Compensation under the GDPR: A Recent Ruling

By Steven Kant

The Austrian Court of Justice has established that a right to compensation for a violation of a GDPR provision exists if three cumulative conditions are met. The existence of non-material damage does not require a specific degree of severity. In a case involving an Austrian citizen and an Austrian postal company, the court found that a single breach of a GDPR provision does not automatically lead to a right to compensation. The court also ruled that a certain level of severity is required for compensation for non-material damage, and that EU provisions for determining the amount of compensation are admissible. The court concluded that both material and non-material damage can justify compensation, and that a specific degree of seriousness is not necessary. The case highlights the importance of interpreting the term 'damage' in the GDPR broadly, and that compensation can be granted for both material and non-material damage.

There exists a right to compensation for the violation of a provision under the GDPR if three cumulative conditions are met. The existence of non-material damage does not require a specific degree of severity. The Court of Justice has established this in the present judgment, where an Austrian citizen and an Austrian postal company were at odds.

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Background and Main Case

Besides delivering mail to Austrian citizens, Österreichische Post has been involved in selling addresses since 2017. They sell so-called "target group addresses" to organizations enabling them to send targeted advertising. The postal company generates these target groups using an algorithm, which combines several social and demographic criteria. Österreichische Post did this without obtaining prior consent from the individuals concerned.

An Austrian citizen (hereinafter: the applicant) was categorized by Österreichische Post's algorithm as having a strong affinity for a specific Austrian political party. Österreichische Post did not sell this data to a third party. Nonetheless, the applicant felt angered and embarrassed by this labeling, claiming to have suffered emotional harm. As a result, the applicant sought compensation of 1,000 euros from the Austrian civil court. The applicant also demanded an immediate halt to the processing.

Appeal and Preliminary Questions

The Austrian court granted the request to cease the processing but rejected the request for compensation. The applicant appealed this decision. The appellate court also rejected the compensation claim, stating that a right to compensation only exists if the damage reaches a certain 'threshold of seriousness.' According to the court, this threshold had not been reached in the case of the applicant. The applicant did not accept this and appealed to the highest federal court in Austria, the Oberste Gerichtshof.

The Oberste Gerichtshof had doubts about the extent of the right to compensation under the GDPR and requested the Court of Justice to make a preliminary ruling. It posed three questions to the Court: 1) Does a single breach of a provision under the GDPR suffice for granting compensation under Article 82 of the GDPR, 2) must a certain level of severity be reached for compensation for non-material damage, and 3) are there EU provisions for determining the amount of compensation? All three questions were found to be admissible.

Answers to the Preliminary Questions

The Court answered the first preliminary question as follows. From the wording of Article 82(1), it's evident that the existence of suffered damage is only one of the three conditions for a successful right to compensation. Apart from the existence of suffered damage, a provision under the GDPR must have been breached, and there must be a causal link between the specific damage and the breach. These conditions must be cumulatively fulfilled for a right to compensation to arise.

Hence, it can be concluded that a single violation of a GDPR provision on its own doesn't automatically lead to a right to compensation.

Addressing the second preliminary question, the Court delves into the meaning of 'damage' in Article 82 of the GDPR. Firstly, it can be inferred from Article 82 that, alongside material damage, non-material damage can also justify compensation. So, is there a need for a certain 'threshold of seriousness' to speak of non-material damage? According to the Court, this is not the case. The context of Article 82 of the GDPR stipulates that both material and non-material damage can give rise to a right to compensation. The article does not mention any threshold of seriousness. Additionally, the Court highlights that the term 'damage' in the GDPR should be interpreted broadly. Demanding a threshold of seriousness would not align with this comprehensive understanding of harm.

Conclusively, there is no requirement for a specific degree of severity for the existence of a right to compensation for non-material damage.

The third preliminary question concerns whether there are EU provisions to determine the amount of compensation. The Court answers this question negatively. The GDPR doesn't contain provisions that establish rules for determining and assessing damages. Because these rules are absent, it's up to each member state to establish further rules on a national level. The Court also mentions that the principles of equivalence and effectiveness should be taken into account. Lastly, the Court refers to Recital 146 of the GDPR, which states that data subjects should receive 'full' and 'actual' compensation for their suffered harm. The right to compensation under the GDPR serves a compensatory purpose: suffered harm should be redressed.

Source: CJEU May 4, 2023, C-300/21, ECLI:EU:C:2023:370

This article was published on May 23, 2023, as a news report for Sdu OpMaat Privacyrecht.

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