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Consumer Protection, the Nation-State, Law, Globalization, and Democracy


John Goldring [ 1 ]

School of Law
University of Wollongong, Australia

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Table of Contents


Abstract

     Consumers are now participants in a global market, and possibly in a cybermarket. Law can only protect them (or us-we are all consumers) through rules which are essentially national, and which can only be enforced within national frameworks. Most of those rules have been enacted through a democratic political process. If the rules are useless in practice, people may question the usefulness of democracy and nation states. Consumer protection laws enable the correction of market failures and the redress of inequalities of information and power. Recent cases indicate that consumer protection laws, for a number of reasons, will be of little practical use to protect consumers in the global economy and in cyberspace. That raises the question of whether democratic politics can ever be used to bring countervailing force against those who abuse their position in the global market or the cybermarket. If so, what other national laws will be rendered useless: labor laws, environmental laws, other laws that result from an often vigorous political process? What functions remain for democratic politics?


Challenges to the Nation-State


A combination of new technologies and the globalization of the economy presents challenges to national legal systems and therefore to the democratic process. National legal systems are the outcome of the political process within the nation.

The legal implications of two recent cases suggest that many social benefits-which people assumed were enshrined in law-are now under threat. Laws embodying political gains of a particular section of society may remain on the books, but technological and economic changes may render them ineffective.

Virgin Atlantic Airways Ltd


In 1995 Virgin Atlantic Airways was fined $14,000 by the U.S. Department of Transportation for putting misleading advertising on the Internet. [ 2 ] It had placed on its World-Wide Web page a statement that a certain fare for a designated sector was available when, in fact, the lowest available fare for that sector was significantly higher. The case was reported in a Canadian newspaper which gave very few details, but even without the details, some implications are obvious:


Williams v. The Society of Lloyd's [ 3 ]


An action against Lloyd's and an agent alleged, among other causes of action, breaches of the Australian Trade Practices Act 1974, s. 52, and its counterpart in the Fair Trading Act 1985 (Victoria), s. 11, which provide that a person shall not, in trade or commerce, engage in conduct that is misleading or deceptive or likely to mislead or deceive. Most of the defendants were located in England. The plaintiff and one of the defendants resided in Victoria. The action arose out of representations alleged to have been made on behalf of Lloyd's and others by their agent in Victoria. In interlocutory proceedings, the judge stayed proceedings against the English defendants permanently on the ground that the Rules of the Victorian Supreme Court did not apply to these proceedings, because claims under the Trade Practices Act and the Fair Trading Act were not "actions in tort". The relevant rules of the court allowed service of process out of the jurisdiction where the proceeding is either founded on a tort committed in Victoria [ 4 ] or is "in respect of damage suffered wholly or partly in Victoria and is caused by a tortuous act or omission wherever occurring." [ 5 ]

The implication of this decision is perhaps even more worrying than the Virgin Atlantic case. Consumer protection laws that prohibit misleading or deceptive marketing behavior are essential. If they are to be characterized other than as laws creating tort liability, it is unlikely that legislation giving effect to consumer protection and other social benefits can ever be enforced beyond the boundaries of the state that enacted them. Criminal laws rarely, if ever, can be enforced beyond the boundaries of the state where enacted. If consumer protection legislation providing civil remedies is to be limited in the same way, it may be virtually useless in a global economy, where marketing may be accomplished through computer-mediated communication. If a nation-state cannot protect the interests of the groups that comprise its political community, then its purpose is in doubt.


Consumer Protection Laws in the Global World


What are consumer protection laws?


Consumers have sought protection through legislation because the general laws and market forces have failed to provide it. Many consumer protection laws either relate to the terms and conditions of contracts that consumers make with suppliers for the supply of goods and services, or to conduct intended to encourage the making of such contracts (marketing, packaging, advertising and provision of information). Previous laws, especially the law of contracts, assumed that the parties to contracts are legally equal in terms of power and information. In substance, in real markets, almost invariably consumers have markedly less power and information than suppliers. The law deems the action of a consumer in buying a commodity to be the making of a contract - in theory a free, consensual act. In practice, the legal consequences are attributed to the action by the law without any consideration of what the consumer actually knows or wants. The common law of contracts simply cannot afford consumers the protection they probably would seek if they were rational, fully informed, and equal in economic power to the supplier. Because contract law offers an inadequate basis for an equitable legal transaction, it must be modified by legislation [ 6 ] in order to afford greater protection to consumers than they can negotiate individually for themselves.

Law and the globalized world


Since 1960 most developed countries with common law legal systems, the nations of Europe and most recently of Asia have enacted significant consumer protection legislation. [ 7 ] Such laws are national, and operate only within the geographical limits of the enacting jurisdiction, except where conflict of laws rules permit them to be applied as part of the law of some other country. [ 8 ] Attempts to apply such existing laws to activities outside the geographical boundaries of the enacting state might prove ineffective. Examples include marketing and sale of goods or services (including financial services) online through the Internet or satellite TV by suppliers who are in remote areas, often beyond the reach of legal process.

If consumers (and groups who are similarly disempowered through social fragmentation, such as employees) are to be able to participate in markets on even a rough approximation of equal terms with suppliers, there must be both a geographically-defined arena in which there can be a political contest of interests and a countervailing political force. If it is impossible to locate production, marketing, distribution and trade in goods and services in a defined physical and juristic locality, no legal control is possible.

International Law and Consumer Protection


Two distinct bodies of rules and principles constitute "International Law"- public international law (formerly called "the law of nations") and private international law (in the United States and other federal systems more accurately called "conflict of laws," because the rules determine which of two different legal systems apply within or outside a particular political institution. The terms "public" and "private" indicate an important practical distinction. Both potentially affect legal and political measures in respect of transnational activities and both are predicated on the existence and operation of nation states. Laws that give remedies or impose sanctions are essentially national laws: international law is of a different order.

International law and municipal law


What a nation state can achieve legally outside its geographical boundaries is determined by both public and private international law.

"Public" international law governs the relations between entities recognized as having legal status. or personality under its own rules of recognition [ 9 ] -usually nation states. There is no supreme, authoritative ruler who has legal authority to discipline states that do not toe the line. The content of the rules comes from the practice of states towards each other (usually referred to as "custom") and from international agreements. For this reason, much public international law is "soft", [ 10 ] and legal positivists deny it the status of "law". Public international law rules do have significant moral and political force, and states that continually break them attract odium with significant economic and political consequences.

Public international law only affects people's behavior indirectly, through the operation of municipal law systems. Its rules have little direct impact on individuals and business corporations. Infringement of any rights afforded by international law ordinarily will assist only those individuals or corporations whose national government takes up their cause. [ 11 ]

"Private" international law by contrast forms part of the system of rules administered and enforced by the national, state or "municipal" law. This body of rules determines whether any jurisdiction is competent to entertain disputes ("judicial jurisdiction"), to enforce any judicial determination of those disputes ("recognition and enforcement"), and which body of rules will be applied to the issues ("choice of law").

In the past the rules of private international law may have seemed remote from the lives of ordinary people. Today's easier communication means that they affect many individuals every day. Anyone who travels from one country to another (or, in a federation, from one state or province to another) is immediately exposed to the operation of private international law, as are businesses that deal anywhere outside their own country or state. Anyone who logs onto the Internet immediately becomes exposed to the rules of private international law in the country where he or she is physically located.

Every system of legally binding commercial arrangements presupposes a national legal system to which, in the last resort, the parties may resort to enforce compliance. Most rules governing international commerce have a common origin in the body of rules developed among traders [ 12 ] that was incorporated into most of the legal systems of Europe. All regulation and public international law itself presuppose national legal systems. This does lead commercial interests to devise means of avoiding litigation in national courts. In the last resort, however, national laws are essential.[ 13 ]

Globalization of commerce and communication may exacerbate the problems that arise when activities of a commercial nature cross national boundaries, especially when any single nation wishes to exercise some control over part or all of these activities.

