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Wendy R. Leibowitz · Live From London
Bar Confronts Sticky Wicket of Cyberjurisdiction
A Report From the Floor of the ABA Annual Meeting

July 24, 2000 (SmartPros) Is ordering a book from a French Web site the legal equivalent of traveling to Paris to buy it, or is the transaction more akin to a Parisian bookseller boarding a plane and delivering it to the buyer?



This is the essence of cyberspace jurisdiction, according to Thomas P. Vartanian, who chairs the e-commerce practice in the Washington, D.C., office of Fried, Frank, Harris, Shriver & Jacobson. Cyberspace could be so distinct a place -- as if we had “landed on Mars” -- as to require an entirely new set of “rules of engagement,” as Mr. Vartanian calls them.

Mr. Vartanian was the first speaker on a distinguished panel that introduced a report prepared by the American Bar Association’s Business Law Section. "Achieving Legal and Business Order in Cyberspace: Global Jurisdiction Issues Created by the Internet" was two years in the making, and comprises contributions of about 100 cyberlaw authorities from around the world. The report can be accessed at www.kentlaw.edu/cyberlaw/docs/drafts/draft.rtf.

It was the panel’s final speaker, however, who illustrated the contrast in perspectives on the issue of cyberjurisdiction. Catherine Kessedjian, deputy secretary general of the Hague Conference on Private International Law, which deals with the jurisdiction of courts, rejected the questions as posed. The question is not where something takes place in cyberspace, she said. "There are too many possible correct answers," especially when software is downloaded. The real issues are which dispute mechanisms work best on the Net, who will resolve disputes and how they will do so.

Private-Sector Procedures
Alternative dispute resolution mechanisms, including mediation on sites belonging to companies like eBay Inc., are springing up independently of the ruminations of legal experts mired in "real-world" dispute paradigms, and faster than Ms. Kessedjian can track them. "By the time I finished my report in December 1999, there were at least a dozen more" dispute resolution methods on the Web, she sighed.

These private, voluntary dispute systems are everything courts are not. "The mechanisms are low-cost," Ms. Kessedjian emphasized, "and they are transparent." Unlike a court, whose procedures often are unfamiliar to the parties, everyone seems pretty clear about online dispute processes. Their goal is not to interpret and apply the law, but rather to leave buyer and seller satisfied.

These were two of the presenters at the American Bar Association convention in London, where there was much pomp and ceremony. A red-coated brass band played fanfares as Prime Minister Tony Blair opened the conference at Royal Albert Hall. After reminding the audience that he had practiced law for seven years before entering politics, he called on Britain to be the bridge between Europe and the United States. Mock courtrooms were set up to try Henry VIII’s divorce and to put the American Revolutionary War generals on trial. Distinguished public servants from the United Kingdom and the United States discussed human rights issues and lawyers’ roles in redressing grievances of torture and abuse of power.

The gap between the vision of a borderless world and the world in which we now live was in evidence in the cyberjurisdiction report. The conference room in which the report was released remained crowded as speaker after speaker rose to address different nuances of law on the Internet: taxation, libel, privacy and data protection, consumer contracts and telemedicine. The document called for the establishment of a multinational online standards commission and the fostering of international industry councils to settle disputes.

Many of the 15 law-firm practitioners and academics on a panel delighted in discussing the nuances of such international bodies, as well as the need for uniformity and predictability in a world in which Americans say "tomato" and British say "banana." The business lawyers who actually operate in cyberspace, however, tried to infuse the discussion with a modicum of reality.

It’s The Customer, Stupid!
John Place, general counsel at Yahoo! Inc., the California-based Internet directory, said that working in cyberspace finally enabled him to understand what Justice Oliver Wendell Holmes meant when he said, "The life of the law is not logic, but experience." Yahoo! is fighting a decision of a French court that held the company liable for the sale of World War II memorabilia on its U.S. auction site. The court, in Lyon, is calling for Yahoo! to bar access to its site from France.

"The rapid increase of countries trying to regulate outside their borders is the biggest threat to Yahoo! right now," said Mr. Place. "We don’t know where many of our customers are located. If someone is accessing the site from America Online in France, it appears to us as if they are in Virginia," where AOL is headquartered, he said.

Michele M. Turner, assistant general counsel at Dell Computer Corp., seemed to put Mr. Place’s comments into real-world context. She noted that Dell sells about $50 million in merchandise per year online, and does not need to turn to courts or to international tribunals to resolve disputes. Indeed, 85% of customer complaints are settled by the first contact with the company, be it e-mail, phone or "snail" mail. "We need to focus on dispute avoidance," she emphasized, not on the creation of cybercourts.

The best way to avoid disputes from rising to a shouted, or e-mailed, "See you in court!" is for consumers to deal directly with the company, she said. In many cases, companies may be able to do more for the consumer than any court can. A company can offer store credit, discounts, refunds, bonus gifts -- in essence, anything to save its reputation.

These days, disgruntled consumers can quickly establish "venting" sites with names like "ihatedell.com." or "dellsux.com." Ms. Turner said that quickly responding to a consumer’s complaint to prevent these sites from popping up is a key goal of Dell’s customer complaint service -- and this would not be an objective for a cybercourt in resolving a dispute. "No court cares as much about satisfying our customers as we do," she said.

Yahoo’s Mr. Place called the ABA committee report is "a start -- but just a start." In determining jurisdiction, the committee focused on the question of which consumers had been "targeted." Thus, if Yahoo! did not target French consumers on its auction site, it would not be subject to French court jurisdiction. That is helpful in some cases, said Mr. Place, but not for auction sites, whose internal guidelines lay out the law. Experience will be the greater teacher, he noted, and he called for companies to work out solutions for themselves before international regulatory entities are established.

Attorney Turnout Is Light
There is, perhaps, no more appropriate symbol of vanishing national borders than the ABA’s decision to hold a portion of its annual convention in London. Location matters, however, especially when it comes to business: Only 7,000 attendees made the journey -- half the expected number -- and the ABA expects to lose almost one million dollars on the event.

Please send comments, questions and article proposals to mailto:information@smartpros.com.

2000, Smartpros Ltd. All Rights Reserved.

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