Legal issues of personal jurisdiction in e-commerce in the European union, the United States and Australia : proposed solutions

The concept of personal jurisdiction is fundamental in e-commerce disputes. The underlying principle to establish personal jurisdiction is physical presence of a party within the court’s territory. This principle is challenged in e-commerce on account of the nature of the internet which allows parties to trade in a virtual environment. Hence, physical presence within a defined territory is difficult to determine in such cases. States have framed laws or the courts have formulated various tests to determine physical presence in e-commerce. This thesis analyses these laws and tests in the European Union (EU), United States (US), and Australia to establish if they are clear and help the courts in establishing personal jurisdiction in e-commerce disputes to deliver consistent decisions. This thesis analyses the personal jurisdictional rules in the EU to highlight their success, identify drawbacks and recommend solutions. It is argued that the EU rules on personal jurisdiction are predictable and certain on account of the clear provisions of the Brussels Regulation (Regulation) and the on-going changes undertaken by the European Commission (EC) to reform personal jurisdictional principles applicable to domestic e-commerce disputes. The underlying concept to establish personal jurisdiction is the domicile of the defendant except in consumer contracts. The EU courts are guided by the letter of the law to deliver certain and consistent decisions in exercising personal jurisdiction. Further, consumers are provided special protection under the Regulation which helps to promote e-commerce. However, the Regulation is limited in its scope to e-commerce disputes within the EU. In international e-commerce disputes, the member state courts have to apply their national rules of jurisdiction. This limitation of the Regulation submits third State defendants to the personal jurisdiction of each member state amounting to the expansive exercise of personal jurisdiction. Although the EC has proposed to extend the Regulation to third State defendants covering international e-commerce disputes, it is argued that it will not resolve the problem because it will create deadlocks. Hence, it is submitted that a new solution is required to establish personal jurisdiction in international e-commerce disputes. Personal jurisdiction in the US is a product of case laws developed over a century by the US Supreme Court. The underlying concept to establish personal jurisdiction is the service of process on the non-resident defendant within the limits of the US Constitution. This thesis comprehensively analyses the US case laws beginning from 1878, tracing the development of personal jurisdiction before the evolution of the internet and e-commerce. This development is called the traditional framework of the Supreme Court. Apart from this traditional framework, there is no other guidance such as a specific legislation to establish personal jurisdiction. In such circumstances, with the evolution of the internet and e-commerce, the lower courts have extended the traditional framework or formulated internet-specific tests to establish personal jurisdiction in e-commerce disputes. It is argued that these different approaches are followed in resolving similar disputes, resulting in inconsistent decisions. This inconsistency is most visible in disputes between users of eBay. Moreover, the same personal jurisdiction inquiry is followed in both domestic and international e-commerce disputes, accentuating the problem. Hence, it is submitted that the lower courts follow various tests and principles which result in inconsistent decisions in both domestic and international e-commerce disputes, and the US therefore requires a new solution. Australia is an emerging e-commerce market. Similar to the EU, the Australian courts are also guided by legislation and court rules in personal jurisdictional inquiry in both domestic and international e-commerce disputes. The underlying concept to establish personal jurisdiction is the service of process on the non-resident defendant. It is argued that the Australian position, like that of the EU, is clear and predictable in domestic e-commerce disputes on account of the application of relevant legislation and court rules on personal jurisdiction. However, with the emerging e-commerce market in Australia, consumers need to be provided more protection with regard to personal jurisdiction. It is submitted that legislation similar to the Regulation in the EU should be enacted to establish personal jurisdiction in domestic e-commerce disputes. Although cases related to e-commerce are few, the High Court decision in Dow Jones v Gutnick has set the foundation for the development of personal jurisdiction in international e-commerce disputes. However, the High Court decision shows that Australian courts exercise expansive personal jurisdiction to protect Australian residents. It is submitted that this approach to personal jurisdiction in international e-commerce disputes is a disadvantage and needs to be addressed. Further, the thesis argues that the approaches followed by courts in the EU, the US and Australia will lead to deadlocks in international e-commerce disputes. This is a current and pressing issue in e-commerce which needs immediate resolution. Hence, the thesis examines the global efforts undertaken to bring about uniformity and predictability to personal jurisdiction in international e-commerce disputes. The application of model laws, international conventions and initiatives of OECD, UNCITRAL and The Hague will be analysed to argue that these efforts fail to address the issue. It is submitted that these efforts either do not address the issue of personal jurisdiction or there is lack of consensus among the States over a particular set of rules to govern personal jurisdiction in international e-commerce disputes. In identifying the problems in personal jurisdictional inquiry in the EU, the US and Australia, the thesis submits that the issue is two-pronged. First, in domestic e-commerce disputes there is uncertainty and inconsistency along with certain identified disadvantages in the laws to establish personal jurisdiction. Second, in international e-commerce disputes the varying approaches to establish personal jurisdiction are conflicting and create a deadlock. Hence, the thesis recommends separate solutions. It recommends that the States should regulate personal jurisdiction in domestic e-commerce disputes through codified laws or regulations, whereas personal jurisdiction in international e-commerce disputes should be regulated through on-line arbitration. In domestic e-commerce disputes, the thesis proposes a legislative approach for the US and lays down certain guidelines. The EU and Australia have been successfully exercising personal jurisdiction through codified laws and need to only address the drawbacks identified in the country-specific chapters of this thesis. In international e-commerce disputes, the thesis recommends on-line arbitration and provides draft rules which will help to resolve the personal jurisdictional problems identified in such disputes. These draft rules will be tested for their effectiveness under the current legal landscape, especially under the New York Convention, to argue for the use of on-line arbitration to resolve personal jurisdiction problems in international e-commerce disputes.