Legal Risk Management in Electronic Commerce

It is clear from the previous chapters that activities on the Internet entail the risk of being met with cross-border law enforcement. The most likely sanctions in traditional cross-border law enforcement are damages in tort, contractual sanctions, injunctions and fines. This is mainly due to the recognition and enforcement of judgments under the Brussels/Lugano System and the 2005 Framework Decision on Financial Penalties. It is assumed that alternative law enforcement can be carried out without the involvement of the state in which the Business is established.

At this point, the possibilities of traditional cross-border law enforcement have been discussed under the assumption that the Business did not take any measures to mitigate the risk of cross-border law enforcement, including in particular the application of geographical delimitation and choice of forum and applicable law. In this chapter, it is examined what the Business can achieve, in terms of risk mitigation, by applying geographical delimitation of its website activities and/or entering agreements on forum and applicable law. In connection to geographical delimitation, it is also discussed whether Community legislation hinders the Business's access to discriminate on the basis of the User's nationality or place of domicile.

Immediately below, there is an analysis of factors, relevant to establishing jurisdiction in a foreign state. This analysis provides a base for determining which factors the Business may focus on to geographically delimit its Internet activities.

5.1. Directing a Website

The purpose of this part is to determine which factors are relevant when establishing jurisdiction in a foreign state. These factors can be used by the Business to adjust its website in order to delimit the risk of cross-border law enforcement. A 'forseeability-test' may not always provide legal certainty, but it may provide an intuitive sense of when a court will assert jurisdiction over a dispute.¹

5.1.1. Jurisdictional Basis

In order to establish what the Business can do to mitigate the risk of cross-border law enforcement, it is necessary to determine what triggers the situations where cross-border law enforcement is possible. As mentioned in chapter 3,² international jurisdiction can be based on the principle of territoriality, objective territoriality principle in particular ('effects jurisdiction') which is relevant in this context since the Business neither has establishment in foreign territories nor 'citizenship' in other states. The jurisdiction comprises a sovereign state's access to both prescribe, adjudicate and enforce, however, without compromising the sovereignty of other states. As established in the previous two chapters, traditional cross-border law enforcement can take place in situations where foreign judgments are recognised and enforced in the state where the Business is established, or in situations where that state applies foreign law under national procedure.

The application of foreign law is most likely to happen within tort and consumer contracts, whereas it is not likely under public law enforcement. The recognition and enforcement of foreign judgments is also not likely to happen within public law enforcement, save situations covered by the 2005 Framework Decision on Financial Penalties and in cases between the Scandinavian States. In private law enforcement recognition and enforcement of foreign judgments, where foreign law is applied is likely to happen in tort and consumer contracts. It should be noted that tort cases may not only be based on the tort forum of the Brussels/Lugano System, but may also be based on the often wider criminal jurisdiction in connection to ancillary procedures.

When discussing the risk for the Business of being sued before a foreign court, it is helpful to make a distinction between 1) contracts, where the connection between the Business and the law enforcer is based on a contractual relationship and 2) outside of contracts, where the connection between those parties is based on actual or possible harm which occurs on the market of the law enforcer. The latter situation may concern harm on several markets and includes both public law enforcement and private law enforcement. A particular business practice may involve the risk of being sued both in connection with a contract and outside of a contract. The nature of the law enforcement must be determined on the basis of the law suit, i.e. whether the law suit relates to a contract between the parties or not.

When dealing with cross-border law enforcement in connection to a contract, the activity on a specific market may be relevant in determining the contractual nature of a website. This falls under substantive law, which is not dealt with in this thesis. As dealt with in the previous chapter, arguments which support deviation from the presumption rule in the 1980 Rome Convention may for example be found by assessing the activity on a foreign market. Therefore, the activity on a foreign market is relevant in connection with contracts in general. In consumer contracts, the activity on the market is of interest in order to determine whether an activity was directed towards the consumer. If an activity was directed towards the state of the consumer, the specific consumer provisions of the 1980 Rome Convention and of the Brussels/Lugano System is likely to apply.

In order to be met with cross-border law enforcement in situations outside of a contract, there must be either actual or possible harm on a market. Since there is no harmonisation of choice of law in tort, the actual or possible harm is to be determined by the national law of the market in question. This thesis does not deal with substantive law as to whether a certain activity entails actual or possible harm. The focus in this thesis is on the risk of cross-border law enforcement, which means that it in this situation is important to focus on when an activity can be said to take place on a market which again means that there exists a risk of doing harm on that market.

The Brussels/Lugano System makes it possible to sue in the courts of the place where the harmful event occur or may occur. The criteria for assessing whether the event in question is harmful and the evidence required of the existence and extent of the harm alleged by the victim is governed by the substantive law determined by the national conflict of laws rules of the court seized. It cannot be ruled out that a foreign court, due to the homeward-trend, may be more likely to designate its own substantive law. In any event, the court will apply its own choice of law rules which means that the business cannot solely rely on the knowledge of the choice of law rules in the state in which it is established.

The question on where an activity on the Internet occurs is dealt with in the previous chapter in relation to tort and consumer contracts. In consumer contracts the question is relevant in connection with determining whether the Business pursues commercial or professional activities in the state of the consumer’s domicile or, by any means, directs such activities to that state (2000 Brussels Regulation). In the 1968 Brussels Convention, the 1988 Lugano Convention and the 1980 Rome Convention, the question is whether the contract was preceded by advertising in the state of the consumer’s domicile.

In connection to tort, it is important for the choice of forum that the activity has a direct effect on the market (the place where the damage occurred),³ whereas the question on choice of law is not yet harmonised. The focus is on the place where the event giving rise to the damage produced its harmful effects upon the victim, which is not necessarily the domicile of the victim. This would mean that the place where harm is produced is where the potentially harmful information is being received and/or promoted or where the damage becomes apparent. Based on the discussion in the previous chapter, it seems reasonable to assume that the main focus in tort must be on whether and to what extent users from a certain state access the website or are likely to access the website. It may reasonably be argued that an activity of some substance has to be carried out on the market in question, or that the activity in question has deliberately been directed towards that state.

The focus on advertising in connection to consumer contracts differs from the approach in tort.⁴ First of all because it has to be determined in the light of a particular contract already concluded. The purpose is thus to determine whether the Business directed commercial activities which lead to the conclusion of a contract or whether the contract was preceded by advertising in the state in question. The difference between the wording of those acts seems to entail no material difference as long as a website can be regarded as advertising.⁵ As mentioned in the previous chapter, the website must be purposefully directed at, at least, the state in question.⁶ In this context, the question is what it takes for a website to constitute advertising or commercial activity which was directed to a particular market in connection with a particular contract. The consumer contract in itself may indicate that the website was directed towards the state in which the consumer is domiciled, but the conclusion of the contract itself is not sufficient, if it is clear that the website was in fact not directed towards the state where the consumer is domiciled.

It seems obvious that the different kinds of jurisdictional bases requires some kind of activity or possible influence on a market in the state where cross-border law enforcement is likely to originate. Due to the generality of the wording of relevant provision and in the lack of substantial jurisprudence, it is difficult to establish what it exactly takes before an activity carried out through a website has sufficient impact on a particular market. The criteria is likely to depend upon the nature of the claim, the factual circumstances and to some extent what result is more fair.

Below, it is discussed, based on case law from different states, which factors may be relevant when determining whether an activity on a website is directed towards a particular market or state.

5.1.2. Selected Case Law

There is only a limited amount of case law from the European Court on Justice which deals with where a website activity is directed. The purpose of this part is to discuss case law from different jurisdictions in order to examine the approach used by various courts when determining where a website is directed. It is of particular interest to identify specific factors to which importance has been attached by the courts. The case law has been chosen in an explorative manner and is notably not intended to provide an exhaustive overview of case law on the question. The examination has, except for one Danish case, been limited to case law available in English, which is the reason why there is an over-representation of case law from common law states.

5.1.2.1. The European Court of Justice

5.1.2.1.1. Herbert Karner Industrie v. Troostwijk

The advocate general raised the question of directing a website in the case of Herbert Karner Industrie v. Troostwijk,⁷ but this end was not taken up by the European Court of Justice. The advocate general noted that an advertisement published on the Internet, of course, is not confined to only one Member State.⁸ The advocate general suggested to refer the question on the possibility to differentiate advertisement on the Internet to the national court.⁹

The 2000 E-Commerce Directive was not in force in Austria at the relevant time (May 2001), and transposition did not occur until 1 January 2002. However, the Advocate General noted that even if it is not possible to vary the publication of advertisements on the Internet according to the Member State concerned, then the only way to comply with the national rule would be to refrain from posting the advertisements on the Internet which the Advocate General found to be consistent with the country of origin principle.¹⁰

5.1.2.1.2. Criminal Proceedings Against Bodil Lindqvist

In the context of personal data, the European Court of Justice has dealt with the publication of personal data on a website.¹¹ The case concerned inter alia the understanding of 'transfer of data to a third country' as provided by article 25 of the 1995 Data Protection Directive.¹² Despite the concrete context of this case,¹³ the reasoning by the court is of general interest.

The court noted that information on the Internet can be consulted by an indefinite number of people living in many places at almost any time,¹⁴ but found that in order to obtain the information on the website in question, an Internet user would have to personally carry out the necessary actions to consult those pages. This means that the website did not contain the technical means to send the information automatically to people who did not intentionally seek access to that website.¹⁵

The court argued that if the directive were interpreted to mean that there is transfer of data to a third country every time that personal data are loaded onto a website, that transfer would necessarily be a transfer to all the third countries where there are the technical means needed to access the Internet which pursuant to article 25(4) of the directive would mean that as long as just one third country would not ensure adequate protection, Member States would be obliged to prevent any personal data from being placed on the Internet.¹⁶ This last argument has probably had significant weight.

5.1.2.2. National Courts in the European Union

5.1.2.2.1. LICRA v. Yahoo! Inc

In the French Yahoo! case, which is further dealt with below,¹⁷ the County Court of Paris dismissed the argument raised by US-based Yahoo!, that the court was not competent to make a ruling in the dispute.¹⁸ The court recognised that the website in question, www.yahoo.com, was directed principally at users based in the United States, with regards to the items posted for sale, the methods of payment envisaged, the terms of delivery, the language and the currency used. The court noted, however, that the auctioning of objects representing symbols of Nazi ideology may be of interest to any person and that the simple act of displaying such objects in France constituted a violation of the French Penal Code.

The court found that this display caused damage in France to the plaintiff who was found justified in demanding the cessation and reparation thereof. The court emphasised that Yahoo! was aware that it was addressing French parties because it transmitted advertising banners in French to users who could be located to make a connection from France. Finally the court noted that any possible difficulties in executing the court's decision in the territory of the US cannot by themselves justify a plea of incompetence. Yahoo! also argued that its servers were installed in the United States.

It should for good measure be stressed that the base for jurisdiction in this case was founded solely on national, French procedural law. As discussed below,¹⁹ this case gave rise to subsequent proceedings in the US.

5.1.2.2.2. Viasat and Canal Digital Denmark v. Another

The question of jurisdiction was discussed in a Danish case,²⁰ concerning the issuance of an injunction against a Columbian resident's website, www.piratdk.com, containing cryptographic keys to decrypt television signals. The website was written in Danish, but probably placed on servers in Switzerland or Russia. The case was rejected on the ground that the Danish tort forum did not provide jurisdiction in cases concerning injunction. The 1968 Brussels Convention did not apply since Columbia is not a contracting state.

5.1.2.2.3. Euromarket Designs Inc v. Peters & Another

In an English trademark case,²¹ an American company which held a UK registered trademark consisting of the words 'Crate & Barrel' took action in connection to an advertisement in a UK magazine and through a website 'www.crateandbarrel-ie.com', by a business in Dublin, Ireland, with the same name. The defendant argued that its advertisement did not constitute use of the mark 'Crate & Barrel' in the United Kingdom, and that it, alternatively, was not 'in the course of UK trade'. The judge did not find that the defendant's advertisement in the UK magazine constituted trade in the UK in the sense of customers buying goods or services for consumption there.²² The same conclusion was reached in connection with the website, where the court attached importance to the fact that the opening page had a reference to the physical building with four floors and that a person who visited the website would see the letters 'ie', indicating an Irish origin, either in www.crateandbarrel-ie.com or www.createandbarrel.ie.²³

The judge concluded that there was no reason why anyone in the UK should regard the website as directed at him.²⁴ The judge noted that an older version of the defendant's website quoted prices in USD, but attached importance to the fact that it was only due to a template which could only work in USD.²⁵ The judge compared the website to a situation where a user would focus a super-telescope into the site concerned, but recognised that other websites, such as that of Amazon.com, have actively gone out to seek world-wide trade, not just by use of the name on the Internet but by advertising its business there, and offering and operating a real service of supply of books to the UK.²⁶ The defendants was found to have had done none of that.

It should be emphasised that this case is a summary judgment concerning the construction of a specific provision in national law, in a specific area which is excluded from the scope of this thesis. It has been argued that the case 'indicates the necessity of finding reasonable indicia in order to determine the country which is targeted by the advertisement in question, be it by use of a trademark or by means of (un)fair competition'.²⁷ It has probably played an important role that neither of the parties had any substantial commercial activity in the UK.²⁸

5.1.2.2.4. 1-800 Flowers Inc v. Phonenames LTD

In another UK trademark case, 1-800 Flowers Inc v. Phonenames LTD,²⁹ Phonenames LTD opposed the trademark registration of '800-FLOWERS' by US-based 1-800-Flowers Inc. The case dealt with whether a US-based business's website constituted use in the UK. In this case, the judges found, based on the evidence, that there were no actual use of the mark in the UK, and rejected that a telephone call from the UK to the US telephone number necessarily involves a use of the mark in the UK. It was also rejected that the evidence concerning the website was sufficient to justify the conclusion that accessing the website amounts to use of the mark at the point of access. It was emphasised that the evidence did not disclose the extent to which the website had in fact been accessed from the UK, and that the US-based business never had a place of business in the UK, and that the services which it provides are performed outside the UK, and, so far as the evidence goes, the only piece of advertising directed specifically at the UK was one advertisement in an independent newspaper.³⁰

It was emphasised that the services, to which the mark related, were the receiving and transfer of orders for flowers and floral products, and that, at the date of registration, those services were performed in the applicant's switching centre in the US and to a lesser extent through the website, equally administered in the US. For that reason the services to which the mark related were not found to be located in the United Kingdom.³¹ In the original, appealed case, the judge stated that 'the mere fact that websites can be accessed anywhere in the world does not mean, for trademark purposes, that the law should regard them as being used everywhere in the world. It all depends upon the circumstances, particularly the intention of the website owner and what the reader will understand if he accesses the site'. The judge noted that in other fields of law, publication on a website may well amount to a universal publication.³²

There was not attached importance to the fact that flowers had actually been delivered in the United Kingdom as the end-result of the applicant's dealing with orders. It was emphasised that knowledge about the service, in the absence of substantive advertising in the United Kingdom, would have arisen from 'overspill' advertising contained in US publications circulating in the United Kingdom or from personal knowledge on the part of people who had lived in or visited the US, or from recommendations to others by such people.³³

Lord Justice Buxton elaborated in general on the concept of 'use in the United Kingdom' by means of a website.³⁴ The judge noted that the implications of Internet use for issues of jurisdiction are clearly wide-ranging, and that the essence of the problem is to fit the factual circumstances of Internet use into the substantive rules of law applying to the many and very different legal issues that the Internet affects. The judge thus rejected that there will be one uniform rule, specific to the Internet, that can be applied in all cases of Internet use. The judge rejected that for instance, 'publication' of statements in a particular jurisdiction by downloading from the Internet according to the rules of the law of defamation or of misrepresentation was of at least strong analogical relevance to whether a trademark downloaded from the Internet had been 'used' in the jurisdiction to which it was downloaded.³⁵ The judge emphasised that caution should be used when for example comparing 'use of a trademark' and 'infringement of a trademark'.³⁶

Paragraph 137: 'There is something inherently unrealistic in saying that A "uses" his mark in the United Kingdom when all that he does is to place the mark on the Internet, from a location outside the United Kingdom, and simply wait in the hope that someone from the United Kingdom will download it and thereby create use on the part of A. By contrast, I can see that it might be more easily arguable that if A places on the Internet a mark that is confusingly similar to a mark protected in another jurisdiction, he may do so at his peril that someone from that other jurisdiction may download it; though that approach conjured up in argument before us the potentially disturbing prospect that a shop in Arizona or Brazil that happens to bear the same name as a trademarked store in England or Australia will have to act with caution in answering telephone calls from those latter jurisdictions'.³⁷

The judge found that the idea of 'use' in certain areas would require some active step that goes beyond providing facilities which enables users to bring the mark into the area, and noted that 'of course, if persons in the United Kingdom seek the mark on the Internet in response to direct encouragement or advertisement by the owner of the mark, the position may be different; but in such a case the advertisement or encouragement in itself is likely to suffice to establish the necessary use'.³⁸

5.1.2.3. United States³⁹

5.1.2.3.1. Zippo Manufacturing Company v. Zippo Dot Com

The most important US-ruling on this matter, Zippo Manufacturing Company v. Zippo Dot Com,⁴⁰ concerned a domain-name dispute, where Pennsylvania-based Zippo Manufacturing Company filed a complaint against California-based Zippo Dot Com alleging trademark dilution, infringement, and false designation for the defendants use of zippo.com, zippo.net and zipponews.com. Zippo Dot Com moved to dismiss for lack of personal jurisdiction and improper forum.

