Cross-Border Electronic Discovery In Asia: Trends, Challenges And Opportunities

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Business these days is more global than ever. Just in 2016, 41% of corporate counsel stated they had to conduct cross-border discovery, up from 35% the year before[1]. Multinational corporations operating in multiple jurisdictions face legal pressures to keep up with local and international standards for compliance, governance and data discovery. Growing trends in the Asia Pacific (APAC) region show a rise in cross-border litigation and surging enforcement of antitrust and Foreign Corrupt Practices Act violations, subjecting Asian companies to US discovery obligations that require the extensive gathering of data. The consequences of mishandling discovery requests and non-compliance are steep, including financial penalties, criminal prosecution and imprisonment. Last year, 9 out of 19 criminal prosecutions by the DOJ involved companies operating in APAC, while similarly APAC also accounted for almost 1/3 of the total fines and penalties given by the SEC[2].

While electronic discovery in the West has become routine, there are additional cultural, procedural and technical complexities that make this process unfamiliar and challenging in the East:

Culture and local practices impact compliance with data preservation and collection techniques
Privacy, respect, and loyalty to leadership are all important values in the APAC workplace. When it comes to data preservation and disclosure to attorneys and authorities, it is important that loyalty and privacy is not misunderstood as superseding obligations to Western legal requirements. Furthermore, the requirements and guidelines for discovery in Asia are also stylistically very different from the US. For example, the Japanese legal system does not require pre-trial discovery in the same manner as in US courts and rather implements discovery during the trial itself. Therefore it may be common for Japanese companies to misunderstand this process, leading them to incorrectly preserve and collect all relevant data. If the company is found negligent in handling the discovery of an issue, consequences of these infractions can be massive such as being held liable for spoliation penalties imposed by US courts[3]. Engaging local forensic partners to work closely with US attorneys and in-house counsel will reduce the risk of violations and ensure companies remain compliant, and additionally can assist in creating robust data retention and compliance programs for future matters.

Local laws impose practical burdens on US law firms and forensic partners
Different countries throughout APAC have varying laws governing electronic discovery when it relates to data collection, privacy and the use of such data. For example, in China there are strict regulations imposed on cross-border data transfer as it may contain ‘state secrets’, which subsequently requires in-country preservation, collection and review. In Japan, local data privacy laws dictate that consent and waivers are required for the transfer of personal information to a third party. Therefore, companies should carefully consider what steps they must take to safeguard protected information before any cross-border transfers are initiated.

eDiscovery preparedness requires considerable planning and forensic expertise
Although US-driven litigation has become more common, discovery in the APAC region remains challenging to tackle without guidance from local forensic and discovery partners. For example, while a majority of data is electronically stored information (ESI), Asian companies still rely heavily on legacy paper records that contain operational and financial information. There has been limited progress, if any, in digitizing these records for ease of use, access and storage. This information can suddenly become relevant in legal proceedings, subsequently requiring massive gathering exercises that pose additional pressures on timing and cost. Paper information is time consuming to capture due to fragility, sizing, optical character recognition (OCR) for CJK language characters, and related coding concerns. Gathering ESI from company-issued devices and servers can pose additional logistical challenges depending on where and how data is stored, due in part to a lack of information governance, as well as the multiple layers of complex, sometimes country-specific, encryption that may exist on user devices. For example, many South Korean and Chinese firms will employ encryption technology which is not available outside of the respective countries and which cannot be readily decrypted with mainstream forensic tools. To mitigate the risk of data spoliation, counsel should work together with locally qualified forensic consultants to map out the relevant data sources and prepare a defensible plan for preservation and collection.

In conclusion:

With the increasing prevalence of cross-border litigation and enforcement across jurisdictions, companies should take proactive measures to stay ahead. Given the high costs associated with non-compliance, senior executives should pre-emptively put strategies in place to ensure they can act quickly, and respond effectively, in the event of a cross-border discovery demand.

Perhaps the most critical step in navigating such demands is for companies to engage local, trusted partners to help understand the lay of the land from cultural, procedural and technical standpoints. When evaluating partners for international projects, companies need to be vigilant in the assessment of local technology and consulting capabilities and should ask for specific examples of prior investigative case experience. Building trust and transparency through candid discussions at the onset will ensure appropriate in-country teams are assembled in relevant jurisdictions and are able to coordinate seamlessly across time zones, for a more consistent, informed approach.

[1] Norton Rose Fulbright, 2016 Litigation Trends Annual Survey. Available at:

[2] US DoJ, FCPA Related Enforcement Actions: 2016. Available at:

[3] Sekisui Am. Corp. v. Hart and Allen et al. v. Takeda Pharmaceutical Co. Ltd. et al. are two recent examples of US courts finding that the companies were guilty of ESI spoliation through failure to implement preservation holds.

Source: Forbes

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