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Data has become the new capital of digital business. This is not a trivial development, as it has implications for the strategic direction of companies, as well as for corporate governance. This new role is largely due to the rapid growth of data in digital applications such as artificial intelligence and autonomous vehicles, which require massive amounts of data to function. In these applications, the quality of data is critical, and a strong data management system can help to ensure that it is high-quality and secure.

The Hong Kong Privacy Commissioner for Personal Data (“PCPD”) has published two sets of recommended model contractual clauses that are designed to address different scenarios. The first set of recommendations addresses the transfer of personal data from a data user in Hong Kong to an entity outside Hong Kong or between two entities both of which are located outside Hong Kong and are controlled by a data user in Hong Kong, where the transfer is subject to the requirements of the PDPO and its six data protection principles (DPPs).

In this context, the term “personal data” is defined broadly under the PDPO to include any information that relates to an identified or identifiable natural person, regardless of whether such information is recorded in a material form or not. This definition is consistent with other legislative regimes around the world, including the Personal Information Protection Law that applies in mainland China and the General Data Protection Regulation that applies in the European Economic Area.

When determining whether a particular transfer is subject to the PDPO, it is important to consider the purpose and nature of the transfer. A key requirement is that the data user must obtain the voluntary and express consent of the data subject to transfer their personal data for a purpose other than the purposes set out in the PICS. This requirement is also consistent with other legislative regimes.

The PCPD’s model contracting clauses are a useful tool to facilitate the completion of a cross-border, data transfer, as they can provide legal certainty to both parties. However, the use of these models is only one part of a comprehensive data transfer process. Other elements, such as the preparation of a transfer plan, are equally crucial. Moreover, it is essential for both data exporters and data importers to be aware of the potential consequences of failure to comply with the PDPO’s requirements for international transfers of personal data. For this reason, it is advisable to seek legal advice before entering into any transfer agreements.