<b><i>Online Extra:</b></i> New Russian Data Residency Law Will Soon Take Effect

There is a new Russian data residency law that will likely impact many companies, which somehow have business connections with Russia.

The law is actually more far-reaching that some businesses may realize at first glance. It will touch many firms, especially those involved with the cloud, e-commerce, Internet, social media, as well as communications and information technology.

Lothar Determann, an attorney at Baker & McKenzie and lecturer in law at the University of California, Berkeley, explained to Legaltech News that companies affected by the new law include those:

• Which have a 'presence' in Russia, such as a subsidiary, branch or representative's office there;
• Who have customers in Russia, such as an Internet or social media company that has users in Russia;
• Which have customers, who have customers or a presence in Russia, such as cloud service providers. Their customers may ask about compliance solutions for the new law, Determann explained; and
• Those companies with suppliers in Russia, such as a development center.

'That means pretty much any company with an international business is affected'to some degree,' Determann said. 'What the effect for a particular company's bottom line is'depends on how significant the Russian ties are for the company.'

The new law will go into effect on Sept. 1, 2015, and basically it means businesses will need to record and process 'personal data' of Russian citizens through databases in the Russian Federation. Determann advises that ”personal data” is defined broadly in this case.

It is also noteworthy that both the United States and the European Union now have limited trade sanctions against Russia for its activity in Ukraine.

'Given the current economic, political and legal climate'more and more companies headquartered outside of Russia want to'or have to'reduce their engagement with Russia,' Determann said.

He further speculated,, 'Perhaps the greatest adverse effect [from the new law] is on Russian companies and Russian citizens.'

'Companies with headquarters or significant presences in Russia will lose access to advanced information technology products and services unless global providers move data bases and data centers to Russia,' he added. 'Actually, few of them will be able to do this by the upcoming deadline and 'even fewer may be willing to do.'

'Russian companies will then have to return to locally hosted or on premise solutions and incur implementation costs, find limited availability, face reduced technology quality and perhaps make do with offline work-arounds,' he added. 'Russian citizens may lose access to foreign online media, social media, email, etc. if global providers are blocked by the Russian government for failure to move data bases and data centers to Russia.'

He also warned: 'They will then have to exclusively use locally hosted media and online services, subject to close control by the Russian government.'

'

Ed Silverstein'writes for Law Technology News,'an ALM sibling of'e-Commerce Law & Strategy.

There is a new Russian data residency law that will likely impact many companies, which somehow have business connections with Russia.

The law is actually more far-reaching that some businesses may realize at first glance. It will touch many firms, especially those involved with the cloud, e-commerce, Internet, social media, as well as communications and information technology.

Lothar Determann, an attorney at Baker & McKenzie and lecturer in law at the University of California, Berkeley, explained to Legaltech News that companies affected by the new law include those:

• Which have a 'presence' in Russia, such as a subsidiary, branch or representative's office there;
• Who have customers in Russia, such as an Internet or social media company that has users in Russia;
• Which have customers, who have customers or a presence in Russia, such as cloud service providers. Their customers may ask about compliance solutions for the new law, Determann explained; and
• Those companies with suppliers in Russia, such as a development center.

'That means pretty much any company with an international business is affected'to some degree,' Determann said. 'What the effect for a particular company's bottom line is'depends on how significant the Russian ties are for the company.'

The new law will go into effect on Sept. 1, 2015, and basically it means businesses will need to record and process 'personal data' of Russian citizens through databases in the Russian Federation. Determann advises that ”personal data” is defined broadly in this case.

It is also noteworthy that both the United States and the European Union now have limited trade sanctions against Russia for its activity in Ukraine.

'Given the current economic, political and legal climate'more and more companies headquartered outside of Russia want to'or have to'reduce their engagement with Russia,' Determann said.

He further speculated,, 'Perhaps the greatest adverse effect [from the new law] is on Russian companies and Russian citizens.'

'Companies with headquarters or significant presences in Russia will lose access to advanced information technology products and services unless global providers move data bases and data centers to Russia,' he added. 'Actually, few of them will be able to do this by the upcoming deadline and 'even fewer may be willing to do.'

'Russian companies will then have to return to locally hosted or on premise solutions and incur implementation costs, find limited availability, face reduced technology quality and perhaps make do with offline work-arounds,' he added. 'Russian citizens may lose access to foreign online media, social media, email, etc. if global providers are blocked by the Russian government for failure to move data bases and data centers to Russia.'

He also warned: 'They will then have to exclusively use locally hosted media and online services, subject to close control by the Russian government.'

'

Ed Silverstein'writes for Law Technology News,'an ALM sibling of'e-Commerce Law & Strategy.