Tags: European | Data | Privacy | CEOs

Gap in European Data Privacy Law Traps US CEOs

Gap in European Data Privacy Law Traps US CEOs
(Dollar Photo Club)

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Thursday, 12 May 2016 07:23 AM Current | Bio | Archive

Austrian native Max Schrems says he still feels normal even though the complaint he filed with the Data Protection Commissioner (DPC) in Europe has changed forever the way Americans do business by invalidating the Safe Harbor Agreement that allowed the easy transfer of data between the two countries.

“I am happy with the judgment,” Schrems said at a lecture hosted by the European American Chamber of Commerce in Manhattan earlier this year. “It’s the first time that the court has found there is a violation of the essence of your rights. It’s a huge bold judgment in that sense.”

The law student’s inquiry spanned from June 2013 to September 2015. Up until then, the transfer of personal data out of Europe was legal.

“The European Court of Justice ruling last year was spawned by Facebook data transfers that now need to be re-examined,” said Markus Rex, CEO of ownCloud, a file access company.

The framework for a new overarching data privacy law that’s been introduced in Europe to replace Safe Harbor is the General Data Protection Regulation (GDPR).

“It is a regulation that will have direct impact once it’s implemented in about two years,” said John Whelan, an attorney and head of the International Technology Practice with A&L Goodbody law firm.

Until then, U.S. companies are out on a limb.

“They are trying to comply with laws that have yet to come to pass because the Safe Harbor agreement was invalidated before there was a new law properly implemented to replace it,” said Roy Hadley, an attorney and partner with Thompson Hine in Atlanta

Thanks to Schrems’ gift for activism and legal acumen, U.S. companies now have the added responsibility of ensuring that their data complies with European standards if and when they are employing Europeans and/or storing the data of European customers.

“The risk is that if you are transferring data from the European Union to the U.S. you could be subject to fines or penalties or prohibited from transferring data unless you have what Europe considers adequate data protection,” said Sharon Klein, managing partner and chair of the privacy, security and data protection group with the Pepper Hamilton law firm in Irvine, California.

One option is for American CEOs to establish servers in Europe that hold data but cannot be accessed by U.S. company headquarters.

“A firm would have to find an organization whether it’s a cloud provider or data center in Europe that can house that data and enter into a contract with them to manage and secure that data and that costs money,” Klein said.

It also gives American tech companies a valid excuse to pay a much lower corporate tax rate in European countries like Ireland.

“You have a lot of companies like Google, Facebook and Apple that have subsidiaries in Ireland because it’s cheaper to be taxed out of Ireland,” Hadley said. “If we force U.S. companies to move any of their operations abroad in order to comply with European data standards, the unintended consequence might be that it shores up their argument that they really are operating in Europe, specifically Ireland, and that they should be taxed there.”

Juliette Fairley is an author, lecturer and TV host based in New York. To read more of her work, Click Here Now.

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Austrian native Max Schrems says he still feels normal even though the complaint he filed with the Data Protection Commissioner (DPC) in Europe has changed forever the way Americans do business.
European, Data, Privacy, CEOs
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2016-23-12
Thursday, 12 May 2016 07:23 AM
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