Zippo Dot Com's contacts with Pennsylvania had occurred almost exclusively over the Internet. Advertising for Zippo Dot Com's service to Pennsylvania residents involved posting information about its service on its website which was accessible to Pennsylvania residents via the Internet. Zippo Dot Com had approximately 140.000 paying subscribers worldwide, hereof approximately two percent (3.000) residing in Pennsylvania. Zippo Dot Com had entered into agreements with seven Internet access providers in Pennsylvania to permit their subscribers to access Zippo Dot Com's news service.

An overview of US constitutional law on long arm jurisdiction as provided in the Zippo Ruling:⁴¹

Jurisdiction under US federal law is based on the law of the state of the court seized which may be exercised within constitutional limitations. The constitutional limitations on the exercise of personal jurisdiction differ depending upon whether a court seeks to exercise general or specific jurisdiction over a non-resident defendant. General jurisdiction permits a court to exercise personal jurisdiction over a non-resident defendant for non-forum related activities when the defendant has engaged in 'systematic and continuous' activities in the forum state.

In the absence of general jurisdiction, specific jurisdiction permits a court to exercise personal jurisdiction over a non-resident defendant for forum-related activities where the 'relationship between the defendant and the forum falls within the 'minimum contacts' framework' and its progeny. The Zippo case concerned specific personal jurisdiction. In order for the exercise of specific personal jurisdiction over a non-resident defendant to be appropriate, three requirements must be satisfied. I.e. 1) the defendant must have sufficient 'minimum contacts' with the forum state, 2) the claim asserted against the defendant must arise out of those contacts, and 3) the exercise of jurisdiction must be reasonable.

The minimum contacts analysis concerns 'whether the defendant purposefully established' contacts with the forum state, entailing that defendants who reach out beyond one state and create continuing relationships and obligations with the citizens of another state are subject to regulation and sanctions in the other State for consequences of their actions. It should, however, be foreseeable that the conduct and connection with the forum state are such that he should reasonably expect to be haled into court there. Jurisdiction is proper where contacts proximately result from actions by the defendant himself that create a 'substantial connection' with the forum State.

Exercise of jurisdiction is reasonable if it does not offend traditional notions of fair play and substantial justice. When determining the reasonableness of a particular forum, the court must consider the burden on the defendant in light of other factors including: 2) the forum state's interest in adjudicating the dispute, 2) the plaintiff's interest in obtaining convenient and effective relief, at least when that interest is not adequately protected by the plaintiff's right to choose the forum, 3) the interstate judicial system's interest in obtaining the most efficient resolution of controversies and 4) the shared interest of the several states in furthering fundamental substantive social policies.

It has been established that jurisdiction cannot be avoided merely because the defendant does not physically enter the forum state, since it is an inescapable fact of modern commercial life that a substantial amount of commercial business is transacted solely by mail and wire communications across state lines, thus obviating the need for physical presence within a State in which business is conducted. It was found that it is proper to exercise jurisdiction when an entity intentionally reaches beyond its boundaries to conduct business with foreign residents.

The court found that, based on a review of the available cases and materials, that the likelihood that personal jurisdiction can be constitutionally exercised is directly proportionate to the nature and quality of commercial activity that an entity conducts over the Internet. The court found that a website could be assessed in accordance with a sliding scale, where at one end the defendant clearly does business over the Internet, i.e. if the defendant enters into contracts with residents of a foreign jurisdiction that involve the knowing and repeated transmission of computer files over the Internet, personal jurisdiction is proper. At the opposite end are situations where a defendant simply posts information on an Internet website, which is accessible to users in foreign jurisdictions. Such a passive website does little more than make information available to those who are interested in it is not grounds for the exercise personal jurisdiction. In between those situations are (interactive) websites where a user can exchange information with the host computer. In these cases, the exercise of jurisdiction is determined by examining the level of interactivity and commercial nature of the exchange of information that occurs on the website.

The court concluded that Zippo Dot Com's electronic interaction with Pennsylvania residents constituted the purposeful availment of doing business in Pennsylvania. The court found that Zippo Dot Com had done more than creating an interactive website, through which it exchanged information with Pennsylvania residents, and that Zippo Dot Com repeatedly and consciously chose to process Pennsylvania residents' applications and to assign them passwords, presumably in order to profit from those transactions. The court emphasised that Zippo Dot Com contracted with approximately 3.000 individuals and seven Internet access providers in Pennsylvania, but noted that there need not be numerous forum-related activities, since it is clear from case law that the test on 'substantial connection' focus on the 'nature and quality' of the contacts with the forum and not the quantity of those contacts.

It was emphasised that Zippo Dot Com knew that the result of these contracts would be the transmission of electronic messages into Pennsylvania, and that the transmission of these files was entirely within its control since it was under no obligation to sell its services to Pennsylvania residents. If a corporation determines that the risk of being subject to personal jurisdiction in a particular forum is too great, it can choose to sever its connection to the state.

The exercise of jurisdiction was found to be reasonable since Pennsylvania had a strong interest in adjudicating disputes involving the alleged infringement of trademarks owned by resident corporations. The court found that this assumption combined with regard to the plaintiff's choice to seek relief in Pennsylvania outweighed the burden on the defendant, especially on ground of its consciously conduct of business in Pennsylvania in order to pursue profits. On these grounds, the court found that personal jurisdiction was appropriately exercised.

5.1.2.3.2. Gator.com v. L.L. Bean

Another US case, Gator.com v. L.L. Bean,⁴² dealt with Gator.com's pop-up-software which offered coupons for one of L.L. Bean's competitors, Eddie Bauer, via a pop-up window, when a user with the Gator-program installed, would visit L.L. Bean's website. L.L. Bean, who was selling clothing and outdoor equipment, was established in Maine, and maintained stores in Maine, Delaware, New Hampshire, Oregon, and Virginia. L.L. Bean was selling over one billion dollars worth of merchandise annually to consumers in 150 different countries, hereof a large percentage through mail order and Internet business. L.L. Bean sold for millions of dollars worth of products in California per year and maintained relationships with numerous California vendors. L.L. Bean was not authorised to do business in California, had no agent for service of process in California, and is not required to pay taxes in California.

L.L. Bean's counsel mailed Gator.com a cease-and-desist letter requesting that Gator stop its pop-up windows. Gator.com responded by filing a declaratory judgment action, in California, requesting a judgment that the Gator program 'does not infringe, or dilute, directly or contributorily, any trademark held by L.L. Bean and does not constitute unfair competition, a deceptive or unfair trade or sales practice, false advertising, fraud, or any other violation of either federal or state law'.

California permits the exercise of personal jurisdiction to the full extent permitted by due process, which requires that there are minimum contacts with the forum state such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice. The court found there to be general jurisdiction, which requires the contacts with the forum state must be of a sort that approximate physical presence. The court noted that factors to be taken into consideration are whether the defendant makes sales, solicits or engages in business in the state, serves the state's markets, designates an agent for service of process, holds a license, or is incorporated there. The court focused on the 'economic reality' of the defendants' activities rather than on a mechanical check-list.

The court noted that in applying the 'substantial' or 'continuous and systematic' contacts test, courts have focused primarily on some kind of deliberate 'presence' in the forum state, including physical facilities, bank accounts, agents, registration, or incorporation. In addition, courts have looked at whether the company has engaged in active solicitation toward and participation in the state's markets (the economic reality). Recognising that L.L. Bean had only few of the factors traditionally associated with physical presence, the court found that there was general jurisdiction in the light of L.L. Bean's extensive marketing and sales in California, its extensive contacts with California vendors, and the fact that, as alleged by Gator, its website was clearly and deliberately structured to operate as a sophisticated virtual store in California.

The court noted that even if the only contacts L.L. Bean had with California was through its virtual store, general jurisdiction would be consistent with the 'sliding scale' test⁴³ because L.L. Bean's website was highly interactive and very extensive. The court noted that an online store can operate as the functional equivalent of a physical store when the nature of the commercial activity is of a substantial enough nature such as it 'approximates physical presence'. The court emphasised that as with traditional business contacts, the most reliable indicator of the nature and extent of Internet contact with the forum state is the amount of sales generated in the state by or through the website.

The court found it reasonable to assert general jurisdiction over L.L. Bean while noting that businesses who structure their activities to take advantage of the opportunities in electronic commerce must reasonably anticipate that those activities, potentially, will subject them to courts in the areas they have targeted.

5.1.2.3.3. Yahoo! Inc v. LICRA

As mentioned above, Yahoo! filed a counter-suit before an American court in response to the French ruling.⁴⁴ Yahoo! claimed that it lacked the technological means to block French citizens from accessing the Yahoo.com auction site to view materials which violated the French order. Yahoo! argued that such a ban would infringe impermissibly upon its rights under the First Amendment to the United States Constitution.⁴⁵ Accordingly, Yahoo! filed a complaint seeking a declaratory judgment that the French court's orders were neither cognisable nor enforceable under the laws of the United States.

In its procedural overview, the court noted that Yahoo! services ending in the suffix, '.com', without an associated country code as a prefix or extension use the English language and target users who are residents of, utilise servers based in and operate under the laws of the United States. Other Yahoo! subsidiary corporations operate regional Yahoo! sites and services in twenty other nations. Each regional websites contains the host nation's unique two-letter code as either a prefix or a suffix in its URL (for example www.yahoo.fr or www.fr.yahoo.com). Yahoo!'s regional sites used the local region's primary language, targeted the local citizen, and operated under local laws.

In its overview, the court firstly recognised that the case in question presented novel and important issues, concerning issues of policy, politics, and culture, arising from the global reach of the Internet, and which are beyond the purview of one nation's judiciary. The court found it critical to define at the outset what was and was not at stake in the proceeding.

'This case is not about the moral acceptability of promoting the symbols or propaganda of Nazism. Most would agree that such acts are profoundly offensive. By any reasonable standard of morality, the Nazis were responsible for one of the worst displays of inhumanity in recorded history. This Court is acutely mindful of the emotional pain reminders of the Nazi era cause to Holocaust survivors and deeply respectful of the motivations of the French Republic in enacting the underlying statutes and of the defendant organisations in seeking relief under those statutes. Vigilance is the key to preventing atrocities such as the Holocaust from occurring again.

Nor is this case about the right of France or any other nation to determine its own law and social policies. A basic function of a sovereign state is to determine by law what forms of speech and conduct are acceptable within its borders. In this instance, as a nation whose citizens suffered the effects of Nazism in ways that are incomprehensible to most Americans, France clearly has the right to enact and enforce laws such as those relied upon by the French Court here.

What is at issue here is whether it is consistent with the Constitution and laws of the United States for another nation to regulate speech by a United States resident within the United States on the basis that such speech can be accessed by Internet users in that nation. In a world in which ideas and information transcend borders and the Internet in particular renders the physical distance between speaker and audience virtually meaningless, the implications of this question go far beyond the facts of this case. The modern world is home to widely varied cultures with radically divergent value systems. There is little doubt that Internet users in the United States routinely engage in speech that violates, for example, China's laws against religious expression, the laws of various nations against advocacy of gender equality or homosexuality, or even the United Kingdom's restrictions on freedom of the press. If the government or another party in one of these sovereign nations were to seek enforcement of such laws against Yahoo! or another U.S.-based Internet service provider, what principles should guide the court's analysis?

The Court has stated that it must and will decide this case in accordance with the Constitution and laws of the United States. It recognises that in so doing, it necessarily adopts certain value judgments embedded in those enactments, including the fundamental judgment expressed in the First Amendment that it is preferable to permit the non-violent expression of offensive viewpoints rather than to impose viewpoint-based governmental regulation upon speech. The government and people of France have made a different judgment based upon their own experience. In undertaking its inquiry as to the proper application of the laws of the United States, the Court intends no disrespect for that judgment or for the experience that has informed it.'⁴⁶

The court found that enforcement of the French order by a United States court would be inconsistent with the First Amendment, the factual question of whether Yahoo! possesses the technology to comply with the order was found to be immaterial, since it would still involve an impermissible restriction on speech even if Yahoo! did possess such technology.

The court found that the case in question was not an attempt to re-litigate or disturb the French court's application of French law or its orders with respect to Yahoo!'s conduct in France. The purpose of the action was solely to determine whether a United States court may enforce the French order without running afoul of the First Amendment. For that reason, the court found it immaterial whether Yahoo! could technically comply with the French order.

The court emphasised that no legal judgment has any effect, of its own force, beyond the limits of the sovereignty from which its authority is derived. The extent to a state, honours the judicial decrees of foreign nations is a matter of choice, governed by 'the comity of nations' which is neither a matter of absolute obligation, nor of mere courtesy and good will, upon the other. It was noted that United States courts generally recognise foreign judgments and decrees unless enforcement would be prejudicial or contrary to the country's interests which entails that courts are not required to give effect to foreign judicial proceedings grounded on policies which do violence to its own fundamental interests.

The court found that the French order's content and viewpoint-based regulation of the website clearly would be inconsistent with the First Amendment, but noted that the case was uniquely challenging since the Internet allows one to speak in more than one place at the same time. Although France has the sovereign right to regulate what speech is permissible in France, the court emphasised that it may not enforce a foreign order that violates the protections of the US Constitution by chilling protected speech that occurs simultaneously within US borders. The reason for limiting comity in this area was found to be sound. In the lack of international standards with respect to speech on the Internet and an appropriate treaty or legislation addressing enforcement of such standards to speech originating within the United States, the principle of comity was found to be outweighed by the Court's obligation to uphold the First Amendment.

5.1.2.3.3.1. Yahoo! Inc v. LICRA (Appeal)

The French defendants moved to dismiss on the basis that the US court lacked personal jurisdiction over them. That motion was denied by the court, and appealed by the defendants.⁴⁷ In the appeal, the court found that if Yahoo! violated the speech laws of another nation, it must wait for the foreign litigants to come to the United States to enforce the judgment before its First Amendment claim may be heard by a US court. The French judgment and fines could only be collected in the United States since the French court had prohibited collection from Yahoo!'s French subsidiary and Yahoo! had no other assets in France.

The court emphasised that Yahoo! obtained commercial advantage from the fact that users located in France were able to access its website. The court noted that the company displayed advertising banners in French to those users whom it identified as French, and that Yahoo! could not expect both to benefit from the fact that its content may be viewed around the world and to be shielded from the resulting costs. The court emphasised that France was within its rights, as a sovereign nation, to enact hate speech laws and the defendants were within their rights to bring suit in France against Yahoo! for violation of French speech law. The only adverse consequence experienced by Yahoo! was the need to wait for the defendants to come to the US to seek enforcement, It was not found to be wrongful for the French organisations to place Yahoo! in such position. A dissenting judge found that the defendants directed their (legal) actions toward Yahoo! in California sufficiently to confer in personam jurisdiction. The judge attached importance to the significant, and daily accruing, fines.

5.1.2.4. Australia

5.1.2.4.1. Dow Jones & Company Inc v. Gutnick

The Australian case Dow Jones & Company Inc v. Gutnick⁴⁸ concerned an article which contained allegations against Mr Gutnick, who were said to have engaged in manipulation of share prices and had associated with an American money launderer and tax evader. The article was posted inter alia on the website of US-based Dow Jones, and which was available worldwide by subscription. 1.700 subscribers were resident in Australia. The Australian High Court found that the Supreme Court of Victoria had sufficient base (place of the tort) for claiming jurisdiction in the tort case initiated by Mr. Gutnick, and which was confined to the damages in Victoria.

The court noted that the special features of the Internet present peculiar difficulties for the legal regulation of its content and, specifically, for the exclusion of access in defined jurisdictions and that such difficulties may have a bearing on the question of whether a particular jurisdiction has an advantage in regulating content published and accessed on the Internet. But the court emphasised that this does not mean that the Internet is, or should be, a law-free zone.⁴⁹ The high court rejected that the publication of the online article occurred at the servers maintained in the state of New Jersey, and noted that 'a publisher, particularly one carrying on the business of publishing, does not act to put matter on the Internet in order for it to reach a small target'. The court also noted that 'it may well be that "firewalls" to deny access to the unintended or non-subscribing reader are at present perhaps imperfect ... Publishers are not obliged to publish on the Internet ... If the potential reach is uncontrollable then the greater the need to exercise care in publication'.⁵⁰

The court found that a publisher should understand and accept the risk of publishing in a multiplicity of jurisdictions and that the 'fact that publication might occur everywhere does not mean that it occurs nowhere'.⁵¹ The court emphasised that the most important event, so far as defamation is concerned, is the infliction of the damage, and that occurs at the place (or the places) where the defamation is comprehended. The court rejected the idea that statements made on the Internet should be less 'localised' than statements made in any other media.⁵²

Each publication does under Australian law give rise to separate causes of action and it is established by case law that a single publication rule, as known in the US, can only be introduced throughout Australia by statute.⁵³ The court did not find that the forum was clearly inappropriate, noting that the plaintiff had confined his claim to the damage suffered in Victoria as a consequence of the publication that occurred in that State.

The court established that the place of the wrong needs to be ascertained in a principled fashion, based on an analysis of the relevant legal issues in view of the rights, interests and legitimate expectations of the parties. The proper way to localise the tort is 'when the tort is complete, is to look back over the series of events constituting it and ask the question, where in substance did this cause of action arise?'. The court rejected to adopt the place of uploading as choice of applicable law and stressed that it is not an excessive burden to ask a publisher of potentially defamatory material to be aware of defamation laws of the place where the possibly defamed person resides.⁵⁴

5.1.2.4.2. Ward Group Pty Ltd v. Brodie & Stone Plc

In this case,⁵⁵ Australian-based Ward Group, the plaintiff, argued that UK-based Brodi & Stone was liable for selling products, similar creams and lotions under the name 'Restoria', to retailers, who advertised and sold the products on the Internet. The application of the Ward Group was dismissed, and the judge attached importance to the impression that the advertising of the UK Restoria products, together with numerous other products, for sale on the Internet by the website proprietors was not specifically targeted or directed at customers in Australia, but rather targeted at potential purchasers anywhere in the world at large.⁵⁶ The only evidenced sales of the UK Restoria products in Australia was evidence adduced by the Ward Group's solicitors ('trap orders').

