Legal experts predict 600% surge in data protection disputes

Disputes could rocket by six times in next five years

The volume of data protection disputes could rise by six times within five years, according to a new study.

The research, carried out by the School of International Arbitration at Queen Mary University of London and Pinsent Masons law firm, found that disputes arising from data protection issues are expected to make up 80% of telecoms, media and technology (TMT) disputes by the year 2021, and 79% for security breaches. Data protection disputes have accounted for just 13% of TMT disputes over the last five years, making the predicted figure a rise of around 600%.

The survey of 340 legal specialists found that the recent series of high-profile data breaches has driven data privacy and security to be one of the most likely causes of TMT disputes.

"Data protection and data security are now recognised as being as critical to business as protecting IP," says David McIlwaine, dispute resolution partner at Pinsent Masons.

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"The reputational and financial effects of such issues can have hugely detrimental consequences for an organisation. Clearly, the twin issues are concerning in-house lawyers. This would suggest that in order to predict and mitigate real business risk, organisations should now be setting and testing their approach to data protection or data security compromise, including, potentially, the creation of a crisis protocol."

Insider threats and worker error could also spur more legal disputes than hackers, as the research showed that the most common factors underpinning data breach disputes have been the result of employee action, rather than malicious third party attacks or data breaches by the IT supplier.

"With the GDPR due to apply in May 2018, the expectation of a significant increase in data-related disputes is justified, both against the data controllers and against data processors," said McIlwaine.

"Some of these disputes may be referred to arbitration (given the increasing prevalence for this dispute resolution mechanism). In that event, the need for arbitrators with specialist experience in this area will become even more crucial."

Professor Loukas Mistelis, Director of the School of International Arbitration at Queen Mary University of London the large number of TMT disputes was surprising.

"The large number of TMT disputes and the value of such disputes can be explained by the very fact that almost all industry sectors now have experienced TMT disputes: from the big banks to major energy and infrastructure corporations," he said.

"While the existence of large telecoms disputes has been in the public domain for some time, the survey sheds lights on disputes which have not previously been systematically recorded. The survey contains a wealth of information which can be analysed at many levels."

The volume of TMT disputes continues to rise, with the research identifying 23% of businesses having been in at least 20 TMT disputes in the last five years, with 34% of all respondents placing the value of their largest dispute at over $100 million.

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