Is it Practicable To Transfer Personal Data From the EEA Without An Adequacy Finding?

Dominic ConlonPartner and Head of Corporate, Leman Solicitors

From 1 January 2021, any EEA-based organisation wishing to transfer personal data from the EEA to any non-EEA country will need to be able to show that the processing will receive the same protection as under EU’s General Data Protection Regulation (GDPR). Many firms might consider this to be impracticable from a cost and administration standpoint, particularly in light of certain new recommendations on which the EU data protection authorities are now consulting. These are briefly explained below. This will affect “thousands” of firms and could prove severely disruptive for cross-border services ranging from payroll and benefits, to e-commerce marketplaces to social media services. If you need assistance in Ireland/EEA please let us know.

Options for transferring personal data from the EEA  

An EEA-based business can only transfer personal data to a non-EEA country, if one of three situations apply: 

  1. the European Commission has ruled that country’s personal data protection laws to be ‘adequate’;
  2. there are appropriate safeguards or ‘transfer tools’ in place to protect the rights of data subjects (including ‘Standard Contractual Clauses’); or
  3. certain ‘derogations’ or exemptions apply to allow the processing as of right.  

No adequacy decision for the UK in the near term

Like the US, the UK as a key example of a non-EEA country without an adequacy finding. For many reasons it is best to assume there will not be an EU adequacy decision relating to the UK’s data protection regime by 1 January 2021, as that process is long and complex, and there are some features of the UK regime which present significant problems, including: 

  • the UK’s use of mass surveillance techniques;
  • intelligence sharing with other countries such as the US;
  • the questionable validity of the UK immigration control exemption;
  • the lack of a ‘fundamental right’ to data protection under UK law; 
  • UK adequacy findings for other countries’ personal data regimes that the EU does not deem adequate; and 
  • the potential for future divergence from EU data protection standards if the UK GDPR is further modified post Brexit. 

The Problem with Standard Contractual Clauses

As a result of the decision of the European Court of Justice in the case against Facebook (‘Schrems II’), a data exporter relying on Standard Contractual Clauses (or other contractual ‘transfer tools’) must first verify that the law of the third country ensures a level of protection for personal data that is equivalent to GDPR. If that level is considered sub-standard, the data exporter may be able to use certain measures to plug the gaps, but this process would need to be carefully documented and is the subject of the main recommendations from the European data protection authorities, discussed below.  

The extent to which you can usefully rely on the derogations, either before considering the other appropriate safeguards or ‘transfer tools’, or if those other options are not available, is also somewhat doubtful, as I will explain.

Assessing whether personal data transfers outside the EEA are appropriate 

To help data exporters evaluate whether the use of transfer tools will be appropriate, the forum of all the EEA data protection authorities (the European Data Protection Board or ‘EDPB’), is now consulting on recommendations for: 

The EDPB’s first set of recommendations contain steps outlined below. The European Essential Guarantees enable data exporters to determine if the rights for public authorities to access personal data for surveillance purposes can be regarded as a justifiable interference with the rights to privacy and the protection of personal data. Basically:

A. Processing should be based on clear, precise and accessible rules;

B. Necessity and proportionality with regard to the legitimate objectives pursued need to  be demonstrated;

C. An independent oversight mechanism should exist;

D. Effective remedies need to be available to the individual.

The steps involved in assessing the appropriateness of transfer tools must be documented. These involve:

  • mapping the proposed transfers;
  • choosing the basis for transfer (adequacy decision, ‘transfer tool’ or derogation);
  • unless an adequacy decision has been made by the EU, working with the data importer to assess whether the law or practice of the third country may impinge on  the  effectiveness  of  the  appropriate  safeguards  of the  transfer tools you are relying  on,  in  the context  of  your  specific  transfer (legislation, especially where ambiguous or not  publicly  available; and/or certain reputable third party findings such as those in Annex 3),  and not rely  on  subjective factors such as the perceived likelihood of public authorities’ access to your data in a manner not in line with EU standards;
  • considering whether any supplementary tools might avoid any problems with the third country’s laws (various use-cases and suggested tools are explained in the Annex 2 to the recommendations);
  • taking any formal steps to implement the relevant tool;
  • re-evaluate the assessment periodically or on certain triggers, such as changes in the law (which you should also oblige the data importer to keep you informed about).

Data exporters must thoroughly record their assessment process in the context of the transfer, the third country law and the transfer tool on which they propose to rely. But it may not be possible to implement sufficient supplementary measures in every case, meaning the transfer must not proceed. As the Commission points out, there are “no quick fixes, nor a one-size-fits-all solution for all transfers.”

The problem with relying on ‘derogations’ 

The EDPB’s first set of recommendations state (at para 27) that “If your transfer can neither be legally based on an adequacy decision, nor on an Article 49 derogation, you need to continue with… ” assessing whether the proposed transfer tool is effective. However, that order of approach is not consistent with Article 49, which provides that:

1. In the absence of an adequacy decision pursuant to Article 45(3), or of appropriate safeguards pursuant to Article 46, including binding corporate rules, a transfer or a set of transfers of personal data to a third country or an international organisation shall take place only on one of the following conditions: 

(a) the data subject has explicitly consented to the proposed transfer, after having been informed of the possible risks of such transfers for the data subject due to the absence of an adequacy decision and appropriate safeguards;

(b) the transfer is necessary for the performance of a contract between the data subject and the controller or the implementation of pre-contractual measures taken at the data subject’s request; 

(c) the transfer is necessary for the conclusion or performance of a contract concluded in the interest of the data subject between the controller and another natural or legal person;

…

Where a transfer could not be based on a provision in Article 45 or 46, including the provisions on binding corporate rules, and none of the derogations for a specific situation referred to in the first subparagraph of this paragraph is applicable, a transfer to a third country or an international organisation may take place only if the transfer is not repetitive, concerns only a limited number of data subjects, is necessary for the purposes of compelling legitimate interests pursued by the controller which are not overridden by the interests or rights and freedoms of the data subject, and the controller has assessed all the circumstances surrounding the data transfer and has on the basis of that assessment provided suitable safeguards with regard to the protection of personal data. The controller shall inform the supervisory authority of the transfer. The controller shall, in addition to providing the information referred to in Articles 13 and 14, inform the data subject of the transfer and on the compelling legitimate interests pursued.

In addition, the EDPB’s own guidance on article 49 itself points out (on pages 3-4) that: 

“Article 44 requires all provisions in Chapter V to be applied in such a way as to ensure that the level of protection of natural persons guaranteed by the GDPR is not undermined. This also implies that recourse to the derogations of Article 49 should never lead to a situation where fundamental rights might be breached…Hence, data exporters should first endeavor [explore?] possibilities to frame the transfer with one of the mechanisms included in Articles 45 [adequacy] and 46 [transfer tools] GDPR, and only in their absence use the derogations provided in Article 49 (1)” [but even then the use of the derogations would imply the need for an assessment of the third country’s personal data protection regime by virtue of article 44].

Accordingly, there seems to be no alternative to running through the steps to assess whether the relevant ‘transfer tools’ will work (with or without supplementary measures) in the context of the transfer and the third country’s law. Yet, as we’ve seen, many firms will likely find that process impracticable from a cost and administration standpoint, so transferring the personal data out of the EEA will not be an option.