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The Catch 22 of Cross Border eDiscovery


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Cross-Border eDiscovery is a hot topic this year. Globalization of businesses and mass mergers and acquisitions has caused an increase in the need for an understanding of how eDiscovery should be handled in other countries. All over the world, courts and local governments have instituted new rules for how parties will engage in discovery related to digital evidence. These new rules have been causing issues between the attorneys required by the US discovery rules to discover digital evidence for their cases and the various governments outside the US and across the world.

While the law in the United States makes it clear that parties to a litigation must preserve documents and electronically stored information, laws in other countries make it equally clear that preserving or collecting that data may violate their data protection laws. In this seminar, you will learn the updates in the local discovery and privacy rules of the top trade partners of the U.S. so that you will be able to handle overseas eDiscovery requirements with greater ease and more knowledge.

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The Catch 22 of Cross Border eDiscovery

  1. 1. The Catch 22 of Cross-Border eDiscovery<br />Best Practice eDiscovery Webinar sponsored by EMC SourceOne eDiscovery – Kazeon and Masters Conference<br />Guest Speaker: Shawnna Childress <br />
  2. 2. Cross Border eDiscoveryby Shawnna Childress, P.I.<br />
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  5. 5. Agenda<br />Cross Border eDiscovery<br />Key Drivers:<br />Globalization<br />Cross Border Litigation<br />Key Concerns:<br />Working with the Rules<br />International Evidence Collection<br />Blocking Statutes<br />Foreign Judgment Enforceability<br />Data Protection and Privacy<br />Managing Information Globally<br />Cloud Computing<br />
  6. 6. Key Drivers of Cross Border eDiscovery<br />Global Economy<br />Cross border businesses<br />Cross border business dealings<br />Cross border communications<br />Boom in corporate mergers, acquisitions and collapses<br />Dell-Perot Systems $3.9 billion<br />Cisco-Tandberg $3.4 billion<br />Cisco-Starent Networks $2.9 billion<br />HP-3Com $2.7 billion<br />EMC-Data Domain $2.1 billion<br />
  7. 7. Key Global Economic Drivers<br />Common for a mid-size company to be a subsidiary of a:<br />Complex, multi-jurisdictional corporate structure<br />Financial Markets<br />Subprime Mortgage Crisis<br />Global Credit Crunch<br />World-wide Banking<br />Trade Markets<br />
  8. 8. Key Global Economic Drivers<br />Common for a mid-size company to be a subsidiary of a:<br />Complex, multi-jurisdictional corporate structure<br />Financial Markets<br />Subprime Mortgage Crisis<br />Global Credit Crunch<br />World-wide Banking<br />Trade Markets<br />Where is the Cross-Border<br />eDiscovery located?<br />
  9. 9. Exports & Imports<br />What are the 15 top countries the US trades with?<br />
  10. 10. U.S. Total Trade (Goods)<br />
  11. 11. U.S. Exports (Goods)<br />
  12. 12. U.S. Imports (Goods)<br />
  13. 13. Exports & Imports<br />Where is the world’s money?<br />
  14. 14. 2010 New Billionaires<br />The world’s billionaires have an average net worth of $3.5 billion (up $500 million in 12 months).<br />The world has 1,011 10-figure titans, up from 793 a year ago.<br />US billionaires account for 40% of the world’s billionaires, down from 45% a year ago.<br />In 2010, of the new billionaires, only 16% are from the U.S.<br />In 2010, Asia added 104 new billionaires.<br />In 2010, NEW to the top rankings is China with 27 new billionaires.<br />For the FIRST TIME, second to the US, China has the most new billionaires.<br />Russia has 62 billionaires on the list, 28 of them returnees who HAD fallen off the list in 2009 amid a meltdown in commodities.<br />
  15. 15. Meet my Billionaires!<br />
  16. 16. Where is the Money?: Top Billionaires in 2010<br />MEXICO Carlos Slim Helu $53.5 billion – Telecom<br />Telecom tycoon who pounced on the privatization of Mexico’s national telephone company in the 90’s. Net worth up $18.5 billion in 2010. Received Regulatory approval to merge his fixed-line assets into American Movil.<br />U.S. Bill Gates $53 billion – Microsoft<br />Net worth up $13 billion in 2010 as Microsoft shares rose 50% in 12 months.<br />More than 60% of fortune held outside Microsoft (Four Seasons hotel, Televisa & Auto Nation)<br />
