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Policy · Credibility 90/100 · · 2 min read

Policy Briefing — CJEU Schrems II Decision

The Court of Justice of the European Union invalidated the EU–U.S. Privacy Shield while upholding Standard Contractual Clauses, forcing companies to reassess transatlantic data transfer safeguards.

Executive briefing: On 16 July 2020 the Court of Justice of the European Union (CJEU) issued its Schrems II ruling in case C-311/18, invalidating the EU-U.S. Privacy Shield framework and imposing enhanced obligations on organizations that rely on Standard Contractual Clauses (SCCs) or other transfer mechanisms to export personal data from the European Economic Area. Businesses must execute rapid legal, technical, and organizational updates to sustain transatlantic data flows while demonstrating accountability to supervisory authorities, customers, and employees.

Decode the judgment and regulatory expectations

The CJEU concluded that U.S. surveillance laws—specifically Section 702 of the Foreign Intelligence Surveillance Act and Executive Order 12333—do not provide protections equivalent to EU fundamental rights, and that the Privacy Shield Ombudsperson mechanism lacked independence and effective redress. While SCCs remain valid in principle, controllers and processors must verify, on a case-by-case basis, that the destination country’s legal system and safeguards provide a level of protection essentially equivalent to EU standards. Supervisory authorities are obligated to suspend or prohibit transfers where protections are inadequate.

Immediately after the ruling, the European Data Protection Board (EDPB) released FAQs clarifying that there is no grace period, consent alone is insufficient for repetitive transfers, and Article 49 derogations should be applied sparingly. Subsequent recommendations from the EDPB and national authorities emphasize thorough transfer impact assessments, adoption of supplementary technical measures—such as end-to-end encryption or pseudonymization—and renegotiation of contractual terms to address governmental access requests.

Perform a comprehensive data transfer inventory

Start with a granular inventory of all cross-border data flows originating in the EU or EEA. Map each dataset, the transfer mechanism used, importing entities, system endpoints, and purposes of processing. Segment transfers into categories: intra-group SCCs, processor SCCs, Binding Corporate Rules, derogations, and Article 49 exceptions. Highlight transfers to the United States as well as other third countries subject to government access concerns. Establish ownership for each transfer, ensuring business units understand their obligations to maintain updated documentation.

Leverage data discovery tooling to validate that system integrations, analytics pipelines, and support tickets do not create shadow transfers outside the documented pathways. Where possible, align the inventory with records of processing activities under GDPR Article 30, enabling supervisors to trace each transfer’s legal basis. Annotate each record with data classification tags—such as sensitive categories, children’s data, or trade secrets—that influence risk ratings and required supplementary safeguards.

Execute transfer impact assessments and risk-based prioritization

Develop a standardized Transfer Impact Assessment (TIA) template that evaluates the legal landscape of the importing country, historical government access disclosures, applicable sector-specific regulations, and the effectiveness of contractual commitments. Reference sources including U.S. intelligence transparency reports, jurisprudence from the European Court of Human Rights, and guidance from data protection authorities. Score each transfer against criteria such as data sensitivity, frequency, reversibility, and ability to implement technical controls.

Prioritize remediation for transfers involving large volumes of personal data, special category information under GDPR Article 9, or contexts where individuals face tangible harm if confidentiality is breached. Document compensating controls such as tokenization, data minimization, or onshore processing alternatives. Maintain executive dashboards that surface high-risk transfers and track mitigation progress, ensuring accountability at the board and audit committee levels.

Harden contractual and organizational measures

Update SCCs to incorporate the European Commission’s 2021 modular clauses, aligning modules with controller-to-controller, controller-to-processor, processor-to-processor, or processor-to-controller relationships. Add annexes that describe applied encryption standards, key management procedures, and data minimization strategies. Explicitly require importers to challenge government access requests, notify exporters promptly, and provide transparency reports where legally permissible.

For vendor relationships, conduct renegotiations to embed Schrems II-aligned safeguards. Require subprocessors to sign equivalent clauses, and mandate that vendors notify you before engaging new third parties in high-risk jurisdictions. Establish a governance committee that reviews vendor compliance evidence—such as independent audits, penetration tests, and privacy certifications—at least annually. Record meeting minutes and decision rationales to demonstrate due diligence.

