As specified in Article 45(2) of Regulation (EU) 2016/679, the adoption of an adequacy decision has to be based on a comprehensive analysis of the third country's legal order, with respect to both the rules applicable to the data importers and the limitations and safeguards as regards access to personal data by public authorities. The assessment has to determine whether the third country in question guarantees a level of protection "essentially equivalent" to that ensured within the European Union (recital 104 of Regulation (EU) 2016/679). As clarified by the Court of Justice of the European Union, this does not require an identical level of protection (2). In particular, the means to which the third country in question has recourse may differ from the ones employed in the European Union, as long as they prove, in practice, effective for ensuring an adequate level of protection (3). The adequacy standard therefore does not require a point-to-point replication of Union rules. Rather, the test lies in whether, through the substance of privacy rights and their effective implementation, supervision and enforcement, the foreign system as a whole delivers the required level of protection (4).

The Commission has carefully analysed Japanese law and practice. Based on the findings developed in recitals 6 to 175, the Commission concludes that Japan ensures an adequate level of protection for personal data transferred to organisations falling within the scope of application of the Act on the Protection of Personal Information (5) and subject to the additional conditions referred to in this Decision. These conditions are laid down in the Supplementary Rules (Annex I) adopted by the Personal Information Protection Commission (PPC) (6) and the official representations, assurances and commitments by the Japanese government to the European Commission (Annex II).

In addition to the APPI, processing of personal information falling within the scope of this Decision is subject to implementing rules issued on the basis of the APPI. This includes an Amendment to the Cabinet Order to Enforce the Act on the Protection of Personal Information of 5 October 2016, and so-called Enforcement Rules for the Act on the Protection of Personal Information adopted by the PPC (11). Both sets of rules are legally binding and enforceable and entered into force at the same time as the amended APPI.

Recently, by a Cabinet Decision adopted on 12 June 2018, the Japanese government amended the "Basic Policy". With a view to facilitating international data transfers, that Cabinet Decision delegates to the PPC, as the authority competent for administering and implementing the APPI, "the power to take the necessary action to bridge differences of the systems and operations between Japan and the concerned foreign country based on Article 6 of the Act in view of ensuring appropriate handling of personal information received from such country". The Cabinet Decision stipulates that this includes the power to establish enhanced protections through the adoption by the PPC of stricter rules supplementing and going beyond those laid down in the APPI and the Cabinet Order. Pursuant to that Decision, these stricter rules shall be binding and enforceable on Japanese business operators.

On the basis of Article 6 of the APPI and that Cabinet Decision, the PPC on 15 June 2018 adopted "Supplementary Rules under the Act on the Protection of Personal Information for the Handling of Personal Data Transferred from the EU based on an Adequacy Decision" (the "Supplementary Rules") with a view to enhance the protection of personal information transferred from the European Union to Japan based on the present adequacy decision. Those Supplementary Rules are legally binding on Japanese business operators and enforceable, both by the PPC and by courts, in the same way as the provisions of the APPI that the Rules supplement with stricter and/or more detailed rules (12). As Japanese business operators receiving and/or further processing personal data from the European Union will be under a legal obligation to comply with the Supplementary Rules, they will need to ensure (e.g. by technical ("tagging") or organisational means (storing in a dedicated database)) that they can identify such personal data throughout their "life cycle" (13). In the following sections, the content of each Supplementary Rule is analysed as part of the assessment of the articles of the APPI it complements.

Unlike before the 2015 amendment when this fell into the competence of various Japanese Ministries in specific sectors, the APPI empowers the PPC to adopt "Guidelines" "to ensure the proper and effective implementation of action to be taken by a business operator" under the data protection rules. Through its Guidelines, PPC provides an authoritative interpretation of those rules, in particular the APPI. According to the information received from the PPC, those Guidelines form an integral part of the legal framework, to be read together with the text of the APPI, the Cabinet Order, the PPC Rules and a set of Q&A (14) prepared by PPC. They are therefore "binding on business operators". Where the Guidelines state that a business operator "must" or "should not" act in a specified way, the PPC will consider that non-compliance with the relevant provisions amounts to a violation of the law (15).

Finally, the APPI creates a framework for the participation of sectoral industry organisations in ensuring a high level of compliance (see Chapter IV, Section 4). The role of such accredited personal information protection organisations (40) is to promote the protection of personal information by supporting businesses through their expertise, but also to contribute to the implementation of safeguards, notably by handling individual complaints and helping to solve related conflicts. To that end, they may request participating PIHBOs, if appropriate, to adopt necessary measures (41). Moreover, in case of data breaches or other security incidents PHIBOs shall in principle inform the PPC as well as the data subject (or the public) and take necessary action, including measures to minimise any damage and to prevent any recurrence of similar incidents (42). While those are voluntary schemes, on 10 August 2017 the PPC had listed 44 organisations, with the largest one, Japan Information Processing and Development Center (JIPDEC), alone counting 15 436 participating business operators (43). Accredited schemes include sector associations such as for instance the Japan Securities Dealers Association, the Japan Association of Car Driving Schools or the Association of Marriage Brokers (44).

Most importantly, the PPC has the power – acting on a complaint or its own initiative – to issue recommendations and orders in order to enforce the APPI and other binding rules (including the Supplementary Rules) in individual cases. Those powers are laid down in Article 42 of the APPI. While its paragraphs 1 and 2 provide for a two-step mechanism whereby the PPC may issue an order (only) following a prior recommendation, paragraph 3 allows for the direct adoption of an order in cases of urgency.

