How to Prepare for Data Privacy Regime with Contracts in Focus?

As India’s data privacy landscape evolves under the Digital Personal Data Protection Act, 2023 (DPDPA), companies must focus on aligning their contracts with the new legal requirements. 𝗖𝗼𝗻𝘁𝗿𝗮𝗰𝘁𝘀 𝗽𝗹𝗮𝘆 𝗮 𝗰𝗿𝘂𝗰𝗶𝗮𝗹 𝗿𝗼𝗹𝗲 𝗶𝗻 𝗴𝗼𝘃𝗲𝗿𝗻𝗶𝗻𝗴 𝘁𝗵𝗲 𝗽𝗿𝗼𝗰𝗲𝘀𝘀𝗶𝗻𝗴, 𝘀𝗵𝗮𝗿𝗶𝗻𝗴, 𝗮𝗻𝗱 𝗽𝗿𝗼𝘁𝗲𝗰𝘁𝗶𝗼𝗻 𝗼𝗳 𝗽𝗲𝗿𝘀𝗼𝗻𝗮𝗹 𝗱𝗮𝘁𝗮.

As a data privacy expert, here’s how you can prepare your organization’s contracts to comply with the DPDPA, along with 𝗸𝗲𝘆 𝗱𝗼’𝘀 𝗮𝗻𝗱 𝗱𝗼𝗻’𝘁𝘀:

1. Understand the Legal Framework

Do:

• Familiarize Yourself with the DPDPA: Before drafting or reviewing contracts, thoroughly understand the DPDPA’s provisions, including key sections on data processing, consent, security measures, and the rights of data principals.

Don’t:

• Ignore Related Regulations: While focusing on the DPDPA, do not neglect other related legal frameworks, 𝘀𝘂𝗰𝗵 𝗮𝘀 𝘀𝗲𝗰𝘁𝗼𝗿-𝘀𝗽𝗲𝗰𝗶𝗳𝗶𝗰 𝗿𝗲𝗴𝘂𝗹𝗮𝘁𝗶𝗼𝗻𝘀 (𝗲.𝗴., 𝗯𝗮𝗻𝗸𝗶𝗻𝗴, 𝘁𝗲𝗹𝗲𝗰𝗼𝗺) 𝘁𝗵𝗮𝘁 𝗺𝗮𝘆 𝗶𝗺𝗽𝗼𝘀𝗲 𝗮𝗱𝗱𝗶𝘁𝗶𝗼𝗻𝗮𝗹 𝗼𝗯𝗹𝗶𝗴𝗮𝘁𝗶𝗼𝗻𝘀 𝘄𝗵𝗶𝗹𝗲 𝗳𝗶𝗻𝗮𝗹𝗶𝘇𝗶𝗻𝗴 𝘁𝗵𝗲 𝗰𝗼𝗻𝘁𝗿𝗮𝗰𝘁𝘀.

2. Draft Comprehensive Data Processing Agreements (DPAs)

Do:

• Include Detailed Processing Clauses: Ensure that your DPAs specify the purposes, types, and methods of data processing. Include obligations related to data protection, such as the requirement to implement security measures and to ensure data minimization.
• Address Sub-Processors: If data processing involves sub-processors, contracts should require prior approval of the data principal or the controller, along with ensuring that sub-processors are bound by the same data protection obligations.

Don’t:

• Overlook Data Subject Rights: Contracts should not omit provisions that support the exercise of 𝗣𝗿𝗶𝗻𝗰𝗶𝗽𝗮𝗹 𝗱𝗮𝘁𝗮 𝗿𝗶𝗴𝗵𝘁𝘀, 𝘀𝘂𝗰𝗵 𝗮𝘀 𝗮𝗰𝗰𝗲𝘀𝘀, 𝗰𝗼𝗿𝗿𝗲𝗰𝘁𝗶𝗼𝗻, 𝗮𝗻𝗱 𝗱𝗲𝗹𝗲𝘁𝗶𝗼𝗻 𝗼𝗳 𝗱𝗮𝘁𝗮, as required by the DPDPA in the first place.

