Data today presents a complex knot of business challenges, especially regarding pain points in Data Processing Agreements (DPAs). Legally mandated by Article 28 of the General Data Protection Regulation (GDPR) and required by other data protection laws, these agreements, usually between a data controller and processor, are tricky to navigate, with significant penalties for non-compliance. This article aims to clarify various components of these agreements, including risk allocation, incident response, information security, audit rights, and disclosures.

Managing risk and liability in data processing agreements

Risk and liability allocation form a significant part of DPAs. The liability clauses vary considerably, including unlimited liability, regular and super caps, and indemnities to balance possible financial risks. It’s important to note that DPAs are subject to jurisdictional differences. Thus, both EU GDPR and UK GDPR must be accounted for, adding a layer of complexity. Nevertheless, a clear understanding of liability limitation clauses and the importance of bilateral indemnity clauses can help manage the potential implications of data breaches.

Incident response and notification obligations

Another challenging aspect of DPAs is the incident response and notification obligations. Processors must alert controllers when they discover a breach, giving controllers the necessary information to notify a supervisory authority. Reporting time limits may be an issue. The DPAs may permit phased information provision, allowing businesses some flexibility in maintaining compliance.

Ensuring information security in data processing relationships

In DPAs, information security management is of paramount importance. Agreements must set strict security requirements for each entity involved in the data processing chain. Changes to security measures must be approved by the controller, tying these responsibilities together. In international agreements, Standard Contractual Clauses (SCCs) can function similarly to international treaties, while the roles and obligations of processors, including subprocessors, must be clearly defined and enforced.

Controllers’ audit rights in the GDPR context

Under Article 28.3(h) of GDPR, controllers have the right to audit data processors. This power, however, comes with ambiguity, and clear guidelines regarding controllers’ audit rights in DPAs are crucial for effective governance. Audit reports or certificates can be used by processors to demonstrate their legal compliance, thus reducing the audit scope and improving efficiency.

Disclosures and subcontracting in data processing agreements

Subcontracting adds another layer of complexity to DPAs. Processors must inform controllers about potential subprocessors, and these obligations must align with the controller’s DPA. The enforcement of GDPR’s disclosure requirements is an evolving area.

Surmounting pain points in data processing agreements

Navigating the intricate web of DPAs, from risk and liability management to disclosures and subcontracting, evokes the mantra: where there is data, there are challenges. Each aspect of these agreements symbolises a unique challenge that requires careful understanding, highlighting the intricate and evolving nature of DPAs. The nuanced complexities of EU GDPR and UK GDPR are crucial considerations in drafting these agreements.

Next Steps

  • Consult with legal and data privacy professionals to ensure your agreements adhere to the relevant privacy and data protection laws. We can help you draft your DPAs.
  • Given the intricate landscape of data management, businesses need to review their DPAs regularly. We can help you review your DPAs and other documents.