The problem of legislative jurisdiction


Both public and private international law restrict the power of nation states to provide legal sanctions and remedies. Any controls on transnational activities must come from nation states, because international intercourse at all levels is essentially anarchic, and the players cannot afford to trust the other players or voluntarily to accept limitations on what they may do.

United States anti-trust law provides a good example of how law, politics and practicalities intersect in ways that destroy international goodwill. [ 14 ] The United States attempts to proscribe activities occurring outside its geographical boundaries by persons who were neither residents nor citizens of the U.S. Virtually every other nation has resisted this attempt. Other attempts by any single nation to proscribe activities beyond its physical boundaries by people who are neither residents nor citizens are likely to create similar problems. When this happens, a state may enforce its extraterritorial laws within its own boundaries, but other states will steadfastly block any attempt to enforce those laws within their own territories.

In 1909, a fruit company, thwarted in its attempts to break into the market for banana production in central America, attempted to invoke the U.S. Sherman Antitrust Act on its behalf. It had been frustrated by activities, including violent and other conduct by, among others, Costa Rican citizens, corporations and its government, all of which would have been contrary to the Sherman Act if done in the U.S. or by U.S. citizens. The U.S. Supreme Court, in a judgment delivered by Justice Holmes, refused to give the legislation any extraterritorial operation whatever. [ 15 ] He relied on the presumption that legislation does not have extraterritorial effect. The Clayton Act, enacted subsequently, expressly provides for its own operation outside the United States. [ 16 ] United Fruit has never been expressly overruled. [ 17 ] However, in United States v. Aluminum Corporation of America, [ 18 ] Judge Learned Hand, influenced by the effects of an extraterritorial breach of the anti-trust laws on business within the United States, indicated that those laws might apply to a U.S. company outside the U.S. There was support for this view in the Supreme Court, [ 19 ] leading some U.S. lawyers to assume that U.S. antitrust laws affect foreign businesses operating outside the U.S.

In 1978, the then U.S. Attorney-General told the Law Council of Australia that if the U.S. did not assert its own values, others would assert their values on the U.S. Sine competition was valued highly in America, the U.S. would continue to assert its sovereignty over activities that impacted business in the U.S. [ 20 ] As a senior U.S. Justice Department official stated:

There are two primary objectives of U.S. policy in the application of our antitrust laws to foreign jurisdictions. First is to prevent national boundaries from providing a haven from which Americans may flout laws designed to protect our domestic competition; and second, to prevent arrangements made abroad from depriving U.S. consumers of the benefits of competition among importers and between domestic and foreign sources of supply. [ 21 ]

This view has been treated with the deepest skepticism by a leading international lawyer. [ 22 ]

Most of the world's uranium is produced outside the United States. Westinghouse, an American manufacturer of uranium-powered electrical generators, claimed to have been affected adversely by a producers' cartel. It commenced actions in the United States against the members of the alleged cartel, and then sought discovery of documents in a number of foreign countries, including the United Kingdom, Australia and Canada. These countries objected to the discovery proceedings in their own courts on the grounds that U.S. laws had no application to acts outside the U.S. by persons who could not in any sense be described as U.S. residents or citizens. [ 23 ] These three countries, among others, enacted 'blocking' legislation to prevent their domestic courts from granting interlocutory orders. Although there were some moves toward a reconciliation, [ 24 ] the situation remains a stand-off. The U.S. alone asserts a right to apply its criminal laws to activities beyond its territorial boundaries. [ 25 ]

The problem is obvious. Because of the cultural and political significance of the anti-trust laws (which are essentially penal laws), U.S. policy makers do not wish to concede that their laws can be thwarted simply because the forbidden acts occur outside the U.S. and the actors are not U.S. citizens. The effects are identical to those that would follow from similar acts or omissions within the territory of the U.S.

On the other hand, the view of virtually every other country is that the operation of laws such as the U.S. antitrust law, like all other penal laws, should be confined to the territory of the legislating state and to individuals and other legal persons over whom that state exerts effective control. Any attempt to apply such laws to non-citizens of that state outside its territorial boundaries is regarded as an arrogant encroachment on national sovereignty and contrary to public international law. The government of any state that wishes to enforce laws that are possibly "penal" outside its boundaries is caught in the dilemma of satisfying the demands of voters and pressure groups internally, and the demands of diplomacy and good relations with other states externally. While it may be easy for governments to explain the impact of political pressures to other governments, it is more difficult for governments-such as the U.S. government with a national culture that has strong historical tendencies to isolationism-to justify actions dictated by international pressure and public opinion of its citizens.

The arguments about antitrust law might apply equally to other transnational activities, including activities conducted online. [ 26 ] Many countries would consider the consequences of transnational cyberspace activities (fraud, pornography, etc.) injurious to their citizens. They might seek to penalize activities carried out beyond territorial limits but with effects within those limits.[ 27 ] By doing so, they run the risk, at worst, of accusations that their activities are contrary to public international law, and at best, disapproving attitudes from the governments of other countries.

Conflict of Laws, Rules and Consumer Protection Laws



Public international law


Public international law does not operate directly within any state but it does influence what states do. Principles of "comity," as applied by municipal courts in conflict of laws cases, embrace some of the broad principles of public international law, especially the principle of territoriality.

Jurisdiction-The territoriality principle


Public international law limits the right of States to legislate extraterritorially or to enforce their laws outside their own boundaries, [ 28 ] whether the consequences of the legislation are to penalize misbehavior (criminal law), or to create enforceable rights between legal persons (civil law). The distinction between civil and criminal law is not always clear. Some regulatory laws, including some laws of a kind that might possibly be contemplated to control transnational or cyberspace activity, are a mixture of "civil" and "criminal" laws. Regulatory laws may create both civil and criminal consequences. [ 29 ] However, the rules that permit extraterritorial operation of laws applying to criminal jurisdiction are different from, and simpler than, those relating to civil claims.

Criminal law


Because criminal law traditionally is not classified as "private law" it is not considered in works dealing with private international law or conflict of laws. The basic principle is: "The criminal courts of a state apply only the law of that state. That is not the case with civil law." [ 30 ] A century ago, Hall wrote:

No country can insist as against another that acts performed in a manner demanded by itself shall be recognized in the country where they are accomplished, still less can it there exercise the jurisdiction over the persons of its subjects without the express or implied consent of the territorial sovereign. [ 31 ]

It is generally accepted that a nation-state may legislate to prohibit specified behavior outside its geographical boundaries, and impose penal sanctions, provided that it only enforces those laws when the accused persons are physically within its territory or under its control. [ 32 ] In Commonwealth countries, it is generally accepted that unless legislation specifically and expressly applies to acts or omissions taking place beyond the territorial limits of the state, it will be construed as applying only to conduct within the jurisdiction. [ 33 ] This view prevails outside the United States. [ 34 ] It does not mean that every element of every offense and its prosecution must take place within the territory of a single jurisdiction. [ 35 ]

A question also arises where an offense has several constituent elements, each of which may occur in a different jurisdiction, and with "inchoate" offenses, attempts and abetting, counseling or procuring the commission of offenses outside the prosecuting jurisdiction. In Canada, it is enough that a significant proportion of the events constituting the offense took place within the territory. [ 36 ] In New Zealand, the Crimes Act 1961, s 7, provides that if "any act or omission forming part of any offense, or any event necessary to the completion of the offense" occurs in New Zealand then the offense is deemed to have been committed in New Zealand, even if the person concerned was not in New Zealand at the time. The law reform agencies of Canada, England and Wales have found that such a provision has merit, but should be confined to situations where the offense was also prohibited under the law where the other acts or omissions occurred. [ 37 ] The Criminal Codes of Queensland and Western Australia, ss 12-14, provide that, if a person commits offenses or makes omissions outside the jurisdiction which, if committed within the jurisdiction would be an offense under the Code, that person, upon entering the jurisdiction, is deemed to have committed that offense. [ 38 ] These provisions do not appear to have been drawn to the attention of the British and Canadian law reform agencies, but represent a solution which is both pragmatic and defensible under international law.

