Data sovereignty
Definition
Data sovereignty is the concept that digital information is subject to the laws and governance structures of the country where it is collected, stored, or processed. This means that when data resides in a particular jurisdiction, it falls under that country’s regulatory and legal authority. Businesses managing personal or sensitive information must consider data sovereignty when using cloud services or storing information overseas.
For example, if an Australian company stores customer data in the United States, that data may be subject to US laws such as the CLOUD Act, in addition to Australia’s Privacy Act 1988.
Advanced
Data sovereignty is closely linked to data residency but focuses specifically on jurisdictional control rather than physical location alone. Governments increasingly impose sovereignty requirements to protect national interests, enhance security, and strengthen privacy protections. In the European Union, GDPR includes strict rules on international data transfers. In Australia, the Privacy Act and Australian Privacy Principles set conditions for overseas disclosure of personal data.
Advanced strategies involve assessing cross-border transfer risks, using contractual clauses such as standard contractual clauses (SCCs), and selecting cloud providers with in-region compliance certifications. Sovereignty concerns also extend to cybersecurity, as data held in foreign jurisdictions may be accessed by foreign governments or exposed to conflicting legal systems. Multinational companies must adopt governance frameworks that address overlapping requirements in multiple countries.
Why it matters
Use cases
Metrics
Issues
Example
An Australian healthcare provider considers outsourcing data storage to an overseas vendor. To comply with sovereignty requirements, it contracts with a provider that guarantees data will remain within Australia and be subject only to Australian law. This reduces legal risks and assures patients of compliance with privacy protections.