Data sovereignty
Data sovereignty is the principle that data is subject to the laws of the country it is stored and processed in — which is why where your systems run is a legal question, not only a technical one.
Also written: data residencyArabic: سيادة البيانات
Why it comes up in AI projects specifically
Because using a hosted model can mean your documents leave your infrastructure, and often leave the country. For a business with client contracts, personnel files or anything under a regulator, that is a question to answer before a pilot rather than after one.
Residency is not the whole of it
Where data sits is one question. Who can compel access to it is another, and they can have different answers — data held locally by a foreign-owned provider may still be reachable under that provider's home jurisdiction.
The practical middle ground
Most requirements are met without giving up capability: run retrieval and storage on your own infrastructure, send only what is necessary to a model, or run a smaller model locally for the sensitive cases and a hosted one for the rest.
Questions people ask
Your clients' contracts may impose it even where the law does not. It is worth checking what you have already promised before choosing an architecture.
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