Ecommerce and Jurisdiction

Earlier in the year I gave a talk on ecommerce and online contracts.

Recently a case I mentioned in my talk(Gutnick v Dow Jones) was concluded.

So it’s worth repeating what the case did and didn’t decide.

For the defendant Dow Jones the defamation case against it was ostensibly about which court had jurisdiction to decide about matters that occurred online. However the rules relating to torts like defamation are different from the rules relating to contracts.

The basis of a court exercising jurisdiction can be either the location of a party or the cause of action.  A foreign body corporate carrying on e-commerce in a place could be held to be carrying on business there and subject to the local court’s jurisdiction even if it did not have a physical office there.

In relation to a contract dispute, where is the contract formed? Where the consumer clicked the button or where the supplier receives the message that the button has been clicked?

In a tort action, such as defamation, the argument was where is the tort committed? Where is the place of publication? Where the information is uploaded or where it is downloaded?

In Dow Jones & Company Inc. v Gutnick [2002] HCA 56 , Gutnick brought an action in the Supreme Court of Victoria claiming that Dow Jones had defamed him by publishing an article, "Unholy Gains" dealing with money laundering allegations on its subscriber-based website. Dow Jones contended that publication occurred when the material was uploaded from the company’s webserver in New Jersey and therefore, the jurisdiction should be there. However Justice Hedigan disagreed, concurring with Gutnick’s argument that "the article was published in the State of Victoria when downloaded by Dow Jones subscribers".

Dow Jones lost an appeal to the Court of Appeal of the Supreme Court of Victoria and appealed again to the High Court. Limited special leave to appeal was granted.

At the appeal, leave was given to a group of 18 international publishers to intervene in support of the appellant.

All of the seven High Court judges dismissed the appeal. The majority judgment was a joint judgment by four of the judges:

Argument of the appeal proceeded from an acceptance, by both parties, of certain principles. First, it is now established that an Australian court will decline, on the ground of forum non conveniens, to exercise jurisdiction which has been regularly invoked by a plaintiff, whether by personal service or under relevant long-arm jurisdiction provisions, only when it is shown that the forum whose jurisdiction is invoked by the plaintiff is clearly inappropriate. Secondly, it is now established that in trying an action for tort in which the parties or the events have some connection with a jurisdiction outside Australia, the choice of law rule to be applied is that matters of substance are governed by the law of the place of commission of the tort. Neither party sought to challenge either proposition.

The majority’s judgment of the High Court concluded that since Mr Gutnick limited his claim to publications within Victoria, the case related to a tort committed within Victoria.

They concluded :
the spectre which Dow Jones sought to conjure up in the present appeal, of a publisher forced to consider every article it publishes on the World Wide Web against the defamation laws of every country from Afghanistan to Zimbabwe is seen to be unreal when it is recalled that in all except the most unusual of cases, identifying the person about whom material is to be published will readily identify the defamation law to which that person may resort.

However in respect of online contracts the jurisdiction debate continues, even when the contract determines the jurisdiction where any litigation will take place. A number of US cases argue that such provisions can be unconscionable.

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