  17. 17. Where is the Money?: Top Billionaires in 2010<br />INDIA MukeshAmbani $29 billion – Oil & Gas<br />Global ambitions: His Reliance Industries, India’s most valuable company, recently bid $2 billion for 65% stake in troubled Canadian oil sands outfit Value Creations.<br />UK/INDIA LakshmiMittal $28.7 billion – Steel<br />London’s richest resident. Sits on board of Goldman Sachs. Daughter in-law recently bought insolvent German fashion house Escada.<br />FRANCE Bernard Arnault $27.5 billion – Luxury Goods<br />Developing upscale Shanghai commercial property<br />
  18. 18. Where is the Money?: Top Billionaires in 2010<br />BRAZIL Eike Batista $27 billion – Mining & Oil<br />2/3 of his fortune comes from relatively new source, OGX Petróleo e Gas Participações, the oil-and-gas exploration company he founded in 2007 and took public a year later. UK/INDIA LakshmiMittal $28.7 billion – Steel<br />GERMANY Karl Albrecht $23.5 billion – Supermarkets<br />Owns one of Germany (and Europes’)dominant grocers plus over 1k stores in the US across 29 states.<br />SWEDEN Ingvar Kamprad $23 billion – Ikea<br />Ikea's reputation under fire. In Russia company fired two top managers for allowing bribes to a power supplier. In France firm is facing an extended workers' strike.<br />
  19. 19. Where is the Money?: Top Billionaires in 2010<br />HONG KONG Li Ka-shing $21 billion<br />Has a large holding in Canadian oil firm Husky Energy, which recently announced its third discovery in South China Sea. <br />SAUDI ARABIA Prince Alsaud $19.4 billion<br />Two-thirds of his fortune is held in his 95% stake in Saudi-listed investment vehicle, Kingdom Holding.<br />In the five weeks leading up to Forbes' stock valuation date, Kingdom shares jumped 49%.<br />Alwaleed and Kingdom Holding together own a 3.5% stake in Citigroup. As the bank's largest individual investor, he has been vocal in his support of its chief executive VikramPandit.<br />
  20. 20. Cross Border Litigation<br />75 of the Global 100 law firms are based in the U.S.<br />The rest of the world is not as litigious as the U.S.<br />
  21. 21. Cross Border Litigation<br />It seems ironic that our global economy is fueled by advanced communications technology but those same communications can wreak havoc when it comes to litigation involving cross-border transactions.<br />
  22. 22. The Catch-22 of Cross Border eDiscovery<br />While the law in the United States makes it clear that parties to a litigation must preserve documents and electronically stored information, laws in other countries make it equally clear that preserving or collecting that data may violate their data protection laws.<br />
  23. 23. Cross Border Litigation<br />Discovery, including the availability of depositions and interrogatories, is RARE and at the court’s discretion in most countries. (Europe, Japan, China, etc)<br />Many traditional “litigation friendly” common law jurisdictions are introducing reforms to reduce the burdens<br />Scope, time, cost of discovery<br />
  24. 24. Where the issues arise?<br />Differences in the body of law for different countries<br />Democracy<br />Socialism<br />Tyranny<br />Communism<br />Example Miranda Rights<br />
  25. 25. Key Concerns: Local Legal Systems<br />  BLUE = Civil law<br />   MAROON = Common law<br />   BROWN = Bijuridical, sistemahíbrido (civil and common law)<br />   BLACK = Customary law<br />   YELLOW = Fiqh<br />
  26. 26. Key Concerns<br />Local Jurisdiction<br />Common Law<br />Law developed by judges through decisions of courts and similar tribunals rather than through legislative statutes or executive branch action. Based on the principle that it is unfair to treat similar facts differently on different occasions.<br />Civil Law<br />It holds legislation as the primary source of law, and the court system is usually inquisitorial, unbound by precedent, and composed of specially trained judicial officers with a limited authority to interpret law.<br />Custom Law<br />The established pattern of behavior that can be objectively verified within a particular social setting. A claim can be carried out in defense of "what has always been done and accepted by law.“<br />Fiqh<br />Islamis jurisprudence. Fiqh is an expansion of the Sharia Islamic law—based directly on the Quran and Sunnah—that complements Sharia with evolving rulings/interpretations of Islamic jurists.<br />
  27. 27. Data Protection Laws Around the World<br />
  28. 28. Differences- Personal Data Definitions<br />US Personal Data<br />Medical Records<br />SSN<br />Banking Info<br />EU – Directive 95/46/EC<br />“Everyone has the right to respect for his private and family life, his home and his correspondence.” ~European Convention for the Protection of Human Rights and Fundamental Freedoms<br />All above plus anything personal sent or received<br />Requires all member countries to put into law a requirement which requires consent to use personal data<br />Communist Country (e.g. China)<br />Whatever they deem necessary at that moment<br />Criminal penalties<br />
