Safe harbor (law)

A safe harbor is a provision of a statute or a regulation that reduces or eliminates a party's liability under the law, on the condition that the party performed its actions in good faith or in compliance with defined standards. Legislators may include safe-harbor provisions to protect legitimate or excusable violations, or to incentivize the adoption of desirable practices.

United States

An example of safe harbor is performance of a Phase I Environmental Site Assessment by a property purchaser: thus effecting due diligence and a "safe harbor" outcome if future contamination is found caused by a prior owner.

Another example is regarding insider information laws. Broker-dealers are required to have in place Chinese walls (also called information barriers) that prevent the transmission of insider information from one department to another. Each broker-dealer firm is required to have its own barriers and to enforce them on its own. Thus, there is no safe harbor regarding this issue.

The Digital Millennium Copyright Act has notable safe-harbor provisions which protect Internet service providers from the consequences of their users' actions (Similarly the EU directive on electronic commerce provides a similar provision of "mere conduit" which while not exactly the same, serves much the same function as the DMCA safe harbor in this instance). The US Patent and Trademark Briefing on ISP Liability states that in order to be eligible for safe harbor the ISP must have adopted and reasonably implemented a policy that provides for the termination in appropriate circumstances of subscribers and account holders of the service provider’s system or network who are repeat infringers.

European Union

The EU Data Protection Directive is an example of a safe harbor law. It sets comparatively strict privacy protections for EU citizens. It prohibits European firms from transferring personal data to overseas jurisdictions with weaker privacy laws, but creates exceptions where the foreign recipients have voluntarily agreed to meet EU standards under the Directive's Safe Harbor Principles.