It was noted that the website displayed the price in British pounds with a US dollar amount in brackets, and that a drop-down menu concerning shipping destination contained a country box containing a list of various countries, including Australia.⁵⁷ The judge did not find those circumstances to indicate a specific intention to market the goods to consumers in Australia. The circumstances indicated no more than that the website proprietors expected that there may be potential consumers in Australia (and elsewhere), that might be interested in purchasing any of the products advertised on the websites.⁵⁸

The judge also attached importance to the arguments that because Restoria products were available from a large number of retail outlets in Australia and on the Ward Group's websites, which rendered it unlikely that Australian consumers would seek out or become aware of the UK websites. Purchasing from those websites would make little economic sense due to higher prices and higher postage costs.⁵⁹

The judge seems to have attached importance, on the trademark question, to the fact that the website was uploaded in the UK and downloaded by the purchaser in Australia,⁶⁰ and noted that the only specific representations made in Australia were the representations made in the course of the trap purchases.⁶¹ It was noted that if a statement is directed from one place to another place where it is known or even anticipated that it will be received by the plaintiff, there is no difficulty in saying that the statement was, in substance, made at the place to which it was directed, whether or not it is there acted upon. When statements on the Internet are made to the world at large, there is some difficulty in regarding them as having been made by a website in a particular jurisdiction, whereas statement directed at persons in a particular jurisdiction should be treated as having been made and received in that jurisdiction.⁶²

In summary, the judge stated that use of a trademark on the Internet, uploaded on a website outside of Australia, without more, is not a use by the website proprietor of the trademark in each jurisdiction where the mark is downloaded. However, as explained above, if there is evidence that the use was specifically intended to be made in, or directed or targeted at, a particular jurisdiction, then there is likely to be a use in that jurisdiction when the mark is downloaded.⁶³

5.1.3. Connecting Factors

All of the above-mentioned cases deal with the particular problems relating to where online activities take place, or where a website can be said to be directed (or targeted).⁶⁴ Precaution should be taken when considering the cases, since they deal with different areas of law, under different conditions and in particular under different jurisdictions. The examination of cases does not provide an exhaustive overview of case law in the area. It should be emphasised that the above-mentioned cases also reflect the interaction by substantial law and procedural law in the court's pursuance of justice. For that reason, it may be a dangerous task to try to derive a particular, general meaning. However, as the purpose is to determine the risk for the Business of being met with legal requirements under foreign jurisdiction, a deduction of relevant factors seem reasonable to carry out, as long as the outcome is read with caution.

It is recognised in all the cases that the Internet is problematic in the context of jurisdiction, and that information on the Internet, in principle, is available wherever there is access to that network. All of the cases seem to adopt an approach which attach importance to the intentions behind the website activity in combination with other factors which may indicate where the activity in question is directed, or to use the US term, where the business has availed itself to particular jurisdictions. It was noted that businesses which leave their websites open for viewing in all states take the risk of being sued before the courts of each country in which their site can be consulted.⁶⁵

In a commentary⁶⁶ to the above-mentioned Ward Group case, it was argued that 'although the decision does not specify the criteria for determining when a foreign-operated website is specifically targeted or directed at customers in Australia, it suggests that Australian courts are willing to accept the principles of recent UK and US decisions that assess a number of factors, including 1) whether the website operator is actively engaged in other forms of advertising or marketing in the jurisdiction (such as television or newspaper advertising), 2) the number of sales via the website to customers in the jurisdiction is not merely random or fortuitous, 3) the website intentionally functions to accept purchases in the currency of the jurisdiction or is specially enabled to process and deliver orders from and to the jurisdiction and 4) other factors, such as the offer of local after-sales support, including toll-free numbers that may be readily used by residents in the jurisdiction'.

There exists no check-list on connecting factors,⁶⁷ but the Nordic Consumer Ombudsmen have compiled a list of connecting factors to be considered when determining whether the national legislation of the Nordic countries is applicable, i.e. if the marketing may be deemed to be directed at that market. An overall assessment is to be carried out, but including in particular the following factors: 1) which languages, currencies and other national characteristics are used, 2) the extent to which the operation or the service in question is otherwise marketed in the market in question, 3) the extent to which there is a connection between the marketing on the Internet and other marketing activities in the market in question and 4) the extent to which the business accepts the conclusion of contracts with consumers belonging to the Nordic country in question.⁶⁸

When it has to be determined where a website is directed, it seems appropriate to adopt an approach which takes into consideration the overall impression of the website, including in particular the commercial activity in the jurisdiction in question and the (assumed) intention of the business. The overall impression of a website may be determined by examining a number of connecting factors,⁶⁹ which may include 1) access to the website, 2) magnitude and nature of business activity, 3) the presentation and relevance of the website, 4) marketing measures and 5) the place of business and technical infrastructure. As provided in the Gator case, it seems reasonable to focus on the economical reality of the Business's activity rather than a mechanical check-list.

The mentioned factors provide an indication of relevant factors to examine when one has to determine the connection to a particular state of an activity carried out through a website. It should be emphasised, as suggested by Lord Justice Buxton, that different law suits may require different degrees of connection. In tort cases for example, it seems reasonable to expect that the risk of cross-border law enforcement is directly proportional to the amount of harm which occurs in the state in question. In connection to a contract, the circumstances leading to the conclusion of the contract and the obligations under the contract are more important. A similar reasoning seems to be found in the Gutnick case, where the court localised the tort by examining, ex post, the series of events constituting the tort. In the US cases, the courts deal generally with the distinction between general and specific jurisdiction.

5.1.3.1. Access to the Website

All of the above-mentioned cases recognise that information on a website in principle is available worldwide. The Lindqvist case showed that availability in the particular context was not sufficient to constitute transfer of personal data. It should be emphasised that any other result would render it virtually impossible to post personal data on a website. It seems like all the cases indicate that mere access is not sufficient for an activity to be of relevance for a particular jurisdiction. This accounts in particular for the effect of (unforeseeable) spill-overs as mentioned in the 1-800 Flower case.

In the Yahoo! case, the French court recognised that Yahoo!'s auction site was not principally directed at French web surfers, but the court attached importance to the fact that Yahoo! was aware that French surfers were accessing the site.⁷⁰ In the Gutnick case, it was noted that a publishing-business in particular does not act to put matter on the Internet in order for it to reach a small target, and that if the potential reach is uncontrollable then the greater the need to exercise care in publication. In both the Gutnick case and the Gator case, the respective judges emphasised that risk of reaching different jurisdictions should, at least in principle, be put on the publisher. This should be viewed in the particular context, where the businesses also had substantial commercial activity in the areas in question.

The access to the Business's website must be a factor of fundamental importance. If users in a particular jurisdiction do not have access to the website, it is difficult to argue that a website is directed towards that state or that the activity in general is of relevance for that jurisdiction. Some of the cases deal with the question of geographical delimitation. In particular, the Yahoo! case seems to go a step further to assume jurisdiction if the business does not put reasonable (technical) means of geographical delimitation into use. That question in general, and the Yahoo! case in particular, is further dealt with below in connection with technical delimitation. In the Troostwijk case, the Advocate General found a website to be available in all states where there is access, but he opened for possibilities in technical delimitation as a matter for the national court to decide. In a previously proposed Hague Convention on Jurisdiction and Foreign Judgments in Civil and Commercial Matters, it was suggested that activities should not be regarded as being directed to a state if could be demonstrated that reasonable steps was taken to avoid concluding contracts with consumers habitually resident in the state.⁷¹

5.1.3.2. Magnitude and Nature of Business Activity

In particular, the amount and nature of the commercial activity in the state in question seem to be important. In the context of trademarks, it has been laid down that the existence and degree of commercial activity in the place where the trademark is registered is of importance.⁷² In the mentioned cases under US law, the court has attached importance to the amount of commercial transactions in the targeted state.

In the Gutnick case, it was not so much the amount of business, but rather that Dow Jones for commercial reasons chose to serve subscribers in Australia. A similar reasoning can be identified in the US case law, where, for example, the court in the Zippo case emphasised that Zippo knew that the result of the contracts with subscribers in the particular state would lead to transmission of electronic messages into that state. In that case, it was noted that numerous forum-related activities are not necessary, since the test on 'substantial connection' focus on the 'nature and quality' of the contacts with the forum and not the quantity of those contacts.

In general, it can be said that the commercial activity in a particular market reflects the relevance for the Business of that particular market. As mentioned in the Gator-case, the most reliable indicator of the nature and extent of Internet contact with the forum state is the amount of sales generated in the state by or through the website. It does not necessarily matter whether the commercial activity derives from the website or other commercial activities. The website must, however, be linked to the commercial activities in the market in question. If the Business chooses to enter contracts with users in a particular market, it must inevitable be an indication of interest in the market in question.

Often, the Business will be aware of the physical delivery address which may provide an assumption that the activity is directed towards a particular state. This information is not necessarily available when the product is downloaded by the Purchaser.⁷³ Information about the issuing location of the User's credit card may also provide information about the location, but this approach does not, as stated in the Gutnick case, afford a universally reliable means of ascertaining the geographic location of the user.⁷⁴ If the Business engages in the selling of products which are delivered online, it may be argued that the Business should all the more be careful to obtain information of the geographical location of the User.

5.1.3.3. The Presentation and Relevance

The presentation of the website, including choice of top-level-domain, language and currency may indicate where a website is directed. The website may also be designed in accordance with national trust mark schemes. The same counts for trade terms which for example may state prices in local currencies or carrying charges for the shipment of goods to a particular market. This was the case in the Ward Group case, where the possibility of choosing Australia as place of delivery was also emphasised along with indicating prices in UK and US currency, but notably not in Australian dollars. None of those factors lead to departure from the overall impression that the website was not directed towards Australia. In the Ward Group case, importance was attached to the relevance of the website, by considering the economic sense, for the purchaser, in buying from the particular website. It has been argued that certain international currencies, such as USD and the Euro, should not be used as a single denominator for jurisdiction.⁷⁵

In the Gator case, the court attached importance to the fact that L.L. Bean's website was clearly and deliberately structured to operate as a sophisticated virtual store in California. The court noted that the nature of the commercial activity was of a substantial enough nature such as it approximates physical presence. The amount of commercial transactions has probably also played a significant role in that connection.

In the Yahoo! cases, both the French and the American courts attached importance to the fact that advertisement on the website was presented in the local language (French), despite the website in general was presented in English. In the Euromarket case, the judge attached importance to the fact that the domain name of the Crate and Barrel contained the letters 'ie' which, in connection with other factors, lead to the activity being only related to Ireland. It has been argued that top-level-domains are used to signify a physical-world location.⁷⁶ In the US Yahoo! case, the court noted that Yahoo! had divided its activities into separate jurisdictions through the use of national prefixes and suffixes. However, both the French and the American courts found the 'American' activities to be directed towards France.

5.1.3.4. Marketing Measures

In the two English trademark cases, the courts focused on the amount of marketing activities, the businesses had carried out in the market, where they claimed use of the trademark. In the Euromarket case, the judge found, under the particular circumstances, that the advertisement in a UK did not constitute use of the trademark in UK. Similarly in 1-800 Flowers case, the judge did not find that a single piece of advertisement in an independent newspaper was sufficient to constitute use in that state. The judge recognised that the position could be different if users would seek the mark on the Internet as a consequence of marketing activities in the state in question. In the Gator case, the judge emphasised the relevance of whether the company has engaged in active solicitation toward and participation in the state's markets.

5.1.3.5. Place of Business and Technical Infrastructure

The place of business, incorporation and technical equipment is of particular interest in connection to law enforcement, since a state as a starting point has powers to prescribe, adjudicate and enforce within its own territory. It is common for the cases dealt with above and the test set-up of this thesis, that they deal with entities without a physical establishment in the targeted market.

Yahoo! had a subsidiary company in France, but the actions related to the US entity. Enforcement of the French order could not be carried out against the French company. Subsidiary companies are normally independent entities which as a starting point cannot be held liable for activities carried out by a parent company. It cannot, however, be excluded that under national law, it will be allowed to pierce the corporate veil.⁷⁷ This was not allowed under French law in the Yahoo! case.

If a business establishes itself in a particular market, it may be taken as a factor indicating that that business's activities are intended to be carried out on that market. It is on the other hand clear from the cases, that lack of establishment is not tantamount to lack of jurisdiction in that place. Under US law and in order to ascertain general jurisdiction, there must be contacts approximating physical presence. The court noted in the Gator case that factors to be taken into consideration include physical facilities, bank accounts, agents, registration, or incorporation. In that case, the court attached importance inter alia to the business's extensive contacts with California vendors. The requirement for specific jurisdiction under US law is less stringent than general jurisdiction, and will be a sufficient base for cross-border law enforcement as dealt with in this thesis, since the claim will relate to activities related to the Business's website.

In the 2000 E-Commerce Directive, it is emphasised that the presence and use of the technical means and technologies required to provide the service (for example servers) do not, in themselves, constitute an establishment of the provider.⁷⁸ This directive has only effect within the Internal Market, and does not in general exclude a state from considering the place of technical equipment when determining where a website activity is directed. This could in particular be of relevance when for example an US company has placed servers in Europe in order for European-based users to get faster access to the website activities.

In the 1-800 Flowers case, the judge noted that the services related to the trademark was carried out at the switching centre in the US and to a lesser extent through the website, equally administered in the US. The judge thus seems to focus on the place where the business's activities are carried out, rather than whether the particular market is targeted. The judge noted, however, that it all depends upon the circumstances, particularly the intention of the website owner and what the reader will understand if he accesses the site.

5.2. Geographical Delimitation

The Internet is a borderless environment.⁷⁹ This means that it, as a starting point, is possible to access information on a website from each and every connected computer, independent of where in the world that computer might be situated.⁸⁰ Geographical delimitation in this thesis covers the possibility of excluding users from certain states. The focus will mainly be on technical delimitation, which is geographical delimitation carried out through technological means as elaborated on below.⁸¹ There are no generally accepted standards for specifying where a website is targeted, and as established above,⁸² it seems common to assess this question in the light of an overall impression of the website. Accepting this approach, it is difficult to provide clear-cut answers to the effectiveness as a means of avoiding particular markets.

It seems reasonable to assume that there is some kind of direct proportionality between user's access to a website and cross-border law enforcement from the state of the users. By employing technical measures, it is possible to limit the legal risk by targeting only particular states.⁸³ It has on the other hand been argued that the only way to secure the Internet by technological means may be to build a parallel public international network which focus on existing sovereignties.⁸⁴ In connection to the Yahoo! case, it was noted that 1) the tribunal demonstrated the principal of how technology may be used to make law effective and 2) that although the tribunal’s solution was not able to filter approximately 20% of targeted users, it did reflect the truism that no law is 100% efficient.⁸⁵

In the case of Twentieth Century Fox Film Corporation v. iCraveTV,⁸⁶ it was found that a requirement of typing a Canadian zip-code was not sufficient to avoid infringing US law in connection to the streaming of copyrighted programs. The typing of the zip-code was combined with the requirement of clicking on an 'In Canada' icon (instead of clicking the 'Not in Canada' icon) and agreeing to terms of use including another confirmation of the user being located in Canada. The activity was directed towards Canadian users, but there was nothing baring US users from typing in a Canadian zip-code. It has been emphasised that iCraveTV's Canadian zip-code was posted on the site.⁸⁷ The injunction could probably not be enforced in Canada,⁸⁸ and it should be emphasised that the case concerned copyright which protects concerns other than those involved with unfair competition law.

Other means such as stating that the website is directed towards certain states, may also be applied by the Business.⁸⁹ This approach resembles the technical delimitation, where the purpose is to bar access either to the website in general or certain functions/information in particular.⁹⁰ The main difference lies in the manner in which the exclusion is carried out. Statements, excluding users from particular jurisdiction, is likely to be a relevant factor to be considered, but the weight will depend on the effectiveness of the measure⁹¹ and the reality of the business, including in particular whether the Business enters contracts with users in those jurisdictions.⁹² It should for good measure be mentioned that problems may arise if for example a disclaimer is posted in English and French law requires such disclaimers to be drafted in French in order to be legally binding upon the User.⁹³

5.2.1. Technical Delimitation

If the Business successfully prevents users from a certain state to get access to the website, it is, all else being equal, difficult to argue that harm has been committed in that state. Even though the delimitation does not prevent access by all users from a particular state, the Business may argue that its activities are not intentionally directed towards the market in question. The delimitation may concern access to the entire website or only certain parts hereof, such as specific product information, certain offers or the contracting mechanism.

The County Court of Paris ordered in May 2000,⁹⁴ that US-based Yahoo! Inc should take all necessary measures to dissuade and make impossible any access, by French users, via yahoo.com to their auction service for Nazi merchandise.⁹⁵ Yahoo! argued that there was no technical solution which would enable it to comply fully with the terms of the court order. A panel of experts was appointed to examine the various technical solutions that could be implemented by Yahoo! in order to comply with that order. Based on this expert statement, the County Court of Paris ordered, in November 2000,⁹⁶ Yahoo! to comply with the injunctions contained in the order of 22 May 2000 subject to a penalty of 100.000 Francs per day of delay after a three month period.

