Photo of Jay Modrall (BE)

On December 15, the Civil Liberties Committee (LIBE) of the European Parliament issued a press release announcing a provisional political agreement between the European Parliament and Council negotiators on the texts of both the General Data Protection Regulation and the Police & Judicial Cooperation Data Protection Directive.  Formal approval by the Council is expected shortly and by the European Parliament in early 2016, after which the legislation will be published in the Official Journal.  The new provisions will apply two years later, in the first quarter of 2018.

On December 7, 2015, the Council of the European Union (the Council) reached an informal agreement with the European Parliament on a new EU directive on network and information security (NISD).

The agreement marks the conclusion of two years of work, since the European Commission (the Commission) and the High Representative of the European Union for Foreign Affairs and Security Policy published a strategy for ‘An Open, Safe and Secure Cyberspace’ and proposed a directive in 2013. Once adopted, likely in early 2016, EU Member States will have 21 months to adopt the necessary national provisions to comply with the NISD.

This week, the Court of Justice of the European Union (“CJEU”) ruled that the EU-US Safe Harbor Decision is invalid in Case C-362/14 (the “Schrems” case).  This followed a similar opinion from its Advocate General, which also sets out the facts of the case.

The decision will impact businesses that rely on the EU-US Safe Harbor to legitimize their storage in, or access from, the US of personal data that is subject to EU data protection rules. It could affect cloud service providers, companies that use cloud services, intragroup shared services and any other export flows to the US that rely on Safe Harbor for data transfer.

In this post we look at what the CJEU decided and on what grounds, and what affected businesses should do next.

As we have written extensively, the European Court of Justice’s (ECJ’s) ruling in the Schrems case on October 6, 2015 may effectively invalidate the US-EU Safe Harbor framework. While we believe that the Advocate General’s rationale for the proposal is weak, organizations that rely on the Safe Harbor are anxious about the consequences such a decision could have on their operations, and want to make appropriate mitigation plans.

The European Court of Justice (ECJ) is expected to rule on Case C-362/14 (the “Schrems” case) on October 6, 2015.  In deciding whether to reject or adopt its Advocate General’s recommendation to invalidate the US-EU Safe Harbor, the ECJ finds itself between the proverbial rock and a hard place. Rejecting the Safe Harbor would lead to uncertainty in the ongoing negotiations to update the Safe Harbor framework, and raise questions about the interpretation of the proposed General Data Protection Regulation, which is currently being finalized in trialogue negotiations among the EU’s Council, Parliament and Commission.  If the ECJ chooses not to take the bait – whether on substantive or procedural ground — and to preserve the Safe Harbor status quo, that decision may actually strengthen the Safe Harbor by intimating that the ECJ believes the Safe Harbor to be valid in its current form, and significantly weaken the position of certain DPAs and other European regulators and legislators who have been assailing the framework over the years.  

Setting aside the practicalities of the decision and its politics, however, there appear to be strong legal grounds for the ECJ not to follow the Advocate General’s recommendation to declare the Safe Harbor invalid.  Most importantly, the Advocate General’s recommendation went far beyond the questions the Irish High Court referred to the ECJ, and his grounds for recommending that the Safe Harbor be declared invalid are legally suspect.