European E-Evidence Proposal and Indian Law

Posted by Vipul Kharbanda at Dec 23, 2018 04:45 PM |
In April of 2018, the European Union issued the proposal for a new regime dealing with cross border sharing of data and information by issuing two draft instruments, an E-evidence Regulation (“Regulation”) and an E-evidence Directive (“Directive”), (together the “E-evidence Proposal”). The Regulation is a direction to states to put in place the proper legislative and regulatory machinery for the implementation of this regime while the Directive requires the states to enact laws governing service providers so that they would comply with the proposed regime.

The main feature of the E-evidence Proposal is twofold: (i) establishment of a legal regime whereunder competent authorities can issue European Production Orders (EPOs) and European Preservation Orders (EPROs) to entities in any other EU member country (together the “Data Orders”); and (ii) an obligation on service providers offering services in any of the EU member countries to designate legal representatives who will be responsible for receiving the Data Orders, irrespective of whether such entity has an actual physical establishment in any EU member country.

In this article we will briefly discuss the framework that has been proposed under the two instruments and then discuss how service providers based in India whose services are also available in Europe would be affected by these proposals. The authors would like to make it clear that this article is not intended to be an analysis of the E-evidence Proposal and therefore shall not attempt to bring out the shortcomings of the proposed European regime, except insofar as such shortcomings may affect the service providers located in India being discussed in the second part of the article.

Part I - E-evidence Directive and Regulation

The E-evidence Proposal introduces the concept of binding EPOs and EPROs. Both Data Orders need to be issued or validated by a judicial authority in the issuing EU member country. A Data Order can be issued to seek preservation or production of data that is stored by a service provider located in another jurisdiction and that is necessary as evidence in criminal investigations or a criminal proceeding. Such Data Orders may only be issued if a similar measure is available for the same criminal offence in a comparable domestic situation in the issuing country. Both Data Orders can be served on entities offering services such as electronic communication services, social networks, online marketplaces, other hosting service providers and providers of internet infrastructure such as IP address and domain name registries. Thus companies such as Big Rock (domain name registry), Ferns n Petals (online marketplace providing services in Europe), Hike (social networking and chatting), etc. or any website which has a subscription based model and allows access to subscribers in Europe would potentially be covered by the E-evidence Proposal. The EPRO, similarly to the EPO, is addressed to the legal representative outside of the issuing country’s jurisdiction to preserve the data in view of a subsequent request to produce such data, which request may be issued through MLA channels in case of third countries or via a European Investigation Order (EIO) between EU member countries. Unlike surveillance measures or data retention obligations set out by law, which are not provided for by this proposal, the EPRO is an order issued or validated by a judicial authority in a concrete criminal proceeding after an individual evaluation of the proportionality and necessity in every single case.[1] Like the EPO, it refers to the specific known or unknown perpetrators of a criminal offence that has already taken place. The EPRO only allows preserving data that is already stored at the time of receipt of the order, not the access to data at a future point in time after the receipt of the EPRO.

While EPOs to produce subscriber data[2] and access data[3] can be issued for any criminal offence an EPO for content data[4] and transactional data[5] may only be issued by a judge, a court or an investigating judge competent in the case. In case the EPO is issued by any other authority (which is competent to issue such an order in the issuing country), such an EPO has to be validated by a judge, a court or an investigating judge. In case of an EPO for subscriber data and access data, the EPO may also be validated by a prosecutor in the issuing country.

To reduce obstacles to the enforcement of the EPOs, the Directive makes it mandatory for service providers to designate a legal representative in the European Union to receive, comply with and enforce Data Orders. The obligation of designating a legal representative for all service providers that are operating in the European Union would ensure that there is always a clear addressee of orders aiming at gathering evidence in criminal proceedings. This would in turn make it easier for service providers to comply with those orders, as the legal representative would be responsible for receiving, complying with and enforcing those orders on behalf of the service provider.

