April 09, 2024

Overview of data sovereignty laws by country

Overview of data sovereignty laws by country

Data sovereignty refers to the concept that data is subject to the laws and governance mechanisms of the country where it is located. This means that a country has the right to exert control and authority over data generated or collected within its borders. Consequently, several countries have established regulations to govern how data is collected, stored, processed, and transferred out of their territory. The main objective of data sovereignty is to ensure increased security for the private data of a country’s residents.

The integration of cloud computing with the continuous exchange of private data across borders has made data sovereignty an increasingly important issue. This is because storing or processing data outside a country’s jurisdiction can lead to several complications. Different countries may have conflicting laws, which can raise concerns about data privacy and security. Furthermore, complying with local regulations can become a challenge when data is spread across the globe.

In this article, we shall review the countries that have data sovereignty laws, as well as the main challenges surrounding data sovereignty internationally. This will give a hint on what data residency requirements by country entail. We shall then conclude by showing you how InCountry can help your company stay compliant with all applicable data sovereignty laws in your industry.

Context of data sovereignty

Data Sovereignty can be discussed under the following contexts:

  1.  Individual control over private data.
  2. International data transfers.

Individual control over private data

Data sovereignty revolves around allowing individuals or groups to manage their data independently. This encompasses various aspects such as the collection, storage, utilization, and interpretation of their data. In this context, it involves ensuring that individuals have the right to determine what happens to their data, including who can access it, how it’s used, and for what purposes.

International data transfers

Within this context, data sovereignty pertains to the legal and regulatory structures dictating where data is stored and ensuring its alignment with the laws applicable to that jurisdiction. This issue is very important in the contemporary globalized landscape, where data has the propensity to traverse international boundaries. 

Data sovereignty laws by country

In this section, we will discuss data sovereignty laws in some countries worldwide. Let’s begin:

Data sovereignty laws in Australia

Although no single Australian data protection law is dubbed an Australian Data sovereignty Law, several Australian privacy laws cover the subject. The laws are as follows:

  • Privacy Act 1988

In Australia, the Privacy Act serves as the cornerstone for regulating how personal information is gathered, utilized, and disclosed. Embedded within this legislation are the Australian Privacy Principles (APPs), which delineate the guidelines governing the management of personal data by both governmental entities and private sector organizations across the nation.

  • Notifiable Data Breaches (NDB) Scheme

Under this Privacy Act, organizations falling under its jurisdiction must comply with the Notifiable Data Breaches (NDB) scheme. This scheme mandates that these organizations inform both the affected individuals and the Office of the Australian Information Commissioner (OAIC) in case of a data breach that meets the eligibility criteria and is likely to cause significant harm to the individuals whose personal information has been compromised.

  • My Health Records Act 2012 (Cth)

This legislation oversees the My Health Record system, which serves as Australia’s national digital health record system. Within its framework, the legislation establishes guidelines concerning the privacy and security measures safeguarding the health information of individuals stored within the My Health Record system.

Data sovereignty laws in Saudi Arabia

In Saudi Arabia, data sovereignty laws are primarily governed by the Saudi Data and Artificial Intelligence Authority (SDAIA). They are enforced through various legal frameworks, including the Data Protection and Cybersecurity Law.

One of the key aspects of data sovereignty in Saudi Arabia is the localization requirement, which mandates that certain types of data be stored and processed within the country’s borders. This requirement aims to enhance the security and control of data, especially concerning critical infrastructure and sensitive sectors such as finance, healthcare, and government services.

Personal Data Protection Law (PDPL)

The recently enacted PDPL governs the collection, processing, and storage of personal data in Saudi Arabia. It establishes principles for the lawful handling of personal information and imposes restrictions on cross-border data transfers. The law requires organizations to obtain consent from individuals before processing their data. It mandates that certain types of personal data must be stored locally unless authorized by the competent authority.

Cybersecurity Law

Enforced by the National Cybersecurity Authority (NCA), the Cybersecurity Law mandates the protection of critical information infrastructure and data assets. It requires organizations to implement measures to safeguard their data from cyber threats and breaches. Additionally, the law emphasizes the importance of data localization to prevent unauthorized access and ensure compliance with Saudi regulations.

It is important to note that other industry-specific legislation in Saudi Arabia may also demand strict data sovereignty and residency processes. For instance, the Telecommunications Act, etc.; hence, businesses need to stay updated with the laws and ensure compliance.

US data sovereignty laws

Data privacy is quite different in the US compared to other first-world countries in Europe. For instance, unlike European countries, they have no central data privacy law that directs all states in the US. Each state has its policies regarding data privacy. Additionally, the privacy laws that exist in the United States seem to give priority to data security, and breach notification than Residency. In other words, they are more interested in ensuring data security and notifying affected individuals of a data breach, than in ensuring that all US residents’ private data remains within the country.

