Ireland: Cloud Computing – Legal Considerations For Data Controllers

Last Updated: 16 May 2011
Article by Matthew Ryan
Most Read Contributor in Ireland, September 2019

What is cloud computing and why is it relevant?

Cloud computing can be described as technology delivered as a service made available on demand over the internet. There are effectively three types of cloud computing services: software as a service ("SaaS"), infrastructure as a service ("IaaS") and platform as a service ("PaaS"). By utilising a cloud computing service, an organisation is effectively outsourcing its IT requirements.

Online email accounts (such as Gmail or Hotmail) are everyday examples of cloud computing, users of which can access their inbox from anywhere in the world. From a business perspective, cloud computing might be used as a platform for obtaining software or storage on demand. For example, an organisation may opt to outsource its storage requirements, resulting in their data being stored on another entity's server.

Cloud computing is one of the fastest growing segments of the global IT industry with use of cloud computing services forecast to increase by 40% per annum in the coming years. It forms part of the Irish Government's vision for a "smart economy" and many of the global IT firms have invested heavily in their Irish-based cloud computing competency centres. These factors have positioned Ireland at the forefront of global developments in cloud computing.

What are the benefits of cloud computing to organisations?

The use of cloud computing services can offer benefits for organisations of all sizes, including:-

  • Cost reductions

    The burdensome task of maintaining IT systems can be outsourced, with organisations paying for software/hardware only as and when they are needed. This greatly reduces capital investment requirements, allowing resources to be invested elsewhere.
  • Access to state of the art applications

    In addition to cost savings, organisations will have the ability to utilise the most up-to-date software/hardware systems, thereby increasing efficiencies.
  • Flexibility

    Organisations will have access to the systems and storage they require on demand. For example, software can be made available in a very short space of time and increased storage capabilities will be available as and when they are needed, without the associated cost of having such capacity in reserve.

Data Protection and Security Issues

Despite the tangible benefits listed above, Irish entities have generally been slow to embrace cloud computing as a service. This is, no doubt, due in part to certain data protection and security issues that Data Controllers1 are obliged to investigate.

In February, 2010 the Chief State Solicitor's Office (the "CSSO") issued a statement to Government departments warning that contracts for cloud computing services being used at the time did not address issues such as data protection, confidentiality and security at a level that would be required in the public sector. At the time this letter caused outrage in the cloud computing community – how could a Government who had publicly endorsed cloud computing overtly condemn its use by Government departments? A number of key data protection and security issues arising in this regard are considered below.

Jurisdictional Issues

Section 11(1) of the Data Protection Act, 1988 (as amended by the Data Protection (Amendment) Act, 2003) (the "Data Protection Act") provides that a Data Controller is prohibited from allowing Personal Data2 under their control to be disseminated to a jurisdiction which does not have an adequate level of data protection, subject to the exceptions set out at section 11(4). The "adequacy" or otherwise of data protection measures will depend on many factors, including the type of data being transferred and the intended use of such data. Countries within the European Economic Area3 are automatically deemed to have an adequate level of data protection. The EU has also approved certain other countries as having a sufficient level of data protection, including Switzerland, Canada, Argentina, Guernsey, Isle of Man, Jersey and, most recently, Israel.

In order to be fully compliant with the Data Protection Act, a Data Controller must have total certainty as to the jurisdictions in which the data under their control may be stored. Cloud computing as a whole appears to fly in the face of this requirement. The reality of a standardised cloud computing contract is that data could be spread across various jurisdictions, each potentially with a varying level of data protection. In fact, it may be difficult to say with any amount of certainty where data is being stored at any given time.

There are ways in which the stringent provisions of section 11(1) may be circumvented, thereby allowing the Data Controller to transfer Personal Data to non-approved jurisdictions. As mentioned above, section 11(4) contains various exemptions. For example, section 11(1) will not be breached where the consent of each data subject is obtained in respect of the data transfer. Where this is not feasible, the Data Controller may consider the following alternatives:-

  • the Data Controller could utilise EU-approved "Model Contracts" which contain data protection standards equivalent to EU requirements; or
  • when disseminating Personal Data to the US, the Data Controller could ensure that the US counterparty has agreed to be bound by the US "Safe Harbor" arrangement.

A more straightforward solution for Data Controllers would be to limit dissemination of data to an agreed list of EEA or approved countries. Service providers may be willing to negotiate such a term, albeit at a premium over their standard service. A Data Controller will need to ensure such a term is suitably drafted in order to meet their responsibilities under the Data Protection Act.

Data Security and Accessibility Issues

Section 2(1)(d) of the Data Protection Act provides that appropriate security measures must be taken against unauthorised access to, or unauthorised alteration, disclosure or destruction of Personal Data, in particular where the processing involves the transmission of data over a network, and against all other unlawful forms of processing. Section 2C(1) of the Data Protection Act provides that in determining what constitutes "appropriate security measures" a Data Controller must have regard to the harm that may result from a breach of security or destruction of the data. Of particular importance is the point at which data is encrypted – will encryption occur at the organisation's premises, or will it occur once the information has entered the cloud?

By utilising the cloud platform, a Data Controller will effectively be giving up control of the security of data whilst still potentially maintaining responsibility for any breach of data security. Section 2C(3) of the Data Protection Act provides that where the processing of Personal Data is carried out by a Data Processor4 on behalf of a Data Controller, the Data Controller is obliged to ensure that the processing is carried out solely in accordance with the contract between the Data Controller and the Data Processor and that the Data Processor provides sufficient guarantees in respect of the technical security measures and organisational measures governing the processing. The Data Controller must also ensure it has the right to audit the security measures utilised by the Data Processor.