In this case, the French court based its decision on the experts' report which indirectly recognised that there is no technical solution which would enable Yahoo! to comply fully with the terms of the court order, but notably concluded that Yahoo! would be likely to achieve a filtering success rate approaching 90% of all French users. The experts noted that Yahoo! already was practising geographical identification which enabled Yahoo! to display French advertising banners in French on its auctions site. The consultants stressed that there was no evidence to suggest that the conclusions in the report would stand in the future, since service and access providers are becoming more international, and surfers are increasingly intent on protecting their rights to privacy.⁹⁷

It was argued in 1999 that it is difficult or impossible to obtain information about the identity and jurisdictions of both senders and receivers of information because of the architecture of the Internet. And 'as a result, real space laws do not readily translate into the context of cyberspace'.⁹⁸ 'With the architecture of today’s Internet, senders are ignorant of the recipient’s jurisdiction and type, recipients are ignorant of an item’s type, and intermediaries are ignorant of both. It is easy to see, then, why, with today’s Internet architecture, governments are having a hard time mandating access controls. Any party on whom responsibility might be placed has insufficient information to carry out that responsibility.'⁹⁹

In the Gutnick case,¹⁰⁰ it was noted that by posting information on a website, the publisher makes the content available to anyone, and that the nature of the World Wide Web makes it impossible to ensure with complete effectiveness the isolation of any geographic area on the Earth's surface from access to a particular website. The court also noted both difficulties with proxies and anonymising technologies and concluded that the nature of Internet technology itself makes it virtually impossible, or prohibitively difficult, cumbersome and costly, to prevent the content of a given website from being accessed in specific legal jurisdictions when an Internet user in such jurisdictions seeks to do so.¹⁰¹

5.2.1.1. The Architecture of the Internet

The Internet is not a single network, but a collection of interconnected networks that use a common set of protocols - a shared architecture. Those interconnected networks are owned by both private and public parties, but nobody owns the Internet as such. The architecture of the Internet can be defined as a) the Internet’s technical protocols (for example, TCP/IP), b) its standards and standard applications (for example, browsers or a digital certificate standard), and c) its entrenched structures of governance and social patterns of usage that themselves are not easily changed.¹⁰² It falls outside the scope of this thesis to provide a thorough presentation of the technology behind the Internet. Some of its main features must, however, be identified in order to properly understand a discussion on how the architecture of the Internet may entail consequences for the law in general and the Business in particular.

Communication media can be analysed on three levels: infrastructural, logical, and content.¹⁰³ Speakers’ corner in Hyde Park may constitute an infrastructure, the English language may be the logical level and the content is whatever said. The Internet can be subdivided into these levels by analysing the hardware (wires, servers, router etc.), the communication protocol (TCP/IP) and the applications (for example World Wide Web). A more simple approach which will be sufficient for most discussions on technology law, is the division between the content layer (information and how it is presented) and the communication/transport layer (whatever enables the communication). It is not necessary for the purpose of this thesis to elaborate further on communication models.

It is sufficient to establish that the Internet is a medium which can be used for the exchange, including in particular dissemination, of information (data). As provided above, it is clear, from a legal perspective, that information on the Internet can be directed towards certain states despite the fact that it is indeed the User who makes the request to access a particular website.

5.2.1.1.1. Protocols and the Domain Name System

Protocols form a fundamental part of electronic communication - in the same way languages do for communication between human beings. The Internet is a packet switched network which entails that the transferred message is broken into small chunks (packets) which are transmitted independently between the sender and receiver. The function of the Internet Protocol (IP) is to send these packets. Another protocol, the Transmission Control Protocol (TCP), is used to detect and recover from errors occurring in the exchange of packets. TCP ensures that the different packets arrive intact and are re-assembled at the destination. IP is the most basic layer of the Internet and it is mostly used together with TCP,¹⁰⁴ but other protocol, such as User Datagram Protocol (UDP) which is not using error-correction, may be used. Computers that are hooked up to the Internet has an IP number which ensures that data sent from one computer reaches only the computer to which it is intended. Not all computers have their own IP address. Many private users 'borrow' an IP address from their Internet service provider whenever they connect to the Internet.

An IP address is a 32-bit number which provides over 4 billion individual addresses. An IP address is usually represented by four decimal numbers which ranges from 0 to 255 separated by dots.¹⁰⁵ In 1999 the deployment of a newer IP protocol¹⁰⁶ began, which provides for IP addresses of a 128-bit number which ensures that there will be IP addresses enough for the future. An IP address cannot be bought, but one can for a recurrent fee obtain a right to the use of an address in accordance with applicable policies. The Internet Corporation For Assigned Names and Numbers (ICANN),¹⁰⁷ which is an internationally organised, non-profit corporation, has the responsibility for Internet Protocol (IP) address space allocation. There are also four regional Internet registries.¹⁰⁸

ICANN is also responsible for managing and coordinating the Domain Name System which is a system that links strings of letters (domain names) to IP addresses. The DNS enables the use of domain names which for example makes it possible to visit ICANN's website by typing 'www.icann.org' instead of the websites IP-number, '192.0.34.65'. A domain name is linked to only one IP address, whereas several domain names can be assigned to the same IP address. A domain name is linked to a specific Top Level Domain (TLD),¹⁰⁹ in this case the '.org' TLD, which is an unrestricted TLD intended to serve the non-commercial community.¹¹⁰

The DNS consists of 13 computers (root servers) which contain IP addresses of all the TLD registries. The content of these computers are recurrently distributed (mirrored) to thousands of computers ('Domain Name Resolvers'). The domain name resolvers are used to translate (resolve) domain names into the corresponding IP addresses when a domain name to communicate with a computer on the Internet. The resolvers are usually located with Internet Service Providers or institutional networks.

The World Wide Web, which is the type of communication which is dealt with in this thesis, can be defined by its protocol. The World Wide Web utilises the Hyper Text Transfer Protocol (HTTP) for the communication between a web-server and the user's web-browser.¹¹¹ The content, which is communicated from the web-server to the web-browser is arranged in accordance with standards put forward in HyperText Markup Language (HTML). HTML is a non-proprietary language for publishing hypertext on the World Wide Web.¹¹² HTML uses tags such as and to define the layout of a text. The mentioned tags tell the web-browser to present the text between the two tags in bold letters. An extended version of HTML, XHTML,¹¹³ is under development.

<BODY>
This is as piece of bold text presented in a paragraph.
</BODY>

As of interest for this thesis, the World Wide Web works in the way that the Business is uploading its website (HTML documents/files) to a web-server which is visited by the User. A visit to the website is initiated by the User typing the URL¹¹⁴ of the website (for example 'http://www.icann.org/index.html'). An electronic request is sent from the web-browser to the web-server and a copy of the file ('index.html') is sent to the user if he is entitled to access the file. Normally, web-pages are public and everybody have full access to the page. Since the request is accompanied by, among other information, the host address (IP number which may translate into a domain name),¹¹⁵ it is possible to define, based on IP numbers, who are allowed to access which files on the web-server. The Internet is basically a delivery mechanism, and the World Wide Web is a service delivered over the Internet.

5.2.1.2. IP Mapping and Geographical Targeting

There are techniques for determining the geographic location of Internet hosts (geo-location technologies).¹¹⁶ Such techniques are widely used to customise advertising on the Internet. The purpose of this part is to discuss the Business's possibilities of identifying the User's nationality or domicile. Insofar as it is possible for the business to establish where the User is residing, the Business may either limit access to certain content, provide specific content or completely deny access. A number of businesses¹¹⁷ are providing services which are claimed to identify the country of a user with an accuracy of up to 99.9 percent.¹¹⁸ Most of the providers of these services emphasise that their technologies can be used for compliance to territorial regulation.¹¹⁹ A number of these businesses actually made submissions to the panel of experts in the above-mentioned Yahoo! case, informing that they in fact have technical means to enable Yahoo! to fulfil the obligations placed upon it by the French court.¹²⁰

It is not the purpose of this chapter to provide a thorough technical description of these systems, but some technical insight is necessary for understanding the limitations inherent in these systems. It should also be mentioned that the technologies has not been tested in the context of this thesis, and the discussion is thus kept on a theoretical level based on the sources referred to.

The Internet Protocol attaches the sender's IP address and the recipient's IP address to each data packet transmitted which enables the recipient of a data packet to determine the sender's IP address. This means that the Business usually will be aware of, or able to obtain information on, the User's IP address. But neither the IP address nor the corresponding domain name reveals the geographical details of the computer or user behind it. There are a number of approaches to determine the geographical location of the User. For the most part several techniques are deployed to build a database which are linking IP addresses not only to a specific country, but in many instances to a specific city.¹²¹

The DNS system gives access providers, sites, etc. the ability to associate their reference address with their geographical location in the form of latitude and longitude coordinates. Based on this information, the exact location can be found, but it is not mandatory to provide this information.¹²² There are a number of so-called Whois-databases,¹²³ which contain various information, including information about the registrant, administrator, billing contact and nameservers. There are a number of problems with Whois-based approaches. The information recorded in the Whois database may be inaccurate and there may be inconsistencies between multiple servers that contain records corresponding to an IP address block. Also, a large (and geographically dispersed) block of IP addresses may be allocated to a single entity and the Whois database may contain just a single entry for the entire block.¹²⁴

Information may also be achieved by performing a traceroute¹²⁵ from a source to the target IP address and infer location information from the DNS names of routers along the path, but a router name may not always contain location information.¹²⁶ Probably the most effective approach to obtain geographical information is the geocluster approach which takes advantage of the fact that IP addresses are provided in clusters. By knowing the location corresponding to a few hosts in a cluster, the location of the entire cluster can be deduced.¹²⁷ In the Yahoo! case, the experts estimated, based on information from the French association of access providers, that 80 percent of the addresses assigned dynamically by the members of that association are identified as French, and that over 70 percent of the IP addresses of all surfers residing in French territory can be identified as being French.¹²⁸

The United States Patent and Trademark Office has issued a patent to Digital Envoy¹²⁹ on systems and methods for determining collecting and using geographic locations of Internet users.¹³⁰ In summary, the process and methodology outlined in the patent include:¹³¹

'A method of determining a geographic location of an Internet user involves determining if the host is online, determining ownership of the host name, and then determining the route taken in delivering packets to the user. Based on the detected route, the method proceeds with determining the geographic route based on the host locations and then assigning a confidence level to the assigned location. A system collects the geographic information and allows web sites or other entities to request the geographic location of their visitors.

The database of geographic locations may be stored in a central location or, alternatively, may be at least partially located at the web site. With this information, web sites can target content, advertising, or route traffic depending upon the geographic locations of their visitors. Through web site requests for geographic information, a central database tracks an Internet user's traffic on the Internet whereby a profile can be generated. In addition to this profile, the central database can store visitor's preferences as to what content should be delivered to an IP address, the available interface, and the network speed associated with that IP address.'

There are a number of limitations in the use of geo-targeting, including situations where the place of the user cannot be determined on the basis of the IP address. Probably the most significant limitation is connected to the fact that a number of users are connecting to the Internet from a multinational access provider. This can be a multinational company or an Internet Service Provider. The experts in the Yahoo! case estimated that 20 percent of the French user's could not be identified as French on this behalf. The problem occurs when the international access provider (company or Internet service provider) is connecting to the Internet from a country which is different from that of the User. In that case, the user will appear to come from the country where the access provider is connecting to the Internet.

Many Internet clients lie behind proxies and/or firewalls that separate the corporate or ISP network from the rest of the Internet. In such a setting, the proxy or firewall typically connects to external Internet hosts, such as Web servers, on behalf of the client hosts. The IP address of the client hosts remains hidden from the external network. As such there is no direct way to map from IP address to location for such clients. Algorithms can be used to identify proxies and firewalls by comparing real addresses to the IP-number - if it shows that users scattered over a large geographical area, it indicates that the IP address us used by a proxy or a firewall which provide the not worthless information that the IP address cannot be mapped to a specific geographical area.¹³³

The US-based Internet service provider American Online (AOL),¹³⁴ which is also providing Internet access for users established in Europe, is using a closed network and a centralised cluster of proxies at one location in Virginia, USA. Therefore all AOL users appear to come from that state,¹³⁵ even though they are connected by for example the French establishment of AOL. Other exceptions stem from the use of so-called anonymizers, which purpose is to replace the user's real IP address by another address.¹³⁶ By using such services, the user will appear to be using the IP address of the anonymizer site and it is thus not possible to determine neither the IP address nor the geographical location of the user.

5.2.1.3. Obtaining Geographical Information From the User

In the French Yahoo! case, the experts considered that it would be desirable to ask surfers whose IP address is ambiguous to make a declaration of nationality. The experts did not find that it could be reasonably claimed that such an approach would have a negative impact on the performance and response time of the server hosting the Yahoo! auctions service.¹³⁷ The experts concluded that with the combination of geographical identification of the IP address and such a declaration of nationality, it would be possible to achieve a filtering success rate approaching 90 percent, but it has been argued that the identification of the country of the user can be determined with 95% accuracy.¹³⁸

It should be noted that after determining the nationality or place of establishment, this information can be stored in a so-called cookie on the User's computer, which can be identified by the server at every visit, so that the User does not have to declare his nationality at every visit. It is also possible and may be desirable to ask the User to verify his nationality at every visit. It is possible to display the nationality that the computer believes that the User have, and provide the opportunity to change this information. This limits the action required by the User to those situations where wrong information has been collected or changes has taken place. This approach should in principle make it possible to get the right geographical information for all users at all visits, provided that the User will provide the right information.

The experts' report in the Yahoo! case noted that the geographical declaration approach entails some risks in connection to users lying about their nationality and that some users consider such questions to be an invasion of privacy.¹³⁹ The problem with wrongful information is a real problem which to some extent can be tackled by denying the User access to possible benefits deriving from a contractual relations established on wrongful geographical information.¹⁴⁰

The privacy issues seem to be the most mentioned concern in relation to geographical targeting. It is argued that 'such IP mapping will raise privacy concerns because it can be used for all kind of content, would enable a form of discrimination and make the Internet a fundamentally regulable space which again could facilitate a more general regulation of behavior in cyberspace'.¹⁴¹ The fear of making the Internet a regulable space cannot be regarded as a valid argument. On the contrary, the idea of making the Internet regulable seems to be in accordance with fundamental principles of jurisdiction and sovereignty of states within international law. It cannot be derived from international law that anybody has the right to disseminate or make available information from one state to another, where such information is deemed illegal. There may be some real concerns on discrimination within the Internal Market which is dealt with below.¹⁴²

It follows from the UN Universal Declaration of Human Rights that 'no one shall be subjected to arbitrary interference with his privacy, family, home or correspondence, nor to attacks upon his honour and reputation. Everyone has the right to the protection of the law against such interference or attacks'.¹⁴³ Article 8 of the 1950 European Human Rights Convention provides that 1) Everyone has the right to respect for his private and family life, his home and his correspondence, and 2) There shall be no interference by a public authority with the exercise of this right except such as is in accordance with the law and is necessary in a democratic society in the interests of national security, public safety or the economic well-being of the country, for the prevention of disorder or crime, for the protection of health or morals, or for the protection of the rights and freedoms of others.

The mentioned privacy concerns do also appear to be more political than legal. The mentioned conventions does not prevent a business from requiring information concerning the nationality or country of domicile. In particular not when it is done in order not to avoid interference with the legal order of other jurisdictions. It falls outside the scope of this thesis to elaborate in further details on privacy issues, but it seems clear that the processing of such information is legal under EU legislation since geographical targeting in order to avoid interfering with foreign law must be considered a legitimate interests in processing insensitive personal data.¹⁴⁴ To the extent it is contrary to fundamental principle of non-discrimination in the EU, the legitimacy of such processing will disappear in connection to discriminate between users from different Member States.¹⁴⁵

5.2.1.3.1. Location, Domicile or Nationality?

The technology behind geographical targeting, as discussed above, is providing the geographical location of the server which is used by the User to connect to the Internet. From this information, it can be deducted to some extent where the user is located when he connects to the Internet, based on the assumption that those places will be within the same state. As mentioned above, such an approach can be combined with information provided by the User. The question is, however, what information the Business needs to obtain from the User in order to mitigate or eliminate the risk of having foreign law enforced on it. The relevant information about the User may be his actual location, domicile (or habitual residence) and nationality which in many cases will point towards only one state.

As discussed above, courts are most likely to attach importance to the Business's intentions to reach a particular market. For that reason, the domicile and the actual location of the User seem to be of particular interest, since those contacts connect the User to a particular market. The actual location is likely to represent a more loose connection to a particular market than the domicile, whereas the nationality, in principle, does not provide a contact to a particular market. The nationality connects the User to a particular state, which may be relevant in connection with exercising jurisdiction under the passive personality principle.¹⁴⁶ The nationality of the User may thus be of interest in connection to jurisdiction, but under the scope of this thesis, the contact to the market seem to be the most relevant parameter. The contact to the market may be either generally (outside of contract) or specifically in relation to a particular contract.

When dealing with tort, the focus is on the place where the harmful event occurred or may occur. As established in the previous chapter,¹⁴⁷ harmful content on the Internet may be assumed to do damage where the information is being received and/or promoted. When it comes to choice of law, the usual approach is the lex loci delicti commissi, which for unfair competition is the market which is affected by the unfair practices (lex injuriae).¹⁴⁸ The criteria in connection to public law enforcement does not differ substantially from the situation in tort. The most important bases for extraterritorial jurisdiction is the objective territoriality principle ('effects jurisdiction') and the principle of passive nationality. The effects jurisdiction may require some activity on the particular market since the principles require a genuine link between the crime and the forum state.¹⁴⁹

The main threats of cross-border law enforcement in connection to contracts are related to certain consumer contracts and to those situations where the rendering court finds reasons to depart the presumption rule designating the law of the seller.¹⁵⁰ If the law enforcement is carried out in connection to a contract, the plaintiff's domicile (Brussels/Lugano System) / habitual residence (1980 Rome Convention) is of interest. the connecting factor in international procedural law is usually the domicile or residence of the parties.¹⁵¹ As regards jurisdiction, the place of performance is of interest since the Business may be sued there, and the Business will need information about where the User is located when selling goods and services. The presumption rule of the 1980 Rome Convention is, however, still favouring the law of the state in which the Business is established.

