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Chapter 13: Cross-Border Data Transfers – Unlocking the EU General Data Protection Regulation
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Why does this topic matter to organisations?
In today's world, it is increasingly important to be able to move data freely to wherever those data are needed. However, the transfer of personal data to recipients outside the EEA is generally prohibited unless:
- the jurisdiction in which the recipient is located is deemed to provide an adequate level of data protection;
- the data exporter puts in place appropriate safeguards; or
- a derogation or exemption applies.
Understanding the application of lawful data transfer mechanisms is essential for all organisations that wish to transfer personal data to recipients located outside the EEA (including processors, such as cloud service providers).
What types of organisations are most affected?
This issue affects all organisations that engage in Cross-Border Data Transfers. For example, organisations using online IT services, cloud- based services, remote access services or global HR databases—among others—will often need to implement lawful data transfer mechanisms.
What should organisations do to comply?
In order to ensure compliance with the requirements of the GDPR, organisations should:
- review their existing and planned business operations;
- identify all circumstances in which personal data are transferred to recipients located outside the EEA; and
- ensure that, for each such transfer, the organisation has in place a data transfer mechanism that complies with the requirements of the GDPR.
To the extent that personal data are transferred from the EU to the US, organisations can no longer rely on the EU-US Privacy Shield, following the CJEU's decision in Schrems II. Any organisation that had been relying on the Privacy Shield should consider alternative transfer mechanisms.
If an organisation identifies any data transfers for which it lacks a lawful data transfer mechanism, the organisation should review the available options and implement the most suitable mechanism promptly.
Icons to convey information quickly
The following icons are used in the table, to clarify the impact of each change:
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Issue | The Directive | The GDPR | Impact |
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). |
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). |
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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 Commission could determine third countries to be Adequate Jurisdictions. |
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 Commission may declare third countries (or a territory, a specified sector, or an international organisation) to be Adequate Jurisdictions. |
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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. |
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). |
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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. |
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. |
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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. |
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. |
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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. |
BCRs must include a mechanism to make the BCRs legally binding on group companies. Among other things, the BCRs must:
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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. |
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). |
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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. |
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. |
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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. |
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). |
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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. |
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). |
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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. |
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). |
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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. |
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. |
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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. |
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. |
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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. |
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. |
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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. |
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. |
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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:
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A Cross-Border Data Transfer may take place if the transfer is necessary for:
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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. |
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. |
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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. |
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. |
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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. |
A Cross-Border Data Transfer may take place if the transfer is necessary for the establishment, exercise or defence of legal claims. |
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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. |
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. |
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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. |
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. |
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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. |
A Cross-Border Data Transfer may take place if:
The controller must inform the relevant DPA and the data subjects about the transfer. |
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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. |
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. |
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Commentary: GDPR Transfer Mechanisms
The GDPR maintains the pre- existing data transfer mechanisms created under the Directive (with some minor amendments). It also creates a number of new transfer mechanisms, of which organisations should be aware. Key changes from the Directive include the following:
- Under the GDPR, several transfer mechanisms no longer require notification to, and/ or authorisation from, DPAs. This significantly reduces the administrative burden on organisations.
- The GDPR introduces several new transfer mechanisms, including DPA Clauses, certifications and a derogation for the purposes of legitimate interests.
- Transfer mechanisms such as BCRs and Codes of Conduct may become more important as a result of the increased harmonisation introduced by the GDPR.
However, there remains a significant amount of uncertainty in this area, in light of Schrems II and the EU-US Privacy Shield is no longer deemed adequate.
Unlocking the EU General Data Protection Regulation:
A practical handbook on the EU's new data protection law
Chapter 2: Complying with the GDPR
Chapter 3: Subject matter and scope
Chapter 4: Territorial application
Chapter 6: Data Protection Principles
Chapter 7: Legal basis for processing
Chapter 9: Rights of data subjects
Chapter 10: Obligations of controllers
Chapter 11: Obligations of processors
Chapter 12: Impact Assessments, DPOs and Codes of Conduct
Chapter 13: Cross-Border Data Transfers
Chapter 14: Data Protection Authorities
Chapter 15: Cooperation and consistency
Chapter 16: Remedies and sanctions
Chapter 17: Issues subject to national law
Chapter 18: Relationships with other laws
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