Chapter 13: Cross-Border Data Transfers – Unlocking the EU General Data Protection Regulation

Under the GDPR, the position on this issue has materially changed (e.g., the GDPR has introduced a new obligation that did not previously exist).

Under the GDPR, the position on this issue has not materially changed (e.g., although the wording may be different in the GDPR, the nature of the relevant obligation is unchanged).

The impact of the GDPR on this issue is likely positive for most organisations (e.g., because the GDPR provides certainty in relation to a previously unclear issue).

The impact of the GDPR on this issue is likely neutral for most organisations (e.g., because the requirements under the GDPR and the Directive are essentially the same).

The impact of the GDPR on this issue is likely negative for most organisations (e.g., because the GDPR introduced a new obligation on organisations).

The impact of the GDPR on this issue is unknown at this stage (e.g., because the impact on organisations is dependent upon secondary guidance that has not yet been written).

General prohibition on transfers

Cross-Border Data Transfers are prohibited, unless certain conditions are met.

Rec.56-57; Art.25, Art.26(1)-(2)

Cross-Border Data Transfers were, without prejudice to compliance with national law, prohibited, unless the transfer was made to an Adequate Jurisdiction (see below) or the data exporter had implemented a lawful data transfer mechanism (or an exemption or derogation applied).

 Rec.101-116; Art.44, 45

Cross-Border Data Transfers may only take place if the transfer is made to an Adequate Jurisdiction (see below) or the data exporter has implemented a lawful data transfer mechanism (or an exemption or derogation applies).

 The GDPR and the Directive have essentially similar general restrictions on Cross-Border Data Transfers.

Commission Adequacy Decisions

Cross-Border Data Transfers to a recipient in a third country may take place, without a need to obtain any further authorisation, if the Commission has decided that such third country ensures an adequate level of data protection (an "Adequate Jurisdiction"). The basis for this principle is that such jurisdictions provide sufficient protection for the rights and freedoms of data subjects without the need for further safeguards.

The current list of Adequate Jurisdictions is: Andorra, Argentina, Canada (for organisations that are subject to Canada's PIPEDA law), Switzerland, the Faeroe Islands, Guernsey, Israel, Isle of Man, Jersey, New Zealand, and Uruguay. Following the decision in Schrems II, the EU-US Privacy Shield is no longer deemed adequate. It remains to be seen whether the European Commission and the US government will negotiate a replacement mechanism.

Rec.56-57; Art.25(1)-(6), 31(2)

Cross-Border Data Transfers to a recipient in a third country could take place if the third country ensured an adequate level of data protection. Adequacy was assessed in the light of all circumstances surrounding the transfer, in particular:

• the nature of personal data;
• the purpose and duration of processing;
• country of origin and country of final destination;
• the rule of law; and
• professional rules and security measures.

The Commission could determine third countries to be Adequate Jurisdictions.

 Rec.103-107; Art.44, 45

Cross-Border Data Transfers to a recipient in a third country may take place if the third country receives an Adequacy Decision from the Commission. Factors that may affect an Adequacy Decision include, inter alia:

• the rule of law and legal protections for human rights and fundamental freedoms;
• access to transferred data by public authorities;
• existence and effective functioning of DPAs; and
• international commitments and other obligations in relation to the protection of personal data.

The Commission may declare third countries (or a territory, a specified sector, or an international organisation) to be Adequate Jurisdictions.

 Adequacy Decisions adopted by the Commission on the basis of the Directive remain in force until amended, replaced or repealed in accordance with the GDPR.

 The catalogue of adequacy requirements is substantially broader and more detailed under the GDPR. It is unclear whether further countries will qualify, and whether existing countries will maintain their status, as Adequate Jurisdictions.

Review of Adequacy Decisions

As illustrated by the Schrems decision, it is always possible that conditions in an Adequate Jurisdiction may change, and that jurisdiction may no longer provide adequate protection. Therefore, the Commission's Adequacy Decisions may need to be reviewed from time to time.

N/A

The Directive did not directly address the need to review Adequacy Decisions. The CJEU in Schrems determined that DPAs can examine claims that an Adequacy Decision provides insufficient protection for transferred personal data.

 Rec.106-107; Art.45(3)-(5), 93(2)-(3)

Adequacy Decisions are subject to a periodic review, at least every four years, taking into account all relevant developments. The Commission can repeal, amend or suspend Adequacy Decisions for jurisdictions no longer ensuring an adequate level of data protection (without retroactive effect).

