Where are Internet Disputes resolved?

When you approach any court in a dispute, the first thing they see is if they have the legal power to look into cases of such nature. This is called jurisdiction — the authority granted to a legal body (a court, in this case) to decide over matters concerning a specific field. For example, for consumer related disputes, the consumer dispute resolution forum has the jurisdiction to adjudicate; if someone steals your bike in Mumbai, then normally Mumbai courts would have the jurisdiction. Traditionally, jurisdiction is decided based on the geographical location¹ of the cause of action, the pecuniary limit² of the court or the subject matter³ that a court can look into.

However, when it comes to internet related disputes, determining the jurisdiction of courts becomes tricky due to its ubiquitous nature.

Let’s say you own a business in India and someone sitting in Canada can view your business website on their computer in Canada. They see something that offends them. Can they successfully sue you in Canada for contents hosted on your website? Does owning a website make your Indian business international?

To answer such questions, let me introduce the following three main legal tests that courts across the world (including India) have used.

• Sliding Scale test
• Effects test
• Specific Targeting test

Sliding Scale Test

Think of any website that you have used regularly in the past. Now, answer the following questions about the website:

• Did you interact with the website to complete any transaction (like online payment, for example)?
• Or was it a passive website that simply displayed information?
• Maybe it was a mix of both?
• How would you categorize this website using the sliding scale shown below?

Zippo Sliding Scale: At one end of the spectrum is a passive website that simply makes information available to those interested in it. At the other end of the spectrum is an interactive website through which the website owner conducts business with its users through repeated transmission of files, etc. GIF created by the author.

With the help of similar questions, the courts in the past have used the sliding scale test to determine if they had jurisdiction over the disputes.⁴ If the website complained of was held to be an interactive one, then the courts assumed jurisdiction to decide over the matter.

On the other hand, if it was held to be a passive website that simply made information available to those interested, then the court would not exercise its jurisdiction.⁵ As a result, owners of interactive websites had to foresee possibilities of being sued internationally; however, passive websites did not have to expect such an outcome.

Problems with this test

An alarmed business website owner voicing her concern. Illustrated by author.

If you relate to the sentiments of this business person (in the comic) then you are not alone. Shortly after this test was put into practice, several problems started surfacing.

• Courts could not decide on how interative a website should be to exercise its jurisdiction.
• Businesses became wary of interacting through their websites for fear of being hauled into disputes across multiple countries.
• This had the potential of stifling businesses from innovating which went against the spirit of innovation.

Recognising these pitfalls in the test, the courts thereafter adopted the effects-based approach to determine whether or not to exercise their jurisdiction.

Effects-based test

Recall the website you thought of earlier. Using the previous test, you were asked to categorize the nature of the website (passive/interactive) using a sliding scale. Under the effects-based approach, instead of examining the nature of the website, you ask yourself:

What are the ‘effects’ of such actions on you/residents of your state? Has it resulted in some harm/injury to you/residents of your state? Were the actions of this website ‘expressly aimed’ at you/residents of your state?

This is the approach that one of the courts took in an online defamatory case. where an airline employee sued her co-employees for publishing defamatory statements against her on her employer’s electronic bulletin board.

The New Jersey Supreme Court in this case held that it could exercise jurisdiction over the co-employees because they posted the said defamatory electronic messages with the knowledge that these messages would be published and read in New Jersey. Therefore, even if the co-employees carried out the action of posting on the electronic bulletin board outside New Jersey, the fact that the effect of the action was felt in New Jersey was sufficient for the New Jersey courts to exercise their jurisdiction.

Illustrated by the author.

This is a valid concern. The effects of a website could be widespread and felt across countries. Can the courts of all these countries then exercise their jurisdiction in that matter? Of course not! It would become extremely chaotic.

To address this confusion, the courts went a step further from the effects test. They sought to determine if the person/people raising the claim were ‘specifically targeted’ by the website/business? Did the website/business purposefully avail itself of that state (and its jurisdiction) where the effects were felt?

Through these additional questions, the court paved the way for a ‘tighter’ version of the effects test.

Specific Targeting test

When you streamline the ‘effects test’, you arrive at the ‘specific targeting’ test. That is to say, the effects test was a step in the right direction but not the destination itself. Besides understanding the effects of the actions complained of, we need something more to establish the intention of the website owner to cause that effect. We may find this in the specific targeting test.

Through the ‘specific targeting’ test, we try to find the link between intention to cause the harm (effects) and the harm actually caused. We do this by asking:

Did the website owner specifically target a particular state/country? Was the harm caused because of such specific targeting?

