By Donald S. Skupsky, JD, CRM, FAI, MIT, President
Information Requirements Clearinghouse
May 7, 2020
More and more corporate clients have expressed interest in developing a global records retention schedule. After years of implementing retention schedules that just included the United States or Canadian legal research or considerations, they now face new needs from expanding sales or manufacturing operations in other countries. The existing retention schedule for one or two countries does not provide for the diverse legal and, perhaps, operational requirements found in other countries.
Once an organization starts developing a global retention schedule, the reality soon sinks in:
- Will my description of records or record series make sense in other countries?
- Where do I find all the international legal research?
- How do I understand the laws in so many different languages?
- What if the retention requirements in certain countries differ from my current retention periods or even differ significantly from each other?
- How do I apply all this information to my retention schedule?
- How do I keep all of this up-to-date?
The issues are daunting and may appear insurmountable. But, there is a pathway through this quagmire. This article reviews the background issues related to developing a global retention schedule, some problems that need to be addressed, and options for developing the global retention schedule and program.
Why is International legal research so complex?
Even for someone who has developed a records retention schedule in the United States or Canada, international legal research poses many problems and difficulties. And, for someone relatively new to records retention, international legal research may seem beyond reach. Here are some of the pitfalls and issues that you will have to work through:
- Legal research for the United States and Canada is readily available through subscription services, internet search and government web sites. Most international law is very difficult to find. Even Lexis and Westlaw, the two primary legal search tools, may only have coverage for a few countries, with only some subject areas included.
- The laws will probably appear in a language other than English (except for the other English-speaking countries), so you must first find the law in its native language, and then translate them into English. All translations, whether done by humans or translation software will be “interpretations of the law,” rather than the law itself. And, thus, the translations might not be accurate, complete or up-to-date.
- The organization and indexing of laws for each country will be different. Even when you find and translate the law, you have difficulty finding the full scope of each subject area.
- The vocabulary used in each may be different. Thus, in the United States, you might research legal requirements for “corporations,” while other countries refer to such entities as “companies.”
- The retention periods may be different in certain countries. Thus, it may be desirable to create one worldwide retention period, or it may be better to create a “Main Rule” and exceptions for certain countries.
- The retention may be influenced by internal “custom and practice” not mentioned in the law, or other factors that only attorneys working in that country really understand. For example, in the United States, retention includes considerations for statutes of limitations and other legal considerations related to litigation concerns. In contrast, other countries have a low level of litigation or do not consider litigation as a factor when determining retention.
- The laws in some countries may not address certain recordkeeping areas. For example, some countries may not have many laws on environmental records (perhaps, because the government cares little about the environment) or have government-sponsored healthcare that eliminates any consideration of private healthcare benefit records.
- The attitudes in some countries toward electronic records and electronic imaging may be different than in the United States.
Determining the Scope of International Legal Research
Even before embarking on the legal research, the scope of legal requirements will need to be determined:
- Does the organization have an office or employees in the country? Or, is business just performed by internet or mail order?
- Does the organization pay taxes in the country?
- Does the organization manufacture products or provide services in the country? What products? What services?
- Does the organization store products in the country?
- Does the organization transport products using its own trucks, railroad cars, ships, aircraft, or other means?
- Does the organization potentially, adversely affect the environment?
All organizations will need to identify and comply with legal requirements affecting their general business activities – e.g., accounting, administration, employment, contracts, legal, marketing, public relations, etc. And, if appropriate, organizations must also identify and comply with legal requirements affecting their industry activities – e.g., agriculture, manufacturing, petroleum, pharmaceuticals, power, telecommunications, retail, etc.
How Should Records Be Described in a Global Retention Schedule?
Records in countries outside of the United States and Canada will typically be referenced in the native language, other than English, with often a different vocabulary. And, even some other English-speaking organizations may describe records using a different vocabulary.
Frankly, most organizations do not have the expertise nor resources to translate the English record series into other languages or to develop separate records retention schedules by countries to reflect the peculiarities of each culture. Instead, it is best to prepare and publish the global schedule in English and let each country adapt it to its particular needs.
