Brussels, BELGIUM — The European Court of Justice (CJEU) issued a landmark ruling today that invalidates Privacy Shield, a key legal mechanism which thousands of companies use to transfer commercial data from the EU to the United States.
The CJEU ruled that the Privacy Shield decision does not comply with EU law. Among other things, the Court held U.S. law does not provide sufficient protection of EU personal data despite the public authorities access limitations provided in the Privacy Shield decision. The Court also takes issue with the Privacy Shield mechanism for EU individuals to seek judicial protection when their data is potentially accessed by U.S. public authorities.
Over 5,000 companies have signed up to the Privacy Shield framework. 70% of them are small and medium-sized businesses. Many U.S. subsidiaries of European companies have also joined.
The CJEU did confirm that Standard Contractual Clauses (“SCCs”), another popular mechanism, remain valid to transfer data outside Europe. However, Data Protection Authorities must suspend or prohibit data transfers under SCCs if the laws of the country of destination are such that the contractual safeguards cannot be met by either one of the parties.
The following can be attributed to Alexandre Roure, CCIA Public Policy Senior Manager:
“This decision creates legal uncertainty for the thousands of large and small companies on both sides of the Atlantic that rely on Privacy Shield for their daily commercial data transfers. We trust that EU and U.S. decision-makers will swiftly develop a sustainable solution, in line with EU law, to ensure the continuation of data flows which underpins the transatlantic economy. We hope enforcement authorities will grant Privacy Shield signatories time to migrate to alternative legal mechanisms.”
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