Enforcement Update: U.S. Courts Demonstrate Reluctance to Extend Application of Chinese Data Security and Privacy Laws In Civil Discovery

The Standing Committee of the National People's Congress (NPCSC) adopted the DSL on June 10, 2021, effective Sept. 1, 2021. In general, the DSL governs data processing and management activities, including the collection, storage, use, processing, transmission, provision, and disclosure of data. See, DSL, Article 3. Importantly, however, the DSL also contains provisions regulating cross-border data transfers to foreign judicial or enforcement authorities. Specifically, Article 36 of the DSL establishes that the "competent authority" shall handle data requests made by foreign judicial or law enforcement organizations in accordance with existing laws and international treaties. (The "competent authority" references the PRC authority charged with overseeing relevant international agreements or treaties. However, the DSL does not provide additional guidance about who the "competent authority" would be in the case of a data request made by a foreign authority that does not have an MLAT with China.) Article 36 also prohibits Chinese organizations and individuals from providing data stored within the People's Republic of China (PRC) to foreign judicial or law enforcement organizations without the prior approval of the competent authority. Although the DSL provides no additional details about that approval process, the law imposes penalties for violators involving fines up to RMB 10 million and the potential suspension or revocation of business licenses for violators that breach the national core data management system, endanger national sovereignty, or implicate national security and development interests. See, DSL, Article 45.