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.

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Implications

Background. Company Z-1 and Company Z-2 are corporate affiliates under common ownership or control, but are separate legal entities. Data is being directly sent from Controller A in the EEA to Processor Z-1; Processor Z-1 onward transfers the information to Processor Z-2 (its sub-processor). Company A has contracted only with Processor Z-1 in the EEA. 1st transfer: 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 As a result, 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 U.S.). Arguably no Chapter V cross border transfer mechanism is needed as Company A is not a “data exporter” as that term is defined within EDPB guidance and the SCCs, and the GDPR does not require a safeguard mechanism for data that is transferred from a company in the EEA to another company in the EEA. 2nd transfer: SCC Module 3. Although Company Z-1 and Company Z-2 may be under common ownership or control, as separate legal entities they are required to put into place a safeguard when transferring data from the EEA to the US.2 In this case because both entities are processors, SCC Module 3 should be selected. Transfer Impact Assessments. Section 14 of the SCCs require that 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. Note that under the Article DPA entered into between Company A and Company Z-1, Company Z-1 is required to “make available to the controller all information necessary to demonstrate compliance with the obligations laid down in this Article.”3 As a result, Controller A may argue that they have a right to receive a copy of the TIA as part of an audit or assessment of Company Z-1.

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

2 EDPB, Guidelines 05/2021 on the Interplay between the application of Article 3 and the provisions on international transfers as per Chapter V of the GDPR at para. 16.

3  GDPR, Art. 28(3)(h).