McGarr Solicitors have opened a new “window” in cyberspace. You can see it HERE.

It is intended to more clearly explain legal issues to victims of personal injury.

Those legal issues can be complex.

The government introduced the Personal Injuries Assessment Board in 2003. This was professedly to benefit the people of Ireland by reducing the premiums for insurance cover.

That may or may not have happened, but the obvious beneficiaries were the insurance companies operating in Ireland and the obvious losers were the Irish victims of personal injury (not “Irish” but “injured in Ireland”).

Separately, the government reduced the time after which a personal injury claim was statute barred, from three years to two years. It also introduced new and onerous procedures for injured persons to adopt, as they sought recovery of compensation from the person or persons who had caused them the injury.

However, these issues have been addressed elsewhere in this website.

Instead of repeating them, this post can refer now, albeit gratuitously, to rotogravure, or rather its absence from the process for producing our new website. Rotogravure was a printing technology, remembered, if for nothing else, by a citation of it in the Irving Berlin song, “Easter Parade”.

When, if ever, will someone write a popular song incorporating the word “inkjet” in it?

Can it match “rotogravure” for poetry?

I think not.

Cloud computing is rapidly becoming a buzzphrase in IT-reliant businesses. Its proponents include some of the largest technology companies in the world. But while enterprises may be able to save money by moving into the cloud it is difficult to see how they can do so with their customer’s personal information without breaching EU data protection law.

Household names like Google, Amazon and Microsoft are racing each other to create rival global platforms for the storage and manipulation of data. They have sent their marketers out amongst us to proclaim the Good News- Cloud Computing will reduce costs and improve service when compared to the traditional self-built and run server rooms most significant organisations are used to.

McKinsey Consulting helpfully offered a definition of Cloud Computing in a recent report on the topic : “Clouds are hardware based services offering compute, network and storage capacity where; hardware management is highly abstracted from the buyer, buyers incur infrastructure costs as variable OPEX, and infrastructure capacity is highly elastic”.

Or, as the rest of us might understand it, that you get to sub-contract out part, some or most of your storage and information processing requirements to an already vastly tooled up company and you access it as you need it across the internet.

Clouds, being amorphous, fuzzy and everywhere, were chosen as the perfect metaphor for this kind of service. But a metaphor can obscure the reality of what’s being offered- to send data out to external companies and store it in their datacentres across the world, without any transparency as to what jurisdictions the data now resides.

Ireland has a particular interest in the development of cloud computing. Google, Microsoft and Amazon have all located major data centres around Dublin. It has been mooted that having these services available will enable Ireland’s entrepreneurs launch global web-based businesses without having to make enormous capital investment.

The difficulty arises when we apply the cloud computing model, developed in the US, to data relating to people in the EU. There is a gap in privacy standards between the two jurisdictions, with the EU protecting its citizens’ personal data in legislation.

Personal Data is defined by Directive 95/46 as “any information relating to an identified or identifiable natural person” and processing same as “collection, recording, organization, storage, adaptation or alteration, retrieval, consultation, use, disclosure by transmission, dissemination or otherwise making available, alignment or combination, blocking, erasure or destruction”.

Ireland’s Data Protection Acts implement this European law into local legislation. The Irish Data Protection Commissioner helpfully defines a Data Controller so that you might more readily recognise if you are one; “A data controller is the individual or the legal person who controls and is responsible for the keeping and use of personal information.” So, the controllers are the people who have the responsibility for the data as it is being processed, no matter where or by whom. The entities they pass the data on to to be dealt with in a specific way are defined as data processors. Cloud computing providers would fall into this class.

But though Irish enterprises work under these European-wide legislative protections of our personal data, the cloud computing model is less sympathetic to our data controllers’ responsibilities.

The FAQ for Amazon’s Cloud offering, called S3, baldly announces that “Amazon S3 allows customers of Amazon S3 to store their data in the EU; however, it is up to the customers of Amazon S3 to ensure that they comply with EU privacy laws.” Furthermore, their Terms of Service states, in all caps for emphasis, that they do not warrant “THAT THE DATA YOU STORE WITHIN THE SERVICE OFFERINGS WILL BE SECURE OR NOT OTHERWISE LOST OR DAMAGED.”

This ‘as-is’ approach clashes fundamentally with the responsibility of a Data Controller to ensure the security of the data they pass on to a data processor. There is the additional complication that, unlike Amazon, not all the cloud computing service providers will promise to keep the data uploaded from the EU in the EU. The result is the possibility of breaching the laws which prevent EU citizen’s personal data being exported to jurisdictions with less stringent protections.

The Irish Data Protection Commissioner’s office is under-resourced, having only a handful of investigations officers for the entire country. It is hardly likely that he will prioritise clamping down on cloud computing providers who are creating high-value employment in Ireland. Nonetheless, for Irish entrepreneurs and IT professionals who are considering taking the cloud computing route , it is important that they do so with an awareness of the difficulties it could throw up later in a due diligence situation.