Deploy technical safeguards for residual risk reduction

Implement encryption at rest and in transit using modern protocols like TLS 1.2+ and AES-256, with cryptographic keys generated and stored within EU-based hardware security modules. Where feasible, adopt end-to-end encryption that prevents service providers from accessing plaintext data. Apply robust pseudonymization or anonymization techniques, splitting identifiers across systems so that only EU-based entities can reidentify data subjects. For analytics use cases, explore privacy-enhancing technologies such as secure multi-party computation or differential privacy to limit exposure.

Introduce granular access controls and monitoring that flag anomalous data exports or administrative actions. Leverage data loss prevention tooling to block unauthorized transfers and generate evidence logs. Implement just-in-time access provisioning, ensuring privileged users require explicit approval for each session involving EU personal data hosted outside the bloc. Combine these controls with regular security assessments and third-party penetration testing to validate effectiveness.

Establish interim communications and stakeholder management

Prepare tailored communications for customers, employees, partners, and regulators explaining how data transfers continue lawfully post-Schrems II. Provide FAQs that outline the safeguards in place, timelines for contract updates, and channels for raising concerns. Coordinate with sales and account teams to address contractual negotiations that hinge on transatlantic data availability. For internal stakeholders, host briefings that summarize regulatory expectations, highlight program milestones, and clarify decision-making authority.

Document correspondence with supervisory authorities, including notifications of new transfers, responses to inquiries, and outcomes of any investigations. Where necessary, engage with data protection officers and works councils to align on monitoring technologies or security analytics that touch employee data. Ensure crisis communication plans account for potential enforcement actions or injunctions that could disrupt service delivery.

Evaluate localization and data minimization alternatives

Assess whether certain services can be localized within the EU or EEA to eliminate high-risk transfers. Conduct feasibility studies on using EU data centers, regional cloud availability zones, or local managed service providers. Compare costs, latency impacts, and contractual implications. For products that must rely on U.S.-based tooling, explore hybrid architectures where sensitive data remains in the EU while pseudonymized or aggregated data supports analytics or machine learning workloads in the United States.

Apply strict data minimization principles: collect only necessary personal data, reduce retention periods, and deploy automated purging workflows. Where ongoing transfers remain indispensable, update privacy notices to reflect the supplementary measures and provide individuals with transparency into the residual risk profile.

Monitor regulatory developments and litigation

Track evolving guidance from the EDPB, European Commission, and national data protection authorities. Notable publications include the EDPB’s Recommendations 01/2020 on supplementary measures, Recommendations 02/2020 on European Essential Guarantees, and opinions from authorities such as the French CNIL and German BfDI. Monitor litigation that may further constrain transfers, including challenges against specific SCC implementations or cloud service arrangements. Maintain a legal watchlist summarizing developments, deadlines, and required updates to policies or technical controls.

Coordinate with industry associations, such as the Cloud Infrastructure Services Providers in Europe (CISPE) or the International Association of Privacy Professionals (IAPP), to benchmark practices and contribute to collective advocacy efforts. Participation in these forums can surface regulatory expectations earlier and support harmonized interpretations across sectors.

Action checklist for the next 90 days

  • Complete TIAs for all U.S.-bound transfers, documenting supplementary measures and executive approvals, and store them alongside SCCs for audit readiness.
  • Roll out encryption and key management enhancements that ensure cryptographic control remains with EU-based entities, including updated key rotation policies.
  • Issue updated privacy notices and customer communications that explain Schrems II remediation steps, offering dedicated contacts for data protection inquiries.
  • Establish a governance cadence—monthly for high-risk transfers, quarterly for others—to review vendor attestations, regulatory updates, and remediation progress.
  • Develop contingency plans for localization or service re-architecture should supervisory authorities suspend specific transfers.

Zeph Tech partners with privacy, legal, and security leaders to operationalize Schrems II compliance, combining transfer impact tooling, contractual intelligence, and peer benchmarks that sustain lawful data flows while respecting fundamental rights.

Follow-up: The Commission adopted the EU–US Data Privacy Framework in July 2023, issued new standard contractual clauses in 2021, and ongoing litigation from NOYB keeps transfer risk assessments on the regulatory agenda for 2024.

Sources

  • International data transfers
  • Standard Contractual Clauses
  • Privacy compliance
  • GDPR
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