 Adequacy Decisions made under the GDPR remain valid for a maximum of four years and may be amended, suspended or repealed. This may affect the ability of organisations to rely on Adequacy Decisions in the long-term.

Agreements between public authorities

Public sector Cross-Border Data Transfers may take place on the basis of agreements between a public authority in the EU and a public authority in a third country, without requiring a specific authorisation from a DPA.

N/A

The Directive did not specifically provide for binding agreements between public authorities or bodies as a legal basis for Cross-Border Data Transfers.

 Rec.108; Art.46(2)(a), (3)(b)

Cross-Border Data Transfers between public authorities may take place on the basis of agreements between public authorities, which do not require any specific authorisation from a DPA. The public authorities must ensure compliance with GDPR requirements.

 Private organisations that are dealing with international regulatory investigations may benefit from the ability of national public authorities to lawfully transfer data between themselves on this basis.

 It is unclear how this instrument will develop in practice.

Binding Corporate Rules

Cross-Border Data Transfer within a corporate group may take place on the basis of Binding Corporate Rules ("BCRs"). The BCRs require approval from DPAs, but once such approval is obtained, individual transfers made under the BCRs do not require further approval.

Art.26(2)

The Directive did not specifically address BCRs. However, it permitted Member States to authorise data transfers where the controller has adduced adequate protections for the transferred data. BCRs being one such measure. Much of the guidance on the requirements for BCRs under the Directive comes from WP29 working papers (see, in particular, working papers 74, 107, 108, 133, 153, 154, 155, 195, 195a, 204 and 212) and from guidance issued by DPAs in certain Member States.

 Rec.108, 110; Art.4(20) 46(2)(b), 47; WP29 BCR Guidance (WP256, WP257)

The GDPR directly addresses the concept of BCRs. The competent DPA will approve BCRs as an appropriate mechanism for Cross-Border Data Transfers within a corporate group (including to members of that group that are established in third countries). If the BCRs meet the requirements set out in the GDPR, they will be approved, and no further DPA approval will be required for transfers of personal data made under the BCRs.

 Unlike the Directive, the GDPR explicitly recognises BCRs and provides clear provisions on requirements and procedures for BCRs. This is likely to make it easier for organisations to obtain DPA approval for, and implement, BCRs. The WP29 issued updated BCR guidance taking account of GDPR. This guidance provides assistance for BCR applicants in ensuring compliance with the requirements of GDPR.

Content of BCRs

Although the language of BCRs can be drafted by the parties, that language must cover certain specified topics, and satisfy the requirements of EU data protection law, before the BCRs can be approved by DPAs.

N/A

The Directive did not specify requirements for the content of BCRs. The WP29 working papers noted above set out guidance on the content of BCRs. Certain general principles (e.g., the requirement to make the BCRs binding upon the members of the relevant corporate group) applied uniformly in all Member States. However, a number of other requirements were interpreted inconsistently from one DPA to another.

 Rec.108, 110; Art.47(1)-(3); WP29 BCR Guidance (WP256, WP257)

BCRs must include a mechanism to make the BCRs legally binding on group companies. Among other things, the BCRs must:

• specify the purposes of the transfer and affected categories of data;
• reflect the requirements of the GDPR;
• confirm that the EU- based data exporters accept liability on behalf of the entire group;
• explain complaint procedures; and
• provide mechanisms for ensuring compliance (e.g., audits).

 Unlike the Directive, the GDPR provides specific guidance on the list of criteria that BCRs must cover. By complying with this list, businesses can significantly increase the likelihood of obtaining DPA approval for their BCRs.

Approval of BCRs

Unlike Model Clauses (which are discussed below), the content of BCRs can be drafted to suit the needs and circumstances of the organisation (provided that they also satisfy the requirements of EU data protection law). Consequently (also unlike Model Clauses) BCRs are not deemed to be pre-approved. Instead, BCRs always require prior approval from DPAs.

N/A

The Directive did not discuss the requirements for approval of BCRs. A mutual recognition procedure applied in 21 Member States, and provided that the applicant must appoint a lead DPA to review the application for BCRs. Once the lead DPA approved the BCRs, that approval was recognised by those 21 Member States. However, for the remaining seven Member States, separate applications were required.

 Rec.108, 110; Art.47(1), 57(1)(s) WP29 BCR Guidance (WP256, WP257)

The competent DPA must approve BCRs that fulfil the criteria set out in the GDPR. Where the BCRs are intended to cover data transfers from multiple Member States, the Consistency Mechanism applies (see Chapter 15).