Grounds on which EPOs can be issued

The grounds on which Data Orders may be issued are contained in Articles 5 and 6 of the Regulation which makes it very clear that a Data Order may only be issued in a case if it is necessary and proportionate for the purposes of a criminal proceeding. The Regulation further specifies that an EPO may only be issued by a member country if a similar domestic order could be issued by the issuing state in a comparable situation. By using this device of linking the grounds to domestic law, the Regulation tries to skirt around the thorny issue of when and on what basis an EPO may be issued. The Regulation also assigns greater weight (in terms of privacy) to transactional and content data as opposed to subscriber and access data and subjects the production and preservation of the former to stricter requirements. Therefore while Data Orders for access and subscriber data may be issued for any criminal offence, orders for transactional and content data can only be issued in case of criminal offences providing for a maximum punishment of atleast 3 years and above. In addition to that EPOs for producing transactional or content data can also be issued for offences specifically listed in Article 5(4) of the Regulation. These offences have been specifically provided for since evidence for such cases would typically be available mostly only in electronic form. This is the justification for the application of the Regulation also in cases where the maximum custodial sentence is less than three years, otherwise it would become extremely difficult to secure convictions in those offences.[6]

The Regulation also requires the issuing authority to take into account potential immunities and privileges under the law of the member country in which the service provider is being served the EPO, as well as any impact the EPO may have on fundamental interests of that member country such as national security and defence. The aim of this provision is to ensure that such immunities and privileges which protect the data sought are respected, in particular where they provide for a higher protection than the law of the issuing member country. In such situations the issuing authority “has to seek clarification before issuing the European Production Order, including by consulting the competent authorities of the Member State concerned, either directly or via Eurojust or the European Judicial Network.”

Grounds to Challenge EPOs

Service Providers have been given the option to object to Data Orders on certain limited grounds specified in the Regulation such as, if it was not issued by a proper issuing authority, if the provider cannot comply because of a de facto impossibility or force majeure, if the data requested is not stored with the service provider or pertains to a person who is not the customer of the service provider.[7] In all such cases the service provider has to inform the issuing authority of the reasons for the inability to provide the information in the specified form. Further, in the event that the service provider refuses to provide the information on the grounds that it is apparent that the EPO “manifestly violates” the Charter of Fundamental Rights of the European Union or is “manifestly abusive”, the service provider shall send the information in specified Form to the competent authority in the member state in which the Order has been received. The competent authority shall then seek clarification from the issuing authority through Eurojust or via the European Judicial Network.[8]

If the issuing authority is not satisfied by the reasons given and the service provider still refuses to provide the information requested, the issuing authority may transfer the EPO Certificate along with the reasons given by the service provider for non compliance, to the enforcing authority in the addressee country. The enforcing authority shall then proceed to enforce the Order, unless it considers that the data concerned is protected by an immunity or privilege under its national law or its disclosure may impact its fundamental interests such as national security and defence; or the data cannot be provided due to one of the following reasons:

(a) the European Production Order has not been issued or validated by an issuing authority as provided for in Article 4;

(b) the European Production Order has not been issued for an offence provided for by Article 5(4);

(c) the addressee could not comply with the EPOC because of de facto impossibility or force majeure, or because the EPOC contains manifest errors;

(d) the European Production Order does not concern data stored by or on behalf of the service provider at the time of receipt of EPOC;

(e) the service is not covered by this Regulation;

(f) based on the sole information contained in the EPOC, it is apparent that it manifestly violates the Charter or that it is manifestly abusive.

In addition to the above mechanism the service provider may refuse to comply with an EPO on the ground that disclosure would force it to violate a third-country law that either protects “the fundamental rights of the individuals concerned” or “the fundamental interests of the third country related to national security or defence.” Where a provider raises such a challenge, issuing authorities can request a review of the order by a court in the member country. If the court concludes that a conflict as claimed by the service provider exists, the court shall notify authorities in the third-party country and if that third-party country objects to execution of the EPO, the court must set it aside.[9]

A service provider may also refuse to comply with an order because it would force the service provider to violate a third-country law that protects interests other than fundamental rights or national security and defense. In such cases, the Regulation provides that the same procedure be followed as in case of law protecting fundamental rights or national security and defense, except that in this case the court, rather than notifying the foreign authorities, shall itself conduct a detailed analysis of the facts and circumstances to decide whether to enforce the order.[10]

Service Provider “Offering Services in the Union”

As is clear from the discussion above, the proposed regime puts an obligation on service providers offering services in the Union to designate a legal representative in the European Union, whether the service provider is physically located in the European Union or not. This appears to be a fairly onerous obligation for small technology companies which may involve a significant cost to appoint and maintain a legal representative in the European Union, especially if the service provider is not located in the EU. Therefore the question arises as to which service providers would be covered by this obligation and the answer to that question lies in the definitions of the terms “service provider” and “offering services in the Union”.

