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Europe US court of justiceThe European Commission (EC) and the US are under pressure to come up with a new replacement system for the recently invalidated Safe Harbour agreement.

A statement from EU advisory body The Article 29 Working Party on the Protection of Individuals, has given those affected by the ruling three months to devise a new system.

However, the US and the EC have previously worked for two years without success to reform the Safe Harbour agreement. The reforms were made necessary after US government surveillance programmes were revealed by National Security Agency (NSA) whistle blower Edward Snowden. However, despite co-operation, for two years progress stalled as the US couldn’t guarantee limits on access to personal data.

“If by the end of January 2016, no appropriate solution is found with the US authorities and depending on the assessment of the transfer tools by the Working Party, EU data protection authorities are committed to take all necessary and appropriate actions, which may include coordinated enforcement actions,” said the statement issued.

Following Court of Justice of the European Union (CREU) ruling on October 6th, many companies risk being prosecuted by European privacy regulators if they transfer the data of EU citizen’s to the US without a demonstrable set of privacy safeguards.

The 4,000 firms that transfer their clients’ personal data to the United States currently have no means of demonstrating compliance to EC privacy regulations. As the legal situation currently stands, EU data protection law says companies cannot transfer EU citizens’ personal data to countries outside the EU which have insufficient privacy safeguards.

EU data protection authorities, meeting in Brussels to assess the implications of the ruling, said in a statement that they would assess the impact of the judgment on other data transfer systems, such as binding corporate rules and model clauses between companies.

The regulators said in their statement the EU and the United States should negotiate an “intergovernmental agreement” providing stronger privacy guarantees to EU citizens, including oversight on government access to data and legal redress mechanisms.

Multinationals can still set up internal privacy rules for US data transfers, to be approved by regulators but these so called ‘binding corporate rules’ are only used by 70 companies. All alternative data transfer systems could now also be at risk of a legal challenge, say lawyers. “The good news is that the European data protection authorities have agreed on a kind of grace period until the end of January,” said Monika Kuschewsky, a lawyer at Covington & Burling.

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