Author: Christopher Hamel-Smith
A South Korean lawyer contacted me recently by telephone. He had located my articles on Y2K legal issues, originally published as part of this series, by conducting a search on the Internet. We discussed a number of his questions and continued our exchange of information and ideas via e-mail. To me this interaction exemplifies the truly global nature of the business environment being created by today's Digital Revolution.
As we use digital technology breaks down the traditional barriers of space and time, our ideas and information, as well as our products and services, become accessible across the globe and around the clock. To survive and prosper we must go beyond using the Internet to purchase software, computers, music, books and other products and services without regard to national boundaries. We must begin to ourselves compete in this global and virtual marketplace where time and distance are rapidly disappearing as competitive factors.
One of the challenges that the global nature of e-commerce poses for the commercial community is that we must learn how to manage our legal risks across national boundaries. This is a particularly difficult because legal systems are rooted in the idea of sovereignty within territorial boundaries. This is reflected, for example, in the ease with which we speak of the Constitution of Trinidad & Tobago, the Laws of Trinidad & Tobago and the Courts of Trinidad & Tobago.
Of course, international trade is not new. And many of the challenges posed to legal systems by the conduct of commerce across state and national borders are also not new. However, digital technology - and the various forms of e-commerce that it facilitates - dramatically increases the extent to which business is conducted across such boundaries. It also permits commerce to be conducted in ways that make it difficult to determine the physical location of the transacting parties. Indeed, e-commerce may also make the physical location of the parties of little practical or commercial relevance. This is reflected in the way that we navigate around the Web, linking from site to site without any regard to the physical location of the various servers.
Legislators and judges who have to develop and apply the laws to meet such new situations face significant challenges. Commercial lawyers who assist companies that engage in e-commerce across national and state borders also face similar challenges in order to adapt existing legal principles to allocate and manage the commercial risks.
One such challenge for businesses and their legal advisors is to create as much certainty as possible about how commercial risks are to be allocated between the parties. And, in previous articles we have examined how contracts can be used to create various legal structures for this purpose. However, we have also seen that the laws that affect how contracts may be formed, interpreted and enforced vary from country to country. For example, different rules apply to such issues as whether certain types of contracts must be made in writing, or must be signed, in order to be legally enforceable. This is obviously a matter that is of considerable significance to the conduct of e-commerce.
In practical terms, it can be very important to ascertain which courts have the authority or jurisdiction to determine any disputes that may arise between parties who are conducting e-commerce across national and state borders. This may determine whether or not you can be forced to become involved in litigation in one or more foreign jurisdictions where you may find it difficult and very expensive to protect your rights. For example, it can lead to the nightmare of becoming embroiled in litigation in a US Court. At least theoretically, it can even expose you to the horror of becoming engaged in litigation in every jurisdiction from which your Website can be accessed, i.e. in almost every country in the world.
While it is not possible to entirely avoid these legal risks associated with conducting e-commerce beyond our national boundaries, there are a number of ways to manage and mitigate these risks. Managers need to be aware of these risks and the options for managing them in order to inform their selection of business models and systems for e-commerce. In my next article we shall therefore examine some of the key legal principles that determine which courts have jurisdiction to determine disputes that arise between parties conducting e-commerce across national and state borders. In doing so, we shall highlight some of the options available to companies that wish to manage the risks associated with this issue. We shall then take a look at the evolving US case law insofar as it can help us to identify - and seek to avoid - some of the characteristics of a Website that may allow a US court to assume jurisdiction over us on the basis that our Website is accessible from within the US.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
