Overseas Data Not Subject to U.S. Warrant: Second Circuit Reverses S.D.N.Y. Decision, Holding That a Warrant Cannot Compel Microsoft to Disclose E-mails Stored Abroad

Sullivan & Cromwell LLP - July 15, 2016

On July 14, 2016, the U.S. Court of Appeals for the Second Circuit held that a service provider is not obligated to comply with a warrant for electronic communications stored abroad.  In In the Matter of a Warrant to Search a Certain E-Mail Account Controlled and Maintained by Microsoft Corporation, the Court held that the Stored Communications Act (“SCA”) does not “authorize courts to issue and enforce against U.S.-based service providers warrants for the seizure of customer e-mail content that is stored exclusively on foreign servers.”

As suggested by Judge Lynch’s concurrence, which invited Congress to reconsider the SCA in light of technological changes since its enactment, the decision may prompt calls for laws and regulations addressing the storage of electronic communications and other data outside the United States, particularly if it is generated or transmitted with a U.S. nexus.  If proposed, such laws and regulations would likely raise concerns from, among others, privacy advocates and technology companies in the United States, and raise objections overseas about the extraterritorial application of U.S. laws and regulations.