Courts of any nation have jurisdiction to try an offense if it occurred in, or its perpetrators have a significant connection with that nation or one of its subdivisions (the "forum"). The generally accepted exceptions are for "universal" crimes, or "crimes against humanity", such as piracy, (the earliest) and genocide. [ 39 ] To achieve more general applicability miscreant behavior in cyberspace would have to reach a level of universal unacceptability deserving of such general condemnation. Some nation-states take the view that their laws may properly apply if an act is committed against their citizens wherever situated [ 40 ] but common law jurisdictions have generally taken the opposite view. [ 41 ] In any event, validity of the extraterritorial operation of laws of this type seems confined only to specific offenses created by statute.

A justification for extraterritorial jurisdiction has been expressed by a former U.S. prosecutor:

Extraterritorial jurisdiction provides the authority by which the United States may enforce its criminal laws against those who conduct their criminal acts from the sanctuaries of foreign jurisdictions. In a world made smaller by supersonic jet travel, cellular telephones, telefax machines, international bank transactions by wire transfer and the use of computers, the need to protect the nation's citizen and the lawful order of our society requires the enactment of legislation with the authority to prosecute those who commit crimes beyond the border. [ 42 ]

These are understandable sentiments, but states often disagree on the kinds of behavior that should be criminalized. Such differences are an essential attribute of national sovereignty, provided that the manner of exercise of sovereignty is not itself contrary to international law or commonly accepted morality. Anti-competitive behavior by business may in fact be the overt and consciously chosen policy of national governments, especially in the face of predatory competition by foreign businesses. It is, nevertheless, an exercise of sovereign power that must, as a matter of public international law, be respected. The criminalization of certain activities, for example, abortion, advertising and production of alcohol and drugs (including tobacco) for recreational use, pornography, advertising and certain economic activities may be regarded as abhorrent and criminal in some nations, but accepted and even constitutionally protected in others.

There are, however, some commonly accepted extraterritorial applications of criminal laws. Most states claim the right to exercise power over contiguous. waters and often within their maritime zones, even though these may technically lie beyond recognized territorial boundaries. [ 43 ] Ships (probably including drilling rigs) and aircraft are traditionally regarded as an extension of the territory of the state in which they are registered. States have a right to protect their diplomatic and consular staff serving in other countries, and the physical premises occupied by embassies and consulates is regarded, for many purposes as the territory of the State they represent. Similar principles may apply, with the consent, in peacetime, of the state where the missions are located, to naval and military forces stationed outside their home territory for example, U.S. forces stationed in Okinawa.

Nation-states also have a right to protect themselves against activities carried on outside their territory with a view to overthrowing or destabilizing their institutional structures. Treason and similar offenses may, under the rules of most legal systems, be punishable, even though the offenses were committed in the territory of another State. [ 44 ] Some nation-states might consider disruption of networked communication would have such deleterious impacts on activities within their jurisdiction that perpetrators causing such disruption would be considered domestic felons.

The claim to criminal jurisdiction that has excited the most comment, however, is the claim to jurisdiction where behavior, wherever and by whom it may be committed, has effects on or in the territory of the prosecuting state. This is the basis of the controversy surrounding attempts by the U.S.A. to enforce its anti-trust laws extraterritorially. The rationale for such law may be easier to comprehend when the activity complained of is not commercial behavior regarded as normal in most countries, but rather the production of heroin for non-medicinal use. Suppose A, B and C, who are all residents and citizens of Illyria, produce heroin in Illyria (where such production is legal) and offer it for sale over the Internet, where potential purchasers in Arcadia arrange for sale and delivery in a third country. Arcadian law penalizes the production, as well as sale and possession of heroin for non-medicinal use. If A ceased to produce heroin in 1992 and closed its Web site offering it for sale then visited Arcadia as a tourist in 1995, would Arcadia have jurisdiction to try him for a crime based on events which happened in Illyria in 1992 but caused effects in Arcadia? [ 45 ] Transnational transactions-far more common now than a century, or even 25 years ago-raise problems which the law finds extremely difficult to resolve. [ 46 ] When transactions are accomplished over computer mediated communication networks, the challenge to the efficacy of local law is even more threatening. If the behavior is considered criminal by the law of one place, why should the perpetrators, assuming they can be found and brought to trial, not be treated as if they were within that place when the prohibited activity occurred?

It seems reasonable for a country to assert jurisdiction if at least one vital element occurs within its territory and that element is also an essential element of a crime in the state where the other elements of the offense took place. To go beyond this risks trampling on the national interests and sovereignty of the other members of the international community.

Extradition and enforcement


Few, if any countries, enforce penal sentences or orders of foreign governments. [ 47 ] Even within federal systems, special legislation or constitutional provisions are Used to enforce minor penal sanctions such as "on the spot" fines for traffic and parking offenses. The reason for this lies in the assumption, in international law and practice, that no nation-state will attempt to exercise its power or public authority within the territory of another, without its express agreement. Even when the United States offends international law and the feelings of other nations by arresting and abducting persons within their territories, [ 48 ] it does not attempt to carry out sentences of U.S. courts in other countries.

The power to tax is regarded, like the power to punish, as an exercise of sovereign power. In the absence of the agreement or treaty arrangements, neither the civil nor criminal courts of any country will recognize or enforce the penal or revenue judgments or orders made by courts (or other aspects of the implementation of public policy) of those countries. [ 49 ]

Where a person commits a crime under the laws of country A but is physically in country B the solution seems to lie in extradition. [ 50 ] A requests B to apprehend and hand over the accused. Extradition involves both the executive and judicial branches of government and usually takes place under a bilateral treaty that sets out grounds for extradition, although ad hoc extradition is possible. Each country also usually has general extradition legislation, setting out general procedures for, and conditions of, extradition orders. After initial contact between governments, leading to police action, such as the issue and execution of an arrest warrant, the accused must be brought before a court where he or she is. That court must be satisfied of matters set out in the legislation, and the accused has the opportunity to contend that extradition is improper-for example that the crime of which he or she is accused is not an "extradition" crime" within the meaning of any relevant treaties or legislation. The most salient characteristic of an extradition crime is that the behavior complained of must constitute activity prohibited by the criminal law of both countries, and must not be a political or ideological. If the prosecution succeeds, the court orders that the accused be surrendered to the authorities of the prosecuting government. That government then disposes of the matter under its own laws, generally by a criminal trial in its own courts.

The procedure may be complex and time-consuming, and the authorities of the prosecuting nation may decide that the time and expense are not justified, relative to the returns. It is questionable whether the peccadilloes that occur in computer mediated communication networks have yet reached the level of concern that would warrant extradition procedures. However, behavior online that is considered sufficiently abhorrent in a number of countries with major online services to warrant extradition procedures would go a long way toward curbing such activities.

