When the European Court of Justice declared the US-EU Safe Harbour framework invalid in the case of Schrems v Data Protection Commissioner, some 4,500 companies began to panic. Many are still struggling to decide what to do: should they implement an alternative method of transferring personal data from the EEA to the US, or should they simply wait to see what happens next?

Waiting is a risky game, as the European data protection authorities’ (DPAs) grace period extends only until January 31 2016, by which time companies must have their cross-Atlantic data transfers in order. After this date, enforcement action may be taken against those transferring personal data without a suitable mechanism in place to ensure adequate protections to personal data. Although the slow churning of US and EU authorities negotiating a replacement for Safe Harbour can be heard in the distance, no timeline has yet been set for its implementation. There is also the added complication of the newly approved EU General Data Protection Regulation, which is likely to muddy the waters of an already murky negotiation.

Will Safe Harbour 2.0 come to the rescue?

According to the European Commissioner for Justice, Consumers and Gender Equality (the Commissioner), the negotiations on ‘Safe Harbour 2’ continue, undoubtedly under added pressure following the invalidation of the original Safe Harbour framework. Whilst both sides understand the sense of urgency, no proposal has yet met the needs of both the national security services and the European DPAs.

In Autumn 2013, the European Commission created a report providing 13 recommendations for improving Safe Harbour Number 13 required that the Safe Harbour national security exception is used only to an extent that is strictly necessary. This recommendation remains a sticking point in negotiations. Human rights and privacy organisations have little hope that these hurdles will be effectively overcome: In November 2015, a letter was sent to the Commissioner from EU and US NGOs, urging politicians to commit to a comprehensive modernisation of data protection laws on both sides of the Atlantic.

Of course, the real bridge to cross is on US law reform, which the Commissioner sees as more about guaranteeing EU rules in the US than changing US law. It seems the ball is very much in the North American court.

Do not, however, be fooled by the House of Representatives passing the Judicial Redress Act, which allows foreign citizens to bring legal suits in the US for alleged violations of their privacy rights. Reform is not easy, and it is now for the Senate to decide whether to follow suit, or to find a way to water down the Act. The govtrack.us website which follows the progress of bills through Capitol Hill gives the act a 22% chance of success. With odds like these, maybe we shouldn’t bet on cross-Atlantic privacy reform in the immediate future

The future of global surveillance

Whilst there have been positive noises coming from the White House regarding the privacy rights of non-Americans, it is unlikely in a post-9/11 world that any government will allow itself to be prevented from accessing data of either its own or foreign nationals.

In light of recent terror attacks all over the world, the Snowden debate is more relevant than ever. How far should government intelligence agencies go towards monitoring communications? Snowden forced governments to think twice about their surveillance practices, but recent attacks may have the opposite effect. Although their so-called ‘snooping’ may breach citizens’ fundamental rights, it may be more a question of how many civil liberties citizens are willing to exchange for safety and security.

The British Government has suggested that fast-track aggressive surveillance proposals (dubbed ‘the Snoopers’ Charter’) are the way forward in helping prevent acts of terror. This new emphasis on drones and cyber-experts marks a big shift from 2010’s strategic defence review. This is a war fought online and across borders and one cannot ignore the context of Safe Harbour here.

The implications on global e-commerce

Hindering cross-border data transfer impedes e-commerce and can potentially causes huge industries to collapse. By 2017, over 45 percent of the world is expected to be engaging in online commerce. A clear path across the Atlantic is essential.

The Information Technology and Innovation Foundation put it bluntly in stating that, aside from taking an axe to the undersea fibre optic cables connecting Europe to the US, it is hard to imagine a more disruptive action to transatlantic digital commerce than a stalemate on data transfer– a global solution must be reached, and soon.

The future of global cross-border data transfer

Time is running out on the Safe Harbour negotiations, and creating frameworks such as this is not simple – especially when those negotiating are starting so far apart and one side (the EU) does not speak with a unified voice.

Most of the 28 European Member States have individual national DPAs, not all of whom agree on the overall approach to reform. If the DPAs could speak in one voice, there could be greater cooperation with the Federal Trade Commission, which could hasten agreements on suitable frameworks for cross-Atlantic data transfers. In the US, much will come down to the law makers and, with an election brewing, it is worth considering the different scenarios.

Even though the two main parties in the US stand at polar ends of the spectrum on many policies, they may not be so distant when it comes to global surveillance. In the wake of the Snowden revelations, Hilary Clinton defended US global surveillance practices. The Republican Party has also been seen in favour of increased surveillance on certain target groups. The question remains: if either party, when elected, is happy to continue with the current surveillance programme, how will the US find common ground with the EU?

Conclusion

Europe seems prepared to act alone in protecting the interests of EU citizens, and the CJEU’s decision in Schrems was a bold and unexpected move on the court’s part. However, with the ever increasing threat to EU citizens’ lives through organised terror, the pressure may be mounting on the EU to relax its stance on data privacy, which could mean that finding common ground with the US may not be so difficult after all. We shall have to wait and see how the US-EU negotiations on Safe Harbour 2 evolve, and whether the European Commission will stand firm and require the US to meet its ‘equivalent’ standard.

 

Written by Sarah Pearce, Partner & Jane Elphick, Associate at Cooley (UK) LLP.