Unlocking the EU General Data Protection Regulation: A practical handbook on the EU's new data protection law: Chapter 16: Remedies and sanctions

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Overview

Why does this topic matter to organisations?

Whereas the remedies and sanctions available to DPAs under the Directive are comparatively low (generally subject to a maximum of less than €1 million per infringement, with average fines being in the low tens of thousands) the remedies and sanctions available to DPAs under the GDPR are significantly greater. In particular, the GDPR allows DPAs to issue fines for serious infringements up to a maximum of the greater of €20 million or four percent of worldwide turnover.

What types of organisations are most affected?

As noted in previous Chapters, EU data protection law is not sector‑specific. Consequently, organisations of all types that process personal data are affected by the significant remedies and sanctions set out in the GDPR.

What should organisations do to prepare?

Organisations should:

  • review their data processing activities and, where appropriate, carry out Impact Assessments, to establish whether there is a risk of material infringement of the GDPR; and
  • establish necessary policies and processes to meet all privacy requirements (e.g., security, complaints handling, data accuracy, breach reporting, etc.). Any current policies regarding personal data will need to be updated, and the necessary changes will have to be made within the organisation's business operations, in order to ensure compliance.

Icons are used below to clarify the impact of each GDPR change. These GDPR impact icons are explained here.

Detailed analysis

Issue

The Directive

The GDPR

Impact

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Right to complain to a DPA

Data subjects who believe that their rights have been infringed, have the right to ask the data controller to remedy the situation. If the complainant does not receive an adequate answer from the data controller, the data subject can file a complaint to the relevant national DPA.

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Rec.63; Art.28(4)

Each DPA can hear complaints lodged by any data subject (or his or her representatives) concerning the processing of his or her personal data (e.g., in relation to the lawfulness of a controller's processing activities). The DPA must inform the data subject of the outcome of the complaint.

materially changes

Rec.141; Art.77

Data Subjects have the right to lodge complaints concerning the processing of his or her personal data with a DPA in the Member State in which they live or work, or the Member State in which the alleged infringement occurred. The DPA is required to keep the data subject informed on the progress and the outcome of the complaint.

positive

The GDPR clarifies the fact that data subjects can complain to different DPAs, depending on where they live or work, or where the alleged infringement took place. However, it is important to bear in mind that, under the "One-Stop-Shop" (see Chapter 14), the DPA to which the complaint is addressed will not necessarily be the DPA that is responsible for regulating the relevant controller.

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Right to a judicial remedy

If the data subject is not satisfied with the DPA's response to his or her complaint, the data subject is entitled to bring a complaint before a national court.

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Rec.55; Art.22, 28(3)

Data subjects have the right to a judicial remedy for any breach of their data protection rights. Decisions taken by a DPA may be appealed through the courts. DPAs also have the power to bring their own legal proceedings in order to enforce EU data protection law.

materially changes

Rec.143; Art.78-79

Data subjects have the right to an effective judicial remedy against:

  • decisions of a DPA concerning them;
  • any failure by a DPA to deal with, or respond to, a complaint within three months; and
  • any unlawful processing of their personal data by a controller or processor.

positive

The GDPR provides greater clarity and legal certainty regarding the claims that can be brought against organisations.

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Venue for proceedings

A significant difficulty in EU data protection law is that a data subject in one Member State might be affected by processing activities taking place in another Member State. In these circumstances, the question of which courts should have authority to hear a particular claim frequently arises.

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Art.22

Member States must allow data subjects to seek judicial remedies for any infringement of the applicable data protection laws, on the basis of the national laws governing the relevant processing.

materially changes

Rec.143; Art.78(3); 79(2)

Proceedings against a DPA or public authority must be brought in the Member State in which the DPA is established.

Proceedings against a controller or processor may be brought in:

  • the Member State in which the controller or processor has an establishment; or
  • the Member State in which the data subject resides (except to the extent that the controller or processor is a DPA or public authority).

negative

Under the GDPR, an organisation may be subject to legal proceedings in unfamiliar jurisdictions, outside the Member State(s) in which it is established.