In connection with certain consumer contracts, as defined in the 1968 Brussels Convention, the 1988 Lugano Convention and the 1980 Rome Convention, the consumer must also take the necessary steps for concluding the contract in the state where he has his domicile.¹⁵² For that reason information about the actual location of the User may be used to allow for consumers to enter contracts if they are not located in the state where they are domiciled / have their habitual residence. It should be noted that the wording of the requirements in the 2000 Brussels Regulation was altered, which does not, in principle, affect the choice of law as established by the 1980 Rome Convention.

In general, the Business wants to avoid pursuing activities on specific markets. A market may be characterised by the group of legal and natural persons that is interested in the Business's activities. It seems that the domicile or habitual residence is the most important information to obtain, followed by the actual location of the User.

There is no definition of habitual residence in the 1980 Rome Convention or in the accompanying Giuliano-Lagarde Report. As regards legal persons, it is noted that the focus is on the principal place of business. The habitual residence is used in connection to contracts, including consumer contracts. The question is, however, whether the court is to apply its own law to determine the habitual residence or the law applicable to the contract. Since choice of law rules are a matter of national law, it is likely that the court will apply the law of the forum to determine the habitual residence.

It was discussed in connection with the 1968 Brussels Convention whether domicile or habitual residence should be applied.¹⁵³ The term 'domicile' for natural persons is not further defined in the acts constitution the Brussels/Lugano System. The use of habitual residence instead of domicile was rejected in the 1968 Brussels Convention because the term 'habitual' was found to be open to conflicting interpretations, since the laws of some of the Member States provide that an entry in the population registers is conclusive proof of habitual residence. It was noted that the concept of domicile, while not without drawbacks, does introduce the idea of a more fixed and stable place of establishment on the part of the defendant than does the concept of habitual residence.¹⁵⁴

The inclusion of both concepts was rejected in order to avoid an increase in the number of competent courts. The approach adopted is to specify which law to be applied in determining the domicile. It follows from the acts constitution the Brussels/Lugano System that in order to determine whether a party is domiciled in the contracting state whose courts are seized of a matter, the court shall apply its internal law. If a party is not domiciled in the state whose courts are seized of the matter, then, in order to determine whether the party is domiciled in another contracting state, the court shall apply the law of that State.¹⁵⁵ It is apparent that a person may have more than one domicile depending on which court is hearing the case.¹⁵⁶

In circumstances dealt with under this thesis, the habitual residence and domicile of the Business will be the same. Only in connection to certain consumer contracts, the domicile / habitual residence of the consumer is of importance. In practice, those concepts are likely to lead to the same result which means that the choice of law is likely to follow the choice of forum where the consumer forum is applied. It is noteworthy that the validity of the contract under those circumstances has to be determined by the law of the consumer and the court of that state will be likely to apply its national concept of habitual residence.

As regards legal persons, it follows from article 53 of the 1968 Brussels Convention and the 1988 Lugano Convention, that the seat of a company or other legal person or association of natural or legal persons shall be treated as its domicile. It follows from this provision that in order to determine that seat, the court shall apply its rules of private international law. In the 2000 Brussels Regulation, article 60(1), it is clarified that a company or other legal person or association of natural or legal persons is domiciled at the place where it has its: a) statutory seat, or b) central administration, or c) principal place of business. This means that the plaintiff can choose to sue the Business in either of these places under the main rule of the defendant's home court. In the situations dealt with in this thesis all these connecting factors will point to the same court, i.e. the court in the state in which the Business is established.

5.2.2. Geographical Delimitation in the Internal Market

The focus in this part is on whether it is compatible with the rules of the Internal Market for the Business to adopt measures which discriminate between users from different Member States.¹⁵⁷ The discrimination may concern access to the Business's website in general or access to certain features such as in particular the buying of offered products. It was suggested by the Economic and Social Committee that businesses should be able to restrict their marketing activities to certain countries by actively informing consumers.¹⁵⁸ It has, on the other hand, been noted that restricting marketing activities on a website to certain countries is a clear discrimination between consumers according to their place of residence which is inconsistent with the principles of common market and free movement of goods and services.¹⁵⁹

The focus in this context is the Business's access to discriminate in order to avoid cross-border law enforcement or as a consequence of strategic business-decisions. It should be emphasised that this thesis does not deal with competition law, under which such discrimination under certain circumstances can constitute breach of the EC Treaty provisions on that matter.¹⁶⁰ This thesis does not deal with more arbitrary discrimination such as that based on for example race.

It seems to be generally accepted that all forms of racial discrimination should be eliminated. It follows from the widely adopted¹⁶¹ 1965 Convention on Racial Discrimination,¹⁶² that states are to prohibit and bring to an end, by all appropriate means, including legislation as required by circumstances, racial discrimination by any persons, group or organisation.¹⁶³ Racial discrimination is defined as 'any distinction, exclusion, restriction or preference based on race, colour, descent, or national or ethnic origin...'¹⁶⁴ Racial discrimination is more vaguely regulated in the 1950 Convention on Human Rights.¹⁶⁵

5.2.2.1. Discrimination on Grounds of Nationality

In the van Gend en Loos case¹⁶⁶ the European Court of Justice established that article 25¹⁶⁷ of the EC Treaty must be interpreted as producing direct effects and creating individual rights which national courts must protect. The court derived the direct effect in the legal relationship between Member States and their subjects from the nature of the prohibition which contains a clear and unconditional prohibition, and from the spirit, the general scheme and the wording of the treaty. Hence the court established that independently of national legislation, Community law both imposes obligations and confer rights on individuals - not only where they are expressly granted by the treaty, but also by reason of obligations which the treaty imposes in a clearly defined way upon individuals as well as upon the Member States and upon the institutions of the Community.

It follows from article 12 of the EC Treaty that within the scope of application of the EC Treaty, and without prejudice to any special provisions contained therein, any discrimination on grounds of nationality shall be prohibited. In Walrave and Koch,¹⁶⁸ it was established that the prohibition in article 49 with reference to article 12 does not apply only to the action of public authorities. It was emphasised that working conditions are governed sometimes by law and sometimes by agreements and other acts concluded or adopted by private persons, and that limiting the prohibitions in article 49 to acts of a public authority would risk creating inequality in their application.¹⁶⁹

The free movement of services is of particular interest in this context since it involves not only the freedom of the provider to offer and supply services to recipients in a Member State, but also the freedom to receive or to benefit as recipient from the services offered by a supplier established in another Member State without being hampered by restrictions.¹⁷⁰ It has been argued that geographical delimitation imposed by a private business constitutes a restriction under article 49.¹⁷¹ To the extent that is true, it should be noted that such private party may rely on the possible justifications of such restrictions to the free movement of services.¹⁷²

The question on direct effect was further elaborated in the Jean Reyners case¹⁷³ concerning the direct effect of the provisions on freedom of establishment in a case where a Dutch national was refused admission to the Belgian bar solely on the lack of Belgian nationality. The European Court of Justice emphasised that the rule on equal treatment of nationals is a fundamental legal provision of the community (EC Treaty, article 12), which is to be implemented through article 43 in the area in question. The court established that article 43, by its essence, is capable of being directly invoked by nationals of all the other Member States.¹⁷⁴

In the Angonese case,¹⁷⁵ it was established that article 39 of the EC Treaty (free movement for workers) with reference to article 12 precludes an employer from taking discriminatory measures¹⁷⁶ in a recruitment competition. It has been argued that this judgment cannot be transferred analogously to the free movement of goods and services,¹⁷⁷ and it was noted that the area of labour contracts may be treated differently than other activities since that area of private activities normally falls outside the provisions on competition law.¹⁷⁸ In Walrave and Koch,¹⁷⁹ the court concluded that the first paragraph of article 49, in any event in so far as it refers to the abolition of any discrimination based on nationality, creates individual rights which national courts must protect.¹⁸⁰ The decision is not likely to mean that all private contractual relationships are at risk of being subjected to free movement rules.¹⁸¹

The European Court of Justice has in another context established that it is impossible in any circumstances for agreements between individuals to derogate from the mandatory provisions of the treaty on the free movement of goods.¹⁸² This case concerns an area which does not fall outside the area of competition law. It seems thus that both businesses and private persons are obliged to observe the provisions of the EC Treaty in contractual relations. It seems hard to find arguments supporting that this should not also be true for private persons activities which are carried out outside a contractual relationship. The private actions must still be able to hinder the free movement of goods and services and fall outside the possible justifications of such hindrance.

There is no clear case law from the European Court of Justice establishing whether a Business is liable under the provisions on the free movement of goods and services in connections to geographical delimitation.¹⁸³ It seems difficult to reject the argument that the Business genuinely seeks to avoid infringing legislation of another Member State and cross-border law enforcement. The risk of having to litigate in a foreign court and possibly with the application of foreign law is a real burden, in particular on a smaller business. It has been argued, in the context of consumer contracts, that the risk of being sued in the country of a potential consumer’s domicile under the Brussels/Lugano System, and the impossibility of departing from this rule during the time of conclusion of the contract suggests that it should be possible for businesses to confine its activities to certain jurisdictions.¹⁸⁴ This reasoning can also be pursued in the light of the tort forum and the risk of being met with requirements under foreign law. Other arguments such as security of payment (collecting costs) may also be invoked by the Business.

It may be argued that the country of origin principle in the 2000 E-Commerce Directive is taking away some of the power of that argument.¹⁸⁵ This would in particular be true to the extent that the country of origin principle truly ensures that the Business only has to comply with national law. This is not the case for contractual obligations in consumer contracts, but may be true in relation to actions in tort,¹⁸⁶ and in relation to public law enforcement. It is, however, difficult to ignore the wide-ranging consequences of denying the Business a right to confine its commercial activities to a certain geographical area.¹⁸⁷

Article 12 of the EC Treaty contains a clear and unconditional prohibition which is likely to have direct effect. The Business is thus, in principle, obliged not to discriminate on grounds of domicile or nationality. This seems to apply even if the area in question is covered by the area of competition law. It may, however, make a difference, whether the activity is carried out across borders. The safeguard against discrimination seem to be all the more relevant if for example a physical store would refuse certain customers on grounds of nationality.

Free movement of goods concerns not only traders but also individuals. It requires, particularly in frontier areas, that consumers resident in one Member State may travel freely to the territory of another Member State to shop under the same conditions as the local population. That freedom for consumers is compromised if they are deprived of access to advertising available in the country where purchases are made.¹⁸⁸

In the case, Familiapress v. Heinrich Bauer Verlag,¹⁸⁹ which dealt with the free movement of goods, the European Court of Justice established that a national prohibition, on the sale of periodicals containing prize competitions, must not hinder the marketing of newspapers which, albeit containing prize games, puzzles or competitions, do not give readers residing in the Member State concerned the opportunity to win a prize.¹⁹⁰ By this approach, the European Court of Justice seems to encourage discrimination based on domicile in order to comply with the legal order of the state where the newspapers are distributed/marketed, i.e. denying access to certain features of the product.

It follows from article 21 of the draft service directive¹⁹¹ that Member States are to ensure that the recipient of a service is not made subject to discriminatory requirements based on his nationality or place of residence and that the general conditions of access to a service which are made available to the public at large by the service provider, do not contain such discriminatory provisions. In the proposal it is noted that if an internal area without frontiers is to be effectively achieved, Community citizens must not be prevented from benefiting from a service which is technically accessible on the market.¹⁹² Article 21(2) provides, however, for possible differences in the conditions of access where those differences are directly justified by objective criteria, such as additional costs effectively incurred because of the distance involved or the technical characteristics of the provision of the service, or different market conditions, or extra risks linked to rules differing from those of the Member State of origin.¹⁹³

5.3. Choice of Forum and Applicable Law

The second risk mitigation technique which is dealt with in this thesis is choice of forum and applicable law. The User is assumed to have access to the Business's website, and the question dealt with concerns to what extent the Business may mitigate or eliminate the risk of cross-border law enforcement by entering an agreement on choice of forum and/or applicable law.

Parties to a contract may as a starting point choose both forum and applicable law (parties' autonomy). This is clear from both the 1980 Rome Convention and the acts constituting the Brussels/Lugano System. So far in this thesis, it was assumed that the Business and the User did not make an agreement on applicable law and jurisdiction. It should be noted that the party autonomy is a concept within private law which allow private parties to designate the proper forum and applicable law. Such an agreement will, as a starting point, only have effect upon the User who is subject to the terms presented by the Business. It will in particular not bind other parties, including in particular competitors, private organisations and public authorities insofar as they are not acting as users of the website.

Contractual delimitation can be assessed at two levels of interaction between the Business and the User. A traditional approach would be to enter such agreements in connection to the selling of goods or services which then concerns the choice of law and forum between the parties in connection to the purchase. Another approach would be to enter a contract concerning the use of the Business's website ('terms of use') which does not necessarily involve a purchase by the User.¹⁹⁴ Thereby the parties may agree on forum and applicable law in disputes between the parties in relation to the content and use of the website.¹⁹⁵

The use of such agreements raises questions on 1) to what extent they may be entered, 2) the consequences of entering such an agreement and 3) how much it takes before such an agreement is entered. It is of particular interest in connection to electronic commerce to what extent the posting of terms of use on a website may constitute an agreement between the Business and the User.

The focus in this thesis is to what extent it is possible to avoid the application of a foreign law or forum. The analysis is thus concentrated on whether the Business can enter an agreement which entails that the forum and the law of the Business is to apply. It cannot be excluded that it, under certain circumstances, would be a better solution to apply another forum or law than that of the Business. This is, however, not dealt with in this thesis. Agreements on choice of law and forum may be entered either before or after a conflict occurs. In the lights of the proactive/preventive approach in this thesis, only pre-conflict agreements are dealt with.¹⁹⁶

5.3.1. In Writing

A new provision was introduced to the Brussels/Lugano System in the 2000 Brussels Regulation which provides that 'any communication by electronic means which provides a durable record of the agreement shall be equivalent to "writing"'.¹⁹⁷ This provision, which also covers clauses in contracts concluded by electronic means, was introduced to take account of the development of new communication techniques, and in order to ensure that an agreement on forum should not be invalidated because it is concluded in a form that is not written on paper but accessible on a screen.¹⁹⁸ As mentioned in the previous chapter, the 1968 Brussels Convention and probably also the 1988 Lugano Convention is likely to be interpreted in the light of the 2000 Brussels Regulation, in the absence of reasons for interpreting two (corresponding) provisions differently.¹⁹⁹

A similar approach could also be expected in relation to the 1980 Rome Convention and the 1955 Hague Convention, since the 2000 E-Commerce Directive²⁰⁰ imposes on Member States to ensure that their legal system allows contracts to be concluded by electronic means, and that Member States in particular must ensure that the legal requirements applicable to the contractual process neither create obstacles for the use of electronic contracts nor result in such contracts being deprived of legal effectiveness and validity on account of their having been made by electronic means. In connection with the amendment introduced in the 2000 Brussels Regulation, it was noted that the change or clarification was also directed to the objectives pursued by the proposal for the 2000 E-Commerce Directive.²⁰¹

Further support for such an approach towards electronic contracting can be found in the principle of equal treatment of electronic contracts in the 1996 UNCITRAL Model Law on Electronic Commerce.²⁰² The model law adopts the 'functional equivalent approach', which focuses on the purposes and functions of traditional paper-based requirement with a view to determining how those purposes or functions can be satisfied by electronic means.²⁰³ According to this principle, information must not be denied legal effect, validity or enforceability solely on the grounds that it is in the form of a data message or solely on the grounds that it is not contained in the data message purporting to give rise to such legal effect, but is merely referred to in that data message.²⁰⁴

It is a fundamental principle in the model law that data messages should not be discriminated against, i.e., that there should be no disparity of treatment between data messages and paper documents.²⁰⁵ Article 6(1) provides that where the law requires information to be in writing, that requirement is met by a data message if the information contained therein is accessible so as to be usable for subsequent reference.²⁰⁶ Article 11 further provides that in the context of contract formation, unless otherwise agreed by the parties, an offer and the acceptance of an offer may be expressed by means of data messages, and that contracts must not be denied validity or enforceability on the sole ground that a data message was used. In the commentary to the model law, it is emphasised that the principles may be useful at an international level as a tool for interpreting international instruments such as conventions.²⁰⁷

It should be mentioned that article 5 bis of the 1996 UNCITRAL Model Law on Electronic Commerce which deals with incorporation by reference, provides that information are not to be denied legal effect, validity or enforceability solely on the grounds that it is not contained in the data message purporting to give rise to such legal effect, but is merely referred to in that data message.²⁰⁸ It should be emphasised that the model law has no formal legal binding effect and my thus mainly serve as inspiration on how to deal with the subject in question. The mentioned provision deals with situations where certain terms and conditions, although not stated in full but merely referred to in a data message, might need to be recognised as having the same degree of legal effectiveness as if they had been fully stated in the text of that data message.²⁰⁹

Both the 2000 E-Commerce Directive and the 1996 UNCITRAL Model Law on Electronic Commerce adopt an approach which does not ensure the validity of contracts entered electronically. These acts pursues solely the objective of ensuring that contracts are not invalid because it is concluded by electronic means. So even though an agreement conferring jurisdiction or designating the applicable law is made electronically, such clause must still be incorporated in a way which meet the requirements in the respective acts on choice of forum and applicable law.

The discussion on the legal validity of contracts entered electronically will not be pursued further in this thesis. The European Court of Justice has not dealt with this question and it falls outside the scope to elaborate on national law and jurisprudence in this context. It seems reasonable, however, to assume that contracts, including agreement on choice of law and forum, may be concluded electronically, but that the validity to a large extent will depend on at least the presentation of the clauses and the nature and expression of consent. The focus in the following part deals with the requirements laid down in the relevant international acts concerning choice of law and forum. To the extent that the validity of a contract is to be determined in accordance with national law, article 9(1) of the 2000 E-Commerce Directive should be borne in mind.