Civil law - rules of Private International Law
[ 51 ]


     Recognition and enforcement law


In almost all countries, courts will recognize and enforce judgments and orders of foreign courts, especially those that provide for the payment of money. [ 52 ] Recognition and enforcement is not automatic, in the absence of local legislation which provides for registration of foreign judgments and generally requires considerable formalities. [ 53 ] The normal procedure for enforcing a civil judgment awarded by a foreign court is that the person seeking to enforce that judgment must commence the appropriate claim in a forum court seeking payment of the debt created by the judgment. The judgment debtor may deny that the foreign court had jurisdiction to make the judgment, or that there was a procedural irregularity (such as a failure to afford the judgment debtor a fair hearing); but normally the forum court will not question the substantive finding of the foreign court and re-litigate the issue. Penal and revenue judgments and their judgments or orders that are "repugnant to the public policy" of the forum (as determined by the courts of that forum) may not be recognized and enforced. [ 54 ]

The court may refuse to recognize and enforce a foreign judgment if it finds that the court giving the original judgment lacked jurisdiction. That question, like the question of jurisdiction in criminal cases, is usually decided on some basis of territoriality. The basic ground for recognizing jurisdiction of a foreign court is that the court determining the issue would itself exercise jurisdiction in similar circumstances.

The most obvious basis of jurisdiction is physical presence of the defendant personally in the jurisdiction, even if that presence is fleeting. [ 55 ] The question is more difficult if the defendant is an artificial legal person, typically a corporation, which has no personal physical presence anywhere. Generally courts recognize jurisdiction of foreign courts over corporations based on the corporation being registered, doing business or having significant assets in the jurisdiction. Defendants may submit to the jurisdiction of the foreign court by defending the action. Defendants who are not physically present in a country may nevertheless be subject to the jurisdiction of its courts if they are domiciled in that country, and in some cases if they are residents or nationals of that country. In the U.S., the Supreme Court has placed a constitutional gloss over the area, by holding that the "due process" clause of the constitution requires at least minimal contacts with the jurisdiction. [ 56 ]

Most states allow the joinder of a defendant who is neither domiciled nor physically present in the jurisdiction if the circumstances giving rise to the claim have a connection with that jurisdiction. In the U.S., these are called "long-arm" statutes. Most other common law jurisdictions have more limited provisions based on Order 11 of the Rules of the High Court In England. For example, Commonwealth Courts usually have jurisdiction in an action for breach of contract if that contract was made in the forum state, no matter where the breach occurs. [ 57 ] Similarly if the claim is founded on a tort and the damage was sustained, or resulted from an act committed within the jurisdiction, the courts will entertain the action. [ 58 ] A statute of this type was invoked in Williams v.. The Society of Lloyd's [ 59 ] difficulties arose because the judge refused to classify the cause of action as a "tort".

     Choice of law


Once the courts of a state take jurisdiction over a civil claim, the next task is to determine which of the legal systems will determine the substantive outcome of the case. By definition more than one legal system is potentially involved, and in common law systems, the courts resort to a series of complex rules, known as "choice-of-law" rules, to determine this issue. Generally, in contract law cases, the parties are free to choose a governing law, and if they fail to do so the court will apply the system of law that has the closest or most significant connection with the transaction. [ 60 ] In tort claims, courts in the U.S. generally make an assessment of which legal system has the greatest interest in the proceeding and apply the law of that state. [ 61 ] Common law courts within the Commonwealth tend to apply the law of the place where the unlawful act was committed. They offer a remedy only if the acts giving rise to a tort claim also unlawful in the forum. [ 62 ] There are weaknesses in both the U.S. and Commonwealth positions. [ 63 ] The complexity of law is a deterrent to litigation.

Is unification or harmonization of law a solution?


A preferable solution seems to be bilateral or multilateral international agreements under which governments concur that each will make criminal, under its domestic laws, the conduct which all desire to prohibit. This process is sometimes called "unification" or "harmonization" of law. If any activities in the Networld are to be made criminal, even though this process seems cumbersome, it may be the only acceptable means available. There are problems of securing agreement of uniform laws. [ 64 ]

Implications for Democracy


The social nature of legislation


Market forces, in practice, do not give adequate protection to consumers of 'household or domestic' goods and services, because of marked inequalities of access to information and economic power. Because everyone is a consumer, in democratic societies legislation has been enacted to correct some of the patent failures of the market. [ 65 ] Rectification of market failures, in practice, depends on political action within a territorially defined nation-state, within which a political contest may take place between the interests of manufacturers and distributors, on the one hand, and that of consumers on the other. The result of this political contest is often legislation-in this case, legislation protecting the interests of consumers as such, and redressing a perceived imbalance. [ 66 ] Democracy, above all, is about who exercises power in society; having information or knowledge is essential, but doing something with that information is the real test. Within society, groups contend about the way in which power is exercised. In other words, within a nation, democratic government allows consumer interests to Use the countervailing power of the state to rectify, in part, the inherent imbalance of power in the market. This facet of democracy-its appropriation by interest groups-is one reason why the "public choice" school criticizes representative democracy.[ 67 ]

The use of countervailing political power by organized consumers (and its analogs, such as the use of governmental power by organized labor to provide minimum standards of safety and remuneration in the workplace, and efforts by citizens to improve administrative law to obtain better control over and accountability of government officials) requires the existence and apparatus of an established government. Interests which are adversely affected by the use of countervailing power of this sort, therefore, favor reduction in the role of the nation-state, and the removal of politics from the operations of the economy. Interest groups which favor state intervention, and which are numerically large but lack resources, like consumer interests and environmentalists, have greater success at local than at wider levels than do interest groups with fewer numbers and more resources, such as organized business groups. [ 68 ] Interest groups such as environmentalists find that they enjoy more political support at local levels, where politicians are more sensitive to local issues, than at national or supranational levels where political concern is more at the macro-level.

Returning to the consumer example, when goods and services are provided by suppliers who do not necessarily have a constant and permanent physical location, or through media that are not necessarily confined to a physical location, (or both) any thought of use of traditional 'countervailing forces' is illusory.

Where structural inequalities exist, (as between employers and employees, or between manufacturers and consumers) many communities, acting democratically, decided that some minimum protections are required for proper social functioning, regardless of what the parties agree. They have therefore limited the theoretical autonomy of the parties to make contracts-a situation which always favors those with the greater wealth and power-in ways that prevent the Use by one party of its economic power to the detriment of the other. For example, in most developed countries it is unlawful to contract to require a worker to work in unsafe conditions, or for less than an agreed minimum rate of pay. It is also unlawful to agree to sell goods for a purpose when the seller knows or ought to know that the goods are not fit for that purpose.

Consumer protection laws are an admission that a legal regime based on freely negotiated contracts serves primarily the interests of suppliers and manufacturers. [ 69 ] The politics (and much ideologically inspired language) about rolling back the apparatus of the nation-state is often really about the removal of legal requirements that limit the use of untrammeled power by the economically strong in ways that adversely affect the economically weak. Those limits are established through democratic processes because people and their representatives place a higher value on safety and public welfare than on the profit margins of business.

Economists have often asserted that political decisions have been made, and legislation enacted, without full knowledge of the economic consequences. This is probably true, and better decisions may have been made if the economic consequences had been considered if they could have been predicted accurately. However, unwillingness in the past to consider economic consequences does not mean that legislatures in the present and future should make decisions based entirely on prescriptions by economists. The values represented by the bottom line in some business's accounts are not the only values that humans hold dear. Business, undoubtedly, would welcome a roll-back of all protection established in favor of consumers, [ 70 ] and an unfettered right to seek profits. In practice, business probably has more influence than most citizens realize. Yet all citizens have a right to assert their voices in determining the nature of public policy decisions within democracies.

The effect of "transnationality"


The presence of an international or transnational element is likely to make the application of political will, translated into law, extremely difficult. International law does not operate directly on human behavior, or the behavior of corporations; the effective actors in international law are nation-states. Rights and remedies acquired under the law of one nation may be recognized and enforced in another nation, but this is not guaranteed. To obtain redress of grievances may be difficult and technically complex quite apart from the practical difficulties of language, location of parties, and finding a party with sufficient assets to justify initiating enforcement procedures.