3. Implement Strong Consent Mechanisms

Do:

• Incorporate Clear Consent Clauses: Contracts should require 𝗼𝗯𝘁𝗮𝗶𝗻𝗶𝗻𝗴 𝗲𝘅𝗽𝗹𝗶𝗰𝗶𝘁 𝗰𝗼𝗻𝘀𝗲𝗻𝘁 𝗳𝗿𝗼𝗺 𝗱𝗮𝘁𝗮 𝗽𝗿𝗶𝗻𝗰𝗶𝗽𝗮𝗹𝘀 𝗳𝗼𝗿 𝘀𝗽𝗲𝗰𝗶𝗳𝗶𝗰 𝗱𝗮𝘁𝗮 𝗽𝗿𝗼𝗰𝗲𝘀𝘀𝗶𝗻𝗴 𝗮𝗰𝘁𝗶𝘃𝗶𝘁𝗶𝗲𝘀, as mandated by Section 6 of the DPDPA. Clearly outline how consent can be obtained, documented, and withdrawn.
• Ensure Transparent Communication: Contracts should include clauses ensuring that data principals are informed about the purpose of data collection, the entities involved, and their rights under the DPDPA.

Don’t:

• Assume Implicit Consent: 𝗡𝗲𝘃𝗲𝗿 𝗿𝗲𝗹𝘆 𝗼𝗻 𝗶𝗺𝗽𝗹𝗶𝗲𝗱 𝗼𝗿 𝗯𝗹𝗮𝗻𝗸𝗲𝘁 𝗰𝗼𝗻𝘀𝗲𝗻𝘁 𝗳𝗼𝗿 𝗱𝗮𝘁𝗮 𝗽𝗿𝗼𝗰𝗲𝘀𝘀𝗶𝗻𝗴. The DPDPA requires explicit and specific consent, and failure to comply can lead to penalties.

4. Address Data Security and Breach Management

Do:

• Mandate Security Safeguards: 𝗖𝗼𝗻𝘁𝗿𝗮𝗰𝘁𝘀 𝘀𝗵𝗼𝘂𝗹𝗱 𝗼𝗯𝗹𝗶𝗴𝗮𝘁𝗲 𝗽𝗮𝗿𝘁𝗶𝗲𝘀 𝘁𝗼 𝗶𝗺𝗽𝗹𝗲𝗺𝗲𝗻𝘁 𝗮𝗽𝗽𝗿𝗼𝗽𝗿𝗶𝗮𝘁𝗲 𝘀𝗲𝗰𝘂𝗿𝗶𝘁𝘆 𝗺𝗲𝗮𝘀𝘂𝗿𝗲𝘀, 𝗶𝗻𝗰𝗹𝘂𝗱𝗶𝗻𝗴 𝗲𝗻𝗰𝗿𝘆𝗽𝘁𝗶𝗼𝗻, 𝗮𝗰𝗰𝗲𝘀𝘀 𝗰𝗼𝗻𝘁𝗿𝗼𝗹𝘀, 𝗮𝗻𝗱 𝗿𝗲𝗴𝘂𝗹𝗮𝗿 𝗮𝘂𝗱𝗶𝘁𝘀, as per DPDPA. Include specific references to security standards like ISO/IEC 27001.
• Establish Breach Notification Procedures: Include clauses that outline the process for reporting data breaches, in compliance with DPDPA. This should include timelines, responsibilities, and the format for breach notification.

Don’t:

• Neglect Data Breach Response Obligations: Do not overlook the importance of timely breach notification. Failure to include clear breach management procedures in contracts can lead to significant legal and financial consequences.