5.3.2. Choice of Forum

The choice of applicable law must be determined in accordance with the national choice of law rules of the state in which the court is located. Due to the homeward-trend,²¹⁰ the risk of applying a law which is foreign to the Business may be greater when the Business is being sued in a foreign court of law, and the costs and inconvenience is also likely to be higher when litigating before a foreign court. For those reasons the Business may be interested in entering a choice of forum agreement with the User.

This analysis includes not only the Brussels/Lugano System, but also the 1958 New York Convention on arbitration awards which has a much wider geographical scope of application than the Brussels/Lugano System.²¹¹ The 1958 New York Convention deals with recognition and enforcement of arbitration awards. A draft Hague convention²¹² is intended to lay down rules for recognition and enforcement for judgment in international cases in civil or commercial matters, where an exclusive choice of court agreements was concluded. It may take a long time before such a convention is finalised, adopted and ratified by a significant number of states. A presentation of the principles in the draft Hague judgments convention has been included because it may provide the outline of an emerging, global convention on choice of forum and recognition of judgments rendered pursuant to such a clause.

5.3.2.1. The Brussels/Lugano System

It follows from article 17(1) of the 1968 Brussels Convention and the 1988 Lugano Convention that if the parties, one or more of whom are domiciled in a contracting state, have agreed that a court or the courts of a contracting state are to have jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship, that court or those courts shall have exclusive jurisdiction. In the corresponding article in the 2000 Brussels Regulation,²¹³ it is provided that the jurisdiction is exclusive unless the parties have agreed otherwise. This enables the parties to agree that the jurisdiction is not exclusive.²¹⁴

Article 17 also applies to an agreement conferring jurisdiction made between a person domiciled in a contracting state and a person not domiciled in a contracting state, if the agreement confers jurisdiction on the courts of a contracting state.²¹⁵

For good measure, it should be mentioned that agreements conferring jurisdiction shall have no legal force if the courts whose jurisdiction they purport to exclude have exclusive jurisdiction by virtue of article 16 of the 1968 Brussels Convention and 1988 Lugano Convention (article 22 of the 2000 Brussels Regulation).²¹⁶ These exclusive jurisdictions are, however, not dealt with in this thesis.

A choice of forum clause under article 17 must be either a) in writing or evidenced in writing, b) in a form which accords with practices which the parties have established between themselves, or c) in international trade or commerce, in a form which accords with a usage of which the parties are or ought to have been aware and which in such trade or commerce is widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade or commerce concerned.²¹⁷ The requirements must be strictly interpreted in so far as that article excludes both jurisdiction as determined by the general principle of the defendant's courts laid down in article 2 and the special jurisdictions provided for in articles 5 and 6.²¹⁸

Article 17(1)(c) was introduced by the 1978 Accession Convention²¹⁹ in order to take account of the specific practices and requirements of international trade, but without departing the need for consensus between the parties to a jurisdiction clause. Despite the relaxation of the formal requirements in article 17(1)(c), it must still be proven that a consensus existed on the inclusion in the contract of the general conditions of trade and the particular provisions.²²⁰ Consensus on the part of the contracting parties as to a jurisdiction clause is presumed to exist where commercial practices in the relevant branch of international trade or commerce exist in this regard of which the parties are or ought to have been aware.

A jurisdiction clause may be entered silently, by for example not reacting to a commercial letter of confirmation containing a pre-printed reference to the courts having jurisdiction, provided that such conduct is consistent with a practice in force in the area of international trade or commerce in which the parties in question are operating and the parties are or ought to have been aware of that practice.²²¹ Actual or presumptive awareness of such practice on the part of the parties to a contract is made out where, in particular, they had previously had commercial or trade relations between themselves or with other parties operating in the sector in question or where, in that sector, a particular course of conduct is sufficiently well known because it is generally and regularly followed when a particular type of contract is concluded, with the result that it may be regarded as being a consolidated practice.²²²

The existence of a practice is not to be determined by reference to the law of one of the contracting parties, and should not be determined in relation to international trade or commerce in general, but to the branch of trade or commerce in which the parties to the contract are operating. A usage exists in the branch of trade or commerce in question where in particular a certain course of conduct is generally and regularly followed by operators in that branch when concluding contracts of a particular type.²²³ Such a course of conduct needs not to be established in specific countries or in all contracting states.

The fact that a practice is generally and regularly observed by operators in the countries which play a prominent role in the branch of international trade or commerce in question can be evidence which helps to prove that a usage exists.²²⁴ Despite the reference to usage in international trade or commerce contained in article 17 of the 1968 Brussels Convention, real consent by the parties is always one of the objectives of that provision, justified by the concern to protect the weaker contracting party by ensuring that jurisdiction clauses incorporated in a contract by one party alone do not go unnoticed.²²⁵

The concept of 'agreement conferring jurisdiction' is an independent concept.²²⁶ Article 17 is based on recognition of the independent will of the parties to a contract in deciding which courts are to have jurisdiction to settle disputes falling within the scope of the convention, and it must be construed in a manner consistent with the wishes of the parties.²²⁷ The choice of court in a jurisdiction clause may be assessed only in the light of considerations connected with the requirements laid down by article 17, and any further review of the validity of the clause and of the intention of the party which inserted it must be excluded.²²⁸

A jurisdiction clause is governed by the provisions of the convention, whereas the substantive provisions of the main contract in which that clause is incorporated are governed by the lex causae determined by the law applicable in accordance with private international law of the state of the court having jurisdiction.²²⁹ It is for the national court to interpret the clause conferring jurisdiction invoked before it,²³⁰ and that court must firstly examine the clause conferring jurisdiction, and hereafter, provided it has jurisdiction, examine the existence of an agreement between the parties.²³¹

The usages referred to in article 17(1)(c) cannot be nullified by national statutory provisions which require compliance with additional conditions as to form.²³² It is in keeping with the spirit of certainty that the national court seized should be able readily to decide whether it has jurisdiction on the basis of the rules of the convention/regulation, without having to consider the substance of the case.²³³ A jurisdiction clause needs not to be formulated in such a way that the competent court can be determined on its wording alone. But the clause must then state objective factors which are sufficiently precise to enable the court seized to ascertain whether it has jurisdiction.²³⁴

It has been established that the mere fact that a clause conferring jurisdiction is printed among the general conditions of one of the parties on the reverse of a contract drawn up on the commercial paper of that party does not of itself satisfy the requirements of article 17(1)(a), since no guarantee is thereby given that the other party has really consented to the clause waiving the normal rules of jurisdiction.²³⁵ If a clause conferring jurisdiction is included among the general conditions of sale of one of the parties, printed on the back of a contract, the requirement of a writing is fulfilled only if the contract is signed by both parties and it contains an express reference to those general conditions.²³⁶

An express reference to a clause conferring jurisdiction which is presented in for example an offer, is valid only if in the case of an express reference, which can be checked by a party exercising reasonable care, and only if it is established that the general conditions, including the clause conferring jurisdiction, have in fact been communicated to the other contracting party with the offer to which reference is made.²³⁷ A confirmation in writing of the contract by the vendor, accompanied by the text of his general conditions, is without effect, as regards any clause conferring jurisdiction which it might contain, unless the purchaser agrees to it in writing,²³⁸ whereas subsequent notification of general conditions containing such a clause is not capable of altering the terms agreed between the parties, except if those conditions are expressly accepted in writing by the purchaser.²³⁹

It follows from article 17(5)²⁴⁰ of the 1968 Brussels Convention and 1988 Lugano Convention that if an agreement conferring jurisdiction was concluded for the benefit of only one of the parties, that party shall retain the right to bring proceedings in any other court which has jurisdiction by virtue of this Convention. This provision, which is not found in the 2000 Brussels Regulation, deals with jurisdiction clauses which give one of the parties a wider choice of courts than the other party. The common intention to confer an advantage on one of the parties must therefore be clear from the terms of the jurisdiction clause or from all the evidence to be found therein or from the circumstances in which the contract was concluded. The designation of a court or the courts of the contracting state in which one of the parties is domiciled is not sufficient in itself.²⁴¹

As mentioned above,²⁴² it has been emphasised in article 23(2) of the 2000 Brussels Regulation that any communication by electronic means which provides a durable record of the agreement shall be equivalent to writing, and that both 1968 Brussels Convention and the 1988 Lugano Convention is likely to be constructed in the light of the regulation. It is important to bear in mind that the provision on choice of forum is to be constructed independently of national law.

It is clear that the clause must be incorporated in a way that it can be proven that a consensus existed on the inclusion in the contract. Terms and conditions, including choice of forum clauses, to a contract entered via a website may be presented in different ways. It is difficult on the basis of the current case law to determine how much it takes before it can be proven that a clause conferring jurisdiction has in fact been included by the parties. If the terms are not clearly presented, an express reference has to be made, and the Business must ensure that the User in fact consents to the agreement. This applies both to choice of forum in connection with contracts and in connection with the use of a website.

Jurisdiction can also be derived from submission, if the defendant makes an appearance before a court of a contracting state / Member State and the appearance is not entered solely to contest the jurisdiction.²⁴³ That article applies even where the parties have by agreement designated a court which is to have jurisdiction.²⁴⁴ The focus in this thesis is, however, on what the business can do to mitigate cross-border law enforcement before the conflict occurs. Where a defendant domiciled in one Member State / contracting state is sued in a court of another contracting state and does not make an appearance, the court shall declare of its own motion that it has no jurisdiction unless its jurisdiction is derived from the provisions of the Convention.²⁴⁵ If the defendant fails to make an appearance, it is not equivalent to a submission to the jurisdiction, and the court must itself ensure that the plaintiff proves that the court has international jurisdiction ²⁴⁶

5.3.2.1.1. Place of Performance

An indirect approach for the Business to mitigate the risk of being sued in a foreign court is to specify that the delivery of the goods or service is to take place in the state where the Business is established. As accounted for in the previous chapter,²⁴⁷ a person may in matters relating to a contract be sued in the courts for the place of performance of the obligation in question. By agreeing that delivery of the Business's obligation in a contract is to take place in the state where the Business is established, the Business can avoid that the User can take advantage of the performance forum deriving from the Business's obligation in the contract.

The European Court of Justice has established that if the place of performance of a contractual obligation was specified by the parties in a clause, which is valid according to the national law applicable to the contract, a court has jurisdiction under the performance forum in article 5(1), irrespective of whether the formal conditions provided for under article 17 have been observed.²⁴⁸ It has subsequently been established by the court that the parties are not entitled to designate, with the sole aim of specifying the courts having jurisdiction, a place of performance having no real connection with the reality of the contract.²⁴⁹ If the sole purpose of determining the place of performance is the determination of the place of the courts having jurisdiction, such an agreement is governed by article 17 and is therefore subject to the specific requirements as to form.²⁵⁰

Defining the place of performance must thus not be a circumvention of the requirements laid down in article 17, and there must be a real connection between the designated place of performance and the reality of the contract. The court designated by virtue of article 5(1) must necessarily be the court which has the closest connection with the dispute,²⁵¹ and this approach does notably not provide an exclusive jurisdiction like article 17.²⁵²

5.3.2.1.2. Consumer Contracts

The access to enter an agreement on choice of forum is limited in connection to the specific provisions on certain consumer contracts as discussed in the previous chapter.²⁵³ These provisions may be departed from only by an agreement: 1) which is entered into after the dispute has arisen, or 2) which allows the consumer to bring proceedings in courts other than those indicated in the section on certain consumer contracts, or 3) which is entered into by the consumer and the other party to the contract, both of whom are at the time of conclusion of the contract domiciled or habitually resident in the same Member State / contracting state, and which confers jurisdiction on the courts of that state, provided that such an agreement is not contrary to the law of that state.²⁵⁴ Only the second condition applies to the situation dealt with in this thesis. There is no benefit for the Business to provide the consumer with more places to sue the Business.

5.3.2.2. The 1958 New York Convention

At a more global level the 1958 New York Convention²⁵⁵ is also of interest for European businesses. This convention provides a widely adopted system for recognition of arbitral awards. The 1958 New York Convention is interesting because of the large number of contracting states (135 states)²⁵⁶ and because each contracting state according to article III recognises arbitral awards as specified in the convention.²⁵⁷

Recognition and enforcement of an arbitral award may be refused if the competent authority in the country where recognition and enforcement is sought finds that 1) the subject matter of the difference is not capable of settlement by arbitration under the law of that country or 2) The recognition or enforcement of the award would be contrary to the public policy of that country.²⁵⁸ A contracting state may in connection to the ratification of the convention declare that recognition and enforcement of arbitral awards is subject to reciprocity, so that the convention apply only to awards from another contracting state.²⁵⁹

Each contracting state must according to article II(1) recognise a written arbitration clause in legal relationships concerning a subject matter capable of settlement by arbitration. The term 'agreement in writing' includes an arbitral clause in a contract or an arbitration agreement, signed by the parties or contained in an exchange of letters or telegrams.²⁶⁰ Electronic agreements on choice of forum is not expressly dealt with, but there are no reasons why such agreements should not be binding upon the parties.²⁶¹

5.3.2.3. Draft Hague Judgments Convention

A convention on recognition of clauses on choice of jurisdiction seems to be emerging out of a previously more ambitious project under the Hague Convention.²⁶² The intention is only to mention this draft convention and its principles here, but further elaboration will not be carried out.

The objective of the draft convention is to make exclusive choice of court agreements as effective as possible in the context of international business in order to do for choice of court agreements what the 1958 New York Convention has done for arbitration agreements.²⁶³ It follows from article 1 of the draft convention that it is intended to apply in international cases to exclusive choice of court agreements concluded in civil or commercial matters. Among other exclusions from scope, the draft convention is not to apply to exclusive choice of court agreements to which a natural person acting primarily for personal, family or household purposes (a consumer) is a party.²⁶⁴

Article 9(1) of the draft Hague Convention provides that a judgment given by a court of a contracting state designated in an exclusive choice of court agreement shall be recognised and enforced in other contracting states in accordance with the rules of the convention. It follows from article 3 of the draft convention that an exclusive choice of court agreement must be entered into or evidenced 1) in writing, or 2) by any other means of communication which renders information accessible so as to be usable for subsequent reference. An exclusive choice of court agreement that forms part of a contract shall be treated as an agreement independent of the other terms of the contract. The validity of the exclusive choice of court agreement cannot be contested solely on the ground that the contract is not valid.²⁶⁵

It is provided in article 3(a) that for the purpose of the convention, an 'exclusive choice of court agreement' is an agreement that designates, for the purpose of deciding disputes which have arisen or may arise in connection with a particular legal relationship, the courts of one contracting state or one or more specific courts in one contracting state to the exclusion of the jurisdiction of any other courts. A choice of court agreement which designates the courts of one contracting state or one or more specific courts in one contracting state shall be deemed to be exclusive unless the parties have expressly provided otherwise.²⁶⁶ Article 9 of the draft convention provides an exhaustive list of grounds on which recognition or enforcement may be refused.²⁶⁷

5.3.3. Choice of Applicable Law

The starting point in the 1980 Rome Convention is that a contract is to be governed by the law chosen by the parties. This principle is recognised in the private international law of most states.²⁶⁸ It follows from article 3(1) of the 1980 Rome Convention that the choice must be expressed or demonstrated with reasonable certainty by the terms of the contract or the circumstances of the case.²⁶⁹ A choice of law clause needs not to be expressly stated in the contract, since the choice may also be demonstrated by the circumstances of the case with reasonable certainty. This can for example be in situations where a previous course of dealing between the parties has been governed by a particular law, where a choice of forum certainly show that the parties intend a particular law to apply, or references to particular section in national law may show that the parties have deliberately chosen that law to govern the entire contract. There must, however, be no doubt that it was the parties' intention that the contract should be governed by that particular law, and the examination is still subject to other terms of the contract and the circumstances of the case.²⁷⁰

The examples mentioned in the Giuliano-Lagarde Report seem to indicate that the circumstances that could replace an express choice of law clause, are mainly circumstances connected to an existing business relation or the negotiations of the particular contract. The report also emphasises that the intentions of the parties are crucial. The court is not permitted to presume a choice of law that is made where the parties had no clear intention of making such a choice.²⁷¹ Such situation is to be determined in accordance with article 4, as dealt with in the previous chapter,²⁷² and which applies 'to the extent that the law applicable to the contract has not been chosen in accordance with article 3'.

In the contracts dealt with in this thesis, which do not involve previous business relationships between the parties and where there is no real negotiations between the parties, the alternative to an express clause seem to be limited, if existing at all. In contracts entered electronically via website, the different parts of the contract may consist of several steps. This means that an electronic contract is not necessarily a single document. The formulation ensures that choice of law clauses presented in earlier steps is to be taken into consideration when determining the parties choice of law.²⁷³

The parties to a contract may select the law applicable to either parts of or the whole contract. It follows from article 3(4) that the existence and validity of the consent of the parties as to the choice of the applicable law is to be determined in accordance with the provisions on material and formal validity and on incapacity (articles 8, 9 and 11).²⁷⁴ Article 8(1) provides that the existence and validity of a contract, or of any term of a contract, must be determined by the law which would govern it under the convention if the contract or term was valid. This provision applies also to the existence and validity of the parties' consent as to choice of the applicable law. This is also clear from the use of the word 'term' which emphasises that it also covers situations in which there is a dispute concerning the validity of a contract term, such as a choice of law clause.²⁷⁵

A party may according to article 8(2) rely upon the law of the country in which he has his habitual residence to establish that he did not consent if it appears from the circumstances that it would not be reasonable to determine the effect of his conduct in accordance with the applicable law. This rule concerns only the existence and not to the validity of a consent, and is designed inter alia to solve problems concerned with the binding effect of silence by one party.²⁷⁶ It can thus not be ruled out that the law of the User may be invoked to challenge whether the User did in fact consent to the choice of law clause. This may in particular raise problems in connection to different approaches to an electronically expressed consent to contracts and consumer contracts which fall outside of the scope of certain consumer contracts as dealt with below. As mentioned above, article 9(1) of the 2000 E-Commerce Directive provides that Member States must ensure that their legal system allows contracts to be concluded by electronic means.

