International lawsuit treaty raises sovereignty fears

Discussions due to be held at The Hague next month will set the stage for harmonised laws that could force controversial content off the Web

Discussions will begin anew next month at The Hague on an international treaty that could make US Web sites and Internet service providers more vulnerable to lawsuits from around the world.

The controversial draft convention, which would set rules for jurisdiction and the enforcement and recognition of foreign judgements, has been in the works for seven years. Delegates to the Hague Conference on Private International Law, an international organisation aimed at harmonising international rules on private law, will meet for formal negotiations from 6 June 6 through to 20 June. This is the first meeting since 1999, when they produced the last public draft.

The treaty as presently drafted could exacerbate a trend of foreign countries claiming jurisdiction over US Web sites, said Barbara Wellbery, a partner at Morrison and Foerster's Washington, DC, office and former chief counselor for e-commerce to the Commerce Department's undersecretary for international trade. One recent example is a French court's efforts to force Yahoo! to block French users from accessing racist material on the company's Web site. While the draft convention would allow US courts to refuse to enforce such a ruling on public policy grounds, it could be enforced in other countries.

"The result could be that the Internet is reduced to the lowest common denominator where Web sites avoid any but the safest content for fear of offending someone and being hauled into court," Wellbery said during a 22 May hearing before a House Energy and Commerce subcommittee.

Some industry officials said businesses that are worried about being subject to the jurisdiction of some countries may simply advise visitors to their Web sites that they do not do business with customers in those countries.

"We cannot afford to allow the Hague process to place us into a situation that Balkanizes the Internet and limits the ability of e-commerce to flourish," said Marc Pearl, a partner at the Shaw Pittman law firm. Pearl is coordinating the e-commerce industry's input to the US delegation to the Hague talks.

The convention also takes a European approach to consumer protection. It would allow consumers to sue in their home courts and would also block companies from including choice of forum clauses in contracts with consumers, critics said. They added that this would prevent companies from encouraging the use of alternative dispute mechanisms to settle arguments with consumers.

Alternative forms of dispute resolution and mediation "are just getting in place, and we are concerned that the Hague convention doesn't adequately protect or recognize the full range of these mechanisms," said Marilyn Cade, AT&T's director of Internet and e-commerce law and government affairs.

Some Internet service providers and consumer groups argued the convention also would allow copyright owners to avoid limitations on the liability ISPs can face for infringement that takes place on their networks without their knowledge by bringing suit in countries without such limitations. Consumer advocates added that the proposal could limit free speech and Americans' right to fair use of copyrighted works. They have urged that intellectual property be removed from the convention.

"It just sets loose a lot of different things," said James Love, director at the Consumer Project on Technology. "It affects speech, wreaks havoc on the free software [movement]. It does way too much."

Copyright owners disputed such arguments, saying they also have concerns with the draft convention.

"A common-sense convention on jurisdiction and the enforcement of foreign judgements could have some benefit to the copyright industries in confronting global infringements, and we support the United States' efforts to reach such a common-sense solution," said Bonnie Richardson, the Motion Picture Association of America's vice president of trade and federal affairs, during last week's House hearing. "Unfortunately, the operative draft of the convention is painted with a broad brush that reflects the fact that much of the discussion leading up to its creation occurred before the advent of e-commerce."

Currently, most foreign judgements are recognized by U.S. courts and an international treaty would help level the playing field for U.S. litigants, said Jeffrey Kovar, the State Department's assistant legal advisor for private international law and the lead U.S. negotiator on the convention.

Still, the US has concerns about the current draft and will seek to replace it with a "simpler approach," he said.

Delegates to the Hague talks will have to decide how to proceed with the troubled draft, which has come under a barrage of criticism from the US business sector as it has gained more attention. While the US could walk away from the convention, both government and industry officials said that the country has more to gain by remaining engaged and attempting to fix the problems with the draft. They said that such a treaty might still affect US businesses even if the US opted against signing it.

"If the delegates to this convention do not use this opportunity to begin to look seriously at revising and editing these troublesome and challenging provisions, it's going to be very difficult to get private sector support and have it ratified and implemented in the US and many countries," Shaw Pittman's Pearl said.

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