UK: The Long Arm Of The Law Gets Longer – UK Introduces Overseas Production Orders

On February 12 2019 the UK Parliament passed the Crime (Overseas Production Orders) Act 2019 (the "COPO Act"). This new law gives UK authorities (including the Serious Fraud Office ("SFO") and the Financial Conduct Authority ("FCA")) the power to apply to a UK court to compel a company or individual operating or based outside the UK to provide electronic data stored outside the UK.

The COPO Act brings the UK into alignment with the regime in the United States. In 2018, the U.S. Clarifying Lawful Overseas Use of Data ("CLOUD") Act came into force1. The CLOUD Act increased the scope of U.S. companies' obligations to disclose electronic data stored outside the United States. The CLOUD Act also created a framework by which foreign countries (such as the UK) could seek disclosure of data held by U.S. cloud service providers ("CSPs"), without U.S. co-operation or oversight.

The COPO Act allows UK authorities to side-step the notoriously slow process of mutual legal assistance ("MLA") in favour of obtaining an Overseas Production Order ("OPO"), which can be served directly on the person storing the electronic data. OPOs could make it much easier for UK authorities to obtain electronic data stored outside the UK, and will particularly affect CSPs in the United States.

These two laws – the COPO Act and the CLOUD Act – reinforce the trend we have seen in recent years of increased international cooperation in cross-border investigations, particularly between the U.S. and the UK. It is highly likely that the U.S. is the first place we will see OPOs in action.

in this On Point we explain how OPOs will work in practice, and examine what impact OPOs will have on U.S. (and other) CSPs which store or process electronic data outside of the UK.

Key Takeaways

  • OPOs will allow UK authorities (including the SFO and FCA) to obtain electronic data held overseas from anyone (but particularly CSPs) operating or based outside of the UK. OPOs can only be challenged in UK courts.
  • The majority of CSPs are based in the U.S.2, which means that OPOs are likely to be used most widely in the United States.
  • OPOs will only be available where the UK has a "designated international co-operation agreement" ("DICA") with the country in which the OPO will be served. The U.S. and the UK have been negotiating such an agreement since 2015. This means that the U.S. is likely to be the first country directly affected by OPOs.
  • The fact that a DICA is a precondition of an OPO means we are unlikely to see OPOs in practice in the immediate future.
  • A DICA with the U.S. could also grant the U.S. reciprocal rights to serve orders for disclosure on parties in the UK.

A New Year, a New Investigatory Tool

Last year, U.S. Congress passed the CLOUD Act. The CLOUD Act empowers federal and state law enforcement authorities to compel U.S. CSPs to provide electronic data regardless of where in the world the data is stored3. The CLOUD Act also created a framework by which other countries could obtain electronic data from U.S. electronic data companies without U.S. oversight or cooperation4.

Fast-forward to February 2019, and the UK government has gone one step further by creating Overseas Production Orders ("OPOs"). Much like the CLOUD Act – which was passed to address issues raised in the case of U.S. v Microsoft5 – the COPO Act addresses the legal lacuna highlighted in the case of KBR Inc. v Serious Fraud Office ("SFO")6. In KBR Inc., the UK High Court held that the SFO can only serve section 2 notices (to compel the provision of documents) on non-UK parties if there is a sufficient UK nexus. Even in those circumstances, the notice must be served within the UK.

In contrast to the CLOUD Act (which only applies to U.S. companies), OPOs can be served on any individual or company operating or based in a country outside the UK. OPOs cannot be challenged in the country in which the OPO is served; they can only be challenged in the court in which the OPO was made (i.e. in the UK). For that reason, OPOs will only be available where a "designated international co-operation agreement" ("DICA") exists between the UK and the country in which the OPO will be served. The UK has been negotiating such an agreement with the U.S. since 20157. The UK government hopes that a DICA with the U.S. will serve as a template for similar treaties with other countries8.

Assuming a DICA is in place, in order to grant an OPO a UK court must be satisfied that there are reasonable grounds to believe that:

  1. an indictable offence has been committed and proceedings in respect of the offence have been commenced (or the offence is being investigated);
  2. the person against whom the OPO is sought has possession or control of all or part of the data;
  3. all or part of the data is likely to be of substantial value to the proceedings or investigation;
  4. all or part of the data is likely to be relevant evidence in respect of the offence; and
  5. it is in the public interest for all or part of the data to be produced.

Failure to comply with an OPO will be dealt with as contempt of court, which could result in a fine or up to two years in prison. Any material disclosed pursuant to an OPO will be admissible in any subsequent prosecution. Courts can also include a non-disclosure requirement as part of the OPO, which prevents the person served with the OPO from disclosing the existence of the OPO to another party (such as is often the case with production orders against banks in the UK).

