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EU-US Data Transfers After Schrems II: European Commission Publishes New Draft Standard Contractual Clauses

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**Update: On June 4, 2021, the European Commission formally adopted the new standard contractual clauses (“SCCs”) for international personal data transfers. Businesses will have a grace period of 18 months from the effective date of the European Commission’s decision to update all existing SCCs for transfers outside the European Union with the new SCCs.

In the meantime, businesses will be allowed to keep using the old SCCs for “new” data transfers over a transition period of three months from the effective date of the European Commission’s decision — giving organizations the chance to make any changes necessary for compliance with the new SCCs before incorporating them into their contracts. Such contracts, however, will also need to be updated within the 18-month-grace period.

On November 12, 2020, roughly four months after the European Court of Justice’s “Schrems II” decision which invalidated the EU-US Privacy Shield, the EU Commission released a draft set of new Standard Contractual Clauses (“SCCs” or “model clauses”).

These updated SCCs allow transfers of personal data from the EU to third countries, as well as a transfers by controllers when engaging processors located inside the EU. (For a further analysis of the Schrems II judgment, and the motivation for these new clauses, see our prior blog post).

Who can use the new SCCs?

The Commission’s draft, which includes the new SCCSs in its Annex, covers two new types of international transfers and contains important updates in order to bring the text of the model clauses in line with the General Data Protection Regulation (“GDPR”).

The current SCCs, approved by the Commission in 2001 and 2010, only addressed two data flow scenarios:

  • An EU-based controller exporting data outside of the EU to other controllers (controller-controller SCCs)
  • An EU-based controller exporting data outside of the EU to processors (processor- processor SCCs).

In this new draft, the Commission addressed a gap which frequently occurred in practice: EU processors exporting data to controllers and processors outside of the EU. This addition further reflects the expanded territorial scope of the GDPR.

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Schrems II: No Privacy Shield for EU-US Data Transfers, but Don’t Put Your Eggs into Standard Contractual Clauses Either

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On July 16th, 2020, privacy professionals scrambled after the Court of Justice of the European Union (CJEU) handed down its decision in Schrems II. The ruling invalidated the US-EU Privacy Shield agreement, which authorized transfers of data from the EU to the US for Privacy Shield-certified companies. Though the ruling on Privacy Shield was unexpected given that it was not directly at issue, such a decision is not without precedent or historical pattern. Privacy Shield itself was a replacement for the Safe Harbor framework that was invalidated in 2015 in Schrems I.

Now that the Privacy Shield framework has been invalidated, both data controllers and data processors are likely concerned about the next steps to take to ensure that any data transfers integral to its operations can continue. Although the U.S. Department of Commerce has indicated that it will continue processing Privacy Shield certifications, affected companies such as U.S. data importers and EU data exporters should quickly explore and adopt other transfer legitimizing mechanisms with their service providers and vendors in order to prevent any gaps in compliance.

Continue Reading Schrems II: No Privacy Shield for EU-US Data Transfers, but Don’t Put Your Eggs into Standard Contractual Clauses Either

American Privacy Laws in a Global Context: Predictions for 2018

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Should putative class members have privacy rights in class action claims under the CCPA?
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[Originally published as the May 2018 Cover Story: Data Privacy and the Law – American Privacy Laws in a Global Context: Predictions for 2018, by Lily Li, in Orange County Lawyer Magazine, May 2018, Vol. 60 No.5.]

Cybersecurity Attacks Are Inevitable

Cybersecurity attacks are on the rise. According to the non-profit organization, Identity Theft Resource Center, there were over 1,579 publicly reported data breaches in 2017, compared to 1,091 in 2016, and 780 in 2015. Not only are these cyberattacks happening at high-profile companies like Equifax, Uber, and Yahoo, they are increasingly happening to businesses of all sizes. Any entity able to pay a ransom is now a potential target.

Law firms are no exception. In 2017, DLA Piper was hit with a “wiper-ware” attack, following previous email hacks of Cravath and Weil Gotshal in 2016. Earlier this year, UK-based cybersecurity firm, RepKnight, reported that almost 800,000 UK law firm email addresses and affiliated passwords were available on the dark web, with over 50% of these credentials posted in the last six months. These law firms did not just include local UK firms, but global law firms with a UK presence.

Given these alarming statistics, what should legislators do?

In the EU, Canada, and China, legislators have decided to develop and implement national data privacy and cybersecurity frameworks: GDPR, PIPEDA, and CSL respectively. The United States, by contrast, still relies upon a patchwork of sectoral laws and inconsistent state rules. This article will take a brief look at developments in the EU, Canada, and China, discuss the current United States privacy framework, and predict likely developments in U.S. privacy law over the next year.Continue Reading American Privacy Laws in a Global Context: Predictions for 2018