One particularly effective method to deal with the language and cultural differences in each country is as follows:
- Create a comprehensive global records retention schedule with record series that reflect the types of records found in all countries and operations worldwide.
- Provide this schedule to offices in each country for review and revise, add or modify the record series to create a comprehensive set of record series.
- Allow each country to develop a “local schedule” based on record titles in its own language, with a vocabulary which best reflects its culture.
- Link the local schedule and these record titles to the global retention schedule for retention and classification purposes. This approach permits countries to develop a “country-based” retention schedule while remaining consistent with the global retention schedule. [Note: This approach can similarly be used to create department, division or regional retention schedules based on the global schedule.]
- Utilize the local schedule for retention purposes in the country.
While the global retention schedule must be systematically developed, with comprehensive, legal research, these local schedules serve merely as a tool to implement the global schedule. Although individual discretion must be utilized to link the local schedule to the global schedule, this is the same discretion that would ultimately be used to link the global schedule to specific records to apply retention. Therefore, no global review would be needed for these local schedules, assuming that the foreign developer has a working knowledge of the global schedule and can seek help as needed.
How Should the Legal Period Be Determined in a Global Retention Schedule?
In order to centrally manage a global schedule, the organization must perform legal research for all countries to which the global schedule will apply. The legal research can then be sorted into related groups of laws (“legal groups”) that address the same or similar subject area. Ultimately, these groups of laws will determine the legal retention periods for the same or similar record series in those areas. Normally, the longest legal retention requirement will determine the legal requirements period for the related record series.
However, in some cases, the legal requirements for some countries may be dramatically different from the other countries in the legal research. For example, in the accounting and tax area, the legal requirements period for the United States and Canada is 6 years, but 10 years for Switzerland and 15 years for China. So there would be two options when determining retention:
- Select the longest legal period for all countries. While this period would be long enough to meet the needs of every country, it would also be too long for most countries. Thus, in the United States, for example, records could be kept 4 or 9 years longer than necessary.
- Establish a “Main Rule” that reflects the legal retention periods for the majority of countries that will serve as the baseline or “minimum” retention for all countries – e.g., the Main Rule based on the United States, Canada and several other countries would be 6 years. Then, create exceptions by countries with longer retention periods or by groups of countries with the same or similar longer retention period. In this example, exceptions can be made for records in Switzerland (10 years) and China (15). But if the relevant countries also include Mexico, Germany and the Czech Republic, all with 10-year requirements for accounting/tax records, you can create one expanded legal group for all four countries as just one exception.
What if you cannot afford global legal research or cannot manage a global schedule?
There is one other option that has proved successful for some organizations desiring a global retention schedule, who lack the means for full implementation. As described above, you create a “Main Rule” for the United States and, perhaps, Canadian legal requirements, based on extensive legal research for those countries. The Main Rule determines the main or base retention for all other countries. Then you submit the retention schedule to your global offices with instructions for their local legal counsel to review and extend the retention periods if needed for the particular countries. All countries would follow, at least the Main Rule, and some countries would extend the period for records kept in those countries based on the advice of legal counsel.
While this approach is not as precise as a full global retention schedule, it does provide some advantages, especially for smaller, multi-national companies. For example, this approach requires little or no international legal research, lower costs to create and manage, fewer problems with managing different languages and cultures, etc. However, this approach might inadvertently result in some office violating local laws due to their failure to properly consult with local attorneys or through their inexperience with records retention and legal research. It also would not work when the headquarters office, possibly housed in the United States, maintains all accounting records for all international offices since there would be no central repository for the international retention differences.
Donald S. Skupsky, JD, CRM, FAI, MIT, President, Information Requirements Clearinghouse (“IRCH”) is a leading expert in records retention and legal requirements for business records. Mr. Skupsky is the developer of the “legal group” methodology and created many records retention principles commonly in use today. IRCH provides international legal research both through the Retention Manager software and database product, and through professional consulting services. For further information, contact Mr, Skupsky at firstname.lastname@example.org or 303- 721-7500, and review the IRCH web site at http://www.irch.com.