Even where nation-states have the political will to unify or harmonize their legal rules, there may be difficulties in securing an expression of the policy which produces the same effects. However, the crucial factor in achieving any political solution to the control of anti-social behavior lies in the effective application of legal rules by entities sufficiently capable of asserting sanctions to effect their efficacy. If netizens can remove themselves from the scope of national laws, nation states may defeat the political process and it is not sufficiently clear what sanctions they may impose to assure compliance with rules they may themselves promulgate.

The Future of Nation-States


For the foreseeable future nation-states will continue to play a significant role both in the physical and the real world. The economically strong forces in society who assert a need to dismantle impediments to international trade often also assert a need for "strong" domestic policies such as more public and private police services and heavier penalties for crime. [ 71 ] Most citizens still expect basic state services, such as those which ensure physical safety and integrity and, though they may be reluctant to admit it, basic welfare services. Businesses expect the nation state to underpin commerce, by providing 'last resort' mechanisms for enforcing contracts. Only nation-states can provide these. The forces that dominate the transnational economic game, themselves beyond the control of any single nation-state, require nation-states and will continue to tolerate them so long as they do not attempt to use the power they retain to pre-empt decisions on major economic and social policy which they prefer to leave to "market forces" -- that is, effectively beyond the power of any government. It is important for consumers and other economically disadvantaged groups to ensure that nation-states have more than a community policing role. Consumers need the machinery of nation-states in order to influence the behavior of suppliers. They lack the power to do so on their own.

Nation-states are also required to satisfy the demands of ethnic and cultural groups who feel that they form a political community. Some of these communities are based on language and customs, some on religion, some on geographic ties and links with land. The former U.S.S.R. and Yugoslavia have broken into a series of relatively powerless states mostly based on ethnicity and language. Other ethnic groups - Francophone Quebecois, Kurds, Basques, Catalans and several groups in Africa - wish to establish their own nation-states. Within the United States and Australia, Amerinds and Aborigines deny the legitimacy of the European conquest with its seizure of their lands. They assert their own rights to sovereignty over native tribal lands. [ 72 ] Economically, these nationalist demands may not make sense, but they are a fact of modern political life. Fortunately, in the Networld, cyberspaces are not limited in number, and any nationality that chooses to exercise sovereign rights in cyberspace may do so establishing cybercommunities. Cybercitizens may adhere to whatever ethos and cultural norms they choose which do not contravene the local laws of the jurisdiction within which they reside.

While law may drag behind social and technological change, it may exercise an influence on the direction of change. Those who are not economic determinists of either the Chicago or Marxian school may draw hope from the idea that the forces that benefit most from globalization-large, transnational businesses-are predicated upon and constantly require support from the legal systems of nation- states.

Nations, and nations alone, provide a forum for the political expression of the popular will. As we are all consumers, the popular will, given the chance and the vehicle for proper expression, will establish legal rights for consumers within national legal systems in their capacity as such. The political will of nations may be required to ensure that those legal rights are recognized and enforced in other jurisdictions. Even though that recognition and enforcement may involve a

surrender of elements of sovereignty, it is relatively minor and does not amount to an abdication of political power. Forces that, contrary to their own needs, devalue or destroy the national state which is the vehicle for the expression of popular will are destroying also the legal infrastructure that underpins the commerce which is their life-blood.

How Consumer Fraud Might Be Addressed in the Networld


The globalization of markets makes it very difficult for the laws of nation states to control the excesses of businesses operating outside of their physically defined territories. Computer mediated communication networks afford new opportunities for transnational marketing that may ignore the restrictions afforded by national consumer protection laws. How then could consumers be protected in this new virtual marketplace? A few possibilities are suggested, but none really offers promise of the level of protection which consumers receive under national laws.

First, the most obvious step would be for nations to seek bi-lateral treaties that establish reciprocal arrangements for enforcing consumer protection laws between nation-states that have similar laws. This would deal with issues arising where two nation-states have a great deal of mutual trade, but suffers from similar territorial challenges if third or fourth nations are involved in any way.

Secondly, the most effective means, but most difficult to accomplish would be an international agreement concerning the rights of consumers online, similar to the international agreements governing transnational postal services and telecommunications. These, of course, depend ultimately on the agreement of nation-states and implementation in national legislation. Although such agreements as the Law of Outer Space take years to conclude and promulgate, if

consumer transactions online become a major component of international trade,

the need to curb outrageous and damaging behavior may become sufficiently compelling to attract the interests of major trading nations to participate in a broadly based effort to establish international consumer protection norms.

Thirdly, the World Trade Organization might determine that consumer fraud online constituted a threat to the viability of international trade. As sanctions may be imposed upon non-conforming nation-states, those countries that tolerated reprehensible behavior on the part of commercial entities operating within their territories might be censured by imposing restrictions on their import/export privileges with participating nation-states.

Fourthly, individual nation-states may enforce their own consumer protection

laws unilaterally by inhibiting the travel of offending parties foreclosing entry into their territories and/or by serving process upon such parties should they choose to enter. This may be a reasonably effective sanction to deter entrepreneurs who are global operators by limiting their mobility-if sufficient important states take this type of action. Also sanctions may be imposed upon nationals who fund or serve as agents for offending offshore parties. Moreover, consumer goods may be stopped at the border if they come from offending merchants. There are practical and political difficulties in such unilateral action, and in any event it may contravene obligations arising under international trade agreements such as the General Agreement on Tariffs and Trade.

Fifthly, Information Service Providers and Internet Access Providers may themselves unite to establish industry norms for appropriate behavior in offering consumer transactions over their systems. Commercial entities that fail to comply may be refused service. Such arrangements are strictly private, and, despite their beneficial consequences for consumers, they may run the risk of offending against national anti-trust or other pro-competition laws.

Sixthly, major commercial interests that choose to offer products online may establish industry organizations that purport to guarantee an optimum level of consumer protection for purchasers of their products. Like the Good Housekeeping seal of approval, participating companies may advertise their compliance as a major attraction to consumers who wish to be assured that they are engaged in a fair and equitable transaction free of fraudulent and unverifiable representations. This has the disadvantage that abuse of consumers is more usually committed by marginal operators rather than established firms with sound reputations, and these marginal operators are unlikely to join industry organizations.

In summary, if trade online proliferates and consumer fraud becomes a major problem, nation-states and commercial interests that provide online access are fairly restricted in the action they may take to curb unacceptable and deleterious practices. Certainly if consumers perceive online commerce as a hazardous place to make purchases, they will not choose this alternative, and a major opportunity for electronic commerce may be forfeited. Consequently, there is strong motivation for reputable business to observe high commercial standards of behavior. Unfortunately, most harm results from the activities of marginal operators who do not care for their reputation and operate entirely in the short-term, or by established firms driven by competitive pressures to drop their standards below an acceptable level. The theoretical tendency of market forces to provide safe and wholesome commodities at an affordable cost does not match practical reality. By the time market forces have time to operate, far too many consumers are dead, maimed, or impoverished. Within a nation-state, national laws may prevent some of this harm, but once national boundaries are crossed, their effectiveness is limited, and consumers can hope for very limited protection.