 The fact that approval must be given by the competent DPA for compliant BCRs is likely to make the adoption of BCRs easier and should significantly decrease the inconsistencies in the interpretation and implementation of BCRs from one DPA to another.

 Pre-existing approvals of BCRs created under the Directive remain valid until amended, replaced or repealed in accordance with the GDPR.

Model Clauses

Cross-Border Data Transfers may take place on the basis of standard data protection clauses approved by the Commission ("Model Clauses").

Rec.59-60; Art.26(2)-(4), 31(2)

Member States could authorise a Cross-Border Data Transfer where the controller adduced adequate safeguards in the form of Model Clauses. Under the Directive, several Member States required DPA notification or authorisation (or both) before Model Clauses could be used.

 Rec.81, 108-109; Art.28(6)-(8), 46(2)(c), 57(1)(j), (r), 93(2)

Cross-Border Data Transfers are permitted if the controller or processor adduces appropriate safeguards in the form of Model Clauses. These do not require any further authorisation from a DPA. The Commission may create new types of Model Clauses.

 DPA authorisation of transfers made under the Model Clauses is not required under the GDPR.

 Model Clauses implemented under the Directive remain valid until amended, replaced or repealed in accordance with the GDPR.

 The Commission may update or replace the existing Model Clauses. The impact of such updates remains to be seen.

DPA Clauses

Cross-Border Data Transfers may take place on the basis of standard data protection clauses adopted by one or more DPAs, in accordance with the GDPR ("DPA Clauses").

N/A

The Directive did not provide for DPA Clauses as an adequate safeguard for Cross-Border Data Transfers.

 Rec.108-109; Art.46(2)(d), 64(1)(d), 57(1)(j), (r), 93(2)

A Cross-Border Data Transfer may take place on the basis of DPA Clauses, which offer a national alternative to the Commission-approved Model Clauses. Transfers made on the basis of DPA Clauses do not require further DPA approval. DPA Clauses may be included in a wider contract (e.g., from one processor to another), provided the original wording of the authorised DPA Clauses is not contradicted (directly or indirectly).

 The GDPR introduces DPA Clauses, which allow DPAs to develop and offer DPA Clauses.

 Model Clauses are a well- known and proven concept; DPA Clauses might develop in a similar direction. However, it is unclear how this will work in practice. The Commission needs to approve DPA Clauses which, in theory, will prevent organisations from forum-shopping.

Codes of Conduct

A Cross-Border Data Transfer may take place on the basis of approved Codes of Conduct. Further commentary on Codes of Conduct is provided on Chapter 12.

Rec.61; Art.27

The Directive encouraged the drawing up of Codes of Conduct. However, it did not specifically permit Cross- Border Data Transfers to be made on the basis of a Code of Conduct.

 Rec.108; Art.40, 41, 46(2)(e)

A Cross-Border Data Transfer may take place on the basis of an approved Code of Conduct, together with binding and enforceable commitments to provide appropriate safeguards. Transfers made on this basis do not require DPA approval (although, as set out in Chapter 12, the Code of Conduct itself requires DPA approval).

 The GDPR introduces the possibility of Cross-Border Data Transfers made in reliance on approved Codes of Conduct. This permits organisations greater flexibility in selecting the data transfer mechanisms that best suit their needs.

Certification

A Cross-Border Data Transfer may take place on the basis of certifications. Further commentary on certifications is provided on Chapter 12.

N/A

The Directive did not provide for certifications as a mechanism for Cross-Border Data Transfers.

 Rec.108; Art.42, 43, 46(2)(f)

A Cross-Border Data Transfer may take place on the basis of certifications together with binding and enforceable commitments of the data importer to apply the certification to the transferred data. Transfers made on this basis do not require DPA approval (although, as set out in Chapter 12, the certification scheme itself requires DPA approval).

 The GDPR introduces certifications as a new lawful mechanism for Cross-Border Data Transfers. This permits organisations greater flexibility in selecting the data transfer mechanisms that best suit their needs.

Ad hoc clauses

A Cross-Border Data Transfer may take place on the basis of contracts negotiated between the data exporter and the data importer ("ad hoc clauses"), subject to approval from the competent DPA.

Rec.59-60; Art.26(2)-(3), 31(2)

A Cross-Border Data Transfer could take place on the basis of ad hoc clauses between the data exporter and data importer. These clauses had to conform to the requirements of the national laws of the relevant Member State, and required approval from the relevant DPA, before transfers could begin.

