The European Court of Justice ruled to invalidate the E.U.-U.S. Privacy Shield on Thursday, July 16, 2020.
The decision is a result of a recent campaign by European privacy-rights activists to limit personal information from being transferred to countries with looser protections than in the EU – the U.S. lack of adhering to the European standards being one of them. The trans-Atlantic agreement, implemented in July of 2016, enabled companies to move digital information freely between the European Union and the United States.
Although it is not immediately clear when and how this new ruling will go into full effect as there will likely be a grace period offered to comply, it is necessary for EU and UK based businesses to immediately start identifying the nature and volume of the personal data they currently transfer to the U.S. on the basis of the EU-US Privacy Shield and then look to alternative arrangements to enable their trans-Atlantic data transfers to continue, such as using Standard Contractual Clauses (“SCCs”). These clauses, which were composed by the European Commission, were deemed by the court to be a sufficient alternative because not only do they lay out the responsibilities concerning safe data transfer, but they also allow EU regulators to intervene in individual instances where they suspect the destination country won’t adequately protect Europeans’ data. While tech giant Microsoft released a statement immediately after the ruling that they have already been using SCCs for data transfer, it is unclear how this tactic will be applicable for smaller businesses.
What is for certain, however, is that not only will EU and UK based businesses need to drastically change the way they share data with U.S. companies, but this invalidation is sure to have a huge impact on the over 5,000 U.S. based companies, including big tech companies like Facebook and Google, that currently use the system. But do not worry – few expect a sudden disruption for moving data between the two continents, and there are talks that American and European officials will now try to negotiate a new deal for transferring digital information. We will keep you posted on any and all new updates on this matter.
Author: Jennifer Kleinman and Daniel Koburger
First Published: 07/17/2020