How to determine applicable law in the cloud?

The identification of applicable laws in the absence of any explicit choice by the parties involved is difficult in relation to any information society service, and cloud computing service models are certainly no exception. In a European context, the provisions of the eCommerce Directive play a central role, as it contains specific rules on applicable law for information society services. However, it is clear that this will be insufficient to address all questions in this domain: the rules established by the Directive obviously apply only in Member States, and in a non-European international context will not be able to solve conflicts of law. In addition, applicability of the law remains linked to the geographical location of the information society service provider, and in a cloud model it may be difficult to identify this entity or its geographical location. Finally, certain issues including contractual consumer protection clauses and intellectual property protection are excluded from the Directive’s scope, meaning that answers to conflicts of law in these domains will have to be sought elsewhere. Thus, it is already very complicated to identify the starting point for the establishment of trust, namely the specific laws that will apply in the absence of a choice by the parties. Globally, voluntary choice of applicable law by the stakeholders in a cloud service model may be the only viable solution to identify applicable law. In practice, the importance of this issue should not be overstated, as the choice of an applicable legal system on a contractual basis has indeed become standard practice in information society service contracts.

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