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In: Economics

When can a court exercise jurisdiction over a party whose only connection to the jurisdic­tion is...

When can a court exercise jurisdiction over a party whose only connection to the jurisdic­tion is via the Internent?

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Expert Solution

One of the advantages of the Internet over other methods of communication and commerce is that it enables access to a much wider, even a worldwide, audience. Spatial distance and national borders are irrelevant to the creation of an Internet business, many of which are conceived for the express purpose of expanding sales horizons across borders.   In a sense, a person can be everywhere in the world, all at once.

Even apart from the Internet, this border-centric view of the law creates certain difficulties in an economy moving toward globalization. Entire bodies of law have been developed by every nation to deal with the resolution of international conflicts of law, conflicts that arise when geography and citizenship would allow a dispute to be decided by the laws of more than one country, and the laws of those countries are not consistent with each other. Conflicts of law are particularly likely to arise in cyberspace, where the location of an occurrence is never certain, where ideological differences are likely to create conflicting laws, and where rules are made not only by nations and their representatives, but also by sub-national and transnational institutions.

There is little dispute that nation-states can prosecute Internet users (or anyone else, for that matter), whatever their location, for revealing national secrets, falsifying official documents, or inciting war. These activities threaten national security, wherever they are committed, and therefore fall under international standards for jurisdiction. Similarly, it is a universal crime to publicly incite torture or genocide. These universal offenses may be prosecuted extraterritorially by any nation, regardless of the citizenship or location of the user.

U.S. courts apply the same "effects" test to foreign parties as to American parties. If minimum contacts exist, parties from other countries may be haled into court in the United States just as parties from one state may be haled into another. Similarly, Americans may be tried by courts in other countries depending on the rules of that country. Although each country's laws are different, most rely on some sort of "effects" test resembling the U.S. test, whereby a party is subject to jurisdiction in a place where his conduct has an effect.   This jurisdiction traditionally is subject to a "reasonableness" test. According to section 421 of the Restatement (Third) of the Foreign Relations Law of the U.S., exercise of jurisdiction is generally reasonable if the party is a citizen, resident, or domiciliary of the state, or if:

. . . (g) the person, whether natural or personal, has consented to the exercise of jurisdiction;
    (h) the person, whether natural or juridical, regularly carries on business in the state;
    (i) the person, whether natural or juridical, had carried on activity in the state, but only in respect of such activity;
    (j) the person, whether natural or juridical, had carried on outside the state an activity having a substantial, direct, and foreseeable effect within the state, but only in respect of such activity; or
    (k)the thing that is the subject of adjudication is owned, possessed, or used in the state, but only in respect of a claim reasonably connected with that thing.

This standard differs somewhat from the U.S. standard for interstate exercise of jurisdiction; for example, transitory presence (known as "tag" jurisdiction), accepted in the U.S., is not generally accepted as a method of international jurisdiction.

Most Internet jurisdiction cases, like that resulting in the Panavision International, L.P. v. Toeppen decision, involve trademark disputes involving use of the Web site domain name and hold that the forum state can exercise jurisdiction over the owner of the Web site because the infringing conduct targets the forum state and thus creates a basis for specific jurisdiction. As in the publishing arena, the Web site must knowingly target potential viewers in the forum state. An alleged injury related to the operation of the Web site is insufficient to create jurisdiction where the Web site operation is not directed at the forum state and no other contacts with the forum state are found. Further, when Web site operation is unrelated to the conduct, courts have generally not allowed exercise of general jurisdiction based on the presence of a passive advertising Web site.

A company putting a Web site on the Internet should remain aware that its Web site may expand the geographic scope of its business. Depending on the nature of the business and the Web site content, the company might now be directing its activities toward customers in other states and countries. This makes it subject to foreign laws and regulations governing business activities and possibly subject to jurisdiction in foreign courts. Thinking in advance about the nature of its business and the content of its Web site will help the company assess the risk of its being hailed into a foreign court, even if definitive answers are not available.


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