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It is often said that the internet is the most regulated communication channel in the world. Potentially, anyone publishing material on the internet or trading through it is subject to laws all around the world. How far this proposition extends is set to be tested in the New York Supreme Court in Banco Nacional de Mexico SA Ramirez, Giordano and Narco News Bulletin.
This is a defamation claim brought by Banco Nacional against two journalists and the Narco News Bulletin website regarding allegations made about one of the bank's officers. The vast majority of the statements relied upon by the bank emanate from Narco News Bulletin, which is published in Mexico but via the web is available throughout the world, including, of course, New York.
The allegations concern activities that were alleged to have taken place in Mexico, many of which repeat what has already been published in the Mexican media. The defendants have countered, saying that Narco News Bulletin has no presence in New York and that the bank has no significant presence there either. Unsurprisingly, the defendants are challenging the New York court's jurisdiction. They argue that it is not enough for the New York court to take jurisdiction over a website which is, as the defendants put it, a "passive, informational website", that can be viewed in New York. The defendants are relying on the 'chilling effect' on freedom of speech should the New York court take jurisdiction. They say that a finding of jurisdiction in New York would mean worldwide jurisdiction over every internet website and all websites would be amenable to a lawsuit in any of the 50 US states or in any foreign country.
However, whether cases like this will have a 'chilling effect' on freedom of speech, or for that matter trade across the internet, does not simply depend on a court taking what appears to be extra-territorial jurisdiction. Even if the New York court decides it has jurisdiction to hear the claims relating to the publications on the Narco News Bulletin and rules against the defendants, whether that has any practical effect will depend on the enforceability of the judgment in New York. If the defendants have no assets or presence there - which appears to be the case - then any favourable ruling for the bank may be a hollow victory.
Of course, it may be possible that another state where the defendants are located would recognise and enforce the New York court's decision, but this appears unlikely where controversial issues of extra-territorial jurisdiction and free speech are at issue. The US courts' own record on recognition of foreign judgments amply demonstrates this.
It may be that the bank will use a favourable judgment to try to block internet access to the Narco News Bulletin by attacking internet service providers (ISPs) which make the site available in New York and throughout the US. But again, that depends upon the ISPs having a presence in the US or any assets there against which any breach of an order can be enforced. Even with this scenario, attempts to restrain what is done on the internet by getting ISPs to police their content have not proved totally successful. This was demonstrated in the Bulger injunction case.
The English Courts caused controversy recently by granting an injunction to prevent the publication of any recent pictures of, or information about, the whereabouts of Robert Thompson and Jon Venables, the killers of James Bulger. The injunction was controversial, not only because of the protection afforded to Thompson and Venables, but also because it purported to have effect against the whole world. However, in the context of the internet, it was widely recognised that practical enforcement against someone who is not present in this country or who has assets here would be virtually impossible.
The attention, therefore, turned to the role of ISPs making such publication in this country possible. The only practical means to try to stop someone overseas from publishing the prohibited information over the internet into this country was to put the onus on ISPs based here to block the material. Under the terms of the original injunction, ISPs would arguably have been responsible for the publication of the offending material, whether or not they knew it was passing through their systems or was held on their servers.
Concerned at the wide-ranging effect of the injunction, Demon Internet sought an amendment to the original injunction. It sought to clarify that ISPs would not be responsible where they did not know that the prohibited material was held on their servers or passing through their systems.
The court agreed to amend the injunction to require that ISPs must have knowledge of the offending material before they were fixed with the responsibility. This is in line with existing English law regarding the responsibility of ISPs for defamatory material posted on, or passing through, their systems.
So, even where it is possible to attack ISPs that have a presence or assets within a jurisdiction, limitations may be placed on the degree of their responsibility, which will qualify the extent of exposure to that legal system.
The case that most clearly illustrates the true exposure to laws around the world for those publishing or trading on the internet is the Yahoo! case. In this case, the French court banned Nazi memorabilia from display for sale through the Yahoo! internet auction site based in the US. The ban was put in place because the auction site was accessible by French citizens and French law prohibits such sales. The French court was satisfied that Yahoo! could put in place filtering software to block 90 per cent of French citizens seeking access to that part of the site. Yahoo! had assets in France against which court fines could be enforced. Under protest, Yahoo! removed the Nazi memorabilia from its US-based website. The material was therefore not simply unavailable for sale to French citizens, but also to anyone around the world.
These three cases illustrate that exposure to laws around the world is a two-stage analysis of jurisdiction and enforcement. Without enforcement, there is no true exposure.
There must, though, be a risk that countries which regulate internet activities lightly, and which do not recognise foreign court rulings, will attract substantial business from internet traders, publishers and service providers which are seeking a safe haven. n
Ian De Freitas is a partner at Berwin Leighton Paisner