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Controller or processor or…? – Self-discovery in data protection

The classification of the actors involved in data processing can lead to complicated demarcation issues in individual cases, even if the distribution of roles specified by the GDPR is straightforward. Thus, controllers and processors may be involved in the processing of personal data. Since the program of duties of these actors is structured differently and the scope of liability differs, it is essential for companies or organizations to determine which data protection role they assume. 

Liability risks in the event of missing or insufficient role allocation

The lack of or incorrect classification as a controller or processor becomes apparent at the latest when a data protection breach subject to notification is identified. In this case, the competent supervisory authority must be notified of the incident, and it must be stated who is the controller and would therefore be liable for a failure to notify under Art. 33 of the GDPR, which could lead to a damage claim under Art. 82 (2) sentence 1 of the GDPR. 

In contrast, the liability of the processor is limited to the violation of legal duties that they perform in their function. However, if the parties involved have not transparently documented the distribution of roles under data protection law up to this point, time-consuming conflicts arise over responsibilities for data processing, even though the prompt notification of a data breach – within 72 hours – must take place. 

If the deadline expires, there is the threat of a substantial fine, additionally this circumstance can be used by the supervisory authority as an opportunity to conduct further investigations and, if necessary, to impose further fines based on these investigations. To prevent possible investigations by the supervisory authority from the outset, each individual actor should document their position as (joint) controller or processor in a verifiable manner.

Controllers are decision makers 

In essence, a controller determines the “whether” and “how” of data processing, thus deciding on the purposes of dataprocessing and specifying the means by which these are to be achieved. 

If, for example, a company decides to commission a service provider to evaluate future personnel development using artificial intelligence (“AI”), it becomes the responsible party. In addition to the aforementioned notification obligation, the responsible party is subject to further obligations, including the following:

  • Information requirements according to Art. 13 and 14 DSGVO,
  • Implementation of data subject rights, e.g., right to access and deletion,
  • Preparation of a comprehensive processing list,
  • Conducting a data protection impact assessment, which is of considerable importance, especially for AI applications,
  • Conclusion of a processing contract with a processor and verification of the existence of appropriate technical and organizational measures.

Joint controllers share decision-making power

If several companies in a group decide to use the AI application together for reasons of cost reduction and, for example, establish a project group with equal representation to implement the AI, there is evidence of joint responsibility. This is because joint responsibility exists if the purposes and means of the data processing are determined through joint cooperation, so that each controller has a determining influence on the data processing. Joint controllers have a duty to comply with the

  • Conclusion of a joint controller agreement pursuant to Art. 26 GDPR.

In essence, the purpose of such an agreement is to ensure that the controllers divide up their duties among themselves in a transparent manner, in particular who will exercise the data subject rights and who will comply with the information obligations.

Processor assists the responsible person(s)

While the controller determines the purposes and means of data processing, the processor has no decision-making authority of their own. They are bound by the instructions of the controller in the processing and acts merely as the controller’s “extended arm”.

If the aforementioned companies decide to commission a service provider to implement the AI application, the service provider is to be classified as a processor. The catalog of duties of the processor is not as extensive as that of the controller and includes, among other things, the following

  • Creation of records of processing activities,
  • Notification to the controller upon becoming aware of a data breach,
  • Support of controller in the exercising of data subject rights,
  • Data processing only on the instructions of the controller and the other obligations under Art. 28 (3) GDPR.

Indication for an initial classification

If other actors are involved in the processing of personal data, the distribution of roles under data protection law should be examined more closely. The following indications are intended to provide an initial guide to self-assessment.

Conclusion

The importance of a correct or justifiable classification becomes apparent at the latest when irregularities occur in data processing and the pressure arises from the GDPR and between the actors to implement the obligations imposed on them in a data protection-compliant manner. It is therefore essential to discuss the allocation of roles from the outset, especially in the case of ambiguous circumstances, so as not to create additional time pressure by re-evaluating the allocation of roles in an emergency.

We will be glad to answer any questions you may have in this regard.

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