# Legal and Regulatory Issues in the Information Economy/Jurisdiction and Conflicts of Law

It has been said that: “For several years, some of the most difficult legal issues on the Internet have involved one of the medium’s greatest assets: its lack of boundaries. Although the free-flowing, borderless nature of cyberspace has revolutionized communication and commerce, it has also led to many lawsuits. And, as if resolving those lawsuits weren’t difficult enough, it’s often just as tough to determine where they should take place.”

## When is there conflict of laws?

A resident of Manila who decides to file a malpractice suit against a Manila-based doctor who had done her an injury may do so in a Manila court. The Manila courts have jurisdiction over the doctor. But if the injured person later on moves to Hanoi, and decides to file the case there, the doctor in Manila will surely object-and validly-that no Hanoi court can have personal jurisdiction over him. That’s an easy case.
Consider a Web site selling pornographic materials set up in Hong Kong, hosted in the Caribbean, with a Web master residing in the Netherlands and owners who are British nationals, and broadcast throughout the world? If a complaint for pornography were to be filed, whom do you sue and where do you sue them?
For our third case, suppose A, in Hanoi, enters into a contract for the delivery of heavy machinery with B, in Yangon. If B fails to deliver the goods, where does A file the case? If A files the case for breach of contract in a Hanoi court, how does the Hanoi court acquire jurisdiction over B?
These examples show that jurisdiction is not straightforward in the Internet.

## How can jurisdiction be asserted or acquired?

In the United States, there are ways by which courts are able to acquire jurisdiction over Web-based activities:
* Gotcha. Where the court obtains jurisdiction over an out-of-State defendant, provided that when he visits the State, that person is served with a summons and a complaint (documents that give the person notice of the lawsuit). This was applied to the case of the Russian programmer sued by the publishers of e-book (Adobe). While attending a convention in Nevada, he was served with a notice and was subsequently arrested.
* Causing an injury within the State. An Internet business can also be subject to jurisdiction for purposefully causing an injury in another state. This principle derives from a series of cases where courts of another State acquired jurisdiction over non-residents who entered the State, caused an accident and left. If someone uses the Internet to cause an injury in one State, the person causing the damage may be hauled into court in the State where the injury occurred. In cases where the connection between the activity and the injury is not clear, courts also look for evidence that the activity was “purposefully directed” at the resident of the forum State or that the person causing the injury had contacts with the State.
* Minimum contacts. A business or person with sufficient contacts with a particular State can be hauled to court even if he/she does not live or has a business in that State. Usually, the basis is the regularity of solicitation of business, derivation of substantial income from goods or services sold in that other State, or engaging in some other persistent course of conduct there. For example, passive Internet sites, which merely advertise but do not really offer to sell goods or services, may be said not to have achieved the required minimum contacts for courts to acquire jurisdiction over them. But with Web sites that actively offer to sell and then subsequently take orders from that State, it can be said that the minimum contacts have been satisfied for purposes of acquiring jurisdiction.
* Effects. When one’s conduct in cyberspace though emanating from another State creates or results in an injury in another, courts in the latter State can acquire jurisdiction over the offender. To illustrate: A case was filed by the DVD Copy Control Association against the creator of DeCCS, a software that decrypts the copy-protection system in Digital Versatile Discs (DVDs) to allow ordinary CD-ROM drives to play or read DVDs. An issue in the case was whether the courts of California had jurisdiction over the person, who was a student in Indiana when the suit was filed and who later on moved to Texas. The court said that the California courts had jurisdiction, citing a 17-year-old US Supreme Court case involving defamation, because the California movie and computing industry was affected by the “effects” of the defendant’s conduct in Indiana. This decision signals an expansion of personal jurisdiction in cyberspace. If other courts chart their course by California standards, any Web publisher could be hauled to court wherever its site has an effect. The attorney general of Minnesota has issued this statement of caution: “Warning to all Internet Users and Providers: Persons outside of Minnesota who transmit information via the Internet knowing that information will be disseminated in Minnesota are subject to jurisdiction in Minnesota courts for violations of State criminal and civil laws.”

## Why is it necessary to establish laws governing jurisdiction?

Due to the global nature of the Internet, it is important to establish which law governs a contract formed, perfected, or conducted online. Without an express choice of governing law, complex and difficult issues can arise. For the time being, it may be prudent for businessmen to determine which existing law and regulations apply and ensure that they are well versed in the local laws of the areas where they wish to set up their Web presence. This is to avoid unexpected liabilities that may arise as well as possible un-enforceability of contracts into which they enter. Better still, when they conduct transactions online, parties must first agree on the legal regimes under which they may operate, so that when a dispute arises, the questions of jurisdiction-what law and what courts-would have already been settled.