5. Manage Cross-Border Data Transfers

Do:

• Include Cross-Border Transfer Clauses: Contracts should clearly outline the conditions for transferring personal data outside India, 𝗲𝗻𝘀𝘂𝗿𝗶𝗻𝗴 𝗰𝗼𝗺𝗽𝗹𝗶𝗮𝗻𝗰𝗲 𝘄𝗶𝘁𝗵 𝗽𝗿𝗼𝘃𝗶𝘀𝗶𝗼𝗻𝘀 𝗼𝗳 𝘁𝗵𝗲 𝗗𝗣𝗗𝗣𝗔 𝗮𝗻𝗱 𝗿𝘂𝗹𝗲𝘀 𝗺𝗮𝗱𝗲 𝘁𝗵𝗲𝗿𝗲𝘂𝗻𝗱𝗲𝗿, 𝗮𝘀 𝗮𝗽𝗽𝗹𝗶𝗰𝗮𝗯𝗹𝗲. Use standard contractual clauses (SCCs) or other mechanisms approved or provided by the Data Protection Board of India.
• Ensure Adequacy Decisions: If transferring data to a jurisdiction outside India, 𝗲𝗻𝘀𝘂𝗿𝗲 𝘁𝗵𝗮𝘁 𝘁𝗵𝗲 𝗿𝗲𝗰𝗲𝗶𝘃𝗶𝗻𝗴 𝗰𝗼𝘂𝗻𝘁𝗿𝘆 𝗽𝗿𝗼𝘃𝗶𝗱𝗲𝘀 𝗮𝗻 𝗮𝗱𝗲𝗾𝘂𝗮𝘁𝗲 𝗹𝗲𝘃𝗲𝗹 𝗼𝗳 𝗱𝗮𝘁𝗮 𝗽𝗿𝗼𝘁𝗲𝗰𝘁𝗶𝗼𝗻, 𝗼𝗿 𝘁𝗵𝗮𝘁 𝗮𝗽𝗽𝗿𝗼𝗽𝗿𝗶𝗮𝘁𝗲 𝘀𝗮𝗳𝗲𝗴𝘂𝗮𝗿𝗱𝘀 𝗮𝗿𝗲 𝗶𝗻 𝗽𝗹𝗮𝗰𝗲.

Don’t:

• Transfer Data Without Safeguards: Avoid transferring data internationally without ensuring that adequate protections are in place, as this could lead to non-compliance with the DPDPA and potential penalties.

6. Review and Update Contracts Regularly

Do:

• Conduct Regular Audits: 𝗣𝗲𝗿𝗶𝗼𝗱𝗶𝗰𝗮𝗹𝗹𝘆 𝗿𝗲𝘃𝗶𝗲𝘄 𝗰𝗼𝗻𝘁𝗿𝗮𝗰𝘁𝘀 𝘁𝗼 𝗲𝗻𝘀𝘂𝗿𝗲 𝘁𝗵𝗲𝘆 𝗿𝗲𝗺𝗮𝗶𝗻 𝗰𝗼𝗺𝗽𝗹𝗶𝗮𝗻𝘁 𝘄𝗶𝘁𝗵 𝘁𝗵𝗲 𝗹𝗮𝘁𝗲𝘀𝘁 𝗹𝗲𝗴𝗮𝗹 𝗿𝗲𝗾𝘂𝗶𝗿𝗲𝗺𝗲𝗻𝘁𝘀 𝗮𝗻𝗱 𝗶𝗻𝗱𝘂𝘀𝘁𝗿𝘆 𝗯𝗲𝘀𝘁 𝗽𝗿𝗮𝗰𝘁𝗶𝗰𝗲𝘀. 𝗨𝗽𝗱𝗮𝘁𝗲 𝗰𝗹𝗮𝘂𝘀𝗲𝘀 𝗿𝗲𝗹𝗮𝘁𝗲𝗱 𝘁𝗼 𝗱𝗮𝘁𝗮 𝗽𝗿𝗼𝗰𝗲𝘀𝘀𝗶𝗻𝗴, 𝘀𝗲𝗰𝘂𝗿𝗶𝘁𝘆, 𝗮𝗻𝗱 𝗯𝗿𝗲𝗮𝗰𝗵 𝗺𝗮𝗻𝗮𝗴𝗲𝗺𝗲𝗻𝘁 𝗮𝘀 𝗻𝗲𝗰𝗲𝘀𝘀𝗮𝗿𝘆.
• Engage Legal Expertise: Regularly consult with legal experts specializing in data privacy to ensure that your contracts are airtight and compliant with the DPDPA and other relevant regulations.

