EU’s top court invalidates data-sharing pact with US

The European Court of Justice (ECJ) has invalidated an agreement that allows big tech companies to transfer data to the United States.

Thursday’s ruling against Privacy Shield could require regulators to vet any new transfers due to concerns that the US government can snoop on people’s data for national security reasons.

It will no longer simply be assumed that tech companies like Facebook will adequately protect the privacy of its European users’ data when it sends it to the US.

Rather, the EU and the US will likely have to find a new agreement that guarantees that Europeans’ data is afforded the same privacy protection in the US as it is in the EU, which has some of the toughest standards in the world.

The case began after former US National Security Agency contractor Edward Snowden revealed in 2013 that the US government was snooping on people’s online data and communications.

The revelations included detail on how Facebook gave US security agencies access to the personal data of Europeans.

The Schrems case

Austrian activist and law student Max Schrems that year filed a complaint against Facebook, which has its EU base in Ireland, arguing that personal data should not be sent to the US, as many companies do, because the data protection is not as strong as in Europe.

Though the legal case was triggered by concerns over Facebook in particular, it could have far-reaching implications for all tech companies that move large amounts of data over the internet if regulators find that US privacy protections are insufficient and block the transfers.

Things like email, flight and hotel reservations would not be affected.

Schrems said the ruling amounted to a victory for privacy.

“The US will have to engage in serious surveillance reform to get back to a ‘privileged’ status for US companies,” he wrote on Twitter.

Companies use legal mechanisms called standard contractual clauses that force businesses to abide by strict EU privacy standards when transferring messages, photos and other information.

Companies like Facebook routinely move such data among its servers around the world, and the clauses – stock terms and conditions – are used to ensure the EU rules are maintained when data leaves the bloc.

‘Legal uncertainty’

The ECJ ruled on Thursday that those clauses are still valid. However, it declared invalid the umbrella agreement between the US and the EU on data transfers, called Privacy Shield. 

The court said in its rulings that there are “limitations on the protection of personal data arising from the domestic law of the United States on the access and use by US public authorities of such data transferred from the European Union to that third country”.

Alexandre Roure, a senior manager at Computer and Communications Industry Association, said the decision “creates legal uncertainty for the thousands of large and small companies on both sides of the Atlantic that rely on Privacy Shield for their daily commercial data transfers”. 

“We trust that EU and US decision-makers will swiftly develop a sustainable solution, in line with EU law, to ensure the continuation of data flows which underpins the transatlantic economy,” he said.