Bindl v European Commission: a catalyst for collective redress and the future of EU data transfers

In a perhaps serendipitous moment for GDPR enforcement, the seemingly benign case of Bindl v European Commission could precipitate a wave of collective redress class actions against big tech.

The decision of 8 January 2025 in Bindl v European Commission by the EU General Court (The Court) has sent ripples across the data protection landscape. Although the €400 compensation awarded may seem nominal, its legal and practical implications could fundamentally reshape how data breaches and cross-border data transfers are handled within the EU. The judgment touches upon crucial aspects of enforcement under EU data protection law, including non-material damages and regulatory compliance in cross-border data transfers, raising significant questions about the road ahead.

The case originated when Bindl, a German citizen and founder of a litigation funding firm specialising in data protection claims, accessed a website hosted by the European Commission multiple times between 2021 and 2022. Concerned about potential data transfers to the U.S., he requested information about which of his personal data had been transferred. The court found that his IP address and other data were transmitted to Facebook’s U.S. servers via the Facebook login feature on the website. This transfer occurred after the Schrems II decision and before the EU-US Data Privacy Framework (DPF) came into force, lacking adequate safeguards as required under GDPR.

This article explores the dual impact of the Bindl judgment, focusing first on its potential to spur a collective redress revolution in Europe for violation of data protection rights, then , on its implications for cross-border data transfers, especially under the EU GDPR and the EU-U.S. Data Privacy Framework before recommending some practical steps to avert exposure to claims for non-compliance with EU data transfer rules.

Paving the way for a collective redress revolution

The Bindl judgment is more than just a milestone in individual compensation claims; it signals a broader shift in how data protection violations are addressed within the EU. Central to this development is the recognition of non-material damages, a concept that significantly lowers the threshold for claimants to pursue redress.

Recognising non-material damages in data breach cases

The Bindl decision is groundbreaking as it recognizes non-material damages arising from a data transfer breach. This marks a critical departure from traditional claims requiring demonstrable material harm. The Court awarded damages to Bindl for the "uncertainty" created over the processing of his personal data following its unlawful transfer to the U.S. The ruling builds on the Court of Justice of the European Union (CJEU) precedent in Österreichische Post AG (C-300/21), which confirmed that non-material damage need not meet a minimum threshold to be compensable under the GDPR.

In Bindl, the transfer of an IP address without appropriate safeguards was deemed sufficient to establish non-material harm, opening the door for individuals to claim damages for even minor data protection breaches. This interpretation aligns with the GDPR Article 82, which allows for compensation for both material and non-material damages. By recognising non-material harm linked to "loss of control" over personal data, the Court has potentially lowered the barriers for claimants to seek redress. The position marks a stark contrast to the UK’s decision in Lloyd v Google (2021), where the Supreme Court held that compensation for loss of control over personal data requires proof of material harm or distress beyond trivial levels, thereby setting a higher threshold for claims.

Implications for collective redress in the EU

The Bindl judgment signals a seismic shift in how collective redress actions for data protection violations may unfold in the EU. Organisations such as NOYB (None of Your Business), founded by privacy activist Max Schrems, are already poised to take advantage of this evolving landscape. NOYB, recently designated as a qualified entity for collective redress in Austria and Ireland, is well-positioned to lead large-scale actions against Big Tech.

With non-material damages now easier to claim, a single unlawful transfer could form the basis of a collective action involving thousands, if not millions, of claimants. While the €400 awarded in Bindl may appear inconsequential, multiplying this figure across a large claimant base could result in significant financial liabilities for organisations. This potential for substantial damages may compel businesses to reassess their compliance strategies and data transfer mechanisms.

The collective redress mechanism under the EU Representative Actions Directive (RAD), which member states are now implementing, further supports this trend. The Directive enables qualified entities to file claims on behalf of groups of individuals, streamlining the process for collective actions. The Bindl case could serve as a model for future collective claims, encouraging organisations to prioritise data protection compliance and mitigate risks proactively.

The future of EU data transfers

The Bindl judgment brings into sharp focus the evolving complexities of the EU data transfer rules  highlighting the legal and operational challenges faced by EU organisations. While mechanisms like Standard Contractual Clauses (SCCs) and the EU-U.S. DPF aim to facilitate lawful data flows, Bindl underscores how even minor compliance gaps can result in significant liabilities.

The challenges of EU Standard Contractual Clauses

The Bindl ruling underscores the challenges organisations face when relying on EU SCCs for cross-border data transfers. EU SCCs have long been the go-to mechanism for ensuring compliance with GDPR’s stringent data protection standards in international transfers. However, Bindl highlights how inadequate safeguards, even in seemingly routine transfers, can result in significant legal liabilities.

The case revolved around a European Commission website offering the "Sign in with Facebook" option, which facilitated the transfer of Bindl's IP address to Meta Platforms in the U.S. The Court found that this transfer lacked any lawful mechanism, such as SCCs or an adequacy decision, rendering it unlawful under EU law. This lapse placed the claimant "in a position of uncertainty" regarding the processing of his data, which the Court considered sufficient to justify damages. This assessment of the Court is problematic in many ways as it overlooks the practicalities of implementing a risk-based approach to data protection compliance, which is a cornerstone of the GDPR.

For organisations, Bindl brings to light the importance of thoroughly vetting third-party tools and services that may result in international data transfers. Even seemingly innocuous transfers, such as IP addresses through login functionalities, require robust safeguards. This case demonstrates that reliance on EU SCCs is not a mere formality but necessitates substantive compliance, including conducting Transfer Impact Assessments (TIAs) to ensure the adequacy of protection for data leaving the EU.

Liability for third-party plugins and social media platforms

The case raises critical questions about the extent to which website operators and third-party platforms, such as Facebook, share responsibility for compliance with data protection laws. During the proceedings, Bindl argued that website operators providing Facebook login features should be held jointly responsible with Facebook for ensuring compliance. Although the Court did not directly rule on Facebook's liability, the judgment draws parallels with the Fashion ID case, where Facebook was found to be a joint controller due to its “Like” button embedded on third-party websites.

This case serves as a cautionary tale for organisations relying on third-party cookies, plugins, or login features. Social media platforms deploying these tools may face increased scrutiny and potential exposure to liability in future class actions brought under GDPR. Businesses embedding such features must proactively assess their data sharing practices and ensure robust compliance with GDPR requirements to mitigate risks of joint liability.

The uncertain future of the Data Privacy Framework

The Bindl judgment also raises questions about the long-term viability of the EU-U.S. DPF, which replaced the invalidated Privacy Shield in 2023. While the DPF provides a mechanism for lawful data transfers to the U.S., it remains vulnerable to legal challenges. Privacy advocates, including Schrems, have already signaled their intent to scrutinise the framework, potentially leading to a "Schrems III" case.

In Bindl, the data transfer occurred during the interregnum between the invalidation of Privacy Shield and the adoption of the DPF. The Court's focus on the lack of appropriate safeguards in this transitional period highlights the persistent vulnerabilities in the transatlantic data transfer regime. Even under the DPF, organisations must be prepared to address concerns about U.S. government access to data, particularly under surveillance laws like the Foreign Intelligence Surveillance Act (FISA) Section 702.

Should the DPF face invalidation, organisations will again find themselves mainly reliant on EU SCCs and other mechanisms, with heightened scrutiny from regulators and courts.

Practical steps for businesses to mitigate risks from unlawful transfers

The Bindl decision highlights that the EU Courts’ commitment to enforcing compliance with  cross-border transfer rules. .  Beyond the potential encouragement it provides to litigation funders, this judgement serves as a clear warning to businesses that international transfer compliance failures could lead to litigation, with relatively low hurdles for claimants to establish to prove a causal link between breaches and damages.

To mitigate risks, businesses should:

Reassess website functionality: Identify and evaluate all third-party tools and plugins, such as social media login features, to ensure they do not facilitate unauthorised or non-compliant data transfers. Enhance data mapping processes: Continue to map and review all personal data flows within the organisation, including interactions with external vendors and onward transfers. Conduct comprehensive risk assessments: Perform Transfer Impact Assessments (TIAs) and Data Protection Impact Assessments (DPIAs) for high-risk processing activities and cross-border data transfers to ensure compliance with GDPR requirements. Strengthen vendor agreements: Update contracts with third parties to include robust data protection clauses, clear compliance obligations, and indemnity provisions to protect against liability for unlawful transfers or other breaches. Ensure safeguards are in place for transfers: Continuously review data flows and confirm that appropriate safeguards, such as EU SCCs are implemented and documented to demonstrate accountability for international transfers. Implement robust audit programmes: Regularly audit vendor compliance with data protection requirements, ensuring that all transfers,including onward transfers,  are appropriately documented, and monitored. Monitor changes in legal standards and transfer tools: stay up to date on regulatory developments and case law, such as Bindl, and incorporate any new compliance expectations into business practices.

For organisations, the judgment serves as a wake-up call to prioritise data protection compliance, particularly in the context of international transfers. By taking these steps, businesses can enhance their resilience to data protection challenges, reduce the risk of litigation, and ensure compliance with evolving regulatory frameworks.

For further information and how we can help you manage your cross-border transfers and general privacy compliance obligations, please contact our Cyber and Data Risk Team at Kennedys