Legal Docs Referring to Data Sovereignty

Legal documents are a fact of life in any enterprise organization. Whether you are a buyer or supplier of physical goods, software, services or anything else. These legal documents put structure around the rules of engagement between one or many parties.

The information in these legal documents can range from pricing, service agreements, IP and much more. One of the highlights of these types of documents in recent years has been specification of data sovereignty clauses in the wording. These clauses are important when companies operate internationally and work with various clients with requirements for strict privacy and security. This means that these legal documents with specific clauses in them are going to dictate many important aspects of how your company operates, and exchanges data with third party partners.

Legal documents that specify where end-user data can be stored and discuss data sovereignty generally fall under various types of agreements, policies, and regulations, especially in industries handling sensitive information. Here are some common examples:

1. Data Processing Agreements (DPA)

• Purpose: Define the terms under which data processors handle personal data on behalf of data controllers, including where the data is stored.
• Key Data Sovereignty Clauses:
  • Geographic restrictions on data storage (e.g., requiring data to remain within specific jurisdictions like the EU).
  • Provisions for compliance with local data protection laws (e.g., GDPR for EU residents, CCPA for California).
• Example: A DPA between a cloud service provider and a client might specify that user data must remain within the European Union due to GDPR requirements.

2. Service Level Agreements (SLA)

• Purpose: Establish performance expectations for services, including uptime and data handling practices.
• Key Data Sovereignty Clauses:
  • SLAs may include specific obligations related to data residency or ensuring data storage complies with the client's national laws.
• Example: An SLA for a SaaS provider may guarantee that data is stored in a specific geographic region, preventing data transfers outside of that area.

3. Privacy Policies

• Purpose: Outlines how a company collects, stores, and processes personal data, including any geographical limitations on data storage.
• Key Data Sovereignty Clauses:
  • Disclosure of the countries where data may be processed or stored.
  • Commitment to ensuring compliance with the data protection regulations of the user's home jurisdiction.
• Example: An e-commerce company's privacy policy might state that user data is stored on servers in the US, but also describe protections in place for international data transfers.

4. Cross-Border Data Transfer Agreements

• Purpose: Govern the transfer of personal data across borders, ensuring compliance with data protection laws in both the origin and destination countries.
• Key Data Sovereignty Clauses:
  • Compliance with legal frameworks like Standard Contractual Clauses (SCCs) under GDPR or Binding Corporate Rules (BCRs) for multinational companies.
  • Restrictions on transferring data to countries without adequate data protection laws.
• Example: A European company transferring data to a US-based service provider may need an agreement referencing SCCs to ensure legal compliance.

5. Cloud Hosting Agreements

• Purpose: Detail the terms under which a company uses cloud infrastructure to store data, including data residency requirements.
• Key Data Sovereignty Clauses:
  • Options to select specific data center locations to ensure data does not leave a particular geographic region.
  • Provisions for meeting local data protection laws where data is hosted.
• Example: A financial institution might stipulate that customer data must be stored in specific data centers within its home country to meet regulatory requirements.

6. Regulatory Compliance Documents

• Purpose: Outlines obligations under national or regional data protection laws regarding where and how data must be stored.
• Key Data Sovereignty Clauses:
  • GDPR (EU): Strict rules on data storage within the European Economic Area (EEA) unless certain legal protections are in place.
  • CCPA (California): Obligations to inform users about the geographical location of their data.
  • China’s CSL (Cybersecurity Law): Requires that certain personal and critical data collected within China be stored within the country.
• Example: Companies operating in the EU need to ensure compliance with GDPR rules, which may restrict the ability to store or transfer EU citizens' personal data outside the EEA without appropriate safeguards.

7. Master Service Agreements (MSA)

• Purpose: Governs the overall relationship between a service provider and its customer, often including specific data protection obligations.
• Key Data Sovereignty Clauses:
  • Specify how and where data is stored, and restrictions on data transfers.
  • May include requirements for compliance with local laws governing data protection and data sovereignty.
• Example: A telecom provider’s MSA might specify that customer data should be stored in the country of origin to meet telecom regulatory requirements.

8. Government Regulations and Industry Standards

• GDPR (EU): Requires data on EU residents to be processed and stored in compliance with its data protection regulations. It includes provisions on cross-border data flows and legal bases for data transfers outside the EU.
• CCPA (California): Similar to GDPR, but with a focus on California residents, requiring companies to disclose where data is stored and transferred.
• HIPAA (USA): Requires healthcare providers to ensure that health data (PHI) is stored and transferred securely, often with constraints on location.
• DORA (EU): Digital Operational Resilience Act for financial services includes clauses requiring firms to control and report on where customer data is stored and processed, ensuring compliance with data sovereignty rules.

These documents not only define where data is stored but also ensure that data is protected and processed in accordance with applicable laws in different jurisdictions. They also often impose additional security measures based on the geographical location of data to ensure compliance with local laws.

Understanding whether your enterprise is adhering to these kinds of contractual clauses or not is impossible without having a mechanism that monitors ground reality. Everything is fun and games till the risk of getting sued for millions of dollars becomes a reality. Data Flow Posture Management solutions, like Riscosity, enable companies to stay within the bounds of these legal frameworks.

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