High Court: Max Schrems entitled to 80 percent of his legal costs against DPC in compromised proceedings

About this case:

• Citation:
  [2022] IEHC 532
• Judgment:
  External link
• Court:
  High Court
• Judge:
  Mr Justice David Barniville

Delivering judgment in the case, Mr Justice David Barniville (President) applied the principles set out in Hughes v. Revenue Commissioners [2021] IECA 5 and determined that Mr Schrems had obtained a substantial part of the reliefs he had sought in the settlement and was therefore entitled to the majority of his costs.

Background

In 2013, Mr Schrems made a complaint to the DPC relating to the handling of data by Facebook. The complaint was reformulated in 2015. At the time of initiating proceedings, the DPC had not progressed its investigation of the complaint and no final decision had been made.

In July 2020, the CJEU delivered its judgment in Case C-311/18 Data Protection Commissioner v. Facebook Ireland Ltd. And Maximilian Schrems, where it was ruled that the provisions of US law did not satisfy EU requirements for data transfers to that jurisdiction. On foot of this judgment, the DPC opened an “own-volition” inquiry as to whether Facebook was acting lawfully in transferring data to the US. A preliminary draft decision was produced by the DPC in August 2020, which resulted in Facebook taking judicial review proceedings against the DPC.

Additionally, Mr Schrems initiated proceedings which challenged the DPC’s decision on the own-volition inquiry and its failure to expeditiously progress his complaint from 2013. 

In correspondence from August 2020, the DPC had stated that it would first conclude the own-volition inquiry before considering Mr Schrem’s complaint. Further, it was not proposed to hear any submissions from Mr Schrems “at this point” but he would have an opportunity to make submissions in the investigation of his complaint following the own-volition inquiry.

Mr Schrems took issue with this approach and sought several reliefs in his judicial review proceedings. Primarily, he sought an order quashing the DPC’s own-volition inquiry. However, he also sought orders/declarations that his complaint would be determined with due diligence and speed and that the DPC had failed to provide adequate reasons for dealing with his complaint in the manner proposed.

Mr Schrems claimed that the DPC was acting in breach of fair procedures by not allowing him to be heard. It was also incorrect for the reformulated complaint to be determined in accordance with legislation that preceded the GDPR and Data Protection Act 2018, Mr Schrems claimed. Finally, Mr Schrems claimed that he was entitled to documents which were sent between the DPC and Facebook which were relevant to his reformulated complaint.

Facebook’s proceedings began on 15 December 2020 and Mr Schrems’ proceedings were due to start on 13 January 2021. However, on 4 December 2020, the DPC sent correspondence to Mr Schrems which conceded that he could make submissions in the own-volition inquiry.

Thereafter, there was further correspondence between the parties which resulted in a compromise on 12 January 2021. In addition to being heard in the own-volition inquiry, it was confirmed that the DPC would deal with Mr Schrems’ complaint in parallel with the own-volition inquiry. Further, the DPC would provide Mr Schrems with the requested documentation and that the DPC would consider the complaint under the GDPR and 2018, provided that the complaint was limited to transfers after 25 May 2018.

The issue of costs was left over by the parties for the court to decide. Mr Schrems submitted that he had been successful in obtaining a substantial part of the reliefs and was therefore entitled to his costs. In response, the DPC stated that the compromise only came about following counsel’s submissions in the Facebook proceedings and that Mr Schrems had not succeeded in quashing the own-volition inquiry, which was the main relief sought. As such, it was claimed that the result was a “score draw” and the proper order was no order for costs.

High Court

Mr Justice Barniville began by identifying the appropriate principles which applied to the costs of the proceedings. It was accepted that neither party was “entirely successful” within the meaning of section 169 of the LSR Act 2015. Further, it was held that the proceedings had become moot as a result of the actions of the parties. Citing Hughes, it was held that where one of the parties took unilateral action which caused proceedings to be moot, that party should bear the costs of the case.

However, Hughes also stated that a court could make no order for costs where a party only received partial reliefs in a compromise. In this situation, unilateral action was not taken because an applicant had agreed to accept to less than they claimed. However, it would unnecessarily constrain the jurisdiction of the court and ignore the legitimate public interest in settling cases if this was made a clear rule, it was held.

It was also held that parties should make efforts to settle their claims entirely and not “substitute one form of litigation for another.” In this regard, it was noted that the court had to deal with a lengthy costs hearing despite the substantive issues being compromised.

Mr Justice Barniville identified three questions which were relevant to the costs application. These were: 1) did the applicant obtain a substantial part of the reliefs in the compromise?; 2) could the necessity of proceedings have been avoided if the compromise was offered earlier?; and 3) would the applicant have obtained the resolution without instituting proceedings?

On the facts of the case, the court was satisfied that Mr Schrems had received a substantial part of the reliefs which were sought in the proceedings. The DPC’s correspondence from December 2020 represented a major shift in its position from September 2020, the court held. While it was accepted that Mr Schrems had not successfully quashed the own-volition inquiry, the court also accepted that this relief was unnecessary in light of the DPC’s concessions.

The court also held that, given the substantial concessions made by the DPC in the settlement, the proceedings could have been avoided if the DPC had offered the compromise earlier in September 2020 or in the statement of opposition. Finally, it was held that Mr Schrems was unlikely to have achieved the compromise if he did not initiate the proceedings, having regard to the position adopted by the DPC in August and September 2020.

Conclusion

The court ordered the DPC to pay 80 percent of Mr Schrems’ legal costs of the proceedings, with the discount of 20 percent to reflect that Mr Schrems did not proceed to seek to quash the own-volition inquiry. 

Schrems v. Data Protection Commission [2022] IEHC 532