There are certain limitations when it comes to choice of law in certain consumer contracts, as defined in the previous chapter. Article 5(2) of the 1980 Rome Convention provides that a choice of law made by the parties in such a contract must not have the result of depriving the consumer of the protection afforded to him by the mandatory rules²⁷⁷ of the law of the country in which he has his habitual residence. The reference is not to international mandatory rules, as concerned in article 7, and the provision embodies the principle that a choice of law in a consumer contract cannot deprive the consumer of the protection afforded to him by the law of the country in which he has his habitual residence.²⁷⁸ The formal validity of such a contract is governed by the law of the country in which the consumer has his habitual residence.²⁷⁹

The parties to a contract may also enter an agreement on choice of law in accordance with article 3 after the conclusion of the contract, but without prejudicing the formal validity of the contract or adversely affect the rights of third parties.²⁸⁰ Even where the parties have entered an agreement on choice of law, such choice does not prejudice the application of mandatory rules of the law of a state, where all the other elements relevant to the situation at the time of the choice are connected with.²⁸¹ This thesis does not deal with agreements on choice of law entered after the conclusion of the contract, and all relevant factors in the situations dealt with will not be connected to only one state.

The 1980 Rome Convention does not, like the Brussels/Lugano System, intend to lay down all requirements for a choice of law clause. It provides some requirements which are to be interpreted in conjunction with the law applicable to the contract. The access for the European Court of Justice to interpret the 1980 Rome Convention is not likely to change that, but it may be asked to elaborate on what it takes for a choice of law to be expressed or demonstrated with reasonable certainty by the terms of the contract or the circumstances of the case.

The 1955 Hague Convention has also as its starting point that a sale is to be governed by the domestic law of the country designated by the contracting parties. It follows from article 2 that such designation must be contained in an express clause, or unambiguously result from the provisions of the contract, and that conditions affecting the consent of the parties to the law declared applicable shall be determined by such law.

5.3.4. The 1993 Directive on Unfair Contract Terms

Clauses on choice of forum and applicable law may also fall under the 1993 Directive on Unfair Contract Terms,²⁸² which deals with consumer contracts. These provisions apply to consumer contracts as defined in the directive itself which is not a definition identical to the definition of certain consumer contracts within the Brussels/Lugano System or the 1980 Rome Convention. Article 5 of the directive provides that where terms offered to the consumer are in writing, these terms must always be drafted in plain, intelligible language, and that the interpretation most favourable to the consumer shall prevail if there doubt about the meaning of a term.

A contractual term which has not been individually negotiated is to be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations arising under the contract, to the detriment of the consumer.²⁸³ Unfair terms used in a contract, concluded with a consumer, by a seller or supplier shall not be binding on the consumer, but the contract shall continue to bind the parties if it is capable of continuing in existence without the unfair terms.²⁸⁴

The annex of the directive contains an indicative and non-exhaustive list of the terms which may be regarded as unfair, and includes under litra q, terms which have the object or effect of excluding or hindering the consumer's right to take legal action or exercise any other legal remedy, particularly by requiring the consumer to take disputes exclusively to arbitration not covered by legal provisions, unduly restricting the evidence available to him or imposing on him a burden of proof which, according to the applicable law, should lie with another party to the contract. This applies inter alia to clauses in consumer contracts conferring jurisdiction to the Business's home court.²⁸⁵ The protection afforded in the directive entails that the national court is able to determine of its own motion whether a term of a contract before it is unfair when the court is making its preliminary assessment as to whether a claim should be allowed to proceed before the national courts.²⁸⁶

As provided above, article 17 of the 1968 Brussels Convention is intended to lay down itself the formal requirements which agreements conferring jurisdiction must meet, and contracting states are not free to lay down formal requirements other than those contained in the convention.²⁸⁷ A conflict between the protection afforded by the 1993 Directive on Unfair Contract Terms and the autonomous system of article 17 may appear in those cases where a consumer contract within the meaning of the directive falls outside of the scope of certain consumer contracts in the 1968 Brussels Convention or the 1988 Lugano Convention.²⁸⁸ This could for example be in situations where the conclusion of the contract was not preceded by specific invitation addressed to the consumer or by advertising or maybe more likely if the consumer did not take in that State the steps necessary for the conclusion of the contract.²⁸⁹ It seems reasonable to believe that the European Court of Justice would include the directive in the autonomous understanding of article 17, since it is provided in article 57(3) of the 1968 Brussels Convention that the convention shall not affect the application of provisions which, in relation to particular matters, govern jurisdiction or the recognition or enforcement of judgments and which are or will be contained in acts of the institutions of the European Communities or in national laws harmonised in implementation of such acts.

It must be assumed that the interpretation of the corresponding article 23 of the 2000 Brussels Regulation has to be interpreted in the light of the 1993 Directive on Unfair Contract Terms, since both instruments are part of the common EU legislation. This is also in line with article 67 of the 2000 Brussels Regulation which concerns relations with other instruments and which provides that the regulation shall not prejudice the application of provisions governing jurisdiction and the recognition and enforcement of judgments in specific matters which are contained in Community instruments or in national legislation harmonised pursuant to such instruments. With the amendments of the provisions on certain consumer contracts in the 2000 Brussels Regulation, as accounted for in the previous chapter, the risk of a conflict between the definitions in the regulation and the directive is, all else being equal, lower.

5.4. Conclusion

As established in the previous chapters, the Business is running a real risk of cross-border law enforcement when placing a website on the Internet. It seems reasonable to establish from the examined case law that there is a direct proportionality between the amount of activity in a state and the risk of traditional cross-border law enforcement deriving from those states. The same may be true for alternative law enforcement. In order to carry out traditional cross-border law enforcement, it is a prerequisite that the circumstances dealt with in the two previous chapters are fulfilled. In order to establish whether a website is directed towards a particular state, a number of connecting factors may be examined. These factors do not provide a complete check-list, and it should be emphasised that courts are most likely to attach importance to the economical reality of the activity.

From the examined case law, connecting factors may be grouped into questions concerning 1) access to the website, 2) Magnitude and Nature of Business Activity, 3) the presentation and relevance, 4) marketing measures and 5) the place of business and technical infrastructure. These factors may be used by the Business to evaluate and adjust its website in order to mitigate the risk of cross-border law enforcement.

The Business may also use other measures to delimit the geographical scope of the Business's website activities. In particular technical measures excluding users from particular jurisdictions may be effective to avoid cross-border law enforcement as long as the employment of such measures reflect a genuine intention to avoid commercial activity in those jurisdictions. Technical measures are not 100% effective, and they may be circumvented by the users. There is, however, likely to be a direct proportionality between the effectiveness of the applied measure and the effectiveness of mitigating legal risks. Technical delimitation may be combined with with asking the User to reveal his identity. Other measures of geographical delimitation, such as for example stating the targeted states may also count in the examination of where the website activity is directed. Such measure is, however, not effectively keeping users away from the website. Even though article 12 of the EC Treaty provides that any discrimination on grounds of nationality is prohibited, it seems to be justifiable to carry out geographical delimitation as long as it is done as part of a general business strategy and in order to avoid certain legal risks.

The Business may also mitigate the risk of cross-border law enforcement by entering agreements on forum and applicable law. This is an effective measure to mitigate the possibility of traditional cross-border law enforcement in connection to contracts. The Business may ensure that it can only be sued in its home court and that the law of the Business is to be applied. Agreements on choice of forum and applicable law may be entered electronically, but it requires insight in national law to determine whether a clause on applicable law is valid. The Business must ensure that clauses on choice of forum and applicable law, in reality, are agreed upon by the parties. Agreements on choice of forum and applicable law do not influence the possibilities in cross-border law enforcement in situations outside of contractual relations. The access to benefit from clauses on choice of forum and applicable law is limited in connection to certain consumer contracts.

4See Mankowski, Peter, Jurisdiction and Enforcement in the Information Society, Nielsen, Ruth, Jacobsen, Søren Sandfeld and Trzaskowski, Jan (editors), EU Electronic Commerce Law, DJØF Publishing, 2004, p. 124 at p. 135f.

5Mankowski, Peter, Jurisdiction and Enforcement in the Information Society, Nielsen, Ruth, Jacobsen, Søren Sandfeld and Trzaskowski, Jan (editors), EU Electronic Commerce Law, DJØF Publishing, 2004, p. 124 at p. 135.

6The Giuliano-Lagarde report uses the example of advertising in a German publication versus an American publication which is also sold in Germany. The first situation is comprised whereas the latter requires that the advertisement appear in special editions intended for the European countries. Giuliano-Lagarde Report, p. 24.

8It was argued by Troostwijk that the Internet does not permit advertisements to be limited to given regions. See Herbert Karner Industrie-Auktionen GmbH v. Troostwijk GmbH. Opinion of Mr Advocate General Alber delivered on 8 April 2003, Case 71/02, paragraphs 21 and 22.

9See Herbert Karner Industrie-Auktionen GmbH v. Troostwijk GmbH. Opinion of Mr Advocate General Alber delivered on 8 April 2003, Case 71/02, paragraphs 21 and 22, paragraph 59.

18The League Against Racism and Antisemitism (LICRA) and the French Union of Jewish Students v. Yahoo! Inc, order of 22 May 2000. See interim Court Order 00/05308 (20 November 2000), The County Court of Paris, p. 3f. Based on English translation posted at www.cdt.org/speech/international/001120yahoofrance.pdf. See also Spang-Hanssen, Henrik, Cyberspace & International Law on Jurisdiction, DJØF Publishing, 2004, p. 184ff.

21Euromarket Designs Inc v. Peters & Another, HC (1999), No 04494 (25 July 2000), High Court (Chancery Division), Mr Justice Jacob, summary judgment. See also Thunken, Alexander, Multi-State Advertising Over the Internet and the Private International Law of Unfair Competition, International and Comparative Law Quarterly, October 2002, p. 909 at p. 9 at footnotes 86 to 88 and Bainbridge, David, Trademark Infringement, The Internet, and Jurisdiction, JILT 2003(1).

27Thunken, Alexander, Multi-State Advertising Over the Internet and the Private International Law of Unfair Competition, International and Comparative Law Quarterly, October 2002, p. 909 at p. 9.

291-800 Flowers Inc v. Phonenames LTD, UK Supreme Court of Judicature, Court of Appeal (Civil Division), on appeal from the High Court (Chancery Division, Mr Justice Jacob), Lord Justice Peter Gibson, Lord Justice Buxton and Lord Justice Jonathan Parker, Case No: A3 2000 0052 CHANCF, Neutral Citation Number: [2001] EWCA Civ 721, 17 May 2001. www.hrothgar.co.uk/YAWS/reps/flowers.htm.

301-800 Flowers Inc v. Phonenames LTD, UK Supreme Court of Judicature, Court of Appeal (Civil Division), paragraph 100. See also paragraphs 128-130 and paragraph 141.

39See in general on US law on jurisdiction Spang-Hanssen, Henrik, Cyberspace & International Law on Jurisdiction, DJØF Publishing, 2004, and Østergaard, Kim, Elektronisk Handel og International Proces- og Privatret, Jurist- og Økonomforbundets Forlag, 2003.

40Zippo Manufacturing Company v. Zippo Dot Com Inc United States District Court for the Western Disctrict of Pennsylvania, 952 F. Supp. 1119; 1997 U.S. Dist. LEXIS 1701; 42 U.S.P.Q.2D (BNA) 1062.

41Zippo Manufacturing Company v. Zippo Dot Com Inc United States District Court for the Western Disctrict of Pennsylvania, 952 F. Supp. 1119; 1997 U.S. Dist. LEXIS 1701; 42 U.S.P.Q.2D (BNA) 1062, see III-A with references (references omitted in this text). See also Bainbridge, David, Trademark Infringement, The Internet, and Jurisdiction, JILT 2003(1), under 2 and Debusseré, Frederic, International Jurisdiction over E-Consumer Contracts in the European Union: Quid Novi Sub Sole?, International Journal of Law and Information Technology, Vol. 10 No. 3, 2002, p. 344 at 245ff with references. See also Geist, Michael A., Is there a There There? Toward Greater Certainty for Internet Jurisdiction, Berkeley Technology Journal, No. 16, 2002, p. 1345 at III.

42Gator.com Corp v. L.L. Bean Inc, Unted States Court of Appeals for the Ninth Circuit, 341 F.3d 1072; 2003 U.S. App. LEXIS 18115; 2003 Cal. Daily Op. Service 7986 (2 December 2002). With references.

44Yahoo! Inc v. La Ligue Contre le Racisme et l'Antisemitisme et al, United States Court for the Northern District of California, San Jose Division, 169 F. Supp. 2d 1181; 2001 U.S. Dist. LEXIS 18378; 30 Media L. Rep. 1001 (7 November 2001).

45'Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances'.

46Yahoo! Inc v. La Ligue Contre le Racisme et l'Antisemitisme et al, United States Court for the Northern District of California, San Jose Division, 169 F. Supp. 2d 1181; 2001 U.S. Dist. LEXIS 18378; 30 Media L. Rep. 1001 (7 November 2001), Part II (Overview). Footnotes omitted.

47Yahoo! Inc v. La Ligue Contre le Racisme et l'Antisemitisme and l'Union des Etudiant Juifs de France, United States Court of Appeals for the Ninth Circuit, 379 F.3d 1120; 2004 U.S. App. LEXIS 17869; 32 Media L. Rep. 2185 (2 December 2002).

48Dow Jones & Company Inc v. Gutnick, Australian High Court, [2002] HCA 56 (10 December 2002), www.4law.co.il/582.htm. See also Garnett, Richard, Case Notes [on] Dow Jones & Company Inc v. Gutnick, Melbourne Journal of International Law, Volume 4, July 2003, Number 1, p. 196 with references.

55Ward Group Pty Ltd v. Brodie & Stone Plc. [2005] FCA 471. See also Butt, John and Kerr, Philip, Trade Mark Infringement on the Internet, FindLaw Australia, May 2005.

64See also Geist, Michael A., Is there a There There? Toward Greater Certainty for Internet Jurisdiction, Berkeley Technology Journal, No. 16, 2002, p. 1345 at IV. It is suggested that a targeting test should focus on three factors: contracts, technology and actual or implied knowledge.

65Vasiljeva, Ksenija, 1968 Brussels Convention and EU Council Regulation No 44/2001: Jurisdiction in Consumer Contracts Concluded Online, European Law Journal, Vol. 10, No. 1, January 2004, p. 123 at p. 132 with references.

67Vasiljeva, Ksenija, 1968 Brussels Convention and EU Council Regulation No 44/2001: Jurisdiction in Consumer Contracts Concluded Online, European Law Journal, Volume 10 (January 2004), Issue 1, p. 123 at page 132.

69See similarly Trzaskowski, Jan, Forbrugeraftaler og Reklamering på Internettet – Internationale Privat- og Procesretlige Aspekter, Ugeskrift for Retsvæsen, 1998, p. 285.

71Svantesson, Dan Jerker B., Geo-Location Technologies and Other Means of Placing Borders on the 'Borderless' Internet, The John Marshall Journal of Computer & Information Law, Fall 2004, p. 101 at p. 3.

73Vasiljeva, Ksenija, 1968 Brussels Convention and EU Council Regulation No 44/2001: Jurisdiction in Consumer Contracts Concluded Online, European Law Journal, Volume 10 (January 2004), Issue 1, p. 123 at page 132.

76Burnstein, Matthew, A Global Network in a Compartmentalised Legal Environment, Internet Which Court Decides? Which Law Applies?, Law and Electronic Commerce, Volume 5, Kluwer Law International, 1998, p. 23 at p. 24.

77See in general Lookofsky, Joseph and Hertz, Ketilbjørn, Transnational Litigation and Commercial Arbitration, second edition, Juris Publishing and DJØF Publications Copenhagen, 2004, p. 354ff.

79See in general Svantesson, Dan Jerker B., The Characteristics Making Internet Communication Challenge Traditional Models of Regulation - What Every International Jurist Should Know About the Internet, International Journal of Law and Technology, Vol 13, No. 1, Oxford University Press, 2005, p. 44ff.

80See Maunsbach, Ulf, Some Reflexions Concerning Jurisdiction in Cases on Cross-Border Trademark Infringements Through the Internet, Scandinavian Studies in Law, Vol. 47 ('IT Law'), Stockholm 2004, p. 493 at p. 496.

81See in general Svantesson, Dan Jerker B., Geo-Location Technologies and Other Means of Placing Borders on the 'Borderless' Internet, The John Marshall Journal of Computer & Information Law, Fall 2004, p. 101.

83Manolopoulos, Andreas, Raising 'Cyber-Borders': The Interaction Between Law and Technology, International Journal of Law and Information Technology, Vol. 11, No. 1, 2003, p. 40 at p. 57.

85The legal implications of the Yahoo! Inc nazi memorabilia dispute: an interview with Professor Yves Poullet, January/March 2001, www.juriscom.net/en/uni/doc/yahoo/poullet.htm.

862000 U.S. Dist. LEXIS 11670; 53 U.S.P.Q.2D (BNA) 1831; Copy. L. Rep. (CCH) P28,030 (8 February 2000). See also Geist, Michael A., Is there a There There? Toward Greater Certainty for Internet Jurisdiction, Berkeley Technology Journal, No. 16, 2002, p. 1345 at I-B.

