Contractual Obligations under UAE and KSA PDPL Laws

Comprehensive Guide to Data Privacy Contractual Obligations under UAE and KSA PDPL Laws

Contractual Obligations under PDPL

1. Mandatory Clauses

Overview

Contracts under the PDPL must include specific clauses to ensure compliance with data protection regulations. These clauses establish the legal framework within which data processing activities are conducted, defining the roles, responsibilities, and obligations of both data controllers and processors.

Key Clauses

1. Purpose of Data Processing:
   • Clearly define the specific purposes for which personal data is collected and processed.
   • Ensure that data is only processed for the purposes explicitly stated in the contract.
2. Legal Basis for Processing:
   • Specify the legal grounds for data processing, such as consent, contractual necessity, legal obligation, vital interests, public task, or legitimate interests.
3. Data Subject Rights:
   • Outline the rights of data subjects, including access, rectification, erasure, restriction of processing, data portability, and the right to object.
   • Include procedures for data subjects to exercise their rights.
4. Data Security Measures:
   • Detail the technical and organizational measures implemented to protect personal data from unauthorized access, loss, or destruction.
5. Data Breach Notification:
   • Establish procedures for notifying the relevant authorities and data subjects in the event of a data breach.
   • Specify the timeline for notifications.
6. Data Transfer:
   • Define the conditions under which personal data may be transferred outside the UAE or KSA, including the use of adequacy decisions, Standard Contractual Clauses (SCCs), and Binding Corporate Rules (BCRs).
7. Retention and Deletion of Data:
   • Specify the duration for which personal data will be retained.
   • Outline procedures for the secure deletion of personal data once it is no longer needed.
8. Sub-Processor Agreements:
   • Ensure that sub-processors comply with the same data protection obligations as the main processor.
   • Include provisions for the approval of sub-processors by the data controller.

Example: Financial Sector

A financial institution entering into a contract with a third-party service provider for processing customer data must include clauses specifying the purpose of data processing (e.g., fraud detection), the legal basis (e.g., contractual necessity), and the security measures to be implemented (e.g., encryption and access controls).

2. Controller and Processor Responsibilities

Controller Responsibilities

1. Determine Processing Purposes and Means:
   • The controller decides why and how personal data is processed.
   • Ensure that data processing activities are aligned with the stated purposes and legal bases.
2. Ensure Compliance:
   • Implement measures to ensure compliance with PDPL.
   • Maintain records of data processing activities.
3. Facilitate Data Subject Rights:
   • Enable data subjects to exercise their rights effectively.
   • Respond to data subject requests within the statutory timeframes.
4. Conduct Data Protection Impact Assessments (DPIAs):
   • Assess the impact of data processing activities on data subjects’ privacy.
   • Implement measures to mitigate identified risks.

Processor Responsibilities

1. Process Data Only on Controller’s Instructions:
   • Process personal data solely based on the controller’s documented instructions.
   • Inform the controller if any instruction violates PDPL.
2. Implement Security Measures:
   • Ensure the confidentiality, integrity, and availability of personal data through appropriate security measures.
3. Assist the Controller:
   • Help the controller comply with their obligations under PDPL, including data subject rights requests and data breach notifications.
4. Sub-Processor Management:
   • Obtain written authorization from the controller before engaging sub-processors.
   • Ensure that sub-processors are bound by the same data protection obligations.

Example: Healthcare Sector

A hospital (controller) contracts with a cloud service provider (processor) for storing patient records. The hospital must ensure the cloud provider processes data only according to the hospital’s instructions, implements robust security measures, and assists with responding to data subject rights requests.

3. Best Practices for Data Privacy in Contracts

Drafting Clear and Precise Contracts

1. Use Clear Language:
   • Avoid ambiguous terms and legal jargon.
   • Ensure that all parties understand their obligations and responsibilities.
2. Define Key Terms:
   • Clearly define all key terms, such as “personal data,” “processing,” “controller,” and “processor.”
3. Specify Detailed Obligations:
   • Provide detailed descriptions of each party’s obligations, particularly concerning data security, data subject rights, and data breach notifications.
4. Include Compliance Clauses:
   • Incorporate clauses that require compliance with applicable data protection laws and regulations.

Data Processing Agreements (DPAs)

1. Purpose and Scope:
   • Clearly define the scope of data processing activities and the purposes for which personal data is processed.
2. Legal Basis for Processing:
   • Specify the legal grounds for processing personal data, ensuring compliance with PDPL.
3. Data Subject Rights:
   • Detail the procedures for handling data subject requests, such as access, rectification, and erasure.
4. Security Measures:
   • Outline the technical and organizational measures implemented to protect personal data.
5. Breach Notification:
   • Establish protocols for reporting data breaches to the relevant authorities and data subjects.
6. Sub-Processing:
   • Include provisions for the use of sub-processors, requiring them to comply with the same data protection obligations.

