European Parliament amps up pressure on EU-US data flows and GDPR enforcement

European Union lawmakers are facing further pressure to step in and do something about lackadaisical enforcement of the bloc’s flagship data protection regime after the European Parliament voted yesterday to back a call urging the Commission to start an infringement proceeding against Ireland’s Data Protection Commission (DPC) for not “properly enforcing” the regulation.

The Commission and the DPC have been contacted for comment on the parliament’s call.

Last summer the Commission’s own two-year review of the General Data Protection Regulation (GDPR) highlighted a lack of uniformly vigorous enforcement — but commissioners were keener to point out the positives, lauding the regulation as a “global reference point”.

But it’s now nearly three years since the regulation begun being applied and criticism over weak enforcement is getting harder for the EU’s executive to ignore.

The parliament’s resolution — which, while non-legally binding, fires a strong political message across the Commission’s bow — singles out the DPC for specific criticism given its outsized role in enforcement of the General Data Protection Regulation (GDPR). It’s the lead supervisory authority for complaints brought against the many big tech companies which choose to site their regional headquarters in the country (on account of its corporate-friendly tax system).

The text of the resolution expresses “deep concern” over the DPC’s failure to reach a decision on a number of complaints against breaches of the GDPR filed the day it came into application, on May 25, 2018 — including against Facebook and Google — and criticises the Irish data watchdog for interpreting “without delay” in Article 60(3) of the GDPR “contrary to the legislators’ intention – as longer than a matter of months”, as they put it.

To date the DPC has only reached a final decision on one cross-border GDPR case — against Twitter.

The parliament also says it’s “concerned about the lack of tech specialists working for the DPC and their use of outdated systems” (which Brave also flagged last year) — as well as criticizing the watchdog’s handling of a complaint originally brought by privacy campaigner Max Schrems years before the GDPR came into application, which relates to the clash between EU privacy rights and U.S. surveillance laws, and which still hasn’t resulted in a decision.

The DPC’s approach to handling Schrems’ 2013 complaint led to a 2018 referral to the CJEU — which in turn led to the landmark Schrems II judgement last summer invalidating the flagship EU-U.S. data transfer arrangement, Privacy Shield.

That ruling did not outlaw alternative data transfer mechanisms but made it clear that EU DPAs have an obligation to step in and suspend data transfers if Europeans’ information is being taken to a third country that does not have essentially equivalent protections to those they have under EU law — thereby putting the ball back in the DPC’s court on the Schrems complaint.

The Irish regulator then sent a preliminary order to Facebook to suspend its data transfers and the tech giant responded by filing for a judicial review of the DPC’s processes. However, the Irish High Court rejected Facebook’s petition last week. And a stay on the DPC’s investigation was lifted yesterday — so the DPC’s process of reaching a decision on the Facebook data flows complaint has started moving again.

A final decision could still take several months more, though — as we’ve reported before — as the DPC’s draft decision will also need to be put to the other EU DPAs for review and the chance to object.

The parliament’s resolution states that it “is worried that supervisory authorities have not taken proactive steps under Article 61 and 66 of the GDPR to force the DPC to comply with its obligations under the GDPR”, and — in more general remarks on the enforcement of GDPR around international data transfers — it states that it:

Is concerned about the insufficient level of enforcement of the GDPR, particularly in the area of international transfers; expresses concerns at the lack of prioritisation and overall scrutiny by national supervisory authorities with regard to personal data transfers to third countries, despite the significant CJEU case law developments over the past five years; deplores the absence of meaningful decisions and corrective measures in this regard, and urges the EDPB [European Data Protection Board] and national supervisory authorities to include personal data transfers as part of their audit, compliance and enforcement strategies; points out that harmonised binding administrative procedures on the representation of data subjects and admissibility are needed to provide legal certainty and deal with crossborder complaints;

The knotty, multi-year saga of Schrems’ Facebook data-flows complaint, as played out via the procedural twists of the DPC and Facebook’s lawyers’ delaying tactics, illustrates the multi-layered legal, political and commercial complexities bound up with data flows out of the EU (post-Snowden’s 2013 revelations of U.S. mass surveillance programs) — not to mention the staggering challenge for EU data subjects to actually exercise the rights they have on paper. But these intersecting issues around international data flows do seem to be finally coming to a head, in the wake of the Schrems II CJEU ruling.

The clock is now ticking for the issuing of major data suspension orders by EU data protection agencies, with Facebook’s business first in the firing line.

Other U.S.-based services that are — similarly — subject to the U.S.’ FISA regime (and also move EU users data over the pond for processing; and whose businesses are such they cannot shield user data via “zero access” encryption architecture) are equally at risk of receiving an order to shut down their EU-U.S. data-pipes. Or else having to shift data processing for these users inside the EU.

U.S.-based services aren’t the only ones facing increasing legal uncertainty, either.

The U.K., post-Brexit, is also classed as a third country (in EU law terms). And in a separate resolution today the parliament adopted a text on the U.K. adequacy agreement, granted earlier this year by the Commission, which raises objections to the arrangement — including by flagging a lack of GDPR enforcement in the U.K. as problematic.

