Impacts of the European Court of Justice ruling on Standard Contractual Clauses and the EU-US Privacy Shield agreement

Trade and market access

Brexit pulse alert: respond to the business impacts of Brexit

17 July, 2020

Brexit development

On 16 July the European Court of Justice issued a decision relating to an ongoing case around EU-US data adequacy widely known as the ‘Schrems II’ case after the citizen who originally brought the case forward. Specifically the Court passed judgement on two issues: whether Standard Contractual Clauses (SCCs) are a valid mechanism for transferring personal data outside the EU and the validity of the EU-US Privacy Shield agreement.

Top Brexit impacts

Broadly the Court supported the use of the SCCs, but invalidated the EU-US Privacy Shield Agreement. The decision contained a number of points which will have impacts in terms of Brexit:

  • The bar for using SCCs is quite high – while they are valid and can fortunately continue to be the basis of most business’ planning, consideration will also need to be given to the legal system and enforcement of protections (possibly including the Charter on Fundamental Rights)
  • National security issues do fall within scope of GDPR. This is relevant because there are already concerns regarding how the UK processes personal data from a security perspective (particularly under the Investigatory Powers Act). This may further raise the bar to securing an adequacy decision
  • Michel Barnier has also previously voiced concerns about the transfer of EU personal data from the UK to the US. The collapse of Privacy Shield will further highlight this concern and may also make an adequacy decision harder to secure.

Actions for business

The exact implications will evolve over time, but the judgment once again reiterates the UK being assessed as being adequate from a data perspective cannot be assumed just because it was previously an EU member. This means firms should put in place SCCs as a fall back. Ensuring that such SCCs meet the terms of judgement as closely as possible will be important.

To discuss specific support with your Brexit preparations based on this latest development contact: Deloitte Brexit Insight

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