John O’Connor outlines the latest position in the ‘Microsoft Warrant case’ where the Cloud provider was ordered by a US Federal Court to produce its customer’s private e-mail content even though it was stored exclusively outside the USA
The District Court for the Southern District of New York has decided that Microsoft Corporation must, pursuant to a warrant, produce to US authorities, content and non-content data relating to an e-mail account (including private emails) of a customer held on a Microsoft server in Ireland. The decision raises significant issues for cloud providers, technology companies, privacy advocates, data protection regulators and governments, not only in Ireland but across the world. The court case has been ongoing since December 2013. In August, the New York District Court removed the stay on the warrant ordering Microsoft to produce the e-mails to the FBI. In order for the case to continue to the New York Second Circuit Court of Appeals, on 5 September 2014, Microsoft declined to comply with the court's ruling, voluntarily entering into contempt, with any sanctions deferred pending the final outcome of the case.
The search warrant was issued pursuant to the US Stored Communications Act (SCA), government legislation from the Ronald Reagan-era. The SCA states that a US company's overseas records must be disclosed domestically when a valid subpoena, order or warrant compels their production. The judge deduced from the facts that it was the intention of US Congress when drafting the SCA that it would have an extra-territorial effect if required. Further evidence of this intention was given in that the controversial US PATRIOT Act, legislation passed to strengthen security controls in the immediate aftermath of 9/11, contains such provisions.
Microsoft has argued to the court that (i) a SCA warrant is confined to US territory and has no effect in a foreign jurisdiction; (ii) interpreting the SCA warrant to have extra-territorial reach is a violation of international law; (iii) compelling Microsoft to hand over the property does not circumvent the fact that it is an illegal search and seizure by law enforcement; (iv) the data belong to Microsoft's customer and do not constitute business records of Microsoft; and (v) the US Government should use an appropriate process designed for this kind of request, such as the Mutual Legal Assistance Treaty (MLAT) with Ireland (signed January 2001) to procure the data relating to this e-mail account. Microsoft's stance is supported by Apple, Cisco, Verizon, and AT&T, all of whom have filed amicus curiae briefs in support of Microsoft's position stating that a final decision in favour of the US Government would create a 'dramatic conflict with foreign data protection laws'.
Judge Preska, presiding, rejected Microsoft's argument (see In re Warrant to Search a Certain E-Mail Account Controlled and Maintained by Microsoft Corp., __ F. Supp. 2d. __, 2014 WL 1661004 (SDNY 25 April 2014)). In so holding, the judge deemed the SCA warrant to be a hybrid of a warrant and a subpoena and therefore, subject to the rules of a subpoena, the property must be handed over to the court.
Some US law
It is well established in US law that US authorities who demonstrate probable cause to a US court may be authorised to search for and seize evidence located within the US. A similar approach is adopted in Ireland and many countries across the world. A US search warrant as described cannot however be deemed valid in a foreign jurisdiction subject to non-US laws. The law regarding a US subpoena is also well established. The recipient of a subpoena must produce the materials required, as listed in the subpoena, if the materials are within the 'possession, custody or control' of the recipient. The USA is also of the view that a search in the context of digital data and information 'occurs when information from or about the data are exposed to possible human observation, such as when it appears on a screen, rather than when it is copied by the hard drive or processed by the computer'.
Relevant Irish law and views
The Irish Data Protection Acts 1988 and 2003 seek to regulate the collection, processing, use and disclosure of data relating to individuals that is processed or controlled in Ireland. The Acts prohibit the transfer of personal data from Ireland outside the European Economic Area unless the receiving country ensures an 'adequate level of protection' for the privacy and fundamental rights and freedoms of data subjects in relation to the processing of personal data, having regard to all the circumstances surrounding the transfer. The data in question were not transferred by Microsoft under Safe Harbor, the long established EU/US framework for the legitimate transfer of personal data from the EEA to the US, and has at all times been in situ in the Irish data centre. The Acts contain certain exemptions relating to the transfer to a third party such as on the grounds of a 'legal obligation' or that it is 'necessary for the administration of justice'. It is the opinion of Michael McDowell, a former Irish Attorney General, and now a pre-eminent senior counsel (barrister) before the Irish Supreme Court that such exemptions are 'only lawful where such disclosure is required or mandated by reference to Irish law and is subject to the jurisdiction and control of the Irish courts'. The ability therefore of the US Government to obtain a warrant, subject to US domestic law, that has effect in Ireland may, it is argued, be a breach of Irish sovereignty.
Mr. McDowell also stated in his view in a declaration before the New York court, that MLAT was the appropriate procedural forum for the transfer to take place. Further to this, in 2003, the European Union and the USA entered into a separate agreement on mutual assistance, which was subsequently applied to the Ireland-US MLAT. The MLAT was established to allow US authorities to seek the assistance of Ireland to obtain evidence located in Ireland which is required for the purposes of US law enforcement, particularly in the context of criminal investigations.
Dara Murphy TD, the Irish Minister of State at the Department of the Taoiseach and Foreign Affairs with Special Responsibility for European Affairs and Data Protection, has expressed the view that the Irish Government has 'serious concerns' about the implications for Ireland and the EU arising from the US court decision. Mr. Murphy suggested that compliance with the warrant may result in Microsoft, and any other US companies with operations in the EU which are served with such warrants in the future, being in breach of the Acts and the EU Data Protection Directive, stating that '[t]his would create significant legal uncertainty for Irish and EU consumers and companies regarding the protection of their data which, in this digital age, is everyone's most valuable asset'.
Wider context and reaction
In the post-Snowden/Wikileaks age, access to and storage of data in bulk by the US National Security Agency under its PRISM Programme continues to haunt the principles of data protection across Europe. The German Government has stated that it will not store data with US cloud providers unless the decision is overturned. The Managing Director of Microsoft Germany, Dr. Christian Illek, has stated that the company is considering the possibility of working with partners to develop a cloud data centre based in Germany, with the aim of alleviating national concerns over cyber security. According to Dr. Illek, Microsoft is testing the idea of a 'German cloud system', where data could be hosted by a partner company (rather than a Microsoft Group company) but not be subject to US law. The Chairman of Hewlett-Packard Germany, Heiko Meyer, had issued a similar message, in which he called for a common cloud space for Europe, similar to the concept of the EU's economic area.
An unavoidable consequence, if the extra-territorial scope of the warrant is upheld, is that US multi-national cloud providers may need to promptly review their business models and engage with data protection regulators, at least to the extent that they host data, including personal data, in the EEA on behalf of third parties and where such data have not been transferred to the US under Safe Harbor or other legitimate data transfer means.
The ramifications of this decision for technology companies threatens the growth of the global cloud model and would appear to be in conflict with Irish and European data protection law. The right of protection against illegal search and seizure of physical property needs to clearly apply also to the digital world. The essence of the cloud model is that the customer's data in the cloud remain the property of the customer and the cloud provider merely acts as a host. The customer's data are not the host's data. It is on this basis of trust and privacy that the cloud model has flourished.
The protection of cloud data has never been so heralded and, at the same time, has never been in such danger. Brad Smith, General Counsel and Executive Vice President, Legal & Corporate Affairs for Microsoft, wrote in the Wall Street Journal, 'Timeless values should endure, and digital common sense should prevail'; a view shared by many in the technology and legal community. It's a view that I share.
John O'Connor is Head of the Technology and Commercial Contracts Group at Matheson, Dublin, Ireland: firstname.lastname@example.org
© Matheson 2014