On that front the parliament highlights how adtech complaints filed with the ICO have failed to yield a decision. (It writes that it’s concerned “non-enforcement is a structural problem” in the U.K. — which it suggests has left “a large number of data protection law breaches… [un]remedied”.)

It also calls out the U.K.’s surveillance regime, questioning its compatibility with the CJEU’s requirements for essential equivalence — while also raising concerns about the risk that the U.K. could undermine protections on EU citizens data via onward transfers to jurisdictions the EU does not have an adequacy agreement with, among other objections.

The Commission put a four-year lifespan on the U.K.’s adequacy deal — meaning there will be another major review ahead of any continuation of the arrangement in 2025.

It’s a far cry from the “hands-off” 15 years the EU-U.S. “Safe Harbor” agreement stood for, before a Schrems challenge finally led to the CJEU striking it down back in 2015. So the takeaway here is that data deals that allow for people’s information to leave Europe aren’t going to be allowed to stand unchecked for years; close scrutiny and legal accountability are now firmly up front — and will remain in the frame going forward.

The global nature of the internet and the ease with which data can digitally flow across borders of course brings huge benefits for businesses — but the resulting interplay between different legal regimes is leading to increasing levels of legal uncertainty for companies seeking to take people’s data across borders.

In the EU’s case, the issue is that data protection is regulated within the bloc and these laws require that protection stays with people’s information, no matter where it goes. So if the data flows to countries that do not offer the same safeguards — be that the U.S. or indeed China or India (or even the U.K.) — then that risk is that it can’t, legally, be taken there.

How to resolve this clash, between data protection laws based on individual privacy rights and data access mandates driven by national security priorities, has no easy answers.

For the U.S., and for the transatlantic data flows between the EU and the U.S., the Commission has warned there will be no quick fix this time — as happened when it slapped a sticking plaster atop the invalidated Safe Harbor, hailing a new “Privacy Shield” regime; only for the CJEU to blast that out of the water for much the same reasons a few years later. (The parliament resolution is particularly withering in its assessment of the Commission’s historic missteps there.)

For a fix to stick, major reform of U.S. surveillance law is going to be needed. And the Commission appears to have accepted that’s not going to come overnight, so it seems to be trying to brace businesses for turbulence…

The parliament’s resolution on Schrems II also makes it clear that it expects DPAs to step in and cut off risky data flows — with MEPs writing that “if no arrangement with the U.S. is swiftly found which guarantees an essentially equivalent and therefore adequate level of protection to that provided by the GDPR and the Charter, that these transfers will be suspended until the situation is resolved”.

So if DPAs fail to do this — and if Ireland keeps dragging its feet on closing out the Schrems complaint — they should expect more resolutions to be blasted at them from the parliament.

MEPs emphasize the need for any future EU-U.S. data transfer agreement “to address the problems identified by the Court ruling in a sustainable manner” — pointing out that “no contract between companies can provide protection from indiscriminate access by intelligence authorities to the content of electronic communications, nor can any contract between companies provide sufficient legal remedies against mass surveillance”.

“This requires a reform of US surveillance laws and practices with a view to ensuring that access of US security authorities to data transferred from the EU is limited to what is necessary and proportionate, and that European data subjects have access to effective judicial redress before US courts,” the parliament adds.

It’s still true that businesses may be able to legally move EU personal data out of the bloc. Even, potentially, to the U.S. — depending on the type of business; the data itself; and additional safeguards that could be applied.

However, for data-mining companies like Facebook — which are subject to FISA and whose businesses rely on accessing people’s data — then achieving essential equivalence with EU privacy protections looks, well, essentially impossible.

And while the parliament hasn’t made an explicit call in the resolution for Facebook’s EU data flows to be cut off that is the clear implication of it urging infringement proceedings against the DPC (and deploring “the absence of meaningful decisions and corrective measures” in the area of international transfers).

The parliament also states in the resolution that it wants to see “solid mechanisms compliant with the CJEU judgement” set out — for the benefit of businesses with the chance to legally move data out of the EU — saying, for example, that the Commission’s proposal for a template for Standard Contractual Clauses (SCCs) should “duly take into account all the relevant recommendations of the EDPB“.

It also says it supports the creation of a tool box of supplementary measures for such businesses to choose from — in areas like security and data protection certification; encryption safeguards; and pseudonymisation — so long as the measures included are accepted by regulators.

It also wants to see publicly available resources on the relevant legislation of the EU’s main trading partners to help businesses that have the possibility of being able to legally move data out of the bloc get guidance to help them do so with compliance.

The overarching message here is that businesses should buckle up for disruption of cross-border data flows — and tool up for compliance, where possible.

In another segment of the resolution, for example, the parliament calls on the Commission to “analyse the situation of cloud providers falling under section 702 of the FISA who transfers data using SCCs” — going on to suggest that support for European alternatives to U.S. cloud providers may be needed to plug “gaps in the protection of data of European citizens transferred to the United States” and — in a more blatant push for digital sovereignty — “reduce the dependence of the Union in storage capacities vis-à-vis third countries and to strengthen the Union’s strategic autonomy in terms of data management and protection”.