Article 47 GDPR

← Article 47 - Binding corporate rules →
Chapter 1: General provisions Article 1: Subject-matter and objectives Article 2: Material scope Article 3: Territorial scope Article 4: Definitions Chapter 2: Principles Article 5: Principles relating to processing of personal data Article 6: Lawfulness of processing Article 7: Conditions for consent Article 8: Conditions applicable to child’s consent in relation to information society services Article 9: Processing of special categories of personal data Article 10: Processing of personal data relating to criminal convictions and offences Article 11: Processing which does not require identification Chapter 3: Rights of the data subject Article 12: Transparent information, communication and modalities for the exercise of the rights of the data subject Article 13: Information to be provided where personal data are collected from the data subject Article 14: Information to be provided where personal data have not been obtained from the data subject Article 15: Right of access by the data subject Article 16: Right to rectification Article 17: Right to erasure (‘right to be forgotten’) Article 18: Right to restriction of processing Article 19: Notification obligation regarding rectification or erasure of personal data or restriction of processing Article 20: Right to data portability Article 21: Right to object Article 22: Automated individual decision-making, including profiling Article 23: Restrictions Chapter 4: Controller and processor Article 24: Responsibility of the controller Article 25: Data protection by design and by default Article 26: Joint controllers Article 27: Representatives of controllers or processors not established in the Union Article 28: Processor Article 29: Processing under the authority of the controller or processor Article 30: Records of processing activities Article 31: Cooperation with the supervisory authority Article 32: Security of processing Article 33: Notification of a personal data breach to the supervisory authority Article 34: Communication of a personal data breach to the data subject Article 35: Data protection impact assessment Article 36: Prior consultation Article 37: Designation of the data protection officer Article 38: Position of the data protection officer Article 39: Tasks of the data protection officer Article 40: Codes of conduct Article 41: Monitoring of approved codes of conduct Article 42: Certification Article 43: Certification bodies Chapter 5: Transfers of personal data Article 44: General principle for transfers Article 45: Transfers on the basis of an adequacy decision Article 46: Transfers subject to appropriate safeguards Article 47: Binding corporate rules Article 48: Transfers or disclosures not authorised by Union law Article 49: Derogations for specific situations Article 50: International cooperation for the protection of personal data Chapter 6: Supervisory authorities Article 51: Supervisory authority Article 52: Independence Article 53: General conditions for the members of the supervisory authority Article 54: Rules on the establishment of the supervisory authority Article 55: Competence Article 56: Competence of the lead supervisory authority Article 57: Tasks Article 58: Powers Article 59: Activity reports Chapter 7: Cooperation and consistency Article 60: Cooperation between the lead supervisory authority and the other supervisory authorities concerned Article 61: Mutual assistance Article 62: Joint operations of supervisory authorities Article 63: Consistency mechanism Article 64: Opinion of the Board Article 65: Dispute resolution by the Board Article 66: Urgency procedure Article 67: Exchange of information Article 68: European Data Protection Board Article 69: Independence Article 70: Tasks of the Board Article 71: Reports Article 72: Procedure Article 73: Chair Article 74: Tasks of the Chair Article 75: Secretariat Article 76: Confidentiality Chapter 8: Remedies, liability and penalties Article 77: Right to lodge a complaint with a supervisory authority Article 78: Right to an effective judicial remedy against a supervisory authority Article 79: Right to an effective judicial remedy against a controller or processor Article 80: Representation of data subjects Article 81: Suspension of proceedings Article 82: Right to compensation and liability Article 83: General conditions for imposing administrative fines Article 84: Penalties Chapter 9: Specific processing situations Article 85: Processing and freedom of expression and information Article 86: Processing and public access to official documents Article 87: Processing of the national identification number Article 88: Processing in the context of employment Article 89: Safeguards and derogations relating to processing for archiving purposes in the public interest, scientific or historical research purposes or statistical purposes Article 90: Obligations of secrecy Article 91: Existing data protection rules of churches and religious associations Chapter 10: Delegated and implementing acts Article 92: Exercise of the delegation Article 93: Committee procedure Chapter 11: Final provisions Article 94: Repeal of Directive 95: /46: /EC Article 95: Relationship with Directive 20: 02: /58: /EC Article 96: Relationship with previously concluded Agreements Article 97: Commission reports Article 98: Review of other Union legal acts on data protection Article 99: Entry into force and application

