By Luigi Neirotti

DPA Requests Change to Code to Include Acceptance of BCRs

Recently, Italy made some changes regarding data export to countries that do not offer adequate protection according to EU standards. On 6 December 2007, the Italian Data Protection Authority (Garante per la protezione dei dati personali) issued a press release announcing that it had officially requested that the Italian Parliament modify the section of the Italian Data Protection Code that referred to the export of data to third countries.
The Italian DPA acknowledged the difficulties that corporations and other organizations face in relation to cross-border data flow, especially in cases where numerous entities and countries are involved. The DPA also acknowledged that the standard contractual clauses are, in certain cases, complicated to deploy with particular regard to groups of companies, and that it appreciates the alternative solution approved by the European Commission consisting in the Binding Corporate Rules (BCR), which appears to be a suitable solution for such situations.

The Italian DPA stressed the necessity of the "bindingness" of the rules, both within the same group and outside the group of companies at hand, and subordinates the validity of BCRs to a strict evaluation of such bindingness.

• The Italian DPA considered that in some member states the BCRs were introduced in the law system by a modification of the data protection regulation. Specifically, the Italian DPA makes mention of:The Federal Republic of Germany where the federal law regulating personal data processing recognizes expressly the possibility to adopt, as an alternative to the "standard contractual clauses", the binding corporate rules (4c, line 2, Bundesdatenschutzgesetz)
• The Republic of France, which approved a modification of its data protection law to mention the possibility to have recourse to "internal rules" of the group (Art. 69 Loi du 6 janvier 1978 relative a  l'informatique, aux fichiers et aux libertes modifiee par la loi relative a  la protection des personnes physiques a  l'egard des traitements de donnees a  caractere personnel du 6 aout 2004)

Based on the above, the Italian DPA considered that the Italian Data Protection Code does not include any mention of the BCRs. Notwithstanding, the Italian Data Protection Code provides the Italian DPA with the power to deploy Commission Decisions with regard to adequacy of the level of protection offered by third countries. The DPA indicated that a modification of the Italian Data Protection Code for the deployment of the BCRs is necessary.

In particular, the Italian DPA considered that the BCRs present uncertainty with regard to the legal qualification of some aspects (under Italian law), with special regard to the real bindingness, that could challenge the protection guaranteed to data subjects. Such uncertainty could lead the Italian DPA to disclaim the validity of the BCRs with regard to the existence of adequate protection offered to the data subjects, notwithstanding such protection would be announced in such an internal group's code of conduct.

The Italian DPA fears that negative consequences could arise — with regard to other member states — for the companies or groups based in Italy belonging to entities interested in data export to third countries. This position suggests that the Italian DPA will put energy behind the request for change to the Data Protection Code and the acceptance of BCRs for Italian entities. It signals that one of the few remaining member nations of the EU that has not been able to embrace the practice of BCRs may be able to change its posture, and that BCRs may be on their way to greater applicability.

Luigi Neirotti is a partner in Studio Legale Tributario, a law firm in association with Ernst & Young, and member of the Milano bar, Italy. He has 20 years of professional experience in the areas of information technology and computer law, with particular regard to IT agreements (transactions related to hardware, software, outsourcing services), as well as to data protection and electronic signatures. His experience is significant also with regard to commercial contracts and other corporate matters. He may be reached at luigi.neirotti@it.ey.com.