[governance] regulating the digital space - whose laws apply, and whose do not

[Paul Lehto]

If a "local" or "state" jurisdiction is prevented from applying its
laws to the internet as it comes within its borders, that does not at
all mean that no laws are being applied to that internet stream coming
within those borders.  As discussed at length in prior threads, there
is always "law coming in" - it's just more heavily weighted in
contract law and property law, with tort or consumer protection law
bearing the brunt of the exclusion of local or state laws, whenever
that exclusion happens.

If local or state laws are forbidden, think of it this way:  the
corporate (or non-corporate) internet companies use contract law,
especially, to specify which country's laws shall apply to
transactions between the parties.  This is called a "choice of law"
clause.

With unhindered freedom of contract (free of consumer protection
"hindrances"), these companies get to pick and choose which country's
contract laws apply, so long as that country's laws have some modest
connection to at least one of the parties to the contract.  However,
if local or state jurisdictions are deemed to be able to regulate, to
that extent these companies have no choice on what laws apply, and
they can not use their overpowering contract bargaining power to
impose the most favorable laws they can find.

With choice of law clauses, there is an incentive for countries to
"compete" to provide the most corporate-friendly laws so as to attract
their business. (The companies must have a major office or something
in that country to support that country being the designated country
for choice of law purposes).

The above is not an exhaustive analysis of all considerations, but I
think not very many people realize this kind of legal/economic
perspective does have significant power to influence the perspectives
of companies.

It's a battle between sovereign countries or democracies exercising
self-government and corporations as to Who gets to Dictate the Laws
applicable to the internet.  If democracies win out, that's
self-government (aka democracy).  If corporations or companies win
out, then they rule the internet.

The fundamental question, thus, is:  Who's in Charge?

People may not like some of the choices legislatures have made or will
make.  But consider this reality:  No country's people are free if
they are not free to make MISTAKES.  Self-government means not just
being able to make laws, but to make even mistaken laws, provided they
are not unconstitutional or human rights violations.  If one is not
free to make mistakes or implement unwise policies, then one is not
free, one is living in a managed environment.  The managers are the
ones that control, and are free...

Paul Lehto, J.D.


On 8/26/11, parminder <parminder at itforchange.net> wrote:
> The below may be  a good addition to the context in which this list has
> been discussing the application of local laws and regulations to global
> digital space/ business, vis a vis the power of different countries/
> jurisdiction to apply their law, especially for the more legitimate
> purposes as in the below case.
>
> My point is, will a developing country, especially a small one, be able
> to penalise google and make it behave as the UG gov could. (See the
> earleir instance of Taipie city government versus google). Is it not a
> major global IG issue?
>
> parminder
>
> http://governancenow.com/gov-next/egov/google-agrees-usd-500-million-settlement-over-pharmacy-adds
>
>
>     Google agrees to USD 500 million settlement over pharmacy adds
>
> PTI | August 25 2011
>
> Internet search giant Google has agreed to pay USD 500 million to settle
> charges that it allowed Canadian pharmacies to place ads on its website
> that resulted in prescription drugs being imported from Canada to the US
> unlawfully.
>
> The Justice Department said the forfeiture is "one of the largest ever
> in the United States" and represents the gross revenue received by
> Google as a result of Canadian pharmacies advertising through its
> 'AdWords' programme, plus gross revenue made by Canadian pharmacies from
> their sales of controlled and non-controlled prescription drugs to US
> consumers.
>
> "The Department of Justice will continue to hold accountable companies
> who in their bid for profits violate federal law and put at risk the
> health and safety of American consumers," Deputy Attorney General James
> Cole said in a statement on Wednesday.
>
> The settlement ensures that Google will reform its "improper advertising
> practices with regard to these pharmacies while paying one of the
> largest financial forfeiture penalties in history," Cole said. Google
> said it "accepts" responsibility for its conduct, acknowledging that it
> improperly assisted Canadian online pharmacy advertisers to run
> advertisements on its site.
>
> Under the terms of an agreement signed by Google and the government,
> Google must also undertake a number of compliance and reporting measures
> to insure it does not indulge in such practices in the future.
>
> An investigation by the US Attorney’s Office in Rhode Island had found
> that Google was aware as early as 2003 that online Canadian pharmacies
> were advertising prescription drugs to Google users in the US through
> its AdWords advertising programme.
>


-- 
Paul R Lehto, J.D.
P.O. Box 1
Ishpeming, MI  49849
lehto.paul at gmail.com
906-204-4026 (cell)
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