Footnotes


  1. BA, LLB (Hons) (Sydney); LLM (Columbia); Barrister and Solicitor (PNG and ACT); Barrister, (NSW); Professor of Law, University of Wollongong, Northfields Avenue, Wollongong, NSW, Australia, 2522. E-mail: j.goldring@uow.edu.au Much of the work represented here was made possible through a research grant from the Law Foundation of NSW, and visiting appointments at the Law Centre, University of Alberta, Canada and the Benjamin N Cardozo Law School of Yeshiva University, New York City. An article expanding on many ideas raised here will appear in the Cardozo Journal of International and Comparative Law.
  2. Jim Carroll, "Lawsuit sends a wake up call to senior management," Computing Canada, Vol. 21, No. 26, p. 028, 20 December 1995; Paul Taylor, "Virgin Air fined for false ad on the Internet," The Financial Post, 24 November 1996, p. 7.
  3. [1993] 1 VR 274, esp 310-312. (Supreme Court of Victoria, McDonald J.)
  4. Rule 7.01(1)(i).
  5. Rule 7.01(1)(j).
  6. For fuller explanation, see J Goldring, "Consumer Law and Legal Theory: Reflections of A Common Lawyer" 13 J Consumer Policy 1, (1990) .
  7. For example, Japan, Korea and Taiwan have all recently introduced product liability legislation which is based on the 1985 Product Liability Directive of the European Communities: See Jocelyn Kellam, ed., (1995)Product Liability in the Asia-Pacific, Sydney, Legal Books.
  8. Text at notes 52-65.
  9. James Crawford, (1979) The Creation of States in International Law, Oxford, Clarendon Press.
  10. C M Chinkin, "The Challenge of Soft Law: Development and Change in International Law" 38 ICLQ 850 (1989) .
  11. As the Turkish and French governments did in the seminal case of the Lotus (1927) PCIJ Series A No 10.
  12. Leon E Trakman, (1983) The Law Merchant: The Evolution of Commercial Law, Littleton, Colo, Fred B Rothman & Co.
  13. Clive Schmitthoff "International Business Law, A New Law Merchant" 129 Current Law and Social Problems (1961) : see also his Commercial Law in a Changing Economic Climate London, Sweet & Maxwell, (1977), 2-3, and (more skeptically) Rene David, "Le droit du commerce international: une nouvelle tache pour les legislateurs nationaux ou une nouvelle 'Lex mercatoria'" in UNIDROIT (1977), New Directions in International Trade Law, Oceana, Dobbs Ferry, 5.
  14. Still the best, and most thoughtful account of the subject (at least in terms of appreciating the position of people outside the United States, is Kingman Brewster Jr, (1958) Antitrust and American Business Abroad, New York, Toronto & London, McGraw Hill, but see also Lea Brilmeyer, (1986) An Introduction to Jurisdiction in the American Federal System, Charlottesville, VA, Chap 10; for a non-U.S. view, J-G Castel, (1988) Extraterritoriality in International Trade, Butterworths, Toronto and Vancouver, Chap 2 is useful. Most self-respecting law reviews have carried at least one article each year on this subject. I will not attempt to refer to all of them. There is an excellent select bibliography by Thomas Amos Behney Jr, 50 Law and Contemporary Problems 3, 303 (1987).
  15. American Banana Co v United Fruit Co 213 U.S. 347 (1909).
  16. 15 U.S.C §22.
  17. see Joseph P Griffin, "Antitrust and Act of State" in John R Lacey, ed, (1983) Act of State and Extraterritorial Reach: Problems of Law and Policy, Chicago, ABA Section of International Law and Practice. The Restatement of the Law (Third): The Foreign Relations Law of the United States (1986) §421 (j) does accord jurisdiction to United States courts over persons where "the persons . . . had carried on outside the state an activity having a substantial, direct and foreseeable effect within the state, but only in respect of such activity". Even this circumscribed statement is, in terms of public international law, controversial, at least everywhere outside the U.S..
  18. 148 F 2d 416 (2d Cir, 1945).
  19. Continental Ore Co v Union Carbide and Carbon Corp 370 U.S. 690 (1962).
  20. Griffen Bell Jr, in A V Lowe, (1983) Extraterritorial Jurisdiction: An Annotated Collection of Legal Materials, Cambridge, Grotius Publications, 4-5.
  21. John H Shenefeld, "The perspective of the U.S. Department of Justice", in Griffin, supra, note 123. 13.
  22. R Higgins, "The Legal Basis of Jurisdiction" in Cecil J Olmstead, ed, (1984) Extraterritorial Application of Laws and Responses Thereto, Oxford, International Law Association and ESP Publishing Ltd, 7-13.
  23. for British reactions: see S Silkin, in Joseph P Griffin, ed, (1979) Perspectives on the Extraterritorial Application of U.S. Antitrust and Other Laws, Chicago, American Bar Association, at 30-32; for Canadian reactions, D Gordon Blair, ibid, 65-7; for Australian reactions, see Laurence W Maher, "Anti-Trust Fall-out: Tensions in the Australian-American Relationship" 13 FL Rev 103 (1982); Warren Pengilley "Extraterritorial Effects of United Sates Commercial and Antitrust Legislation: A View from 'Down Under'" 16 Vanderbilt J Trans Law 833 (1983).
  24. The 1982 agreement between Australia and the U.S. is an Appendix to Lacey, supra, note 17.
  25. for example, R Y Jennings, "Extraterritorial Jurisdiction and the United States Anti-trust Laws" [1957] BYIL 146; Brewster, supra, note 14; cf H P de Vries and A Loewenfeld, "Jurisdiction in Personal Actions - A Comparison of Civil Law Views" 44 Iowa L Rev 306 (1959); Kurt H Nadelmann, "Jurisdictionally Improper Forum" in XXth Century Comparative and Conflicts Law - Legal Essays in Honor of Hessel E Yntema, (1961); L I de Winter, "Excessive Jurisdiction in Private International Law" 17 ICLQ 706 (1968); Hans Smit, "Common and Civil Law Rules of In personam Adjudicatory Authority: An Analysis of Underlying Policy" 21 ICLQ 335 (1972).
  26. If, in fact activities in cyberspace can be seen as being in any way different to those conducted in "real" space, so long as that space is beyond the territorial boundaries if the state concerned: see I Trotter Hardy, "The Proper Legal Regime for Cyberspace", 55 U Pitt L Rev 993-1000 (1994).
  27. In its December 1995 Second Report, the Australian Senate Committee on Computer On-line Services has recommended a series of measures, including criminal sanctions, to proscribe the communication of pornographic material.
  28. Brilmeyer, supra, note 14; R Higgins, supra, n. 22, 7-13; (as to criminal law) Restatement of the Law (Third): The Foreign Relations Law of the United States (1986) §422; A V Lowe, "The Problems of Extraterritorial Jurisdiction: Economic Sovereignty and the Search for a Solution" 34 ICLQ 724 (1985); J-G Castel, (1988) Extraterritoriality in International Trade: Canada and the United States of America Practices Compared, Toronto and Vancouver, Butterworths .
  29. In both the U.S.A and Australia, since the Sherman Act of 1890, the tendency has been to include both civil and criminal sanctions for contravention of provisions of legislation designed to promote competition, as this avoids some consequences of bureaucratic "capture" and expenses for the state.
  30. Glanville Williams, "Venue and the Ambit of Criminal Law - Part I" 81 L Q Rev 275, 277 (1965); The U.S. position with respect to criminal law is similar: Restatement (Third): Foreign Relations §422.
  31. W E Hall, (1894) A Treatise on the Foreign Powers and Jurisdiction of the British Crown, Oxford, Clarendon Press, 3.
  32. Enforcement by way of confiscation of assets may be permissible if the assets are within the jurisdiction: Banco Nacional de Cuba v Sabbatino 376 U.S. 398 (1964).
  33. Cox v Army Council [1963] AC 48 (HL); Air-India v Wiggins [1980] 1 WLR 815; 2 All ER 593.
  34. Law Reform Commission of Canada, (1984) Criminal Law Working Paper No 37, Extraterritorial Jurisdiction, Ottawa; esp 1-3; Sharon A Williams and J-G Castel, (1981) Canadian Criminal Law, International and Transnational Aspects, Toronto, Butterworths, Chapter 2; Edward M Morgan, (1990) International Law and the Canadian Courts, Carswell, Toronto, Calgary and Vancouver, Chap 2; Jennings, supra, note 125; Michael Akehurst, "Jurisdiction in International Law" 46 BYIL 146 (1972-3); R S O'Regan, (1988) "Extraterritoriality", in New Essays on the Australian Criminal Codes, Sydney; Christopher L Blakesley, "United States Jurisdiction over Extraterritorial Crime" 73 J of Crim L and Criminology 1109 (1982).
  35. Blakesley, supra, note 34, probably gives the fullest account of the then current position in the U.S.A; see also Behney, supra, note 14; In the UK see Akehurst, supra, note 34; Great Britain, The Law Commission, (1970) Territorial and Extraterritorial Extent of the Criminal Law, WP 29, London; in Canada, G V LaForest, (1970) The Ambit of Criminal Law, Ottawa, Law Reform Commission of Canada, Working paper: Law Reform Commission of Canada, supra, note 34
  36. Libman v R [1985] 2 SCR 178; 21 DLR (4th) 174.
  37. Great Britain, The Law Commission, (1970) Territorial and Extraterritorial Extent of the Criminal Law, WP 29, London, 47.
  38. O'Regan, supra, note 34
  39. for example, Polyukhovich v The Commonwealth (1991) 172 CLR 501 (High Court of Australia). The trial of Adolf Eichmann in Jerusalem is also often cited to support this principle, and there is little doubt that Israel, or any other State, could have tried Eichmann for these crimes. What was questioned (and is questioned in other cases) is the use of illegal means to bring defendant s to such cases before the courts.
  40. Such circumstances gave rise to the leading case of The Lotus (above).
  41. R v Keyn (1876) 2 Ex D 63 (Court for Crown cases reserved); Croft v Dunphy [1933] AC 156; 59 CCC 141 (Privy Council).
  42. Richard D Gregorie, "Extraterritorial Jurisdiction: Its use, Its Roots and Its Validity" 15 Nova L Rev 625 (1991), (referring to General Noriega, the former president of Panama.)
  43. see Michael Hirst, "Jurisdiction Over Cross-frontier Offenses" 97 L Q Rev 80 (1981). See also Law Reform Commission of Canada, (1984), Criminal Law Working Paper No 37, Extraterritorial Jurisdiction, Ottawa; esp 1-3; Sharon A Williams and J-G Castel, (1981)Canadian Criminal Law, International and Transnational Aspects, Toronto, Butterworths, Chapter 2; Edward M Morgan, (1990) International Law and the Canadian Courts, Carswell, Toronto, Calgary and Vancouver, Chap 2; Jennings, supra, note 125; Michael Akehurst, "Jurisdiction in International Law" 46 BYIL 146, (1972-3); O'Regan, supra, note 34; Blakesley, supra, note 34
  44. for example, Joyce v DPP [1946] AC 347; the House of Lords found that English courts had jurisdiction to try Joyce (also known as "Lord Haw-haw") who was a citizen of the Republic of Ireland, and whose acts, (broadcasting Nazi propaganda in English) amounting to treason, had been committed in Germany.
  45. cf DPP v Doot [1973] AC 807.
  46. Consider these cases:

    DPP v Stonehouse [1978] AC 55, where a former British Cabinet minister faked his death in Florida, intending to defraud an English insurance company;
    Treacey v DPP[1971] AC 527 where the accused wrote and posted in England a blackmailing letter demanding money; the letter was delivered to the addressee in Germany; cf Re Chapman [1970] 5 CCC 46 (Ontario CA.) ;
    R v Blythe (1895) 1 CCC 263 (BC SC) where a man in British Columbia wrote letters to a girl in Washington State which constitute an attempt to seduce her while she was under age;
    Ward v R (1980) 142 CLR 308 (High Court of Australia) where D and V were both residents of Victoria. D was standing at the top of a steep bank of a river which forms the border between Victoria and NSW. D shot V, who was standing on a sandbank in the river, intending to kill him, and succeeded. When the matter came to trial it was established that the boundary of Victoria is the bank of the river on the Victorian shore, so that the sandbank on which V was standing is in the territory of NSW. The NSW Courts assumed jurisdiction and dealt with the matter. See O'Regan, supra, note 34, 14.

  47. Glanville Williams, supra, note 130; L Collins ed., (1993) Dicey and Morris on the Conflict of Laws, 12th ed, London, Sweet & Maxwell, 97 say that "There is a well-established and almost universal principle that the courts of one country will not enforce the penal and revenue laws of another country."; Restatement of the Law (2nd) Conflict of Laws §§ 89, 120; Restatement of the Law (3rd) Foreign Relations § 422.
  48. As the United States did in the Escamilla case, referred to in LaForest, supra, note 135. In that case and subsequently (eg General Noriega) U.S. law enforcement officers have arrested foreign nationals in foreign countries with the purpose of removing them physically, and regardless of the wishes of the State where the persons are found, for trial in the United States : see Ethan A. Nadelmann, (1993) Cops Across Borders: The Internationalization of U.S.A Criminal Law Enforcement, University Park, PA, Pennsylvania State University Press. The legality of acts of this type was upheld by the U.S. Supreme Court: Ker v. Illinois 119 U.S. 436 (1886). In the cases of Eichmann and some other cases, Israel has also abducted persons accused of crime under its laws in the territory of other states.
  49. In the UK, Australia, Canada and most Commonwealth Countries the decisions by the Privy Council in Sirdar Gurdyal Singh v. Rajah of Faridkote [1894] AC 679 and Attorney-General (New Zealand) v. Ortiz [1984] AC 1 and the House of Lords in Government of India v. Taylor [1955] AC 491 still represent the law. See Attorney-General (UK) v. Heinemann Publishers Australia Pty Ltd (the Spycatcher case) (1988) 165 CLR 30, esp 43; Morgeaud Investments Ltd v De Savoie [1990] 3 SCR 1074, 76 DLR (4th) 256; Hunt v T & N plc [1993] 4 SCR 289; L Collins ed., (1993) Dicey and Morris on the Conflict of Laws, 12th ed, London, Sweet & Maxwell, 97; P E Nygh, (1991) Conflict of Laws in Australia, 6th ed, Sydney, Butterworths, 242-245; J-G Castel, (1994) Canadian Conflict of Laws, 3rd ed, Toronto and Vancouver. 161-163. For the U.S. position see Restatement of the Law (Second) Conflict of Laws §§ 89, 98-102; Hilton v. Guyot 159 U.S. 113 (1895); H.M. The Queen in Right of British Columbia v. Gilbertson 597 F. 2d 1161 (9th Cir. 1979). It is interesting that U.S. Courts (1) appear to be able, even in the absence of reciprocal legislation, to enforce foreign revenue or tax law s: Restatement of the Law (Second) Conflict of Laws § 89, note (b); (2) have refused to give extraterritorial operation to U.S. legislation dealing with employment conditions (see Benz v Compania Naviera Hidalgo, 353 U.S. 138 (1957); McCulloch v Sociedad Nacional 372 U.S. 10 (1963); Windward Shipping (London) Ltd. v. American Radio Association 415 U.S. 104 (1974); (cf International Longshoremen's Association v Ariadne Shipping Co. 397 U.S. 195 (1920) and Marine Cooks v Panama SS Co., 362 U.S. 365 (1960)), discussed in NOTE (B A Rosenfeld) "Extraterritorial Applications of United States Laws - A Conflict of Laws Approach" 28 Stanford L. Rev 1005 (1976). They appear to have not enforced anti-discrimination laws outside the U.S..
  50. See I Shearer, (1971)Extradition in International Law, Manchester, Manchester UP; Restatement (3rd) Foreign Relations § 475-478.
  51. The following account is based on the situation in common law countries: I have drawn on available literature of Australia, Canada, the UK and the U.S.. The basic principles governing recognition and enforcement of foreign judgments in each of these countries is the same, though the federations may differ in their treatment of internal conflict of laws, and the "due process" clause of the U.S. Constitution has affected judicial attitudes in that country. The "long-arm" statutes of some states are considered below. Reference may be made to P E Nygh, (1991) op cit; J-G Castel, op cit; (994); L. Collins op cit; (1993); Restatement of the Law (Second) Conflict of Laws, Chap. 3, (1971), and Gary B Born with David Westin, (1992) International Civil Litigation in United States Courts, 2nd ed., Kluwer Law and Taxation Publishers, Deventer and Boston, Chapter 2.
  52. Orders affecting status of persons, such as orders for the custody of children of marriages that have ended, create different problems. Because that type of proceeding has few analogies with events relating to the use of cyberspace, it will not be pursued further.
  53. Restatement of the Law (3rd) Foreign Relations § 481-482. Like most of the principles set forth in the Restatement, these principles are always subject to a requirement of "reasonableness".
