On March 23, 2018, Congress passed the “Clarifying Overseas Use of Data Act,” also known as the “CLOUD Act” (H.R. 4943, S. 2383), a new U.S. law that will have a dramatic effect on the United State government’s control over and access to data stored overseas.  The CLOUD Act was introduced to the U.S. Senate and House of Representatives on February 6, 2018, as part of a $1.3 trillion omnibus spending bill.  The bill passed both houses of Congress on March 23, 2018, and was signed into law by the President the next day.

In a nutshell, the CLOUD Act amends the 1986 Stored Communications Act (“SCA”), Title II of the Electronic Communications Privacy Act (“ECPA”), to allow U.S. authorities to compel U.S.-based service providers to provide data stored on servers, regardless of whether that data is stored in the U.S. or a foreign jurisdiction.   Specifically, the CLOUD Act states:

“[a] provider of electronic communication service or remote computing service shall comply with the obligations of this chapter to preserve, backup or disclose the contents of a wire or electronic communication and any record or other information pertaining to a customer or subscriber within such provider’s possession, custody, or control, regardless of whether such communication, record, or other information is located within or outside of the United States.” [Emphasis added.]

Under the existing SCA, the U.S. could access data stored overseas only through Mutual Legal Assistance Treaties (“MLATs”), which are written agreements between two or more countries prescribing how each country will cooperate with another during cross-border investigations and other legal proceeding.  MLATs are ratified by the U.S. Senate, and an MLAT must receive a two-thirds approval to pass.  The U.S. currently has MLATs with over 60 countries and the European Union.  However, the CLOUD Act provides the U.S. government with an alternative mechanism to MLATs.  Now, U.S. law enforcement officials can compel U.S.-based companies to turn over customer data hosted in any foreign jurisdiction without having to negotiate or go through one of these agreements.  This will presumably make it easier and faster for the U.S. to reach data stored abroad.

The CLOUD Act comes on the heels of the high-profile U.S. v. Microsoft Supreme Court case, which was heard by the Court on February 27, 2018.  The Microsoft case centers on whether a U.S. provider of email services must comply with a U.S. warrant by disclosing electronic communications within the provider’s control, even if the communications are stored in non-U.S. jurisdictions.  The Microsoft case deals with Microsoft’s servers in Ireland, but the case is expected to have far-reaching implications for international data privacy in general.  The Court is expected to rule on this case by June 2018.

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