Wednesday, June 02, 2004

Article: The Impact of PIPEDA

Today's Globe Technology has a comment by Adam N. Atlas, a member of the bars of Quebec and New York. He discusses the cross-border aspects of PIPEDA and the article merits a read.


"The best kept secret in privacy law is what to do about cross-border information transfers. There has been a lot written about the new Canadian privacy law, entitled Personal Information Protection and Electronic Documents Act (PIPEDA), but few lawyers or other experts are willing to offer an opinion on the legality of international cross-border information transfers under PIPEDA.

To date there is little to be found within the published rulings of the Privacy Commissioner that can definitively answer the numerous questions that this issue poses. This is surprising given that nearly every business in Canada faces the privacy question almost on a daily basis. The following is a practical overview for any business that sends or receives any personal information from or to Canada across international borders. ..."

The one area that he doesn't really touch on is probably the most prevalent example of the impact of PIPEDA on cross-border data flows. That is American retailers doing business with Canadian customers. For example, Land's End and LL Bean both collect personal information in association with any sale to a Canadian. PIPEDA itself is silent about its impact on cross-border transactions, but the Commissioner's office has taken the view that PIPEDA applies. Usual Canadian principles of conflicts of laws would suggest that Canadian federal law can apply where there is a "real and substantial connection" with this jurisdiction. Since the law is designed to protect Canadian residents and the collection would be deemed to take place "in Canada", applying it to American retailers is consistent with that purpose. The company may be able to tell the Commissioner to buzz off when she calls the corporate offices in Ohio, but the Federal Court's order or award of damages may be enforceable outside of the country. If the company has assets in Canada, it has a much stronger interest in complying.

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