While cloud computing undoubtedly carries a degree of security risk, its proponents may argue that data security is more likely to be breached through the theft of a laptop or the failure of an on-site storage system than through the cloud. Service providers are attempting to overcome the innate risk in the cloud through various measures. For example, some cloud services are designed to sustain the concurrent loss of data in two or more facilities. In addition, organisations that hold Sensitive Personal Data5 or other sensitive information (i.e. intellectual property or data of a sensitive commercial nature) may avail of a "private" cloud (effectively a cloud specifically for one customer) for a greater level of security. A private cloud may not, however, fulfil all the security needs of a particular organisation and should only be used where appropriate.

In addition to the above, Data Controllers must also ensure that data is accessible at all times and kept in an intelligible form. The former requirement is of particular concern, as service providers will often indicate that the service may be interrupted for scheduled maintenance or may even be suspended for a wide variety of reasons.

The Contract

Many cloud service providers offer only a standardised "take it or leave it" service level agreement containing clauses that are heavily weighted in their own favour. In addition, many cloud service providers seem oblivious to the data protection issues that the cloud raises for their clients. While negotiation is always a possibility, the effective negotiation of key terms may not be a reality for small organisations coming up against global IT heavyweights.

While initial industry reaction to the CSSO's letter was negative, that letter might have a positive long-term effect - cloud service providers must now appreciate that in order to benefit from their significant investment in cloud technologies they will need to adapt the terms of their service level agreements to suit the needs of their clients. In any event, when considering contracting for cloud computing services, a Data Controller should pay particular attention to following contractual provisions:-

  • Exemption Clauses

    Standardised contracts often contain sweeping disclaimers. Some go as far to disclaim any of the normal responsibilities that a Data Processor should burden. Data Controllers should take the time to identify any such disclaimers, as it is often they who will be left carrying the mantle.
  • Jurisdictional Issues

    As mentioned above, Irish Data Controllers have an obligation not to disseminate data to a country that is not either in the EEA or an approved country unless: (a) the transfer benefits from an exemption under section 11(4) of the Data Protection Act, (b) the Data Controllers are utilising EU-approved "Model Contracts", or (c) their counterparty is availing of the US "Safe Harbor" arrangement. To avoid any doubt, the service level agreement should specify the country (or countries) in which data may be stored.

    From a dispute resolution perspective, it is imperative to determine the law which will govern the service level agreement. Ideally, this should be that of the jurisdiction in which the organisation is based. If not, the organisation may be exposed to the ominous task of litigating in a foreign jurisdiction.
  • Termination of the Contract

    It is important to determine the rights each party have to terminate the service level agreement. Such terms are often weighted heavily in favour of the cloud service provider and can be arbitrary. Notice periods can often be short, leaving little time to make alternative arrangements. Further, the process whereby data is returned to the Data Controller on the termination of the contract should be set out in detail. In particular, the timeline and format in which this process is to be concluded should be specified.
  • Deletion of Data

    When the time comes for data to be deleted, the service level agreement should state unambiguously that once the customer has been returned a copy of its data, the service provider will delete all reference to such data.

Conclusions

In general, Irish organisations appear to be adopting a "wait and see" approach when it comes to cloud computing. Proponents of cloud computing may argue that the slow uptake of such services in Ireland is due to a lack of understanding of the technologies involved. However, organisations are right to be cautious - cloud computing represents a new and untested frontier in data protection and security.

The risks associated with cloud computing, while arguably no greater than those associated with maintaining an independent IT infrastructure, may prohibit some organisations (especially those who deal with Sensitive Personal Data) from acquiring such services. It may be the case that organisations will utilise the cloud solely in respect of certain areas of their operations where their obligations under the Data Protection Act are less stringent.

It is the responsibility of a Data Controller to ensure the security of the data they control. Before entering into a contract for cloud computing services, a Data Controller will need to be satisfied that the service being provided complies with their obligations under the Data Protection Act. Standardised contracts often do not meet the level of data protection Data Controllers are required to provide. The belief within the industry is that Government departments and larger organisations will have to be the ones to take the first step in terms of cloud computing usage. Once this occurs, the path will be cleared for smaller organisations to follow suit.

Advocates for cloud computing argue that EU legislation will need to be amended to facilitate the expansion of cloud computing services. As it stands, the potential of the cloud is being severely limited, particularly as a result of jurisdictional issues. They feel that appropriate arrangements can be made in the legislation for the benefit of cloud service providers and consumers alike. Whether such an amendment will materialise remains to be seen. For the moment the prime focus of the legislation is the protection of Personal Data.

Footnotes

1 Defined in Section 1(1) of the Data Protection Act as a person who, either alone or with others, controls the contents and use of Personal Data.

2 Defined in Section 1(1) of the Data Protection Act as data relating to a living individual who is or can be identified either from the data or from the data in conjunction with other information that is in, or is likely to come into, the possession of the Data Controller.

3 The 27 Member States together with Norway, Iceland and Liechtenstein.

4 Defined in Section 1(1) of the Data Protection Act as a person who processes personal data on behalf of a Data Controller but does not include an employee of a Data Controller who processes such data in the course of his employment.

5 Defined in Section 1(1) of the Data Protection Act as any Personal Data as to: (a) the racial or ethnic origin, the political opinions or the religious or philosophical beliefs of the data subject, (b) whether the data subject is a member of a trade union, (c) the physical or mental health or condition or sexual life of the data subject, (d) the commission or alleged commission of any offence by the data subject, or (e) any proceedings for an offence committed or alleged to have been committed by the data subject, the disposal of such proceedings or the sentence of any court in such proceedings.

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
 
In association with
Related Topics
 
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