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Representation of data subjects

A data subject may be represented in the exercise of their rights by representatives who, under national law, fulfil the necessary requirements. (For example, a union or works council may represent the data protection interests of employees.)

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Rec.61; Art.27(2)-(3), 28(4)

A representative or association may lodge a complaint to a DPA on behalf of a data subject, or represent the rights or interests of data subjects in other respects (e.g., in relation to Codes of Conduct).

materially changes

Rec.142; Art.80

A not-for-profit body, organisation or association whose statutory objectives are in the public interest and which is active in the field of the protection of data subjects' rights and freedoms may lodge a complaint to a DPA on behalf of a data subject or exercise the right to judicial remedy and the right to seek compensation on behalf of data subjects. Under national law, Member States may mandate a body to lodge complaints on behalf of data subjects, without being mandated by those data subjects.

positive

The GDPR clarifies the requirements regarding claims brought by third parties on behalf of data subjects.

 

positive

The GDPR allows for the possibility of representatives seeking judicial remedies and compensation from organisations, on behalf of multiple data subjects (i.e., collective claims that are similar to class action litigation).

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Suspension of proceedings

In an increasingly internationalised world, it is not uncommon for judicial proceedings to be brought in multiple jurisdictions regarding the same subject matter. In the case of data protection claims, this is a relatively recent, but increasingly important, development.

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N/A

The Directive does not address the circumstances in which a Member State learns of proceedings involving the same controller or processor concerning the same subject matter in another Member State, or the circumstances in which such proceedings are pending at first instance.

materially changes

Rec.144; Art.81

Where a court in one Member State learns of proceedings pending in another Member State, concerning the same controller or processor and the same subject matter, that court may:

  • contact the relevant court in the other Member State to confirm the existence of such proceedings; and
  • suspend its own proceedings if appropriate.

Where these proceedings are pending at first instance, any other court may also, on the application of one of the parties, decline jurisdiction, if the court first seized has jurisdiction.

positive

By allowing national courts to suspend proceedings, the GDPR could lessen the burden on organisations that are faced with parallel proceedings in multiple Member States.

 

negative

Claims could be delayed if a national court decides to suspend proceedings pending the outcome of a case in another Member State. It is also possible that the outcome of cases in other jurisdictions may influence proceedings (which may or may not work in the organisation's favour).

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Compensation and liability

EU data protection law takes the view that controllers (and, more recently, processors) should be liable to pay compensation to data subjects in the event of any unlawful processing of personal data.

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Rec.55; Art.23

A data subject who has suffered harm as a result of the unlawful processing of his or her personal data is entitled to receive compensation from the controller for the harm suffered. The controller may be exempted from such liability, in whole or in part, if it proves that it is not responsible for the event giving rise to the harm.

materially changes

Rec.146-147; Art.82(1)-(2), (4)

A data subject who has suffered harm as a result of the unlawful processing of his or her personal data has the right to receive compensation from the controller or processor for the harm suffered.

  • Any controller involved in the processing is liable for the harm caused.
  • A processor is liable for the harm caused by any of its (or its sub-processor's) processing activities that are not in compliance with its obligations under the GDPR, or are in breach of the controller's instructions.
  • To ensure effective compensation, each controller or processor will be held liable for the entirety of the harm caused, if they are involved in the same processing and responsible for that harm.

negative

The GDPR expands the scope of liability for infringements of EU data protection law to both controllers and processors.

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Liability of joint controllers

Where liability arises in a joint controllership scenario, EU data protection law's primary focus is on ensuring that the data subject is protected. The question of how liability should be apportioned between the joint controllers, while important to organisations, is a secondary question from the perspective of EU data protection law.

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Rec.55; Art.23(2)

The controller may be exempted from liability, in whole or in part, if it proves that he is not responsible for the event giving rise to the damage.

materially changes

Rec.79, 146; Art.26(3), 82(3)-(5)

Data subjects are entitled to enforce their rights against any of the joint controllers. Each joint controller is liable for the entirety of the damage, although national law may apportion liability between them. If one joint controller has paid full compensation, it may then bring proceedings against the other joint controllers to recover their portions of the damages.

negative

The GDPR makes joint controllers fully liable. Once "full compensation" has been paid to the affected data subject(s), joint controllers may recover damages from one another. This means that some joint controllers may find themselves facing much higher liability for claims made under the GDPR.