Try to answer these questions in the following scenario (in the comic strip below) as if you were the judge in this case:

Disclaimer: This comic strip is based on the Banyan tree case decided by the Delhi High Court. The picturisation is simply to help the reader understand better. Full text of the original case can be accessed in the link below. This comic strip is not intended to mislead or offend anyone. It is merely meant for educational purpose. Illustrated by the author.

What’s your judgement after reading this comic? Do you think the other company specifically targeted Delhi residents through its website? Why? What was the harm caused to the original Banyan Tree Resorts?

In a case with similar facts, the Delhi High Court held that Banyan Tree Resorts (the Plaintiff) had to show that the defendant company had ‘purposefully availed’ the jurisdiction of this court by establishing that:

1. The nature of activity carried out by the defendant company through its website was with an intention to conclude a commercial transaction.
2. The website specifically targeted Delhi residents which resulted in injury/harm to Banyan Tree Resorts.⁶

This two-pronged test has later been used by several courts for resolving jurisdiction issues, especially in cases dealing with infringement of Intellectual Property Rights.

The specific targeting test admittedly has more advantages⁷ as opposed to the previous tests. But are there ways in which you can avoid approaching the wrong court entirely?

Clarify now or justify later?

An exhausted business owner clarifying the jurisdictions her website is targeting. Illustrated by the author.

This is the approach that most of the websites (especially business sites) follow — to clarify the jurisdiction upfront rather than justify the right jurisdiction at the time of dispute.

The common practice is to use forum selection clauses or click-wrap agreements where the jurisdiction is already predetermined. Forum selection clauses are contractual clauses which identify the forum for resolving disputes at the time of entering into the contract itself. These clauses are usually contained in the terms of use of the website as well as in click-wrap agreements where the user clicks on the ‘I agree’ button before continuing to use the site.

So, what now?

While the legal enforceability of these clauses and agreements is still an evolving issue in India, they are largely considered valid in several other countries. Therefore, as a business service provider, you could perhaps benefit by using such clauses on your website and bringing them to the notice of the user before they avail your services. That way, even if a dispute reaches the court, these clauses may be used as evidence⁸ to establish ‘specific targeting’.

As a user of any website, it might be a good idea to skim through the terms of use of the website before clicking on the ‘I agree’ button. It is highly likely that the jurisdiction has already been predetermined in such terms of use and as a user it helps to be informed about the forum of dispute in case a dispute arises in the future.

Footnotes

1. Geographical location is important because it helps determine which court can exercise its authority in that area and which country’s laws apply to that case. Normally a court cannot extend its authority outside of the territory of the said state/country because of the international law principle which recognizes all sovereign countries as equal. This means that one country cannot enforce its own law on another country outside of its sovereign territory.
2. Pecuniary jurisdiction sets certain pecuniary limits on courts. For example, certain district courts have a cap of Rs. 20,00,000. This means that suits amounting to more than Rs. 20,00,000 will not lie before such district courts. The pecuniary limit varies from court to court. So one would need to check the relevant court’s rules for the exact limit.
3. Subject matter jurisdiction refers to the power vested in courts to decide matters pertaining to a particular subject matter only. For example, the consumer dispute fora have jurisdiction to deal with only consumer-related disputes and not criminal matters like theft, burglary.
4. Here, dispute refers to those disputes involving parties who are not based out of the same place. If they are based out of the same place within the same territory where the court has jurisdiction, then these tests are not required.
5. In the Zippo case (where the ‘sliding scale’ test was propounded) the court used a three pronged test to see if the exercise of jurisdiction was appropriate: (i) whether the defendant had sufficient ‘minimum contacts’ (ii) whether the claim arose out of such minimum contacts; (iii) whether exercise of jurisdiction would be reasonable. It is for establishing the first prong of this test that the court came up with the sliding scale test which was thereafter used by several courts to determine exercise of jurisdiction.
6. While this judgement laid down the law for determining if someone had purposefully availed its jurisdiction, it did not decide on the facts of the case; it sent the case back to the Single Judge to decide on the facts of the case.
7. Advantages of Specific Targeting Test: The adoption of specific targeting test reduces the number of forum states that could have jurisdiction over the matter as opposed to the previous tests. From the point of view of businesses, it provided a more reliable standard of jurisdiction because it is only fair that the businesses are held responsible for the harm caused in those states/countries that they ‘intentionally’ targeted. It provided a stronger link between the online actions complained of and the power of the courts to look into a matter. You can read more about this test here, here and here.
8. Prof. Michael Geist in his paper also talks about the technology available to avoid specific jurisdictions. He challenges the notion of the internet being considered borderless by courts given the rapid emergence of technologies we have today that makes geographic identification a reality. Interestingly, an argument to this effect was also made by the Plaintiff in the Banyan Tree case where it was argued that in the absence of the defendant adopting such technologies to block access to Delhi viewers, implied that Delhi was specifically targeted by the defendant.