Facebook loses challenge

Facebook loses challenge as court rules in favor of DPC

Facebook loses challenge as court rules in favor of DPC’s draft decision for an inquiry and suspension of Facebook’s data transfers to the US. 

Following the Schrems II judgement of last July, the Irish Data Protection Commission, launched an inquiry into Facebook Ireland Ltd, and suspended the company’s EU-US data flows. Facebook disagreed with, and decided to challenge the decision. The company asserted that the DPC’s decision, and the procedures subsequently adopted are susceptible to judicial review. This long standing legal battle over Facebook Ireland’s right to continue making data transfers to the US, has now come to an end. This ruling, affirming Ireland’s lead regulator’s decision to suspend their EU-US data flows is likely to have major effects on Facebook’s operations. 

This decision is the culmination of an eight year battle, initiated by a 2013 complaint from Mr. Max Schrems.

Facebook Ireland, a subsidiary of the US company Facebook Inc, provides the social networks Facebook and Instagram to the European region, and houses its central administration and European headquarters in Dublin. In June 2013, Mr Maximilian Schrems filled a complaint with the DPC regarding the transfer of his personal data to the US by Facebook Ireland, claiming that it was unlawful under national and EU law, and in October 2013, the DPC stated that the matter would be “investigated promptly with all due diligence and speed”. In May 2016, the DPC wrote to Facebook Ireland and Mr Schrems with a draft decision that Standard Contractual Clauses could not lawfully be relied upon in respect to transfers of EU citizens’ personal data to the US. After this judgment, in July 2020, the CJEU gave a judgment. The court ruled that according to the GDPR, EU residents whose personal data is transferred to a third country using Standard Contractual Clauses must be afforded the same level of protection guaranteed within the European Union and the GDPR. Since the authorities in the United States cannot be bound by Standard Contractual Clauses, data transferred there may not be effectively protected. As a result of last year’s judgment, the Irish DPC launched an inquiry, and came to a preliminary decision to halt Facebook’s data transfers to the US, a decision that was subsequently challenged by Facebook. 

Facebook challenged the draft decision by the DPC claiming that they should have awaited guidance from the EDPB. 

Facebook challenged the draft decision, as well as the inquiry, claiming that the Data Protection Commission should have waited for guidance from the European Data Protection Board before proceeding with an inquiry and ordering suspension of its data transfers. The company asserted that as a member of the EDPB, the DPC would have received imminent guidance from the EDPB, and should not have acted prior to receiving that. This guidance was eventually published in November 2020, and as of May 14th 2021, the High Court has ruled that Facebook Ireland “ has not established any basis for impugning the DPC decision or the PDD of the procedures for the inquiry adopted by the DPC.” The judge rejected claims by Facebook that the DPC was in breach of its duty in how the case was handled. Justice David Barnaville also stated however, that the DPC should have responded to certain questions that Facebook raised in their October 2020 correspondence.

Facebook loses challenge as high court ruling gives the Irish DPC the right to open a second “own volition“ investigation against Facebook.

This long standing battle has now come to an end, resulting in an inevitable suspension of Facebook’s data transfers to the US. A second, “own volition” investigation has also been opened and is running simultaneously with the original complaint dating back to 2013, which led to the CJEU’s “Schrems II” decision. Regarding Facebook’s appeal of the DPC’s decision, the High Court, in its 127 page document outlining its judicial review of this case, rejected Facebook’s claims against the DPC. Eight years after the initial complaint, it is now certain that the DPC will have to act to stop Facebook‘s EU-US data transfers. This decision is likely to heavily impact Facebook’s operations. Regardless, the company said it looked forward to defending its compliance to the Data Protection Commission.

Do you make international data transfers to third countries? We can help you. Aphaia provides both GDPR and Data Protection Act 2018 consultancy services, including data protection impact assessments, transfer impact assessments and Data Protection Officer outsourcing.  Contact us today.

EU-US Privacy Shield

EU-US Privacy Shield invalidation business implications follow-up

Since the Court of Justice of the European Union (CJEU) invalidated the EU-US Privacy Shield in their Schrems II judgement delivered two weeks ago, many questions have arisen around international data transfers to the US.

After the invalidation of the EU-US Privacy Shield by the CJEU two weeks ago, as reported by Aphaia, data transfers to the US require another valid safeguard or mechanism that provides an adequate level of data protection similar to the one granted by the GDPR.

European Data Protection Board guidelines

With the aim of clarifying the main issues derived from the invalidation of the EU-US Privacy Shield, the European Data Protection Board (EDPB) has published Frequently Asked Questions on the Schrems II judgement. These answers are expected to be developed and complemented along with further analysis, as the EDPB continues to examine and assess the CJEU decision.

In the document, the EDPB reminds that there is no grace period during which the EU-US Privacy Shield is still deemed a valid mechanisms to transfer personal data to the US, therefore businesses that were relying on this safeguard and that wish to keep on transferring data to the US should find another valid safeguard which ensures compliance with the level of protection essentially equivalent to that guaranteed within the EU by the GDPR.

