When content delivery is global, under what jurisdiction is legal control

exercised?

Up until now, it is has been widely assumed that content providers manage the risk of online

publication by hosting their content on servers within jurisdictions where the law is a known

quantity. Editorial and legal control is exercised accordingly.

However, the High Court, in the first Internet matter it has heard, will later this year

pronounce on an appeal by Dow Jones against a decision of the Victorian Supreme Court which found

last year that jurisdiction is determined by the place in which online content is accessed.

The Dow Jones vs Gutnick appeal was heard in late May before the Full Bench of the High Court in

Canberra. The Internet Industry Association (IIA), together with a number of major international

publishers and portal sites, was granted leave to appear before the High Court (as interveners)

to collectively advance arguments in support of Dow’s case.

The appeal concerned mining entrepreneur Joseph Gutnick’s right to sue in Victoria for allegedly

defamatory material published by Dow Jones in its investor magazine Barron’s. (The article

implied that Gutnick was involved with a convicted money launderer and tax evader). The online

version of the article was accessible to the world by registering on the Barron’s Web site.

The central issue concerned was which legal jurisdiction applied: that of New Jersey where Dow

Jones maintained their servers (or alternatively New York where they exercised editorial

control), or Melbourne where Gutnick accessed the article, where his reputation largely resided,

and where defamation is easier to prove.

The Victorian Supreme Court Judge, Justin Hedigan, at first instance last December, found for

Gutnick on the basis that the article was accessible by readers in Victoria, so the act of

publishing – and therefore the defamation – had occurred there.

His Honour accepted Gutnick’s argument that publishing on the Internet was a “push” technology

and that publication occurs at the time and place the reader comprehends the material. His Honour

rejected Dow Jones’ argument that publishing was a “pull” technology which relied on the act of

an Internet user requesting content before it could be served to them.

While this might seem like a technical legal distinction, the implications that flow from it are

very significant for those publishing content on the Net. In practical terms, it means if the

location of the Internet user determines the jurisdiction and applicable law, then an Internet

publisher will have no way of managing its risk because they cannot reasonably foresee what laws

might apply in every place where its content may be accessed.

It is possible that insurers might be reluctant to cover an unquantifiable risk of this kind, and

some fear this might have a chilling effect on online publication generally.

In addition, the implications of this case could extend beyond defamation, since what is at issue

here is the question of jurisdiction and applicable law.

This means that a publisher would have to consider all other types of liability which might also

arise from publication including other torts such as negligence and passing off, and under laws

governing things like privacy, obscenity, sedition, racial vilification, consumer protection, and

e-commerce.

Furthermore, decisions of the Australian High Court are persuasive in other Commonwealth

countries and may therefore influence the way that others deal with similar issues. For these

reasons, the implications of the High Court’s findings may turn out to be very wide indeed.

If the appeal is lost, the future of online publication may depend on securing legislative

changes to take account of the novel and ubiquitous nature of the Internet.

Peter Coroneos is Chief Executive of the Internet Industry Association (IIA), which, together

with AIMIA, has worked on policy issues for a number of years.

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