Facebook loses last-ditch attempt to derail DPC decision on its EU-US data flows

Facebook has failed in its bid to prevent its lead EU data protection regulator from pushing ahead with a decision on whether to order suspension of its EU-U.S. data flows.

The Irish High Court has just issued a ruling dismissing the company’s challenge to the Irish Data Protection Commission’s (DPC) procedures.

The case has huge potential operational significance for Facebook, which may be forced to store European users’ data locally if it’s ordered to stop taking their information to the U.S. for processing.

Last September the Irish data watchdog made a preliminary order warning Facebook it may have to suspend EU-U.S. data flows. Facebook responded by filing for a judicial review and obtaining a stay on the DPC’s procedure. That block is now being unblocked.

We understand the involved parties have been given a few days to read the High Court judgement ahead of another hearing on Thursday — when the court is expected to formally lift Facebook’s stay on the DPC’s investigation (and settle the matter of case costs).

The DPC declined to comment on today’s ruling in any detail — or on the timeline for making a decision on Facebook’s EU-U.S. data flows — but deputy commissioner Graham Doyle told us it “welcomes today’s judgment”.

Its preliminary suspension order last fall followed a landmark judgement by Europe’s top court in the summer — when the CJEU struck down a flagship transatlantic agreement on data flows, on the grounds that U.S. mass surveillance is incompatible with the EU’s data protection regime.

The fall-out from the CJEU’s invalidation of Privacy Shield (as well as an earlier ruling striking down its predecessor Safe Harbor) has been ongoing for years — as companies that rely on shifting EU users’ data to the U.S. for processing have had to scramble to find valid legal alternatives.

While the CJEU did not outright ban data transfers out of the EU, it made it crystal clear that data protection agencies must step in and suspend international data flows if they suspect EU data is at risk. And EU to U.S. data flows were signalled as at clear risk given the court simultaneously struck down Privacy Shield.

The problem for some businesses is therefore that there may simply not be a valid legal alternative. And that’s where things look particularly sticky for Facebook, since its service falls under NSA surveillance via Section 702 of the FISA (which is used to authorize mass surveillance programs like Prism).

So what happens now for Facebook, following the Irish High Court ruling?

As ever in this complex legal saga — which has been going on in various forms since an original 2013 complaint made by European privacy campaigner Max Schrems — there’s still some track left to run.

After this unblocking the DPC will have two enquiries in train: Both the original one, related to Schrems’ complaint, and an own volition enquiry it decided to open last year — when it said it was pausing investigation of Schrems’ original complaint.

Schrems, via his privacy not-for-profit noyb, filed for his own judicial review of the DPC’s proceedings. And the DPC quickly agreed to settle — agreeing in January that it would “swiftly” finalize Schrems’ original complaint. So things were already moving.

The tl;dr of all that is this: The last of the bungs which have been used to delay regulatory action in Ireland over Facebook’s EU-U.S. data flows are finally being extracted — and the DPC must decide on the complaint.

Or, to put it another way, the clock is ticking for Facebook’s EU-U.S. data flows. So expect another wordy blog post from Nick Clegg very soon.

Schrems previously told TechCrunch he expects the DPC to issue a suspension order against Facebook within months — perhaps as soon as this summer (and failing that by fall).

In a statement reacting to the Court ruling today he reiterated that position, saying: “After eight years, the DPC is now required to stop Facebook’s EU-US data transfers, likely before summer. Now we simply have two procedures instead of one.”

When Ireland (finally) decides it won’t mark the end of the regulatory procedures, though.

A decision by the DPC on Facebook’s transfers would need to go to the other EU DPAs for review — and if there’s disagreement there (as seems highly likely, given what’s happened with draft DPC GDPR decisions) it will trigger a further delay (weeks to months) as the European Data Protection Board seeks consensus.

If a majority of EU DPAs can’t agree the Board may itself have to cast a deciding vote. So that could extend the timeline around any suspension order. But an end to the process is, at long last, in sight.

And, well, if a critical mass of domestic pressure is ever going to build for pro-privacy reform of U.S. surveillance laws now looks like a really good time…

“We now expect the DPC to issue a decision to stop Facebook’s data transfers before summer,” added Schrems. “This would require Facebook to store most data from Europe locally, to ensure that Facebook USA does not have access to European data. The other option would be for the US to change its surveillance laws.”

Facebook has been contacted for comment on the Irish High Court ruling.

Update: The company has now sent us this statement:

Today’s ruling was about the process the IDPC followed. The larger issue of how data can move around the world remains of significant importance to thousands of European and American businesses that connect customers, friends, family and employees across the Atlantic. Like other companies, we have followed European rules and rely on Standard Contractual Clauses, and appropriate data safeguards, to provide a global service and connect people, businesses and charities. We look forward to defending our compliance to the IDPC, as their preliminary decision could be damaging not only to Facebook, but also to users and other businesses.