What about Standard Contractual Clauses?

The CJEU considered the SCC validity depends on the ability of the data exporter and the recipient of the data to verify, prior to any transfer, and taking into account the specific circumstances, whether that level of protection can be respected in the US. This seems to be difficult though, because the Court found that US law (i.e., Section 702 FISA and EO 12333) does not ensure an essentially equivalent level of protection.

The data importer should inform the data exporter of any inability to comply with the SCCs and where necessary with any supplementary measures and the data exporter should carry out an assessment to ensure that US law does not impinge on the adequate level of protection, taking into account the circumstances of the transfer and the supplementary measures that could be put in place. The data exporter may contact the data importer to verify the legislation of its country and collaborate for the assessment. Where the result is not favourable, the transfer should be suspended. Otherwise the data exporter should notify the competent Supervisory Authority.

What about Binding Corporate Rules (BCRs)?

Given that the reason of invalidating the EU-US Privacy Shield was the degree of interference created by the US law, the CJEU judgement applies as well in the context of BCRs, since US law will also have primacy over this tool. Likewise before using SCCs, an assessment should be run by the data exporter and the competent Supervisory Authority should be reported where the result is not favourable and the data exporter plans to continue with the transfer.

What about derogations of Article 49 GDPR?

Article 49 GDPR comprises further conditions under which personal data can be transferred to a third-country in the absence of an adequacy decision and appropriate safeguards such as SCCs and BCRs, namely:

  • Consent. The CJEU points out that consent should be explicit, specific for the particular data transfer or set of transfers and informed. This element involves practical obstacles when it comes to businesses processing data from their customers, as this would imply, for instance, asking for all customers’ individual consent before storing their data on Sales Force.
  • Performance of a contract between the data subject and the controller. It is important to note that this only applies where the transfer is occasional and only for those that are objectively necessary for the performance of the contract.

What about third countries other than the US?

The CJEU has indicated that SCCs as a rule can still be used to transfer data to a third country, however the threshold set by the CJEU for transfers to the US applies for any third country, and the same goes for BCRs.

What should I do when it comes to processors transferring data to the US?

Pursuant to the EDPB FAQs, where no supplementary measures can be provided to ensure that US law does not impinge on the essentially equivalent level of protection as granted by the GDPR and if derogations under Article 49 GDPR do not apply, “the only solution is to negotiate an amendment or supplementary clause to your contract to forbid transfers to the US. Data should not only be stored but also administered elsewhere than in the US”.

What can we expect from the CJEU next?

The EDPB is currently analysing the CJEU judgment to determine the kind of supplementary measures that could be provided in addition to SCCs or BCRs, whether legal, technical or organisational measures.

ICO statement

The ICO is continuously updating their statement on the CJEU Schrems II judgement. The latest version so far dates 27th July and it confirms that EDPB FAQs still apply to UK controllers and processors. Until further guidance is provided by EU bodies and institutions, the ICO recommends to take stock of the international transfers businesses make and react promptly plus they claim that they will continue to apply a risk-based and proportionate approach in accordance with their Regulatory Action Policy.

Other European Data Protection Authorities’ statements

Some European data protection supervisory authorities have provided guidance in response to the CJEU Schrems II judgement. While most countries are still considering the implications of the decision, some other are warning about the risk of non-compliance and a few of them like Germany (particularly Berlin and Hamburg) and Netherlands have openly stated that transfers to the US are unlawful.

In general terms, the ones that are warning about the risks claim the following:

  • Data transfers to the U.S. are still possible, but require the implementation of additional safeguards.
  • The obligation to implement the requirements contained in the CJEU’s decision is both on the businesses and the data protection supervisory authorities.
  • Businesses are required to constantly monitor the level of protection in the data importer’s country
  • Businesses should run a previous assessment before transferring data to the US.

The data protection supervisory authority in Germany (Rhineland-Palatinate) has proposed a five-step assessment for businesses. We have prepared the diagram below which summarizes it:

Can the level of data protection required by the GDPR be respected in the US?

The CJEU considered that the requirements of US domestic law and, in particular, certain programmes enabling access by US public authorities to personal data transferred from the EU, result in limitations on the protection of personal data which do not satisfy GDPR requirements. Furthermore, the CJEU stated that US legislation does not gran data subjects actionable rights before the courts against the US authorities. 

In this context, it seems difficult that a company could be able to demonstrate that they can provide an adequate level of data protection to personal data transferred from the EU, because basically it would have to bypass US legislation.

Latest moves in the US Senate does not shed light in this issue, because the “Lawful Access to Encrypted Data Act” was introduced last month. It mandates service providers and device manufacturers to assist law enforcement with accessing encrypted data if assistance would aid in the execution of a lawfully obtained warrant.

Do you make international data transfers to third countries? Are you affected by Schrems II decision? We can help you. Aphaia provides both GDPR and Data Protection Act 2018 consultancy services, including data protection impact assessments, and Data Protection Officer outsourcing. We also offer CCPA compliance servicesContact us today.