EU Court Affirms EU-US Data Protection Framework: Practical Implications for Global Businesses

By: Daniel J. Gershman, Esq.

Introduction

On September 3, 2025, the Court of Justice of the European Union (CJEU) put months of uncertainty to rest by upholding the European Commission’s adequacy decision for the EU-US Data Protection Framework (DPF). In doing so, the Court confirmed that personal data can continue to flow from the European Economic Area (EEA) to certified organizations in the United States without the need for additional safeguards. This ruling is significant for any company with cross-border operations, digital services, or cloud-based infrastructure that relies on transatlantic data transfers.

At FRB, we have closely tracked the development of the DPF since its inception and provided an initial overview of the scheme and its requirements. Readers who would like a refresher on the structure and obligations of the Framework can consult our previous article before diving into the latest developments.

This article explains what the CJEU’s decision means in practice, why it matters for businesses large and small, and how organizations can position themselves for compliance and competitive advantage in the modern data economy.

The Decision in Context

A Brief Procedural History

The current DPF is the third transatlantic data-transfer mechanism adopted by the European Commission following the invalidation of its predecessors: the Safe Harbor in 2015 (Schrems I) and the EU-US Privacy Shield in 2020 (Schrems II). Max Schrems, the Austrian privacy advocate who initiated both challenges, argued once again that US intelligence-gathering practices and the lack of judicial redress rendered the Framework incompatible with Articles 7, 8, and 47 of the EU Charter of Fundamental Rights.

In its decision, the CJEU acknowledged that the United States had introduced substantial reforms to address the deficiencies identified in Schrems II, including Executive Order 14086, which tightened the principles governing US signals intelligence and created the Data Protection Review Court to provide EU data subjects with independent, binding remedies. Finding these safeguards “essentially equivalent” to EU standards, the Court rejected the application seeking annulment of the adequacy decision and thereby preserved an indispensable legal bridge for EU-US commerce.

Key Holdings

1. Adequacy: The Court held that the revised US legal framework offers a level of protection for personal data that is, in substance, equivalent to that guaranteed within the EU.
2. Redress Mechanisms: The newly established Data Protection Review Court was deemed to satisfy EU requirements for effective judicial redress, addressing the crux of the Schrems II critique.
3. Proportionality and Necessity: US surveillance activities, as reformulated by Executive Order 14086, were found to be limited to what is strictly necessary and proportionate.

Why the Ruling Matters for Transatlantic Commerce

Data is the lifeblood of modern business, and any impediment to international data flows risks disrupting supply chains, cloud services, HR management, customer analytics, and countless other operations. Prior to the ruling, many firms hedged their bets by executing Standard Contractual Clauses (SCCs) supplemented by Transfer Impact Assessments (TIAs) and, in some cases, technical measures such as end-to-end encryption or data minimization strategies.

While SCCs remain valid, and may still be necessary for transfers to non-certified US entities, companies that participate in the DPF can now: (a) streamline compliance obligations, reducing administrative overhead associated with TIAs; (b) accelerate product launches and service deployments by eliminating legal bottlenecks; and (c) Enhance customer trust by demonstrating alignment with EU data-protection expectations.

In short, the CJEU’s endorsement of the Framework injects long-awaited legal certainty into transatlantic commerce, enabling organizations to focus on innovation rather than litigation risk.

Compliance Takeaways for Businesses

1. Certification Considerations. US entities seeking to receive EU personal data should evaluate whether self-certification to the DPF makes commercial sense. Certification requires publicly committing to the Framework’s principles, updating privacy notices, and subjecting oneself to US Federal Trade Commission (FTC) oversight. For many companies, the benefits of frictionless data flows outweigh the costs of these obligations.
2. Contractual Revisions. EU-based exporters may wish to revise data-processing addenda to reference the DPF where counterparties are certified. Retaining SCCs as a fallback remains prudent, particularly for transfers that may evolve outside the scope of certification.
3. Vendor and Supply-Chain Management. Even if a company elects not to certify, it must still understand how the decision ripples through its vendor ecosystem. Due diligence questionnaires should capture whether third-party processors are DPF-certified or rely on alternative transfer tools and what supplemental measures they maintain.
4. Ongoing Monitoring. The Framework is subject to annual joint reviews by EU and US authorities. Businesses should implement an internal compliance calendar to track these reviews and any potential legislative or judicial challenges that could alter the viability of the DPF.

Interaction with Other Transfer Mechanisms

Although the ruling removes immediate uncertainty, it does not eclipse the relevance of SCCs, Binding Corporate Rules (BCRs), or derogations under Article 49 GDPR. Organizations need a tailored, multilayered transfer strategy that flexibly accounts for (a) transfers to non-certified US entities, (b) intra-group transfers spanning additional jurisdictions without adequacy decisions; and (c) situations where data categories or processing activities fall outside the DPF’s substantive scope.

A holistic strategy will safeguard business continuity should the Framework face future legal challenges or amendments.

Preparing for Heightened Regulatory Scrutiny

Regulators, consumer advocates, and privacy-minded customers will not abandon their vigilance simply because the Court has ruled. To mitigate enforcement and reputational risk, businesses should:

1. Maintain updated, transparent privacy notices reflecting the transfer mechanism relied upon;
2. Conduct regular gap analyses mapping the flow of personal data and identifying any processing outside the DPF’s protections;
3. Document risk assessments and mitigation steps to demonstrate accountability under Articles 5(2) and 24 GDPR; and
4. Train staff on new policies, incident-response procedures, and individual rights handling.

Proactive compliance not only satisfies regulators but also reassures clients and investors that data protection is woven into the organization's operational fabric.

Conclusion: Charting a Confident Course Forward

The CJEU’s decision to uphold the EU-US Data Protection Framework is more than a legal milestone; it is an invitation to cultivate transatlantic innovation on a foundation of trust. For businesses, the ruling alleviates immediate pressure but does not eliminate the need for vigilant, adaptive compliance.

FRB stands ready to guide organizations through the evolving data-privacy landscape, whether that means pursuing certification, renegotiating contracts, or designing a layered global-transfer strategy. Our multidisciplinary team combines deep regulatory insight with pragmatic business acumen, ensuring that our clients can leverage data responsibly and competitively.

If your business transfers personal data between the EU and the United States, operates across borders, or is planning to expand into new markets, Falcon Rappaport & Berkman can guide you through the EU-US Data Protection Framework and related requirements. Our team helps companies assess compliance obligations, evaluate certification options, and build holistic privacy strategies that not only safeguard operations and customer trust but also transform regulatory complexity into commercial opportunity. Contact our Corporate & Securities Practice Group at 516-599-0888 or complete the form below to learn more.

DISCLAIMER: This summary is not legal advice and does not create any attorney-client relationship. This summary does not provide a definitive legal opinion for any factual situation. Before the firm can provide legal advice or opinion to any person or entity, the specific facts at issue must be reviewed by the firm. Before an attorney-client relationship is formed, the firm must have a signed engagement letter with a client setting forth the Firm’s scope and terms of representation. The information contained herein is based upon the law at the time of publication.