Expert group work underway on Data Act standard contractual clauses

The European Data Act requires the Commission, before 12 September 2025, to develop and recommend non-binding model contractual terms (MCTs) on data access and use, including terms on reasonable compensation and the protection of trade secrets. It also obliges the Commission to come forward with non-binding standard contractual clauses (SCCs) for cloud computing contracts to assist parties in drafting and negotiating contracts with fair, reasonable and non-discriminatory contractual rights and obligations.

An expert group started to work on the MCTs and SCCs back in September 2022. In November and December 2024, the Commission conducted a series of workshops to engage stakeholders and to receive feedback on:

• the SCCs for switching and exit, termination, security and business continuity, liability, non-amendment, and non-dispersion;
• the MCTs between data holders and data users, as well as the data use by the data holder, arrangements for access to data by the user, and transfer of the connected product to successors;
• the MCTs between data holders and data recipients but also the link with the user's request, the contract between the data recipient and the user, as well as the ways in which data can be accessed by the data recipient;
• the reasonable compensation for making data available agreed between data holders and data recipients under the Data Act, as well as a possible compensation for the user in exchange of access and use of the data by the data holder in certain circumstances (for example when the user agrees not to share the data with other entities); and
• voluntary data sharing and is relevant for bilateral or multilateral data sharing agreements but also for the use of MCTs in data spaces.

In 20 November 2024, the European Commission conducted a workshop on the SCCs for switching and exit, termination, security and business continuity. To recall, chapter VI of the Data Act aims to remove obstacles to effective switching between providers of data processing services to avoid customer lock-in. The source provider must give reasonable support to customers to allow for switching.

The Commission shared draft clauses prior to the workshop for input. These SCCs are meant to be directly inserted in contracts. The Commission made clear that it will not provide a full reference switching contract.

Stakeholders raised various questions and concerns with regards to the sharing of trade secrets and the non-static nature of IP rights, parallel use of cloud environments, protection of data which reside under jurisdictions outside of the EU, and the data types that are exportable and exempted. In general, stakeholders felt that the switching and action plan was not fit-for-purpose and that improvements were necessary.

Furthermore, stakeholders mentioned that the Data Act obligates providers to ensure data can be exported to allow customers to exit with their data intact, instead it would be preferable to have the responsibilities for the actual moving/testing set as A/B options. Those options and responsibilities should be up to the contracting parties to decide.

Seminar participants also said that more practical and operation guidance is needed to define “reasonable assistance” by the source providers. The Commission stated that reasonable is “what is needed for timely switching” and that translation of the legal requirements into technical standards is a challenge that should be assessed on a case-by-case basis. The Commission acknowledged that the concept of functional equivalence for Infrastructure as a Service (IaaS) switching is seen as important issue that needs further work.

The Commission explained that switching and termination are interconnected but need to be treated separately. In this context, the Data Act assumes that the contract is terminated upon completion of the switching process. The customer should clearly state that he wants to contract to stay in place.

For fixed term contracts, the switching process should be completed before the end of the contract. If necessary, the contract will be extended for the switching process to be completed.  A source provider is allowed to stipulate a penalty for early terms upon concluding of the contract. The Commission iterated that a fixed-term contract can be terminated with a maximum two-month notice. The customer can switch by paying early termination fees.

SCCs are designed to facilitate that the customer’s ability to choose to move only a certain subset of applications, i.e., the customer may choose to switch only a certain subset of “services” from the source provider to the destination provider. The Commission agreed that clarification is needed. Clarifications are also needed for providers notification obligations to customers.

In addition, the Commission stated that it will encourage the use of harmonised standards, but that there will not be standards for everything.

Next steps

The European Commission will continue working on updating the SCCs to have them ready by 12 September 2025. It is still to be decided by the Commission whether a second round of workshops will be held.  In any case, industry aims to be stay closely involved in the process.