Why Cross-Border Litigation is a Compliance Concern

As the global economy expands, more and more organizations are conducting business across borders, inevitably leading to litigation, government inquiries and compliance audits that span international boundaries. Not surprisingly, cross-border litigation often results in complex electronic discovery (often referred to as e-discovery) issues, where organizations are required to produce electronically stored information from various countries as evidence.

One needs only to look at today’s headlines to see examples of this in practice. New York may be the epicenter of the Bernard Madoff financial scandal, but its devastating effects have rippled across the globe. Consequently, the scandal has set off an avalanche of lawsuits by investors globally. For example, Repex Ventures SA recently named Bernard Madoff and Sonja Kohn, chairwoman of Bank Medici AG, in a lawsuit claiming that the bank’s chairwoman didn’t disclose that her client’s investments were being funneled into Madoff’s funds. This matter exemplifies the e-discovery complications encountered in cross-border litigation because the plaintiff, Repex Ventures, is a British Virgin Islands corporation and has filed the lawsuit in the New York federal court against Bank Medici AG, which is based in Vienna. Examining a case like this, it comes as no surprise that globalization, combined with the growth in litigation, have resulted in a dramatic increase of cross-border e-discovery requirements.

Responding to cross-border e-discovery requirements can be a risky and complex procedure since it is not simple to transfer electronic data from one country to another. In contrast to the U.S., where most emails and documents produced in the office belong to the company and can be used openly, Europe fervently protects the privacy of employees, restricting the disclosure of anything that could be considered personal data. In the aforementioned example, the legal requirements of at least three different countries must be considered during the e-discovery process. In this case specifically, both the European Union’s Directive 95/46/EC (regarding the protection of personal data) and country-specific laws (i.e., “blocking” statutes) have legal implications associated with the processing and transfer of data.

As background, Directive 95/46/EC was adopted by the European Commission in 1995 and provides data privacy protection for citizens of member states. It defines requirements for personal data privacy and protects personal data from disclosure in many instances. The Directive defines personal data as “any information relating to an identified or identifiable natural person.” This broad definition means that many types of information, such as email addresses, are considered personal data. Chapter 4 of the Directive specifically dictates regulations for the transfer of “personal data” to countries outside the EU and states that data may not be transferred to countries that do not provide an adequate level of protection.

To Continue Reading: Click Here
----------------------------------------------
Source: s-ox.com
By: Brandon Cook