Safe Harbor

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A number of jurisdictions around the world follow the lead from Europe in relation to data protection and impose similar restrictions on the export of personal data unless there is an “adequate level” of protection offered in the recipient jurisdiction. The EU Commission’s “US Safe Harbor” decision had permitted the transfer of personal data between Europe and the US by establishing that an adequate level of data protection was ensured by the EU-US Safe Harbor scheme.

It is being reported that the EU and the US have reached an agreement in principle on the revised cross-border data transfer framework, commonly referred to as Safe Harbor 2.0. Both sides expect further progress on the specifics in November of this year. Some of the thornier issues, however,regarding US surveillance activities, that are critical to addressing the concerns the ECJ raised in Schrems, are yet to be firmed up with verifiable compliance commitments.

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.