EU-US Privacy Shield – Open for Business
15 July 2016
On 12 July 2016, the European Commission adopted the replacement for the EU-US Safe Harbor scheme – the so-called ‘Privacy Shield’. This is the new, EU-approved mechanism for the transatlantic transfer of personal data. The Privacy Shield will enter into force immediately and companies will be able to self-certify with the US Department of Commerce from 1 August 2016. This post, the first in our series on the Privacy Shield, provides an overview of the new framework.
It has taken two and a half years of negotiations between the EU and the US to agree on a new framework for transatlantic data transfers. Following the publication of the draft text of the Privacy Shield adequacy decision and related annexes in February 2016, amendments were made to take into account concerns of the Article 29 Working Party, the collective group of EU data protection authorities (“DPAs”), and the European Data Protection Supervisor, both of whom had criticised perceived inconsistencies and a general lack of clarity in the draft documents.
The new Privacy Shield framework seeks to protect the fundamental rights of individuals whose data is transferred to the US and to provide legal certainty for businesses. The Shield imposes greater obligations on US companies who self-certify under the scheme and provides for stronger monitoring of and enforcement against participating companies by US authorities. In addition, EU concerns over US surveillance have been addressed through commitments and written assurances made by US authorities and by reforms in US surveillance laws.
What will the Privacy Shield do?
The Privacy Shield seeks to be an effective and practical tool for businesses, meeting the requirements set down by the Court of Justice of the European Union (“CJEU”) in the case of Schrems, which invalidated Safe Harbor.
Some of the key features of the Privacy Shield are as follows:
- Obligations on Companies: The Shield imposes strong obligations on companies which transfer EU citizens’ data to the US. In particular, the Shield provides for regular reviews of companies’ data protection practices, stricter conditions for the onward transfer of personal data and restrictions around data retention.
- Government Oversight: The Shield provides for increased oversight and enforcement by US authorities including the Federal Trade Commission (“FTC”), the Department of Commerce and the Department of Transportation.
- Individual Redress: The Shield offers individuals a number of redress mechanisms, which are discussed further below.
- Ombudsperson: Redress in the area of national security will be available to individuals through the new Ombudsperson, who will be independent from the US intelligence community.
How will the Privacy Shield Work in Practice?
The Privacy Shield is a self-certification scheme. Organisations must register to be on the Privacy Shield list and self-certify by making a submission to the US Department of Commerce that they meet the data protection standards set out under the Privacy Shield. These submissions must be made annually.
The Department of Commerce will maintain an updated list of the certified organisations on its website. In particular, it will monitor and verify that companies’ privacy policies are in line with the principles set down under the Shield and that they are available to the public. Organisations are required to undertake follow-up procedures to verify their compliance with the principles, either through self-assessment or external compliance reviews.
What redress mechanisms are available to individuals?
In order to strengthen the protection of EU citizens, the Privacy Shield scheme creates a series of redress mechanisms for individuals, including:
- Complaint to US self-certified company: EU data subjects are encouraged, in the first instance, to contact US companies directly. The company must respond to the individual within 45 days.
- Complaints to ‘home’ DPA: An individual may complain to their home, i.e. local, DPA, who may then refer the complaint to the Department of Commerce or the FTC, if appropriate.
- Federal Trade Commission: The FTC, which has wide enforcement powers, will also accept complaints directly from individuals.
- Arbitration: This is a “last resort” resolution which allows an EU data subject to request binding arbitration by the Privacy Shield Panel, a panel composed from a pool of at least 20 arbitrators chosen by the Department of Commerce and the European Commission based on their independence, integrity and experience in US privacy and EU data protection law.
In our next blog post, we will examine the Privacy Shield in further detail. In particular, we will focus on practical guidance for companies wishing to avail of the Shield.
For more information, contact a member of our Technology team.
The content of this article is provided for information purposes only and does not constitute legal or other advice.