31.07.2020 | KPMG Law Insights

Data transfer following the ECJ ruling of July 16, 2020 C-311/18 (“Schrems II”).

On July 16, 2020, the ECJ issued a ruling in the Schrems II case that has far-reaching consequences for international data transfers:

  • The EU – U.S. Privacy Shield is ineffective and can no longer be used for data transfer to the U.S.. There is no grace period.
  • While the EU Standard Contractual Clauses (“SCC”) continue to be effective, the contracting parties must examine whether there are legal regulations in the recipient country that restrict compliance with the SCC and whether, if necessary, an adequate level of data protection can be ensured through supplementary regulations. The same applies to already approved Binding Corporate Rules (“BCR”).
  • The supervisory authorities have the right to prohibit data transfers also on the basis of the SCC, insofar as the regulations made with the SCC are not (or cannot be) complied with in individual cases.

The European Data Protection Board “EDPD/EDSA” announces in its FAQs, as of July 23, 2020, that it will provide guidance on the complementary measures for SCC. These could be legal, technical or organizational measures. For the USA, according to the ECJ’s findings, only measures that technically prevent access by the US authorities without a legality check in accordance with the principles of the GDPR or that give the data subjects the opportunity to seek effective legal protection in the USA should be considered.

Following the EDPD/EDSA, the following recommendation currently exists for dealing with data transfers to third countries:

  1. Data transfer to the U.S. on the basis of the EU-U.S. Privacy Shield will not continue. Check whether the data transfer can be switched to another legal basis, e.g. the SCC, or whether there is an exceptional circumstance pursuant to Art. 49 GDPR.
  2. When transferring data to the U.S. and other third countries based on SCCs, data recipients in the third countries must check whether they can comply with SCCs in their country and inform the data exporters in the EU. The same is true for BCR. All data exporters in the EU should therefore immediately write to their data recipients in third countries and ask for appropriate information. No more information needs to be obtained for the USA, as the ECJ ruling already contains all the information.
  3. If the data recipient in the third country declares that it cannot comply with the SCC or does not provide information, both (data exporter and data importer) must check whether the security gap can be closed by supplementary legal, technical or organizational measures and agree on these measures in an amendment agreement to the concluded SCC.
  4. If the data recipient in the third country cannot comply with the SCC, the security gap cannot be closed by supplementary measures and Art. 49 GDPR does not apply, the data must be moved to the EU. If this is not possible, the responsible supervisory authority must be informed.

We are happy to support you, e.g. with the

  • Analysis of your service relationships with data recipients in third countries with regard to any need for adaptation
  • additions to the SCC required as a result
  • Analysis of the legal situation in third countries, as well as for
  • Responding to requests or orders from data protection authorities

We will provide you with further information on the implementation of the ECJ ruling “Schrems II” in third countries, in particular in the USA, in our 2 webinar series, in German together with the experts from KPMG AG Wirtschaftsprüfungsgesellschaft and in English together with our lawyer colleagues from Nelson Mullins Riley & Scarborough LLP in the USA, as well as with our lawyer colleagues from other countries, planned for the end of August 2020.

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Dr. Konstantin von Busekist

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Head of Global Compliance Practice
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