Internet Regulation-Economist Article

A JURISDICTIONAL TANGLE
Media companies around the world are alarmed by a high-court ruling in Australia

A RULING by Australia's high court on Tuesday December 10th has further complicated the already murky question of which laws and whose courts have jurisdiction over the Internet. In a closely watched libel case, the court has confirmed a lower-court ruling that Dow Jones can be sued in the Australian state of Victoria over an article that appeared on its website. The court rejected the American company's claims that any libel action should be heard in New Jersey, where its web servers reside. A range of media groups and Internet firms--including CNN, Yahoo!, the NEW YORK TIMES, the WASHINGTON POST, Britain's GUARDIAN, Reuters and Amazon--had joined the case on Dow Jones's side, fearing that a ruling against the firm would set an important precedent which could make all Internet publishers open to lawsuits in any of the 190 countries where the Internet can be accessed and so curb free speech everywhere.

The case has been brought by Joseph Gutnick, a wealthy Australian businessman, over an article in BARRON'S, a weekly financial magazine and corporate cousin of the WALL STREET JOURNAL, Dow Jones's main publication. Mr Gutnick objected to an article in the October 2000 issue that appeared both in print and on Dow Jones's popular Internet site. The article claimed that Mr Gutnick was "the biggest customer" of a convicted money launderer. Melbourne-based Mr Gutnick sued Dow Jones in the state court of Victoria, which has some of the severest libel laws in any established democracy.

Dow Jones acknowledged that it had several hundred online subscribers in Victoria, but argued that the case should be heard where the articles were "published" and said that publication took place when the article was uploaded to its computer servers in New Jersey, where Mr Gutnick's chances of winning a libel suit would be much slimmer. The Victoria court ruled that, in fact, publication also took place in Victoria when the articles appeared on subscribers' computer screens, and so the case could be tried locally. Dow Jones appealed. The Australian high court has now confirmed the earlier ruling. Mr Gutnick will be able to pursue his case in the lower state-court.

This is just the latest in a string of cases in which courts worldwide have struggled to cope with the question of who has jurisdiction in the borderless domain of cyberspace. These have involved not just defamation, but criminal law as well. The most celebrated has been a case brought against Yahoo!, an Internet portal, for the sale of Nazi memorabilia on one of its auction websites, which a French court ruled breached French law against the its auction sites, it has continued to fight enforcement of the French ruling display of Nazi insignia. Although Yahoo promptly banned all hate paraphernalia from in
American courts. It has won its case in an American federal court on the grounds of America's first amendment free-speech protections, but French civil-rights campaigners have appealed, and the case is now being heard by a federal appeals court.

In a more ominous development, Andrew Meldrum, an American reporter, was prosecuted this year by Robert Mugabe's repressive government in Zimbabwe for "publishing a falsehood" in an article published on the website of the GUARDIAN. Mr Meldrum (who also writes for THE ECONOMIST) was ultimately acquitted of the charge, but the Zimbabwe court had no hesitation about claiming jurisdiction in the case, and Mr Meldrum faced the possibility of two years in jail. It is the possibility of global liability, in both criminal and defamation law, which now worries big media companies.

However, the outcome of the Australian case may not be as damaging as these companies fear. For one thing, it was not much of a surprise. Settled law in most countries has long allowed defamation suits to be brought against publishers wherever their publication is circulated, irrespective of where they based their operations or did their printing. For example, Britain, where libel laws have long favoured the plaintiff, has always been a favourite forum for such suits, even against foreign newspapers with minimal circulations in Britain. Similar cases in the United States have allowed plaintiffs to sue locally, though no American state libel laws are as restrictive of press freedoms as British laws.

In the Australian case, the high court limited its ruling by saying that a libel action could be brought only if the person had a reputation in the place where the material was published, in this case Mr Gutnick's home city of Melbourne. If the ruling is followed as a precedent by other nations' courts, as publishers fear, then this limitation alone could stop a frenzy of jurisdiction-shopping by plaintiffs. Moreover, libel cases are expensive to pursue. The threat of a wave of cases may be more theoretical than realistic. Not many people have the deep pockets of Mr Gutnick, who made his money in mining.

Nevertheless, one thing the Gutnick case does highlight is that national laws in a wide array of areas, not just libel, now seem to be out of step with the realities of the Internet. This tangle will take years to sort out, and is likely to require unprecedented co-operation among national governments, in criminal law enforcement as well as civil lawsuits.

In the case of libel itself, there seem to be two obvious paths, but both are fraught with difficulties. Governments might agree international rules for libel. But with different traditions on how much latitude a free press should have, reaching agreement is bound to be difficult. Alternatively, technology may yet come to the rescue. Software that allows websites to identify the geographical location of a visitor is becoming ever more refined. Eventually, it may allow publishers to block access to anyone in certain countries where libel laws pose too much of a risk. The use of such blocking software--which is also being deployed by repressive governments such as China's and Saudi Arabia's--might well offer publishers a persuasive legal defence in libel lawsuits, even if users found a way to obtain an offending article.

Many publishers and Internet enthusiasts will view the spread of such technology as a tragedy, fragmenting the Internet just as it promises to be an engine for global free speech and creativity. But the technology might also push governments into relaxing their restrictions on speech and publication. Voters in Melbourne are unlikely to be happy to discover that they cannot access mainstream websites because of the severity of their local libel laws.