Data ruling could cost Europe €143bn a year, High Court told

Irish Data Protection Commissioner Helen Dixon

Tim Healy

A DRAFT finding by the Irish Data Protection Commissioner relating to data transfers between the EU and the US could cost the European economy €143bn a year if upheld, Facebook has claimed.

The finding - that EU-US data transfer channels by Facebook are invalid on grounds of inadequate US legal protections for EU citizens' privacy rights - was made by Commissioner Helen Dixon, the High Court heard.

Yesterday, the US government made an application, unprecedented in the Irish courts, to join the huge action by Commissioner Dixon aimed at establishing the legality of channels, known as Standard Contractual Clauses (SCCs), being used for daily EU-US data transfers.

Judge Brian McGovern will rule by the end of July on applications by the US and by major Irish, EU and US business and civil liberties organisations, along with data privacy campaigner Kevin Cahill, to join the case as amicus curiae (assistant to the court on legal issues).

The action is aimed at having the validity or otherwise of the SCCs referred by the High Court to the Court of Justice of the EU (CJEU)for determination.

Unless a party has been joined by the High Court, it cannot participate in any reference to the CJEU.

The Commissioner, in a draft finding last May, said Austrian lawyer Max Schrems had raised "well-founded" objections to the validity of the SCCs.

When a "well-founded" decision is reached, the next step for a Commissioner is to seek to have the CJEU decide the issue.

The outcome of continuing EU-US discussions on a "Privacy Shield" may affect the wording of any referral, her counsel, Michael Collins SC, said.

The SCCs were approved under European Commission decisions of 2001, 2004 and 2010 but doubts about their validity have mounted after disclosures about US mass surveillance by Edward Snowden and since the CJEU last year struck down the 15 year old "Safe Harbor" arrangement for EU-US data transfers. The Commissioner's case is against Facebook Ireland (because Facebook's European headquarters is here) and Mr Schrems because she considers they are the appropriate parties to address the relevant issues arising from Mr Schrems's complaint.

The case, with potentially huge implications for business entities and millions of EU citizens, raises significant issues concerning surveillance by US national security agencies and whether US law provides an adequate remedy for any breach of privacy rights of EU citizens.

Its importance was underlined by the applications to join by the US government; the Business Software Alliance, a global business organisation whose application was supported by the American Chamber of Commerce Ireland; the Irish Business & Employers Confederation; and Digital Europe, the representative organisation for the European digital industry.

Privacy and human rights issues were underlined in the applications from the Irish Human Rights & Equality Commission; the American Civil Liberties Union/Irish Council for Civil Liberties (in a joint application); and US data privacy watchdogs, the Electronic Frontier Foundation and the Electronic Privacy Information Centre.

Paul Gallagher SC, for Facebook Ireland, said the case has enormous implications for Ireland, the EU and globally.

While the court "of course has to the apply the law even if the heavens fall in", it should know to what extent the heavens might fall in on the basis of its decision, counsel said.

Eileen Barrington SC, for the US, said it is in "a unique and unprecedented position" because its laws were at the heart of the case" and it was of "critical importance" it be joined to inform the court about the adequacy of US data protection laws.

It was hard to exaggerate the importance with which the US viewed this case with its potential to impact on US agencies and EU-US commerce, she said.