Introduction to E-Commerce Law

Module 1 - Jurisdiction from a Domestic and International Perspective

a. Domestic Jurisdiction

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NARRATIVE

International Shoe and its progeny map the four corners of the subject of jurisdiction in the United States. The question of what court has control over the person or property in dispute is the central focus. Discussion of the presence of the parties within the Forum is common for state and federal courts as they shift disputes from court to court. Inconvenience is the frequent defense for a party who wishes to avoid defending themselves in a foreign jurisdiction.

This first module is a review of jurisdiction as a tenet of American jurisprudence. The businessperson who offers goods or services online should be aware of these basics. A brick and mortar business stands upon the ground of a forum in a physical way so that the court can exercise its power over the business. Selling to neighbors makes dispute resolution a matter of local jurisdiction. The court is said to have “personal jurisdiction” over the parties and the cause of the dispute by virtue of the fact that each of the parties resides within the boundaries that the court claims as its jurisdiction.

When people began to have commercial dealings with entities outside of the jurisdiction of the local court, the concept of how one exercises judicial power over out-of-forum parties needed to be refined. The case International Show Co. v. Washington expanded the courts reach. It found that the person did not have to be physically within the jurisdictional boundaries of the court. All that was necessary was that the party maintains sufficient contacts within the forum and the court could exercise “personal jurisdiction” over the party.

The Minimum Contacts doctrine allowed for General and Specific jurisdiction depending upon the number and duration of the contacts. One who did business in the forum, who had branch offices, or sent catalogs into the forum, was held to be under the General jurisdiction of the court. One who only had limited contacts with the forum could still come under the jurisdiction of the court for activities irregularly conducted within the state.

The Minimum Contacts doctrine allowed for General and Specific jurisdiction depending upon the number and duration of the contacts. One who did business in the forum, who had branch offices, or sent catalogs into the forum, was held to be under the General jurisdiction of the court. One who only had limited contacts with the forum could still come under the jurisdiction of the court for activities irregularly conducted within the state.

When US courts apply the Minimum Contacts doctrine to Internet cases, they distinguish among several categories of websites, including passive websites and interactive websites. Typically, passive websites do not allow for e-businesses to be required to defend a lawsuit brought in another state, and interactive websites likely require the company to appear in court in another state to answer claims and lawsuits initiated there. With time, courts have been refining this approach, which is called the “interactivity” doctrine. For certain cases, they have also developed another doctrine, called the “effect-based” doctrine.

From an international perspective, the issue of jurisdiction becomes even more complicated. The rules are different in the European Union, for instance, and in spite of the efforts of the Hague Conference on Private International Law and the Rome Institute on the Unification of Private Law, no general consensus has been found yet on how to harmonize jurisdiction rules worldwide. Recent cases such as the Yahoo! case, in which Yahoo was ordered by a French Court to implement technical or access control measures blocking auctions featuring Nazi memorabilia from French residents, show that e-businesses may be hauled into courts in any foreign country where their website is accessible.

Thus, the website operator needs to be aware that a customer may raise a dispute in a far corner of the country that may have to be defended in that far corner. The location of the suit is a threshold question that must be determined before the case can go forward. And, as Internet jurisdiction is still an unsettled body of law, the website provider should preempt the question by setting the jurisdiction in the terms of the contract. Choice of law and forum clauses, written into the sales contract, will go a long way toward settling the question of jurisdiction. Ignore this simple remedy and you may find yourself in a courtroom in a location far from your home ground.

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ASSIGNMENTS

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SUPPLEMENTAL DOCUMENTS

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CASE LAW

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