Large companies including IBM, Google, Microsoft, Amazon and others use the deal, set up between the USA and the European Commission 15 years ago.
The deal called, the Safe Harbour agreement is now invalid.
The ruling strikes at the heart of commerce between the USA and the EU, and follows revelations by NSA contracted Edward Snowden (pictured) about the US Prism programme that allowed security authorities to snoop on individuals’ private data.
While details are still sketchy, it appears that different data authorities in the different countries might have to make decisions about data transfers in their own territories.
The case started after a complaint by an Austrian law student that wanted a decision on whether Facebook transferring European users’ data to servers based in the States was licit.