  54. Restatement of the Law (2nd) Conflict of Laws, (1971) § 98, which states that a "valid judgment rendered in a foreign nation after a contested proceeding will be recognized in the United States so far as the immediate parties and the underlying cause of action are concerned"; Restatement of the Law (3rd) Foreign Relations § 482(2)(d); Attorney-General (UK) v Heinemann Publishers Australia Pty Ltd (the Spycatcher case) (1988) 165 CLR 30 involved an attempt by the UK government to prevent publication in Australia of information which it alleged to contravene provisions of its official secrets legislation. The High Court of Australia drew an analogy between that type of legislation and penal and revenue laws: see esp at 43.
  55. Restatement (3rd) Foreign Relations § 482(b); Restatement (2nd) Conflict of Laws §28; Laurie v Carroll (1958) 98 CLR 310; Amusement Equipment Inc v Mordelt 779 F 2d 264 (5th Cir, 1985).
  56. International Shoe Co v Washington 326 U.S. 310 (1945); Helicopteros Nacionales de Colombia v Hall 466 U.S. 408 (1984); Brilmeyer, supra, note 14.
  57. English Rules of Court O 11, r 1(1)(d); for example, where a contract is made by fax or telex, the English courts have ruled that the contract is made in the place where the acceptance is communicated to the offeror, i. e. the place where it is received. So if the acceptance of an offer is received in England by telex, fax or e-mail, the contract is made there, and English Courts will entertain an action wherever the breach may have occurred: See Dicey & Morris s 329; Nygh, 39-41.
  58. English Rules of Court, O 11, r 1(1)(f); Dicey & Morris 340; Nygh 42-52. See Distillers Co (Biochemicals) Ltd v Thompson [1971] AC 458; Moran v Pyle National (Canada) Ltd (1973) 43 DLR (3d) 239: Hunt v T & N plc [1973] 4 SCR 289; J Goldring. "Product Liability and the Conflict of Laws in Australia" 6 Adelaide L Rev 151 (1978); Peter Kaye, (1991) Private International Law of Tort and Product Liability, Dartmouth, Aldershot .
  59. [1993] 1 VR 274, esp 310-312. (Supreme Court of Victoria, McDonald J.)
  60. Bonython v The Commonwealth [1951] AC 201; Amin Rasheed Shipping Corp v Kuwait Insurance Co [1984] AC 50; Restatement of the Law (2nd) Conflict of Laws §188.
  61. Babcock v Jackson 191 NE 2d 279 (1963); Restatement of the Law(2nd) Conflict of Laws §145.
  62. Phillips v Eyre (1870) 6 LR QB 1; but cf Breavington v Godleman (1988) 80 ALR 362.
  63. Great Britain, Law Commission, (1990) Private International Law: Choice of Law in Tort and Delict, LRC 193, London, HMSO: Australia, The Law Reform Commission, (992) Choice of Law, ALRC 58, Canberra.
  64. J Goldring, "Uniformity, Harmonisation or Restatement of Laws: Desirability and Implementation" 68 Reform, 68, 7 (1996); for a fuller account: J. Goldring, 'Unification of Law in Australia' (1977) 1 Uniform Law Review 82; and 'The Unification and Harmonisation of the Rules of Law' 9 Federal Law Review 284 (1978).
  65. for example, John Kenneth Galbraith, American Capitalism: The Concept of Countervailing Power, Boston, Houghton Mifflin, (1952) Chaps 9-10; Cass R Sunstein, "Disrupting Voluntary Transactions" In J Roland Pennock and John W Chapman, Eds, (1989) Markets and Justice (NOMOS XXXI), New York and London, New York University Press,279; Michael Pertschuk, (1982) Revolt Against Regulation: The Rise and Pause of the Consumer Movement, Berkeley, Los Angeles and London, University of California Press, Chap 1, 62-66ff.
  66. Mark V Nadel, (1971) The Politics of Consumer Protection, Indianapolis and New York, Bobbs-Merrill. See also various contributions in David A Aaker and George S Day, eds, (1978) Consumerism, Search for the Consumer Interest, 3rd ed., New York, The Free Press; Stephen Breyer, (1982) Regulation and its Reform, Cambridge, Mass, Harvard University Press, especially chaps 1 and 9: more recently Anthony Ogus, (1994) Regulation: Legal Form and Economic Theory, Oxford, Clarendon Press, Part 1.
  67. for example, Daniel A Farber and Phillip P Frickey, (1991)Law and Public Choice: A Critical Introduction, Chicago and London, University of Chicago Press, Chapter 5, for a discussion of these arguments.
  68. Ogus, supra, note 67, 99-101 cites the success of industry groups which had been unsuccessful at local or national level succeeding with the central organs of the European Union.
  69. Patrick S Atiyah, (1979) The Rise and Fall of Freedom of Contract, Oxford.
  70. Robert B Reich, (1991) The Work of Nations: Preparing Ourselves for the 21st Century, New York, Knopf, esp 140, 301-305.
  71. P Hirst and G Thompson, "Globalization and the Future of the Nation-state" 24 Economy and Society 408 (1995).
  72. Eric Hobsbawm, (1995) Age of Extremes: The Short 20th Century 1914-1991, London, Abacus, 428.


About the Author

     John Goldring was Dean of the Faculty of Law at the University of Wollongong (near Sydney, Australia) from its establishment in 1990 until July 1995. He remains a Professor at that University. He was educated at the University of Sydney and Columbia University. After practicing as a lawyer in Sydney and New York, he took a teaching position at the University of Papua and New Guinea, and has since held teaching and research posts in Australia, Italy, Norway, Canada, the United States and the United Kingdom. He has written books and articles in the areas of commercial, consumer protection, constitutional and administrative law and on legal education. He has served on a number of government inquiries and public bodies and was a member of the Australian Law Reform Commission from 1987 until 1992. At the Commission he was involved with references on Product Liability, Standing and Access to the Courts, Federal Choice of Law Rules, Personal Property Securities and Multiculturalism and the Law. In 1993 he was appointed a member of the Australian Consumers' Council by the Commonwealth Minister for Consumer Affairs. Much of the work represented here was made possible through a research grant from the Law Foundation of NSW, and visiting appointments at the Law Centre, University of Alberta, Canada and the Benjamin N. Cardozo Law School of Yeshiva University, New York City. An article expanding on many ideas raised here will appear in the Cardozo Journal of International and Comparative Law.