The Right to Compensation Under the GDPR: Key Takeaways from Recent Case Law of the Court of Justice of the European Union

Case C-300/21 – UI v Österreichische Post AG: Judgment delivered in May 2023

Austria’s postal service processed data of members of the public to develop an algorithm for the purpose of political advertising.

Firstly, some comfort was provided by the CJEU’s finding that a mere infringement of the GDPR is not itself sufficient to confer a right to compensation, rather the claimant must satisfy three cumulative conditions:

1. There must be an infringement of the GDPR;
2. The claimant must have suffered material or non-material damage; and
3. There must be a causal link between the infringement and the damage.

Secondly, the CJEU held that the right to compensation is not conditional on the damage meeting a threshold of seriousness, thus the GDPR precludes any national rule or practice imposing such a threshold. The Court further noted that the GDPR does not contain any rules governing the assessment of damages. Accordingly, it is up to each Member States’ legal systems to prescribe domestic rules for actions under Article 82, once the principles of equivalence and effectivenss of EU law are complied with.

Case C-340/21 – VB v Natsionalna agentsia za prihodite: Judgment delivered in December 2023

A cyberattack on the Bulgarian National Revenue Agency resulted in the publishing of six million people’s personal data online.

One question that was referred related to Article 82(3) and whether a controller would be exempt from its obligation to pay compensation to a data subject if the damage was a result of unauthorised disclosure of, or access to, personal data by a third party. The CJEU held that a controller could only avoid liability in this situation if it proved that it was in no way responsible for the event that gave rise to the damage.

Another question asked whether the fear experienced by a data subject with regard to a possible misuse of his or her personal data by third parties as a result of an infringement of the GDPR is capable, in itself, of constituting ‘non-material damage’. The CJEU noted that Article 82(1) does not distinguish between situations in which the personal data has already been misused or where there is a fear that the personal data will be misused in the future. Therefore, it held that Article 82(1) of the GDPR must be interpreted as meaning that the fear experienced by a data subject with regard to a possible misuse of their personal data can alone constitute ‘non-material damage’, provided this fear is well-founded  (which the national court is responsible for verifying).

Case C-667/21 – ZQ v Medizinischer Dienst der Krankenversicherung Nordrhein: Judgment delivered in December 2023

This case concerned the processing of personal data relating to the data subject’s capacity to work.

In answering the German court’s questions relating to Article 82, the CJEU held that the establishment of liability on the part of the controller is subject to the existence of a fault committed by the controller. The CJEU explained that this fault is presumed unless the controller proves that it is in no way responsible for the event giving rise to the damage. This reversal of the burden of proof somewhat lowers the bar for data subject litigants and highers the potential exposure for controllers, thus showing the importance of having secure data processing practices in place should a controller wish to rebut the presumption of fault.

In relation to Article 82(1), the referring court enquired whether the degree of fault on the part of the controller or processor is a factor to consider when assessing the amount of non-material damage to be compensated. It specifically asked whether ‘non-existent or minor fault on the part of the controller or processor can be taken into account in their favour’. The CJEU held that as the right to compensation under Article 82 GDPR does not fulfil a punitive function, the degree of seriousness of the controller or processor's fault in causing the damage is not relevant when determining the amount of damages to be awarded.

Case C-687/21 – BL v Saturn Electro-Handelsgesellschaft mbH Hagen: Judgment delivered in January 2024

While purchasing an electrical appliance, the plaintiff completed a sales contract and credit agreement containing his personal details which were all then erroneously given to a different customer but returned within half an hour. Along with conclusions already reached by the CJEU in the previously discussed cases, the CJEU also held that the mere fact that the data subject fears the abuse of their data is insufficient on its own to claim compensation for non-material damages. Rather, the claimant must show that they have actually suffered damage through proving a well-founded fear (which is for the national court to determine) that there is a risk of misuse of their personal data, and demonstrating that this risk is not hypothetical. A purely hypothetical risk of misuse by an unauthorised third party cannot give rise to compensation.

Case C-741/21 – GP v Juris GmbH: Judgment delivered April 2024

The case concerned a customer of a business who realised his personal data was being used for the purposes of direct marketing and subsequently revoked all consents to receive information from that company and objected to this processing of his data. He later received two advertising leaflets for which he claimed compensation under Article 82 for alleged unlawful processing.

The CJEU clarified that it is not sufficient for a controller to claim that the damage was caused by the failure or negligence of a person acting under the controller’s authority, within the meaning of Article 29 in order to avail of the exemption from liability under Article 82(3). The CJEU also held that as Article 82 is compensatory in nature, in contrast to Article 83 which is punitive, the criteria used for determining the amounts of administrative fines under Article 83 cannot be used to determine the amount of damages under Article 82. The Court followed on from the reasoning that as Article 82 is compensatory rather than punitive, the fact that several infringements have been committed by the controller in relation to the same data subject cannot constitute a relevant criterion for the purposes of assessing the compensation to be awarded to that data subject under Article 82. It further held that only the damage actually suffered by that person must be taken into consideration in order to determine the amount of monetary compensation.

Case C-182/22 – JU v Scalable Capital GmbH: Judgment delivered June 2024

The claimant’s data was stolen from a trading platform operated by the defendant. However, there was no evidence of the data actually being used for fraudulent purposes. The novel questions that the CJEU addressed led to the following conclusions:

1. The GDPR does not establish a hierarchy between physical, material or non-material damage and to assume that physical injury is more serious than non-material damage would risk being contrary to the principle of full and effective compensation for the damage suffered.
2. Where damage is established but where that damage is not serious, the national court can compensate the data subject by awarding minimal compensation, provided it compensates the data subject in full for the damage suffered.
3. The theft of personal data alone cannot give rise to a claim of identity theft or fraud.

Article 82(1), in light of recitals 75 and 85, must be interpreted as meaning that in order for identity theft to be classified as such and to give rise to a right to compensation for non-material damage, the identity of a person affected by a theft of personal data must actually be misused by a third party. However, compensation for non-material damage caused by the theft of personal data, under Article 82(1), cannot be limited to cases where it is shown that that data theft subsequently gave rise to identity theft or fraud.

Key Takeaways

In light of this recent case law, the key principles which controllers ought to be aware of are as follows:

(a) A mere infringement of the GDPR by a controller is not sufficient to be entitled to compensation. The claimant must also establish that the infringement caused them damage (material or non-material).

(b) There is no seriousness threshold of damage which must be met to be entitled to compensation.

(c) Non-material damage may include a loss of control over personal data or fear about potential future misuse, but the claimant must prove a well-founded fear that the data will be misused and that the risk is not hypothetical.

(d) Damages under Article 82 are compensatory and not punitive in nature.

(e) The concept of damage must be interpreted autonomously across all Member States, but national legal systems can prescribe procedural rules to determine the amount of compensation.

(f) Where the damage established is not serious, a national court can award minimal compensation, provided it compensates the data subject in full for the damage suffered.

(g) Theft of personal data alone cannot give rise to a claim for compensation based on alleged identity theft, rather the data subject must prove that their stolen data has been misused by a third party.

This progress made by the CJEU offers welcome clarity for controllers regarding how Article 82 is to operate when data subjects claim compensation for an infringement of the GDPR.

Article provided by INPLP member: Rob Corbet (Arthur Cox LLP, Ireland)

co-author: Stephanie Breen

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