 Rec.108; Art.46(3)(a), (4), 63

A Cross-Border Data Transfer may take place on the basis of ad hoc clauses. These clauses must conform to the requirements of the GDPR, and must be approved by the relevant DPA subject to the Consistency Mechanism, before transfers can begin.

 The GDPR permits Cross-Border Data Transfers made on the basis of ad hoc clauses (as did the Directive).

 Pre-existing DPA approvals of ad hoc clauses remain valid until amended, replaced or repealed in accordance with the GDPR.

 DPAs are obliged to apply the Consistency Mechanism (see Chapter 15) which will, in theory, ensure a consistent regulatory approach across all Member States.

Administrative arrangements

A Cross-Border Data Transfer may take place on the basis of administrative arrangements made by the data exporter, subject to the authorisation from the competent DPA.

N/A

The Directive did not provide for administrative arrangements as a legal basis for Cross-Border Data Transfers.

 Rec.108; Art.46(3)(b), (4), 63

Cross-Border Data Transfers may take place on the basis of administrative arrangements between public authorities (e.g., a Memorandum of Understanding), which include adequate protection for the rights of data subjects. Transfers made on this basis require DPA approval.

 Private organisations that are dealing with regulatory investigations may benefit from the ability of national public authorities to lawfully transfer data between themselves on this basis.

 It is unclear how this transfer mechanism will develop in practice.

Third country judgments and decisions

Third country court judgments, or administrative authority decisions, are recognised as a legal basis for a Cross-Border Data Transfer only if the transfer is subject to appropriate international agreements.

N/A

The Directive did not directly mention third country court judgments or administrative authority decisions as a lawful data transfer mechanism.

 Rec.115; Art.48

A judgment from a third country, requiring a Cross- Border Data Transfer, only provides a legal basis for such a transfer if the transfer is based on an appropriate international agreement, such as a Mutual Legal Assistance Treaty. However, this is without prejudice to other grounds for a transfer.

 This requirement may result in organisations being unable to comply with orders from courts in third countries (e.g., the US) without the existence of an appropriate international agreement. If no such agreement exists, the transfer may nevertheless be lawful if the conditions of Art.45, 46, 47 or 48 are met. However, it should be noted that the UK has effectively opted out of Art.48 of the GDPR, on the basis of Protocol 21 to the Treaty on European Union and the Treaty on the Functioning of the European Union.

Consent

A Cross-Border Data Transfer may be made on the basis of the consent of the data subject. Further commentary on consent is provided on Chapter 8.

Rec.58; Art.26(1)(a)

A Cross-Border Data Transfer could be made on the basis of the data subject's unambiguous consent. Any such transfers could only be carried out in full compliance with the applicable national laws that implemented the Directive.

 Rec.111; Art.49(1)(a), (3)

A Cross-Border Data Transfer may be made on the basis that the data subject, having been informed of the possible risks of such transfer, explicitly consents.

 The shift from "unambiguous" consent to "explicit" consent is unlikely to make very much practical difference for most organisations.

 The obligation to prove that data subjects have been informed of the possible risks associated with the transfer may impose a material administrative burden on organisations that rely on consent as a legal basis for Cross-Border Data Transfers.

Contracts between a data subject and a controller

A Cross-Border Data Transfer may be made on the basis that it is necessary for the purposes of performing or implementing a contract between the data subject and the controller.

Rec.58; Art.26(1)(b)

A Cross-Border Data Transfer could take place if the transfer was necessary for:

• the performance of a contract between the data subject and the controller; or
• the implementation of pre contractual measures taken in response to the data subject's request.

 Rec.111 Art.49(1)(b), (3)

A Cross-Border Data Transfer may take place if 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 in response to the data subject's request.

 The position as it was under the Directive is essentially unchanged under the GDPR.

Contracts that are in the data subject's interest

A Cross-Border Data Transfer may be made on the basis that it is necessary for the purposes of performing or concluding a contract in the interests of the data subject (e.g., a parent making a purchase on behalf of a child).

Rec.58; Art.26(1)(c)

A Cross-Border Data Transfer could take place if the transfer was necessary for the conclusion or performance of a contract between the controller and a third party, which was in the interests of the data subject.

 Rec.111; Art.49(1)(c), (3)

A Cross-Border Data Transfer may take place if the transfer is necessary for the conclusion or performance of a contract between the controller and a third party, where it is in the interests of the data subject.