Don’t:

• Let Contracts Become Outdated: Do not allow contracts to become obsolete or misaligned with current legal standards. Regularly updating contracts is essential to maintaining compliance and reducing legal risk.

7. Embed Data Privacy Culture Across the Organization

Do:

• Train Employees on Data Privacy: Ensure that 𝗮𝗹𝗹 𝗲𝗺𝗽𝗹𝗼𝘆𝗲𝗲𝘀 𝗶𝗻𝘃𝗼𝗹𝘃𝗲𝗱 𝗶𝗻 𝗱𝗿𝗮𝗳𝘁𝗶𝗻𝗴, 𝗿𝗲𝘃𝗶𝗲𝘄𝗶𝗻𝗴, 𝗼𝗿 𝗲𝘅𝗲𝗰𝘂𝘁𝗶𝗻𝗴 𝗰𝗼𝗻𝘁𝗿𝗮𝗰𝘁𝘀 𝗮𝗿𝗲 𝘁𝗿𝗮𝗶𝗻𝗲𝗱 𝗼𝗻 𝗱𝗮𝘁𝗮 𝗽𝗿𝗶𝘃𝗮𝗰𝘆 𝗹𝗮𝘄𝘀 𝗮𝗻𝗱 𝗯𝗲𝘀𝘁 𝗽𝗿𝗮𝗰𝘁𝗶𝗰𝗲𝘀. Foster a culture of data protection and compliance across all levels of the organization.
• Promote Accountability: Assign specific responsibilities for data privacy within the organization, ensuring that key personnel understand their roles in contract management and compliance.

Don’t:

• Overlook Organizational Buy-In: Data privacy compliance requires more than just legal expertise; it necessitates buy-in from all stakeholders. Don’t underestimate the importance of organizational awareness and commitment to data protection.

Preparing for the data privacy regime in India, especially under the DPDPA, requires meticulous attention to detail in your contracts.

By following these do’s and don’ts, companies can not only ensure compliance but also build trust with clients, customers, and partners.

𝗥𝗲𝗴𝘂𝗹𝗮𝗿𝗹𝘆 𝘂𝗽𝗱𝗮𝘁𝗶𝗻𝗴 𝗰𝗼𝗻𝘁𝗿𝗮𝗰𝘁𝘀, 𝗶𝗺𝗽𝗹𝗲𝗺𝗲𝗻𝘁𝗶𝗻𝗴 𝗿𝗼𝗯𝘂𝘀𝘁 𝗱𝗮𝘁𝗮 𝗽𝗿𝗼𝘁𝗲𝗰𝘁𝗶𝗼𝗻 𝗺𝗲𝗮𝘀𝘂𝗿𝗲𝘀, 𝗮𝗻𝗱 𝗳𝗼𝘀𝘁𝗲𝗿𝗶𝗻𝗴 𝗮 𝗱𝗮𝘁𝗮 𝗽𝗿𝗶𝘃𝗮𝗰𝘆 𝗰𝘂𝗹𝘁𝘂𝗿𝗲 𝘄𝗶𝘁𝗵𝗶𝗻 𝘁𝗵𝗲 𝗼𝗿𝗴𝗮𝗻𝗶𝘇𝗮𝘁𝗶𝗼𝗻 𝗮𝗿𝗲 𝗸𝗲𝘆 𝘁𝗼 𝗻𝗮𝘃𝗶𝗴𝗮𝘁𝗶𝗻𝗴 𝘁𝗵𝗲 𝗰𝗼𝗺𝗽𝗹𝗲𝘅𝗶𝘁𝗶𝗲𝘀 𝗼𝗳 𝗱𝗮𝘁𝗮 𝗽𝗿𝗶𝘃𝗮𝗰𝘆 𝗶𝗻 𝗜𝗻𝗱𝗶𝗮.

To know more or discuss further, you may connect on dataprivacy@amlegals.com