We will review a couple of these privacy laws that pay a premium on data security and breach notification below:

  • Gramm-Leach-Bliley Act (GLBA)

Also known as the GLBA, this policy compels financial institutions to ensure the privacy and security of consumers’ personal financial data. Embedded within its provisions are stringent requirements aimed at safeguarding non-public personal information (NPI), which encompasses sensitive financial details. Additionally, the GLBA imposes strict standards on data security measures, necessitating financial institutions to implement robust safeguards to protect against unauthorized access or breaches. It outlines protocols for prompt and thorough notification in the event of a data breach, emphasizing transparency and accountability in handling consumers’ financial information.

  • Health Insurance Portability and Accountability Act (HIPAA)

The HIPAA, as it is often called, serves as a cornerstone in ensuring the safeguarding of sensitive health information, known as protected health information (PHI). Its provisions extend across healthcare providers, health plans, and business associates, outlining stringent requirements to uphold the security and privacy of protected health information (PHI). The HIPAA governs various aspects, including the permissible use, disclosure, and security measures surrounding PHI within the United States healthcare system. Through its regulations, it aims to establish a framework that promotes the responsible handling and protection of individuals’ health information, thereby fostering trust and confidentiality in healthcare interactions.

  • California Consumer Privacy Act (CCPA)

This has to be one of the most popular data privacy laws in the US. The California Consumer Privacy Act, also known as the CCPA confers distinct rights upon residents of California concerning their personal information managed by businesses. This legislation places obligations on businesses engaged in the collection and processing of personal data belonging to California residents. These obligations encompass various requirements, such as facilitating access to personal data, enabling the deletion of such data upon request, and providing mechanisms for individuals to opt out of certain data practices. By implementing these measures, the CCPA aims to empower individuals with greater control over their personal information and to compel businesses to adopt transparent and accountable practices in handling consumer data within the state of California.

Canadian data sovereignty laws

Like the US, Canada does not have specific legislation dedicated to data sovereignty. It, however, has a couple of data privacy legislation that offer guidance on Canada’s data sovereignty Law stand. They are as follows:

  • Personal Information Protection and Electronic Documents Act (PIPEDA)

The PIPEDA serves as the principal federal legislation governing the handling of personal information within Canada’s private sector. This comprehensive law sets out regulations dictating how personal data is collected, utilized, and disclosed by organizations. Central to PIPEDA is the establishment of rules aimed at safeguarding individuals’ personal information, which includes mandates for organizations to obtain consent before collecting and using such data. Moreover, PIPEDA extends its jurisdiction to regulate the cross-border transfer of personal information, ensuring that data transfers comply with stipulated requirements to maintain the privacy and security of individuals’ data. Through these provisions, PIPEDA aims to uphold privacy rights while fostering trust and accountability in the management of personal information by private sector entities operating in Canada.

  • The Digital Privacy Act

This is an amendment to PIPEDA. It implemented various enhancements to bolster privacy safeguards, thereby marking a significant step forward in protecting individuals’ personal information. Among these changes was the introduction of mandatory data breach reporting and notification obligations imposed on organizations. This requirement mandates that organizations promptly report data breaches and notify affected individuals, contributing to greater transparency and accountability in data management practices. Additionally, the amendment introduced strengthened consent provisions, emphasizing the importance of obtaining informed and explicit consent from individuals before the collection and use of their personal data. These amendments reflect a proactive approach to modernizing privacy laws and adapting to evolving technological landscapes, aiming to reinforce privacy protections and instill greater confidence in the handling of personal information by organizations.

While the federal government enforces the privacy principles delineated in PIPEDA, provinces such as Quebec, Alberta, and British Columbia have enacted their privacy laws, which closely align with PIPEDA. Although the emphasis on data residency is not legally mandated nationwide, it is encouraged. Transparency regarding data storage locations is paramount, and businesses are obligated to secure user consent for any transfers of data outside Canada. This collective approach underscores Canada’s commitment to prioritizing robust data security practices while respecting individual privacy rights within an evolving digital landscape.

Singapore data sovereignty laws

Singapore’s approach to data sovereignty diverges from countries with more stringent regulations, characterized by the absence of dedicated legislation specifically addressing this aspect. Instead, the focal point lies in data protection, predominantly governed by the Personal Data Protection Act (PDPA).

  • Personal Data Protection Act (PDPA)

The PDPA delineates a comprehensive framework dictating how organizations handle personal data, encompassing collection, usage, disclosure, and safeguarding practices.