Legal Text

Article 47 - Binding corporate rules

1. The competent supervisory authority shall approve binding corporate rules in accordance with the consistency mechanism set out in Article 63, provided that they:

(a) are legally binding and apply to and are enforced by every member concerned of the group of undertakings, or group of enterprises engaged in a joint economic activity, including their employees;

(b) expressly confer enforceable rights on data subjects with regard to the processing of their personal data; and

(c) fulfil the requirements laid down in paragraph 2.

2. The binding corporate rules referred to in paragraph 1 shall specify at least:

(a) the structure and contact details of the group of undertakings, or group of enterprises engaged in a joint economic activity and of each of its members;

(b) the data transfers or set of transfers, including the categories of personal data, the type of processing and its purposes, the type of data subjects affected and the identification of the third country or countries in question;

(c) their legally binding nature, both internally and externally;

(d) the application of the general data protection principles, in particular purpose limitation, data minimisation, limited storage periods, data quality, data protection by design and by default, legal basis for processing, processing of special categories of personal data, measures to ensure data security, and the requirements in respect of onward transfers to bodies not bound by the binding corporate rules;

(e) the rights of data subjects in regard to processing and the means to exercise those rights, including the right not to be subject to decisions based solely on automated processing, including profiling in accordance with Article 22, the right to lodge a complaint with the competent supervisory authority and before the competent courts of the Member States in accordance with Article 79, and to obtain redress and, where appropriate, compensation for a breach of the binding corporate rules;

(f) the acceptance by the controller or processor established on the territory of a Member State of liability for any breaches of the binding corporate rules by any member concerned not established in the Union; the controller or the processor shall be exempt from that liability, in whole or in part, only if it proves that that member is not responsible for the event giving rise to the damage;

(g) how the information on the binding corporate rules, in particular on the provisions referred to in points (d), (e) and (f) of this paragraph is provided to the data subjects in addition to Articles 13 and 14;

(h) the tasks of any data protection officer designated in accordance with Article 37 or any other person or entity in charge of the monitoring compliance with the binding corporate rules within the group of undertakings, or group of enterprises engaged in a joint economic activity, as well as monitoring training and complaint-handling;

(i) the complaint procedures;

(j) the mechanisms within the group of undertakings, or group of enterprises engaged in a joint economic activity for ensuring the verification of compliance with the binding corporate rules. Such mechanisms shall include data protection audits and methods for ensuring corrective actions to protect the rights of the data subject. Results of such verification should be communicated to the person or entity referred to in point (h) and to the board of the controlling undertaking of a group of undertakings, or of the group of enterprises engaged in a joint economic activity, and should be available upon request to the competent supervisory authority;

(k) the mechanisms for reporting and recording changes to the rules and reporting those changes to the supervisory authority;

(l) the cooperation mechanism with the supervisory authority to ensure compliance by any member of the group of undertakings, or group of enterprises engaged in a joint economic activity, in particular by making available to the supervisory authority the results of verifications of the measures referred to in point (j);

(m) the mechanisms for reporting to the competent supervisory authority any legal requirements to which a member of the group of undertakings, or group of enterprises engaged in a joint economic activity is subject in a third country which are likely to have a substantial adverse effect on the guarantees provided by the binding corporate rules; and

(n) the appropriate data protection training to personnel having permanent or regular access to personal data.

3. The Commission may specify the format and procedures for the exchange of information between controllers, processors and supervisory authorities for binding corporate rules within the meaning of this Article. Those implementing acts shall be adopted in accordance with the examination procedure set out in Article 93(2).

Relevant Recitals

Recital 110: Binding Corporate Rules

A group of undertakings, or a group of enterprises engaged in a joint economic activity, should be able to make use of approved binding corporate rules for its international transfers from the Union to organisations within the same group of undertakings, or group of enterprises engaged in a joint economic activity, provided that such corporate rules include all essential principles and enforceable rights to ensure appropriate safeguards for transfers or categories of transfers of personal data.

