EBU5027 E-Commerce Law

Coursework Essay
Author: Changhao Li Word Count: 1589 words
Class: 2008215114 Student Number: ee08b439

1. Abstract:

The essay mainly deals with two aspects just as follows:

First of all, the article will discuss the rules of jurisdiction and how electronic commerce is
impacted because of these rules. What is more, how these rules are evolving for electronic
commerce and if there is any method to make jurisdiction more certain are also included in the
article.
Secondly, as jurisdiction has expanded, some suggestions aiming at offering strategies to restrict
worldwide exposure for websites or online merchants are given.
[Keywords] jurisdiction, e-commerce, strategy to restrict exposure

2. Introduction

E-commerce, a new global trend with the development of network economy, whose transaction
efficiency is high and cost is cheap, plays an important role in information age. However, the
current legal system can’t find the proper certain regulations especially for jurisdiction. This
paper aims to discuss the jurisdictional implications of e-commerce and how to minimize
exposure to liability online.

3. Main body

3.1 The discussion of jurisdiction

Jurisdiction refers to the permission that a certain country owns for accepting or judging a certain
case. If a court has no jurisdiction, then its judgment does not have legal effect which cannot
receive acknowledgement and enforcement in the other countries.
In general, whether a court has jurisdiction is up to the country's domestic law and international
conventions the country participate. Different countries judge jurisdiction with different system.

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Jurisdiction in China

According to the Article 22, 24 and 25 of the Civil Procedure Law of the People’s Republic of
China, the parties to a contract may agree to choose in their written contract where the
defendant has his domicile, where the contract is performed or signed, where the plaintiff has his
domicile or where the object of the action is located to exercise jurisdiction over the case,
provided that the provisions of this Law regarding jurisdiction by forum level.

Jurisdiction in US

The court has the jurisdiction depends on whether it corresponds to the “due process”.
Defendant can be sued in the courts of a state for any claim, if the defendant has “systematic”
and “continuous” contacts with that state. But if the jurisdiction doesn’t exist, the court should
analysis whether the defendant has “minimum contacts”.

Jurisdiction in EU

Civil Jurisdiction and Judgments Ordinance, whose abbreviation is Brussels Regulation, regulate
the civil and commercial matters of the system of basic laws between the EU members.
Meanwhile, the regulation also includes B2B and B2C contract.

3.2 The influence of judicial power on e-commerce

E-commerce is basing on network which is a global system and a world without boundary.
However, jurisdiction is exclusive which have clear boundary. That is to say, people have no need
to consider the geographical boundaries existing outside the network. And once online, the web
site he will access is clear, but the jurisdiction area is difficult to find and foresee. Through
traditional jurisdiction it is difficult to judge a certain location and exact range of a certain
e-commerce case as well as corresponding to a certain jurisdiction area. If the problem of
jurisdiction can't be solved, then the operation of e-commerce will suffer from the risks which
may be out of control.

Case analyzing

In April 2000, international anti-racial discrimination sued Yahoo! headquarter and Yahoo! France
through France big trial court. The reason was Yahoo! headquarter launched a series of Nazi
auction commodity and Yahoo! France provided users from France with related links. In
November 20, France big trial court made a final judgment: Yahoo! headquarter shall take all
possible technology means to stop France user from visiting Nazi-related auctions, otherwise
they will be imposed of 100,000 francs. Yahoo! France must immediately discontinue the visit

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when France users search out the pages which are against France laws.
But Yahoo! headquarter thought the business of Yahoo. Com activities mainly basing on English
should be judged by American courts. According to the constitution about freedom of speech
terms of the United States, Nazi-related auction should not be abandoned just because of France
laws.
From the case above we know judicial power may affect e-commerce and it’s a problem
presenting in legal theory field.

3.3 Jurisdictional rules are evolving for e-commerce

In order to step out the dilemma that traditional jurisdiction face, a large number of countries are
seeking for a new jurisdiction mode.

3.3.1 The United States

As a network technology pioneer, through the judicial practice in recent years, there have been
many e-commerce cases of jurisdiction involving. Especially the related jurisdiction principles and
theories which gradually formed in the American case -law are recognized and accepted across
the international community.

Long-arm jurisdiction in e-commerce

In the American legal system, the personal jurisdiction divided into general jurisdiction and
Long-arm jurisdiction. Long-arm jurisdiction means that when the defendant's domicile is not the
place where court locates, but there is a certain minimum contacts with the state, and
corresponding right is relevant with the contact. Under this sort of situation the state has
jurisdiction for the defendant. Since e-commerce is often border-crossing and even
boundary-crossing, long-arm jurisdiction can deal with e-commerce cases effectively.

