It is not uncommon for international financial institutions to face the conundrum of being required to provide documents and information for litigations in the United States that would violate privacy laws in their home country or where their affiliates are located. The most common issues arise in connection with discovery requests that seek information prohibited by the European Union (“EU”) Data Protection Directive (Directive 95/46/EC) (PDF) that restricts the transfer and processing of broadly defined “personal” data to countries with “inadequate” protections, such as the United States. The Sedona Conference recently published best practices on how to approach such issues in its publication entitled “International Principles on Discovery, Disclosure & Data Protection.”
In January 2012, the European Commission proposed reforms (PDF) to the data protection rules to further strengthen online privacy rights. To complicate matters further, in addition to the EU Directive, some countries, such a France and Spain, have enacted their own “blocking” statutes that put stricter limits on the distribution of information. A company that violates these directives and statutes may face criminal and civil penalties. Among the information that these laws seek to protect is anything that may identify an individual, such as a name, description or email address, regardless of the context in which this information is contained. Although difficult to accomplish, there may be ways to overcome these barriers. See, for example, Matt Sorenson's article entitled European Union Data Privacy Directive 95/46/EC, Transfer Mechanisms from the European Union to Non-Union Countries, ISSA Journal (Feb. 2011) (available on-line in PDF format). The laws and guidelines overseas are constantly in flux and it is likely that they will only become more stringent. Thus, it is important for global financial services companies to stay abreast of these data privacy issues.