  29. 29. Emails<br />An email within an organization can just as easily be sent… from Florida to Paris as it can go from Florida to New York<br />
  30. 30. World-wide Internet Censorship<br />
  31. 31. Data Protection & Privacy<br />In many civil law jurisdictions, particularly the EU, protection of personal information is perceived as a fundamental human right.<br />
  32. 32. Complications<br />Complications:<br />How discovery friendly are the jurisdictions in which the defendants have known assets?<br />What resources are there to proceed with litigation in that jurisdiction?<br />Time & Cost, eDiscovery Assistance, Trusted Legal Rep.<br />Judgment enforceability<br />Prospects for success & settlement<br />Possible lack of company policies<br />Custodian objections<br />“tipping off” employees may impair investigations<br />Answers:<br />Consulting with qualified local counsel<br />Evaluate company’s policies regarding access to the data<br />Evaluate binding corporate rules to provide for data access and transfers<br />
  33. 33. Foreign Judgment Enforceability<br />World-wide<br />Hague Convention<br />European Union<br />Council Reguation (EC) No. 44/2001 (except Denmark who opted out)<br />Safe Harbor Provision<br />
  34. 34. Key Concern: Cross Border Evidence Collection<br />US to Rest of World<br />Hague Convention<br />Party may request the Court to send a Letter Rogatory (request letter) to the Central Authority within a participating foreign country to compel production of evidence.<br /><br />From US to Americas<br />Inter-American Convention on Letters Rogatory<br />Within European Union<br />Council Regulation (EC) No. 1206/2001<br />If the above doesn’t work, use Letters Rogatory<br />
  35. 35. Blocking Statutes<br />Some countries have blocking statutes which effectively make it illegal (criminal/financial penalties) for an entity within that country to comply with a foreign request for discovery<br />Criminal Impact of Blocking Statutes<br />French Penal Law No. 80-538 (1980)<br />Offensive Use of Blocking Statutes<br />Accepting an Adverse Inference: Lyondell-Citgo Refining v. Petroleos de Venezuela (SDNY May 2, 2005)<br />The jury can infer the evidence would have been adverse to the defendant.<br />Discovery Obligations and Blocking Statutes<br />Does not excuse obligation: Enron v. JP Morgan Secur, Inc.<br />Discovery ordered, even after Court acknowledgement of French Blocking Statute violation: Aeropspatiele<br />Court must balance the production of documents from a foreign party with their good faith effort: Restatement (Third) of Foreign Relations Law 442(1)(c); SocieteInternationale v Rogers <br />
  36. 36. Blocking Statutes - Rejection<br />Intel Corp. v Advanced Micro Devices, Inc., 542 U.S. 241 (2004)Complaint filed by AMD against Intel before Directorate-General for Competition of the European Commission<br />AMD recommended that the Commission request discovery of documents previously produced by Intel in a private antitrust law suit in the United States<br />Court upheld request and rejected ‘showing of foreign discoverability’ argument<br />
  37. 37. InformedConsent by Custodians<br />Must be acquired before access is granted to data collector to collect the data<br />Data collector will need to specify and disclose the purpose of the data collection (or access)<br />Written consent from custodians before data can be collected<br />
  38. 38. Once you get access to the data, then what?<br /><ul><li>Legal
  39. 39. Technical
  40. 40. Project Management</li></li></ul><li>Data Processing & Hosting<br />Where will the data be processed?<br />Onsite<br />Taken offsite, but kept in-country<br />Taken offsite, out of country<br />What processing software can handle the languages identified through custodian interviews and sampling collection?<br />Where will the data be hosted?<br />Onsite<br />Taken offsite, but kept in-country<br />Taken offsite, out of country<br />
  41. 41. Data Processing & Hosting<br />Use data collector to perform the following activities:<br />Develop filtering criteria and keyword searches in multiple languages<br />Determine (and get a WRITTEN agreement with opposing counsel) as to what data is relevant to the investigation/case<br />Perform local data collections<br />Consider the use of network data acquisition methods<br />Consider arranging for transfer of relevant material to central location<br />Implement protocols to protect data such as use of encrypted media and establish secure data rooms in appropriate regions<br />Process on-site<br />Host on-site<br />
