A recent Gmail outage reminds us that the cloud is not always
up. What goes up must come down. Servers crash. Companies go
bankrupt. When a cloud service provider fails or the technology
falters, what happens to the servers that house the data? Think of
where your cloud-based data is hosted... and then try to imagine
what it would take to get that data back. In these cases, questions
of jurisdiction and bankruptcy law quickly come to the fore.
In the ongoing case involving Megaupload, a court
battle is being fought over the servers: who will take conduct of
them and what's to be done with the data on those servers?
The Canadian case of Stanford International Bank Ltd.
(Syndic de), 2009 QCCS 4106 (CanLII), also
involved a dispute over servers of a bankrupt company. In the
Stanford International case, the bankrupt company was
offshore. A liquidator acting for receivers based in Antigua sought
an order from a Canadian court to confirm the winding-up order.
However, the court objected when it discovered that the servers,
located in Canada, had been erased by the Antiguan receivers, the
data had been copied, and the copies were stored in Antigua.
Essentially, the Antiguan receivers removed all the electronic data
from the Canadian servers to Antigua, thus removing the data from
the jurisdiction of Canadian courts and regulatory authorities.
The number of servers in that case was small enough to permit
copying; compare that to the Megaupload case which involves some
1100 servers. No-one wants to incur the cost to house and maintain
such a large number of servers, so they are in legal limbo until
the court makes a ruling.
In some cases, the data sits on identifiable servers - you could
in theory (if you know where the server farm is located) point to a
box and say, that's where my data is stored. In other cases,
such as Amazon's "Elastic Compute Cloud" Service,
high levels of redundancy mean the same data may appear in multiple
instances across multiple servers, located in multiple geographical
areas. It would be impossible even in theory to determine where the
data is physically located. When negotiating mission-critical
cloud-computing agreements, take time to consider the issues of
what happens when the cloud comes down, and get proper advice for a
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The Law Society of British Columbia’s Cloud Computing Working Group issued its Final Report on Cloud Computing on January 27, 2012, amending an earlier consultation report approved by the "Benchers" on July 15, 2011.
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