EU Court Again Rules That NSA Spying Makes U.S. Companies Inadequate for Privacy

The European Union’s highest court today made clear—once again—that the US government’s mass surveillance programs are incompatible with the privacy rights of EU citizens. The judgment was made in the latest case involving Austrian privacy advocate and EFF Pioneer Award winner Max Schrems. It invalidated the “Privacy Shield,” the data protection deal that secured the transatlantic data flow, and narrowed the ability of companies to transfer data using individual agreements (Standard Contractual Clauses, or SCCs).

Despite the many “we are disappointed” statements by the EU Commission, U.S. government officials, and businesses, it should come as no surprise, since it follows the reasoning the court made in Schrems’ previous case, in 2015.

Back then, the EU Court of Justice (CJEU) noted that European citizens had no real recourse in US law if their data was swept up in the U.S. governments’ surveillance schemes. Such a violation of their basic privacy rights meant that U.S. companies could not provide an “adequate level of [data] protection,” as required by EU law and promised by the EU/U.S. “Privacy Safe Harbor” self-regulation regime. Accordingly, the Safe Harbor was deemed inadequate, and data transfers by companies between the EU and the U.S. were forbidden.

Since that original decision, multinational companies, the U.S. government, and the European Commission sought to paper over the giant gaps between U.S. spying practices and the EU’s fundamental values. The U.S. government made clear that it did not intend to change its surveillance practices, nor push for legislative fixes in Congress. All parties instead agreed to merely fiddle around the edges of transatlantic data practices, reinventing the previous Safe Harbor agreement, which weakly governed corporate handling of EU citizen’s personal data, under a new name: the EU-U.S. Privacy Shield.

EFF, along with the rest of civil society on both sides of the Atlantic, pointed out that this was just shuffling chairs on the Titanic. The Court cited government programs like PRISM and Upstream as its primary reason for ending data flows between Europe and the United States, not the (admittedly woeful) privacy practices of the companies themselves. That meant that it was entirely in the government and U.S. Congress’ hands to decide whether U.S. tech companies are allowed to handle European personal data. The message to the U.S. government is simple: Fix U.S. mass surveillance, or undermine one of the United States’ major industries.

Five years after the original iceberg of Schrems 1, Schrems 2 has pushed the Titanic fully beneath the waves. The new judgment explicitly calls out the weaknesses of U.S. law in protecting non-U.S. persons from arbitrary surveillance, highlighting that:

Section 702 of the FISA does not indicate any limitations on the power it confers to implement surveillance programmes for the purposes of foreign intelligence or the existence of guarantees for non-US persons potentially targeted by those programmes.

and

… neither Section 702 of the FISA, nor E.O. 12333, read in conjunction with PPD‑28, correlates to the minimum safeguards resulting, under EU law, from the principle of proportionality, with the consequence that the surveillance programmes based on those provisions cannot be regarded as limited to what is strictly necessary.

The CJEU could not be more blunt in its pronouncements: but it remains unclear how the various actors that could fix this problem will react. Will EU data protection authorities step up their enforcement activities and invalidate SCCs that authorize data flows to the U.S. for failing to protect EU citizens from U.S. mass surveillance programs? And if U.S. corporations cannot confidently rely on either SCCs or the defunct Privacy Shield, will they lobby harder for real U.S. legislative change to protect the privacy rights of Europeans in the U.S.—or just find another temporary stopgap to force yet another CJEU decision? And will the European Commission move from defending the status quo and current corporate practices, to truly acting on behalf of its citizens?

Whatever the initial reaction by EU regulators, companies and the Commission, the real solution lies, as it always has, with the United States Congress. Today’s decision is yet another significant indicator that the U.S. government’s foreign intelligence surveillance practices need a massive overhaul. Congress half-heartedly began the process of improving some parts of FISA earlier this year—a process which now appears to have been abandoned. But this decision shows, yet again, that the U.S. needs much broader, privacy-protective reform, and that Congress’ inaction makes us all less safe, wherever we are.