Cloud computing is said to become mainstream, but it’s still a work in progress, especially in term of cloud security and cloud outages. With scary case studies of how cloud outages disrupt business operations or how sensitive data got stolen from the cloud, cloud computing disputes are likely to happen.
This fantastic piece of article written by Gerry Silver for Law.com, titled 5 Key Considerations When Litigating Cloud Computing Disputes, can give you some ideas on what litigators are going to focus when client vs. cloud vendor disputes happen.
These are 5 key items litigators focus on when representing a corporation or a cloud provider in cloud computing legal disputes:
1. Review the limitation of liability
The limited of liability clause should be found in the cloud services agreement. The clause should arrange how to recover losses for business interruptions. Reviewing the clause will let all parties know about the rights and responsibilities of each party.
2. May the limitation of liability clause be circumvented?
Litigators, cloud service providers, and cloud clients should observe whether the limitation of liability clause may be circumvented. Cloud service providers should show what they have done to ensure the availability and reliability of the service – those will help leverage them in the dispute. For clients, they should also find out whether the cloud vendor is doing its due diligence, to see whether the clause can be negotiated.
3. Analyze contract claims
In any disputes, all parties need to analyze the root of the problems – the best way to do it is by analyzing what was claimed in the cloud service agreement to see whether the claims are fulfilled or not – i.e. a cloud hosting claims 99.9% uptime – is it really fulfills the claim?
4. Remedies
There are several paths for dispute remedies. In cloud vendor’s case, if it can recover loss of data in cloud security issues, the dispute can be settled. For cloud client, path to remedies may include contract termination or the possibility to transfer to other cloud service provider with no cost incurred.
5. Insurance and compensation
Are there insurance policies to cover any business interruptions, loss of data and such? If so, insurance companies need to be notified regarding the matter. If there’s any monetary compensation involved, it should be taken care of accordingly.
Takeaway
Based on the above key litigation items, it’s imperative for cloud clients to understand what they are signing when partnering with a cloud vendor – be sure you read – and re-read – the contract offered by a cloud vendor. If you are not sure what you could miss in the contract, be sure to hire the right lawyer to review the contract for you and make legal suggestions on your behalf.
For cloud vendors, be sure you take extra care when building a contract with your client; you don’t want to miss even a key point that could put you into legal troubles later on. Be sure to seek the help of a good lawyer who is knowledgeable about cloud computing as a business.
