European airlines have been told they cannot hand over details of passengers flying into the United States to US authorities.
Last year EU governments came in for much criticism from privacy and civil liberties lobbyists when it was agreed to approve the data transfers.
Under the May 2004 agreement, European airlines had been obliged to give US authorities 34 items of information on passengers flying to the US, including name, address, all forms of payment and contact telephone numbers.
The United States insisted the transfer of personal details was essential to fight terrorism following the 11 September attacks on New York and Washington by suicide plane hijackers.
But the European Court of Justice challenged the deal, contending it had no legal basis and infringed fundamental rights.
In an initial response, the US pledged to seek a temporary way forward with the EU and said summer transatlantic air traffic should not be disrupted, nor security lowered.
European airlines said there should be no short-term effect on travellers.