The challenges of collecting data outside the U.S.

EU, China, Brazil and others have different privacy restrictions

Privacy means many different things to different people. And when looked at from a global perspective, with different countries having vastly divergent cultures and histories, its definition is understandably diffuse.

This situation is exacerbated these days when it comes to collecting data from foreign countries for discovery purposes. In our Internet Age, with emails and other information constantly whistling across the welkin, a company may have its data residing on servers in multiple countries or even continents. While the immediate accessibility is a benefit, the potential problems companies face when it comes time to collect or produce that data for the sake of a lawsuit or discovery can be serious—especially for U.S. businesses. The most severe fines can cost a company up to €4.5 million, not to mention reputational damage or a finding of adverse inference (see “Stiff sanctions”).

“The real issue I see these days is that a lot of people don’t fully appreciate the severe restrictions and the significant sanctions that can come from trying to apply U.S. concepts in a foreign country,” says Littler Mendelson Shareholder Paul Weiner. “They just don’t recognize that there’s a significant difference, and assume they can get data from a foreign country just like they can in the U.S.”

European Disunion

Compared to the rest of the world, U.S. data privacy laws (see “Philosophical Differences”) are extremely limited, particularly when it comes to personal data about individuals. While the definition of personal data varies worldwide, it often rather broadly includes information relating to any way that one can identify another individual.

The European Union (EU) is one such conglomeration of nations that broadly defines privacy. The right to privacy in Europe is carefully explicated in its human rights laws—Article 8 of the European Convention on Human Rights highlights the respect for a person’s “private and family life, his home and his correspondence”—and is broadly interpreted. While the EU issued a joint data protection directive for all 27 nations in the mid-1990s, it is implemented nationally. This means that though each EU nation’s data privacy laws should be the same, they’re actually all slightly different versions of the same thing. So, in essence, there are 29 different sets of rules (rules by each EU nation’s data protection authority, plus those of the European Data Protection Supervisor and the European Commission).

Some European nations, including France and Switzerland, have blocking statutes, which effectively are separate privacy rules set out within the civil code that prohibit disclosure of certain information to countries without similar data privacy laws. “To an extent, these are even more problematic,” says Gail Cartwright, a partner at Latham & Watkins. Not the least of which are the penalties and sanctions levied against companies, which for many years were seen as an empty threat but can be severe.

Outside of Europe, China also has strict data privacy laws that make it the equivalent of a felony to transfer data to a country that doesn’t have similar privacy laws. Likewise, Brazil makes the collection of private data illegal under its constitution.

Avenues for Discovery

Despite the significant complications, there are a few ways to go about getting data out of Europe. One is under Article 23 of the Hague Convention, through which parties can have letters rogatory sent to a local court that, in turn, will issue a request to disclose the data.

“If you go through that process, then you’re sort of safe,” Cartwright says. “The U.S. courts and parties don’t always like the process and it’s not seen as mandatory by U.S. courts, whereas in Europe, the privacy regulators say you should go through the process.” However, a number of EU nations—France, Spain, the Netherlands, Germany—have filed reservations that restrict what can be asked for to make it narrower than the U.S. definition of a relevant document.

But not everyone agrees that the Hague Convention is the best route. “In my experience, I’ve found the Hague Convention to be very time-consuming, and it’s not a very streamlined or effective procedure,” Weiner says.

Another potential avenue to extract data from EU nations is through safe harbor provisions, under which certain outside companies are licensed to accept data from EU sites. “They basically have set themselves up as little EUs in the
U.S., so they have the same types of protections as the EU and other countries,” says Quarles & Brady Partner Steven Hunter.

Practical Considerations

In-house counsel should bear these tips in mind when trying to mine foreign data. It’s critical for companies and outside counsel to understand the differences between U.S. rules and foreign rules. Retaining local counsel from the start is the best way to do so. “There’s no substitute,” Hunter says. “As smart as we U.S. lawyers are, we’re not licensed in those countries.”

Notifying adversaries and the court early on that foreign data is involved also is crucial, especially because opposing counsel and judges may not be versed in the problems collecting foreign data presents. “I like to be proactive and alert everybody that both parties and the court may need to work together to overcome the additional hurdles when dealing with foreign data,” Weiner says.

When confronted with privacy and blocking statutes, it’s sometimes possible to anonymize the data so it doesn’t relate to specific individuals. With this method, it’s possible to limit what information people are seeking or what needs to be produced.

Counsel also should ensure that all data requests are narrowed only to what’s absolutely relevant. Concurrently, counsel should ensure that data are handed over under protective order and, if possible, with a data-processing agreement outlining how it should be handed back at the end of a trial. 

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