On 24 January 2014, the High Court of Berlin upheld a ruling of the District Court of Berlin from 6 March 2012, according to which Facebook is subject to German and not Irish data protection law (the PM and the decision in German can be found here). The proceeding was initiated by the Federation of German Consumer Organisations (VZBV) and mainly dealt with the legality of the friend-finder feature in the social network.

I will only summarize the relevant aspects of the ruling having regard to the question of the applicable data protection law. The key provision for the answer, which national data protection law has to be applied to a processing of personal data in the EU, can be found in Art. 4 of Directive 1995/46/EC („DPD“). Of course, the Court primarily takes into account the relevant national provision of the German Federal Data Protection Act, § 1 (5), but also makes clear that these national provisions have to be interpreted in accordance with the DPD. The High Court at first describes the general principles of these provisions and rightly clarifies that Art. 4 DPD has to be regarded as part of the core elements of the DPD. It furthermore lays down the two possibilities foreseen in Art. 4 (1) DPD, to examine the relevant data protection law. That is

• According to Art. 4 (1) (a) DPD, the national law of that Member State, where the processing is carried out in the context of the activities of an establishment of the controller on the territory of the Member State; or
• According to Art. 4 (1) (c) DPD, if the controller is not established on Community territory and, for purposes of processing personal data makes use of equipment, automated or otherwise, situated on the territory of the said Member State, unless such equipment is used only for purposes of transit through the territory of the Community.

These two possible connecting factors ((1) if the relevant controller is established in the EU OR (2) if the relevant controller is established outside the EU and makes use of equipment within a Member State) are the bases for the first part of the Court’s decision.

According to the ruling, Facebook Inc. in America and not Facebook Ireland has to be regarded as the competent controller for the processing of personal data of German users. So in the Court’s view, the controller is not established in the EU and therefore Art. 4 (1) (c) DPD has to be applied. Facebook Inc. uses Cookies to process personal data of German users. In accordance with the view taken by the Art. 29 Working Party (WP 179, p. 21), the Court considers the placing of Cookies on the PC of a user and the processing of personal data via these Cookies as „making use of equipment“.

In a next step the Court examines, if perhaps nevertheless the relevant establishment for the processing of personal data could in fact be Facebook Ireland. As a consequence, Art. 4 (1) (a) DPD and Irish data protection law would apply to the data processing. This is exactly the view taken by the Higher Administrative Court of Schleswig-Holstein in its ruling from 22 April 2013. The Higher Administrative Court found that only Facebook Ireland can be qualified as the controller for the processing of personal data by German users.

However, the High Court of Berlin does not agree to this finding. According to the Court, Facebook did not sufficiently prove that its establishment in Ireland really determines the means and purposes of the relevant processing operations. In the Court’s view, Facebook Ireland does not effectively and actually exercise the processing operations under consideration. Facebook contended that the establishment in Ireland is the single contractual partner of users outside of North America. But this alone did not convince the Court to qualify Facebook Ireland as the relevant establishment in the sense of Art. 4 (1) (a) DPD. Especially an actual decisive power by Facebook Ireland would be missing. In the Court’s view, the contractual powers of Facebook Ireland towards its parent company in America are displaced by the corporate law competences of Facebook Inc.

The second (and alternative) base of the decision is the recognition of the possibility of a free choice of data protection law. The Court refers to the terms of use of the German Facebook site, where it states that „this statement is subject to German law“. The Court considers this choice of law not only to affect the applicable contract law, but also to encompass data protection law. In the view of the Court, the German Federal Data Protection Act consists of public law as well as private law provisions. With regard to the private law provisions, a choice of law would be possible.
In my opinion, a choice of law is not possible having regard to data protection law. Art. 4 (1) DPD and the relevant national transpositions should be qualified as overriding mandatory rules in the sense of Art. 9 Rom I Regulation or Art. 16 Rom II Regulation. This is also the view, taken by the Higher Administrative Court of Schleswig-Holstein. Unfortunately, the High Court of Berlin does not mention the Rom I or II Regulations. Also the Art. 29 Working Party, in its opinion on apps (WP 202), made clear that „It is important for app developers to know that both directives are imperative laws in [a way; comment by author] that the individual’s rights are non-transferable and not subject to contractual waiver. This means that the applicability or European privacy law cannot be excluded by a unilateral declaration or contractual agreement“ (page 8).

After the decision by the High Court of Berlin, we now face two deviating decisions by High Courts in Germany on the question of the applicable data protection law regarding Facebook and the question of a free choice of data protection law. One has to await, if Facebook proceeds against the decision of the High Court of Berlin.