The term service provider has been defined in Article 2(2) of the Directive as follows:

“‘service provider’ means any natural or legal person that provides one or more of the following categories of services:

(a) electronic communications service as defined in Article 2(4) of [Directive establishing the European Electronic Communications Code];[11]

(b) information society services as defined in point (b) of Article 1(1) of Directive (EU) 2015/1535 of the European Parliament and of the Council[12] for which the storage of data is a defining component of the service provided to the user, including social networks, online marketplaces facilitating transactions between their users, and other hosting service providers;

(c) internet domain name and IP numbering services such as IP address providers, domain name registries, domain name registrars and related privacy and proxy services;”

Thus broadly speaking the service providers covered by the Regulation would include providers of electronic communication services, social networks, online marketplaces, other hosting service providers and providers of internet infrastructure such as IP address and domain name registries, or on their legal representatives where they exist. An important qualification that has been added in the definition is that it covers only those services where “storage of data is a defining component of the service”. Therefore, services for which the storage of data is not a defining component are not covered by the proposal. The Regulation also recognizes that most services delivered by providers involve some kind of storage of data, especially where they are delivered online at a distance; and therefore it specifically provides that services for which the storage of data is not a main characteristic and is thus only of an ancillary nature would not be covered, including legal, architectural, engineering and accounting services provided online at a distance.[13]

This does not mean that all such service providers offering the type of services in which data storage is the main characteristic, in the EU, would be covered by the Directive. The term “offering services in the Union” has been defined in Article 2(3) of the Directive as follows:

“‘offering services in the Union’ means:

(a) enabling legal or natural persons in one or more Member State(s) to use the services listed under (3) above; and

(b) having a substantial connection to the Member State(s) referred to in point (a);”

Clause (b) of the definition is the main qualifying factor which would ensure that only those entities whose offering of services has a “substantial connection” which the member countries of the EU would be covered by the Directive. The Regulation recognizes that mere accessibility of the service (which could also be achieved through mere accessibility of the service provider’s or an intermediary’s website in the EU) should not be a sufficient condition for the application of such an onerous condition and therefore the concept of a “substantial connection” was inserted to ascertain a sufficient relationship between the provider and the territory where it is offering its services. In the absence of a permanent establishment in an EU member country, such a “substantial connection” may be said to exist if there are a significant number of users in one or more EU member countries, or the “targeting of activities” towards one or more EU member countries. The “targeting of activities” may be determined based on various circumstances, such as the use of a language or a currency generally used in an EU member country, the availability of an app in the relevant national app store, providing local advertising or advertising in the language used in an EU member country, making use of any information originating from persons in EU member countries in the course of its activities, or from the handling of customer relations such as by providing customer service in the language generally used in EU member countries. A substantial connection can also be assumed where a service provider directs its activities towards one or more EU member countries as set out in Article 17(1)(c) of Regulation 1215/2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters.[14]

Part II - EU Directive and Service Providers located in India

In this part of the article we will discuss how companies based in India and running websites providing any “service” such as social networking, subscription based video streaming, etc. such as Hike or AltBalaji, Hotstar, etc. and how such companies would be affected by the E-evidence Proposal. At first glance a website providing a video streaming service may not appear to be covered by the E-evidence Proposal since one would assume that there may not be any storage of data. But if it is a service which allows users to open personal accounts (with personal and possibly financial details such as in the case of TVF, AltBalaji or Hotstar) and uses their online behaviour to push relevant material and advertisements to their accounts, whether that would make the storage of data a defining component of the website’s services as contemplated under the proposal is a question that may not be easy to answer.

Even if it is assumed that the services of an Indian company can be classified as information society services for which the storage of data is a defining component, that by itself would not be sufficient to make the E-evidence Proposal applicable to it. The services of an Indian company would still need to have a “substantial connection” with an EU member country. As discussed above, this substantial connection may be said to exist based on the existence of (i) a significant number of users in one or more EU member countries, or (ii) the “targeting of activities” towards one or more EU member countries. The determination of whether a service provider is targeting its services towards an EU member country is to be made based on a number of factors listed above and is a subjective determination with certain guiding factors.

