The following piece, written by the Hogan Lovells privacy team, was posted to the International Association of Privacy Professionals’ (IAPP) Privacy Tracker on January 29th. The post, Will the New Year Bring New Privacy Laws to Brazil?, is reprinted in its entirety below with permission from the IAPP. If the Brazilian legislature fails to pass the bills promptly or does not include the data localization measures discussed below in the final legislation, Brazil’s president may choose–to the extent permitted by Brazil’s constitution–to implement many of the privacy provisions contained in the proposed laws by executive decree.
The World Cup is not the only event to look out for in Brazil this year. Brazil has been developing two significant pieces of privacy legislation since the late 2000s, and it looks like they may be voted on soon. The Marco Civil da Internet (“Civil Internet Bill”) would establish what some have called an “Internet Bill of Rights” that includes data protection requirements and the preservation of net neutrality. The Data Protection Bill would establish a comprehensive, European-style data protection framework governing the processing of all personal data. The proposed laws would replace Brazil’s current sector-specific privacy framework. Brazil is the fifth largest country in the world, and the number of Brazilian Internet and smartphone users is growing rapidly. The new laws would therefore have a significant impact on organizations offering digital products or services to Brazilian consumers. We here provide background on the proposed laws and insights as to their potential impacts.
In 1988, Brazil was at the forefront of Latin American privacy law when the country implemented habeas data rights in its federal constitution. Habeas data provides individuals with the right to file a judicial complaint requesting access to, correction of, or deletion of the data that organizations are holding about them. Several Latin American countries soon followed Brazil in providing these constitutional rights. Brazil’s desire to attract international business, especially from the European Union, may well have been one of the reasons that the country for years has been debating whether to follow the eight Latin American countries that have passed comprehensive data protection laws or regulations modeled on the European Union’s framework and replace Brazil’s sector-specific framework with the Data Protection Bill and the Civil Internet Bill.
Legislative inertia and the lack of uniform support for the bills have prevented the initiatives from being passed in recent years. However, recent NSA surveillance revelations have reignited the push for data protection reform. Dilma Rousseff, Brazil’s President, has been a vocal critic of U.S. surveillance practices and was actively pressing for data protection reform in the last few months of 2013.
Brazil’s Civil Internet Bill would do more than just establish online privacy protections. The draft legislation effectively establishes an Internet Bill of Rights for Brazilians. These rights include privacy protections along with a fundamental right to access the Internet and a mandate for net neutrality. The law also regulates the enforcement of digital copyright issues and the online collection of evidence in criminal and civil investigations. In recent months, President Rousseff and members of the Worker’s Party have added new provisions to the Civil Internet Bill. The most controversial of these is a data localization rule, which would give Brazil’s executive branch the right to force operators of online services to store Brazilian data only in Brazilian data centers. Other amendments to the Civil Internet Bill include requiring service providers to obtain express consent from users prior to processing personal data online and providing that companies violating the Bill would be subject to suspension of Brazilian data collection activities or fines of up to 10% of the organizational revenues.
Critics have argued that the Civil Internet Bill, especially with its localization requirements, would raise operating costs significantly for companies doing business in Brazil. Several industry groups have noted that the localization requirements would undermine the decentralized nature of the Internet, which has facilitated the growth of global digital trade.
Brazil’s Data Protection Bill is modeled primarily on the European Data Protection Directive and would regulate the online and offline processing of personal data. The bill would give Brazilians the rights to access, correct, and delete personal data and require that organizations generally obtain express, informed consent prior to processing a Brazilian’s personal data. The Data Protection Bill would create a data protection authority, the National Data Protection Council. In the event of a data breach, companies would be required to notify the Council and sometimes the media. Like the EU data protection framework, the Data Protection bill would generally prohibit organizations from transferring personal data to countries not providing adequate protections for personal data. Although the Data Protection Bill does not specify which countries do provide adequate protections, it is likely that the Data Protection Council would not deem the United States to be one of those countries. Organizations violating the Data Protection Bill would face penalties of up to 20% of organizational revenue.
If one or both of these bills are passed into law, companies with Brazilian operations would likely have to implement significant changes to their privacy and security practices. Data localization requirements and cross-border transfer restrictions would have a substantial effect on business operations with questionable privacy and security benefits. For example, cyberattacks can occur no matter where data is stored.
In spite of the arguments being raised against the bills, however, the desire to establish Brazil as a leading player in the Global Multistakeholder Meeting on the Future of Internet Governance to be held in São Paulo on April 23-24 may well prompt the Brazilian legislature to pass one or both laws in the next few months. Some reports indicate that the Civil Internet Bill will be voted on in February. A vote on the Data Protection Bill is likely to happen soon after. We will be watching the developments closely and evaluating how the changes may effect Brazilian companies as well as Latin American and global trade.