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September 11, 2015

A U.S. Court of Appeals is set to begin considerations on September 9, 2015 as to whether law enforcement can force American companies to turn over customer information such as email, which are housed on overseas servers. Microsoft Corp is appealing a decision made by a lower court, challenging the validity of a search warrant for emails stored on one of its servers in Ireland. The court's position maintains that the issue is not where the emails were located, but whether the company controlled access. The government has likened the email request to a records subpoena rather than a physical warrant. Friend-of-the-court briefs from supporters of Microsoft's position as wide ranging as Verizon and supporting briefs from the American Civil Liberties Union, the U.S. Chamber of Commerce, the Washington Post and Fox News have all lodged complaints with the government's position. 

Analyst Comment: It is unclear at this time how the Appeals Court will decide in this case, but the ruling will have far reaching implications for the security of data held by U.S. companies. Many such firms maintain servers abroad to better serve international clients. Their ability and choice in investment destinations could be hampered by local laws in places such as Iceland, where user data is highly protected. The seizure law could also theoretically be applied in reverse, allowing foreign governments to request data stored in the U.S. by firms based in their country. 

Prepared by: Clint Richards, the Netherlands 

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