“Software as a Service” (SaaS) providers such as Google, IBM, Cisco and others are offering multinational corporations the opportunity to replace their enormously expensive and ever changing technological infrastructure with SaaS computing facilities. Individual companies would archive and access information in these systems through the internet at a presumably lower unit price (cloud computing). These providers also promise to manage the skyrocketing costs of collecting and disclosing electronically stored information (ESI), especially emails, demanded in U.S. judicial and regulatory proceedings (e-discovery).

Since these repositories are not under the control of the company being sued, they argue that the very strong policy and procedure, audit trails and reliability in the “cloud” are a vast improvement over a company’s internal procedures.  However, international cross-border e-discovery issues threaten to rain on the cloud computing parade. The SaaS provider, the multinational corporation and their attorneys must carefully address and anticipate these e-discovery issues early in their discussions or risk costly sanctions. Moreover, litigation counsel cannot be surprised to learn that all of the company’s ESI is outside of the company’s control.

Civil code countries, such as France and Germany, take dramatically different approaches to cross-border information transfer than does the U.S. The U.S. requires parties in any litigation to exchange information which “may” lead to the discovery of admissible evidence. Issues of confidentiality and privacy are dealt with through various devices such as protective orders and confidentiality agreements. This is not true for many European and Asian countries where U.S. type discovery is rare and broad data protection and privacy rights are enforced by the state and are not negotiable by an employer. For example, “processing,” includes a company’s operations relating to collecting, storing, retrieving, disclosing and transmitting personal data and includes any information relating to an identified or identifiable natural person. Countries have introduced laws (”blocking statutes”) to restrict cross-border disclosure of information to foreign jurisdictions. See generally, “The Sedona Conference Framework for analysis of cross border discovery conflicts-A practical guide to navigating the competing currents of international data privacy and discovery” .

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