On 10 July 2023, the European Commission adopted a new adequacy decision for the EU-US Data Privacy Framework (“DPF”).  This follows the previous invalidation of the Safe Harbor and Privacy Shield schemes under the Schrems cases.

The DPF was made possible after President Biden signed an Executive Order in October 2022 on ‘Enhancing Safeguards for United States Signals Intelligence Activities’, which addresses the concerns raised by the European Court of Justice (“ECJ”) in its Schrems II decision of July 2020. It provides for safeguards that limit access to data by US intelligence authorities to what is “necessary and proportionate” to protect national security and includes enhanced oversight by US intelligence services to ensure compliance with limitations on surveillance activities.

The decision finds that the US ensures an adequate level of protection – comparable to that of the EU – for personal data transferred from the EU to US companies that have self-certified under the new framework. On the basis of the new adequacy decision, personal data can be transferred from the EU to US companies that participate in the Framework, without the need for additional data protection safeguards such as standard contractual clauses (“SCCs”) and without the need to conduct a transfer impact assessment (“TIA”).

EU individuals will have access to redress if their data is wrongly handled by US companies. This includes free of charge independent dispute resolution mechanisms and an arbitration panel.

US companies can join the DPF by committing to comply with a detailed set of privacy obligations. This will include, for example, privacy principles such as purpose limitation, data minimisation and data retention, as well as specific obligations concerning data security and the sharing of data with third parties.

The safeguards put in place by the US will also facilitate transatlantic data flows more generally, since they also apply when data is transferred by using other tools, such as SCCs and binding corporate rules.

The Framework is administered and monitored by the US Department of Commerce. The US Federal Trade Commission will enforce US companies’ compliance.

What about the UK?

As a result of Brexit, the DPF only applies to personal data that is subject to EU GDPR and does not apply under UK GDPR. However, in June 2023, the UK and the US agreed to establish a UK Extension to the Data Privacy Framework, that will create a ‘data bridge’ between the two countries. Now that the DPF has been adopted, this should go live in the near future.

So, what happens next?

But will the new DPF survive any future challenge such as a possible Schrems III? Some have commented that the DPF is not materially different to the failed Privacy Shield. We think that a challenge is likely but shall have to wait and see.

But, at least for the time being, EU and US firms can take advantage of the DPF as a more straightforward transfer mechanism than implementing SCCs and without the need to conduct a TIA. For those that do, updates will be required to their privacy notices to reflect this. For organisations that continue to rely on SCCs, TIAs can take account of the beneficial impact of the changes to US surveillance laws.

Nigel Miller
nmiller@foxwilliams.com

On 2 February 2022 the UK Government’s Department for Culture, Media and Sport put before Parliament the International Data Transfer Agreement (IDTA), an addendum to the new EU standard contractual clauses (New EU SCCs) (Addendum) and various transitional provisions. The documents can be accessed here.

The IDTA has been created as the UK equivalent to the New EU SCCs for international data transfers. The EU commission modernised the EU SCCs on 4 June 2021. The New EU SCCs can be used by parties to incorporate standardised clauses into their contracts. These clauses deal with different sections, for instance for data controllers and processors. The IDTA is a standalone agreement that will apply to all transfers of personal data outside of the UK regardless of whether a party is a data controller or processor. Whilst there are a few exceptions, this includes data importers who are subject to the rules of the UK GDPR.

When the New EU SCCs were published on 4 June 2021, they didn’t apply in the UK due to Brexit. The IDTA and the Addendum have been created to replace the current SCCs used in the UK. The IDTA will take the binding effects of the European Court of Justice Schrems II[1] decision into account.

By addressing the necessary UK legal requirements, the Addendum will allow data exporters who continue to operate in the EU and UK to rely on the New EU SCCs without the need for an IDTA. The intent is to simplify the process for data exporters and will be supported by further guidance from the ICO on the risk protection steps that data exporters will need to undertake when transferring data.

The introduction of the IDTA and Addendum has been welcomed by the ICO, they have stated that “The IDTA and Addendum will also help to support the UK’s digital economy, by enabling the global flow of people’s personal data in order to deliver goods and services.”

The ICO will continue to develop the following guidance to provide help and support for businesses:

• Clause by clause guidance to the IDTA and Addendum.
• Guidance on how to use the IDTA.
• Guidance on transfer risk assessments.
• Further clarifications to the international transfers guidance.

The ICO have stated that the IDTA and the Addendum “are immediately of use to organisations transferring personal data outside of the UK“. The ICO hopes, subject to Parliamentary approval, that these changes will grant parties more confidence when entering into data transfer agreements. The ICO have confirmed that if approved, the IDTA, Addendum and transitional provisions will come into force on 21 March 2022.

[1] Previously EU to US transfer of data was permitted under the Privacy Shield Decision. This was ruled to be illegal and stricter requirement for data transfer were expected based on the SCCs.