Example: Retail Sector

A retail company entering into a contract with an online payment processor should include a DPA specifying the processing purposes (e.g., transaction processing), the legal basis (e.g., contractual necessity), and the security measures to be implemented (e.g., encryption).

Specific Clauses and Provisions

1. Confidentiality:
   • Require parties to maintain the confidentiality of personal data and restrict access to authorized personnel only.
2. Data Retention:
   • Specify the retention periods for personal data and the procedures for secure deletion once the data is no longer needed.
3. Audit Rights:
   • Grant the controller the right to audit the processor’s compliance with data protection obligations.
4. Data Transfer Restrictions:
   • Define the conditions under which personal data may be transferred outside the UAE, ensuring compliance with PDPL.
5. Liability and Indemnification:
   • Include clauses that address liability for data breaches and non-compliance, specifying indemnification obligations.

Example: Hospitality Sector

A hotel contracting with a customer relationship management (CRM) provider should include specific clauses on data retention (e.g., retaining customer data for five years), data transfer restrictions (e.g., data must be stored within the UAE), and audit rights (e.g., annual compliance audits).

4. Liability and Risk Management

Indemnity Clauses

1. Scope of Indemnity:
   • Define the scope of indemnity to cover data breaches, non-compliance with PDPL, and third-party claims arising from data processing activities.
2. Indemnity Procedures:
   • Establish procedures for claiming indemnity, including notification requirements and timelines.
3. Limitations:
   • Specify any limitations on the indemnity, such as monetary caps or exclusions for certain types of damages.

Example: Technology Sector

A software development company including an indemnity clause in its contract with a client should cover data breaches caused by the software, specifying procedures for claiming indemnity and any limitations on liability.

Limitation of Liability

1. Caps on Liability:
   • Set caps on the total liability of each party for data breaches and non-compliance with PDPL.
2. Exclusions:
   • Define exclusions to the limitation of liability, such as liability for gross negligence or willful misconduct.
3. Types of Damages:
   • Specify the types of damages covered by the limitation of liability, such as direct, indirect, consequential, or punitive damages.

Example: Telecom Sector

A telecommunications company limiting its liability in a contract with a data analytics provider might cap liability at a specific amount, exclude liability for indirect damages, and specify that liability for gross negligence is not limited.

Cyber Insurance Requirements

1. Coverage Requirements:
   • Specify the minimum coverage requirements for cyber insurance, including the types of incidents covered and the coverage limits.
2. Policy Terms:
   • Detail the terms of the cyber insurance policy, such as deductibles, exclusions, and the process for making claims.
3. Additional Insured:
   • Require the processor to name the controller as an additional insured on the cyber insurance policy.

Example: Finance Sector

A bank requiring its third-party payment processor to maintain cyber insurance might specify coverage for data breaches and cyber-attacks with a minimum coverage limit of $10 million and require the bank to be named as an additional insured.

5. Data Subject Rights and Compliance

Access, Rectification, and Erasure

1. Access Requests:
   • Establish procedures for responding to data subject access requests, including verification of identity and timelines for response.
2. Rectification Requests:
   • Implement processes for correcting inaccurate or incomplete personal data upon the request of the data subject.
3. Erasure Requests:
   • Define the conditions under which personal data must be erased, such as when the data is no longer necessary for the purposes it was collected or when the data subject withdraws consent.

Example: E-commerce Sector

An online retailer must have procedures in place to respond to customer requests for access to their purchase history, correction of shipping address errors, and deletion of account information upon request.

Data Portability

1. Format and Delivery:
   • Specify the format in which personal data will be provided to data subjects requesting data portability, such as CSV or XML.
2. Timelines:
   • Establish timelines for responding to data portability requests, ensuring compliance with statutory requirements.
3. Security Measures:
   • Implement measures to securely transfer personal data to the data subject or another controller, ensuring data integrity and confidentiality.

Example: Insurance Sector

An insurance company must be able to provide policyholders with their personal data in a portable format, such as CSV, within the statutory timeline, and ensure that the data is securely transmitted to the policyholder or a new insurance provider.

6. Data Transfers and Cross-Border Considerations

Transfer Mechanisms

1. Adequacy Decisions:
   • Transfer personal data to countries that have been deemed to provide an adequate level of data protection by the UAE authorities.
2. Standard Contractual Clauses (SCCs):
   • Use SCCs to facilitate the transfer of personal data to countries without adequacy decisions, ensuring that data protection obligations are met.
3. Binding Corporate Rules (BCRs):
   • Implement BCRs for intra-group data transfers, ensuring compliance with PDPL and maintaining a high level of data protection across the organization.