OPOs will be available in the UK to the police, HM Revenue & Customs, the Serious Fraud Office, the National Crime Agency, the Financial Conduct Authority, and anyone else to be named in regulations.

Perhaps most significantly, the default time period for responding to an OPO will be seven days from service of the OPO. Depending on the scope of the request and the volume of data to be disclosed, this will exert serious administrative pressure on CSPs to identify, separate and prepare the data for disclosure within the requisite time-frame, unless they apply for an extension.

All Bark and no Bite?

The CLOUD Act and the COPO Act provide powerful tools to authorities on both sides of the pond to request and receive electronic data stored overseas. But while the CLOUD Act will be easily enforceable in U.S. domestic courts, it is difficult to see how the UK will enforce compliance with OPOs in other countries. Presumably, any DICA will include provisions to address this issue, but it is hard to see how an OPO, which cannot be challenged or overturned in the locality in which it is served, could nonetheless be enforced there. As currently drafted, the COPO Act does not confer any punitive powers on UK courts to enforce compliance.

The only option this leaves UK courts is the contempt of court procedure, and that is unlikely to hold much sway with some of the U.S. giants. Mark Zuckerberg, for example, famously declined to travel to the UK to give evidence to the UK digital culture media and sport select committee ("the Select Committee")9. While the Select Committee does not enjoy the same judicial authority as a court order, Zuckerberg's refusal to travel to the UK to give evidence to the Select Committee perhaps offers an insight into the approach U.S. CSPs (and other foreign companies) might take when responding to OPOs.

This will be an area to monitor, once the terms of any DICA are agreed. That is, assuming the terms of any DICA are made public.

Brexit

Refreshingly, this is one issue which will be largely unaffected by Brexit. A DICA is a precondition of any OPO, and a DICA has to be specifically designated as such by the Secretary of State in regulations. This means that the UK will have to negotiate any DICAs with other countries and have them properly designated (which will include laying them before the UK Parliament) before they can be relied on for the purpose of an OPO. The UK government has already indicated that it intends to use the U.S. DICA as a precedent for DICAs with other countries. Accordingly, any DICA with European countries (or the EU as a collective) would have to be negotiated separately to the MLA frameworks currently in place.

In the Distance but Gaining Ground...

The fact that a DICA is a precondition of an OPO means we are unlikely to see many OPOs in practice in the immediate future. The UK government has acknowledged that currently it is negotiating only with the U.S, and those negotiations have been ongoing since 2015. Reaching similar agreements with other countries will take time, and many may simply refuse.

However, where available, OPOs could substantially increase the administrative burden on CSPs operating or based in any country which enters into a DICA with the UK. Given the relatively advanced stages of negotiations between the UK and the U.S., U.S. CSPs in particular would be wise to start preparing now for the increased pace and volume of disclosure requests that they could face, if a DICA between the U.S. and the UK is finalized. As we move towards an environment of global enforcement which is increasingly reliant on cross-border cooperation, it is more likely than not that OPOs will be a reality for U.S. companies in the future.

Practical Guidance Tips

In last year's white paper, Dechert proposed a number of practical tips for data companies preparing for the CLOUD Act. Those tips apply equally to any company seeking to prepare for the introduction of OPOs:

  • Consult with key members of your Legal and IT teams to assess the potential impact of the COPO Act on current and future operations.
  • If you have not already done so, map your cloud data so you know where your data is stored.
  • Review your current contracts with CSPs to see what notification provisions are currently in place.
  • Designate a point person to monitor this area so critical developments can be shared in real time with key stake holders or decision makers.

Footnotes

  1. Dechert published a white paper on the CLOUD Act in 2018, which can be accessed here.
  2. Home Office Impact Assessment, Title: Crime (Overseas Production Order) Bill, 11 May 2018, p. 4. See also the House of Lords Library Briefing: Crime (Overseas Production Orders) Bill [HL], 5 July 2018, p. 1.
  3. Forecasting the Impact of the New US CLOUD Act, Dechert LLP, 2018, p. 3.
  4. Ibid.
  5. 584 U.S. _ 2018.
  6. [2018] EWHC 2368.
  7. House of Lords Library Briefing: Crime (Overseas Production Orders) Bill [HL], 5 July 2018, p. 5.
  8. Home Office Impact Assessment, Op. Cit., p. 5.
  9. "Mark Zuckerberg has 'no plans' to go to UK to give evidence to MPs", The Guardian, 15 May 2018.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions