MHC Tech Law: EU-US Privacy Shield is now open for business


18 Jul 20165 Shares

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In the first in a series on the EU-US Privacy Shield, Mason Hayes & Curran provides an overview of the new framework.

On 12 July 2016, the European Commission adopted the replacement for the EU-US Safe Harbour scheme, the so-called Privacy Shield. This is the new, EU-approved mechanism for the transatlantic transfer of personal data, and will enter into force immediately, with companies able to self-certify with the US Department of Commerce, from 1 August 2016.

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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, each 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 Harbour.

Some of the key features of the Privacy Shield are as follows:

  • Obligations on companies: The Shield imposes strong obligations on companies that 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 Privacy Shield work?

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.
  • Alternative dispute resolution (ADR): Individuals can also complain, free of charge, to the independent ADR body, either in the US or in the EU, that has been designated by an organisation to investigate and resolve individual complaints. Companies must include the details of the independent resolution body in their privacy policy and provide a link to the website of that ADR provider.
  • Complaints to local DPA: An individual may complain to their local DPA, which 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 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.

The content of this article is provided for information purposes only and does not constitute legal or other advice. For more information on Privacy Shield, contact a member of MHC’s Technology team.

Tech Law is a weekly series brought to you by Irish law firm Mason Hayes & Curran, whose legal tech team advises the world’s top social media organisations and emerging start-ups. Check out www.mhc.ie for more.

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