- On Tuesday, the highest EU court ruled that the Safe Harbour agreement is invalid, Reuters reported.
- The agreement allows thousands of companies to transfer data easily from Europe to the United States.
- The court said the Safe Harbour agreement does not sufficiently protect EU citizens' personal data.
It is unclear if the decision would immediately require companies to suspend personal data transfers to the United States, which would cause significant disruption for U.S. companies that operate in the EU. Many companies, particularly tech firms including Google and IBM, have said the Safe Harbour agreement eases the transfer of data -- such as payroll and human resources information -- between the two countries. The system was set up by the European Commission 15 years ago.
The EU court said American companies were "bound to disregard, without limitation, the privacy safeguards where they come into conflict with the national security, public interest and law enforcement requirements of the United States.”
"The EU's highest court has pulled the rug under the feet of thousands of companies that have been relying on Safe Harbour," said Monika Kuschewsky, special counsel at law firm Covington. "All these companies are now forced to find an alternative mechanism for their data transfers to the U.S."