1) Tentative Agreement on New “Privacy Shield”
Framework for Transatlantic Data Flows
Reached
By Michael K. Chung, Chanley T. Howell, James R. Kalyvas, Sophie Lignier, Steven M.
Millendorf, and Aaron K. Tantleff
03 February 2016
Legal News: Privacy, Security & Information Management, Legal News: Technology
Transactions & Outsourcing
Quick Read
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The United States and the European Commission reached a tentative agreement on a new
framework for the transfer of personal data
This issue impacts all U.S. businesses that transfer personal data between the EU and the
United States
The new framework is called “EU-U.S. Privacy Shield” and replaces the U.S.-EU Safe
Harbor
The text of the tentative agreement is not yet available
The Privacy Shield must still be approved by the Article 29 Working Party
Redress to EU citizens against U.S. companies is a prominent feature of the Privacy Shield
Updates from the EU are expected this week
The Standard Contractual Clauses and the Binding Corporate Rules are still the only EU
approved methods of data transfers at this time
Based on statements by the Article 29 Working Party today, Companies relying solely on
the Safe Harbor as a means of complying with the EU Data Directive remain exposed in the
same way they were before this tentative agreement
On February 2, the United States and the European Commission reached tentative agreement on
a new framework for the transfer of personal data between the European Union and the United
States called the EU-U.S. Privacy Shield. The new framework replaces the U.S.-EU Safe Harbor
framework, which was invalidated by the Court of Justice of the EU (Court of Justice) in October
2015, resulting in EU Data Protection Directive compliance questions for U.S. businesses that
transfer personal data between the EU and the United States.
EU Justice Commissioner Vera Jourova stated that she is confident that the new framework will
withstand review by the Court of Justice because it provides “clear safeguards and transparent
obligations on U.S. access to data” and the Court of Justice’s ruling was used as a requirements
roadmap during the negotiations. Although the text of the Privacy Shield has not yet been released,
some of the requirements were identified by the U.S. Department of Commerce and the European
Commission. The tentative agreement on the Privacy Shield is currently pending review and
approval by the Article 29 Working Party, composed of representatives from the national data
2) protection authorities of the 28 EU member states. The Privacy Shield will require:
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A published commitment from companies who agree to the Privacy Shield to adopt robust
obligations on how personal data is collected and processed, and how individual rights are
guaranteed to be monitored by the U.S. Department of Commerce and enforced by the U.S.
Federal Trade Commission
Binding assurances from the U.S. that access to personal data by public authorities for law
enforcement and national security purposes will be subject to clear limitations, safeguards,
and oversight mechanisms that prohibit indiscriminate mass surveillance of European
citizens
Annual joint reviews between the European Commission and the U.S. Department of
Commerce, which will include the issue of limited and proportionate national security access
and allow for the input of intelligence experts from the U.S. and European Data Protection
Authorities
The creation of a dedicated U.S. Ombudsperson within the State Department and outside the
intelligence community, who will provide independent oversight and other functions over the
intelligence community, and who will follow up within the United States on referrals from the
European Data Protection Authorities
Multiple channels for redress by EU citizens directly against U.S. companies, including:
r A process to complain to companies, and a deadline for companies to respond to such
complaints
r A way to escalate the complaint, at no cost to the EU citizen, to an Alternative Dispute
Resolution process
r European Data Protection Authorities can also refer complaints directly to the U.S.
Department of Commerce and the Federal Trade Commission
r For complaints regarding access by national intelligence authorities, referral to the
Ombudsperson is provided as an arbitration method of last resort
Much like the original U.S.-EU Safe Harbor framework, the U.S. Department of Commerce will
monitor the published commitments to the above principles, and the U.S. Federal Trade
Commission will enforce companies’ adherence to these commitments. As was the case under the
Safe Harbor, companies that transfer human resources data may not rely solely on the Privacy
Shield, and must additionally comply with decisions from individual European Data Protection
Authorities.
Next Steps
Vice-President Ansip and Commissioner Jourova have been mandated to draft a formal
“adequacy decision” in the coming weeks. Following review of the draft decision by the Article 29
Working Party, the EU College of Commissioners — the European Commission’s political
leadership — may then adopt the decision. At the same time, the United States will “make the
necessary preparations to put in place the new framework,” including details on how it will monitor
commitments and implement the new Ombudsperson role. It is estimated that the new framework
will be in place for use by organizations in the United States in three months.
It is unclear whether the adequacy decision will address the alternative mechanisms governing the
transfer of data between the EU and the United States, such as whether the binding corporate rules
and model contracts clauses are valid in light of the Court of Justice’s ruling that invalidated Safe
Harbor, and whether, in light of the new Privacy Shield, such alternative mechanisms are valid.
It is expected that Privacy Shield will be endorsed by the Article 29 Working Party; however, the
Privacy Shield is not universally endorsed.
Impact to Business
3) The Article 29 Working Party set a deadline of January 31, 2016, to arrive at a new agreement with
the United States before the European Data Protection Authorities would begin enforcement
actions. The Article 29 Working Party stated today that it does not acknowledge validity of transfers
made under the invalidated Safe Harbor and that, prior to its approval of the Privacy Shield, the
European Data Protection Authorities will continue to evaluate cases and complaints regarding
data transfers to the U.S. on a case by case basis.
While the new agreement faces additional hurdles, such as approval by the EU member privacy
regulators and the possibility of legal challenges from individuals and privacy advocates, this
significant development provides a welcomed path forward for finalizing requirements for crossborder data transfers from the EU to the United States.
Foley will continue to closely monitor these developments and will provide an analysis of the
Privacy Shield text when it is released, as well as recommendations for the implementation of new
requirements and management of new risks.
Related Materials
Foley’s whitepaper, “Taking Control of Cybersecurity,” provides a practical guide for
organizations to review their existing information security practices and get recommendations on
effectively managing information security risk.
Click here to view the EU-U.S. Privacy Shield fact sheet from the Department of Commerce.
Click here to view the Article 29 Working Party press release.
James Kalyvas
Partner
Los Angeles, California
213.972.4542
jkalyvas@foley.com
Chanley Howell
Partner
Jacksonville, Florida
904.359.8745
chowell@foley.com
Aaron Tantleff
Partner
Chicago, Illinois
312.832.4367
atantleff@foley.com
Sophie Lignier
Of Counsel
Brussels, Belgium
322.787.9700
Steve Millendorf
Associate
San Diego, California
4) 858.847.6737
smillendorf@foley.com
Michael Chung
Associate
Los Angeles, California
213.972.4601
mchung@foley.com