There does not seem to be clarity however on what would constitute a significant number of users and whether this determination is to be based upon the total number of users in an EU member country as a proportion of the population of the country or is it to be considered as a proportion of the total number of customers the service provider has worldwide. To explain this further let us assume that an Indian company such as Hotstar has a total user base of 100 million customers.[15] If there is a situation where 10 million of these 100 million subscribers are located in countries other than India, out of which there are about 40 thousand customers in France and another 40 thousand in Malta; then it would lead to some interesting analysis. Now 40 thousand customers in a customer base of 100 million is 0.04% of the total customer base of the service provider which generally speaking would not constitute a “significant number”. However if we reckon the 40 thousand customers from the point of view of the total population of the country of Malta, which is approximately 4.75 Lakh,[16] it would mean approx. 8.4% of the total population of Malta. It is unlikely that any service affecting almost a tenth of the population of the entire country can be labeled as not having a significant number of users in Malta. If the same math is done on the population of a country such as France, which has a population of approx. 67.3 million,[17] then the figure would be 0.05% of the total population; would that constitute a significant number as per the E-evidence Proposal.

The issues discussed above are very important for any service provider, specially a small or medium sized company since the determination of whether the E-evidence Proposal applies to them or not, apart from any potential legal implications, imposes a direct economic cost for designating a legal representative in an EU member country. Keeping in mind this economic burden and how it might affect the budget of smaller companies, the Explanatory Memorandum to the Regulation clarifies that this legal representative could be a third party, which could be shared between several service providers, and further the legal representative may accumulate different functions (e.g. the General Data Protection Regulation or e-Privacy representatives in addition to the legal representative provided for by the E-evidence Directive).[18]

In case all the above issues are determined to be in favour of the E-evidence Directive being applicable to an Indian company and the company designates a legal representative in an EU member country, then it remains to be seen how Indian laws relating to data protection would interact with the obligations of the Indian company under the E-evidence Directive. As per Rule 6 of the Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules, 2011 (“SPDI Rules”) service providers are not allowed to disclose sensitive personal data or information except with the prior permission of the except disclosure to mandated government agencies. The Rule provides that “the information shall be shared, without obtaining prior consent from provider of information, with Government agencies mandated under the law to obtain information including sensitive personal data or information for the purpose of verification of identity, or for prevention, detection, investigation including cyber incidents, prosecution, and punishment of offences….”. Although the term “government agency mandated under law” has not been defined in the SPDI Rules, the term “law” has been defined in the Information Technology Act, 2000 (“IT Act”) as under:

“’law’ includes any Act of Parliament or of a State Legislature, Ordinances promulgated by the President or a Governor, as the case may be. Regulations made by the President under article 240, Bills enacted as President's Act under sub-clause (a) of clause (1) of article 357 of the Constitution and includes rules, regulations, byelaws and orders issued or made thereunder;”[19]

Since the SPDI Rules are issued under the IT Act, therefore the term “law” referred as used in the would have to be read as defined in the IT Act (unless court holds to the contrary). This would mean that Rule 6 of the SPDI Rules only recognises government agencies mandated under Indian law and therefore information cannot be disclosed to agencies not recognised by Indian law. In such a scenario an Indian company may not have any option except to raise an objection and challenge an EPO issued to it on the grounds provided in Article 16 of the Regulation, which process itself could mean a significant expenditure on the part of such a company.

Conclusion

The framework sought to be established by the European Union through the E-evidence Proposal seeks to establish a regime different from those favoured by countries such as the United States which favours Mutual Agreements with (presumably) key nations or the push for data localisation being favoured by countries such as India, to streamline the process of access to digital data. Since the regime put forth by the EU is still only at the proposal stage, there may yet be changes which could clarify the regime significantly. However, as things stand Indian companies may be affected by the E-evidence Proposal in the following ways:

  • Companies offering services outside India may inadvertently trigger obligations under the E-evidence Proposal if their services have a substantial connection with any of the member states of the European Union;
  • Indian companies offering services overseas will have to make an internal determination as to whether the E-evidence Proposal applies to them or not;
  • In case of Indian companies which come under the E-evidence Proposal, they would be obligated to designate a legal representative in an EU member state for receiving and executing Data Orders as per the E-evidence Proposal.
  • If a legal representative is designated by the Indian company they may have to incur significant costs on maintaining a legal representative especially in a situation where they have to object to the implementation of an EPO. The company would also have to coordinate with the legal representative to adequately put forth their (Indian law related) concerns before the competent authority so that they are not forced to fall foul of their legal obligations in either jurisdiction. It is also unclear the extent to which appointed legal representatives from Indian companies could challenge or push back against requests received.

Disclaimer: The author of this Article is an Indian trained lawyer and not an expert on European law. The author would like to apologise for any incorrect analysis of European law that may have crept into this article despite best efforts.


