Facebook warns of EU crisis if private data transfers blocked

Crisis after clampdown would make financial crash seem minor, lawyer for firm claims

The Data Protection Commissioner wants a European Court of Justice determination before finalising her investigation of Max Schrems’s complaint over transfer of his personal data by Facebook Ireland Ltd to its US parent, Facebook Inc.

The Data Protection Commissioner wants a European Court of Justice determination before finalising her investigation of Max Schrems’s complaint over transfer of his personal data by Facebook Ireland Ltd to its US parent, Facebook Inc.

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The European Union would face an “enormous” crisis if it could not trade with countries that did not match its data-protection standards, lawyers for Facebook have told the High Court.

If third countries lacking equivalent data protections could not be traded with, an “enormous” crisis would engulf the EU that would make the global financial crisis of the past eight years seem “minor”, Paul Gallagher SC argued. Many individual EU member states do not meet the standards of data protection set at EU level, he added.

The Data Protection Commissioner had applied the wrong legal test when making her draft decision in May 2016 that a complaint by Austrian privacy activist and lawyer Max Schrems over Facebook’s transfer of his personal data to the US was “well-founded”, Mr Gallagher submitted.

The commissioner, he argued, erred in seeking to have the validity of data transfer channels, known as standard contractual clauses, decided by the Court of Justice of the EU (CJEU).

Privacy Shield

In her proceedings seeking to have the Irish court refer that matter to the European court, the commissioner should have, but did not, address the European Commission’s July 2016 decision approving the Privacy Shield framework for EU-US data transfers, he added.

The commissioner reached a provisional view that safeguards for data-privacy rights of EU citizens whose data is transferred to the US are inadequate, he said. The relevant EC data protection directive did not mandate the remedies being argued for and allowed a derogation permitting data transfers to countries that do not match EU data protection standards, he said.

Mr Gallagher on Friday outlined some of the reasons for Facebook’s opposition to the commissioner’s application to have Ms Justice Caroline Costello ask the European court to determine whether the commission’s decisions approving the standard contractual clauses for EU-US data transfers are valid.

The commissioner wants the European Court of Justice determination before finalising her investigation of Mr Schrems’s complaint over transfer of his personal data by Facebook Ireland Ltd to its US parent, Facebook Inc. Facebook’s European headquarters are in Ireland.

Mr Schrems argues a referral is unnecessary or at least premature and there is already adequate material before the commissioner on foot of which she should decide to suspend the data transfers. Facebook also opposes referral but for very different reasons and strongly disputes that the standard contractual clauses decisions are invalid.

Expert statements

The US government is among several parties joined to the case as amici curiae – assistants to the court on legal issues. The amici have all provided submissions to the court on legal issues but three of them – the Business Software Alliance, the Washington-based Electronic Privacy Information Centre and Digital Europe – applied on Friday to also have the judge admit sworn statements from their experts as evidence in the case. The US government did not apply to have any affidavit evidence admitted on its behalf.

The other applications were opposed by the commissioner and Facebook, who argued the role of amici is to make submissions on legal issues, not adduce evidence on the factual aspects of a trial. The judge said she would rule on the applications on Monday.

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