Notably, the PDPA does not explicitly mandate data storage within Singapore’s borders. However, it does incorporate provisions for cross-border data transfers. In compliance with the PDPA, organizations engaging in such transfers are required to conduct risk assessments, obtain user consent, and implement safeguards to ensure an adequate level of protection for the data in the recipient country.

While these regulations do not impose strict requirements on data residency, they prompt organizations to contemplate the associated privacy and security risks inherent in overseas data transfers. Consequently, this consideration indirectly influences data storage decisions, potentially prompting some businesses to opt for local data storage to uphold compliance with regulatory standards and mitigate associated risks.

Chinese data sovereignty laws

Unlike most of the countries reviewed so far, the Chinese government places a premium on data sovereignty. They try to ensure data security through several data privacy laws that emphasize data residency, and sovereignty. They are discussed in more detail below:

  • Cybersecurity Law (CSL)

The CSL, implemented in 2017, lays down a fundamental framework for regulating data security and governance in China. Notably, one of its key provisions mandates data localization, necessitating specific categories of data to be stored within the borders of China. This requirement aims to bolster the country’s control over data flows and enhance cybersecurity measures by ensuring that sensitive data remains within Chinese jurisdiction. By enforcing data localization, the CSL seeks to mitigate potential risks associated with foreign data storage and strengthen China’s ability to safeguard its digital infrastructure and protect national security interests.

  • Data Security La (DSL)

Introduced in 2021, the DSL represents a significant advancement in fortifying data security and governance measures within China. Notably, it places more emphasis on data classification, particularly labeling certain data as “important data,” thereby highlighting its critical significance for national interests and security. Furthermore, the DSL imposes stricter regulations concerning the transfer of data outside China, aiming to bolster control over cross-border data flows and mitigate potential risks associated with unauthorized data transfers. By implementing these measures, the DSL aims to enhance China’s ability to safeguard sensitive information, reinforce data sovereignty, and strengthen overall cybersecurity resilience in an increasingly interconnected digital landscape.

  • Personal Information Protection Law (PIPL)

The Personal Information Protection Law represents a significant milestone in China’s data privacy landscape, offering comprehensive regulation over the collection, utilization, storage, and transmission of personal information. Central to its provisions is a strong emphasis on obtaining user consent, underscoring the importance of individuals’ rights and preferences in the handling of their personal data. Moreover, the PIPL imposes stringent restrictions on the cross-border transfer of personal data, aiming to safeguard the privacy and security of individuals’ information by limiting its dissemination to foreign countries. By prioritizing user consent and imposing strict controls on data transfers, the PIPL endeavors to enhance data privacy standards, foster trust in digital interactions, and reinforce China’s commitment to protecting individuals’ personal information in an increasingly globalized digital environment.

From these major Chinese data privacy laws, it is quite clear that the Chinese government is huge on data sovereignty. However, in the wake of 2024, the Chinese government seems to be warming up to the idea of cross-border data transfer. It is currently planning to make the process of cross-border data transfers easier.

GDPR data sovereignty laws

This data privacy law needs no introduction, as it stands as the apex privacy law in the whole of Europe! Enforced in 2018, it has boosted data security within the EU/EEA and has served as a role model for several data privacy laws around the world. 

Contrary to common belief, the General Data Protection Regulation (GDPR) of the European Union (EU) does not impose strict data sovereignty laws. Instead, the GDPR is primarily focused on granting EU citizens greater control over their personal data and ensuring its protection. This comprehensive regulation governs various aspects of personal data management, including collection, usage, storage, and security, with the overarching goal of safeguarding individuals’ privacy rights.

Unlike the Chinese privacy laws, the GDPR does not explicitly mandate that data must be stored within the EU borders. Organizations subject to the GDPR are permitted to store data anywhere globally, provided they adhere to the regulation’s stringent data protection principles and requirements. However, the GDPR places restrictions on the transfer of personal data of EU citizens to countries outside the EU to ensure that such data receives an adequate level of protection.

To facilitate data transfers while maintaining compliance with GDPR standards, the regulation outlines several mechanisms for achieving adequacy. These include adequacy decisions by the European Commission, standard contractual clauses (SCCs) between data controllers and processors, and binding corporate rules (BCRs) for multinational companies.

Although GDPR compliance does not mandate data storage within the EU, many organizations opt to do so as a strategic choice. Storing EU citizen data within the EU simplifies compliance with GDPR and minimizes the complexities associated with ensuring adequacy for data transfers outside the EU.