[1] Explanatory Memorandum to the Proposal for Regulation of the European Parliament and of the Council on European Production and Preservation Orders for Electronic Evidence in Criminal Matters, Pg. 4, available at https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52018PC0225&from=EN.

[2] Subscriber data means data which is used to identify the user and has been defined in Article 2 (7) as follows:

“‘subscriber data’ means any data pertaining to:

(a) the identity of a subscriber or customer such as the provided name, date of birth, postal or geographic address, billing and payment data, telephone, or email;

(b) the type of service and its duration including technical data and data identifying related technical measures or interfaces used by or provided to the subscriber or customer, and data related to the validation of the use of service, excluding passwords or other authentication means used in lieu of a password that are provided by a user, or created at the request of a user;”

[3] The term access data has been defined in Article 2(8) as follows:

“‘access data’ means data related to the commencement and termination of a user access session to a service, which is strictly necessary for the sole purpose of identifying the user of the service, such as the date and time of use, or the log-in to and log-off from the service, together with the IP address allocated by the internet access service provider to the user of a service, data identifying the interface used and the user ID. This includes electronic communications metadata as defined in point (g) of Article 4(3) of Regulation concerning the respect for private life and the protection of personal data in electronic communications;”

[4] The term content data has been defined in Article 2 (10) as follows:

“‘content data’ means any stored data in a digital format such as text, voice, videos, images, and sound other than subscriber, access or transactional data;”

[5] The term transactional data has been defined in Article 2(9) as follows:

“‘transactional data’ means data related to the provision of a service offered by a service provider that serves to provide context or additional information about such service and is generated or processed by an information system of the service provider, such as the source and destination of a message or another type of interaction, data on the location of the device, date, time, duration, size, route, format, the protocol used and the type of compression, unless such data constitues access data. This includes electronic communications metadata as defined in point (g) of Article 4(3) of [Regulation concerning the respect for private life and the protection of personal data in electronic communications];”

[6] Explanatory Memorandum to the Proposal for Regulation of the European Parliament and of the Council on European Production and Preservation Orders for Electronic Evidence in Criminal Matters, Pg. 17, available at https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52018PC0225&from=EN.

[7] Articles 9(4) and 10(5) of the Regulation.

[8] Article 10(5) of the Regulation.

[9] Article 15 of the Regulation.

[10] Article 16 of the Regulation. Also see https://www.insideprivacy.com/uncategorized/eu-releases-e-evidence-proposal-for-cross-border-data-access/.

[11] Article 2(4) of the Directive establishing European Electronic Communications Code provides as under:

‘electronic communications service’ means a service normally provided for remuneration  via electronic communications networks,  which encompasses 'internet access service' as defined in Article 2(2) of Regulation (EU) 2015/2120; and/or 'interpersonal communications service'; and/or services consisting wholly or mainly in the conveyance of signals such as transmission services  used for the provision of machine-to-machine services and for broadcasting, but excludes services providing, or exercising editorial control over, content transmitted using electronic communications networks and services;”

[12] Information Society Services have been defined in the Directive specified as “any Information Society service, that is to say, any service normally provided for remuneration, at a distance, by electronic means and at the individual request of a recipient of services.”

[13] Proposal for a Directive of the European Parliament and of the Council Laying Down Harmonised Rules on the Appointment of Legal Representatives for the Purpose of Gathering Evidence in Criminal Proceedings, Pg 8, available at https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52018PC0226&from=EN.

[14] Proposal for a Directive of the European Parliament and of the Council Laying Down Harmonised Rules on the Appointment of Legal Representatives for the Purpose of Gathering Evidence in Criminal Proceedings, Pg 9, available at https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52018PC0226&from=EN.

[15] Hotstar already has an active customer base of 75 million, as of December, 2017; https://telecom.economictimes.indiatimes.com/news/netflix-restricted-to-premium-subscribers-hotstar-leads-indian-ott-content-market/62351500

[16] https://en.wikipedia.org/wiki/Malta

[17] https://en.wikipedia.org/wiki/France

[18] Proposal for a Directive of the European Parliament and of the Council Laying Down Harmonised Rules on the Appointment of Legal Representatives for the Purpose of Gathering Evidence in Criminal Proceedings, Pg 5, available at https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52018PC0226&from=EN.

[19] Section 2(y) of the Information Technology Act, 2000.

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