Success Through Data Management

General Counsel Perspective
D&I Alert

Posted on

23 Nov

2018

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Dittmar & Indrenius > Insight > Success Through Data Management

An insightful and tasty luncheon at the atmospheric Garden by Olo, engaging discussions and a key note speech by Reijo Aarnio, the Finnish Data Protection Ombudsman. We at D&I had the pleasure of hosting an event on data asset management and the upcoming changes to Finnish data protection laws.

These are the key takeaways for general counsels from the event.

Harmonisation, Harmonisation and Harmonisation

According to Mr Aarnio, harmonisation is essential in monitoring compliance with the GDPR. Mr Aarnio pointed out that the Finnish Data Protection Ombudsman does not have the power to provide interpretations of the GDPR. Instead, the power to ensure the consistent application of the GDPR is vested only in the European Data Protection Board (“EDPB”). Thus, the Ombudsman must rely greatly on the EDPB’s opinions.

This setting is not optimal in light of business development as business decisions must often be made well before any interpretations are issued by the EDPB. The fact that the Data Protection Ombudsman does not provide relevant guidance at this stage weighs heavily on the controllers’ shoulders. Due to the resulting uncertainty, it is of great importance to ensure that all controller decisions are well founded and diligently documented in accordance with the accountability principle.

Despite its incapability to provide independent interpretations of the GDPR, as the Finnish supervisory authority, the Data Protection Ombudsman has, however, the power and obligation to monitor and enforce the application of the GDPR in Finland, as well as to promote the awareness of controllers and processors of their obligations under the GDPR. To this end, Mr Aarnio greatly urged Finnish companies to an open dialogue with the Data Protection Ombudsman.

Prevent Data Protection Disputes

As has been widely discussed during the past few years, under the GDPR, sanctions can be high – up to 4 percent of a company’s global annual revenue. However, fines are not the only punitive measure in the toolbox of the Data Protection Ombudsman. In addition, the Ombudsman has, inter alia, the power to impose temporary or definitive restrictions on controllers’ businesses, including bans on processing data. As Mr Aarnio pointed out, such a ban could in many occasions be more significant than any administrative sanction. By way of example, if such a ban were to interrupt a controller’s business entirely, already a three week ban would be likely to cause higher losses than the 4 percent maximum of an administrational fine.

In any event, prevention of disputes is the key. The most successful resolution of a dispute is preventing it from ever happening. Our Partner and Head of Dispute Powerhouse Jussi Lehtinen pointed out that in order to avoid proceedings by the data protection authority it is not enough to merely ensure that a company’s data assets are processed adequately. The company must also appear trustworthy to the outside observer.

Harness Your Data Assets Correctly

Data is often regarded as the new oil – an asset that can fuel businesses in multiple ways. Although we at D&I definitely see the value of data, we would rather compare it to the wind. Like the wind, data is a renewable source which needs to be correctly harnessed in order for it to create value.

In practice, data is valuable only if two key criteria are met: when it can be used for the right purpose, and processed by the right company. That is why identifying processing purposes and systematically allocating data controllership is so important, as Iiris Kivikari, Senior Associate in our Data Protection, Marketing & Consumers team pointed out. Lawyers have a great responsibility in ensuring that data is available to the businesses that need it the most.

What to Focus On

So, what should a general counsel pay attention to based on the six month old GDPR? As Jukka Lång, our partner and head of our Innovation Powerhouse, noted, now is the time to shift the focus from GDPR compliance work to planning the full use of data assets.

To do so, it is especially important to ensure that a data protection perspective is built into the business. Further, internal reporting must be planned and executed thoroughly to ensure that data protection matters are duly escalated to the management level able to take a stand on them. This includes, among others, the capability to respond to data breaches in a timely manner and implementing efficient annual reporting procedures.

Last, but definitely not least, the structuring of data assets should be planned in a way that promotes innovation and efficient business. By doing so companies are able to maximize their valuations and enable the efficient use of data assets throughout their organisation.

