The nature of the cloud is such that it is likely that more than one legal jurisdiction will be involved in relation to any particular external cloud service. For example, relevant jurisdictions are likely to include the UK (where the institution is based) and the countries where the cloud computing provider, its servers and any subcontractors reside.
The laws governing applicable law (which country's laws apply to a particular issue) and jurisdiction (which country's courts will hear a particular dispute) are complex, and the answer may vary according to the area of law and the jurisdiction in which the question arises. However, some general observations are possible.
A cloud computing provider will normally specify within its contract terms that the contract is governed by the laws of a specific country and that disputes will be heard in that country's courts. Usually this will refer to the the jurisdiction in which the provider has its principal place of business, but occasionally it may be legal system where the customer is based. The law typically places few restrictions on this type of contractual clause, except some controls on electing a totally irrelevant jurisdiction, and more stringent controls in relation to consumer (non-business) contracts.
In the event of a dispute an institution, if possible, will want to avoid having to enforce contractual terms in an overseas jurisdiction, under foreign law, or having to defend an action in an overseas jurisdiction and under foreign law. Colleges and universities may therefore have to consider the possible additional costs if the service provider chosen applies a foreign choice of law and jurisdiction clause, versus the benefits of that particular service.
For further analysis of the laws and jurisdiction applicable in cloud computing contracts refer to the Terms of Service Analysis for Cloud Providers, Legal Studies Research Paper No. 63/2010, published by Queen Mary School of Law.