Under current New Zealand law, Internet Service Providers ("ISPs") are potentially liable for carrying third party information, giving rise to civil and criminal causes of action. This is the case even where the ISP has no knowledge of the actionable information.

Who is at risk?
An ISP generally includes any person ororganisation that provides users with access toand/or content via, the Internet.


What is the potential liability?
In New Zealand, potential sources of ISP liability for content include civil actions, such as defamation, breach of intellectual property, and breach of privacy. There are also potential criminal offences, such as the display or supply of objectionable publications under the Films, Videos and Publications Classifications Act 1993 ("FVPCA").

Some existing laws may offer protection for innocent ISPs. For example, under the Defamation Act 1992, "distributors" and "processors" may be protected against liability if they had no knowledge of the defamatory material and did not know that the material distributed was likely to be defamatory in nature. By comparison, other laws offer no defence for ISPs to rely on. For example, under the Films, Videos and Publications Classifications Act 1993 ("FVPCA"), ISPs are potentially liable by hosting or simply providing access to "objectionable material". Although not originally intended to apply to ISPs, the FVPCA technically captures the carriage and hosting by ISPs of any content that qualifies as "objectionable" under the Act. This is the case even where the ISP is simply acting as an access provider (i.e. the content is overseas).

What is Government's response?
Currently in New Zealand, the Government does not specifically regulate the provision of services by ISPs. However, the Ministry of Economic Development has stated that the issue of ISP liability is so significant that separate legislation may be required. This was in response to recommendations made by the Law Commission (in its report, Electronic Commerce Part 2: A Basic Legal Framework) that ISPs should have no civil or criminal liability for content unless the ISP:

- has actual knowledge of the existence of the relevant information; and
- fails to promptly remove any offending information which it becomes aware of.

What about ISP liability overseas?
The recommendations made by the Law Commission are consistent with approaches taken overseas to ISP liability. For example, in Australia, ISPs are not liable under State or Territory law for content where they are not aware of its nature. Nor are they required to monitor, make inquires, or keep records of Internet content which they host or carry. However, they may be required, by law, to remove any "prohibited content" located in Australia, or where the prohibited content is hosted outside Australia, take all reasonable steps to prevent users from accessing the content.


What are the practical implications for the Internet community?
ISPs may be easier to locate than primary publishers (who may be located offshore), and are also likely to have greater financial resources to settle claims. Despite this, there have been no known successful prosecutions against ISPs in New Zealand for third party content the ISP hosts or carries.

Overseas ISPs have not been so lucky. The claim made against Yahoo.com for providing access to Nazi memorabilia in France, has been well publicised. In the United States, in February 2001, a New York ISP, BuffNET, pleaded guilty to the misdemeanour charge of knowingly providing access to child pornography. This was the first time an ISP in the United States had been found liable for illegal content on its servers.

Because of the ramifications of ISP liability, some web portals in the United States have started restricting the services they provide. For example, AltaVista, under child protection legislation reportedly recently closed down services, including chat rooms and bulletin boards, after they were publicly accused of being too loose in preventing children from visiting adult only areas.


What to do?
Hopefully, the Government will address the uncertainties surrounding ISP liability in New Zealand sooner rather than later. Until then, an ISP which suspects that one of its subscribers is downloading or supplying objectionable material should consider each situation on a case by case basis.

- There is no obligation, at law, to monitor the content.
- If the ISP has concerns regarding certain content, does it actually know that the content breaches the law?
- If not, the ISP should ensure it has reasonable grounds for believing this, before alerting the relevant authorities. This is necessary to avoid a possible breach of the Privacy Act.
- It should also consider its contractual arrangements with the subscriber before limiting access to content/services.
- If content is an "objectionable publication" under the FVPCA, the ISP should seek legal advice as to the ISP's liability for copying and disseminating it is strict.

This is a general summary only and should not be taken as a substitute for specific advice.

x-tech group Simpson Grierson
Web site: Simpson Grierson

Contacts
Michael Sage, Partner, michael.sage@simpsongrierson.com
Earl Gray, Partner, earl.gray@simpsongrierson.com
Jan Kelly, Partner, jan.kelly@simpsongrierson.com
April 2001