Finally, the PSIA may carry out investigations under the Subversive Activities Prevention Act ("SAPA") and the Act on the Control of Organisations Which Have Committed Acts of Indiscriminate Mass Murder ("ACO") where such investigations are necessary to prepare the adoption of control measures against certain organisations (126). Under both Acts, upon request by the Director-General of the PSIA the Public Security Examination Commission may issue certain "dispositions" (surveillance/prohibitions in the case of the ACO (127), dissolution/prohibitions in the case of the SAPA (128) and in this context the PSIA may carry out investigations (129). According to the information received, these investigations are always conducted on a voluntary basis, meaning that the PSIA may not force an owner of personal information to provide such information (130). Each time, controls and investigations shall be conducted only to the minimum extent necessary to achieve the control purpose and shall not under any circumstances be carried out to "unreasonably" restrict the rights and freedoms guaranteed under the Constitution of Japan (Article 3(1) of SAPA/ACO). Moreover, according to Article 3(2) of the SAPA/ACO, the PSIA must under no circumstances abuse such controls, or the investigations carried out to prepare such controls. If a Public Security Intelligence Officer has abused his/her authority under the respective Act by forcing a person to do anything which the person is not required to, or by interfering with the exercise of a person's rights, (s)he may be subject to criminal sanctions pursuant to Article 45 SAPA or Article 42 ACO. Finally, both Acts explicitly prescribe that their provisions, including the powers granted therein, shall "not under any circumstances be subject to an expanded interpretation" (Article 2 of SAPA/ACO).

Finally, as indicated, the PSIA may only carry out investigations to the extent this is necessary with respect to the adoption of a prohibition, dissolution or surveillance disposition under the SAPA/ACO, and for these dispositions the independent (136) Public Security Examination Commission exercises ex ante oversight. In addition, regular/periodic inspections (which in a comprehensive manner look at PSIA's operations) (137) and special internal inspections (138) on the activities of individual departments/offices etc. are carried out by specifically designated inspectors and may lead to instructions to the heads of relevant departments etc. to take corrective or improvement measures.

According to the case law of the Court of Justice (147), and as recognized in Article 45(4) of Regulation (EU) 2016/679, the Commission should continuously monitor relevant developments in the third country after the adoption of an adequacy decision in order to assess whether Japan still ensures an essentially equivalent level of protection. Such a check is required, in any event, when the Commission receives information giving rise to a justified doubt in that respect.

Therefore, the Commission should on an on-going basis monitor the situation as regards the legal framework and actual practice for the processing of personal data as assessed in this Decision, including compliance by the Japanese authorities with the representations, assurances and commitments contained in Annex II. To facilitate this process, the Japanese authorities are expected to inform the Commission of material developments relevant to this Decision, both as regards the processing of personal data by business operators and the limitations and safeguards applicable to access to personal data by public authorities. This should include any decisions adopted by the PPC under Article 24 of the APPI recognising a third country as providing an equivalent level of protection to the one guaranteed in Japan.

Member States and their organs are required to take the measures necessary to comply with acts of the Union institutions, as the latter are presumed to be lawful and accordingly produce legal effects until such time as they are withdrawn, annulled in an action for annulment or declared invalid following a reference for a preliminary ruling or a plea of illegality. Consequently, a Commission adequacy decision adopted pursuant to Article 45(3) of Regulation (EU) 2016/679 is binding on all organs of the Member States to which it is addressed, including their independent supervisory authorities. At the same time, as explained by the Court of Justice in the Schrems judgment (148) and recognised in Article 58(5) of the Regulation, where a DPA questions, including upon a complaint, the compatibility of a Commission adequacy decision with the fundamental rights of the individual to privacy and data protection, national law must provide it with a legal remedy to put those objections before a national court which, in case of doubts, must stay proceedings and make a reference for a preliminary ruling to the Court of Justice (149).

In application of Article 45(3) of Regulation (EU) 2016/679 (150), and in the light of the fact that the level of protection afforded by the Japanese legal order may be liable to change, the Commission, following the adoption of this Decision, should periodically check whether the findings relating to the adequacy of the level of protection ensured by Japan are still factually and legally justified.

Where, on the basis of the regular and ad hoc checks or any other information available, the Commission concludes that the level of protection afforded by the Japanese legal order can no longer be regarded as essentially equivalent to that in the European Union, it should inform the competent Japanese authorities thereof and request that appropriate measures be taken within a specified, reasonable timeframe. This includes the rules applicable to both business operators and Japanese public authorities responsible for criminal law enforcement or national security. For example, such a procedure would be triggered in cases where onward transfers, including on the basis of decisions adopted by the PPC under Article 24 of the APPI recognising a third country as providing an equivalent level of protection to the one guaranteed in Japan, will no longer be carried out under safeguards ensuring the continuity of protection within the meaning of Article 44 of the GDPR.

On duly justified grounds of urgency, such as a risk of serious infringment of data subjects’ rights, the Commission should consider adopting a decision to suspend or repeal this Decision that should apply immediately, pursuant to Article 93(3) of Regulation (EU) 2016/679 in conjunction with Article 8 of Regulation (EU) No 182/2011 of the European Parliament and of the Council (153).

The European Parliament has adopted a resolution on a digital trade strategy that calls on the Commission to prioritise and speed up the adoption of adequacy decisions with important trading partners under the conditions laid down in Regulation (EU) 2016/679, as an important mechanism to safeguard the transfer of personal data from the European Union (155). The European Parliament has also adopted a resolution on the adequacy of the protection of personal data afforded by Japan (156).