Case analyzing

A California network news service provider named Zippo's domain name was sued by a lamps
and lanterns manufacturers in Pennsylvania also called Zippo for trademark infringement
litigation. The defendant said it only published service advertisement on the Internet, whereas in
Pennsylvania it had no activity places. But the court found the defendant actually had sold the
password to about 300 Pennsylvania residents and signed 7 contracts with Pennsylvania ISP. In
order to determine the jurisdiction of this e-commerce case, Pennsylvania court divided websites
into three categories:
1) Simple interactive website, just as a normal information platform, and do not have
interactive functions (i.e. BBS, search engine, etc.)
2) Obviously an e-commerce interactive website, engaged in online shopping, allow visitors to

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 do reservation or upload and download files, and send E-mail for sale, etc.
3) In-between website (i.e. FTP, etc.)
When the court consider jurisdiction for the first kind of website, they rarely claim jurisdiction.
For the second kind of website they usually claim jurisdiction, and for the third kind it is up to the
degree of interactivity. Finally Pennsylvania’s court claimed long-arm jurisdiction and this
principle became a significant rule in e-commerce for federal’s court since then.

3.3.2 International Community

Besides the United States, some other authoritative international organizations made great
contribution to e-commerce law improvements.

Geneva conference in 1999

In September 1999, the Hague international private law association invited all member countries
and some international organizations, having held a round-table meeting in the University of
Geneva. The conference focused on the theme of jurisdiction-related issues such as contract, tort,
and court selection.

ABA Global Cyberspace Jurisdiction Project in 2000

ABA (America Bar Association) initiated global BBS in London for solving the problem of
jurisdiction in e-commerce and achieved a report appealing that countries shall collaborate to set
up Global Online Standards Commission to enact standards for network.
This report put forward some solutions to the e-commerce cases and pointed out that in the
following conditions, the operators should be subject to the site of a country's personal
jurisdiction or enforcement jurisdiction as follows:
1) Operators is the country's usual residents or its main business status is in the country
2) Site has targeted the country and disputes are caused by site content.
3) Disputes are caused by the transaction of sites. Although this site is not aiming at any certain
country, it is an interactive website and can be thought engaging in commercial activities in
the country.

3.4 The strategy to restrict the worldwide exposure

With the rapid popularization of Internet, e-commerce has welcomed a high-speed development.
However, e-commerce is born with many worldwide exposures. In order to deal with that, the
strategies below can be taken:

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3.4.1 Block strategy

Block the e-commerce company. Sometimes company can't adapt to the legal situation. It's
better to choose blocking instead of gaining more losses.

3.4.2 Local-adaption strategy

It’s nearly impossible for a company to change the local legal situation. Therefore, the wiser
choice is that according to the requirement of local laws the company should take some action,
obtaining a qualification to continue its local business.

3.4.3 Risk strategy

Risk Classification

E-commerce is born with many risks mainly classified as follows:

1) Security legal risk
2) Contract legal risk
3) Tort legal risk

Risk strategy

1) The most important issue is transaction security and delivery security. For transaction
website or online merchants can develop online pay tools, such as eBay’s Paypal. Delivery
security should focus on defining and operating the relationship of consignor, logistics
providers and the consignee between in detail.
2) Some necessary measures shall be taken to limit the sites of interaction procedures such as
using contract to limit the issue of jurisdiction when conducting online and adding the
proper hold harmless agreement on the home page of the site
3) E-commerce sites owners should claim a statement which related to the issue about
copyright protection in order to make a note for the visitors browsing the website.

4. Conclusion

Jurisdiction is different among different countries like China, US and EU. With the development of
e-commerce, traditional jurisdiction rules are evolved and many international communities are
trying to set up standards. It’s a significant job that understanding about jurisdiction across the
worldwide areas and how to minimize exposure to liability online. Thus according to particular
situation online merchants should choose appropriate strategy such as block strategy,

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local-adaption strategy or risk strategy.

5. Reference and bibliography

[1] The discussion about jurisdiction in the network tort

http://www.lawtime.cn/info/shangwu/wlqq/201001311198.html
[2] E-commerce's development and risk aversion
http://www.lunwenshop.com/anli/zhishiguanli/200807/1015.html
[3] E-commerce jurisdiction problems research
http://www.ccpcc.com/jjxj/km1/020615.htm
[4] Queen Mary’s Lecture Slides of E-commerce laws

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