  42. 42. Foreign Languages<br />How will you handle the multiple foreign languages?<br />Example: Chinese Dialects<br />Gan - 赣语/贛語31 million<br />Guan (Mandarin) - 官话/官話836 million<br />Hui - 徽語3.2 million<br />Jin - 晋语/晉語45 million<br />Kejia (Hakka) - 客家話34 million<br />Min - 閩語/闽语60 million<br />Wu - 吴语/吳語77 million<br />Xiang - 湘语/湘語/湖南话/湖南話36 million<br />Yue - 粵語/粤语71 million<br />Unclassified not determined<br />
  43. 43. Local Unique Challenges<br />State Secret data in China<br />1989 “Law on Guarding State Secrets”<br />It’s a crime to release state secret data.<br />Major policy decisions on state affairs; <br />The building of national defense and in the activities of the armed forces; <br />Diplomatic activities and in activities related to foreign countries and those to be maintained as commitments to foreign countries; <br />National economic and social development; <br />Science and technology; <br />Activities for preserving state security and the investigation of criminal offences; and <br />Any other matters classified as "state secrets" by the national State Secrets Bureau.<br />
  44. 44. China’s Well-Known State Secret Case<br />Rio Tinto espionage case<br />Accused to having industry data crucial to the negotiations (too detailed to have been obtained legally)<br />Arrests cam shortly after Rio Tinto declined to sell part of the company to the Chinese state-owned company Chinalco.<br />Rio Tinto accused of causing 100 billion USD worth of damage to the Chinese Economy over a 6 year period. <br />Hu sentenced to 10 years in jail<br />Accuser later admitted to fabricating data<br />
  45. 45. Case Scenario<br />Example scenario<br />US multi-national with operations in U.S., Europe and Asia<br />Allegations of product failure<br />Approach<br />Assess company policies and local country rules<br />Obtain copies of company policies and validate existing agreements<br />Consult with law firms within each region with local ediscovery/edisclosure experience<br />Implement legal hold<br />Define roles for the data collector(s)<br />Acquire written custodian informed consent approval<br />Acquire local government approval (if needed)<br />
  46. 46. Little Decisions Cost Big $<br />Business decision by a multi-jurisdictional corporation made to close two data centers<br />Increased storage capacity to local PSTs on desktops and laptops of employees<br />CIO Savings $2 Million<br />GC Cost $10+ Million<br />
  47. 47. Cloud Computing & Web 2.0<br />
  48. 48. Web 2.0<br />The term Web 2.0 is commonly associated with web applications that facilitate interactive information sharing and collaboration on the web.<br />The term Web 2.0 was coined in 1999 by Darcy DiNucci in her article “Fragmented Future”.<br />
  49. 49. Cloud Computing<br />Cloud computing is internet based computing, whereby shared software and information are provided to computers and other devices on-demand like the electricity grid.<br />Everything is set up on virtual sources.<br />Most cloud computing infrastructure consists of services delivered through data centers and built on servers.<br />
  50. 50. Web 2.0<br />
  51. 51. Clouds are Local (and NOT)<br />…and so are their implications.<br />While clouds definitely deliver fast access to resources and can allow rapid deployment of new applications along with speed and dynamic scaling, this may come with substantial legal risks. IT & Legal professionals should keep in mind: <br />Where your customers are determines what rules apply. <br />Disparate regulatory environments complicate compliance management. <br />Cross-border data flow further increases complexity. <br />Some countries are a worse place to be than others. <br />
  52. 52. Do you know where your data is in the cloud?<br />Country-specific regulations governing privacy and data protection vary greatly.<br /><br />
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  58. 58. What can we do?<br />Safe Harbor Provisions & Certifications<br />Hague Convention – Ask the court to invoke the Hague Convention for the taking of evidence abroad in civil and commercial matters. It establishes a set of uniform procedures where a court of one country can request assistance from the court of another country. (The likelihood of success is slim.)<br />Meet with the country’s local government official and be as transparent as possible regarding what data you will be taking with you and get written approval.<br />Prepare a written discovery plan and get consent.<br />
  59. 59. For more information<br /><br />
  60. 60. Next Steps<br />Best practices white papers, analyst papers and more…<br />eDiscovery <br /><br /><br />Information Governance<br /><br /><br />Upcoming events<br />Masters Conference – Use code: EMC11<br /><br />EMC eGRC Seminar Series - throughout North and Latin America<br /><br />Best Practices eDiscovery webcasts (EMC+MastersConf)<br /><br />