Buying or selling a company is like a house purchase. Before the buyer closes the deal, they’re going to want to be reassured that the last owner didn’t do anything that might see them inheriting a legal headache. It may only be when the first wave of early-adopter companies start to be acquired that we will get a clear picture of the full cost of moving to cloud computing.

The government’s draft NAMA Bill is intended to assist Ireland’s banks in the financial crisis.

The government’s NAMA scheme is itself a form of State Aid and is in breach of Article 87 (3) (b) of the EU Treaty. In principle it is, therefore illegal. The scheme is not currently activated but the effects of the government’s disclosed intentions are manifest in the economy. The Commission has previously found a declaration by a government, to advance State Aid, is a form of State Aid. Complaints about the current consequences of the NAMA plan have been voiced publicly by;

a. The manager of the Park Hotel, Kenmare, Co. Kerry;
b. The Chief Financial officer of ACC Bank;

The government has claimed the origins of the NAMA scheme lie in “advice” from international institutions including the EU Commission, the International Monetary Fund and the European Central Bank.

The attribution of credit to the EU Commission for NAMA is presumed to be a reference to Commission Communication 2009/C 72/01. This Communication was an “easing” of State Aid regulation as applied to bank restructuring.

In fact, the government’s scheme is not in conformity with Commission Communication 2009/C 72/01.

The NAMA scheme is of such a scale as to raise concern about the sustainability of public finances by over-indebtedness. The EU Commission expresses concern that asset relief should not undermine public debt capacity.

The NAMA scheme, far from being limited to the minimum necessary, is extended to the maximum, limited only by the creative skill of the government. Government spokespersons have given indications that the “transfer value” is intended to lie in a range of 66% to 75% of bank book value. The EU Commission mandates that the bank must bear the maximum level of loss. NAMA, as “floated” by government, seeks to reverse this principle.

The government has failed to make public the impact on the [public] balance sheet. No information has emerged from government to show the impact, on public debt, of NAMA.

The government has failed to make public the disclosure of impairments and assessment of eligible banks. This requirement is mandated by the Commission.

The government has disclosed its intention to avoid imposing on the banks the losses associated with impaired assets to the maximum extent. The full measure of bank loss is the difference between current market value and bank book value. The government’s indicated “transfer value” is much closer to book value than market value.

Only Anglo Irish Bank has been wound up or nationalised. The government has failed to evaluate losses or correctly identify losses, as evidenced by the absence of adminstration or nationalisation of any other bank. There is good reason to think some, at least, Irish commercial banks are insolvent. That there is uncertainty on the point is evidence of government default.

The government has failed to disclose details of the daily portfolio values presumably received by the government from the banks. Alternatively, the banks have failed to make such values or disclose them to the government. The Commission mandated this daily exercise for participating banks.

The government has maximised uncertainty about the proper value of of the banks’ assets. The government has consistently refused to declare the “transfer value” it has in mind; it cites the mantra “case by case” to justify this. The Commission expressed the need to make public disclosure of asset values by [the government].

The government has conflated “complex assets” with the impaired assets of Irish banks (the outcome of a real property bubble). The Commission identifies “toxic assets” as the source of most bank asset impairment. Irish banks did not suffer to any appreciable extent from such assets; Irish impaired assets are in the real estate category. These latter are not “complex”. Their values are low due to the bubble bursting and the effects of recession.

The government has ignored the necessity to secure adequate remuneration for the Irish state. The NAMA scheme has no chance of recovering, for the Irish state, the cost of taking the impaired assets from the banks. The Commission mandated the recovery of all losses by the State from the participating banks.

The government has failed to ensure the beneficiary banks bear the losses incurred in the transfer of assets. The Commission’s requirement on the point is expressed in different ways; it says the banks must bear the losses to the maximum and that the State should secure adequate remuneration.

The government has denied the relevance of “market values” for impaired assets and asserts its intention to value impaired assets on a “case by case” basis, without distinguishing between market value and tranfer value and without assigning assets to “baskets”(as explained in Communication 2009/C 72/01). The government has failed to properly examine the value of impaired assets. By deferring the valuation exercise and avoiding transparency it is evading the Commission’s requirements.

The government is intent on setting impaired asset values at too high a level. The assets are predominently real estate assets and the effect of the government action will be similar to the negative experience produced in Japan from a similar cause. The Commission noted the Japanese example in requiring States to avoid such an effect, a frozen real estate market a decade long.

The government has attributed the Irish financial crisis to the collapse of Lehman Bros., rather than to a property bubble. This prevents any proper remedy being applied to Ireland’s public debt and banking crisis.

The government’s NAMA plan exposes Ireland to proceedings by the EU Commission and/or non-participating banks and to claims for damages by those banks and the claw -back of Aid from the participating banks.

At a time when the finances of the State are so badly stretched, Ireland cannot afford this.