With no set protocol for solving international e-commerce disputes in place, conflict resolution can get a little murky. However, current court battles and jurisdiction conventions may force a renewed focus on a key aspect of an increasingly global trading community.

As companies increasingly use the Internet to engage in e-commerce with other countries, they need to be acutely aware of the cultural differences and social mores of the host country, as the laws and customs of one country may conflict with the sales practices of the other. This is especially true since the question of “which country’s laws govern international e-commerce transactions?” has yet to be answered.

Central to this discussion is a recent ruling by the French courts against Yahoo. The reason for the court’s verdict was based on an infringement of the country’s laws prohibiting the sale of Nazi memorabilia to citizens of its country. The Internet giant was ordered by the French court to either block access of its site to French citizens, or pay a fine of $13,000 for each day the auction site remained accessible. Yahoo removed the offending materials from its site but did not comply with the ruling. Instead, it turned to the United States Federal Court in San Jose, CA. for relief. It hopes that the US Federal Court will rule in its favor establishing that the French Court cannot hold U.S. companies to French laws, particularly as the US-based Yahoo web site was not targeting the French. There has not yet been a decision as to whether the US Federal Court will hear Yahoo’s case. If it does, the outcome will set an important precedent for legislation governing international business of all types. At the moment, the eyes of the e-commerce world are focused on the outcome.

The Yahoo dispute has spurred the development of content-filtering software that some argue may affect the relative freedom of international e-commerce, as well as the flow of information over geographical borders. In considering the possibilities of future confrontations, the emergence of content filtering software packages was, perhaps, inevitable. The systems employ the user’s Internet Protocol (IP) address as the basis for determining the location at which the web site is accessed. For example, if the IP address indicates that the user is from France, a block can be placed to prevent the user from accessing pages that are deemed illegal under French law. In relation to “tracking”, a group of technical advisors in the Yahoo case, showed that newly developed software was only able to identify 60% of portal users. Even, if filtering software were developed to a higher degree of efficiency, some experts suggest that it would be rather chaotic for companies to tailor their content to meet the differing legal requirements of each country. In addition, they contend that filtering software threatens to ignite the issues of privacy and free-speech as the technology could be used to suppress the traffic of information to specified populations and/or track and create profiles of individuals based on their IP address.

Slated to resume talks in June of this year is the Hague Convention on Jurisdiction, an international treaty-setting body investigating the feasibility of E-commerce jurisdiction. Among the issues being debated is whether consumers should have the right to take businesses to court from their home countries. As one might imagine, the results are important to any U.S. business that intends to engage in e-commerce with foreign country.

With regard to the possible outcome of the talks, many believe the Hague Convention should avoid rushing to judgement. There is a general opinion that the Yahoo case should be resolved first and treated as a precedent. In the words of one Hague Convention member, Marc Pearl, “Letting the courts, both legal and the court of public opinion and common sense, play out will help define and set a foundation upon which to build where we want to go in treaties.”

Sources: Border Disputes Simmer
Elizabeth Hurt
Business 2.0, April 30, 2001
http://www.business2.com/ebusiness/2001/04/globalsimmer.htm

Taming the Web
Patricia Jacobus, Lisa M. Bowman, Rachel Konrad
CNET News, April 19, 2001
http://news.cnet.com/news/0-1005-201-5589627-0.html?tag=unkn

Yahoo Case Raises Issue of Internet Borders
Matt Berger
Upside Today, November 3, 2000
http://www.upside.com/texis/mvm/print-it?id=3a01c42cd&t=1

Hague Convention Homepage in English
http://www.hcch.net/e/index.html