Data Sharing Agreement: A General Guide

A data sharing agreement (DSA) is a lawfully binding contract between two or more companies that oversees data use, sharing, and protection. In addition, the agreement summarizes the terms and conditions of how data will be gathered, stored, transmitted, and deleted. It also determines the parties involved, the types of data to be transferred, and the objective for which the data will be used.

Key Elements of a Data Processing Agreement

A data processing agreement (DPA) is an additional document often appended to the main contract between a data controller and a service provider. While each data processing agreement must comply with applicable regulations, it generally incorporates common elements as follows:

• Limitations on Data Nature and Usage Data processing agreements incorporate accountability, responsibility, and consent principles into all data processing operations. Data processing agreements safeguard personal data by establishing a legal framework for data processors to follow. The framework covers data subjects, including end-users, customers, employees, contractors, or vendors. Additionally, data processing agreements require transparency regarding the data's subject matter, processing nature, and duration. Data processing agreements narrow down the categories of personal or customer data that may be processed, such as contact information, addresses, or necessary data. Furthermore, data subjects have the right to request their stored data, which data processors must address promptly and sincerely.
• Data Privacy Measures Privacy is a delicate issue; people may unintentionally breach it while working with personal data. A good DPA must clearly define privacy protection expectations for all stakeholders. Attention to detail is significant in a data processing agreement. In cases where personal data processing poses high risks to natural persons' rights, GDPR mandates that data controllers conduct a data protection impact assessment. They must consult data protection officers and supervisory authorities. Data processing agreements ensure that data processors and sub-processors provide adequate assistance during assessments and consultations.
• Data Security Measures Data processing agreements must translate legal requirements into concrete actions by defining the organizational and security measures controllers, processors, and sub-processors and must implement and monitor them. Organizational measures include defining roles and responsibilities, reporting hierarchy, and appointing a data protection officer or equivalent. Data processing agreements recommend information security measures such as data anonymisation, strong authentication and authorisation policies, data encryption, maintaining processing activity records, and conducting regular risk assessments. Data processing agreements also require processors and sub-processors to hold general and industry-specific certifications.
• Data Retention PoliciesNegligence is a common cause of data breaches. Personal data can accumulate over time without proper storage and monitoring policies, risking exposure to malicious actors. Data processing agreements preempt this by outlining storage, retention, deletion, and monitoring policies. GDPR grants data subjects the right to request the deletion of their data, which Data processing agreements ensure data processors comply with.
• Data Breach Reporting A personal data breach is a security breach that results in unauthorized access, loss, alteration, or disclosure of personal data. Data processing agreements ensure that affected data processors notify the data controller promptly, who, in turn, informs the affected data subjects and data protection authorities.
• Data Transfer and Residency Policies Data transfers and residency have become contentious issues in many countries due to citizens' rights protection, geopolitical strategies, and national security goals. Data processing agreements provide a legal basis for data flows between data exporters and importers, ensuring compliance with residency and transfer laws. For instance, GDPR's standard contractual clauses protect personal data sent outside the European Economic Area to the same extent as GDPR within the EEA.
• Non-Compliance Penalties Data processing agreements specify penalties, fines, compensations, and legal remedies for data processors or sub-processors that fail to comply with data privacy and protection laws. For example, GDPR authorizes supervisory authorities to impose fines of up to 20 million euros or 4% of an entity's annual turnover. Data processing agreements define penalties according to an entity's responsibilities to avoid or forward them to responsible sub-processors.

Importance of Data Sharing Agreements

There are various reasons why data sharing agreements are important:

• Risk Management: Defining the terms and conditions of data sharing in the agreement can help organizations manage risks associated with data misuse, mishandling, unauthorized access, accidental loss or destruction, and breaches of confidentiality.
• Legal Compliance: Organizations may need to comply with legal requirements like the General Data Protection Regulation (GDPR) or the Health Insurance Portability and Accountability Act (HIPAA) based on the shared data type. Data sharing agreements guarantee compliance with such regulations.
• Trust and Transparency: Data sharing agreements promote trust and transparency between organizations by outlining how data will be used and protected, building trust with customers and stakeholders.
• Operational Efficiency: A well-crafted Data sharing agreement can enhance the efficiency of the Data sharing process between organizations, saving time, reducing costs, and improving overall operational efficiency.