Articles

ECJ on territorial application of domestic data protection law: a single representative can fulfill “stable establishment” concept under Directive 95/46/CE

ECJ on territorial application of domestic data protection law: a single representative can fulfill “stable establishment” concept under Directive 95/46/CE

ECJ on territorial application of domestic data protection law: a single representative can fulfill “stable establishment” concept under Directive 95/46/CE

07.01.2016 EU law

On 1 October 2015 the European Court of Justice (“ECJ”) rendered a judgment in response to the questions raised by the Kúria (Hungarian Supreme Court) on the applicability of Hungarian data protection law and on the powers of the Hungarian Data Protection Authority (“DPA”) in relation to a company that is registered in Slovakia but offers online services in Hungary.

This was an important decision as the ECJ ruled that the concept of “establishment” in the meaning of article 4 of the Directive 95/46/CE of the European Parliament and of the Council of 24 October 1995 (the “Directive”) should be flexibly interpreted, and thus it cannot depend on the place where the company is registered.

The claimant, Weltimmo, is a company registered in Slovakia and runs a real estate services website for Hungarian properties. After a one-month grace period during which advertising on the website was free of charge, Weltimmo kept the advertisers’ data, charged them for the services it provided, and if necessary, sent their data to debt collection agencies. The Hungarian DPA fined Weltimmo for violation of the Law of 2011 on the right to self-determination as regards information and freedom of information. Weltimmo then brought an action before the Budapest Administrative and Labour Court and then to the Supreme Court.

In the first part of its decision, the ECJ clarifies that the applicable law to a data controller must be determined in light of Article 4 of the Directive rather than Article 28, which only relates to the role and powers of the supervisory authority. The ECJ further restates the ruling on the Google Spain case (C-131/12) and confirms that the words “in the context of the activities of an establishment” in Article 4 of the Directive cannot be interpreted restrictively. After having clarified that, the ECJ analyzes the several aspects of this requirement.

Firstly, the ECJ refuses to adopt a formalistic approach of the concept of “establishment” whereby companies would be deemed established solely where they are registered. This establishment concept must, however, imply that there is (1) a certain degree of stability of the arrangements; and (2) an effective exercise of activities. These two conditions must be interpreted in the light of the specific nature of the company’s economic activities and the provision of the services concerned. The ECJ further insists that this is even more true for companies such as the one at stake, which offers services only over the Internet.

Even more importantly, the ECJ affirms that the effectiveness of the activity can be very limited, as it was the case here, in which only one representative of Weltimmo was present in Hungary as the point of contact between the company and the data subjects. Indeed, the Court states that “the presence of only one representative can, in some circumstances, suffice to constitute a stable arrangement if that representative acts with a sufficient degree of stability through the presence of the necessary equipment for provision of the specific services concerned in the Member State in question.”

Secondly, the ECJ assesses whether the processing of the personal data is carried out in the context of the activities of the establishment. The ECJ refers again to the Google Spain case and clarifies that this does not mean that the activity must be carried out by the establishment itself, but rather in the context of its activities.

The ECJ, while leaving the factual assessment of Weltimmo being established in Hungarian in the case at stake, has nevertheless broadened the territorial scope of domestic data protection law significantly by affirming that the mere presence of an individual in one Member State, who acts for a company registered in another Member State, can be sufficient for the DPA of the former Member State to have power over this company.

The case (C-264/14) can be found on http://www.curia.europa.eu

Click here for a PDF version of the 52nd edition of our ICT Law Newsletter

Related news

22.07.2021 NL law
Towards a European legal framework for the development and use of Artificial Intelligence

Short Reads - Back in 2014, Stephen Hawking said, “The development of full artificial intelligence could spell the end of the human race.” Although the use of artificial intelligence is nothing new and dates back to Alan Turing (the godfather of computational theory), prominent researchers – along with Stephen Hawking – have expressed their concerns about the unregulated use of AI systems and their impact on society as we know it.

Read more

19.07.2021 BE law
One year of Schrems II: a state of affairs for international data transfers

Articles - International data transfers have been the subject of intense debates ever since the Court of Justice issued its landmark judgement of Schrems I, on 6 October 2015. The intensity of the debate was further reinforced since the Schrems II decision one year ago, on 16 July 2020. The decision annulled the U.S. Privacy Shield and severely tightened the rules on the use of standard contractual clauses (“SCCs”).

Read more

18.05.2021 NL law
Kroniek: De bestuursrechtelijke aspecten van de AVG

Articles - Tom Barkhuysen, Steven Bastiaans en Fatma Çapkurt (Universiteit Leiden) schreven samen de eerste editie van de nieuwe jaarlijkse NTB kroniek: de bestuursrechtelijke aspecten van de AVG. Hierin bespreken zij onder meer de meest relevante (bestuursrechtelijke) jurisprudentie van het afgelopen jaar op het gebied van de AVG.

Read more

18.06.2021 NL law
FAQ: Wat houdt het Wetsvoorstel elektronische gegevensuitwisseling in de zorg (Wegiz) in en wat is de verhouding tot de AVG?

Short Reads - (Digitale) gegevensuitwisseling in de zorg is een actueel thema. Illustratief is een item bij EenVandaag van april 2021 waarin de analoge werkwijze bij gegevensuitwisseling in de zorg wordt aangekaart, maar ook dit artikel in het NRC van afgelopen maand waarin verslag werd gedaan van een datalek waardoor duizenden gevoelige patiëntgegevens op straat kwamen te liggen. 

Read more

04.05.2021 NL law
Participatie en privacyregels: hoe te combineren onder de Omgevingswet?

Short Reads - In het stelsel van de Omgevingswet (Ow) is een belangrijke rol bedacht voor participatie bij de totstandkoming van besluiten. Het beoogde resultaat: tijdig belangen, meningen en creativiteit op tafel krijgen en daarmee een groter draagvlak en kwalitatief betere besluitvorming bereiken. Door een grotere betrokkenheid van meer personen gaan overheden en initiatiefnemers ook meer persoonsgegevens verwerken. Dit brengt privacyrisico’s met zich mee. Wat regelt de Ow op het gebied van privacy, de verwerking van persoonsgegevens en datagebruik?

Read more