European Court of Justice Strikes Down U.S.-EU Safe Harbor Agreement For Its Data Transfer Mechanism That Is Violative of Web Users' Privacy Rights

The European Court of Justice, the European Union's highest court, on Tuesday struck down a U.S.-EU agreement that allowed the transfer of personal information from European web users to the United States. The decision came after concerns over privacy and safety was raised in court.

The decision declared the 15-year-old "Safe Harbor" pact between the United States and European Union. It introduced a process through which about 4,5000 companies, including Apple and Google, collect personal online information from European web users in violation of privacy rights.

The New York Times reports Monday, the case was brought to court by 27-year-old Austrian law student Max Schrems in light of the leaks from former National Security Agency contract Edward J. Snowden which showed that American intelligence agencies had wide access to the data from Europe.

The court also said that each of the 28 European Union member states should have data protection regulators to oversee how companies access and collect online information.

While data protection advocates celebrated the decision of the court, many companies are left with uncertainty as billions of dollars hangs in the balance in the online advertising business, the Wall Street Journal writes.

Businesses are now calling for a complete reform on the Safe Harbor agreement. However, other date arrangements are expected to undergo examination to check if they contain similar loopholes or threat to privacy.

"We can't assume that anything is now safe," said Brian Hengesbaugh, privacy lawyer at Chicago-based firm Baker & McKenzie. "The ruling is so sweepingly broad that any mechanism used to transfer date from Europe could be under threat."

Meanwhile, European laws provide other mechanisms for transferring personal date legally, such as the so-called model contracts.

"Losing Safe Harbor would be hugely disruptive to all sorts of business," said a representative of a U.S.-based cloud services company.

According to the New York Times, the ruling does not only affect tech companies, but also organizations with international operations.

First vice president for the European Commission Frans Timmermans, who is in charge of carrying out the ruling, assured business that they could still move date from European to the United States provided that certain measures at met.

"Citizens need robust safeguards," said Timmermans. "And companies need certainty."

In its decision, the European court held that the 500 million citizens affected by the data transfers did not have the right to file legal cases in United States courts in case they believe that their privacy had been violated.

A bill that will give web users legal recourse is currently under debate in the Congress.

U.S. Secretary of Commerce Penny Pritzker said she would work with the European Commission to reform the Safe Harbor agreement.

Edward Snowden Tuesday congratulated Max Schrems for his win in court. Snowden tweeted Schrems, "You've changed the world for the better."