In summary, the GDPR underscores the importance of data protection and control for EU citizens’ personal data, regulates transfers of data outside the EU, and provides mechanisms to ensure adequacy. While it does not dictate data storage location, many businesses choose to store data within the EU to streamline GDPR compliance efforts.

UAE data sovereignty laws

In the United Arab Emirates (UAE), the legal landscape surrounding data sovereignty is gradually taking shape, albeit without a comprehensive law exclusively dedicated to this aspect. While there is no legislation strictly addressing data sovereignty, several regulations touch on it. Two such are the Federal Law 45 of 2021, known as the Personal Data Protection Law (PDPL), and the Health Data Law. We will discuss them in the next paragraph.

Federal Law 45 of 2021, also known as the Personal Data Protection Law (PDPL)

This serves as the primary legislation governing data protection in the UAE. The PDPL establishes a framework dictating how organizations handle personal data, encompassing its collection, usage, storage, and security. Notably, while the PDPL emphasizes robust data security practices and user control over personal information, it does not explicitly mandate data storage locations within the UAE.

However, there exists a significant exception concerning health data within the UAE’s legal framework. The Federal Law No. 10 of 2008, commonly referred to as the “Health Data Law,” along with Ministerial Decision No. 51/2021, imposes restrictions on the storage and transfer of health data of UAE residents. Generally, this health data must be stored within the UAE, although exceptions are permitted upon approval from the relevant health authority.

This emphasis on health data sovereignty underscores the UAE’s evolving focus on data sovereignty, particularly concerning sensitive data categories like health information. While not a universal requirement, the Health Data Law signifies a growing recognition of the importance of safeguarding sensitive data within the UAE’s jurisdiction.

Looking ahead, the UAE’s data sovereignty landscape is expected to evolve further, with potential future regulations addressing data storage locations more comprehensively. Additionally, sector-specific regulations may introduce additional data residency requirements, particularly in industries where heightened data protection measures are warranted. However, given that the enforcement mechanisms of the PDPL are still in development, the practical implications for data sovereignty in the UAE remain to be fully realized.

In summary, while the UAE prioritizes data protection through legislation like the PDPL, there is no explicit legal mandate for general data residency. However, specific regulations, such as those governing health data, impose restrictions requiring data to be kept within the UAE’s borders in certain cases. As the UAE’s data sovereignty approach continues to evolve, it is likely to see further development and refinement in the years to come.

Main challenges regarding data sovereignty laws

Here are some of the critical challenges facing the development of data sovereignty laws internationally: 

  • Cross-border data transfer

This has to be the major challenge facing data sovereignty internationally. Why so? In this global economy, numerous businesses operate on a global scale and often need to transfer data across borders for diverse purposes such as processing, storage, or analysis. However, data sovereignty laws frequently impose restrictions or requirements on these transfers, leading to complexities and compliance challenges for multinational companies.

  • Data localization requirements

Several countries like China enforce strict data localization requirements, dictating that specific types of data must be stored within the nation’s borders. Adhering to these mandates can pose significant financial and technical obstacles for businesses, especially those with worldwide operations or a dependency on cloud services.

  • Conflicting data privacy laws

As you may have noticed, data sovereignty laws tend to differ between countries, leading to conflicts when data moves across borders. For instance, while the US privacy laws seem to be open to cross-border data transfer, the Chinese laws are against it. This can create legal uncertainty for businesses, especially when trying to reconcile conflicting requirements from multiple jurisdictions.

  • Negative impact on global trade and innovation

Stringent data sovereignty laws may hinder international trade and innovation by creating barriers to the free flow of data and imposing additional compliance burdens on businesses. This can stifle economic growth and limit opportunities for cross-border collaboration and expansion.

  • Risk of data breaches and security incidents

Conflicting data sovereignty laws will make it challenging for businesses to implement consistent data security measures across multiple jurisdictions. This may increase the risk of data breaches and security incidents, potentially leading to legal and reputational consequences for organizations.

How InCountry helps global companies stay compliant with data sovereignty laws

A major challenge most organizations face with data privacy laws is the conflicting laws between countries. This is made worse by the fact that these laws are ever-evolving, as they go through periodic updates to help them remain effective in combating data theft risks. Staying abreast with these laws while ensuring compliance could be herculean, especially as they do not add anything to the bottom line of the business. We understand this at InCountry and have tailor-made solutions to help businesses stay compliant without breaking a sweat.

One of our solutions, the Data-Residence-as-a-Service, helps your business maintain data residency by saving all your client’s data in the required country while giving you access to those data from anywhere in the world. This is similar to data sovereignty in the cloud. With this, you do not have to worry about data transfer laws. 

Contact us today, let’s discuss your needs and show you how much value we can contribute to your organization.