A number of high profile US groups have recently filed a brief supporting a challenge by Yahoo! to a French court ruling that restricts what products Yahoo! can offer on its US auction site. Yahoo! maintains the site which is aimed at US customers. The outcome of the Yahoo! challenge could have a major effect on the ability of foreign courts to enforce their own laws on ISPs ("Internet Service Provider") and Internet content providers and users world-wide.
Background
In November 2000, a French court ordered Yahoo! to prevent French users from viewing or participating in any auction of Nazi-related memorabilia conducted on the Yahoo! US based servers. Yahoo! was given three months to set up a system to filter French users or suffer a fine for each day that it failed to comply. The order was made to comply with French law that prohibits the display or sale of items that incite racism. Yahoo! already ran a French auction site that banned the sale of Nazi memorabilia. Yahoo! unsuccessfully argued that it could not effectively block people from one country going into another country-specific site to access objectionable material. In the end Yahoo! complied with the ruling by removing all Nazi-related memorabilia from its US auction pages.
Yahoo! challenge
Yahoo! has recently asked a US court to issue a declaratory judgment supporting its view that French courts have no authority over content carried on US-based servers and aimed at US users. A US federal judge has agreed to consider this issue and the next hearing in the case will be held in the US District Court in San Jose, California shortly.
This move has been supported by a number of high profile groups in the US such as the US Chamber of Commerce, Information Technology Association of America, US Internet Industry Association, Online Publishers Association and the United States Council for International Business. This support is given on the basis that the French ruling could seriously impact the online activities of American businesses, grinding them to a halt.
The brief supporting Yahoo! challenged the French ruling on a number of other grounds. It stated that:
- The activity took place in the US not France and was not directed at France.
- The French court lacked personal jurisdiction over Yahoo!.
- Compliance with foreign law may result in a breach of domestic law. By banning the sale of Nazi-related memorabilia from US Web sites there could be a breach of the US constitutional right to freedom of speech.
- Compliance with local laws in every country where the Internet was accessed would cripple the Internet and the compliance costs could lead to a number of small companies and non-profit organisations not being viable.
- If every US Web site operator was required to abide by the laws of every nation with Internet access, it would be impossible for anyone to comply.
Lessons to be learnt for New Zealand based Web sites
The final outcome and impact of the Yahoo! challenge is difficult to predict. However, there are steps that New Zealand Web site operators can take to minimise the risks of a foreign court deciding that it has the right to hear a case in its jurisdiction. In a recent case the US Federal Court in New Jersey declined to hear a case against a Spanish company on the grounds that the Web site was not purposefully directed at New Jersey or the United States.
When establishing a Web site, consider using the following:
- Terms of use that clearly indicate the jurisdiction and system of law that will apply to use of the Web site and govern any disputes.
- Notices and disclaimers that state which country or countries the Web site is aimed at (and which exclude residents of all or specified other countries).
- Filters or blocking devices. As mentioned in the Yahoo! case, it is possible to prevent users with certain Internet protocol addresses from accessing a Web site.
- Careful selection of audience. The language used on the Web site, contract information and the ability for the audience to contact agents or the business may be useful pointers as to whether the Web site is aimed at a particular country.
This is a general summary only and should not be taken as a substitute for specific advice.
x-tech group Simpson Grierson Web site:
x-tech group Simpson Grierson Contacts
Earl Gray, Partner, earl.gray@simpsongrierson.com
Michael Sage, Partner, michael.sage@simpsongrierson.com
Jan Kelly, Partner, jan.kelly@simpsongrierson.com
Lianne Young, Senior Associate, lianne.young@simpsongrierson.com
Sean Murphy, Solicitor, sean.murphy@simpsongrierson.com
October 2001