Commentary

In order to compensate for a lack of data protection in a third country that has not been declared as safe under Art. 45 GDPR, entities can adopt binding corporate rules (BCR) pursuant to Articles 46(2)(b) and 47 GDPR. They constitute an appropriate safeguard for international data transfers. While it did not specifically deal with BCRs, the Schrems II judgment of the Court of Justice held that the use of appropriate safeguards "requires that they provide a level of protection that is essentially equivalent to that under EU data protection law based on the Charter. The EDPB has found that this standard applies to all the types of appropriate safeguards in Article 46(2) that are of a contractual nature, which includes BCRs.4 This means that the Schrems II judgment is also relevant to BCRs, and that BCRs may require the use of supplementary transfer tools just as the standard contractual clauses do."

(1) Binding Corporate Rules

Binding Corporate Rules are one of the legal basis to transfer personal data outside of the EU to be used in the absence of the adequacy decision.  Article 4(20) GDPR defines them as "personal data protection policies which are adhered to by a controller or processor established on the territory of a Member State for transfers or a set of transfers of personal data to a controller or processor in one or more third countries within a group of undertakings, or group of enterprises engaged in a joint economic activity".

They refer specifically to the third-country transfers within one group of undertakings or group of enterprises engaged in a joint economic activity. Therefore, BCRs cannot be used as a justification for international data transfers to entities that are not part of the relevant group of undertakings or group of enterprises engaged in a joint economic activity.

An "enterprise” is defined in Article 4(18) GDPR as  'a natural or legal person engaged in an economic activity, irrespective of its legal form, including partnerships or associations regularly engaged in an economic activity'. “A group of undertakings”, following Article 4(19) GDPR, is formed by 'a controlling undertaking and its controlled undertakings'.  The GDPR does not define what is 'a group of enterprises engaged in a joint economic activity’. According to Kuner, this could be a joint venture or an alliance, “as long as it is stable”. BCRs may be introduced for data controllers, data processors or in a mixed form.

Article 47(1) GDPR establishes the following requirements for the BCRs: (i) they are legally binding, apply to and are enforced by every member of the group, including the employees (Article 47(1)(a) GDPR); (ii) expressly confer enforceable rights on data subjects with regard to the processing of their personal data (47(l)(b) GDPR; and (iii) fulfil the requirements laid down in Article 47(2) GDPR.

(a) Legally Binding and Enforced by Every Member Concerned as well as by Employees

The BCRs must contain a clear duty for all the members of the Group and for the employees to respect the BCRs. The Group will have to explain in its application form how the rules are made binding between the companies/entities in the group by, say, one or more of intra-group agreement, unilateral undertakings, internal regulatory measures, policies of the group, or other means. The same shall be done with regard to employees by one or more individual and separate agreement/undertaking with sanctions, clause in employment contract with sanctions, internal policies with sanctions, or collective agreements with sanction.

(b) Confer Enforceable Rights on Data Subjects

The BCRs must grant rights to data subjects to enforce the rules as third-party beneficiaries. The rights should cover the judicial remedies for any breach of the rights guaranteed and the right to receive compensation. The BCRs must contain a duty for the EU headquarters, or the EU Member with delegated responsibilities to accept responsibility for and to agree to take the necessary action to remedy the acts of other members linked by the BCRs outside of the EU and to pay compensation for any damages resulting from the violation of the BCRs by members of the BCRs. The BCRs must also state that, if a member of the group outside the EU violates the BCRs, the courts or other competent authorities in the EU will have jurisdiction and the data subject will have the rights and remedies against the member that has accepted liability as if the violation had taken place by them in the member state in which they are based instead of the member of the group outside the EU.

(c) Respect Specific Content Requirements

See paragraph 2 below.