87Geist, Michael A., Is there a There There? Toward Greater Certainty for Internet Jurisdiction, Berkeley Technology Journal, No. 16, 2002, p. 1345 at I-B.

89See in general on disclaimers / terms of use, Svantesson, Dan Jerker B., Geo-Location Technologies and Other Means of Placing Borders on the 'Borderless' Internet, The John Marshall Journal of Computer & Information Law, Fall 2004, p. 101 at p. 15ff.

90See Bainbridge, David, Trademark Infringement, The Internet, and Jurisdiction, JILT 2003(1), under 5. It is mentioned that a trader, who advertises his goods on a website, should make it clear if for example sale and delivery is only intended for the United Kingdom. See also Svantesson, Dan Jerker B., Geo-Location Technologies and Other Means of Placing Borders on the 'Borderless' Internet, The John Marshall Journal of Computer & Information Law, Fall 2004, p. 101, p. 16ff.

91See Kohl, Uta, The Rule of Law, Jurisdiction and the Internet, international Journal of Law and Information Technology, vol. 12, no. 3, p. 367-376 at p. 371.

92See Mankowski, Peter, Jurisdiction and Enforcement in the Information Society, Nielsen, Ruth, Jacobsen, Søren Sandfeld and Trzaskowski, Jan (editors), EU Electronic Commerce Law, DJØF Publishing, 2004, p. 124 at p. 147f. with references. See similarly Trzaskowski, Jan, Forbrugeraftaler og Reklamering på Internettet – Internationale Privat- og Procesretlige Aspekter, Ugeskrift for Retsvæsen, 1998, p. 285 at p. 290. See also Svantesson, Dan Jerker B., Geo-Location Technologies and Other Means of Placing Borders on the 'Borderless' Internet, The John Marshall Journal of Computer & Information Law, Fall 2004, p. 101 at p. 20 with references.

93See Vasiljeva, Ksenija, 1968 Brussels Convention and EU Council Regulation No 44/2001: Jurisdiction in Consumer Contracts Concluded Online, European Law Journal, Volume 10 (January 2004), Issue 1, p. 123, at page 132.

94Order of 22nd May 2000. See interim Court Order 00/05308 (20 November 2000), The County Court of Paris. Based on English translation posted at www.cdt.org/speech/international/001120yahoofrance.pdf.

95Yahoo! Inc was also ordered to issue to all Internet surfers a warning informing them of the risks involved in continuing to view such sites and to submit for deliberation by all interested parties the measures that it proposes to take.

96Interim Court Order 00/05308 (20 November 2000), The County Court of Paris. Based on English translation posted at www.cdt.org/speech/international/001120yahoofrance.pdf.

97Order of 22nd May 2000. See interim Court Order 00/05308 (20 November 2000), The County Court of Paris. Based on English translation posted at www.cdt.org/speech/international/001120yahoofrance.pdf.

104There is extensive information source on these technologies on the World Wide Web. See for example: McCrea, Philip, Smart, Bob and Andrews, Mark, Blocking Content on the Internet: a Technical Perspective prepared for the National Office for the Information Economy. CSIRO Mathematical and Information Sciences, June 1998, p. 12ff.

108APNIC (Asia/Pacific Region), ARIN (North America and Sub-Sahara Africa), LACNIC (Latin America and some Caribbean Islands) and RIPE NCC (Europe, the Middle East, Central Asia, and African countries located north of the equator).

114Uniform Resource Locator, i.e. the entire Internet address of the Internet resource accessible via the World Wide Web. The URL includes the transfer protocol and the excact location of a file on the webserver (using for example directory name and filename, including extension).

116See in general Svantesson, Dan Jerker B., Geo-Location Technologies and Other Means of Placing Borders on the 'Borderless' Internet, The John Marshall Journal of Computer & Information Law, Fall 2004, p. 101.

117For example Quova (www.quova.com), NetGeo (www.netgeo.com), Digital Envoy (www.digitalenvoy.net) and IP2Location (www.ip2location.com). See also Geist, Michael A., Is there a There There? Toward Greater Certainty for Internet Jurisdiction, Berkeley Technology Journal, No. 16, 2002, p. 1345 at IV-B-2.

118See www.quova.com/company/quova-factsheet.shtml, where it is stated that Quova's country-level accuracy was measured at 99.9% and US state-level accuracy at 94.0% and 93.9% by PricewaterhouseCoopers.

120Order of 22nd May 2000. See interim Court Order 00/05308 (20 November 2000), The County Court of Paris. Based on English translation posted at www.cdt.org/speech/international/001120yahoofrance.pdf.

121Such an approach is also suggested in Lessig, Lawrence and Resnick, Paul, Zoning Speech on the Internet, Michigan Law Review, November 1999, p. 395 at p. 408. It is noted that such an 'IP map' might sufficiently segregate restrictive jurisdictions from non-restrictive ones. See also Svantesson, Dan Jerker B., Geo-Location Technologies and Other Means of Placing Borders on the 'Borderless' Internet, The John Marshall Journal of Computer & Information Law, Fall 2004, p. 101 at p. 6ff.

122Order of 22nd May 2000. See interim Court Order 00/05308 (20 November 2000), The County Court of Paris. Based on English translation posted at www.cdt.org/speech/international/001120yahoofrance.pdf.

123See for example www.ripe.net/db/about.html and www.internic.net/whois.html which covers the following top level domains: .aero, .arpa, .biz, .com, .coop, .edu, .info, .int, .museum, .net, and .org. See also www.zoneedit.com/whois.htm.

124Padmanabhan, Venkata N. and Subramanian, Lakshminarayanan, An Investigation of Geographic Mapping Techniques for Internet Hosts. Proceedings of the ACM SIGCOMM 2001 Conference on Applications, Technologies, Architectures, and Protocols for Computer Communication, San Diego, CA, August 2001.

125See for example Svantesson, Dan Jerker B., The Characteristics Making Internet Communication Challenge Traditional Models of Regulation - What Every International Jurist Should Know About the Internet, International Journal of Law and Technology, Vol 13, No. 1, Oxford University Press, 2005, p. 47f.

126Padmanabhan, Venkata N. and Subramanian, Lakshminarayanan, An Investigation of Geographic Mapping Techniques for Internet Hosts. Proceedings of the ACM SIGCOMM 2001 Conference on Applications, Technologies, Architectures, and Protocols for Computer Communication, San Diego, CA, August 2001.

127Padmanabhan, Venkata N. and Subramanian, Lakshminarayanan, An Investigation of Geographic Mapping Techniques for Internet Hosts. Proceedings of the ACM SIGCOMM 2001 Conference on Applications, Technologies, Architectures, and Protocols for Computer Communication, San Diego, CA, August 2001.

128Order of 22nd May 2000. See interim Court Order 00/05308 (20 November 2000), The County Court of Paris. Based on English translation posted at www.cdt.org/speech/international/001120yahoofrance.pdf. See also Spang-Hanssen, Henrik, Cyberspace & International Law on Jurisdiction, DJØF Publishing, 2004, p. 186ff. with reference to discussions following-up on the experts' report.

133Padmanabhan, Venkata N. and Subramanian, Lakshminarayanan, An Investigation of Geographic Mapping Techniques for Internet Hosts. Proceedings of the ACM SIGCOMM 2001 Conference on Applications, Technologies, Architectures, and Protocols for Computer Communication, San Diego, CA, August 2001. See point 2.1.

135Padmanabhan, Venkata N. and Subramanian, Lakshminarayanan, An Investigation of Geographic Mapping Techniques for Internet Hosts. Proceedings of the ACM SIGCOMM 2001 Conference on Applications, Technologies, Architectures, and Protocols for Computer Communication, San Diego, CA, August 2001. See point 2.1 and 6.3.

137Order of 22nd May 2000. See interim Court Order 00/05308 (20 November 2000), The County Court of Paris. Based on English translation posted at www.cdt.org/speech/international/001120yahoofrance.pdf.

139Interim Court Order 00/05308 (20 November 2000), The County Court of Paris. Based on English translation posted at www.cdt.org/speech/international/001120yahoofrance.pdf.

140For example the use of the consumer forum. See Mankowski, Peter, Jurisdiction and Enforcement in the Information Society, Nielsen, Ruth, Jacobsen, Søren Sandfeld and Trzaskowski, Jan (editors), EU Electronic Commerce Law, DJØF Publishing, 2004, p. 124 at p. 149 ('He who comes to justice, must come with clean hands').

144The area is harmonised in the European Union by directive 95/46 (24 October 1995) on the protection of individuals with regard to the processing of personal data and on the free movement of such data. The directive only deals with the processing of information relating to an identified or identifiable natural person. In many cases this requirement will not be satisfied, but when the person is identifiable the rules in the directive must be complied with. Information about nationality are under normal conditions not particularly sensitive and article 7(1)(f) of the mentioned directive provides that (normal, insensitive) personal data may be processed if it is necessary for the purposes of legitimate interests pursued, except where such interests are overridden by certain interests for fundamental rights and freedoms of the data subject. It should for good measure be noted that also other requirements in the directive apply to such processing of personal data.

158Opinion of the Economic and Social Committee on the ‘Proposal for a Council Regulation (EC) on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters’, OJ C 117 (26 April 2000), p. 10.

159Vasiljeva, Ksenija, 1968 Brussels Convention and EU Council Regulation No 44/2001: Jurisdiction in Consumer Contracts Concluded Online, European Law Journal, Volume 10 (January 2004), Issue 1, p. 123 at page 132.

164Article 1(1). It is provided in article 1(3) that the convention is not to affect legal provisions concerning nationality, citizenship or naturalization, provided that such provisions do not discriminate against any particular nationality.

167EC Treaty article 25: 'Customs duties on imports and exports and charges having equivalent effect shall be prohibited between Member States. This prohibition shall also apply to customs duties of a fiscal nature'.

168B.N.O. Walrave and L.J.N. Koch v. Association Union cycliste internationale, Koninklijke Nederlandsche Wielren Unie et Federación Española Ciclismo. Case 36-74 (12 December 1974). See also J. C. J. Wouters, J. W. Savelbergh and Price Waterhouse Belastingadviseurs BV v. Algemene Raad van de Nederlandse Orde van Advocaten, intervener: Raad van de Balies van de Europese Gemeenschap, case 309/99 (19 February 2002), paragraph 120 with references.

170Piergiorgio Gambelli and Others, case 243/01 (6 November 2003), paragraph 55 with reference to Eurowings Luftverkehrs AG v. Finanzamt Dortmund-Unna. Case 294/97 (26 October 1999), paragraph 33 and 34 and to Graziana Luisi and Giuseppe Carbone v. Ministero del Tesoro. Joined cases 286/82 and 26/83 (31 January 1984), paragraph 16.

172See Union royale belge des sociétés de football association ASBL v. Jean-Marc Bosman, Royal club liégeois SA v. Jean-Marc Bosman and others and Union des associations européennes de football (UEFA) v. Jean-Marc Bosman. Case 415/93 (15 December 1995), paragraph 86.

174The court rejected that the fact that the council has failed to issue directives provided for by articles 44 and 47 or the fact that certain of the directives actually issued have not fully attained the objective of non-discrimination required by article 43, should lead to another result.

176A requirement to provide evidence of linguistic knowledge exclusively by means of one particular diploma issued only in one particular province of a Member State.

179B.N.O. Walrave and L.J.N. Koch v. Association Union cycliste internationale, Koninklijke Nederlandsche Wielren Unie et Federación Española Ciclismo. Case 36-74 (12 December 1974). See also J. C. J. Wouters, J. W. Savelbergh and Price Waterhouse Belastingadviseurs BV v. Algemene Raad van de Nederlandse Orde van Advocaten, intervener: Raad van de Balies van de Europese Gemeenschap, case 309/99 (19 February 2002), paragprah 120 with references.

181Schepel, Harm, The Enforcement of EC Law in Contractual Relations: Case Studies in How Not to 'Constitutionalize' Private Law, European Review of Private Law, 5-2000, p. 661 at p. 666.

183Oliver, Peter, Free Movement of Goods in the European Union, Fourth Edition, Sweet and Maxwell, 2003, paragraph 4.40. See similarly Nielsen, Ruth, E-handelsret, 2. udgave, DJØF, 2004, p. 98.

184Vasiljeva, Ksenija, 1968 Brussels Convention and EU Council Regulation No 44/2001: Jurisdiction in Consumer Contracts Concluded Online, European Law Journal, Volume 10 (January 2004), Issue 1, p. 123, at page 134.

191See Proposal for a Directive of the European Parliament and of the Council on services in the internal market, Working document of the Luxembourg Presidency, containing clarifications to the Commission's proposal, Interinstitutional File: 2004/2001 (COD) (10 January 2005).

194See Vasiljeva, Ksenija, 1968 Brussels Convention and EU Council Regulation No 44/2001: Jurisdiction in Consumer Contracts Concluded Online, European Law Journal, Volume 10 (January 2004), Issue 1, p. 123, at page 132 which provides that 'The most obvious way for the company to avoid the danger of being sued in the courts of all Member States would be to place a kind of disclaimer to their website'.

195The terms of use may also contain substantive provisions whereby the User may waive certain rights to for example claiming damages. Such substantive terms are not dealt with in this thesis.

198Proposal for a Council Regulation on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, COM(1999) 348 (15 July 1999), p. 18.

201Proposal for a Council Regulation on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, COM(1999) 348 (15 July 1999), p. 18, with reference to the Commission proposal for a Council Directive on certain legal aspects of electronic commerce in the internal market, COM(1998) 586 (5 February 1990).

2021996 UNCITRAL Model Law on Electronic Commerce with Guide to Enactment. General Assembly Resolution 51/162 (16 December 1996). See also UNCITRAL Model Law on Electronic Signatures with Guide to Enactment 2001, Resolution 56/80 adopted by the General Assembly.

206This principle applies according to article 6(2) whether the requirement therein is in the form of an obligation or whether the law simply provides consequences for the information not being in writing.

211See in general Lookofsky, Joseph and Hertz, Ketilbjørn, Transnational Litigation and Commercial Arbitration, second edition, Juris Publishing and DJØF Publications Copenhagen, 2004, p. 784ff.

212See Preliminary Draft Convention on Exclusive Choice of Court Agreements, draft report drawn up by Masato Dogauchi and Trevor C. Hartley, Preliminary Document No 26, December 2004, www.hcch.net. See also Comments on the Preliminary Draft Convention on Exclusive Choice of Court Agreements received by the Permanent Bureau, Preliminary Document 29, May 2005.

214This additional flexibility is warranted by the need to respect the autonomous will of the parties. See proposal for a Council Regulation on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, COM(1999) 348 (15 July 1999), p. 18.

217See in general Mankowski, Peter, Jurisdiction and Enforcement in the Information Society, Nielsen, Ruth, Jacobsen, Søren Sandfeld and Trzaskowski, Jan (editors), EU Electronic Commerce Law, DJØF Publishing, 2004, p. 124 at p. 132ff.

219Convention of 9 October 1978 on the accession of the Kingdom of Denmark, Ireland and the United Kingdom of Great Britain and Northern Ireland (OJ 1978 L 304, p. 1).

221See Mainschiffahrts-Genossenschaft eG (MSG) v. Les Gravières Rhénanes SARL, Case 106/95 (20 February 1997), paragraphs 16-20. See also Trasporti Castelletti Spedizioni Internazionali SpA v. Hugo Trumpy SpA, Case 159/97 (16 March 1999), paragraphs 18 to 20.

225Erich Gasser GmbH v. MISAT Srl. Case 116/02 (9 December 2003), paragraph 50. See also Mainschiffahrts-Genossenschaft eG (MSG) v. Les Gravières Rhénanes SARL, Case 106/95 (20 February 1997), paragraph 17 and Trasporti Castelletti Spedizioni Internazionali SpA v. Hugo Trumpy SpA, Case 159/97 (16 March 1999), paragraph 19.

228Elefanten Schuh GmbH v. Pierre Jacqmain, Case 150/80 (24 June 1981), paragraphs 25 and 26 and Trasporti Castelletti Spedizioni Internazionali SpA v. Hugo Trumpy SpA, Case 159/97 (16 March 1999), paragraph 49 and 51.

243See article 18 of the 1968 Brussels Convention and 1988 Lugano Convention and article 24 of the 2000 Brussels Regulation which concerns jurisdiction implied from submission.

257See in general Lookofsky, Joseph and Hertz, Ketilbjørn, Transnational Litigation and Commercial Arbitration, second edition, Juris Publishing and DJØF Publications Copenhagen, 2004, p. 784ff.

262See Preliminary Draft Convention on Exclusive Choice of Court Agreements, draft report drawn up by Masato Dogauchi and Trevor C. Hartley, Preliminary Document No 26, December 2004, www.hcch.net.

263Draft report drawn up by Masato Dogauchi and Trevor C. Hartley, Preliminary Document No 26 of December 2004, http://hcch.e-vision.nl/upload/wop/jdgm_pd26e.pdf, p. 7.

267Preliminary Draft Convention on Exclusive Choice of Court Agreements, draft report drawn up by Masato Dogauchi and Trevor C. Hartley, Preliminary Document No 26, December 2004, http://hcch.e-vision.nl/upload/wop/jdgm_pd26e.pdf.

269See in general Lookofsky, Joseph and Hertz, Ketilbjørn, Transnational Litigation and Commercial Arbitration, second edition, Juris Publishing and DJØF Publications Copenhagen, 2004, p. 399ff.

287Elefanten Schuh GmbH v. Pierre Jacqmain, Case 150/80 (24 June 1981), paragraphs 25 and 26. See also Trasporti Castelletti Spedizioni Internazionali SpA v. Hugo Trumpy SpA, Case 159/97 (16 March 1999).

5. Risk Mitigation