Will 2023 Be the Year When the United States Receives an Adequacy Decision under GDPR from the European Union?

Electronic discovery for legal matters within the United States often involves preserving, collecting, processing, reviewing, and producing data that concern individuals living outside the United States. In some of these situations, the data privacy laws of jurisdictions outside the United States can complicate electronic discovery to be performed in the United States. Perhaps the most well-known data privacy law is the European Union’s General Data Protection Regulation (“GDPR”), which outlines requirements related to the processing of the personal data of individuals residing in the and the European Economic Area (“EEA”) and addresses the transfer of data outside the EEA.

Article 45 of GDPR forbids the transfer of the personal data of EEA residents (described as “data subjects”) to any country outside of the EEA unless (i) the EU determines that the country’s legal privacy frameworks and practices ensure an adequate level of protection for data subjects’ personal data (termed an “adequacy decision”), or (ii) one or more safeguards deemed appropriate by the EU are imposed on the cross-border data transfer. Accordingly, transfers of personal data of EEA residents to a country outside the EEA that lacks an adequacy decision must rely on such safeguards (or, alternatively, a derogation defined by Article 49 of GDPR). These safeguards can include use of data processing agreements that contain standard contractual clauses, binding corporate rules that address data privacy and protection concerns, and/or binding and enforceable commitments by the data controller or processor located in the country to which the data are being transferred.

Some legal matters requiring cross-border data transfer to the United States may not clearly fit within one of Article 49’s derogations, which may prompt the need to employ such a safeguard to accommodate the data transfer because the United States does not currently have an adequacy decision from the EU. However, such an adequacy decision may soon exist. On December 13, 2022, the European Commission published a draft adequacy decision for the United States, based largely on a new United States executive order that commits to changes to its foreign intelligence agencies’ access to personal data and the creation of a new system through which EU data subjects can seek redress for the infringement of their data privacy rights in the United States. This draft adequacy decision will now receive review and feedback from the European Data Protection Board, the Council of the European Union, and the European Parliament before its possible implementation.

With a GDPR adequacy decision possible for the United States by the summer of 2023, legal practitioners in the United States can consider how data transfer and review workflows in some circumstances could be streamlined in the wake of such an adequacy decision. The European Commission’s draft adequacy decision is available at https://commission.europa.eu/document/download/e5a39b3c-6e7c-4c89-9dc7-016d719e3d12_en?filename=Draft%20adequacy%20decision%20on%20EU-US%20Data%20Privacy%20Framework_0.pdf.