Legal mechanisms for data stewardship - the role of data trusts

The challenge of 21st century data governance is to create systems of data stewardship that enable access to data while managing the rights associated with different data types in ways that command public confidence. Different legal mechanisms can play different roles in data stewardship: data trusts, cooperatives, corporations and contracts can all contribute in different ways to the safe and effective use of data. 

To explore the opportunities and benefits associated with these different models, over the last year the Data Trusts Initiative has been working with the AI Council, Open Data Institute, City of London Law Society and Ada Lovelace Institute on a review of legal mechanisms for data stewardship. The report – published today – summarises how different legal frameworks can help achieve different data sharing objectives, and what action is needed to advance these forms of data stewardship. It considers three legal mechanisms that can underpin data sharing activities:

• Corporate or contractual mechanisms, which are perhaps the most common form of data access arrangement in use today. These create terms and conditions for data use that are mutually agreed by parties in a data-sharing relationship – they facilitate sharing of specified data for an agreed purpose. 

• Data cooperatives can also be established using contractual or corporate structures, but this form of data stewardship focuses on allowing members to pool their resources to take a stake in management of the cooperative organisation. 

• Data trusts are an emerging alternative approach to data governance. A data trust is a proposed mechanism for individuals to take the data rights that are set out in law (or the beneficial interest in those rights) and pool these into an organisation in which trustees would exercise the data rights conferred by the law on behalf of the trust’s beneficiaries.  

This blog post takes excerpts from the report to summarise how data trusts contribute to this landscape of data stewardship –

Why create data trusts?

Trust law offers strong institutional safeguards: Core to the rationale for using trust law as a vehicle for data governance is the fiduciary duty it creates. Trustees are required to act with undivided loyalty and dedication to the interests and aspirations of the beneficiaries. The strong safeguards this provides can create a foundation for data governance that gives data subjects confidence that their data rights are being managed with care. Adding to these fiduciary duties, the law of equity provides a framework for accountability. If not adhering to the constitutional terms of a trust, trustees can be held to account for their actions by the trust’s beneficiaries or the overseeing Court acting on their behalf. The Court’s equitable jurisdiction to supervise and intervene if necessary is not easily replicable within a contractual or corporate framework.

Data trusts provide a vehicle for collective action: By leveraging the negotiating power inherent in pooled data rights, the data trustee would become a more powerful voice in contract negotiations, and be better placed to achieve favourable terms of data use than any single individual. In so doing, the role of the data trustee would be to empower the beneficiaries, widening their choices about data use beyond the ‘accept or walk away’ dichotomy presented by current governance structures. It is possible to imagine situations in which individuals might group together on the basis of shared values or attitudes to risk, and seek to use this shared understanding to promote data use. In coming together to define the terms of a trust, individuals would be able to express their agency and influence data use by defining their vision. Current legal frameworks offer few opportunities to enable group action in this way. 

Data trusts have the flexibility to respond to emerging areas of need, where rights and responsibilities might not yet be well-defined: Trust law has ancient roots. The fiduciary responsibilities at its core can be traded to practices established in Roman law, and the idea of a ‘trust’ has its origins in medieval England. Over this long history, the Courts of Chancery have played an important role in settling claims over rights and creating remedies where these rights have been infringed. Centred around the concept of equity – that disputes should be settled in ways that are fair and just – these Courts have often found or clarified rights that might not be directly visible in Common Law, but which can be adjudicated on according to principles of fairness. It is in part this ability to flex and adapt over time that has ensured the longevity of trusts and trust law as a governance tool. In today’s environment of rapid technological change and shifting patterns of data use, the flexibility offered by trusts offers the possibility of creating a governance mechanism that is able to adapt to emerging needs. In conditions of change or uncertainty around data use, this flexibility offers the ability to act now to promote some types of data use, while creating space to change practices in the future. 

Building on the report

Data trusts, data cooperatives and corporate and contractual mechanisms can all be powerful mechanisms in the data-governance toolbox. Which mechanism to choose for any circumstances will depend on a number of factors, in particular the intended outcome and the nature of the relationship between the different parties involved. In this context, data trusts can be an important tool for data stewardship where the aim is to redistribute power in decisions about data use, supporting individuals to better assert their data rights.

In thinking about how to develop ideas around data trusts, the report notes that: Understanding what data rights can be placed in trust, when those rights arise and how a trust can manage those rights will be crucial in creating a data trust. Further work will be required to analyse the sorts of powers that a trustee tasked with stewarding those rights might be able to wield, and the advantages that might accrue to the trust’s beneficiaries as a result. These areas of investigation are core to the work of the Data Trusts Initiative. For further information about the steps necessary to move data trusts from theory to practice, take a look at our first Working Paper on this topic.

To read the full report on Legal Mechanisms for Data Stewardship, visit the Ada Lovelace Institute’s website.

 Author: Jess Montgomery (2021)