 The position as it was under the Directive is essentially unchanged under the GDPR.

Public interest

A Cross-Border Data Transfer may be made on the basis that the transfer is necessary for important reasons of public interest.

Rec.58; Art.26(1)(d)

A Cross-Border Data Transfer could take place if the transfer was necessary, or legally required, on important public interest grounds.

 Rec.111-112; Art.49(1)(d), (4)

A Cross-Border Data Transfer may take place if the transfer is necessary for important reasons of public interest. Such interests must be recognised in EU law or in the law of the Member State to which the controller is subject.

 The changes introduced by the GDPR make little practical difference, because interests that are not recognised by EU or Member State law are unlikely to be viewed by DPAs as a legal basis for a Cross-Border Data Transfer.

Legal claims

A Cross-Border Data Transfer may be made on the basis that it is necessary for the purposes of legal proceedings, or obtaining legal advice.

Rec.58; Art.26(1)(d)

A Cross-Border Data Transfer could take place if the transfer was necessary, or legally required, on important public interest grounds for the establishment, exercise or defence of legal claims.

 Rec.111; Art.49(1)(e)

A Cross-Border Data Transfer may take place if the transfer is necessary for the establishment, exercise or defence of legal claims.

 The position as it was under the Directive is essentially unchanged under the GDPR.

Data subject's vital interests

A Cross-Border Data Transfer may be made on the basis that the transfer is necessary to protect the vital interests of the data subject.

Rec.58; Art.26(1)(e)

A Cross-Border Data Transfer could take place if the transfer was necessary in order to protect the vital interests of the data subject.

 Rec.111-112; Art.49(1)(f)

A Cross-Border Data Transfer may take place if the transfer is necessary in order to protect the vital interests of the data subject or of other persons, where the data subject is physically or legally incapable of giving consent.

 Extending the scope of this ground to cover third parties provides organisations with another legal basis for Cross- Border Data Transfers, albeit in limited circumstances.

 In reality, very few organisations will ever make use of this basis for Cross- Border Data Transfers, as this basis only justifies transfers in a "life-or-death" situation.

Public registers

A Cross-Border Data Transfer may be made on the basis that the data to be transferred are taken from a public register.

Rec.58; Art.26(1)(f)

A Cross-Border Data Transfer could take place if the transferred data were taken from a register which was open to the public, or to any person who could demonstrate a legitimate interest in inspecting it.

 Rec.111; Art.49(1)(g), (2)

A Cross-Border Data Transfer may take place if the transferred data are taken from a register which is open to the public or, upon request, to any person who can demonstrate a legitimate interest in inspecting it. This does not permit a transfer of the entire register.

 The position as it was under the Directive is, for the most part, unchanged under the GDPR.

Controller's compelling legitimate interests

A Cross-Border Data Transfer may be made on the basis that the transfer is necessary for the purposes of a compelling legitimate interests of the controller. Further commentary on legitimate interests is provided in Chapter 7.

N/A

The Directive did not allow for Cross-Border Data Transfers to be made on the basis of the controller's legitimate interests.

 Rec.113; Art.49(1), (3), (6)

A Cross-Border Data Transfer may take place if:

• none of the other legal bases applies;
• the transfer is not repetitive;
• it only concerns a limited number of data subjects;
• the transfer is necessary for the purposes of compelling legitimate interests pursued by the controller which are not overridden by those of the data subject; and
• the controller has adduced suitable safeguards for the transferred data.

The controller must inform the relevant DPA and the data subjects about the transfer.

 The GDPR introduces the possibility that organisations may be able to make Cross- Border Data Transfers on the basis of compelling legitimate interests. Even if the scope of this transfer mechanism is narrow, it provides for another option to enable Cross-Border Data Transfers.

 It is unclear how this transfer mechanism will develop in practice.

Certain transfer mechanisms may be limited by law

A number of lawful mechanisms for Cross-Border Data Transfers may be limited, under applicable EU or Member State law, to certain categories of data.

N/A

The Directive did not provide for the possibility of limiting lawful data transfer mechanisms in this way.

 Rec.111; Art.49(5)

EU law or law of the Member States may, for important reasons of public interest, expressly limit Cross– Border Data Transfers relating to specific categories of personal data. Member States must notify such restrictions to the Commission.

 The fact that individual Member States can restrict the ability of organisations to transfer certain categories of personal data may severely hamper the business activities of some organisations, and result in inconsistent restrictions from one Member State to the next.