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The new Finnish Data Protection Act supplementing the GDPR enters into force on 1 January 2019
5 Dec 2018 Finland passes new Data Protection Act, which nationally supplements and clarifies the General Data Protection Regulation. Background The European Union's General Data Protection Regulation (EU) 2016/679 ("GDPR") entered into force on 24 May 2016 and has been applicable from 25 May 2018. Even though the Regulation is directly applicable in all Member States, it leaves some issues to be decided on or further regulated by Member States. In Finland, the Regulation is nationally supplemented and clarified with a new Data Protection Act. The new act was delayed but the Finnish Parliament accepted the relevant legislative proposal on 13 November with presidential confirmation taking place on 5 December. The Data Protection Act will enter into force on 1 January 2019 thus e.g. enabling the Finnish supervisory authority, the Data Protection Ombudsman to carry out tasks and exercise powers provided by the GDPR. Administrative fines not applicable to public authorities and bodies The Data Protection Act does not enable imposing administrative fines on public authorities and bodies, which was an issue highly debated during the preparation of the legislation. The GDPR leaves it to Member States to legislate whether administrative fines apply to public authorities and bodies. With diverse arguments for and against, the Finnish legislator decided not to apply the sanction risk of administrative fines to state, municipal, and other public authorities and bodies. For all this, it should be borne in mind that such bodies and authorities process vast amounts of significant personal data. Apart from administrative fines, they are subject to obligations and supervision under the GDPR and the Data Protection Act as well as to general public law requirements and criminal liability. The need to extend the imposition of administrative fines to public bodies and authorities will likely be monitored and assessed in the future. The Data Protection Ombudsman will be the Finnish supervisory authority According to the Data Protection Act, the Finnish Data Protection Ombudsman is the supervisory authority in Finland responsible for monitoring the application of the GDPR. The GDPR would also allow the supervisory authority to be composed of multiple members and even the establishment of more than one supervisory authority. In the Finnish solution, the position and related tasks are allocated to a single official despite earlier discussions of establishing a new authority in the form of an agency. However, upon accepting the new Data Protection Act, the Finnish Parliament required the Government to further examine the possibility of establishing a new data protection agency in the future. According to the Parliament's reply, in the development of the Data Protection Ombudsman organisation it should especially be ensured that administrative sanctions are imposed by a multi-member body and that the authority is independent, as required by the GDPR. The Data Protection Ombudsman shall have an office, which includes at least two Deputy Data Protection Ombudsmen and a necessary amount of referendaries and other personnel. The Office shall also include an internal advisory board, which, at the request of the Data Protection Ombudsman, shall give opinions on significant questions regarding the application of data protection law. Due to the significant workload relating to the enforcement of the GDPR, the current budget proposal for 2019 would allocate 855,000 euros as additional resources to the Office of the Data Protection Ombudsman, thereby – in a longer run – almost doubling its personnel from the current manpower of approximately 23 officials. The sanctions will be imposed by a new collegial body Although the Finnish supervisory authority is a single official, it was deemed vital that the power to impose administrative fines rests with a body composed of more than one member. The Data Protection Act introduces a new collegial body composed of the Data Protection Ombudsman and the Deputy Data Protection Ombudsmen. In Finland, administrative fines may only be imposed by this collegial body. By contrast, the advisory board does not directly participate in imposing administrative fines. The collegial body is chaired by the Data Protection Ombudsman and quorum for the body's decisions on administrative fines requires the presence of at least three members. The decision supported by the majority of members shall prevail and, in case of a tied vote, the decision less adverse to the party subject to the sanction. Especially as upon the time of writing the deputy ombudsmen are not yet appointed, the time will show the sanctioning policies and practices of the collegial body. Taking into account the current practices of the Finnish data protection authority we do not, however, expect that it takes significantly active approach on fines. Since administrative fines are seen as severe sanctions for data controllers and processors, it was considered necessary to allocate the imposition of administrative fines to a multi-member body. Similarly to the structure of the Finnish supervisory authority, the need to further develop the composition and decision-making procedure of the collegial body in relation to administrative fines will be monitored and assessed in the future. It should be noted that fines are not the only punitive measure in the toolbox of the Data Protection Ombudsman. The Data Protection Ombudsman has various other corrective powers (e.g. order of compliance and rectification and ban on processing), the use of which the Ombudsman may enforce by issuing a notice of a conditional fine. Conditional fines apply to private parties and public authorities and bodies. These other corrective powers, such as the power to impose bans on processing data, may in many occasions be more significant than the fines, as discussed in our recent article, which can be found here . The right to appeal to the Supreme Administrative Court requires a leave to appeal According to the Data Protection Act, decisions of the Data Protection Ombudsman and Deputy Data Protection Ombudsmen and decisions on administrative fines may be appealed against by lodging an appeal in an Administrative Court. There is no possibility to request an administrative review of decisions of the supervisory authority and, therefore, an appeal to an Administrative Court is the first legal remedy. It should be noted that a decision qualifying for appeal may state that the decision is enforceable notwithstanding appeal. Therefore, the effects of a ban on processing, for instance, may not necessarily be postponed simply by appealing. However, obtaining a court order prohibiting enforcement of such decision may be possible in certain circumstances. An appeal against the decision of an Administrative Court to the Supreme Administrative Court requires leave to appeal according to the Data Protection Act. The requirement for leave to appeal is in line with current policies regarding the developing role of the Supreme Administrative Court. The applicable age for children will be 13 The GDPR requires that where information society services are offered directly to a child, processing of personal data on the basis of consent is lawful only if the child is at least 16 years old. Member States may provide for a lower age by law, but not below 13 years. According to the Data Protection Act, the applicable age in Finland is 13 years. In relation to children younger than that, consent must be given or authorised by the holder of parental responsibility over the child. The Finnish and Nordic view highlight a child's right to participate in the modern digital culture and benefit from services of the information society. While it is vital to provide necessary safeguards for the protection of children against harmful phenomena online, the use of internet and digital services is considered to have an important impact on a child's learning, social skills and self-expression. Looking forward The acceptance and confirmation of the Data Protection Act mark the end of a long wait in Finnish data protection law. However, in a more extensive process we have reached but an intermediate stage. The need to adjust the form and structure of the national supervisory authority and the non-application of administrative fines to public authorities and bodies will be monitored in the future and re-visited if necessary. Moreover, many amendments to specific legislation required by the GDPR are still under way. For example, the Finnish Parliament is currently processing amendments to the Act on the Protection of Privacy in Working Life, the peculiar and important Finland specific act governing the employee data. This next phase will be of great importance and interest, and show in part that there is still a long way to harmonising the European data protection regime.   Special thanks to the co-author of this insight Oskari Paasikivi, D&I Trainee 2018.

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