(2) Minimum Content

Article 47(2) GDPR non-exhaustively lists what should be included in the BCRs. The WP29 introduced specific guidelines for controllers and for processors on that matter. They may include, amongst others: structure and contact details, material scope and a general description of the transfers so as to allow the DPAs to assess that the processing carried out in third countries is compliant (Articles 47(2)(a), 47(2)(b) GDPR); explanation how the rules are made binding and enforced among its members and employees (Article 47(1)(a), 47(2)(c) GDPR); conferral of rights on data subjects to enforce the rules as third-party beneficiaries, including at least data protection principles, transparency and easy access rules, rights of the data subject, national legislation, right to complain through the internal complaint mechanism of the companies, cooperation duties with the DPAs and liability and jurisdiction provisions (Article 47(1)(b), 47(2)(c), 47(2)(e), 47(2)(g), 47(2)(i), 47(2)(l) GDPR; a duty for the EU BCR member to accept responsibility for and to agree to take the necessary action to remedy the acts of other members outside of the EU and to pay compensation for any material or non-material damages resulting from the violation of the BCRs by them (Article 47(2)(f)) GDPR; commitment that a training on the BCRs will be provided to personnel that have permanent or regular access to personal data (Article 47(2)(n) GDPR; a duty for the group to have data protection audits on regular basis (Article 47(2)(j) GDPR and to designate where required a DPO (Article 47(2)(h) GDPR).

(3) Exchange of Information

The format and procedures for the exchange of information about BCR between the controllers, processors and DPAs shall be specified by the Commission, in accordance with Article 93(2) GDPR. Additionally, the European Data Protection Board may issue relevant guidelines and opinions. The EDPB has so far endorsed five papers of the WP29 relating to BCRs.

Approval Procedure

BCRs are approved by the national DPAs rules in accordance with the consistency mechanism set out in Article 63 GDPR. Following provisions of Article 64(f) GDPR, the EDPB issues a non-binding opinion whenever the DPA aims to approve the BCRs.

The group interested in introducing the BCRs should propose the supervisory authority  to act as “the BCR Lead”. In the application, it should include all relevant information about a nature and general structure of the processing activities. The WP29 proposed the following informal criteria to take into account while defining the right SA: the location(s) of the Group’s European headquarters; the location of the company within the Group with delegated data protection responsibilities; the location of the company which is best placed (in terms of management function, administrative burden, etc.) to deal with the application and to enforce the binding corporate rules in the Group, the place where most decisions in terms of the purposes and the means of the processing (i.e. transfer) are taken; and the member state within the EU from which most or all transfers outside the EEA will take place.

The DPA that received the application informs other DPAs concerned about its decision to become the BCR Lead. If it agrees to does so, then the other DPAs have, under Article 57(1)(g) GDPR, a right to raise any objections within two weeks (period extendable to two additional weeks if requested by any SA concerned). If the DPA refuses to act as the BCR Lead, it should explain the reasons for its decision as well as its recommendations (if any) as to which other DPA would be appropriate. Once a decision on the BCR Lead has been made, the latter starts the discussions with the applicant and review the draft BCR documents. Other DPAs concerned may act as co-reviewers of the documents. After the review process, the applicant sends to the BCR Lead “a consolidated draft” that maybe commented by other DPAs concerned. The BCR Lead submits, following Article 64(1) GDPR and Article 64(4) GDPR, a draft decision to the EDPB. The EDPB issues a non-binding opinion on the BCRs. If the opinion endorses the draft decision, the BCR Lead adopts the decision approving the BCRs. If the opinion requires any amendment to the draft BCRs, the BCR Lead, acting under Article 64(7) GDPR, communicate to the Chair of the Board within the two-week that either it intends to maintain its draft decision or that it intends to amend it in accordance with the EDPB opinion. If the BCR Lead refuses to include the EDPB amendments in the draft decision, then dispute resolution under Article 65(1) GDPR is triggered. If the BCR Lead decides to follow the EDPB opinion, it contacts the applicant immediately in order to request the amendments to the draft. When the draft BCRs have been finalized in accordance with the EDPB opinion, the BCR Lead amends its initial draft decision, approves the BCRs and notifies the EDPB. After the approval, the BCR Lead informs all other DPAs concerned about its decision.

The group whose BCRs have been not accepted by the DPA can challenge it under Article 78 GDPR. The opinion of the EDPB may be challenged before the European Court of Justice in the annulment procedure under Article 263 of the TFEU.

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Decisions

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