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Announcement today on Privacy Shield from European Commissioner Jourová & US Secretary of Commerce PDF Print E-mail
Monday, 18 July 2016
Privacy Shield comments from Legal specialist Sarah Thompson from the London office of international law firm McGuireWoods:   Despite vast criticisms and doubts that the EU-U.S. Privacy Shield will survive, the new deal clearly does provide more robust obligations and commitments than its predecessor, the Safe Harbor framework. It has stood up to rigorous negotiations and knock backs and shows the successful coordination and progress made between the EU and U.S counterparts, which meets the short falls of the Safe Harbor framework.

The Shield includes enhanced privacy protections, especially stronger rules regarding onward transfers, data retention and redress, including a U.S. ombudsman which will be completely independent from intelligence agencies. One key development is that the Shield will be reviewed on an annual basis allowing it to evolve and adapt to future technology and legal developments. I am hopeful that this will not just be a tick-box exercise, but an in-depth review enabling amendments to be made to mitigate future CJEU scrutiny.

Time will tell as to whether companies have confidence in the Shield and decide to rely on it as a means to justify their personal data transfers to the U.S. However, major technology companies are already showing their commitment in the new transfer deal with Microsoft issuing a statement welcoming the decision and announcing that it will sign up to the new framework as soon as possible. Digital Europe, a group representing the European digital technology industry have also commended the approval.

Despite my optimism, the Shield will undoubtedly face legal challenge with privacy activists already threatening to take the agreement to court. Schrems, the individual responsible for bringing the Safe harbour framework before the CJEU, has criticized the deal and has already said that he would challenge the agreement as soon as it is finalised.

Nevertheless, the Shield is an important step and provides some legal certainty for companies that have been left in limbo since the Safe Habor invalidation. Without Safe Harbor, businesses have relied on Model Clauses and Binding Corporate Rules, both of which have their limitations. This approval is ever more important in light of the legal challenge against the Model Clauses.

Many companies will also be wondering what the implications Brexit will have on the Shield. It is not yet clear how this will affect the UK in light of Brexit, but one possibility is that the UK may agree a separate agreement with the U.S. similar or identical to the Shield. This would certainly simplify matters and create some regularity in data protection standards between the UK and EU.

This decision means, subject to any successful challenges from privacy activists, U.S. internet giants and the wide range of cloud businesses will be able to continue to operate in Europe and retain EU data on servers in the U.S. It also enables the thousands of small and medium-sized businesses to continue sending EU citizens’ personal data to the U.S. which is critical for everyday business. This deal has averted a potentially major digital trade conflict between the two blocs on this issue and has restored some trust between the countries.

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