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Exemptions from liability

In line with general principles of liability, a controller or processor is exempt from liability to the extent that it is not responsible for the relevant harm.

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Rec.55; Art.23(2)

The controller may be exempted from liability, in whole or in part, if it proves that he is not responsible for the event giving rise to the damage. It may also be a defence to show that the liability arose in whole or in part from force majeure.

materially changes

Art.82(3)

A controller or processor is exempt from liability if it proves that it is not responsible for the event giving rise to the harm. There is no mention of force majeure events.

neutral

The GDPR creates the possibility of direct liability for processors (see above) and it therefore extends this exemption to processors. In all other respects, this principle remains unchanged under the GDPR.

 

negative

The Directive exempts controllers from liability for harm arising in cases of force majeure. The GDPR contains no such exemption, meaning that controllers may bear the risk in force majeure cases.

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Administrative fines

As is common in other areas of regulatory law, a system of penalties and administrative fines exists to ensure compliance with the requirements of EU data protection law. It is up to national DPAs to decide whether to issue such a fine and, if so, to determine what the amount of that fine should be.

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Rec. 55; Art.8(5), 24

Member States set their own rules regarding the mechanisms for determining and applying administrative fines. In general, DPAs have a wide degree of discretion as to the circumstances in which to issue a fine, and what the amount of that fine should be. (One notable exception is Spain. Under the Spanish law that implements the Directive, the DPA must issue a fine in certain circumstances.)

materially changes

Rec.150, 152; Art.83

Each DPA shall ensure that it imposes sanctions and administrative fines in a manner that is effective, proportionate and dissuasive.

Where a Member State's legal system does not provide for administrative fines, fines may be initiated by the DPA and imposed by the national courts.

neutral

The concept of administrative fines for breaches of EU data protection law changes only very slightly under the GDPR. However, it is important to note that, as set out below, there are significant changes to both the amount of any fines and the factors relevant to determining those fines.

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Maximum administrative fines

As with many other areas of regulatory law, EU data protection law has a concept of a maximum fine, in order to help ensure that fines are applied on a broadly consistent and proportionate scale.

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Rec. 55; Art. 24

In the majority of cases, the maximum fine under national data protection law for a single infringement is less than €1 million (although France is in the process of increasing the fines applicable under its national law to match the GDPR).

materially changes

Rec.150; Art.83(5)-(6)

The maximum fine that can be imposed for serious infringements of the GDPR is the greater of €20 million or four percent of an undertaking's worldwide turnover for the preceding financial year.

negative

The GDPR sets out new maximum fines of the greater of €20 million or four percent of an undertaking's worldwide turnover, fundamentally changing the potential financial consequences of breaching EU data protection law.

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Application of administrative fines by DPAs

The issue of how DPAs determine whether to issue a fine and, if so, what the amount of that fine should be, is fundamental to ensuring the consistent application of EU data protection law.

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N/A

The Directive is silent on the question of how DPAs should determine whether to issue an administrative fine, or what the amount of that fine should be.

materially changes

Rec. 150; Art.83(2)

When deciding whether to impose a fine and deciding on the amount, DPAs are required to give due regard to a range of issues, including:

  • the nature, gravity and duration of the infringement;
  • the number of data subjects affected and the level of harm suffered by them;
  • the intentional or negligent character of the infringement;
  • any action taken by the controller or processor to mitigate the harm;
  • any relevant previous infringements by the controller or processor;
  • the degree of co-operation with the relevant DPA;
  • whether the infringement was self-reported by the controller or processor; and
  • any other aggravating or mitigating factors.

positive

By explaining the factors that are relevant to determining the imposition and amount of a fine, the GDPR provides organisations with significantly greater certainty regarding the risk of a fine.

 

neutral

The national legal systems of Denmark and Estonia do not permit administrative fines. In those Member States, Rec.151 states that penalties may be imposed through the courts instead.

