementary measures where privacy risks are identified.  

On 25th March 2022, the European Commission and the United States announced that they have agreed in principle on a new  Trans-Atlantic Data Privacy Framework. The final agreement is expected to be in place sometime this summer 2023 and will replace the Privacy Shield Framework. It is expected that the UK Government will strike a similar deal once the EU/US one is finalised. However both are likely to be challenged in the courts. 

The Meta fine is one of this year’s major GDPR developments nicely timed; within a few days of the 5th anniversary of GDPR. All organisations, whether in the UK or EU, need to carefully consider their data transfers mechanisms and ensure that they comply with Chapter 5 of GDPR in the light of the DPC’s ruling. A “wait and see’ approach is no longer an option.  

The Meta fine will be discussed in detail on our forthcoming International Transfers workshop. For those who want a 1 hour summary of the UK International Transfer regime we recommend our webinar.  

US Data Transfers and Privacy Shield 2.0 

On 14th December 2022, the European Commission published a draft ‘adequacy decision’, under Article 47 of the GDPR, endorsing a new legal framework for transferring personal data from the EU to the USA. Subject to approval by other EU institutions, the decision paves the way for “Privacy Shield 2.0” to be in effect by Spring 2023.

The Background

In July 2020, the European Court of Justice (ECJ) in “Schrems II”, ruled that organisations that transfer personal data to the USA can no longer rely on the Privacy Shield Framework as a legal transfer tool as it failed to protect the rights of EU data subjects when their data was accessed by U.S. public authorities. In particular, the ECJ found that US surveillance programs are not limited to what is strictly necessary and proportionate as required by EU law and hence do not meet the requirements of Article 52 of the EU Charter on Fundamental Rights. Secondly, with regard to U.S. surveillance, EU data subjects lack actionable judicial redress and, therefore, do not have a right to an effective remedy in the USA, as required by Article 47 of the EU Charter.

The ECJ stated that organisations transferring personal data to the USA can still use the Article 49 GDPR derogations or standard contractual clauses (SCCs). If using the latter, whether for transfers to the USA or other countries, the ECJ placed the onus on the data exporter to make a complex assessment  about the recipient country’s data protection legislation (a Transfer Impact Assessment or TIA), and to put in place “additional measures” to those included in the SCCs. 

Despite the Schrems II judgment, many organisations have continued to transfer personal data to the USA hoping that regulators will wait for a new Transatlantic data deal before enforcing the judgement.  Whilst the UK Information Commissioner’s Office (ICO) seems to have adopted a “wait and see” approach, other regulators have now started to take action. In February 2022, the French Data Protection Regulator, CNIL, ruled that the use of Google Analytics was a breach of GDPR due to the data being transferred to the USA without appropriate safeguards. This followed a similar decision by the Austrian Data Protection Authority in January. 

The Road to Adequacy

Since the Schrems ruling, replacing the Privacy Shield has been a priority for EU and US officials. In March 2022, it was announced that a new Trans-Atlantic Data Privacy Framework had been agreed in principle. In October, the US President signed an executive order giving effect to the US commitments in the framework. These include commitments to limit US authorities’ access to data exported from the EU to what is necessary and proportionate under surveillance legislation, to provide data subjects with rights of redress relating to how their data is handled under the framework regardless of their nationality, and to establish a Data Protection Review Court for determining the outcome of complaints.

Schrems III?

The privacy campaign group, noyb, of which Max Schrems is Honorary Chairman, is not impressed by the draft adequacy decision. It said in a statement:

“…the changes in US law seem rather minimal. Certain amendments, such as the introduction of the proportionality principle or the establishment of a Court, sound promising – but on closer examination, it becomes obvious that the Executive Order oversells and underperforms when it comes to the protection of non-US persons. It seems obvious that any EU “adequacy decision” that is based on Executive Order 14086 will likely not satisfy the CJEU. This would mean that the third deal between the US Government and the European Commission may fail.”

Max Schrems said: 

“… As the draft decision is based on the known Executive Order, I can’t see how this would survive a challenge before the Court of Justice. It seems that the European Commission just issues similar decisions over and over again – in flagrant breach of our fundamental rights.”

The draft adequacy decision will now be reviewed by the European Data Protection Board (EDPB) and the European Member States. From the above statements it seems that if Privacy Shield 2.0 is finalised, a legal challenge against it is inevitable.

UK to US Data Transfers 

Personal data transfers are also a live issue for most UK Data Controllers including public authorities. Whether using an online meeting app, cloud storage solution or a simple text messaging service, all often involve a transfer of personal data to the US. At present use of such services usually involves a complicated TRA and execution of standard contractual clauses. A new UK international data transfer agreement (IDTA) came into force on 21st March 2022 but it still requires a TRA as well as supplementary measures where privacy risks are identified. 

Good news may be round the corner for UK data exporters. The UK Government is also in the process of making an adequacy decision for the US. We suspect it will strike a similar deal once the EU/US one is finalised.

This and other GDPR developments will be discussed in detail on our forthcoming GDPR Update workshop. 

Our next online GDPR Practitioner Certificate course, starting on 10th January, is fully booked. We have places on the course starting on 19th January. 

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