The European Court of Justice (ECJ) has ruled that the transatlantic Safe Harbor agreement, which lets US companies use a single standard for consumer privacy and data storage in the US and Europe, is invalid.
The court went further by slamming the European Commission for signing the deal 15 years ago, which more than 4,000 companies have signed up to over the years.
The ECJ said in its judgement:
“No provision of the directive prevents oversight by the national supervisory authorities of transfers of personal data to third countries which have been the subject of a commission decision.
“Thus, even if the commission has adopted a decision, the national supervisory authorities, when dealing with a claim, must be able to examine, with complete independence, whether the transfer of a person’s data to a third country complies with the requirements laid down by the directive.”
This means companies may now face scrutiny from individual European countries' data regulators and could be forced to host European user data in Europe, instead of hosting it in the US and transferring it over.
It added that the Safe Harbor scheme enabled interference, by US public authorities, with the fundamental rights of persons.
In short the commission's Safe Harbor cannot usurp the powers of national authorities, the ruling said.
The implications of the ruling will be wide ranging, particularly for Europe’s cloud adoption curve.
At an event in London today cloud ERP firm NetSuite, with unexpected timing, finally announced the opening of two European data centres.
The new data centre deployments will be in Amsterdam, Netherlands and the other in Dublin, Ireland, enabling companies to store their business data physically in the EU.
NetSuite CTO Evan Goldberg said: “This is going to give our customers more opportunity to store the data where they see fit.”
Commenting on the Safe Habor ruling Goldberg added that the company’s internal resources can access the data, but “we can do that neatly in Europe”.
“We are well-placed as this decision evolves. We have the resources so that if you choose, you can keep everything internal to Europe,” Goldberg said.