The following is part of Greenberg Traurig’s ongoing series analyzing cross-border data transfers in light of the new Standard Contractual Clauses approved by the European Commission in June 2021.

Visual

Implications

• Background. Company Z-1 and Company Z-2 are corporate affiliates who are under common ownership or control, but are separate legal entities. Data is being directly sent from Controller A in the EEA to Processor Z-2 in the United States. Company A has contracted only with Processor Z-1 in the EEA. The solid line indicates the data flow; dashed line indicates the contractual relationships.

• The GDPR requires that an Article 28 data processing agreement (DPA) be completed between Company A and Company Z-1. Note that under the GDPR, Company Z-1 is not permitted to transfer information outside of the EEA without the authorization of Company A.¹ If Company Z-1 intends to subcontract the processing of data (including the receipt of data from Company A), the DPA should at a minimum include a general authorization to transfer information outside of the EEA; it might also identify the specific country in which Company Z-2 is located (i.e., the US). In addition, the European Commission has defined the “data exporter” as being the “controller or processors transferring the personal data to a third country.”² As Company A is physically transmitting personal data to Company Z-2 an argument could be made that Company A must enter into a cross-border transfer mechanism. This could arguably take one of two forms:

  • Option 1: SCC Module 2 CàP between Company A and Company Z-1 that permits Company Z-2 to “sign on” to the agreement through the optional Clause 7 docking clause (Option 2 in the diagram).

  • Option 2: SCC Module 2 CàP could be entered between Company A and Company Z-2.

• Transfer Impact Assessments. Section 14 of the SCCs require that Company A, Company Z-1, and Company Z-2 document a transfer impact assessment of United States law to determine whether either party has reason to believe that the laws and practices of the United States that apply to the personal data transferred prevent Company Z-2 from fulfilling its obligations under the SCCs.

• Law enforcement request policy. Section 15 of the SCCs require Company Z-2 to take specific steps in the event that it receives a request from a public authority for access to personal data. As a result, Company Z-2 might consider creating a law enforcemen¹

FOOTNOTES

1 EDPB, Guidelines 07/2020 on the concepts of controller and processor in the GDPR, Version 1.0, at paras. 116 and 117.

2 Commission Implementing Decision of 4.6.2021 at para. 3.