Example: Manufacturing Sector

A manufacturing company transferring employee data to a subsidiary in another country must use SCCs or BCRs to ensure that the data is protected according to UAE standards.

Adequacy Decisions

1. Identifying Adequate Countries:
   • Stay informed about countries that have been recognized as providing an adequate level of data protection by the UAE authorities.
2. Reviewing Compliance:
   • Regularly review and update contracts to reflect any changes in adequacy decisions and ensure ongoing compliance with PDPL.

Example: Travel Sector

A travel agency transferring customer data to a partner in an adequate country must verify that the partner complies with the UAE’s data protection requirements and regularly review the adequacy status of the country.

7. Information Security and Incident Response

Security Measures

1. Technical Measures:
   • Implement encryption, access controls, and secure data storage to protect personal data.
2. Organizational Measures:
   • Develop policies and procedures for data protection, conduct regular training for employees, and perform security audits.
3. Risk Management:
   • Conduct regular risk assessments to identify and mitigate potential threats to personal data.

Example: Healthcare Sector

A hospital must implement strong encryption for patient records, restrict access to authorized personnel only, and regularly audit its data protection measures to ensure compliance.

Breach Notification

1. Notification Procedures:
   • Establish procedures for detecting, investigating, and reporting data breaches to the relevant authorities and affected data subjects.
2. Timelines:
   • Specify the timelines for notifying authorities and data subjects, ensuring compliance with statutory requirements.
3. Incident Response Plan:
   • Develop an incident response plan that outlines the steps to be taken in the event of a data breach, including containment, investigation, and remediation.

Example: Retail Sector

A retail company experiencing a data breach involving customer payment information must notify the relevant authorities within the statutory timeline, inform affected customers, and implement measures to prevent future breaches.

8. Monitoring and Audits

Compliance Monitoring

1. Regular Monitoring:
   • Continuously monitor data processing activities to ensure compliance with PDPL.
2. Compliance Reviews:
   • Conduct periodic reviews of data protection practices, policies, and procedures to identify and address any gaps in compliance.

Example: Telecom Sector

A telecommunications company must regularly monitor its data processing activities and conduct compliance reviews to ensure adherence to PDPL requirements.

Regular Audits

1. Audit Schedules:
   • Establish a schedule for regular audits of data processing activities, security measures, and compliance with PDPL.
2. Third-Party Audits:
   • Engage third-party auditors to provide an independent assessment of the organization’s data protection practices.
3. Audit Reports:
   • Document audit findings and implement corrective actions to address any identified issues.

Example: Finance Sector

A bank must conduct regular audits of its data processing activities and security measures, engage third-party auditors for an independent assessment, and address any compliance gaps identified in audit reports.

Conclusion

Compliance with PDPL requires meticulous planning, precise execution, and ongoing vigilance. By incorporating the best practices outlined in this chapter, organizations can ensure robust data protection, mitigate risks, and maintain compliance with UAE data protection laws.

Appendices

Sample Clauses

Purpose of Data Processing

“The Processor shall process personal data solely for the purposes of [specific purposes], as instructed by the Controller, and shall not process personal data for any other purpose without the Controller’s prior written consent.”

Data Breach Notification

“In the event of a data breach, the Processor shall notify the Controller within [specified timeframe] and provide all necessary information to enable the Controller to comply with its legal obligations under PDPL.”

Checklist for Compliance

1. Purpose and Scope:
   • Clearly define the purpose and scope of data processing activities.
2. Legal Basis:
   • Ensure a valid legal basis for all data processing activities.
3. Data Subject Rights:
   • Implement procedures to handle data subject requests for access, rectification, erasure, and portability.
4. Security Measures:
   • Implement technical and organizational measures to protect personal data.
5. Data Breach Notification:
   • Establish procedures for detecting, investigating, and reporting data breaches.
6. Data Transfers:
   • Use appropriate transfer mechanisms for cross-border data transfers.
7. Compliance Monitoring:
   • Regularly monitor data processing activities to ensure compliance.
8. Regular Audits:
   • Conduct regular audits and engage third-party auditors for independent assessments.
9. Indemnity Clauses:
   • Include indemnity clauses to cover potential legal costs and damages.
10. Limitation of Liability:
    • Define and limit the extent of liability for data breaches and non-compliance.
    • To know more or discuss on specialised data privacy services related to PDPL of UAE and KSA, connect with us on info@amlegals.com or dataprivacy@amlegals.com
      

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