iFLR INTERNATIONAL FINANCIAL LAW REVIEW Multinationals face - PDF document

January 2006 www.IFLR.com iFLR INTERNATIONAL FINANCIAL LAW REVIEW Multinationals face e-discovery challenges Steven Bennett and Sam Millar compare the different approaches to e-discovery in the US and the UK, highlighting the difficulties that international businesses face

Discovery Multinationals face in issue and the forum in which those matters are to be aired. Although the current lack of a univer- e-discovery challenges sal approach to these issues in itself imposes a burden on an international business (there are costs associated with complying with differing obligations imposed by different jurisdictions), other Steven Bennett and Sam Millar compare the different approaches to problems can arise. For example, the e-discovery in the US and the UK, highlighting the difficulties that obligations imposed by one country may international businesses face conflict with the obligations imposed by another. The US courts, for example, U ntil the 1990s, companies largely (i) How is the volume of electronic might require discovery of electronic data relied on paper as the medium by data to be successfully and proportionate- by a French domiciled company that is which their activities and data ly managed? not required of the company by French were documented. Hard copy invoices, let- (ii) How is relevant electronic data to courts, and may even be considered ters and faxes between parties – filed, as a be determined? unlawful. Further, the obligation to dis- matter of best practice, in folders and files (iii) How is the importance and rele- close electronic data in multiple and produced in hard copy form – told the vance of metadata to be determined? jurisdictions in itself can constitute a sig- story of a deal or evidenced a course of con- (iv) How should archived and deleted nificant burden on the operation of a tractual dealing. data be handled? multinational business. Over the last 10 years, however, the (v) Who should bear the costs and bur- development of new technologies has dens of e-discovery? The US approach caused businesses in the developed world (vi) To what extent, if at all, should the At a national level, the US is a common to move increasingly away from paper as normal rules of privilege be affected by law jurisdiction with permissive pre-trial the medium by which their activities are electronic data? discovery. Rule 26(b)(1) of the Federal documented, and towards electronic stor- (vii) Spoiling and the destruction of Rules of Civil Procedure permits discovery age and transmission of business records. evidence. How does one deal with the of “any matter, not privileged, that is rele- With the advent of email, the internet fact that many electronic records are not vant to the claim or defense of any and sophisticated mobile devices, the designed to be permanent? party....”. longstanding reliance by business on The good news is that, to a greater or With the exception of Louisiana (the paper has given way to a widespread lesser extent, these practical issues apply sole civil code system in the US) the indi- reliance document on electronic storage across the large number of jurisdictions vidual states also embrace the common of data and a digital trail. in which typical multinational businesses law tradition. State civil procedure sys- Although evidence of a business practice operate. Many tems generally or activity derived from an email is no dif- jurisdictions, follow the liberal ferent in substance from evidence derived moreover, are discovery princi- The bad news is that, at present, from a letter or memorandum, electronic actively developing ples outlined in documents have certain distinctive proper- local rules to deal the Federal Rules there is no universal or multi- ties, which have raised a new set of issues sensibly with such of Civil Procedure. in litigation. Those issues can be particu- issues. The bad jurisdictional standard for Nevertheless, larly tricky in the international context. news is that, at because of the exis- addressing and resolving Electronic data is distinctive in: (i) its rela- present, there is no tence of the federal tive volume (multiple drafts or copies of universal or multi- e-discovery issues system there can emails can be stored easily); (ii) its duplic- jurisdictional be significant ability (emails can be circulated easily to standard for divergence in the large numbers of recipients); (iii) its addressing and law relating to dis- dynamic and changeable content (such as resolving such closure of email, which can be amended and for- issues. A business operating in the US electronic data in individual jurisdictions. warded easily); (iv) the existence of and the UK (by way of example) is sub- Indeed, rulings on e-discovery issues have metadata, that is, information about a par- ject to different rules with respect to: (i) varied from state to state and from feder- ticular data set, which might describe, for the preservation and disclosure of elec- al district to federal district. example, how, when, and by whom the tronic data in the context of court Under the national rules, as a general data was received, created, accessed, for- proceedings; and (ii) the preservation and proposition, relevant information need matted and/or modified; (v) its durability disclosure of electronic data as required not be admissible at trial if the discovery (even deleted copies of electronic docu- by particular regulatory regimes, such as appears “reasonably calculated to lead to ments can be recovered using forensic EU data protection and privacy legisla- the discovery of admissible evidence”. recovery techniques). tion and the US Sarbanes-Oxley Act. The Federal Rules of Civil Procedure These distinctive properties of electron- Consequently, a business operating in provide a full range of pre-trial discovery ic data have given rise to the following two or more countries must comply with devices, including: discovery of specialist practical issues with which courts and tri- a multitude of different (and sometimes opinions, depositions, interrogatories, bunals across the developed world are contradictory) e-disclosure obligations, production of documents, inspections now grappling: depending on the nature of the matters and requests for admissions. Under Rule 2 IFLR/January 2006 www.iflr.com