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Penalties and criminal sanctions

For any infringement of EU data protection law that is not subject to administrative fines, Member States may specify additional penalties.

blank

Rec. 55; Art.24

Member States set their own rules regarding the mechanisms for determining and applying penalties.

materially changes

Rec.149, 152; Art.84

Member States set their own rules on penalties applicable to infringements of the GDPR, in particular those infringements that are not subject to administrative fines. Member States may also provide their own rules on criminal sanctions for infringement of the GDPR.

negative

At a practical level, it is likely that there will continue to be some differences between the application of penalties, due to variations in the national laws of Member States. The possible introduction of criminal sanctions for unlawful processing of personal data presents a significant risk for organisations, depending on how Member States interpret and apply that power.

Further analysis

Commentary: Levels of administrative fines

The GDPR sets out new maximum fines of the greater of €20 million or four percent of an undertaking's worldwide turnover. This is arguably the most significant single change set out in the GDPR, and is likely to cause organisations to view compliance with EU data protection law in a fundamentally different way. The term "undertaking" comes from EU competition law (specifically, Art.101 of the TFEU) and is deliberately broad. The CJEU has stated that this concept "encompasses every entity engaged in an economic activity, regardless of the legal status of the entity and the way in which it is financed" (Joined Cases C-159/91 and C-160/91).

The GDPR also provides that DPAs must take into account a range of factors when deciding whether to impose a fine, and what the amount of that fine should be. It is hoped that this approach will result in a more uniform approach by DPAs to the significant fines introduced under the GDPR.

Case law: Determining which DPA is competent to hear a complaint

In October 2015, the CJEU handed down its judgment in Weltimmo v Nemzeti (Case C-230/14). The CJEU stated that each DPA established by a Member State must ensure compliance with the Directive, within the territory of that DPA's respective Member State.

Consequently, each DPA is competent to hear claims lodged by a data subject concerning the protection of his rights and freedoms in regard to the processing of personal data, even if the relevant processing occurred under the law of another Member State.

However, in the event that the law of another Member State applies, the DPA's powers must be exercised in compliance with the territorial sovereignty of that other Member State, with the result that a DPA cannot impose penalties outside the territory of its own State.

Under the GDPR, this approach is revised by the Consistency Mechanism (see Chapter 15).

Case law: Right to a judicial remedy

If the data subject is not satisfied with the DPA's response to his or her complaint, the data subject is entitled to bring a complaint before a national court. A significant example of this principle in operation is the decision of the CJEU in Schrems (Case C-362/14), in which the data subject was not satisfied with the Irish DPA's response to his original complaint. He then brought his complaint to the Irish courts which, in turn, referred the complaint to the CJEU, where the data subject's complaint ultimately succeeded.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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  • Google Analytics - For more information on Google Analytics cookies, visit www.google.com/policies. To opt-out of being tracked by Google Analytics across all websites visit http://tools.google.com/dlpage/gaoptout. This will allow you to download and install a Google Analytics cookie-free web browser.

Facebook, Twitter and other Social Network Cookies. Our content pages allow you to share content appearing on our Website and Services to your social media accounts through the "Like," "Tweet," or similar buttons displayed on such pages. To accomplish this Service, we embed code that such third party social networks provide and that we do not control. These buttons know that you are logged in to your social network account and therefore such social networks could also know that you are viewing the JD Supra Website.

Controlling and Deleting Cookies

If you would like to change how a browser uses cookies, including blocking or deleting cookies from the JD Supra Website and Services you can do so by changing the settings in your web browser. To control cookies, most browsers allow you to either accept or reject all cookies, only accept certain types of cookies, or prompt you every time a site wishes to save a cookie. It's also easy to delete cookies that are already saved on your device by a browser.

The processes for controlling and deleting cookies vary depending on which browser you use. To find out how to do so with a particular browser, you can use your browser's "Help" function or alternatively, you can visit http://www.aboutcookies.org which explains, step-by-step, how to control and delete cookies in most browsers.

Updates to This Policy

We may update this cookie policy and our Privacy Policy from time-to-time, particularly as technology changes. You can always check this page for the latest version. We may also notify you of changes to our privacy policy by email.

Contacting JD Supra

If you have any questions about how we use cookies and other tracking technologies, please contact us at: privacy@jdsupra.com.

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