International data transfers
An international transfers breach has resulted in a record GDPR fine for Meta. Ibrahim Hasan explains why.
Personal data transfers between the EU and US is an ongoing legal and political saga. The latest development is yesterday’s largest ever GDPR fine of €1.2bn (£1bn) issued by Ireland’s Data Protection Commission (DPC) to Facebook’s owner, Meta Ireland. The DPC ruled that Meta infringed Article 46 of the EU GDPR in the way it transferred personal data of its users from Europe to the US.
The Law
Chapter 5 of the EU GDPR mirrors the international transfer arrangements of the UK GDPR. There is a general prohibition on organisations transferring personal data to a country outside the EU, unless they ensure that data subjects’ rights are protected. This means that, if there is no adequacy decision in respect of the receiving country, one of the safeguards set out in Article 46 must be built into the arrangement. These include standard contractual clauses (SCCs) and binding corporate rules.
The former need to be included in a contract between the parties (data exporter and importer) and impose certain data protection obligations on both.
The problem with US transfers
In 2020, in a case commonly known as “Schrems II, the European Court of Justice (ECJ) concluded that organisations that transfer personal data to the US can no longer rely on the Privacy Shield Framework as a legal mechanism to ensure GDPR compliance. They must consider using the Article 49 derogations or SCCs. If using the latter, whether for transfers to the US or other countries, the ECJ placed the onus on the data exporters to make a complex assessment about the recipient country’s data protection and surveillance legislation, and to put in place “additional supplementary measures” to those included in the SCCs. The problem with the US is that it has stringent surveillance laws which give law enforcement agencies access to personal data without adequate safeguards (according to the ECJ in Schrems). Therefore any additional measures must address this possibility and build in safeguards to protect data subjects.
In the light of the above, the new EU SCCs were published in June 2021. The European Data Protection Board has also published its guidance on the aforementioned required assessment entitled “Recommendations 01/2020 on measures that supplement transfer tools to ensure compliance with the EU level of protection of personal data”. Meta’s use of the new EU SCC’s and its “additional supplementary measures” were the focus of the DPC’s attention when issuing its decision.
The decision
The DPC ruled that Meta infringed Article 46(1) of GDPR when it continued to transfer personal data from the EU/EEA to the US following the ECJ’s ruling in Schrems II. It found that the measures used by Meta did not address the risks to the fundamental rights and freedoms of data subjects that were identified in Schrems; namely the risk of access to the data by US law enforcement.
The DPC ruled that Meta should:
- Suspend any future transfer of personal data to the US within five months of the date of the DPC’s decision;
- Pay an administrative fine of €1.2 billion; and,
- Bring its processing operations in line with the requirements of GDPR, within five months of the date of the DPC’s decision, by ceasing the unlawful processing, including storage, in the US of personal data of EEA users transferred in violation of GDPR.
Meta has said that it will appeal the decision and seek a stay of the ruling, before the Irish courts. Its President of Global Affairs, Sir Nick Clegg, said: “We are therefore disappointed to have been singled out when using the same legal mechanism as thousands of other companies looking to provide services in Europe.
“This decision is flawed, unjustified and sets a dangerous precedent for the countless other companies transferring data between the EU and US.”
The future of US transfers
The Information Commissioner’s Office told the BBC that the decision “does not apply in the UK” but said it had “noted the decision and will review the details in due course”. The wider legal ramifications on data transfers from the UK to the US can’t be ignored.
Personal data transfers are also a live issue for most UK Data Controllers including public authorities. Whether using an online meeting app, cloud storage solution or a simple text messaging service, all often involve a transfer of personal data to the US. A new UK international data transfer agreement (IDTA) came into force on 21st March 2022 but it still requires a Transfer Risk Assessment as well as supplementary measures where privacy risks are identified.
On 25th March 2022, the European Commission and the United States announced that they have agreed in principle on a new Trans-Atlantic Data Privacy Framework. The final agreement is expected to be in place sometime this summer 2023 and will replace the Privacy Shield Framework. It is expected that the UK Government will strike a similar deal once the EU/US one is finalised. However both are likely to be challenged in the courts.
The Meta fine is one of this year’s major GDPR developments nicely timed; within a few days of the 5th anniversary of GDPR. All organisations, whether in the UK or EU, need to carefully consider their data transfers mechanisms and ensure that they comply with Chapter 5 of GDPR in the light of the DPC’s ruling. A “wait and see’ approach is no longer an option.
Ibrahim Hasan is a solicitor and director of Act Now Training.
The Meta fine will be discussed in detail on Act Now’s forthcoming International Transfers workshop. For those who want a 1 hour summary of the UK International Transfer regime Act Now recommends its webinar.
