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. 

%d bloggers like this: