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Gawith, Daril --- "Cost-Effective Redress for Low-Value International Consumer Transactions: Current Status and Potential Directions" [2006] UQLRS 3

Last Updated: 8 January 2009



THE UNIVERSITY OF QUEENSLAND

LEGAL RESEARCH SERIES



COST-EFFECTIVE REDRESS FOR LOW-VALUE INTERNATIONAL CONSUMER TRANSACTIONS: CURRENT STATUS AND POTENTIAL DIRECTIONS



A THESIS SUBMITTED FOR THE DEGREE OF DOCTOR OF PHILOSOPHY AT THE UNIVERSITY OF QUEENSLAND IN

FEBRUARY 2006



Daril Gawith

T C Beirne School of Law







STATEMENT OF ORIGINALITY



The work contained in this thesis has not been previously submitted for a degree or diploma at any other higher education institution. To the best of my knowledge and belief, the thesis contains no material previously published or written by another person except where due reference is made.



Signed: _______________________________________________________

Daril J Gawith – Candidate



Date: ________________________________________________________



_______________________________ _____________________

Dr Nick James Date

Principal Supervisor

ACKNOWLEDGEMENTS



I wish to acknowledge the outstanding supervisory efforts of Professor Stephen Colbran, Head of Law School, the University of New England, my first supervisor, and my current supervisors Dr Nick James and Professor Ross Grantham of the T.C. Beirne School of Law, University of Queensland, both for their extraordinarily positive approach, efficiency and diligent guidance.

PUBLICATIONS AND PRESENTATIONS



PUBLICATIONS BY THE CANDIDATE RELEVANT TO THE THESIS



Gawith, D. ‘Litigation for international online consumer transactions is not cost effective – A case for reform?’ (2007) 14 Murdoch University E-Law Journal 196-244.[1]



Gawith, D. ‘Non litigation-based redress for international consumer transactions is not cost effective – A case for reform?’ (2006) 3 Macquarie Journal of Business Law 115-150. [2]



Gawith, D. ‘A comparison of model laws as a starting point for the development of an enforceable international consumer protection regime’ (2003) 8 International Trade and Business Law Annual 247-273.



Gawith, D. ‘Protection for Internet consumer transactions: a purpose-built international consumer protection convention’ (1999) 18 Communications Law Bulletin 8-12.



ABSTRACT



This thesis considers whether cost-effective redress for post-transaction problems with low-value international consumer transactions is or can be achieved by any of the existing or proposed litigation-based or non-litigation-based redress methods. It is conclusively established that none of these redress methods are sufficiently cost-effective, and that the only cost-effective method would be a fully harmonised international consumer redress/protection law.

TABLE OF CONTENTS



LIST OF ABBREVIATIONS



B2B – business to business

B2C – business to consumer

CISG – Convention for the International Sale of Goods

EU – European Union

ICT – international consumer transaction

OECD – Organisation for Economic Co-operation and Development

UK – United Kingdom

UN – United Nations

US – United States

CHAPTER ONE: REDRESS FOR INTERNATIONAL CONSUMER TRANSACTIONS – A RESEARCH PROJECT



I INTRODUCTION



This thesis is concerned with whether or not a consumer who engages in an international consumer transaction (ICT) with a foreign vendor, via the Internet or otherwise, has any cost-effective means of redress in the event of non-delivery or wrong-delivery of goods by the vendor in relation to standard ICT contracts. “Standard” contracts here are those concluded directly between vendor and consumer (i.e. not involving third party intermediaries such as Ebay) and not involving exceptional circumstances such as where the contract is concluded by the consumer using mobile telephones whilst temporarily outside their usual jurisdiction. The focus is upon contractual disputes where the vendor subsequently fails to perform for any reason other than non-performance by the consumer.



Although there is also an international focus in this thesis, most of the analysis conducted here is from an Australian perspective. That is, while the thesis is not preoccupied solely with Australian consumer parties to ICTs, Australian law is the starting point for most of the analysis. This limits the scope of the thesis to illustrating, by analogy, the sorts of problems facing consumer parties to ICTs in other jurisdictions, and avoids the need to look at the details of consumer laws of multiple jurisdictions. The only exceptions to this limitation are brief considerations of the positions of US and EU consumers. This is done where the laws and practices of comparable non-Australian jurisdictions appear to offer significant advantages to consumers.



Some preliminary definitions are required here:



A “foreign vendor”, in this thesis, is one in a different country to the consumer; neither party is necessarily in any particular country.



A “consumer transaction” is a transaction involving the purchase of goods for a price of up to AUD$50,000. i.e. this thesis is only concerned with redress available to consumers engaging in transactions for less than this amount. This amount is similar to the upper limit found in Australian consumer protection legislation of AUD$40,000 (higher if the goods are acquired for non-commercial purposes) since 1986.[3] The figure of “AUD$50,000” provides a practical upper monetary limit with which to compare potential expenses to be incurred in attempting to acquire a remedy for a disputed or failed ICT. It also acknowledges that quite substantial sums of money can be lost in connection with disputed or failed ICTs. The failure by a consumer to take precautions before entering into higher value ICTs (assuming that is at all possible: see the section on transaction insurance in chapter four, for example) is not viewed as a justification for post-transaction remedies being unavailable, through the courts or elsewhere: it is not an offence at law to fail to protect oneself.



“Redress” means any reasonable method by which a consumer who is an aggrieved party to an ICT could justifiably seek a remedy from an uncooperative vendor for non-delivery or wrong-delivery of goods. Redress is specifically of concern in this thesis, as opposed to the wider but related issue of consumer protection. “Consumer protection” is a broader concept and covers issues of regulation of the bargaining phase and of contract terms as well as access to justice issues. Thus redress and protection are related, but they are not the same. For example, if there is greater “protection” through the legislative imposition of uniform and implied terms, then arguably there will be fewer disputes and dispute resolution will be less costly because there will be no need for arguments over private international law rules regarding applicable law. Thus there is a strong argument that issues of cost effective redress for ICTs should not be considered in isolation from the broader issues of consumer protection law for ICTs. This link between redress and protection is the context for later discussion of issues (especially in chapter six) concerning consumer protection law for ICTs.



“Cost-effectiveness” is the ultimate criterion used for the assessment of the redress methods, actual and potential, examined in this thesis: can a genuinely aggrieved consumer obtain cost-effective redress in connection with a failed or disputed ICT using the method contemplated? Cost-effective here means “economical in terms of the desired result received for the cost incurred”.[4] In this thesis, cost-effectiveness is evaluated in terms of “cost”, “difficulty of enforcement” and “complexity”. The basis of and justification for this choice of criteria is discussed in chapter two.



“Non-delivery” means that the goods which are the subject-matter of the ICT are (1) not delivered at all, either to the purchaser or their agent, within the terms of the contract by the contractual delivery date, or by some reasonable date, or within some reasonable period of time, or (2) not delivered to the contractually-agreed place of delivery, whether that place is express or implied by the contract. The term also encompasses a proper physical and contractual delivery, but without appropriate transfer of ownership because, for example, the goods are not free from some sort of encumbrance to title, potentially making the delivery a mere bailment.



“Wrong-delivery” means the delivery of goods which fail to achieve reasonable conformity with the specification of the goods named in the relevant contract; it includes delivery of goods of a fundamentally different nature to that specified by the contract (for example, a computer was contracted for, but a book was delivered); delivery of goods of a slightly different nature to that specified, where exact conformity to a contractual description is a condition of the contract; delivery of goods unfit for a contractually-stated purpose; delivery of goods of unmerchantable quality; and delivery of goods which do not correspond to a contractual description.



One of the central contentions of this thesis is that, at present, for most instances of non-delivery or wrong-delivery, the cost of litigation as a redress method is too high. In one sense there is no relationship between the monetary value of an ICT and the cost of litigation because the cost of litigating for a loss of $2,000 will be about the same as for a loss of $50,000. In another, more pragmatic, sense however, in terms of the decision to litigate, there is a relationship between the monetary value of an ICT and the cost of litigation:[5] The lower the value of an ICT, the more unjustifiable the expense of litigating in order to recover that amount. It would be irrational to spend $50,000 to recover $2,000. A common sense approach would suggest the threshold point beyond which the cost of litigation becomes unjustifiable would be something less than the anticipated recovery amount. A rational person would not spend $50,000 to recover $50,000 because there would be no financial gain and non-monetary costs, such as time and stress, would not be compensated. The issue then becomes “how much less than the expected recovery amount would be worth spending to pursue a remedy?” and built into the task of rationally computing the highest amount to spend in pursuing a remedy through litigation costs is the factor of risk. Since the prospective litigator doesn’t know for certain what the outcome will be, they will have to decide upon the highest amount to invest in pursuing a remedy given that it must be profitable, financially and otherwise, and worth the perceived degree of risk. Thus some of this kind of process will involve objective factors such as known or knowable costs of litigation and, because of variable personal attitudes to potential risk as between different plaintiffs, subjective factors. As explained in detail in chapter three, litigation will be too expensive to use as a remedy for any losses less than the highest value of any ICT, even if the litigation costs are less than $50,000: litigation under the current regime, generally speaking, will be too expensive compared to the value of most ICTs even though they could be quite valuable. The important question then is whether there are any forms of ICT redress which are cost-effective.



The conclusions reached in this thesis apply to all ICTs whether or not they are conducted online. For reasons of simple practicality (see below), it seems that the Internet is and will for the immediate future continue to be the most common means by which consumers will engage in low value ICTs[6] for the purchase of consumer goods. However, ICTs are engaged in via the Internet are not a special case, and the problems faced by consumers contracting internationally via the Internet are not substantively new. The only differences the Internet appears to make are (1) the global volume of ICTs has increased exponentially because the Internet makes ICTs vastly easier to engage in; and (2) the complexity of ICTs mediated by the Internet, and thus the potential complexity of the associated legal issues, is potentially much higher in some cases.[7] Consumers will not normally prefer to engage in ICTs by telephone. This, then, is the justification for frequently focussing on online ICTs in this thesis. Further, the Internet itself could provide a new forum for redress via the possibility of an automated cybercourt, a prospect considered in chapter seven.



There is, on the other hand, an important distinction between ICTs and consumer transactions involving parties in the same country: the international dimension of ICTs makes them more-expensive to obtain a remedy for. Adding jurisdictions typically adds greater expense, as explained in detail in chapter three. Such additional expense where an ICT is low value makes obtaining a cost-effective remedy, in the present circumstances, virtually impossible. Obtaining a cost-effective remedy for a domestic consumer transaction may not be easy but getting one for an ICT is virtually impossible precisely because it is an ICT. This is the justification for the focus in this thesis upon international consumer transactions.



II THE RESEARCH PROBLEM



The Internet has contributed to the emergence of a world market far larger than any single national market. Consumers generally stand to directly benefit from this global market because they now have access to a wider variety of goods, cheaper prices through increased competition, a greater choice of suppliers, reduced transaction costs, the ability to shop from home (particularly beneficial for those in geographically-remote areas), the ability to shop at any time, and the ability to conclude transactions at greater speed. Consumers also benefit indirectly from the ability of vendors to reduce the cost of finding customers and suppliers, expand their trading areas from local to global, reduce the time it takes to purchase and receive goods, pay for and receive goods as they are needed without having to rely on large inventories, and reduce or even eliminate the cost of creating documents and other printed materials. Such reductions in costs are frequently passed on to the consumer by way of cheaper prices, and customer service is enhanced with faster response times.[8]



Unsurprisingly then, use of the Internet to purchase goods is increasing. According to Australian government data, “on average, approximately one million Australians aged 14 years and over made a purchase online in any given week of 2002-03. This represented an increase of 85 per cent since 2000-01.”[9] It was predicted that business to consumer e-commerce would add 2.7 per cent to Australia’s GDP by 2007[10] on the basis of an Australian Competition and Consumer Commission report of May 2000.[11] This is consistent with international trends. According to OECD data,[12] e-commerce sales in the USA,[13] as a share of total retail sales, increased to 1.2% in late 2001, being valued in excess of US$10 billion in 2001. The same data also notes that an average of 10% of all e-commerce transactions in nine European Union (EU) countries plus Canada involve purchases from sources outside the EU and Canada.



According to the OECD’s survey of online consumers, one of the most significant impediments to engagement in an ICT is consumer concern about the lack of consumer protection, specifically “trust concerns/concerned about receiving and returning goods”.[14] The above data shows that the proportion of e-commerce sales to total retail sales have increased without alleviation of consumer concerns about Internet purchasing. This suggests that a solution to the problem of untrustworthiness (for consumers) will lead to a further, possibly exponential, acceleration of e-commerce sales.



The current picture, however, is that of a virtual state of anarchy in respect of ICTs, in the sense that vendors, in the apparent absence of cost-effective redress methods for low-value ICTs, can generally breach ICTs with impunity. The Vienna Sales Convention[15] is a multi-lateral convention which regulates the rights and obligations of parties to international commercial (business to business) sales of goods contracts but, under Article 2(a), it is expressly inapplicable to consumer transactions. National consumer protection laws, such as Australia’s Trade Practices Act and the Sale of Goods Acts of the various Australian States, whilst applicable to consumer transactions, may not be practically applicable to international consumer transactions due to their limited jurisdictional reach, or face resistance by foreign vendors to acceptance of such legislation as the governing law of such transactions.



The use of national consumer protection laws in ICTs, through choice of law clauses within contracts between vendors and consumers, can involve complex private international law issues concerning jurisdiction, recognition and enforcement. In any event, agreements between consumers and online vendors regarding the governing law of the contract, concluded through “negotiations” to decide which shall be the law governing the contract in the event of any future dispute, are typically weighted in favour of the vendor through use of standard form “take it or leave it” contracts as provided by the vendor. This is, arguably, inappropriate for the average ICT consumer.[16] If ICTs continue to become commonplace, it will be despite such problems. The more that such problems can be solved, the more commonplace ICTs will become. Conversely, unless a remedy is soon found, unsatisfactory experiences with Internet consumer transactions will eventually result in critical loss of consumer confidence in the Internet and electronic commerce.



A minimal solution to the ICT redress problem would be to make the enforcement provisions of national consumer protection laws globally enforceable through international treaty. A more comprehensive solution would be the full harmonisation[17] of those national laws into a single international consumer protection regime. Both solutions could only be achieved through the negotiation and implementation of a comprehensive international convention, and only governments, working in concert, can achieve that, since only they have the coercive powers of states, individually as sovereign nations and collectively through treaties. A third possible solution is a libertarian one: leave those who choose to conduct transactions in cyberspace[18] alone to regulate themselves. However, such a “self-regulated cyberspace”, a concept considered in detail in chapter two, would have no ultimate authority to enforce its own laws, at least where breach of consumer contract occurs off-line through non-delivery or wrong-delivery of goods. Non-litigation based remedies, such as alternative/online dispute resolution, are usually ineffective remedies for ICTs, a point explored in chapter four.[19]



It might be argued that the “minimal solution” just described is already available through the international scheme underlying the Foreign Judgments Act 1991 (Cth).[20] This scheme facilitates the enforcement of the rulings of a plaintiff’s local court against foreign defendants in the country of the defendant. Such enforcements, however, are limited to the rulings of superior courts and thus are well beyond the monetary jurisdiction for matters involving low-value ICTs. They also involve agreements between only a limited number of countries[21] and are only applicable to the assets of the defendant in the country of the defendant.



As this thesis will demonstrate, none of the existing or presently proposed solutions to the ICT redress problem are satisfactory. The pursuit of a foreign vendor from within his or her own country through use of national consumer redress laws is not economically viable in respect of the vast majority of ICTs, being too small in value as compared to the cost of litigation. Other potential consumer redress schemes such as “industry codes of conduct” (where vendors are members of an industry sector which regulates itself), alternative/online dispute resolution, web-site “trust marks” or the like, credit card-holder maximum liability limits on fraudulent transactions, “chargeback”, or transaction insurance, are either legally unenforceable, too narrowly-based,[22] or impractical.[23]



Before the governments of the world can proceed to develop and implement either a minimal or a comprehensive international consumer redress/protection law, it must be completely and authoritatively demonstrated that none of the existing or presently proposed solutions to the ICT redress problem are adequate. Such a complete and authoritative demonstration has not yet been conducted, and this thesis fills that gap.



III RESEARCH OBJECTIVES



From that starting point, this thesis seeks to achieve three specific objectives. Firstly, it seeks to justify the interventionist/governmental protection of consumers engaging in consumer transactions, including ICTs, by referring to the academic scholarship concerning legal and theoretical perspectives on protection for ICTs as phenomena of cyberspace. Secondly, it seeks to assess the adequacy, in terms of cost-effectiveness, of the litigation-based and non-litigation-based forms of existing redress for ICTs. Finally, it seeks to assess, in general terms, the contribution of a range of potential solutions, including a critical review of relevant model laws enacted or proposed by the UN,[24] the European Union,[25] the OECD[26] and others. Such assessment will be conducted particularly to consider the importance of the lack of harmonisation of such model laws in contributing to the lack of cost-effectiveness in ICT redress problems, and to assess the likely effectiveness of the various initiatives/solutions (if any) to harmonise or unify such laws.



Chapter two, entitled Theoretical background, legal context and methodology, surveys the academic scholarship concerning two areas: consumer protection, and the regulation of cyberspace and, to some extent, realspace, in terms of “libertarianism” and “interventionism” – terms which will be defined there. It considers whether cyberspace should be regulated at all, who should regulate cyberspace, and how it should be regulated; and concludes that interventionism is the best approach to take to solve problems with cost-effective redress for ICTs. The purpose of this survey is to establish and examine the wide context in which problems associated with redress for ICTs exist, since most ICTs will be transacted, at least to some extent, within cyberspace. In examining that context then, the link between the availability or otherwise of cost-effective redress for non-delivery or wrong-delivery in ICTs and the existing regulation regime is considered. This chapter also provides a legal context for the redress of non-delivery or wrong-delivery in ICTs from the perspective of Consumer Protection Law, Contract Law, Private International Law and Cyberlaw. Finally, this chapter describes in detail the methodology used in the assessment of the cost-effectiveness of the various ICT redress methods considered in chapters three and four.



Chapter three, entitled Litigation-based redress,[27] demonstrates that redress for non-delivery or wrong-delivery in low-value ICTs by means of litigation[28] is not cost-effective and notes that a significant cause of this problem is the lack of harmony amongst various national private international law rules. The chapter also looks at the extent to which “wrap” and “standard form” contracts may impede redress for consumers engaged in ICTs.



Chapter four, entitled Non-litigation-based redress,[29] assesses the cost-effectiveness of existing non-litigation-based redress mechanisms. The assessment is based upon the various empirical data available, including data on contractual solutions such as credit card terms and transaction insurance, technological solutions such as trust marks, consumer complaints bulletin boards, and national deregistration, ADR and arbitration, consumer education programs, industry codes of conduct, and the appointment of foreign lawyers.



Chapter five, entitled The Vienna Sales Convention, examines the Vienna Sales Convention[30] as an example of a model law which either purports to provide an interventionist solution to the problem of ICTs or could be seen as something analogous to or make a substantial contribution to a potential future solution to the current problems with ICTs. The context for that examination is the lack of uniform international law for the regulation of ICT contract terms and the availability of cost-effective redress. The chapter looks at the history of the Convention, its fundamental objectives and the problems intended to be solved by it, and why the Convention is, at present, inapplicable to ICTs. Although not currently applicable to ICTs, it is worth looking at whether the Convention could, and should, be made applicable to ICTs given that it covers the same issues that a multi-state ICT convention or some alternative solution might cover. The chapter examines how the Convention is implemented (or otherwise) in three countries: Australia, the USA and the UK. The chapter also examines the literature concerning the effectiveness of the Convention as a form of consumer protection for international commercial transactions, and concludes by examining whether it would be reasonable or appropriate to consider amending the Convention to handle the problem of legal redress/protection for low-value ICTs.



Chapter six, entitled Other model laws for the redress of international consumer transactions, consists of evaluative research into what academic, judicial and other commentators are saying about the specific redress and enforcement provisions of the model consumer redress-related laws proposed by Australia, the United Nations,[31] the Organisation for Economic Cooperation and Development,[32] the European Union[33] and the United States – and whether such provisions translate, or could translate, into mechanisms for cost-effective ICT redress.



Both chapters five and six are concerned with the assessment of potential redress for ICTs. Chapter five, however, is concerned with only one model law, whereas chapter six is concerned with many. The reason for this is that the Convention, for the reasons considered in chapter five, is the major model upon which a possible solution could be based, whereas the models in chapter six are less significant, although all are worthwhile subjects for consideration as each has some contribution to make to a potential solution. There is also a difference in emphasis in the two chapters: chapter five looks at one model law broadly, whereas chapter six focuses narrowly on just the redress and enforcement provisions of the six model laws considered.



Chapter seven, entitled Conclusions, reviews and draws together the various themes examined in chapters two to six in relation to the overall research question concerning whether or not a consumer who engages in an ICT with a foreign vendor has any cost-effective means of redress in the event of non-delivery or wrong-delivery of goods by an uncooperative vendor. The chapter provides a table which demonstrates the relationships between the conclusions to chapters three and four, and the research question. The chapter also draws its overall conclusions, expressed in terms of the methodology defined in chapter two, that there is no cost-effective redress for low-value ICTs available from any current redress method and that the potential solution with the greatest probability of success is the development of an international consumer redress convention or, better still, an international consumer protection convention, the distinction being considered in chapter six. The chapter closes with an evaluation of the importance of the overall study to the development of the law of international consumer protection, and suggests what research might be done in the future to extend the study further.

CHAPTER TWO: THEORETICAL BACKGROUND, LEGAL CONTEXT AND METHODOLOGY



I INTRODUCTION



The first and second parts of this chapter set out the theoretical background and legal context within which this thesis is located. In addition to locating this thesis in relation to the existing literature, the objectives are (1) to determine whether the availability or otherwise of cost-effective redress for non-delivery or wrong-delivery in relation to ICTs is the result of the existing regulation regime, and (2) to determine whether the existing regulation regime might, in any sense, provide a solution to redress problems with ICTs. The chapter also suggests an implied justification for consumer protection law, and considers how that implied justification broadens the recognised express justifications such as information asymmetry and inequality of bargaining power. The third part of this chapter describes in detail the methodology used in subsequent chapters to assess the cost-effectiveness of various ICT redress methods. The methodology is justified as one which at least reduces subjectivity, as far as possible, in the assessment of competing redress methods, without necessarily achieving complete objectivity.[34]



The theoretical background sets out the academic scholarship justifying the protection of consumers both generally and in cyberspace. “Consumer protection”, as noted in chapter one, is closely related to the thesis topic of redress for ICTs, and is in fact the wider context for that thesis topic. Specifically, cost-effective redress, actual or potential, may depend upon state-regulated or “interventionist” consumer protection, and such intervention needs justification. The scholarship offers a range of justifications for and approaches to realspace and cyberspace regulation for consumer redress/protection and other purposes. Each such justification and approach can be located within one of two alternative classes known here as “libertarianism” and “interventionism”, defined below. This chapter describes how the tension between libertarianism and interventionism manifests in the debate about the regulation of cyberspace, i.e. about who should regulate cyberspace, if anyone at all, and how. It describes practical examples, noted in the literature, of libertarian and interventionist solutions to the problems of cyberspace regulation. As noted in chapter one, it is established that interventionism is the better approach to take to solve problems with cost-effective redress for ICTs.



In considering the debate between the libertarians and the interventionists, the parallel between this debate and the general political and economic debate in wider society between the realspace libertarians (e.g. de-regulationists and free marketeers) and interventionists is noted, as arguments from that debate are relevant to the debate about cyberspace regulation. In fact, as indicated in the previous chapter, there is little difference in the arguments in relation to cyberspace as compared with realspace other than the already noted differences that could arise because of the global volumes of ICTs, and differences in the complexity of ICTs as a result of the inadvertent or otherwise involvement of greater numbers of jurisdictions. A consideration of the academic scholarship concerning interventionism and libertarianism could therefore include both realspace and cyberspace regulation. For the sake of clarity however, they are handled separately in this thesis; no fundamental distinction is implied in doing so. In any event, as noted in chapter one, most ICTs are transacted, at least to some extent, within cyberspace. Therefore, in a sense, consideration of the regulation of cyberspace as distinct from realspace is a consideration for potential interventionism for the regulation of ICTs in practice. Cyberspace is, after all, likely to be the actual environment concerned, and arguably deserves particular and more extensive treatment.



It is established in this chapter that, for the purposes of protecting consumers engaging in low value ICTs, unless the libertarians can solve their enforcement problems the only truly cost-effective solutions will be those proposed by the interventionists. As Perritt argues:



Self regulation will not be acceptable in the long run unless it is backed up by real sanctions for violators ... and unless the ground rules within the self regulatory regime are appropriately linked with widely shared norms of conduct.[35]



Retailers can now easily supply consumer goods internationally because of the Internet. There is currently no law to effectively protect ICTs, especially low value ICTs. The only thing, therefore, that currently might protect them, is market forces: the power of consumers to “vote with their feet” by shopping elsewhere. That is, a consumer could survey the market for alternate suppliers until a safer or better supplier is found. However, this option would be of little use retrospectively, and it is post-transaction problems with ICTs under consideration in this thesis. Further, the act of shopping around the global market made available by the Internet until a better vendor is found is inefficient, electronic agents[36] aside, the focus here being on average consumers. In any event, consumers often only know what vendors tell them, hence the “information asymmetry” justification for consumer protection (see below). Added to this is the practical point that retailers probably are unlikely to unilaterally become consumer-friendly simply because a few consumers may shop around. Thus unregulated or under-regulated market forces will not cost-effectively protect ICTs, generally speaking, and certainly not in respect of post-transaction problems. Thus interventionist solutions – the aim of which, consistent with the purposes behind consumer protection law generally, is to protect relatively powerless consumers through legislative constraints upon the sharp practice of vendors – are seen as preferable where there are limitations upon the effectiveness and legal certainty of cyberspace self-ordering, and especially where some aspects of the performance of ICTs necessarily occur in realspace and beyond the influence of any potentially self-regulated cyberspace.



The legal context of the analysis conducted in this thesis corresponds with the legal framework for the regulation of ICTs, which necessarily exists at the interface of four main categories of law: Consumer Protection Law, Contract Law, Private International Law and Cyberlaw. Consumer Protection Law is that body of law created by and applied within nation-states intended to correct power imbalances between suppliers and consumers resulting from differences in product knowledge.[37] Contract Law here refers to the body of law concerning the existence and enforceability of consumer contracts. Private International Law is the body of law concerned with resolving conflicts which arise in private law matters because of interactions between different legal systems, such as where a consumer contract is formed in one country and is breached in another.[38] The issues confronting a court in such circumstances include whether the court has the inherent power to exercise any jurisdiction in the particular case, the laws of which jurisdiction should be applied to resolve the dispute, and transborder recognition and enforcement of judgments.



Cyberlaw, also known as Internet Law or Cyberspace Law, is the body of law purportedly used to regulate cyberspace. As such, the term incorporates the Law of Electronic Commerce, the body of law which purports to regulate the commercial and consumer sub-set of cyberspace.[39] More specifically, the Law of Electronic Commerce is the loose set of laws which collectively regulate the conduct of electronic commerce or particular aspects of it, including laws concerning the validity of electronically-formed contracts, authentication, digital signatures, electronic payment systems, certain aspects of intellectual property, consumer protection, privacy, defamation, website content regulation, and Internet gambling. The Law of Electronic Commerce is thus a synthesis of older forms of law such as tort and contract and newer laws necessitated by recently-developed technologies.[40]



Each of these four categories of law has some bearing upon ICTs, and the application of each category to ICTs is in some way problematic, hence the need for a new contextual category of law, International Consumer Redress/Protection Law. There is no distinct or necessary boundary between these categories of law – in fact there is much overlap between them, as will be seen – and International Consumer Redress/Protection Law is best viewed as a composite of the other four categories with perhaps no elements unique or original to itself.[41]



This chapter concludes by establishing a methodology for assessing the cost-effectiveness of 14 ICT redress methods. The methodology involves the use of a table as a tool for the comparative analysis of the redress methods undertaken in chapters three and four. The 14 redress methods are evaluated according to a set of three criteria defined in this chapter, with the results used to progressively fill in the blank cells within the table. The three criteria are cost, enforceability and complexity, and each of the redress methods will be assessed under each of those criteria in order to give an overall result regarding each method’s cost-effectiveness.



The table is thus used for the formal and consistent evaluation of the 14 redress methods considered, and re-appears in the final chapter to assist with documenting the overall conclusions of this thesis.



II THEORETICAL BACKGROUND



This section considers why consumers should be provided with any sort of remedy at all, and suggests where an actual cost-effective remedy for non-delivery or wrong-delivery in ICTs might be located within the existing regulatory framework. It begins with a consideration of who a “consumer” is, as this is an important element of the definition of and assessment of remedies for ICTs. This is the case not only because of the general nature of the consumer as a “non commercial” party, but also because the monetary scope of a consumer transaction goes to the fundamental relationship between cost and effect, which is assessed by the methodology proposed later. Further, the definition and consideration of key terminology in this chapter is an important step in preparing the tools needed to analyse the problem, to accurately report findings and to accurately describe potential solutions.



A Consumers



What is a “consumer”? Dictionary definitions of the term include “one who uses a commodity or service for a non-commercial purpose”,[42] “one that acquires goods or services for direct use or ownership rather than for resale or use in production and manufacturing”,[43] and “a person who buys a product or service for personal use”.[44] According to Oughton, a consumer could also be either “an individual not acting in a business capacity”, or “a supplier acting [as a consumer] in the course of a business”.[45] Goldring[46] cites s.4B of the Australian Trade Practices Act 1974, which initially defined a consumer as any person acquiring goods or services at a price of $15,000 or less, and notes that the dollar amount was increased to $40,000 by 1986 to provide additional protection for small business purchasers.[47]



These definitions are basically similar.[48] This thesis includes all of the above ideas regarding the definition of “consumer”.[49] For the purposes of this thesis, a consumer is defined as “one who purchases goods or services for personal, domestic or small business consumption”. “Business” is included because the justification for the provision of protection to individuals engaging in cost-effective redress for low-value transactions (set out below) applies equally to small businesses.



B Consumer protection



Why protect consumers? At this point it is worthwhile, in establishing the relevance of this section, to recall the distinction drawn between consumer redress and consumer protection noted in chapter one. Redress, in this thesis, means any method provided by any of the model laws under examination here by which a consumer who is an aggrieved party to an ICT, would seek a remedy from a merchant, for non-delivery or wrong-delivery of goods. Redress is specifically of concern in this thesis, as opposed to the wider but related issue of consumer protection. Consumer protection is a broader concept and covers issues of regulation of the bargaining phase and regulation of contract terms as well as access to justice issues. Thus redress and protection are related but they are not the same. For example, if there is greater “protection” through uniform and implied terms, then arguably there will be fewer disputes and they will be less costly because there will be no need for arguments over private international law rules on applicable law. Thus there is a strong argument that issues of cost effective redress for ICTs should not be considered in isolation from the broader issues of consumer protection law for ICTs. This link between redress and protection is the context for the analysis of justifications for consumer protection law, in both realspace and cyberspace, that follows.



Taperall notes the fundamental difference between suppliers and consumers, necessitating consumer protection law:



[P]rivate individuals ... increasingly find themselves to be in a disadvantageous position in dealing with the business community ... attention has been devoted to such matters as the poor quality frequently found in goods and services; the failure to provide adequate information ... deceptive practices ... the unfairness of many one-sided contracts. [50]



Two elements of the justification for the intervention of the state in the protection of consumers are implicit within this quote: information asymmetry and inequality of bargaining power. These themes are discussed below but first consider the quotation further. It suggests that consumers are in a disadvantageous position with respect to business. Goldring observes[51] that by the end of the 18th century, what was to become the English Sales of Goods Act (1893) had evolved to govern transactions between merchants with equal economic power between them, and not those involving persuasion by certain “unscrupulous or reckless” suppliers to uninformed consumers. He goes on to say that “by definition, consumers are not equal to the providers of what they consume.”[52] This view echoes Oughton’s statement[53] regarding the inequality of bargaining power between supplier and consumer: “a consumer is not in a position of obtaining equality of bargaining power due to difficulties in obtaining information”, information, that is, about the things supplied by suppliers. Thus a consumer may have unequal bargaining power because he or she suffers from information asymmetry. As noted below, however, they can also be discrete rationales for consumer protection.



This power/information imbalance theme appears often in the literature justifying consumer protection. Oughton notes[54] that under English legislation such as the Consumer Protection Act 1987 and the Food and Safety Act 1990, a supplier of goods and services can be guilty of a criminal offence without proof of any criminal intent, and the rationale for this is that because of “a general lack of information on the part of consumers ... the ability of the consumer to make a prudent shopping decision is diminished.”[55] In other words, consumer protection law compensates for an inequality of bargaining power as between the supplier and the consumer, based on differential product knowledge or information. This inequality, Oughton points out,[56] has always existed – where suppliers are specialists who tell the consumer only what the supplier wants the consumer to hear – but has actually increased since World War II because of the surge in both the volume and the sophistication of new consumer goods such as television sets, and services such as car servicing, which have become available on the market since that time and regarding which consumers generally would understand less than suppliers. Without the legislative protection of consumers, commerce would suffer from lack of consumer trust.



As regards asymmetry of information, Coteanu notes



[I]ts detrimental effect on the loss in consumers’ surplus that they experience due to the lack of information on price, terms and conditions, characteristics of product and services and to the difficulties in verifying through experience the performance and the characteristics of product or service advertised ... [and] the asymmetry of information in online consumers’ transactions is much worse than in [the] off-line environment.[57]



Consumers’ surplus is “the amount in excess of a price paid which a consumer would be willing to pay rather than go without the article”.[58]



Asymmetry of information, then, can mean higher cost in terms of higher total cost for the acquisition of consumer goods. This is a situation which is avoidable in a domestic context through regulation, and this justifies the intervention of a domestic consumer protection regime. It may also contribute to the need for the intervention of a special consumer protection regime for ICTs.



At this point it should be noted that inequality of bargaining power and information asymmetry are two of the principal justifications for consumer protection law, and that while they can and often do coincide, that is not always the case. A consumer may suffer from inequality of bargaining power not because of information asymmetry but also where, for example, the transaction is “forced” upon them through a standard form contract presented to the consumer by the vendor. The consumer may be aware of and understand the relevant issues all too well but, because of the circumstances, there may be no real potential for negotiation of terms.[59]



Various situations exhibiting inequality of bargaining power are described in the literature. For example, Ramsay refers to inequality of bargaining power resulting from “the high transaction costs of redress” and from the high cost of “consumer organization”.[60] These are situations where the consumer has relatively less bargaining power than the vendor where the individual consumer cannot afford the cost of litigation or other means of redress, not can they afford the costs involved in making arrangements for collective bargaining against rogue vendors. On the same theme, Goldring et. al. say that



Individual consumers are relatively weak; they are individuals, while suppliers and manufacturers of goods and services these days more often than not are large corporations. This power relationship often causes consumers to feel awed and intimidated when they wish to obtain recourse against a supplier or manufacturer from whom they have acquired something which does not meet their expectations. The obstacles facing them are immense. To talk of a “free market” of equal individuals is absolute nonsense. In very few cases at all can the consumer be said to be the equal of the supplier or the manufacturer.[61]



Coteanu indicates the presence of inequality of bargaining power in the online world in “the authoritarian process of designing terms and conditions – which means that the online contracts are prepared by business and imposed on consumers worldwide”.[62] Such imposition is not unique to the online world, it just happens in the online world, and possibly more often because of greater exposure.



Also, in justifying the protection of consumers, we can note the following general points. Apart from the ignorance consumers suffer relative to the knowledge the vendor has about his or her own goods, services and business practices, consumers are also protected from the sharp practice and the negligence of vendors. They are also protected from their ignorance concerning consumer rights, and ignorance concerning remedies available in the event of legitimate grievance.



At a higher level of abstraction, it is arguable that there are two classes of justification for consumer protection, express and implied. The express variety, already considered above, is the justification based, for example, on either information asymmetry or inequality of bargaining power in the consumer contract formation stage, as it underpins modern consumer protection laws, that is, laws which post-date establishment of those theoretical justifications. An example of such law would be section 52 of the Trade Practices Act 1974 (Australia) which prohibits misleading and deceptive conduct of a corporation engaged in trade or commerce.



The potential implied justification however, is all of the express justification just noted plus a general right to a remedy for actual abuse, with respect to both contract formation and performance, in all current and prospective consumer protection law. That is, the implied justification broadens the express variety in four ways: it extends protection beyond contract formation to contract performance, in terms of protecting against information asymmetry and inequality of bargaining power while providing a general right to a remedy for actual abuses, in all existing consumer law including that which pre-dates “modern” consumer law, as defined above, and future consumer law.



This implied/extended justification may have legitimacy because it can, without difficulty, be seen in abstract terms as deriving from the intent of universal or overarching social values. Such values concern the need to protect consumers where they are treated unfairly in any way; and “unfairness” is not necessarily limited to information asymmetry and inequality of bargaining power during the formation phase of a consumer contract where just certain limited kinds of historical (i.e. modern) consumer laws are applicable. In any event, the general thrust of the rationale for consumer protection at least suggests an improvement in the efficacy of the remedial responses to breaches of ICTs.



Thus section 52 Trade Practices Act for example, could be seen as merely one example from a category of consumer protection which is neither exclusive nor closed. Such is the “catch-all” nature of the “general right to a remedy for abuses” justification in the implied justifications where “information asymmetry” and “inequality of bargaining power” during contract formation do not necessarily cover every particular type of actual abuse. Information asymmetry during contract formation, for example, should be seen as just one situation amongst a potentially infinite number of circumstances where regulatory intervention is justifiable. Seen in this way, there is no particular piece of consumer law which protects against all unforeseen circumstances in all categories of abuse. Thus examples of current consumer laws, such as sections 52 and 53 of the Sale of Goods Act 1894 (Queensland),[63] which pre-date modern theoretical justifications are, in a sense, retrospectively covered by such justifications. Also, non-performance by a vendor of a consumer contract could also be an actual abuse and would also be covered by the implied justification, as would any actual laws which intervene to protect against such an abuse.



To clarify the implied justification one step further, it should be noted that the “general right to a remedy for abuses” concerns a real remedy not a theoretical one. Therefore any remedy which, in practical terms, is generally beyond the reach of the average consumer for reasons of any one or more of cost, difficulty of enforcement or complexity factors, would not be any kind of remedy at all. A cost-effective remedy for unperformed ICTs would therefore be co-extensive with the implied justification for intervention in the form of consumer protection.



Finally, a point made at the beginning of this chapter is worth revisiting. It was noted that cost-effective redress, actual or potential, may depend upon state-regulated/interventionist consumer protection, and such intervention needs justification. At this point it can be said that such redress definitely will depend on an interventionist solution, and such solutions are justified. The following section considers the theoretical background a little more closely.



C Libertarianism and interventionism



As a preliminary point, the use here of the terms “libertarianism” and “interventionism” represent labels attached by this thesis to two broad approaches to consumer redress/protection and that there is a limited relationship between those labels and the broader interventionist/libertarian distinction in separate but associated bodies of theory such as Law and Economics, and Regulatory Theory. A second preliminary point should also be noted concerning the relevance of this section to the role of interventionism in the provision of cost-effective redress for ICTs. As will be seen, interventionism is the necessary solution to the problem; cost-effective redress for ICTs without interventionism is inconceivable.



Libertarianism, also known as the “laissez-faire”[64] school of thought, is the socio-economic or political doctrine that an economic system functions best when there is no interference by government because competition between private individuals is more effective than the state as a regulator of economic life.[65] Libertarianism is now used generally as a synonym for strict free market economics,[66] but it is used here as a label for the arguments advanced by those who wish to see cyberspace (and realspace) unhindered by government intervention.



Interventionism is used generally as a name for the view that there are some circumstances where regulation through government intervention is justifiable (e.g. consumer law, law of contract), and is used specifically here as a label for the view that the best ICT redress solutions will be those provided by court-based dispute resolution (or, with sufficient enforceability, government-provided alternative dispute resolution) methods. This view is the outcome or at least the necessary implication of the analysis undertaken in theoretical terms in this chapter, and the outcome of the analysis undertaken in practical terms in chapters three and four.



As defined in this way, the labels “libertarianism” and “interventionism” appear to be mutually exclusive: government is either involved in the regulation of human affairs or it is not. It is acknowledged, however, that some who espouse a libertarian approach may still accept some intervention; where there is no ordering by market forces, for example. Thus there are libertarians who are partly interventionist[67] and vice-versa.



There are at least two other reasons why the labels are not as mutually exclusive as they initially appear to be. First, some libertarians may object to interventionism not just because there is any kind of intervention but because of the reason for the intervention. For example, they may object to intervention because of some perception of an unacceptable political agenda behind the intervention. Such libertarians might then be interventionist in different circumstances. In this thesis, however, such a distinction is unnecessarily abstract and distracting, as it is the ICT redress methods, as a matter of simple fact or reasonable argument, that can be labelled in this thesis simply as either interventionist or libertarian (e.g. litigation versus transaction insurance, respectively), and each method is judged in terms of cost-effectiveness according to the framework established in this chapter.



Secondly, rather than simple opposites, “libertarianism” and “interventionism” represent the ends of a scale of graduated difference between two extremes. For example, there is the protection solution of “responsive regulation” that is located somewhere between the two extremes because it seeks to make use of private incentives to achieve regulatory goals.[68] Again, however, such distinctions are unnecessarily abstract for present purposes as the focus here is upon the redress methods and their problems in practice.



Thus, as noted, this thesis is not concerned with the interventionist/libertarian distinction as it appears in wider literature. Rather, it is concerned to provide a description of the scholarship regarding the regulation of cyberspace, and the labels “interventionism” and “libertarianism” must be understood in this narrow sense. Nevertheless it is somewhat useful to begin by looking briefly at the contextual interventionism/libertarianism debate with respect to realspace, before turning to the cyberspace regulation debate.



Goldring, in favour of interventionism, argues that “consumers do not form a cohesive group, and even if they did, it is doubtful that market forces could in practice provide adequate protection for those who lack the information ... necessary for survival in the modern economy,” and that “governments [which are] formed from the whole spectrum of political parties accept the necessity for intervention in the market.”[69] Goldring sees that as a repudiation of the “unreal theories of the free marketeers”.[70]



In contrast, Vogel argues that the alleged incompatibility between efforts to promote free trade and effective consumer and environmental regulation has been “exaggerated” and “misplaced,” claiming that in fact it can be shown that trade liberalisation efforts can actually improve the effectiveness of consumer and national environmental regulations. “By contrast, ‘ecoprotectionism’ threatens both free trade and, ironically, the improvement of environmental quality and consumer protection as well.”[71] While this is not explained, presumably the reason why this may be so, if it is true, is that international ecoprotectionism may diminish free trade and therefore decrease profits, resulting in the need for increased local environmental exploitation to replace profits lost from international trade; but if suppliers are allowed to operate in a free and non eco-protected market, they will wish to comply with whatever environmentally-conscious consumers reasonably demand in order to enjoy the benefits of continued demand. According to Vogel, increased trade liberalisation and decreased ecoprotectionism both increase global economic inter-dependence, which, in turn, must improve global consumer protection through the “natural” forces of supply and demand.[72] The question arises as to whether such natural forces are sufficiently effective to fulfil the aims of consumer protection as described above.



Vogel goes on to say that “it is no longer possible to understand the making of ... consumer regulation exclusively in national terms. Regulation ... is being shaped more and more by political and economic forces outside the nation state”[73] suggesting some challenges to be found in satisfying the demands of transborder consumer protection requirements. Seen in the context of the global realspace market environment, interventionism seems the better approach for realspace ICTs if national legislators of the various trading nations can agree on a united approach, as they found it necessary to do in respect of international commercial transactions through the Vienna Sales Convention,[74] in dealing with the complexities of the transborder consumer transaction environment.



D Libertarianism versus interventionism in cyberspace



As noted earlier, cyberspace is where the vast majority of ICTs are transacted in practice. It is therefore of value to consider ongoing scholarly debate about the governance of cyberspace.



Regarding the development of thinking about cyberspace regulation, Boss and Ritter both describe how an issue for the “Congress on Uniform Commercial Law in the 21st Century” – held in May 1992 – was how UNCITRAL[75] might promote uniformity in commercial law to stimulate the global trading community, and the potential development of model rules regarding EDI[76] in connection with international commercial transactions. This shows how early thinking about “e-commerce” was exclusively in terms of B2B (business-to-business) transactions.[77]



Furthermore, as seen from the early 1990s, because e-commerce law could arguably have to be developed almost from a legislative vacuum, an opportunity was seen (by the commentators of the period) to avoid the anticipated need to laboriously unify national e-commerce laws at a later date – because, as yet, there weren't any. Therefore, the new e-commerce laws could be unified ab initio if countries studied and approached these problems together, in order to develop common understanding upon which a universal system could be built.[78] With the rise of national e-commerce laws since 1992, however, the opportunity presented by these visionary and idealistic views was missed, and the theoretical advantages of having a harmonious universal system for regulation of B2C transactions remain unfulfilled to this day.



A libertarian theme of interest to Boss was industry self-regulation through industry-generated codes of conduct. Two criticisms of this were that because commercial entities sometimes try to create their own rules (in the absence of any national or international framework to guide e-commerce) legal uncertainty could result, and such uncertainty could increase the cost of transacting. Further, self-regulation was thought of as inadequate to deal with the legal requirements for writing and signatures in different countries.



By 1994 the narrow focus of the earlier writers had begun to widen, and there was a growing maturity in the cyberspace regulation debate with the continued emergence of the debate between the interventionists and the libertarians. One of the most debated points of contention was whether cyberspace creates unique legal issues or just the same old issues in a new medium.



In 1994, Hardy argued that “in applying existing law to cyberspace old analogies just don't cut it”.[79] He offered a hybrid view that in some respects there is nothing new in cyberspace, but in other respects the circumstances of cyberspace do indeed give rise to new legal questions.[80] Despite the question as to whether existing laws designed with other media in mind should be applied to the new medium as well, he argued that no legal questions are unique as they all involve human conflict;[81] but when the policy considerations that underlie an existing rule no longer make sense as applied to cyberspace, truly new rules may be worth having.[82] Hardy's thinking was not so much a debate about who should regulate cyberspace, but whether the required regulation might be any kind of legally-novel phenomenon.



Hardy did however argue that rapidly-changing technology implied a need for flexible regulation of behaviour and, in some cases, purely “decentralised” rules should be applicable, i.e. where the parties work their own contractual arrangements to suit themselves rather than using some sort of judicial or legislative resolution.[83]



Another issue raised by Hardy was the possible range of responses to the potentially new cyberspace issues. The range of responses suggested included legislative responses, case-by-case adjudication for the build up of precedent, international conventions, citizens creating their own customs, service providers regulating their own patch of cyberspace, and even a modest degree of anarchy.[84] In hindsight, it can now be seen that all of these responses are operative, to some degree or other, in 2007.



Hardy also argued for contracts as the “second level of behaviour regulation” after problem avoidance, i.e. for contracts as “the basic control mechanism for much cyberspace activity”, but suggested that when contracts cease to function “the only solution will be a statutory or judicial one”.[85] Hardy's thinking thus contains elements of both libertarianism and interventionism.



To their credit, it now appears that Hardy, Ritter and Boss all had at least an unconscious appreciation of the need to take social and technological complexity into account in their analyses, resulting in views consistent with the conclusion that simplistic solutions may be inappropriate.



Other issues of importance at this time, beyond the debate regarding the possibility of new laws for cyberspace, included the question whether cyberspace was itself something new (e.g. a new form of community where people meet and talk, build and define themselves, in ways not possible in realspace) and privacy issues.[86]



By 1996, the early vacillation about whether there should be new laws for cyberspace or not was being attacked vigorously. In 1996 Johnson and Post introduced new libertarian perspectives into the debate.



Cyberspace requires a system of rules quite distinct from the laws that regulate physical, geographically-defined territories [because] global computer-based communications [undermine] the feasibility – and legitimacy – of laws based on geographic boundaries ... [and because cyberspace phenomena] have no clear parallel in the non-virtual world ... [and] ... just as a country's jurisprudence reflects its unique historical experience and culture, the law of cyberspace will reflect its special character, which differs markedly from anything else found in the physical world. For example, the law of the Net must deal with persons who “exist” in cyberspace only in the form of an e-mail address and whose purported identity may or may not accurately correspond to physical characteristics in the real world. In fact, an e-mail address might not even belong to a single person.[87]



Thus it was argued that a new law must emerge, one that could be reconciled with traditional legal systems by treating it as a distinct doctrine applicable to a clearly demarcated sphere.[88]



When “persons” in cyberspace don't equate to natural persons, when their “property” may be intangible and portable, and when they may readily escape a jurisdiction, the relationship between the “citizen” and the “state” changes radically, and therefore cyberlaw cannot be the same as traditional law.[89] Johnson and Post appear to have been the first clear (or, at least, systematic) libertarians in this debate.



A potentially more important aspect of this new approach, however, was a clarification and a development of the interventionist versus libertarian debate. Interventionists argued that because people involved in cyberspace still actually inhabit realspace, conventional law makers and enforcers must continue to remedy problems created in realspace by those acting in cyberspace. Conversely, libertarians maintained that “questions remain about who sets the rules and how they are enforced. We believe the Net can develop its own effective legal institutions”, that “the community of online users and service providers is up to the task of developing self-governance”, and that “the self-regulating structures of cyberspace seem better suited to dealing with the Net's legal issues”.[90]



Johnson and Post’s idea of cyberspace may give it the potential to be “self-regulating”.



For example, the current domain name system evolved from decisions made by engineers and the practices of Internet service providers, [and] every [computer] system operator [who determines an individual's “existence” in cyberspace, and] who dispenses a password imposes at least some requirements as conditions of continuing access ... system operators have an extremely powerful enforcement tool at their disposal to enforce such rules – banishment ... [and] communities of users have marshaled [sic] plenty of enforcement weapons to induce wrongdoers to comply with local conventions.[91]



Thus, for Johnson and Post, engineers, system operators and users will be the law makers and enforcers of cyberspace. This pre-supposes or implies two points, however: firstly, that merchants, for example, who set up stand-alone websites, will (at least) usually be effectively subject to these engineers, system operators and users; and secondly that all relevant conduct of such parties would be able to be regulated by engineers, system operators and users, assuming they choose to. Both these points may be logically rebutted. “Cyberspace” conduct will not always be constantly scrutinised and monitored for unacceptable behaviour, and this appears to be even more the case with a deliberately un-regulated cyberspace. Furthermore, the off-line performance of cyberspace merchants is simply beyond the purview of such people.



Johnson and Post cited the medieval lex mercatoria, the so-called Law Merchant, as a historical precedent for workable self-regulation.[92] Just as the medieval merchants developed their own law out of necessity, Johnson and Post argued that “dispute resolution mechanisms suited to this new environment also seem certain to prosper” – invoking the idea of “virtual courts” and “virtual magistrates”[93] – again, without noting that these suggestions apply only to the regulation of behaviour that is actually online. In other words, such views seem not to explain (or even notice) how these “self-ordering” suggestions could regulate post-transaction breaches of online contracts later detected offline, nor by what authority the “virtual courts” of cyberspace would enforce their rulings in realspace across international borders. If, however, this is a misunderstanding of their position, and what is really being said is that any loss or damage deriving from acts initiated in cyberspace can be remedied by law created by the (non-governmental) inhabitants of cyberspace itself, then the point may be uncontested, so long as some effective legally-predictable enforcement regime is available. It is doubted, however, that such a regime can in fact be provided by the non-governmental inhabitants of cyberspace. Such parties could not know about real world post-transaction breaches of online contracts.



Lessig responded to the libertarians by saying that they “want to argue for a separation between realspace law and cyberspace law that I don't believe can yet be sustained, nor do I believe that it should ... we, here, in this world will keep a control on the development here”.[94] To that might be added the point that arguably cyberspace is within realspace and thus might be subject to realspace laws. In contrast to the argument that realspace regulation is ineffective or even futile for cyberspace, Lessig argued that cyberspace will be regulated by realspace interventionist regulation to the extent that it affects realspace life.[95] In the light of subsequent judicial decisions relating to cyberspace, such as the Yahoo case and others,[96] this view may be defensible.



Another possible libertarian argument is that unlike realspace where the state tries to convince citizens to adopt norms of behaviour (obey the law), in cyberspace because of the unavoidability of “code” (software controls), the state doesn't need to “convince” anyone of anything: it’s either obey or stay out, and there simply won't be any opportunity to do otherwise. Thus “law as code is a start to the perfect technology of justice”.[97] This argument appears to make Lessig less of an interventionist and more of a libertarian than he appears at first sight. The difference then between Johnson and Post's libertarianism and Lessig’s is that the “self-regulatory code” of Lessig's cyberspace is state-controlled, which is still a form of interventionism. This is evidenced by such statements by Lessig as



from this perspective, the Communications Decency Act of 1996, and the NII White Paper on Copyright are the very same thing: ... the aim of both is to subsidize technologies of control – to increase the ability to select who gets access to what – and the medium cyberspace is perfectly designed for that control.[98]



As noted however, it is not shown by either side in this debate how their solutions would apply to breaches of consumer contracts formed in cyberspace because of unremedied non/wrong-delivery of goods in realspace.



Despite interventionist attacks, libertarian views remained influential to some extent. According to the editors of the Harvard Law Review in 1999, for example, “some form of Internet regulation [seems] both unavoidable and desirable”.[99] This may be understood to mean that even self-regulation, if effective, would be better than none. Such libertarians have, however, departed from the earlier position that Cyberlaw and realspace law are forever separate, by asserting that “[the old libertarian] assertion that cyberspace is immune from territorial regulation is susceptible to an empirical rebuttal: realist commentators who disagree with them need only refer to examples of successful Internet regulations [in Singapore[100] and China[101]] to refute their argument”.[102] The courts of the USA and France appear to agree with this view (see the references to the Yahoo and Brookfield cases, above).



In respect of public international law,[103] one method used for solving transborder enforcement problems is by the creation of multi-lateral agreements to overcome the inadequacies of separate national regulation. Halpern argues that in respect of the



global clash between geographically bounded trademarks and the limitless reach of the Internet ... discrepancies in international trademark rights have been resolved through international treaties [but that] until recently, this conventional treaty approach has been successful ... with the recent, incredible explosion of e-commerce however, such a traditional process has become economically obsolete [and is being replaced] by the development of an Internet Common Law.[104]



Under this new “Law”, bodies such as the Internet Corporation for Assigned Names and Numbers (ICANN) are “a prime example of how the conventional method of multinational cooperation is being supplanted by the new approach of individual consent and norms”,[105] arguably running a Johnson and Post type of argument.



Further on, however, Halpern concedes that



the private ordering that has come to dominate the Internet is premised on the underlying support of the state ... government agencies responsible for consumer protection, for example, still play an essential role in defining and enforcing the default rules ... contracts ... must rely upon these background rules.[106]



Regarding “Internet Common Law authorities” like ICANN:



One of the biggest challenges of ODR [Online Dispute Resolution] is its enforceability. Sometimes enforceability in ODR is readily achievable. ICANN is an excellent example of this. When a panellist in a UDRP [Uniform Dispute Resolution Policy] process transfers a domain name, ICANN can easily enforce that decision because they have absolute control over the database that assigns domain names to their owners. In B2C e-commerce disputes, this type of absolute enforceability is not possible. If [for example] a product is shipped to a purchaser and the wrong amount of money is charged, the shipper [or the ODR-provider] cannot compel the purchaser to return the item or to pay more money.[107]



So much for the conventional treaty process having become “obsolete”. Review of Halpern's argument here is not, however, included merely to dismiss it, but is included positively to demonstrate the potential importance of the treaty approach to the resolution of international consumer disputes.



Finally, aside from interventionist ideology, the question arises as to whether it is actually possible to regulate the Internet as a technical rather than a legal issue. An entire book could be written on this topic, with the libertarian/interventionist debate taking just one part of that.[108] Thus an exhaustive treatment of this topic is beyond the scope of a thesis on redress for ICTs. Just two views on the feasibility of effective Internet regulation however, relevant by analogy, are that



Internet protocols embody features that present a wide range of very substantial technical difficulties to the would-be regulator of Internet gambling ... addressing the challenges of unlicensed and extra-jurisdictional providers is a great deal more challenging – there is limited scope for effective unilateral initiatives ... the intractability of technical difficulties confronting hard forms of [national] regulation together with the international jurisdictional problems, are likely to remain insurmountable obstacles.[109]



Balanced against this is the observation made earlier that recent libertarian views have departed from their earlier position that Cyberlaw and realspace law are forever separate, by asserting that



[the old libertarian] assertion that cyberspace is immune from territorial regulation is susceptible to an empirical rebuttal: realist commentators who disagree with them need only refer to examples of successful Internet regulations [in China and Singapore] to refute their argument.[110]



As noted, the courts of the USA and France appear to agree with this view (see references to the Yahoo and Brookfield cases, above). In any event, the conclusion may be drawn from these two quotes that effective multi-lateral initiatives may be forthcoming, and from less repressive regimes.



The previous section, partly on interventionism and libertarianism in realspace, concluded that seen in the context of the global realspace market environment, interventionism seems the better approach for realspace ICTs if national legislators of the various trading nations can agree on a united approach, as they found it necessary to do in respect of international commercial transactions through the Vienna Sales Convention,[111] in dealing with the complexities of the transborder consumer transaction environment. From the consideration in this section, regulation for ICTs in cyberspace would be just as much in need of an interventionist approach to deal transborder complexities as those in realspace – if not more so.



Finally, it is perhaps instructive at the end of this section to reflect on a point, made in the introduction to this chapter and which has been illustrated throughout this section. Interventionist solutions – the aim of which, consistent with the purposes behind consumer protection law generally, is to protect relatively powerless consumers through legislative constraints upon the sharp practice of vendors – are preferable where there are limitations upon the effectiveness and legal certainty of cyberspace self-ordering, and especially where some aspects of the performance of ICTs necessarily occur in realspace and beyond the influence of any self-regulated cyberspace. Finding a remedy to the problem of lack of cost-effective redress for non-delivery or wrong-delivery in ICTs will mean finding a remedy that involves state intervention because of the need for state enforcement power and the lack of a need to make big profits.



III LEGAL CONTEXT



The legal context of the analysis conducted in this thesis corresponds with the legal framework for the regulation of ICTs, which necessarily exists at the interface of four main categories of law: Consumer Protection Law, Contract Law, Private International Law and Cyberlaw.



As noted in chapter one, the major concern of this thesis, cost-effective redress for non-delivery or wrong-delivery in ICTs, exists in a wider context. For example, issues of cost effective redress for ICTs should not be considered in isolation from the broader issues of consumer protection law for ICTs; and, in fact, a comprehensive solution to the problems of failed ICTs will inevitably involve laws beyond those merely for access to justice. Likewise, as ICTs involve contracts formed between private citizens in different countries, sometimes in cyberspace, the full context involves, at least, four areas of law. Thus there are links between redress, consumer protection, Private International Law, Contract Law and Cyberlaw and they collectively make up the general context of a discussion of redress for ICTs.



A Consumer Protection Law



1 Australian consumer protection law



The most important consumer protection law in Australia is the Trade Practices Act 1974.[112] The Trade Practices Act came into force on 1st October 1974, and it was introduced to provide uniformity of business rules for fair trade in relation to both business-to-business (B2B) trade and business-to-consumer (B2C) trade. The Trade Practices Act thus regulates both anti-competitive trade practices, and misleading or deceptive trade practices throughout the entirety of Australia. The general purpose of the legislature in enacting the Trade Practices Act was stated in the Australian Federal Parliament’s Second Reading Speech:



The purpose of the Bill is to control restrictive trade practices and to protect consumers from unfair commercial practices ... The principle known as caveat emptor ... [which] may have been appropriate for ... village markets ... has ceased to be appropriate as a general rule ... [because] now the marketing of goods or services is conducted on an organised basis and by trained executives ... [with whom] the untrained consumer is no match ...[and thus now] the consumer needs protection by the law ...[113]



Thus whereas once, in “village markets”, the seller and the buyer had a roughly equal knowledge about the subject of their negotiations, the widespread availability and complexity of goods – such as motor cars, computers, television sets, etc. – means there is indeed now an inequality of bargaining power (through an information/knowledge imbalance) in the market, thus prompting governments to try to achieve a level playing field on behalf of the entire community.



Thus the Trade Practices Act is two acts rolled into one: it contains laws concerning B2B transactions, such as laws about restrictive trade and anti-competitive practices; and it contains laws promoting the protection of consumers engaged in B2C transactions.[114] It is this second type of law which is of direct relevance to ICTs; specifically, certain provisions contained in Part V,[115] but also provisions in Parts IVA[116] and VI[117] (indirectly) in connection with ICTs involving the wrong-delivery or non-delivery of goods to consumers.[118]



The most important specific provisions which should be considered here are section 71, from Part V, and section 80, from Part VI. Section 71 relates to the problem of wrong-delivery of goods, as defined in this thesis, by prohibiting the supply of goods, by a vendor to a consumer, when they are unfit for purpose or not of merchantable quality. Section 80 allows an aggrieved consumer to apply for a mandatory injunction to compel performance of a contract to remedy such breaches. In terms of the justification for state intervention in the form of consumer protection law, the specific ground for intervention in contractual performance is undoubtedly inequality of bargaining power: society will not tolerate non/wrong delivery by a corporation merely because a corporation is better able to absorb the response of individual consumers to non/wrong deliveries than consumers are able to absorb non/wrong deliveries. In other words, just because a corporation has greater bargaining power, a corporation should not be permitted to breach contracts with consumers by non/wrong delivery. As for non-delivery, further examples of statutory intervention are section 52 Sale of Goods Act (1896) (Queensland), which allows a consumer to sue for damages for non-delivery of goods, and section 53 of the same Act, which allows a consumer to sue for specific performance of a contract for supply of goods.[119]



2 Regulation of B2B and B2C transactions



There are three questions which need to be considered here. The first question is whether there is an essential difference between B2B and B2C transaction types such that a regulatory regime for B2C transactions, completely separate from that for B2B transactions, needs to exist.



According to Vaughan[120] “the main difference between B2B and B2C is the buyer, whose expectations, choice of suppliers and product, payment method and purchasing requirements vary dramatically”. While this is not a juridical approach to the question, Vaughan’s perspective is a reminder that consumers are indeed different or at least can be different from corporations, and a pointer back to the basic discussion regarding whether consumers should be protected by law at all. On this point Martin, for example, says that



B2B contracts justify the adherence to traditional “freedom of contract” principles in a way that B2C contracts do not. Businesses may be presumed to possess a measure of sophistication in commercial bargaining which individual consumers do not.[121]



To argue that the existence of two different types of law, trade practices law to regulate B2B and consumer protection law to regulate B2C, is evidence that there is a difference between them requiring separate laws, is a circular argument, and thus the discussion must fall back on whether or not consumers should be protected by law at all. As the question has already been canvassed however, it is not necessary to go any further with that here.



The second question is whether an interventionist approach should be taken to the regulation of international B2C transactions just because an interventionist approach is taken to the regulation of international B2B transactions. The interventionist arguments given above for the protection of consumers would, as a matter of common sense, strongly suggest that interventionism for protection of B2C transactions should be stronger than for B2B transactions given the weaker position of consumers in B2C transactions. Further, the fact that ICTs can occur in cyberspace does not, in any way, appear to weaken the arguments for consumer protection through interventionism. On the contrary, the greater the distance of the vendor from the consumer, the more the consumer needs protection, since foreign vendors could more-easily avoid national regulators or enforcement agents.



The third question is whether B2B laws can simply be modified to regulate B2C transactions. The existence of distinct laws for the independent regulation of trade practices and of consumer protection suggests not but, perhaps more telling, is the fact that both the Vienna Sales Convention[122] and the Hague Convention on Private International Law,[123] both of which purport in some way to regulate international B2B transactions, expressly exclude provisions regulating ICTs. Why this might be the case with respect to the Vienna Sales Convention is examined in detail in chapter five.



B Contract law



An issue of fundamental importance to redress for ICTs and the wider issue of international consumer protection is whether an enforceable contract even exists – a contract cannot be sued on if it doesn’t exist, so the question of whether a contract can be validly formed internationally and electronically, in cyberspace, is fundamental. Once that threshold is crossed, however, the law regarding enforceability of contracts per se drops out of the picture, at least as far as it is separate from consumer protection law. As a result, contract law, for the purposes of this thesis,[124] can be dispensed with quickly.



Whilst the basic principles of offer and acceptance are not affected by technology, legal requirements that contracts be constituted in writing or signed can pose difficulties for paperless transactions. Consideration has therefore been given to statutory developments relating to digital signatures. The challenge for the law is that of assuring the recipient that the sender of the electronic message is who he or she purports to be, that the text of the message has not been altered thus eliminating the risk of repudiation, and that the recipient wishes to do business with the sender within the terms of a potentially binding electronic communication[125] In other words, there is an issue as to whether electronic contracts can be valid and binding.



Many common business practices have been held to result in “signatures” sufficient under the Statute of Frauds. In Brown v The Butchers and Drovers' Bank[126] a bill of exchange endorsed with the figures “1.2.8” written in lead pencil, was held sufficient to amount to a signature for the purposes of the Statute of Frauds, and code words adopted by pre-arrangement, bank account numbers written on the back of cheques, stationary containing a business letterhead, and purchase order forms with the firm name at the top have all been held to satisfy the “signed” requirement of the Statute.[127] Section 8(1) Electronic Transactions Act 1999 (Australia), a piece of legislation based on the UNCITRAL Model Law on Electronic Commerce, provides that “for the purposes of the Commonwealth, a transaction is not invalid because it took place wholly or partly by means of one or more electronic communications.” Section 10 Electronic Transactions Act 1999 (Australia) provides that an electronic signature, such as a consumer’s electronic signature in an ICT, can be valid if certain requirements are satisfied. Other countries have passed similar legislation.



C Private International Law[128]



Private international law[129] is part of the municipal (domestic) law of each country and subject to unilateral change by each country's own legislature.[130] As such, private international law rules vary between countries. Private international law deal with relations between private persons in different countries and is concerned with resolving “conflicts”, wherever they arise, due to interaction between independent legal systems. Conflicts can occur, from the viewpoint of a particular local court, when a dispute has foreign elements in it, such as where one of the parties is a resident of a foreign state, the cause of action has arisen in a foreign state, or a foreign legal system or foreign litigation are somehow relevant.



A basic issue in this area, for this thesis, is whether consumer protection principles found in private international law[131] are effective for transactions mediated by the Internet. A representative view on this issue seems to be that



the private international law on consumer contracts is not very well developed and is unlikely to be able to cope with the new problems caused by Internet consumer trade ... current private international law does not always provide adequate solutions for consumer contracts made over the Internet.[132]



It has been noted, however, that



the place and form of marketing activity in the net [is] not appropriate, as far as connecting factors are concerned, to determine the applicable law ... relevant connecting factors are the places of business or residence of the parties and, additionally, the substantial content of any marketing on the net. On the basis of these connecting factors a set of basic rules for consumer contracts made in the Internet can be established.[133]



Unfortunately, however, while rules for jurisdiction clauses in ICTs for the sale and purchase of goods have been proposed, some do not seem to amount to radical departures from the ordinary private international law rules which present so many problems in this area. For example,



where the contract is for the supply of goods to a delivery address coincident with the consumer’s residence, a strong connection of the contract to that place exists ... the connection is strong enough to place the applicable law in the country of the consumer’s residence in the absence of a choice-of-law [clause].[134]



The basic private international law problems for ICTs, whether mediated by the Internet or not, are uncertainty, complexity and expense. Uncertainty because of the unknowable outcome of potentially involving foreign laws, complexity because of the inherent complexity of litigation involving multiple legal systems, and expense because of the need comply with the practical demands of complexity. While, strictly speaking, these problems are not unique to ICTs mediated by the Internet, they may be greatly aggravated by it, as is neatly illustrated in the following passage:



[I]f [both] parties are located in the forum jurisdiction[135] ... a court will apply the lex fori [the local law] ... however, where the controversy has a ‘significant relationship to more than one state,’ the court must ... determine which jurisdiction’s laws it will apply ... [but] activities conducted via the Internet may give rise to particularly thorny choice-of-law questions ... online transactions may routinely involve several jurisdictions ... a person in State A may make a communication through a ... computer located in State B, ... received by a person in State C ... through a server located in State D (... owned and operated by a company headquartered in State E), ... that results in ... shipment of physical goods ... from a source located in State F.[136]



Thus a court may potentially be faced with a matrix of facts far more complex than that found in “normal” or “traditional” transborder transactions in realspace, which can make the jobs of deciding who has jurisdiction and of what law will apply extremely difficult. While not new in terms of their intrinsic legal nature, the potentially extreme increase in uncertainty, complexity and expense by the new technology is new and hence more demanding.



The law of the European Union offers some help in resolving private international law problems. “The Rome Convention ... provides that a choice of law may not deprive the consumer of the protection afforded by the mandatory rules of the country of his habitual residence”, and “where there is no choice of law clause in a consumer contract, Article 5(3) specifies that the applicable law is that of the country of the consumer’s habitual residence.”[137] These suggest some approaches a possible international consumer redress/protection solution might adopt, without providing an answer as to how such rules may be internationally enforced, and without providing an answer regarding how such rules will potentially act as a brake on the growth of ICTs, being expensive and possibly too-complex for vendors.



A potential advantage of the European approach, however, is that



[despite the fact that] it is common for servers to be located in places other than that of the business, for example a French firm may use a server in Switzerland because it is cheaper than using a French one ... [and the fact that] some businesses may try and escape a particular jurisdiction by placing a server outside its reach ... the Giuliano and Lagarde Report seems to indicate that a server cannot be a ‘place of business’ within the meaning of the [Rome] Convention ... a server’s location is no more relevant to the application of the Convention than the fact that a contracting company happens to use a foreign telephone or postal service. The Convention focuses on the substance of transactions, as opposed to their form.[138]



In other words, under this approach, a vendor may not escape liability merely by placing their server in a vendor-friendly country. Such an approach could become an element of a solution for cost-effective redress for ICTs.



There are some libertarians in this area with unconventional views regarding seller and consumer relations. The Internet, according to Rice, citing an example concerning securities traders, “alters the balance of power between buyer and seller [because it] arms buyers with masses of information and new analytical tools”.[139] While this assertion has to be seen in the context of the fact that securities traders are undoubtedly more sophisticated than the usual Internet consumer, the point is novel and may in fact become a general development to watch for in the future. That is, consumers could, arguably, become sophisticated enough not to need interventionist assistance in acquiring cost-effective redress for their ICTs in the first place. More relevant to private international law issues is the view that “the Internet frustrates these traditional principles [of jurisdiction]”.[140] Furthermore,



the basic principles of jurisdiction are essentially geography-based. As a result, jurisdictional principles are difficult to apply to the Internet, which is a largely boundless medium. A website may be viewed from anywhere in the world ...the actual location of computers is irrelevant to either the providers or recipients of the information, and there is no necessary connection between the Internet address and a physical location.[141]



Furthermore,



packet switching communication protocols allow individual messages to be subdivided into smaller packets that are then sent independently to a destination ... [one] may travel via telephone lines through several different states ... or even through a satellite in space ... another ... may travel by fibre optic cable, arriving ... before the first packet.[142]



The conclusion drawn from this observation is that “the rules of jurisdiction ... predate the personal computer age ... courts and regulators, when analysing jurisdictional questions, have analogised the Internet to [the] telephone ... a serious issue because the Internet of today is but a glimmer of what lies ahead”.[143] In other words the old rules haven’t kept up with the effect of the new technology. The controlling minds behind these events, however, necessarily remain at specific points in realspace, a fact no doubt behind the European Union’s position that “the Convention focuses on the substance of transactions, as opposed to their form”.[144]



Supported by arguments that



the Internet defies traditional rules based on national sovereignty and locality, national legislatures cannot impose their will on it, courts cannot call the actors in the Internet before them or seek to regulate their actions ... cyberspace is an area beyond the reach of municipal law that is either anarchic or must be made subject to its own rule and institutions,[145]



it has been re-asserted recently that the problem of locating relevant cyberspace events geographically, the problem of identifying cyberspace parties, and the fact that the global reach of the Internet potentially brings multiple legal systems into play in any ICT done there, all challenge existing private international law rules.[146]



Of this assertion it has been noted that “these issues have not as yet been addressed specifically by the revisions of private international law and jurisdiction which have taken place at national and international level. I am not aware of any rule that addresses specifically jurisdiction and choice of law in Internet transactions”.[147] It has also been noted that the Hague Conference on Private International Law of 1993 which lead to a draft Convention on Jurisdiction and Recognition of Foreign Judgements in 1999 does not contain any direct reference to electronic commerce, and thus its application to the Internet has proven to be controversial as some have urged the “country of origin” approach favouring sellers, while others have urged the “country of destination” approach, favouring consumers.[148]



In the light of this, a warning has been made by Nygh against an automatic reflex to adopting libertarian views because “those who act through the Internet can be found within legislative and judicial jurisdiction of nation states. Cyberspace is not a no-man’s land where anarchy reigns.”[149] Nygh also noted that the Yahoo case in France[150] shows that “national law and courts can have a considerable influence on the Internet.”[151] Cyberspace is a not beyond the reach of conventional state intervention, according to this view.



While it has been argued that “in the discussions in The Hague it was generally accepted that ... if the goods turn out to be defective or are not delivered at all, the ordinary rules can be applied”,[152] the question must be asked whether these legally enforceable “ordinary rules” are cost-effective in their application to ICTs involving low monetary values. It would not be enough that the existing laws work in theory, they must also be cost-effective in practice.



D Cyberlaw



In this thesis, “cyberspace” has been defined as the global but generally borderless notional virtual “space” created by the Internet, as opposed to the actual physical world which is referred to as “realspace”. Cyberspace has also been defined as “a computer network consisting of a worldwide network of computer networks that use the TCP/IP network protocols to facilitate data transmission and exchange,”[153] and as “the online world of computer networks”.[154]



Within cyberspace, arguably legally novel phenomena occur. For example, multiple cyberspace identities may be used to represent a single real world identity, or vice versa; and the identity of a person “existing” in cyberspace may not correspond with any physical or artificial identity in the real world.[155] Further, cyberspace lends itself to the increased probability that a vendor’s true identity or location is legally unknowable, and that the law governing any particular transaction is indeterminate.



Cyberlaw has been defined in this thesis as the body of law used to regulate cyberspace. It has also been defined by Lim as “an embryonic collection of laws and principles which, through design or necessity, have been applied to the Internet”,[156] and by Fitzgerald as a “law relating to the internet, digital intellectual property and electronic commerce”.[157] All three of these definitions emphasise that “Cyberlaw” is new, is a synthesis of older laws, is very broad in scope, and is as yet undefined as an exact jurisdiction.



A major theme within the Cyberlaw literature is whether governments should be involved in consumer protection in cyberspace through a sub-set of Cyberlaw. Specifically, the issue is whether consumers who shop internationally[158] can be protected by “market forces” or other non-governmental means, or whether there is a need for consumer redress/protection laws specifically adapted or created for ICTs. This issue is thus concerned with arguments about the extent of government involvement in consumer redress/protection in cyberspace, and thus informs considerations given to the nature and extent of regulation proposed by any relevant model law, whether national or international: whether governments are to be involved in protecting ICTs, and how should or might that be done. Consideration of how to protect ICTs is thus an issue at the core of any consumer redress/protection sub-set of Cyberlaw. Solutions to ICT problems will thus come, apart from other sources, from (and will affect the development of) Cyberlaw.



IV METHODOLOGY – EVALUATION OF ICT REDRESS METHODS



As explained in the previous chapter, the principal objective of this thesis is the assessment of the cost-effectiveness of a range of existing and potential ICT redress methods. The remainder of this chapter is a description of the methodology used in subsequent chapters to assess the cost-effectiveness of ICT redress methods. The use of a table of criteria to assess cost-effectiveness is explained and justified, the meaning of each of the criteria used in the table is explored,[159] the justification for selecting such criteria is explained, and the relationship between the criteria and the notion of “cost-effectiveness” is clarified.



As a preliminary, the following point should be noted. There is a very pragmatic, utilitarian analysis underpinning the assessment scheme proposed in this section. Such an analysis or approach is one possible approach that might have been used from amongst a number of alternatives. Other approaches, such as “consumer rights” or “fairness” approaches, for example, are essentially theoretical. The utilitarian approach used here is preferable where there is a need to provide results which are practical and immediately useful.



In the interests of clarity and simplicity, in this thesis a table is used to summarise the comparative analysis undertaken throughout the thesis. The various ICT redress methods are evaluated according to a clearly defined set of criteria, with the results used to progressively fill in the blank cells within the table. The table is a tool for formal and consistent evaluation of the various redress methods considered throughout, and re-appears in the final chapter to assist with documenting the overall conclusions of the thesis.



Three criteria – “cost”, “difficulty of enforcement” and “complexity” – are used to assess the overall cost-effectiveness of the redress methods considered, such that each method obtains a result, under each of the three criteria, of either “very low”, “low”, “acceptable”, “high” or “very high”. For example, litigation could get a “high” for cost, a “low” for difficulty of enforcement and a “high” for complexity, and so on. Other consumer protection criteria such as honesty, fairness, safety, knowledge, choice, privacy, peace of mind, and the right to a remedy for abuses, are either implicit within the three criteria chosen or, with the exception of the right to a remedy for abuses, are irrelevant to the objectives of this thesis as discrete criteria. Safety, for example, is not relevant to ICTs for the purchase of goods where the only legal issues considered here in relation to such purchases relate to non-delivery or wrong-delivery. Wrong delivery includes non-conformity with contractual specification, and product liability would involve a separate cause of action.



As indicated in chapter one, an issue in this methodology is the presence or absence of subjectivity in the application of these criteria. For example, while “cost” can be a distinctly objective factor, the process of deciding that a particular cost in a particular case is “high” or “very high” could indeed be quite subjective. It was also noted at the outset that the methodology used in this thesis, was one which at least begins the task of reducing subjectivity. It is suggested therefore that where a person not only uses the methodology described here with ordinary standards of common sense, but also uses their own values regarding such differences as “high” and “very high” in a manner which is both consistent and as reasonable as possible in all the circumstances, the methodology will be as close to “completely objective” as is possible.



There are 14 ICT redress methods assessed in this thesis and noted in the table. These redress methods are organised and considered in three classes, as follows:



1. Litigation-based redress under current legal regime (method 1),



2. Current non-litigation-based redress (methods 2 to 9), and



3. Potential non-litigation-based redress (methods 10 to 14).



There is a significant difference in the degree of treatment given to the various redress methods. Each method receives the degree of consideration that is warranted. The first method shown, litigation, is covered by an entire chapter, chapter three. Methods 2 to 9 are covered, to different extents, in the first part of chapter four. Methods 10 to 14 are covered in the last part of chapter four.



As the result of applying the three evaluation criteria, cost, difficulty of enforcement and complexity, each of the 14 redress methods is given an overall cost-effectiveness “result” of either “yes” or “no”, on the basis that any method which has any one or more evaluation criteria that is higher than “acceptable” (i.e. “high” or “very high”) will receive a “no” for its cost-effectiveness result. Thus a method whose cost, difficulty of enforcement and complexity was low or acceptable by all three criteria, would be cost-effective.



At this point it should be noted that the overall conclusions reached in chapter seven regarding the cost-effectiveness of the various redress methods examined are based upon the findings, in chapters three and four, in respect of methods 1 to 9 only. Methods 10 to 14 are only potential redress methods.[160]



The model laws covered in chapters five and six are evaluated by this thesis in order to assess their potential contribution to the formulation of a solution – a harmonised international consumer redress/protection regime.



Evaluation of ICT redress methods

Methods
Cost
Difficulty of enforcement
Complexity
Cost-effective?


Litigation-based redress under current legal regime

1 – Litigation










Current and potential non-litigation based redress

2 – Credit card terms








3 – Foreign lawyers








4 – Foreign public consumer protection authorities








5 – Alternative Dispute Resolution / Online Dispute Resolution








6 – Arbitration








7 – Industry-based consumer dispute resolution schemes








8 – Industry codes of conduct








9 – Escrow services










10 – Transaction insurance








11 – Trust marks








12 – Consumer education








13 – Consumer complaints bulletin boards








14 – National deregistration of vendor websites










COST



Cost is defined in this thesis as an outlay or expenditure, tangible or intangible, incurred or anticipated, in exchange for a desired object or outcome. It, therefore, includes both monetary and non-monetary factors. In the context of this thesis, a cost, for example, might be a monetary outlay to compel the replacement of faulty delivered consumer goods with goods of merchantable quality as previously contracted for. The wisdom of the bargain is, then, a separate issue.



The next issue is why cost is used as a criterion here, and how the use of cost as a criterion for evaluating ICT redress methods can be justified. Along with enforceability and simplicity, cost is used as a basis for comparing different ICT redress methods. If the same outcome for all redress methods could be assumed, the fundamental basis for comparison of the different methods would be cost: the method with the lowest cost incurred in achieving that fixed/known/common outcome would be the best redress method available. That simple proposition, however, becomes complicated where the cost criterion itself has some influence over the redress method selected. In a world where all things are not equal and different redress methods are likely to have different outcomes, the cost criterion may influence the redress method selected, for example, where a greater or lesser amount of funds were available for funding the pursuit of a remedy. In that case the volume of available funds would make the number of potential redress methods either greater or lesser, respectively. So where money was no object, a more-expensive method could be paid for; conversely, limited funds could rule out the more expensive methods. Therefore, in this context, in opposition to the initial proposition that the cheapest remedy would be the best remedy where all other things were equal, the most-expensive remedy that could be afforded could be the best remedy. Alternately, there may be two equally-desirable fairly-expensive outcomes out of (for example) ten available remedies, but at different costs. In that case, the best available remedy may not be either the most or least expensive. Cost, as a criterion where different redress methods may have different outcomes, should therefore be seen as one which interacts with the value available for acquiring the best result, and which is decided by comparative cost. It is therefore a relative criterion and not an absolute one.



In conclusion, both where (apart from cost) the redress methods are equal, and where nothing about the redress methods may be equal, cost is not only a useful means of differentiating between the different redress options available, but is a necessary and unavoidable factor which must be considered by a consumer in pursuit of a remedy for non-delivery or wrong-delivery in ICTs, since it may be assumed that no remedy will come without some cost.



DIFFICULTY OF ENFORCEMENT



Enforceability is defined by this thesis to mean the aspect of an ICT redress method such that the remedy offered by the method may be imposed compulsorily upon a party to the ICT (assuming that physical enforcement in the real world is actually possible and not merely hypothetical) either directly through litigation or indirectly through legal or equitable/moral obligation. Alternatively, enforceability may be thought of as having compulsion in varying degrees of strength. Thus “difficulty of enforcement” is a variable depending on the degree of compulsion involved. By way of illustration, “consumer education” as a remedy for solving ICT problems would normally be understood to involve no compulsion and thus having “high” difficulty of enforcement, since the information offered by way of consumer education would normally be unilaterally offered simply as good advice for avoiding such problems in the first place, on a take it or leave it basis. On the other hand, ADR and arbitration would generally be understood as having comparatively less difficulty of enforcement associated with them, at least in some cases. ADR may involve enforceability by way of a process which might result in a binding (and thus enforceable) agreement. Arbitration can be binding where a quasi-judicial judgment may be binding and thus enforceable against the relevant party.[161] Litigation is highly enforceable (i.e. “low difficulty of enforcement”) when the party being sued is within the relevant jurisdiction because it involves state-backed enforcement powers, but may be less enforceable when the other party is not within the jurisdiction.



Where all current or potential remedies are part of an array of potential solutions of varying degrees of effectiveness, it would be inappropriate to consider only highly enforceable redress methods. This is because less enforceable redress methods still have the potential to provide what a legitimately-aggrieved consumer may be seeking. For example, they may be effective to the extent that a vendor, the subject of action under one or more less enforceable redress methods, might see a certain result as inevitable and produce the remedy the consumer is seeking in order to avoid future, more expensive, and strongly enforceable action by a consumer. Enforceability generally, however, must be a criterion for present purposes, because this thesis is concerned with cost-effective remedies, and such remedies would frequently exclude less enforceable redress methods precisely because they are less enforceable and therefore less effective on the balance of all factors involved.



COMPLEXITY



For present purposes, the definition of complexity is the opposite of or the lack of “simplicity”. Simplicity is the state of being simple, where “simple” is defined as freedom from complications, that is, a state where there is an absence of confusion or complexity.



ICT redress methods are evaluated in terms of simplicity according to the extent to which those methods are accompanied by complexity, confusion or complications. Thus complexity, confusion or complications may involve a range of factors of various types, such as degree of difficulty in learning, using or applying the remedy, potential waiting time, inconvenience and stress, and include objective and subjective complications. Such factors can overlap with each other, and they can even overlap with the cost and enforceability criteria. Simplicity is thus a catch-all criterion, a clear advantage of which is to allow for a limitation in the total number of criteria being used to evaluate ICT redress methods. A useful way to delineate “cost” from “complexity” here is to classify those variables under “cost” which may be objectively quantified and which are direct costs (e.g. court filing fees) and to classify under “complexity” those variables which generate secondary/indirect and possibly subjective costs. This proposal does not claim absolute scientific precision as it merely intends to be sufficiently accurate to be useful.



Therefore complexity (lack of simplicity) is used as a criterion to evaluate the redress methods listed in the table because, firstly, it would be an advantage to a consumer to be able to avoid unnecessary complications as between similar or equal redress methods and, secondly, the criterion is general enough to cover a wide range of factors left over after consideration of cost and enforceability factors in relation to the methods. On that basis, an ideal redress method might be one which was cheap, enforceable, not too difficult to use, speedy and relatively stress-free.



COST-EFFECTIVENESS



As the meaning of “cost” has already been discussed above, here the definition of “effective” is presented. Effective has been defined as “having an intended or expected effect”,[162] “having an effect ... coming into operation”[163] and “producing a decided, decisive, or desired effect ... being in effect: operative”.[164] There are both objective and subjective dimensions in these definitions: producing “an effect”, producing “a desired effect”. Thus an ICT redress method might be objectively effective because, for whatever reason, it produces the legally appropriate effect; and a method might be subjectively effective because, for whatever reason, the consumer is satisfied with the effect that the method has produced, whatever that may be.



In the real world of consumers with differing human needs, there is a need for breadth of options and flexibility as regards remedies for non-delivery or wrong-delivery in ICTs. Furthermore, this thesis is a research exercise and not a goal-seeking exercise and thus it does not arbitrarily define a single pre-existing redress method as “effective” only to conduct research to “prove” that. In other words, there is currently no single effective solution, so all current methods have some value and are treated as such.



A narrow inflexible definition of effective, such as “having an effect”, is therefore unsuitable, and the full scope of the three definitions, including both objective and subjective aspects, must be included. The definition of effective adopted for the purposes of this thesis is “having a reasonable, lawful and desirable outcome”.



As already noted in chapter one, a definition of cost-effective could be “economical in terms of the desired result received for the cost incurred”, where “economical” means not wasteful or extravagant. An alternative definition of cost-effective is “economical in terms of tangible benefits produced by money spent”,[165] but given the previous definitions of cost as involving more than just money, and effective as including subjective effectiveness, the former definition is preferred here. Consistent with this definition, solutions which are completely free of financial cost but which fail to achieve sufficient results will not be cost-effective. The definition of “cost-effective” for the purposes of this thesis is “where, in the pursuit of a remedy for a failed or disputed ICT, cost, difficulty of enforcement and complexity are not high”.



Another preliminary issue here is why cost-effectiveness itself is not included in the table as one of the criteria for evaluating the various ICT redress methods. It is not included because it is a composite criterion, and elementary criteria were required for greater clarity of analysis. The overall effect of applying the cost, enforceability and complexity criteria however, will give clear indication of whether or not any redress method is cost-effective; that is, if a method does well (i.e. achieves a “very low”, a “low” or an “acceptable”) according to each of the three existing criteria, then that method would be relatively cost-effective.



Finally, two points should be noted. In each case where the table appears in later chapters to show how individual redress methods have been evaluated according to the criteria, with the results used to progressively fill in the blank cells, an explanation of the considerations underlying each assigned result is given. That is, where necessary, each result is discussed and justified. For any particular redress method to be considered cost-effective, an overall result where the result for all three criteria would be “very low”, “low” or “acceptable” would be required. In other words, a result for any redress method scoring a “high” or a “very high” under any one or more of the three evaluation criteria will not be considered to be cost-effective as defined.[166]



V CONCLUSION



The two major trends in the academic scholarship regarding the regulation of cyberspace generally and of ICTs in particular are the ongoing debates between the libertarians such as Johnson and Post and others and the interventionists such as Lessig, Netanel, Rule, Halpern and others, and the debate about private international law problems for ICTs.



The former debate seems more contentious and therefore unpredictable. It is extremely likely, in the international and inchoate environment of cyberspace, that there will be both self-ordering and regulatory intervention[167] by national and supra-national bodies, at least for the foreseeable future, as a result of local and immediate needs and realities, and governmental objectives driven by developing social policies. There seems little doubt that there will always be self-ordering in cyberspace to some extent – just as there has always been some self-ordering in realspace – but given the fact that governments have both the power to involve themselves in regulation of cyberspace, and extensive motivation for doing so, the broad debate has already changed from whether governments should be involved, to what should be regulated by them, and how.



In the latter case, the consensus of opinion is that a continued resort to private international law rules to solve problems with ICTs is simply unworkable. Such rules are unpredictable given the virtually infinite range of rules that could be applied in many situations involving ICTs, and complex where transactional facts are complex and therefore involve delay and costs which are disproportional to the value of the transactions involved, especially as regards low-value ICTs.



In considering the possible solutions to the problem, one can see the beginnings of convergence between the separate debates about interventionism and private international law. In Boss's “universal system – developed cooperatively by different countries”, in Hardy's “statutory or judicial solution”, in Post's “promotion of the common welfare”, in Goldring's “multi-lateral international agreements” and “broadly-based effort to establish international consumer protection norms”, and in Tokeley's “cyber-jurisdiction which would regulate the internet independent of national laws”, one may be seeing the beginnings of a single resolution to both debates. Such a solution may also provide an answer to the problem of offline/post-transaction non-performance by cyberspace vendors.



The Introduction to this chapter stated that the legal context for the regulation of ICTs necessarily exists at the interface of four main categories of law: Consumer Protection Law, Contract Law, Private International Law and Cyberlaw. That view contained an implied goal: to construct a conceptual structure from those four disparate categories, as a general regulatory theory of ICTs. Such a conceptual structure or theory should serve conveniently as a guiding principle for steering a path towards a clear workable solution.



This chapter has established the evaluative methodology used in this thesis to assess cost-effectiveness, and has set out the theoretical background based upon consumer protection justifications (express and implied) and the interventionist/libertarian distinction. This chapter has also noted some legal protections for consumer transactions, the assurance of the validity of electronic contracts, a description of scholarly debates and potential solutions concerning the problems of private international law, and contributions regarding the development of Cyberlaw. These separate strands can now be brought together into the beginnings of a specific regulatory theory of ICTs in the form of a simple formulation: in the case of non-delivery or wrong-delivery in a valid and binding ICT, where protection, for the consumer party, is justifiable, no form of redress will be acceptable unless that form of redress is at least cost-effective.



CHAPTER THREE: LITIGATION-BASED REDRESS



I INTRODUCTION



This chapter is an assessment of the cost-effectiveness of litigation as an ICT redress method, where the consumer and the vendor are in different countries and neither party is in any particular country. As will be seen, litigation in such circumstances will usually involve private international law rules. This chapter is therefore concerned with private international law issues in the form of contractual terms such as jurisdiction and choice of law clauses and how such terms impact on the cost-effectiveness of litigation for ICTs. Contractual terms are related to litigation because they are potentially enforceable through the litigation process. The chapter demonstrates that redress for non-delivery or wrong-delivery in low-value ICTs by means of litigation is generally not cost-effective, wherever litigated, and notes that a significant reason for this lack of cost-effectiveness, in the context of the relatively small loss sustained by a consumer in an ICT, is the lack of harmony (i.e. full mutual compatibility) amongst various national private international law rules which increases cost, difficulty of enforcement and complexity for litigants beyond that associated with basic (i.e. non-international) litigation.[168]



The chapter is divided into two main parts, description and assessment. In the description part, the basic non-international litigation process is briefly described, and then private international law factors in international litigation, which can complicate basic litigation, are described. This is because any type of private international law issue that could be seen as so connected with the litigation process as to be part of the litigation redress method where it is used in relation to ICTs, must be described and assessed where it could potentially impact on that method. In other words, where private international law issues arise in relation to international litigation – and they usually will because litigation for disputed ICTs, under the current regime, will always potentially involve problems with private international law rules – such issues are an integral part of the litigation redress method and therefore they too must be described and assessed. The method could not be assessed, as far as it relates to ICTs, without consideration of private international law issues. For example, the method could not be properly assessed if the impact of a certain jurisdiction clause upon the litigation process was ignored. Also, of further interest here, is the relationship between the phenomena known as “wrap” and “standard form” contracts with the private international law issue of jurisdiction, which can arise as an issue in relation to ICTs.



In the assessment part of this chapter, the litigation redress method, in both its basic and international forms, is assessed in terms of cost, difficulty of enforcement and complexity, the criteria established in the previous chapter.



II DESCRIPTION OF LITIGATION-BASED ICT REDRESS



A The Basic Litigation Process



In this section, the basic non-international litigation process in the Common Law system, up to trial, is briefly described in broad and generic terms.[169]



A party with some sort of grievance, a consumer who has not received what they have paid for, perhaps, will initiate proceedings in a court of their choosing; usually within the local area they have residence. This will be done by lodging with the court registry a properly completed form such as a Plaint and Summons form, a Writ of Summons form, or similar, with the prescribed number of copies. The court registry, if they accept the submission, will provide the party so lodging, the plaintiff, with a service copy that must be served upon the person being sued, the defendant. The plaintiff, by some means within the rules of service provided by the court, will serve the service copy upon the defendant who will then be aware that the litigation process has been commenced against them. The service copy so served is actually a court document, not a document from the plaintiff, and will state in broad terms what the complaint is and what the defendant must do in order to respond. A defendant has two options: respond or not respond. If the defendant does not respond they are at risk of the plaintiff obtaining a default judgment against them as the court will assume the plaintiff’s claim is not denied. If the defendant decides to respond, they can issue some sort of Appearance indicating that they wish to contest the plaintiff’s proceedings upon some basis. This completes the first cycle of action and response in the “interlocutory” (unconcluded dialogue) phase, which may continue until the actual trial phase commences in court before a judge. The interlocutory phase includes the “pleadings” phase which commences at this point.



The pleadings consist of three parts. The Statement of Claim, is issued by the plaintiff, and details the exact nature of the grievance and indicates the causes of action concerned (for example, breach of contract), and the nature of the remedy the plaintiff is seeking. The defendant responds with a Defence or Defence and Counter-Claim and/or Set-Off, which indicates the defendant’s response to the plaintiff’s Statement of Claim and what, if anything, the defendant is claiming from the plaintiff in response. The plaintiff may respond to the Defence with a Reply or a Reply and Answer, which may be used if the Defence has raised some matters not raised by the plaintiff previously. This concludes the pleadings phase of the interlocutories, which may continue with any one or more of Discovery, Interrogatories and/or Inspection between the parties, where the parties collect evidence from each other, for the purpose of reducing surprise, putting the parties on an equal footing and defining the issues, should proceedings continue into the trial phase.



If there is no settlement (mutually agreed resolution) prior to trial, the interlocutory phase concludes and the litigation process continues into the trial phase.



This is a very general description of the basic litigation process, which could be complicated by difficulties and exceptions in the surrounding facts and circumstances, should there be any.



Each step in the litigation process just described will represent a time and cost problem to the plaintiff. Such problems would be very likely to increase significantly, possibly dramatically, should the process involve private international law issues which would probably arise if the parties reside in different countries.



B Private International Law



Private international law, also known as “conflict of laws”, is a set of rules and principles which are adopted by each country and which can vary from country to country, with the result that they are at present internationally unharmonised. These rules and principles are concerned with resolving conflicts and inconsistencies which can arise in international private law matters (i.e. those between persons, natural or corporate, in different states) because of interactions between different legal systems. For example, a conflict of laws will arise if a contract is formed in one country and breached in another. In that case a number of questions will arise, such as whose law applies and where the matter should be litigated. Unfortunately, as noted by Juenger,



[t]he outstanding characteristic of the conflict of laws is the astonishing lack of consensus on the discipline’s goal and methods. Uncertainty about the proper approach to multistate problems reigns supreme and the conceptual apparatus of the approaches that have been proposed is as complex as it is unconvincing ... Alas, in spite of all the valiant intellectual efforts lavished on it, and the voluminous literature that has built up over the ages, the law of conflicts remains mired in mystery and confusion.[170]



It will remain so while private international law rules are unharmonised globally.[171]



A basic objective of private international law rules is to promote harmony, or at least to assist with providing a resolution of disputes, between interacting persons of different nations[172] by resolving inconsistencies between their different legal systems. Before this objective can be achieved, however, the preliminary private international law issues to be dealt with by a court are:

  • whether the court (the “local forum”) has the inherent power to hear arguments and make decisions – the jurisdiction / choice of court question, [173]
  • whose substantive law has the closest connection with the subject-matter of the dispute and is thus more applicable to it – the choice of law question, and
  • whether judgments of the court hearing the case will be recognized and enforceable elsewhere (i.e. where the defendant lives).

According to Juenger



Analytically, these three categories are distinct. For centuries jurists have drawn a line to separate choice of law, on the one hand, from jurisdiction and the recognition of foreign judgments on the other. The choice of the applicable law is regarded as a “substantive” matter, whereas jurisdiction and recognition are considered to be “procedural”. Functionally, however, the three topics are intertwined. An attorney will be hesitant to litigate in a forum whose choice-of-law rule invokes a law that defeats his client’s claim, and he ought to advise against suing in a court whose judgment cannot be enforced in the forum and will not be recognized elsewhere.[174]



In other words, it would be a tactical error on the part of a plaintiff to originate proceedings in a court in a particular geographic jurisdiction when they have a choice not to do so, knowing that the substantive law that may be applied to the dispute by that court will not suit their needs, or that any favourable judgment of that court won’t be effective against a foreign defendant. Thus the issues of jurisdiction and choice of law, and jurisdiction and recognition, are intertwined.



A reasonable place to commence a consideration of international litigation involving private international law is with jurisdiction and its associated issues.



C Jurisdiction



“Jurisdiction” is a generic term[175] with a range of different meanings.[176] In this chapter it means a court’s power to hear and decide a matter. More-specifically, jurisdiction has been defined as



The scope of the court’s power to examine and determine the facts, interpret and apply the law, make orders and declare judgment. Jurisdiction may be limited by geographic area, the type of parties who appear, the type of relief that can be sought, and the point to be decided.[177]



A court may also have a monetary jurisdiction, so that the court may be limited to hearing matters involving either upper or lower monetary amounts, or both.[178] The word “jurisdiction” can also have the popular sense of being the geographic domain of a particular court.[179]



Thus, where the court's jurisdiction is called into question by either party or by the court itself, the court will begin by considering whether it has authority to consider the matter in question at all, as determined by such factors as geographic area (involving a connection between the matter and the local court geographically), the monetary value or the nature of the subject-matter involved, and the effect of any contractual jurisdiction clause. A court may also consider the question of “personal jurisdiction”, i.e. a court’s authority to require a defendant to appear, based on valid service or submission.[180]



The parties to an ICT may agree that a court in a particular place is to be used in the event of dispute between them. This agreement will manifest in the form of a jurisdiction clause (described below) within their contract. Quite often however, the content of a jurisdiction clause will be imposed upon consumers through the use of wrap and standard form contracts, which may make international litigation necessary in the first place.



D “Wrap” and Standard Form Contracts



The issues at this point involve digressing briefly from pure private international law issues to consider the nature of wrap and standard form contracts, whether such contracts are enforceable, and the fact that such contracts can be used by a vendor to dictate jurisdiction, choice of law or any other terms, to a consumer. As we shall see, this can be a tactical move, even a “pre-emptive strike” by a vendor to forestall the possibility of litigation from a foreign consumer.



All of the terms “shrinkwrap”, “clickwrap” and “browsewrap” indicate some issue in respect of the inclusion or otherwise of terms in contracts.[181] A “shrinkwrap” contract may be described as one where a consumer purchases goods which have been completely physically sealed inside “shrinkwrap” – thin protective see-through plastic used to contain all components of the package of goods just purchased (for example, computer software on disks plus user manuals) – and which contains inside the package some sort of notice that using the goods inside the package signifies the consumer’s assent to the terms of use clauses also contained within the package (e.g. licence terms). There is a direct similarity then, between shrinkwrap issues and the “ticket” cases involving car parks and public transport, and therefore with the legal topic of the enforceability of exclusion/exemption clauses in contracts.



Clickwrap contracts are those where an online purchaser indicates their willingness to make an offer to buy goods by clicking on an “I agree” button or similar. [182] The issue here is whether the vendor’s screen (containing invitations to treat regarding consumer goods) was designed in such a way as to amount to reasonable notice of the vendor’s terms and conditions applicable to the ICT.



Browsewrap contracts are those where “the user can obtain [the goods] without giving unambiguous consent to the terms of the offer”[183] – apparently similar to a “free trial offer” type of situation not unlike the situation in Hill v Gateway. [184]



All wrap contracts can be standard form contracts containing jurisdiction, choice of law and other terms. A standard form contract (also known as an adhesion contract) has been defined as “a contract (often a signed form) so imbalanced in favour of one party over the other that there is a strong implication it was not freely bargained”,[185] and as a



contract between two parties that does not allow for negotiation, i.e. take it or leave it. It is often a contract that is entered into between unequal bargaining partners, such as when an individual has a contract thrust into her hand by the salesperson of a multinational corporation. The consumer is in no position to negotiate the standard terms of such contracts and the company's representative often does not have the authority to do so.[186]



Standard form contracts are found, for example, in relation to air tickets, bank documents, insurance documents, and car rentals.



In respect of shrinkwrap contracts, and on the face of traditional rules regarding such matters, enforceability will turn on whether sufficient notice has been given of the matter the seller is seeking to bind the purchaser to – on whether, relative to the time of contracting, the notice came too late for enforceability.



The law is evolving. “Recent cases have begun to recognise the practical importance of allowing terms to be made known later in some situations”[187] The Australian case of McRobertson Miller[188] and the US case of Hill v Gateway[189] are examples. The court in the Australian case recognized that the contract may not come into existence after the purchase of an air ticket but before the flight “when the passenger had had a reasonable chance to object to the conditions”.[190] The court in the US case held that a contract came into existence thirty days after purchase of goods where the package contained a notice that the customer was taken to agree to contract terms if they did not return the goods within thirty days of purchase.[191] Furthermore, in the case of an actual shrinkwrap contract, there may be two contracts – one between the consumer and the retailer, and a separate one between the consumer and the manufacturer of the goods contained within the shrinkwrap.[192]



Thus, on the face of it, as far as shrinkwrap contracts are concerned, there appears nothing that might impede redress for consumers engaged in ICTs so long as the vendor operates along similar lines in respect of reasonable opportunity for inspection of goods and conditions. Many vendors will not allow an inspection period prior to payment however, and in fact the norm would probably be that goods must be paid for prior to shipment; but more-importantly, what constitutes a “reasonable opportunity for inspection of contractual terms and conditions” for the average on-line shopper, is a serious issue in terms of information asymmetry[193] and inequality of bargaining power,[194] as noted in chapter two.



In respect of clickwrap contracts, the issue is whether the vendor’s screen, containing invitations to treat regarding consumer goods, was designed in such a way as to sufficiently bring to the attention of the shopper the vendor’s terms and conditions applicable to the ICT. If yes, then the contract will be valid on the face of it: Hotmail Corporation v Van$ Money Pie Inc.[195] Once again, there appears nothing that might impede redress for consumers engaged in ICTs so long as “sufficient” effort is made to bring notice to the consumer.



In respect of browsewrap contracts, to the extent that “the goods” mentioned here refers to downloadable software or similar, browsewrap is not an issue for this chapter which deals exclusively with non/wrong delivery of physical goods. However, if the term “browsewrap” is wide enough to encompass physical goods, the comments made above in relation to “shrinkwrap” contracts are applicable here.[196]



In respect of standard form contracts, there are arguments on both sides as to their appropriateness. On the negative side is the view that situations involving standard form contracts can involve inequality of bargaining power as consumers can have little opportunity to influence the terms of such contracts or even whether such contracts are used at all. This view of standard form contracts is consistent with the views of many writers on the topic. For example, “the buyer finds herself obligated to terms to which she did not voluntarily agree”,[197] and “[t]he unifying theme is dominant corporations taking advantage of submissive individuals”.[198] That consumers can have little opportunity to influence the terms of standard form contracts may be even more true of online contracts where vendors, possibly at great geographical distance from consumers, are less likely to be directly confronted with consumers seeking to negotiate contractual terms. On the positive side however, while standard form contracts are presented to consumers on a take it or leave it basis, they “do have the advantage of reducing transaction costs”[199] by standardising like-transaction terms; and, in any event, “[I]n advanced economies buyers and sellers do not typically haggle over prices: they are set by the seller on a take-it-or-leave-it basis ... [which] does not imply lack of bargaining power on the part of buyers: it might, in fact, imply a bargaining advantage.”[200] Also, consumers, despite being the weaker of the “unequal bargaining partners”, are arguably no better off otherwise with the doctrine of “freedom of contract”, where the consumer would theoretically be free to negotiate all the terms of a contract relating to a low-value ICT. Standard form contracts may thus represent a trade-off of competing policy arguments, and may not necessarily impede redress for consumers engaged in ICTs – especially if interventionist (statutory) adjudication and enforcement options are available. A serious question remains however, as regards the effect of the undoubtedly significant power advantage enjoyed by website vendors using standard form contracts where freedom of contract private international law rules, such as Article 17(2) Brussels Regulation,[201] can actually work against a consumer. This is because such rules may represent a loss of opportunity for the restraining effect of consumer redress/protection law where it might have otherwise been present.



Finally, the ultimate point about wrap and standard form contracts, for present purposes, is that they can be used by vendors to dictate jurisdiction, choice of law and other terms to consumers. Such contracts can contain any manner of terms, suitable to vendors, which would not merely favour the vendor in the event of dispute, but would make the acquisition of a remedy by a consumer-plaintiff practically unattainable, as the remainder of this chapter demonstrates. On the balance of competing arguments, the consumer would probably better protected, as a general rule, under the current regime, by insisting on their right to negotiate contractual terms or, at the very least, by examining the terms of the wrap or standard form contract concerned, to determine that the jurisdiction and choice of law terms are acceptable to their needs, and avoid commitment if necessary. Unfortunately this is probably beyond the sophistication of the average consumer, a fact which arguably calls for some kind of reform.



E Jurisdiction / Forum Selection Clauses



Parties to an ICT may use a jurisdiction clause (or forum selection clause) in their contract to specify their purported agreement regarding governing jurisdiction.[202] A jurisdiction clause is “a clause in a contract providing for the settlement of any dispute between the parties arising out of the contract to take place in a court of law of a particular jurisdiction.”[203] A jurisdiction clause purports to establish, by agreement between the contracting parties, where a matter will be heard, either physically or virtually. What a jurisdiction clause does not do, is to specify that the law of a particular place is to be the law governing the contract. Therefore, it is conceivable that a court in one place could be specified by a contract to be where the law of a different place shall be applied to the dispute. This is the essential difference between a jurisdiction clause and a choice of law clause. So, the jurisdiction clause only purports to deal with the threshold issue as to where the matter shall be initially dealt with (and thus could be known alternately as a choice of court/forum clause), and not which substantive law will apply to the contractual dispute.



F Judicial Discretion



An associated issue worth considering very briefly here is that of judicial discretion. Many courts throughout the world are able to exercise discretion in relation to a range of private international law issues. They can exercise discretion in regards to jurisdictional matters – for example, through application of the doctrine of forum non conveniens[204] – and in relation to the effect of the parties’ choice of law clauses in their contract. Also, subsequent recognition and enforcement issues can be affected by judicial discretionary issues too. These issues are considered further, in Part III.



G Choice of Law / Applicable Law



The following descriptions concern private international law issues which can operate to either create cost, difficulty of enforcement and complexity problems in respect of obtaining redress for non-delivery or wrong-delivery in ICTs where none previously existed in respect of jurisdictional or other issues, or create such problems in addition to problems with jurisdictional or other issues.



Beyond issues of jurisdiction, a court may consider arguments as to whether or not the local law (the lex fori) is the appropriate substantive law to apply to the matter (e.g. local law of contract), or whether some other (foreign) law applies. This is the “choice of law” or “applicable law” issue,[205] and can be simplified or complicated by such issues as whether or not the parties have included a choice of law clause in their contract, and the effect on the contract of relevant state or mandatory or international laws.



The distinction between “choice of law” and “applicable law” should be noted. “Choice of law” is the contractual agreement regarding which jurisdiction’s laws shall govern the contract in the event of dispute (as indicated by the parties through a choice of law clause in their contract), while “applicable law” is the law which will govern the contract in the event of dispute over the content of a choice of law clause, or in the event of statutory over-ride of a choice of law clause (e.g. section 67(a) Trade Practices Act 1974), or in the absence of contractual agreement regarding such situations, as decided by a court. Another way of thinking about the difference is to consider that a choice of law may be made in order to determine the applicable law.



H Mandatory Rules and Public Policy



The reference to section 67(a) Trade Practices Act 1974 above, raises the general issue of mandatory rules. One definition of “mandatory rules” is found in Article 3(3) of the Rome Convention,[206] which provides that mandatory rules are rules of law of a particular country which cannot be derogated from by contract. Such rules cannot then be ignored by parties to contracts which have some close connection with that country. Section 67(a) Trade Practices Act, as an example of such a rule, provides in summary that “Where the proper law of a contract for the supply of goods would, but for a term that it should be the law of some other country, be the law of Australia, this Division applies to that contract notwithstanding that term”. In that case, the rules to be found in “this Division”, whatever they may be, will be part or all of the mandatory governing rules of the contract if the contract had some close connection with Australia. That could be the case, arguably, if the consumer party to the contract was resident in Australia and/or the contract was formed in Australia.



Article 5(2) of the Rome Convention, as further illustration of how mandatory rules can work, preserves protection for consumers of the mandatory rules of their home country upon certain conditions, such as the contract being formed as the result of a specific invitation from or advertising by a foreign vendor and the consumer having taken all steps necessary on the consumer’s part for conclusion of the contract in their own country.



Schu advises us that there are two types of mandatory rule.



Firstly, there are mandatory rules in a domestic sense. That means they cannot, according to the definition, be avoided by contract within their own legal system, however, they do not claim effect if the law of which they are part of is not the applicable law to the contract. Thus, mandatory rules in a domestic sense allow themselves to be contracted out of by virtue of a choice of law. The second type of mandatory rule are those in a conflict [i.e. private international law] sense. Like the first type of mandatory rules they cannot be avoided by a domestic contract, but they cannot be avoided by choice of law either, because they themselves purport to be applicable even though the parties have chosen another law.[207]



It is the mandatory rules of the second variety which are of interest here because they relate to situations involving ICTs, which can involve conflict of laws problems, and because such rules can affect the cost-effectiveness of the litigation redress method for ICTs. How that may be the case is explained in the Assessment part of this chapter.



As regards the issue of the impact of public policy in multi-jurisdictional cases, Clarkson and Hill, to illustrate, remark that some English courts will not apply certain foreign laws on the grounds that such laws would be contrary to “public policy”, i.e. they would be contrary to English justice and morality or the English public interest,[208] noting, however, that “the doctrine of public policy is used relatively sparingly in the English conflict of laws, especially in comparison with the laws of some foreign countries such as France and Germany”.[209] It is also pointed out that



while the doctrine of public policy is seldom applied as such, many of the conflicts rules [such as those regarding consumer protection for example] ... are in fact crystallisations of public policy considerations ... [and] ... [t]he important difference between excluding foreign laws on grounds of public policy and applying these crystallised public policy rules is that with the former there is always a discretion, whereas rules, where applicable, are mandatory.[210]



The conclusion that may be drawn from this is that the effect on the cost-effectiveness of the litigation redress method for ICTs, because of public policy factors as factors independent from mandatory rules, may be negligible. This is the case as national consumer protection rules are well-established and widespread – even as far as France and Germany.



I Renvoi



At this point a very brief consideration of the private international law issue of “renvoi” may be worthwhile. Renvoi is concerned with conflict between national private international law rules, and thus is a topic that also illustrates the consequences of unharmonised / mutually inconsistent national private international law rules,[211] even if there is some doubt as to whether it is applicable to ICTs.[212]



The word “renvoi” has been defined as “the conflict of laws problem that occurs when a forum court is directed by its choice of laws rules to the law of another country whose rules in turn direct the matter back to the forum court.”[213] Renvoi then is concerned with a potential absurdity, an endless cycle of referral from country to country, resulting in a kind of jurisdictional deadlock.



J Forum Shopping



On the issue of “forum shopping” Juenger notes that



the decision to sue in a particular place often implies a choice of the applicable law ... courts that purport to heed choice-of-law precepts in practice nonetheless end up applying the lex fori [the local law] with considerable frequency. This “homing trend” is universal. It is one, though perhaps not the principal, reason for the phenomenon known as “forum shopping.” As the parties’ juggling for position indicates, the procedural aspects of multistate litigation are frequently of far greater practical importance than the selection of the applicable law.[214]



Thus parties can sometimes go looking for a court that they think will best be suited to delivering them a desired outcome. This is known as forum shopping.



On this topic, Bell says that



the venue in which ... litigation is to take place will often be critical for the ultimate outcome of the dispute ... the guiding aspiration of the conflict of laws, namely that the venue in which a piece of litigation is tried should not affect the outcome or result of that litigation, is unattainable as a matter of practical reality ... [and one reason for this is] absence of uniform choice of law rules ... forum will dictate what may be significantly different potential outcomes for any given dispute depending on the forum in which the litigation proceeds.[215]



Of particular interest here is the issue of “negative” or “reverse” forum shopping, an attempt by and a tactic of a defendant to try to get the litigation changed to an alternative forum or, better still, to no forum at all.



On that topic, Bell says that “the concept of ‘forum shopping’ has largely been considered ... from a plaintiff’s perspective. But if the premise of this paper has any foundation, namely that ‘venue matters’, then it must matter equally for the defendant”.[216]



Reverse forum shopping to obtain the best substantive law for a defendant for example, is just one of many reasons why a defendant might engage in reverse forum shopping, as shall be seen below. As a preliminary however, it is necessary to generally consider certain interlocutory proceedings[217] – challenging jurisdiction, stays of proceedings, applications for negative declaratory relief and anti-suit injunctions[218] – that a defendant may employ for the purposes of reverse forum shopping.



Challenging jurisdiction is a tactic which may be made on the grounds (for example) that the defendant has no presence in the forum, has not submitted to the forum jurisdiction, has no assets or no creditors in the jurisdiction, or has not breached a contract there.



Bell illustrates this tactic by giving examples from circumstances involving English law. He says



To draw an illustration from the Civil Procedure Rules, if a claimant or plaintiff has served a defendant outside the jurisdiction on the basis that the defendant was domiciled in England, relying solely on the defendant’s residence in England for the last three months or more, the defendant may make a clean and simple objection to jurisdiction by demonstrating absence of the requisite residence for the period in question.



Similarly ... a plaintiff ... must demonstrate ... a good arguable case that its claim falls within a case authorized by the Civil Procedure Rules ... for example, that a contract was breached in England by reason of non-payment of the claimant, a defendant who is able to demonstrate ... that payment was not due in England and, hence, that no breach occurred there would be well advised to challenge jurisdiction on this elementary ground.[219]



As a procedural issue,



[a] defendant who intends to contest the court’s jurisdiction applies to the court for an order setting aside service or setting aside the originating process ... The court decides whether it has jurisdiction and if so whether it is the proper forum for the disposition of the litigation. In addition to any power under the rules [of court] to set aside service or to stay a proceeding, the court also has an inherent jurisdiction to do so ... the power to decline jurisdiction is discretionary.[220]



Seeking a stay (a suspension) of proceedings on the ground of forum non conveniens (because, for example, another forum is more appropriate for some reason) or because of an exclusive jurisdiction clause[221] is a method which “defendants are now using as a weapon rather than as a legitimate defence”.[222] A stay is the same in effect as a challenge to jurisdiction, as can be seen from the previous quote, but which may happen later in proceedings, i.e. after an appearance has been entered.



An application for a stay is made according to whatever the court’s rules require. In Australia, for example,



If the rules require an application to be made to a judge, the application is made at chambers, usually by summons or application, depending on the court’s practice. Where an application is to be made to the court it is made by way of motion and the moving party serves a notice of motion on the opposite party ... In most jurisdictions the rules state that evidence is given by affidavit.[223]



Challenging jurisdiction and stays of proceedings are



the two most direct strategies which may be employed in the battle over venue ..... but a foreign court [from the defendant’s perspective] ... may have extremely widely drawn jurisdictional rules or else lack a doctrine of forum non conveniens so that these expedients will be of limited value to the defendant.[224]



In such circumstances a defendant may approach avoidance of the plaintiff through their own local court by means of negative declarations and anti-suit injunctions. Applications for negative declaratory relief and anti-suit injunctions go together. A negative declaration (an application that the applicant – a vendor, for example – is not liable to the respondent-consumer, on certain grounds) does not necessarily achieve anything positive for a applicant/defendant on its own, thus the applicant/defendant may then seek an anti-suit injunction, directed at the foreign consumer, based upon the negative declaration as a prior fundamental legal claim. An anti-suit injunction may be a tool used by a defendant where, for example, the forum court (the defendant’s court) has claimed sufficient jurisdiction and has no issue with forum conveniens. Thus a defendant over whom a court has personal jurisdiction may apply, as an alternative tactic, for an injunction restraining proceedings. An application for an injunction, of course, will proceed by the usual means and will be judged by the usual criteria – a triable issue on the negative declaration, and whether or not the foreign defendant would be exposed to unreasonable levels of inconvenience and expense were the injunction not granted.[225]



K Recognition and Enforcement



To conclude this description of private international law issues which can affect the cost-effectiveness of the litigation redress method for ICTs, let us consider the topic of recognition and enforcement. Recognition and enforcement issues in private international law are of relevance to ICTs when, for example, a foreign court, i.e. a court foreign to the country in which a consumer-plaintiff resides, is asked by a successful plaintiff to recognize and enforce the judgment of their own local court. For example, the question arises as to what will happen when an Australian consumer obtains a judgment against a German vendor in an Australian court, and asks a German court to enforce the Australian judgment.



First, let us note that “enforcement of a judgment necessarily involves its recognition ... there can be no enforcement without recognition”[226] and therefore we can talk here about enforcement as incorporating the prior recognition phase, although recognition itself may not be without complication. According to Clarkson and Hill, recognition and enforcement can be based on the theory (using the example above) that if an Australian court produced a judgement based upon a correct assumption of jurisdiction, then the Australian court’s judgment should prima facie be regarded as creating an obligation between the parties to the Australian proceedings which the German court ought to recognize and, where appropriate, enforce.[227] Furthermore, this approach still forms the basis of recognition and enforcement in the statutory regimes based on the common law, but the recognition and enforcement of foreign (e.g. Australian) judgments is limited by a range of defences which may be invoked by a local defendant. For example, German public policy considerations (unlikely in relation to an ICT) or German notions of justice and fairness.[228]



An assessment of impact of all of the above factors upon the cost-effectiveness of the litigation redress method now follows.



III ASSESSMENT OF LITIGATION-BASED ICT REDRESS



A Cost



In order to assess the litigation redress method by the cost criterion, it is necessary to first consider the cost of basic (non-international) litigation. That is because international litigation, as a method of protecting ICTs, can incorporate all the features of basic litigation. Therefore, before the impact of private international law issues upon litigation can be assessed, the cost of basic litigation must first be considered as one inescapable element of the total cost of international litigation.



Assessment of the litigation method can only suffer by the impact of the additional cost of the international aspects of litigation, as compounded by the basic cost of ordinary litigation. For example, the cost of ordinary litigation is a problem which can only be aggravated by the tactical use, by a defendant, of reverse forum shopping, during interlocutory proceedings.



A benchmark cost of litigation figure of AUD$50,000.00 will be used here.[229] It is somewhat arbitrary but a reasonable approximation is needed, and it is based on the following.



Giving a definition or even an approximation of litigation costs for a hypothetical case (or a real one, for that matter) is virtually impossible. Acquiring actual data would be an entire project in its own right, and using hypothetical values is not meaningful. There are too many variables. It is commonly known and widely accepted, however, that litigation is expensive. There are many sources, at an informal level, which are of the view that litigation is expensive, even without transnational dimensions to it. While the informality of the sources is less than optimal, the sheer volume of such evidence is supportive. A brief survey reveals the following sample.



An Australian article entitled “Tackle the high cost of litigation, not the DIY brigade” describes how many litigants cannot afford lawyers to litigate for them and are congesting the courts as a result.



One of the big challenges for the administration of justice in 2004 is the rise and rise of the self-represented litigant ... self-representation is marching onwards and upwards at a faster clip than the growth in the legal profession. This must be a disturbing development for the cartel that is satisfactorily licensed to ply its trade in the publicly funded courts and tribunals of the land ... the trend towards self-representation demonstrates that consumers are voting with their feet. The prices set for services provided by the licensed cartel are out of alignment with the market for those services. In classic terms, the sellers are in the process of pricing themselves out of the market.[230]



Similarly, a Canadian article entitled “Lack of Courtroom Experience Due to High Costs of Litigation” describes how lawyers are finding it difficult to acquire courtroom experience because people are no longer hiring lawyers to litigate for them due to the expense of litigation.



Some of Canada’s senior barristers say the high cost of litigation and the economic pressures on law firms are marrying with unintended result: An entire generation of litigation counsel is not getting out of the office and into the courtroom frequently enough to develop basic advocacy skills ... litigation as a lose-lose situation – even if they win [the parties who formerly hired lawyers more frequently] they’re going to spend an enormous amount of money in legal fees.[231]



According to a US article by Michael Hanks entitled “The Five Limits of Litigation”



[l]litigation is extremely expensive ... Even in justified litigation (i.e. where [subject-matter of the dispute] value exceeds the probable attorney’s fees, costs, and the value of your time), attorney’s fees will be burdensome[232]



Hanks implies an interesting point, that litigation for ICTs would not be “justified” (as defined), supporting the contention of this chapter that litigation is not a source of redress for low-value ICTs because it is simply not cost-effective.



Another US article, by Roy Martin, entitled “The Cost of Litigation” notes that



[l]litigation is expensive. An attorney will typically spend an average of two to three hours preparing for every hour in court ... in addition to the obvious financial cost of litigation, there are emotional costs as well ... anger, resentment, grief, rage, sadness, guilt and other complex feelings.[233]



Apart from supporting the assertion that litigation is expensive, this quote also suggests that the “cost” of litigation is broader in meaning than just monetary cost. Vincent DiCarlo in “How to reduce the high cost of litigation” writes that “litigation is bloodless war – expensive, exhausting, and generally out of control. It should be avoided wherever possible.”[234]



Other US commentators have pointed out that litigation (as it currently is) is not cost-effective, even for winners. Scott Berinato in “You sue, you lose: the high cost of litigation” quotes Abraham Lincoln’s assertion that “the nominal winner is often a real loser – in fees, expenses and waste of time”.[235] An article by John Sullivan entitled “Lawmakers Should Help Businesses Combat Litigation Costs” includes the following:



‘I was ruined but twice in my life,’ a French philosopher wrote, ‘once when I lost a lawsuit and once when I won one’ ... That’s truer now more than ever, especially for people trying to do business in California. Litigation is one of your biggest competitors. It’s a cost you’ve got to fight all the time.[236]



A webpage by Jossey-Bass, a subsidiary of Wiley publishers, advertises a journal series entitledAlternatives to the High Cost of Litigation”.[237] This shows that a well-respected publisher has no qualms about accepting the view that litigation is expensive, and feels that it is enough of an issue to devote an entire journal series to it.



To conclude this section on the cost of basic litigation, it should be noted that cost is inter-connected with its difficulty of enforcement and complexity. Cost rises as complexity rises, and enforcement of a potential remedy becomes more and more beyond the reach of a plaintiff the more expensive the remedy becomes.



Consideration can now be given to the cost of transnational litigation – i.e. the cost of litigation involving private international law issues because the parties are in different countries. Let us commence with some general observations.



Some analogous evidence is available from Gamertsfelder who writes that



the mere fact of disparity [between Australian and Japanese law] will allow the [foreign] defendant to attack the judgment on public policy grounds. Even if arguments based on these grounds are overcome, this will increase litigation costs ... [and] furnish the defendant with a delaying tactic. [238]



He goes on to comment that



a successful judgement creditor can obtain reimbursement of court costs incurred in bringing enforcement proceedings. However attorney’s fees are not generally recoverable. Thus the costs of attorney’s fees must also be factored in to the benefit-risk equation when a judgment creditor determines a strategy in relation to cross-border litigation.[239]



He further notes that “if Australia and Japan were both party to a Convention in the form of the Brussels or Lugano Convention the risk involved ... would be significantly reduced”.[240]



To this can be added Rule’s observation that



The law surrounding these transboundary transactions is complex. Just figuring out which law applies to a transaction can cost a lot of money. Getting legal representation or even just advice from another country can be frustrating and expensive. Legal systems don't really know how to handle disputes that straddle borders very well. Paying lawyers to put the time into figuring it all out really doesn't make that much sense, especially if the transaction is less than a couple of thousand dollars.[241]



At this point we can consider the differences between how particular jurisdiction issues (namely, how a court determines if it has jurisdiction or not, contractual jurisdiction clauses and judicial discretion) are handled in Australia, the USA, and the European Union. It is precisely such differences, especially if a vendor-defendant can exploit such differences, which are a likely cause of the potential ineffectiveness of litigation, beyond its basic expense, as a remedy for non-delivery or wrong-delivery in low-value ICTs. Put another way, unharmonised private international law rules around the world regarding jurisdiction can amount to increases in the cost of litigation for consumers, can mean that the terms of the ICT are difficult to enforce because litigation can become virtually impossible, and complex beyond the experience of even general practice lawyers.



The following is mainly concerned with a survey of the differences between how courts in different states decide whether or not they have jurisdiction. The question as to whether a vendor who is a party to a disputed ICT could exploit such differences and other factors is examined later.



As noted already, there may be a whole range of factors that a court will consider in determining whether or not it has jurisdiction. Assuming, however, that there are no problems with other jurisdictional issues (for example, assuming there is no question as to whether or not a court has subject-matter jurisdiction[242] and has a right to hear matters concerning ICTs), the important issue is how a court determines if, regardless of its rights, it should hear and decide a dispute.



Australia



A court in Australia will have sufficient personal jurisdiction over a defendant if that person has either

  • been served with originating process (a writ or otherwise) in accordance with the rules of that court), or
  • has voluntarily submitted to the court,[243] for example by unequivocally evincing an intent not to assert an objection[244] including assenting to a contractual jurisdiction clause.[245]

A defendant in an action brought by an aggrieved ICT consumer will not necessarily be a natural foreign person; it is more likely to be a corporation. In Australia such a defendant would be deemed to be present in the jurisdiction if they carry on business in the jurisdiction,[246] which means that they must be registered with the Australian Securities and Investment Commission (ASIC) and, by section 601CX(1)(b) of the Corporations Act 2001 (Cth), they may be served through their notified local agent.[247] Vendors who operate through foreign websites that may be accessed from Australia, however, will not necessarily be so registered. In that case service must be affected either

  • according to the rules of court in respect of contract cases (as ICT cases will be), and on the grounds that either the contract was made within the jurisdiction, was governed by the law of the forum or was broken within the jurisdiction;[248] or
  • in respect of proceedings founded on the breach of an Act within Australia such as a misrepresentation in breach of section 52 of the Trade Practices Act 1974 (Cth). [249]

Under the private international law rules of Australia, where service of process[250] is made to a defendant outside Australia, service of process must be authorised by the rules of court of whichever court in which process is issued.[251] The various Australian rules are not uniform. For example, in some cases leave of the court is required prior to service,[252] and in others[253] leave is not required.[254] There are further differences between the various Australian courts’ jurisdiction rules flowing from this basic difference regarding whether or not leave is required prior to service of process.



In relation to the courts where leave is not required prior to service[255]



if the defendant does not appear, leave to proceed is required in all States ... If leave to proceed is not obtained in the jurisdiction where it is required, any subsequent order or judgment will be a nullity ... [and] the defendant may apply to set aside the service of the originating process on the ground that service was not authorised by the rules of court,[256]



which, in the wider scheme of things, is a relatively minor point, but it serves to illustrate that there are many ways in which a defendant vendor can exploit differences between private international law-related rules for tactical advantage.



Furthermore, even if a court decides it has personal and all other required forms of jurisdiction,

“the court may still decline to exercise jurisdiction, or the defendant may obtain a stay of the proceedings, on the basis ... [of] the doctrine of forum non coveniens”. [257]



One possible definition of forum non conveniens is as follows:



Forum non conveniens is Latin for “inconvenient forum”[258] or “inappropriate forum.” It is a legal doctrine employed by courts to dismiss a case where the court, although having jurisdiction over the dispute, is of the opinion that the dispute more appropriately belongs in a different legal forum. There may be a wide variety of reasons why the court chosen by the plaintiff can be inappropriate. The factors to be considered include the location of potential witnesses and relevant evidence, the choice of law applicable to the dispute, possible undue hardship for the defendant, the most expeditious use of judicial resources, and other factors. In any event, the dismissal for forum non conveniens is discretionary,[259] and the court will not dismiss a lawsuit unless it believes that there is an adequate alternative legal forum open to the plaintiff. The doctrine of forum non conveniens exists in both common law and civil law systems (with specific variations in different jurisdictions), as well as in international law.[260]



Another definition is:



Forum non conveniens. Latin for a forum which is not convenient. This doctrine is employed when the court chosen by the plaintiff (the party suing) is inconvenient for witnesses or poses an undue hardship on the defendants, who must petition the court for an order transferring the case to a more convenient court.[261]



As noted in the first definition, [262] the doctrine may be applied by both common law and civil law courts, and in potentially different ways. For example, forum non conveniens is applied in some common law countries using the “more appropriate forum” test, whereas Australia, controversially, uses the “clearly inappropriate forum” test.



According to Nygh and Davies,[263] the Australian position on forum non conveniens is expressed by a combination of three cases: Spiliada,[264] Oceanic Sun[265] and Voth.[266] A summary of their consolidation of these cases is that the plaintiff has a marginal prima facie right to have a particular court hear the matter if the defendant (wherever they may be) has been properly served, unless the court is satisfied that it is a clearly inappropriate forum for hearing the matter. This means that the right only exists if there is a “finely balanced contest” between the parties,[267] i.e. an absence of strong factors which either support or displace that prima facie right. For example, where there is a presence of substantial unfairness to (and shown by) the defendant with respect to the particular forum, the right won’t exist and the court could find the forum clearly inappropriate. The test can be seen as being more “plaintiff-friendly” than the “more appropriate forum” test used elsewhere, as it places a greater burden on the defendant to convince the court that an Australian forum is not appropriate.



With respect to this position, Nygh argues that “it places Australia out of step with other members of the Commonwealth of Nations ... [it] is designed to encourage forum shopping by plaintiffs[268] ... [and] the decision in Voth is internally inconsistent ... the situation may require legislative intervention”.[269]



It should be noted at this point however, that it is not the purpose of this chapter to analyse the nature or merits of the Australian forum non conveniens test. That test is considered here merely as further evidence of difference between national private international law rules which could be exploited by a foreign defendant for tactical advantage (e.g. to prevent a local consumer from obtaining justice).



According to Deane J in the 1988 Oceanic case,[270] decided by the High Court:



A party who has regularly invoked the jurisdiction of a competent court has a prima facie right to insist upon its exercise and to have its claim heard[271] ... the onus lies upon the defendant to satisfy the local court ... that it is so inappropriate a forum for their determination that their continuation would be oppressive and vexatious to him. [272]



This is the origin of the Australian “clearly inappropriate forum” test under the forum non conveniens doctrine, and was confirmed as Australian law in the Voth decision.[273]



USA



As regards US federal and state jurisdiction rules generally, the situation is even more idiosyncratic. While there are some similarities to Australian rules, there are also significant differences across fifty US states, due to the fact that US jurisdiction law is more-specifically developed for Internet e-commerce (because commercial and consumer activity on the Internet started in the USA and because of the size of the consumer market there).



US federal courts recognize two types of personal jurisdiction, general and specific. General jurisdiction is exercised over non-resident defendants regardless of whether the subject-matter of the case is related to the defendant’s connection with the forum state, and arises when the defendant engages in continuous and systematic contacts with the forum state.[274] General jurisdiction is relatively exotic when it comes to “US Internet jurisdiction” as the US Supreme Court has upheld general jurisdiction only once, instead preferring to establish specific jurisdiction.[275]



Specific jurisdiction will arise according to the application of the minimum contacts analysis espoused in International Shoe Co. v Washington,[276] a three part test looking (broadly) at the defendant “purposefully availing” themselves in the plaintiff’s state (intentionally doing business there), a close nexus existing between the defendant’s activities and the plaintiff’s cause of action, and the court’s exercise of jurisdiction over the defendant being reasonable. [277] Under this analysis, a court in the state in which the consumer resides will have jurisdiction over a foreign defaulting Internet seller in relation to an ICT, when “the minimum contacts of a non resident defendant with a forum are such that the exercise of jurisdiction does not offend traditional notions of fair play and substantial justice”.[278]



The defendant must have such a degree of “minimum contact” with the forum that “he might expect the necessity of litigating there ... [for example] by doing business within it ... however a defendant need not have physically entered a forum in order to be subject to its jurisdictional reach.”[279]



For the purpose of further refining the resolution of jurisdictional questions, particularly in relation to the assessment of “purposeful availment”,[280] US courts have developed two approaches. Firstly, they have classified Internet cases into three categories along a sliding scale from the Zippo case:[281]



First [jurisdiction over a foreign trader will be asserted] when a defendant clearly does business over the Internet with clients from a particular jurisdiction ... Second, a middle category encompasses interactive Web sites where a user can exchange information with a host computer ... [and] Third, a passive Web site that does little more than make information available to those who are interested in it.[282]



So there is a sliding scale between deliberately “reaching” from the defendant’s server to the plaintiff’s location to actively engage in business with the plaintiff, on the one hand, to a defendant’s web pages merely being available within their server for those seeking them out, on the other hand, with varying degrees of difference in between those extreme positions.[283]



The second approach is the effects and targeting test from Calder v Jones[284] which provides that where an act is done intentionally, has an effect within the forum State and is directed or targeted at the forum State, the jurisdiction will be satisfied.[285] This is not dissimilar to the first of the three positions just described in the Zippo sliding scale test.



As regards US state jurisdiction rules, the key difference compared with a purely federal analysis is the extra requirement for satisfaction of state long-arm statute rules[286] and the US Constitution. A “long arm statute” has been defined as “a law that allows one state to claim personal jurisdiction over someone living in another state”.[287] Each US state has its own long-arm statute(s), and an example of how easily US states may claim such jurisdiction can be seen in the case of Bochan v La Fontaine No. 1:98CV1749 (E.D. Va. May 26, 1999). In that case the Eastern District court of Virginia ruled that the Texan defendants were not present in the state of Virginia since 1993 nor done any business there. The defendants, however, were subject to personal jurisdiction under the long-arm statute of that state due to having posted allegedly defamatory messages to the Internet via “America On Line”, a service based in Virginia.



In considering a matter with potential foreign elements, a US state court begins deliberations by examining whether jurisdiction over a foreign party is allowed under the forum state's long arm statute, and whether that jurisdiction would fall within the due process principle of the Fourteenth Amendment to the US Constitution.[288] It is “the due process clause of the Fourteenth Amendment [which] enables a state to create a long-arm statute”. [289]



At this point it is appropriate to consider US views on forum non conveniens in respect of international US cases. Fitzgerald’s view, as follows, will be qualified by some analysis of the so-called “US foreign plaintiff rule”, below.



In the US, the plaintiff’s choice of forum will be rarely disturbed, unless the balance of private and public interests is strongly in favour of the defendant. This will only occur if the action may be more efficiently and fairly tried elsewhere [and there are] at least two fora in which the defendant is amenable to process ... private interest factors include all practical issues that make trial of a case easy, expeditious and inexpensive ... public interest factors include the avoidance of unnecessary problems regarding conflict of laws or in the application of foreign laws.[290]



The comment there that “the plaintiff’s choice of forum will be rarely disturbed” probably really means the American plaintiff’s choice of forum will be rarely disturbed. The court in Piper Aircraft[291] held that “ ... when the plaintiff [who is a US citizen] has chosen the home forum ... it is reasonable to assume that this choice is convenient. When the plaintiff is foreign, however, this assumption is much less reasonable ...”. The potential problem with that doctrine here then, is that it could be abused by rogue American vendors seeking to avoid prosecution within the US.



In the wake of Piper Aircraft American federal courts have dismissed a substantial number of cases brought by foreign plaintiffs ... there is some evidence that the doctrine can be used to protect American defendants from valid claims, even where the American court would be the most suitable place to sue.[292]



Overall, the rules for courts in Australia and the US to decide whether they have jurisdiction over foreign Internet retailers are substantially different, potentially creating differences in private international law rules that may be exploited by parties to litigation of ICTs through forum shopping or negative forum shopping (see below).[293] The Australian test for ICT-type matters is likely to consist simply in the plaintiff “regularly invoking the jurisdiction of a competent court”,[294] and Australian courts have nothing like the tests developed for US courts in the International Shoe, Zippo, Calder and Piper Aircraft cases.



European Union



As regards European Union (EU) private international law rules, personal jurisdiction in civil and commercial matters (where at least one of the contracting parties lives in an EU member state) is regulated mainly[295] by the Brussels Regulation (the Regulation).[296] The general jurisdiction rule under the Regulation, Article 2, is that “subject to this Regulation, persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State”.[297] So, by that rule, an EU vendor would be sued where the vendor is situated. In the case of consumer contracts however, the general rule is not applicable, being over-ridden by Section 4 (Articles 15-17) generally.[298] Article 15(1) provides, inter alia, that



In matters relating to a contract concluded by a ... consumer, ... jurisdiction shall be determined by this Section [section 4] ... if:



...



(c) ... the contract has been concluded with a person who pursues commercial or professional activities in the Member State of the consumer’s domicile or, by any means, directs such activities to that Member State or to several States including that Member State, and the contract falls within the scope of such activities. [299]



A question could now be asked as to how that provision may compare with the Zippo sliding scale, and at which point on that scale would “pursuing commercial activities by any means directed at the Member State” equate to. It would seem reasonable to conclude that the provision may equate to the entire scale except for the most-passive website end of that scale.[300]



Furthermore, Article 16(1) – within the scope of “determined by this section” in Article 15(1) – provides that “a consumer may bring proceedings against the other party to a contract either in the courts of the Member State in which that party is domiciled or in the courts for the place where the consumer is domiciled”.[301]



Thus in the EU, subject to Article 17 – on contracting out of Article 16(1) – the consumer decides where they wish to bring proceedings against the defendant in an ICT matter, a rule which basically preserves the general status quo regarding the prima facie inviolability of a plaintiff’s choice of forum.



Article 17(2) provides, inter alia, that



The provisions of this Section may be departed from only by an agreement ... which allows the consumer to bring proceedings in courts other than those indicated in this Section. [302]



In other words, in relation to ICTs, an EU consumer can “agree” (to the extent possible where a vendor uses a standard form contract) that in the event of litigation, the forum shall be somewhere other than the domicile states of the consumer and the defendant. This position may raise questions such as those regarding consumer/vendor power differentials, and the use by vendors of standard form contracts (see below).



The doctrine of lis pendens (or lis alibi pendens) is codified by Section 9 of the Regulation. The term lis pendens refers to the case



when the same parties are litigating the same question at the same time, but in more than one country ... this duplicates efforts [and] risks ... incompatible judgments ... [lis pendens has been] absorbed by ... the doctrine of forum non conveniens and is now regarded as an important factor [within that doctrine] that the court must take into account when deciding whether [it will accept jurisdiction and hear the case].[303]



Section 9 of the Regulation, however, refers only to cases where courts of different Member States are purporting to hear the same matter. In that case, Article 27 of the Regulation provides that “any court other than the court first seized shall of its own motion stay its proceedings”. This is known as the “first come, first served” rule,[304] but does not cover the kind of situation contemplated by this chapter, which would most likely be where one of the parties to an ICT is within the EU and the other is not. In that case, Section 9 would be inapplicable as the non-EU court would be governed by its own version of the doctrine of forum non conveniens / lis pendens and not by Section 9 of the Regulation.



Once again, there is the problem of regional/national differences in private international law rules that may be exploited by parties to litigation of ICTs through forum shopping or negative forum shopping (considered below).



The previous passage considered differences between how courts in Australia, the USA and the European Union determine if they have jurisdiction or not. It is this lack of harmony in the way this issue is decided between different countries which creates possibilities which may be exploited by vendor-defendants (as will be demonstrated especially by the section below on forum shopping). Such possibilities are one of the causes of the cost-ineffectiveness of litigation beyond its basic expense, as a remedy for non-delivery or wrong-delivery in low-value ICTs. Put another way, private international law rules regarding jurisdiction that are unharmonised with each other can increase the cost of litigation for consumers.



Also, the issue of unharmonised rules regarding jurisdiction can only be compounded by the presence of “negotiated” jurisdiction clauses within ICTs. As noted above, jurisdiction clauses deal with the threshold issue of where a dispute, if any arises, shall be adjudicated. Unfortunately, however, it is not necessarily as simple as that. A jurisdiction clause itself will not prevent a defendant from using forum non conveniens and other factors to renege on their own jurisdiction clause.[305] A jurisdiction clause could be disputed, and overturned by a court. As noted by Jew:



Even where the parties have agreed to the exclusive jurisdiction of a particular country, eg England, it is still possible for one of the parties to the contract to seek a stay of proceedings in that country, or to bring an action in another country, eg Australia, if the party can establish that Australia is clearly the more appropriate forum for determining the dispute.[306]



Furthermore, apart from tactical manoeuvring by a defendant, that could happen where, for example, all the evidence or witnesses turned out to be in a country other than that specified by a jurisdiction clause. Furthermore, contractual provisions in ICTs could also be effected by over-riding local or international laws.



The US courts will generally uphold a forum selection clause unless it is unfair or unconscionable to do so ... [e.g.] if the weaker party to the transaction cannot “shop around” for better terms or has no real choice in the matter



Forum selection clauses have been successfully used by US online suppliers in adhesion contracts[307] to control the forum in which they may be sued ... However, the courts [by application of discretionary powers] have refused to enforce forum selection clauses in online contracts where it was unreasonable or unconscionable to do so, having regard to the customers’ lack of sophistication ... the distance which customers must travel to attend proceedings in the chosen forum ... and where the operation of the forum selection clause is unduly onerous, having regard to the small amount in dispute.[308]



As noted, the issue of unharmonised rules regarding jurisdiction can only be compounded by the presence of “negotiated” jurisdiction clauses within ICTs. That is, added to the problems outlined in the previous section, is the potential effect of extra complications caused by the presence of a jurisdiction clause which is disputed by the parties. In that case, the cost problems described above would only be increased.



Furthermore, it is a combination of the relative sophistication of Internet vendors and judicial discretionary power that provides scope for abuse of jurisdiction clauses by vendors.



The mere fact of the exercisability of discretion, by different courts, in connection with such matters, is just one consequence of the provincial nature of the various differing private international law standards throughout the world. It is that consequence which makes it possible for defendants to try to bring tactical interlocutory (forum shopping and other evasive) proceedings in relation to non-delivery or wrong-delivery in ICTs. In a world of harmonised choice of law rules and reduced judicial discretion, however, there would be nowhere for a defendant to hide, and a change of forum would be pointless.



A glimpse of the problem may be seen in the following excerpt:



The most likely manner in which a party may seek to subvert the operation of an exclusive jurisdiction clause is through an appeal to the discretion of the court, more precisely, through an appeal to the court not to exercise its discretion and to decline to stay proceedings.[309]



Without the existence of such discretionary powers, there would be less scope for a rogue Internet vendor to play tactical “games” for the purpose of avoiding justice.



Cost problems are therefore not only created by mere unharmonised jurisdiction rules as between different countries, and potentially exacerbated by jurisdiction clauses, but are potentially exacerbated still further by judicial discretionary powers which can arguably give the entire scenario a dimension of subjectivity, as between different judges, and thus unpredictability.



The impact of choice of law issues (as described above) may now be assessed. This assessment is concerned not so much with analysis of the differences between how courts in different countries decide what the applicable law is, using their own “choice of law rules”,[310] but simply with establishing that the differences exist to add confusion and expense to the litigation of ICTs and scope for tactical manoeuvres by a defendant vendor.



In Australia “the law of the forum will be applied to determine if a choice of law clause is effective.”[311] If the contract contains no such clause, “the courts will determine whether, on a proper construction of the contract, the parties have evinced a common intention as to the system of law by which the contract will be governed” [312] and, if that is not possible, the courts will “apply the law with which the contract has the closest and most real connection at the time that the contract is formed.” [313] These rules are simple enough, but it is the difference with comparable laws in other places that creates the potential problem.



In the USA, choice of law rules are contained in the Restatement (Second) of Conflict of Laws (1971) (Second Restatement).[314] Of this law, Fitzgerald says that



Commentators have criticised the choice of law rules in the Second Restatement on grounds ranging from their flexibility producing unpredictability in application, through to their being “an incoherent mishmash” [and that] the key concept that permeates the choice of law rules in the Second Restatement is the “most significant relationship” [for which] there is no definition. [315]



The choice of law rules in the EU are provided by the Rome Convention[316] (the Convention) which “applies to contractual obligations in any situation involving a choice of law between the laws of different countries”.[317] The Convention enshrines the doctrine of freedom of contract in its Article 3(1), potentially allowing for abuse by vendors through standard form contracts (see below) but does, under Article 5(2), preserve protection for consumers of the mandatory rules of their home country upon certain conditions, such as the contract being formed as the result of a specific invitation, or by advertising, from/by the vendor and the consumer having taken all steps necessary on the consumer’s part for conclusion of the contract in their own country.[318] The exact detail of the rules in the EU, while being somewhat analogous in intent, is unique to the EU and is not harmonised with comparable US or Australian laws.



This previous passage on choice of law issues considered differences between how courts in Australia, the USA and the European Union determine the appropriate substantive law to apply to a matter. Once again, it is the lack of harmony in the way this issue is decided between different countries which creates possibilities which may be exploited by vendor-defendants. Private international law rules regarding choice of law that are unharmonised with each other can increase the cost of litigation for consumers.



Next, the potential cost impact of mandatory rules may be briefly assessed. In the description part of this chapter relating to this topic, it was noted, referring to section 67(a) Trade Practices Act as an example, that the rules to be found in “this Division” of that Act, whatever they may be, would be part or all of the mandatory governing rules of the contract if the contract had some close connection with Australia, and that could be the case, arguably, if the consumer party to the contract was resident in Australia and/or the contract was formed in Australia. The problem, using that example, is that non-Australian vendors may seek to avoid such provisions and may attempt to dispute the basis of whatever is claimed to constitute the “close connection” with Australia (or whatever country is providing the allegedly applicable “mandatory” rules). For example, a vendor could argue, under Article 5(2) of the Rome Convention, that there was no “specific invitation” or relevant “advertising” on their part – which is what Article 5(2) requires for applicability of the mandatory rules of the consumer’s country. Also, the basis of what can constitute close connection, in the present circumstances, can change from country to country, diminishing the lack of universal acceptance of such rules. As usual, wherever there is a source of dispute, there can potentially be negative cost (and enforcement) implications for a consumer plaintiff.



The potential impact of renvoi can now be assessed. Renvoi can present a dilemma which can, of itself, provide scope for cost, difficulty of enforcement and complexity problems for a consumer suing a foreign vendor, purely because of the intrinsic nature of unharmonised national private international law rules – and, as noted below, even the solutions to the problem of renvoi only serve to exacerbate the problem. Nygh and Davies say that



[O]ne, though certainly not the sole, object of the law of conflicts is to ensure a uniformity of result irrespective of the forum chosen ... In an ideal world where all legal systems employed conflict rules that were identical in content and interpretation, the objective of uniformity of result would be achieved. Unfortunately, however, conflict rules differ. They differ because some legal systems use choice of law rules that are quite different from our own ... [and] Even where the choice of law rules are the same, their interpretation may differ ... How can the problem of renvoi be solved? Three solutions have been put forward.[319]



The detailed nature of the three solutions (called “rejection”, “single renvoi” and “total renvoi”) is not relevant here as it is the disharmony of acceptance of a single solution to the problem of renvoi that is the question concerning this chapter. In respect of the first solution mentioned however, Nygh says, “it is followed by a number of foreign countries.”[320] In respect of the second solution, Nygh says, “it is followed by most civil law systems”.[321] In respect of the third solution, Nygh says, “this last method has found favour with the courts in the United Kingdom and Australia and, to a limited degree, with those in the United States.”[322] It would seem then that, globally, there is a long way to go to Nygh and Davies’ “ideal world where all legal systems employed conflict rules that were identical in content and interpretation”.



The most recent High Court of Australia decision on renvoi in Neilson’s case[323] appears only to confirm this view, the judges deciding 5-2 (Kirby and McHugh dissenting), with two judges accepting double/total renvoi, one judge favouring rejection, and the remainder accepting single renvoi. It is submitted that the range of difference for achieving the same decision amongst the five judges in the majority and the similarity of reasoning yet with a different decision by two judges (Gleeson and Kirby), perpetuates the complexity, instability, subjectivity and unpredictability of this sub-set of private international law. This result can only give comfort to those who would seek to exploit globally unharmonised private international law.



Self-evidently, renvoi, if operable in respect of ICTs, could only increase cost problems.



The potential impact of forum shopping may now be assessed. A number of aspects of the litigation redress method raised above amount to opportunities for vendor exploitation of the fact of unharmonised private international law rules. The topic of jurisdiction and other issues considered above shall now be revisited briefly in order to assess the potential problem of reverse forum shopping.



Determining whether or not a court has jurisdiction can be a complicated process, requiring the balancing of a range of factors, with potentially different factors in different courts in different countries.



A question arises, however, as to why jurisdiction would even become an issue before a court. Jew’s view on this is that



Where parties from more than one jurisdiction enter into a contract [as will be the case with ICTs usually], the laws of several different jurisdictions could be relevant to issues arising under the contract. The law of the place where the contract was made, the law of the place of performance and the law of the domicile of each party are all relevant in the conflict of laws as it relates to contracts.[324]



From that, one can immediately see the potential for problems; not that a court may not be easily able to resolve such issues to its own satisfaction but because a vendor may, either vexatiously or tactically, make an issue out of such factors so that litigation, for the consumer, becomes too expensive as compared with the highest possible recovery amount. Awards of costs are also unpredictable and thus cannot be relied on to assist a plaintiff, especially given the variety of multi-state rules.



Further points of potential tactical exploitation raised above were the variety of different rules of service across the courts of different states in a federal system (as in Australia for example), and the differing rules world-wide in respect of the doctrine of forum non conveniens as between Australia and the rest of the Commonwealth, the US and the EU.



It was also noted that despite the use of jurisdiction clauses in otherwise binding ICTs, the potential for exploitation still exists through the ability of vendors to renege on them and in the freedom of courts to exercise discretion to tolerate such practices.



Furthermore, there was potential for vendor exploitation of world-wide private international law disharmony and judicial discretion in respect of the variety of choice of law and renvoi rules, and in respect of the variety of recognition and enforcement rules.



The question now is whether a defendant-vendor in an ICT matter might want to exploit the fact that private international law rules regarding jurisdiction and other issues are globally unharmonised. The answer is necessarily “yes” because, being unharmonised, the vendor may well want to seek to contest proceedings where the rules of another jurisdiction may be more favourable. Furthermore, as noted, a vendor defendant may so vexatiously make an issue out of such factors that litigation becomes too expensive as compared with the highest possible recovery amount.



So a vendor seeking to contest proceedings where the rules may be more favourable in another jurisdiction can use “negative” or “reverse” forum shopping, a tactic of a defendant to try to get litigation changed to an alternative forum, or better still, to no forum at all. The tactic thus includes both positive approaches (e.g. challenge the jurisdiction of the forum court) and negative approaches (somehow evade proceedings altogether), including the most basic and potentially most effective method, non-appearance.



As regards non-appearance, if a defendant is not within the consumer’s jurisdiction, cannot be compelled to go there, does not conduct business there and does not plan to (at all, or under the same name), has no assets there, and has no creditors that may be garnisheed there, then the issue would be why (under the current private international law regimes around the world) the vendor would make any kind of response to proceedings there. The vendor’s cheapest, simplest and most-effective tactic then, in such circumstances, would simply be to ignore proceedings altogether and perhaps allow the consumer to obtain a default judgment.[325] That may not even be registrable in the vendor’s jurisdiction and, if so, would be unenforceable (at either common law or under some statutory regimes). In any event, default judgement or not, a hollow “victory” for the consumer-plaintiff would be an expensive and meaningless victory.



As regards positive, more-sophisticated tactics a vendor might employ – true reverse forum shopping – Bell argues that



there is for defendants an enormous advantage in winning by way of an interlocutory proceeding ... venue will often be of crucial significance in transnational litigation ... a defendant will have as much interest as a plaintiff in securing a forum in which it is most likely to meet with success (or further its particular strategic motivation, which may be fragmentation, delay, or an impact on the sequence of proceedings).[326]



Thus reverse forum shopping could just as well involve a mere war of attrition as involve any other, more positive, motivation.



For Bell, a defendant winning by way of interlocutory proceedings can involve challenging jurisdiction or seeking (dismissal or) stays of proceedings (on principles of forum non conveniens on the grounds, for example, of inapplicability of local contract law, non-breach of contract, and breach outside the jurisdiction), and either seeking negative declaratory relief and anti-suit injunctions,[327] or both – none of which necessarily involve submission, by a defendant, to the forum jurisdiction.[328]



At this point the clear potential should be noted for tactical use of each of the interlocutory proceedings described above[329] as a tool for a foreign defendant-vendor in an ICT matter where private international law rules around the world remain unharmonised – a tool to fend off a consumer’s litigation by (ultimately) making it too expensive for a plaintiff-consumer.



In respect of the use of these interlocutory proceedings, Bell concludes that “a great deal can turn on the venue in which a particular transnational dispute is to be resolved ... the various tools available to a defendant [discussed above] ... will be used to their limits by defendants”.[330]



Such tools may be ineffective as tactical manoeuvres by a defendant using them to evade justice in the presence of harmonised private international law rules; changing venues would then be pointless.



Reverse forum shopping is potentially a powerful tool in the hands of a defendant-vendor who is seeking to evade litigation. It is made possible only by unharmonised private international law rules and is a major explanation of the fact that international litigation, to remedy failed low value ICTs, is not cost-effective on grounds of cost.



Finally, recognition and enforcement issues may now be assessed. They are assessed under the Cost heading although they could be assessed equally under the next two headings, presenting both difficulty of enforcement and complexity problems for litigators. There are a range of rules regarding enforcement jurisdiction worldwide: case law and statutory law in common law countries, and conventions in the EU. Once again, however, these rules are unharmonised and create potential for inefficiencies and tactical manoeuvres by a defendant.



As regards case law, because the USA is not a party to the scheme underlying the Foreign Judgments Act 1991 (Cth),[331] enforcement jurisdiction rules in matters involving, for example, US consumers and Australian plaintiffs, or vice-versa, would be determined by common law principles. Furthermore, despite the commonality of the legal heritage between Australia and the USA, the actual rules may well be different from court to court in each of these two countries. For example, the common law rule applied in Australia, that the court may enforce the judgment of the court of another country if the court in the other country had personal jurisdiction over the defendant, is derived from the case of Singh v Rajah of Faridkote [1894] AC 670, [332] a case which is not necessarily applicable throughout the whole of the USA (or elsewhere).



Where the Foreign Judgments Act 1991 (Cth) is applicable, under section 5, some types of judgments of foreign courts will be mutually enforceable through registration as between signatory nations. A problem for consumers that may arise under section 6(6)[333] of this scheme is that judgments which aren't legally enforceable in the country in which they were made cannot be registered in the defendant's country, and even where they are registered, a defendant can apply to the court (under section 7) for registration to be set aside for a wide variety of reasons, an even more likely problem for consumers. These reasons include that the courts of the country of the original court had no jurisdiction in the circumstances of the case (section 7(2)(a)(iv)), or that the judgment debtor, being the defendant in the proceedings in the original court, did not (whether or not process had been duly served on the judgment debtor in accordance with the law of the country of the original court) receive notice of those proceedings in sufficient time to enable the judgment debtor to defend the proceedings and did not appear (section 7(2)(a)(v)).



In other words, an effect of sections 6(6) and 7(2) of the Foreign Judgments Act is that as rules of law in a forum that are not harmonised with the private international law rules of other countries, they may be shopped for by a defendant seeking tactical advantage through and by forum shopping (see below).



As noted, the USA is not a party to the scheme underlying the Foreign Judgments Act 1991 (Cth), and the general principle of enforcement jurisdiction there is that no judgment has effect beyond the limits of the sovereignty from which its authority is derived.[334] Thus (subject to the due process requirement of the Fourteenth Amendment of the US Constitution, noted above) common law principles of enforcement (explained above) prevail in respect of international US cases and, to some extent, statutory rules[335] in respect of about half of the US states.[336]



So a consumer seeking to enforce a foreign judgment in the US must file proceedings in accordance with the laws of the relevant state, and await the discretion of the courts of that state.[337]



Furthermore, there may be (First Amendment freedom of speech) constitutional dimensions to US enforcement rules. Fogel J in the District Court for the Northern District of California in the Yahoo[338] case held that the order of the French court was inconsistent with the First Amendment of the US Constitution and held that that precluded enforcement of the French judgment in the US.[339] Interestingly, while “freedom of speech” will probably never be a direct issue in ICTs, the idea that a French person may still be able to purchase Nazi memorabilia through a Yahoo-sponsored website because of US law, is evidence of the link between ICTs and unharmonised private international law rules.



Enforcement rules in the EU are regulated mainly[340] by the Brussels Regulation (the Regulation)[341] which covers two situations – where foreign judgments are issued by courts of EU member states (but both disputants are within the EU and in different countries), and where the judgments are issued by non-member states. In the former case, a foreign judgment regarding an ICT will be enforceable if it relates to a non-excluded civil or commercial matter (Regulation Article 1), if it is a judgment of a court or tribunal of a member state (Article 32) and if the judgment was not contrary to Section 4 regarding consumer contracts. In the latter case, where the judgments are issued by non-member states, the Regulation (or Lugano Convention) will still apply unless there is a specific international agreement which may over-ride it.[342]



Enforcement jurisdiction rules worldwide are unharmonised and create potential for inefficiencies and tactical manoeuvres by a defendant. Once again, therefore, these can only add cost problems to the already high cost of litigation.



B Difficulty of enforcement



There are at least six factors which have the potential to increase the difficulty of (obtaining and/or) enforcing a judgment in cases involving ICTs.[343] These include: the increased expense of transborder litigation; the potential need to relocate proceedings, evidence and witnesses; the presence of jurisdiction clauses; the potential exercise of judicial discretionary powers; the potential involvement of mutually inconsistent private international law rules regarding choice of law; and renvoi.



  • Expense: Mutually inconsistent private international law rules regarding jurisdiction can mean that the terms of an ICT are difficult to enforce simply because potential enforcement proceedings subsequent to expensive litigation can become too expensive. Strictly speaking, however, if something becomes too expensive, it is beyond being merely “difficult to enforce”, it has become impossible to enforce.

  • Re-location: Obtaining and/or enforcing a judgement may also be made more difficult because of the potential need to re-locate court proceedings, evidence and witnesses to a court in a different country. Beyond the merely financial aspects of this scenario, a consumer plaintiff can potentially face a litany of factors to be coordinated in order to pursue a remedy. Such factors could include the need to make return air transportation arrangements for multiple persons (plaintiff and, potentially, witnesses); the need to make arrangements for temporary suitable accommodation for multiple persons; the need to obtain permissions, in some cases, for absences; the need to make arrangements for management of affairs at home during an absence; the need to make arrangements for the timely and secure transportation of evidentiary material to the country where a matter is to be heard. Added to such difficulties is the potential for time requirements to change unexpectedly: the plaintiff might be asked to stay longer than was originally anticipated; and all such time change scenarios will have “ripple” / “flow on” effects elsewhere.

  • Jurisdiction clauses: The terms of an ICT may also be made more difficult to enforce because of the potential effect of extra complications caused by the presence of a jurisdiction clause which is disputed by the parties. A jurisdiction clause, in itself, could cause difficulties. It can be the cause of the previous scenario regarding the potential need to re-locate. A disputed jurisdiction clause, however, would necessarily add a preliminary dimension of difficulty through the need to address and resolve all significant aspects of the dispute in question. A jurisdiction clause could be disputed (prior to obtaining judgment or at the enforcement stage) for a variety of reasons, the most basic being the presence of mutually incompatible rules regarding jurisdiction clauses as between the different potential jurisdictions involved in connection with the ICT in question. A jurisdiction clause could also be disputed by a defendant for purely tactical reasons, raising the issue of negative forum shopping – for no reason other than simply to frustrate the plaintiff.

  • Judicial discretionary powers Difficulty-of-enforcement problems are not only created by merely inconsistent jurisdiction rules as between different countries, and potentially exacerbated by jurisdiction clauses, but are potentially exacerbated still further by judicial discretionary powers which can arguably give any judicial process a dimension of subjectivity, as between different judges, and thus unpredictability. Judges, being human, are as potentially subject to as many subjective influences (bias, for example) as others; and there may also be, in different courts, wider latitude for the exercise of discretionary powers, regarding varying defences found in different countries. For example, a German judge may have different discretionary powers than those exercisable by judges elsewhere, which are exercisable in relation to peculiarly German public policy or other grounds for objections to a possible decision to recognize and enforce the judgment of a court in another country.

  • Choice of law: Mutually inconsistent private international law rules regarding choice of law can increase the probability of unsuccessful litigation, for a consumer, through a potential change in substantive law. In other words, because of the effect of inconsistency between different relevant private international law rules, a substantive law, unfavourable to the plaintiff, may unexpectedly apply.

Choice of law could also potentially be a problem for a plaintiff at the actual recognition and enforcement stage too. A court, asked to recognize and enforce the judgment of a court elsewhere may exercise its discretion not to recognize a judgment due to public policy or unfairness grounds in connection with what the judgment court held to be the correct applicable law.



  • Renvoi: Renvoi, if operable, can also add difficulty of enforcement problems if interlocutory manoeuvrings drive proceedings through a succession of different courts.

As noted, enforcement jurisdiction rules worldwide can be mutually inconsistent and create potential for inefficiencies and tactical manoeuvres by a defendant. Once again, therefore, these can only increase difficulty to the prospect of obtaining and enforcing any favourable judgement a consumer may obtain.



C Complexity



Mutually inconsistent private international law rules around the world regarding jurisdiction, choice of law, renvoi and recognition and enforcement can be complex beyond the experience of even general practice lawyers. A litigant’s local private international law rules can be complex in their own right. Added to this scenario is the certainty that even special private international law practitioners will not have mastery over the laws of any other jurisdiction they may have to deal with. The general picture that emerges then is one of potentially huge complexity, especially true if more than one set of foreign private international law rules are applicable.



Added to such problems is the potential effect of extra complications caused by the presence of a jurisdiction clause which is disputed by the parties. In that case, the complexity problems described above would only be increased by the characteristics of the dispute involved.



Complexity problems may also be potentially exacerbated by judicial discretionary powers which can arguably, as noted, give the entire scenario a dimension of subjectivity, as between different judges, and thus unpredictability.



As regards the impact of the effect of mandatory rules, one can see the scope for disputation as to whether any particular mandatory rules may apply to any given ICT. Recalling the applicability of section 67(a) Trade Practices Act, the sufficiency of the degree of connection with a particular country is debateable. Recalling the provisions of Article 5(2) of the Rome Convention, what is enough to constitute a “specific invitation” is debateable, and what is enough to constitute “having taken all steps necessary” is debateable. Mandatory rules can therefore add an extra dimension of complexity and uncertainty and thus cost



Once again, renvoi, if operable, and reverse forum shopping, could only add complexity problems. Proceedings being sent between courts (or even the possibility of that) would increase complexity.



In a chapter titled “Consumer redress and access to justice”[344] Iain Ramsay argues that lawyers, as intermediaries (i.e. between consumer/plaintiff and vendor/defendant), have the power, by virtue of their discretionary decisions,[345] to affect consumers’ choice regarding the type of redress method they will attempt, and whether or not redress will even be attempted: “lawyers exercised a discretion in filtering away from the legal system disputes that in their view were not sufficiently important”.[346] This, in turn, Ramsay argues, is affected by individual lawyers’ personal values[347] and financial and ideological interests.[348] One of the consequences noted by Ramsay, consistent with and supporting the findings of this thesis, is that the role of intermediaries like lawyers has “implications for the [future] design of legal rules. ‘Bright line’ rules which reduce the need for intermediaries might be a desirable policy in certain areas.”[349] This is consistent with the findings and recommendations of this thesis because it finds that litigation is not cost-effective (and thus obstructs access to justice) and recommends that new legal and technological solutions are implemented which will reduce or even eliminate the need for intermediaries.



IV CONCLUSION



Assessed by the cost criterion, the litigation redress method – involving the usual high cost of ordinary litigation, plus any extra costs resulting from tactical manoeuvring engaged in by a foreign vendor who might use negative forum shopping, for example – would be expensive. In fact, under current circumstances, litigation for ICTs is likely to cost more than the highest it could recover. The cost criterion for evaluating the litigation method of protecting ICTs is “high” because the cost of litigation, as a general rule, is high and would only be made more expensive by adding transnational complications to it. The result is not “very high” because there might be some occasional exceptions to the general rule. Therefore, if any particular consumer wished to sue a foreign vendor, the probability is very high that their costs would be high or very high relative to the value of an ICT.



Assessed by the difficulty of enforcement criterion, effective litigation has significant actual coercive force, being backed by state/court enforcement powers (assuming the vendor has accessible assets that such powers might be employed against), if such enforcement power can be accessed. It will be accessible if use of the litigation redress method is not too costly or too complex. The difficulty of enforcement criterion for evaluating the litigation method of protecting ICTs, as a discrete criterion, produces a “low” result here because successful litigation is backed by state/court enforcement powers. The result is not “very low” because the mere presence or applicability of enforcement powers does not guarantee that a remedy will be available to the consumer; the vendor may have non-existent or inaccessible assets, for example.



Assessed by the complexity criterion, the litigation method is comparatively complex, and especially so where transnational complications are involved. The complexity criterion for evaluating the litigation method of protecting ICTs produces a result of “very high” because the relative complexity of litigation, as a general rule, is high and would only be made more complex by adding a transnational dimension to it.



Using this approach, the proposition that redress for non-delivery or wrong-delivery in low-value ICTs by means of litigation is generally not cost-effective can now be expressed by litigation, and thus its cost-effectiveness as a redress method, being given a tabulated result as follows.[350]



Criteria for evaluation of ICT redress methods

Method
Cost
Difficulty of enforcement
Complexity
Cost-effective?


Litigation-based redress under current legal regime

Litigation
High
Very High
No


As regards litigation generally not being cost-effective for redress of ICTs, the likelihood, however, is that it is not litigation as such which is lacking, intrinsically, but court-based remedies as they currently exist which appears to be the problem. As to whether modified court-based approaches may provide a solution remains to be seen, the biggest problem being the relative cost of litigation and enforcement as compared with the low values of ICT losses under consideration here. If the cost of litigation and enforcement with respect to ICTs could somehow be dramatically reduced, through cyber-jurisdiction techniques for example, litigation will be the only solution if non litigation-based methods of redress are not cost-effective.



At this point the question arises as to whether non litigation-based methods of redress for non-delivery or wrong-delivery in low-value ICTs are effective. That question is considered in the next chapter.

CHAPTER FOUR: NON-LITIGATION-BASED REDRESS



I INTRODUCTION



The previous chapter established that redress for non-delivery or wrong-delivery in low-value ICTs by means of litigation is not cost-effective, and explained why that was the case. This chapter considers whether redress[352] for ICTs by means other than through litigation are cost-effective and, as will be seen, finds that such redress methods as they currently exist are generally ineffective.



Redress for ICTs by means other than litigation includes chargeback, transaction insurance, pressure applied through foreign lawyers or consumer protection bodies, and ADR. Such methods could also be classified according to whether they fall into a protection-through-trust or a protection-through-technology category. For example, a trust mark falls into the former,[353] while consumer complaints bulletin boards or a “cybercourt” (basing automated judgements upon decisional heuristics) could fall into the latter. It is not intended to go into this issue further in this thesis other than to note the following. Trust measures are a form of proactive consumer redress. Generally they are only effective as redress for ICTs to the extent that they may prevent the failure of ICTs, and are of no assistance to any particular instance of ICT non-delivery or wrong-delivery.



The focus of this chapter, then, is upon any currently available method, other than litigation, by which a consumer who is an aggrieved party to an ICT could seek a remedy from a foreign merchant for non/wrong-delivery of goods. Such methods include quasi-litigation through some form of ADR, and effective “pressure”[354] – applied through an agreement between a merchant and a credit card issuer (on behalf of a consumer), or between a merchant and an industry body to which the merchant is a member, or by any other body – that may so effect a merchant that a remedy is made available by them to the consumer. This chapter also looks at such potential non-litigation-based redress remedies as transaction insurance and trust marks. There are 13 redress methods considered in this chapter. It was considered important that no possible or alleged redress method be excluded from consideration as it would be unreasonable to draw a conclusion that “there are no cost-effective redress methods” if any potential method had been excluded.



The data in this chapter on such topics as contractual protections[355] (such as may be associated with credit card terms, chargeback, transaction insurance and escrow), technological protections (such trust marks, consumer complaints bulletin boards), ADR and arbitration, consumer education programs, industry codes of conduct, the appointment of foreign lawyers and foreign public consumer protection authorities, and on the national deregistration of websites, was collected from bank-level credit card issuer conditions of use, credit card provider websites, and OECD reports; from insurance companies (by telephone, mail and Internet searches); from academic texts, public sector reports and unpublished conference proceedings; and from a number of Brisbane and Sydney law firms with overseas agencies.



As a preliminary to the next passage on credit cards, it should be noted that the topic of “chargeback” is treated in this thesis as a topic subsumed within the broader topic of protection by credit card terms. Consider, however, the following specific points in relation to chargeback: A chargeback is a process initiated by a consumer for the purpose of obtaining a refund on a purchase made through use of a credit card. The process begins by the consumer contacting the financial institution from which they obtained their credit card. What happens next is a process used by Mastercard and Visa card issuing institutions, and American Express. The consumer lodges a complaint in relation to the transaction in question. The institution then investigates the merits of the complaint. If the institution finds the complaint is without merit, the chargeback will be declined. Otherwise, provisional credit to the value of the claim will be obtained from the vendor’s bank who then conduct their own investigation into the merits of the complaint. Again, if that institution finds the complaint is without merit, the chargeback will be declined.. Note three points. Financial institutions in these cases have unilateral power to decide a disputed ICT for a consumer, and a consumer has two chances to have their complaint unilaterally dismissed. Appealing a dismissal will throw the consumer back to litigation (discussed in the previous chapter) or arbitration (discussed in this chapter).[356]



II CURRENT NON-LITIGATION BASED REDRESS



A Credit Card Terms[357]



Description



Broadly speaking, a “credit card”[358] is a means by which a bank-level card issuer pays a vendor for goods or services on behalf of a card holder (a consumer), and the card holder is able to defer full payment of the resultant principal debt from one month to the next, by payment of a minimum percentage of that debt. Thus a payment could be made to pay part of the debt and an interest charge, and possibly some kind of government duty, in whole or in part.



Credit issued through the use of credit cards is based on four bilateral loan contracts between card issuers (bank-level issuers), card holders/consumers, vendors who are willing to accept particular cards, and the vendor's financial institution. The four contracts are between consumer and vendor, between issuer and consumer, between issuer and vendor's financial institution, and between vendor and their financial institution. Vendors provide goods or services to cardholders in accordance with prior agreements between issuers and vendors, whereby issuers agree to reimburse vendors for purchase transactions on behalf of card holders. A reimbursement of a vendor by an issuer thus amounts to a loan by the issuer to the card holder.



A hypothetical example would be where a consumer quotes their personal Mastercard number to a vendor in lieu of payment for goods offered for sale by the vendor. Assuming there are no disputes between the four parties, “Mastercard” will pay the vendor (through the vendor's financial institution), and the consumer will repay “Mastercard” through a single payment or a series of instalment payments.[359]



Credit card “terms” are the terms of use (sometimes called the “the conditions of use”), which a prospective card holder must agree to in order to become a card holder. Thus they are terms contained within the contract between the card holder and the bank-level card issuer. Such terms include the card issuer’s terms regarding transaction-security where the cards are involved in the purchase of goods. Therefore, the terms potentially amount to a method of protecting ICTs because they could provide redress for card-holding consumers in the event of non or wrong delivery of goods.



Assessment



In some cases, the inherent risks to the consumer in a transaction involving payment by credit card (through potential non/wrong-delivery of goods, for example) will be insured against by built-in transaction-security insurance provided by the issuer. The future of this scheme as a solution to ICT problems depends however on the specific transaction-security terms offered by issuers[360] in respect of individual transactions. (The content of applicable local law[361] is relevant too, but such law is independent of the topic of credit cards terms being examined here). It is thus necessary to look at the specific terms applicable to each particular transaction in question, something beyond the scope of this thesis. It is possible however to look at representative terms relating to the four major card types available,[362] and analyse them in terms of their cost, enforceability and simplicity from the perspective of the consumer.[363]



Citibank Visa



Citibank expresses its Visa card transaction-security terms in the following way:



Delivery Guarantee: If you purchase a personal item with your Citibank Credit Card and the item is never delivered, the Citibank Delivery Guarantee means you're covered for up to $10,000, for one transaction per Statement Period.



Purchase Cover: Purchase Cover provides insurance for almost all new personal items bought with your Citibank Credit Card. If any items are lost, stolen or damaged within three months of purchase, we'll arrange for them to be repaired, replaced, rebuilt, or reinstated, free of charge. It doesn't matter where in the world it happened.[364]



In respect of the Delivery Guarantee, the consumer is thus covered only for purchase transactions worth $10,000 or less (in whole, or in part, i.e. the first $10,000 worth of a transaction exceeding $10,000), but will not be covered for any secondary or subsequent non-deliveries within any Statement Period (one calendar month). There would be no coverage, under these terms, for values exceeding $10,000 relating to non-delivery, or for non-delivery of goods of any value if the non-delivery related to a second or subsequent purchase in the same month. This provides a reasonable but limited level of protection, and a consumer relying on these terms is left with limited redress under current law for non-delivery.



In respect of the Purchase Cover, there would be no cover under these terms where goods arrived in a damaged state (a form of wrong delivery) or there is a dispute between the consumer and vendor regarding delivery of the wrong type of goods.



Westpac Mastercard



With respect to the Westpac Mastercard, according to the “Safe Shopping Online” page of Mastercard International's website:



If you don't receive the goods ordered, or they are of an unacceptable quality and you have returned the goods, ask the financial institution that issued your card if it will undertake a “chargeback”. They may be willing to cancel the transaction and reverse the payment to the business.[365]



Unfortunately the cardholder could not rely on this as it does not come from an actual Mastercard issuer, and amounts to “consumer advice” only. Westpac Banking Corporation's Consumer Credit Cards Conditions of Use limits its relevant transaction-security to the following terms:



“Unauthorised transaction” means any transaction made without your knowledge or consent. [Clause 2.0 (x)]



If an unauthorised transaction is an eCommerce Transaction and we are notified that the transaction is unauthorised by the due date shown on your Card Account statement, the Account Holder will not be liable for the amount of the transaction. [Clause 11.2.3]



If you have a problem or complaint, it is your responsibility to notify us of the situation. We will aim to resolve the matter when you first contact us. If we cannot resolve your issue there and then, we will ... let you know who is handling your complaint, keep you informed of what is happening, and aim to resolve your complaint within five working days.



If you remain dissatisfied with the outcome ... you can refer your complaint to The Australian Banking Industry Ombudsman. [Clause 10.2][366]



These clauses are of no use to a cardholder in the face of non/wrong delivery, as such cases do not involve “unauthorised” use, as defined.



American Express



American Express expresses its transaction-security terms as follows:



Online Fraud Protection Guarantee: Provided you notify us immediately upon discovery of any fraudulent transactions and you have complied with your Card Conditions, you will not be held liable for any unauthorised charges.[367]



The use of the term “unauthorised” (as with Westpac Mastercard) refers to unauthorised usage of the card by a third party (after it has been lost, stolen or “borrowed”). Therefore, if a consumer uses their own card (as with Citibank Visa card holders), they will have to pay fully for transactions involving breach of contract by the vendor (such as those involving non/wrong-delivery of goods, which involve a “service dispute” between vendor and consumer only), and thus the transaction-security terms noted are inapplicable to breach of contract cases where an American Express card is used as a means of payment. In other words, where there is no fraud by an unauthorised third party, there is no transaction-security provided by the credit card terms themselves, and a “chargeback” will only be made in certain circumstances, on the decision of American Express:



If a Merchant does not provide you with the goods and services purchased by use of the Credit Card, we may at our discretion credit your Account for the amount charged. If we do so, you appoint us your attorney to pursue any rights you may have against the Merchant, in your name but at our cost.[368]



Diners Club



The relevant Diners Club terms are the Diners Club Electronic Access Conditions of Use, which expresses its transaction-security terms as follows:



We will promptly look into the [disputed] matter and decide what course of action should be followed, if your complaint is not immediately settled to the satisfaction of both of you and us ... We will advise you in writing of our procedures for the investigation and resolution of the complaint. [Clause 13(c)]



Where, as a result of our investigation, we discover that the account has been incorrectly credited or debited, we will, where appropriate, promptly adjust the account ... [Clause 13(h)][369]



A great advantage to the consumer is that the submission of a complaint to Citibank, Westpac, American Express or Diners Club and the subsequent response by those issuers in relation to the attempted purchase of goods for which there was an unremedied non/wrong delivery, is free of charge. The pursuit of a remedy is conducted entirely at the expense of the issuers.



As regards the enforceability, by the consumer, of the vendor, no direct coercion of the vendor is possible as the result of a relationship between the consumer and any card issuer. As regards the enforceability, by the consumer, of an issuer, the issuers would be contractually bound to provide the limited protections available. If it came down to a dispute between the consumer and any of the issuers, however, the consumer would probably not have a cost-effective remedy through any of the four cards if they had to sue an issuer to enforce the relevant contract due to the typical relative difference between transaction value and litigation cost. In respect of enforceability through Westpac Mastercard and American Express, the consumer is in a worse position than the Citibank Visa card holder. As noted, the clauses under those two cards are of no use to a card holder in the face of non/wrong delivery, as such cases do not involve “unauthorised” use, as defined; and are subject to the discretion of the issuer in the case of American Express and Diners Club.



Finally, the complexity of the protective qualities of the card can be evaluated. As far as this method does provide redress, it is relatively simple to contact an issuer, lodge a complaint, provide further details of the transaction in question and of the nature of the complaint, and expect them to conduct the handling of the matter from then onward. The cards all do well in terms of complexity and cost then but suffer from lack of enforceability – especially in the case of Westpac Mastercard as compared with the Citibank card, as there is nothing worth enforcing. Thus the consumer is left without any real power to obtain a remedy using any card, in the worst case scenario, for a justified complaint.



In respect of card issuers generally, there is anecdotal evidence that they are often quite willing to assist with purchase difficulties associated with the use of credit cards. This chapter however, is concerned with the relevant black letter terms which card usage is subject to, and with the actual formal redress methods in the event of serious dispute.



Conclusion



The OECD says that there are four “approaches” to consumer protection for payment cardholders in OECD Member countries, namely legal and regulatory regimes, industry practice, individual issuer initiatives and the recommendations of international organisations.[370] With respect to the first approach (the only approach with potentially serious enforcement power behind it), the OECD advises that



Not all OECD Member countries have legal or regulatory regimes covering consumer protections for payment cardholders. Further, there are great differences among those that do have these regimes. While many Member countries, for example, have specific provisions with regard to unauthorised charges and processing errors, not as many have specific provisions addressing non-delivery or non-conforming goods and services.[371]



Of those Member countries that do have such provisions, since they are national provisions, they are probably ineffective outside their own national boundaries. Hence “there may be more comprehensive protections for domestic transactions than for cross-border transactions. There are questions as to whether the [UK] Consumer Credits Act’s section on liability in cases of breach of contract or misrepresentation applies to overseas transactions”;[372] and while “in the United States cardholders doing business with merchants outside the United States are covered by the same federal legal protections as those afforded them when trading with merchants within the United States”,[373] the enforcement effectiveness of such purportedly “long arm” statutes are questionable where the only assets of merchants who are outside the US, are outside the US.[374]



An overall result of “no” for cost-effectiveness of the credit card redress method is determined as follows. As cost is not actually a factor at all in the kind of support offered to consumer card holders (i.e. card issuers charge nothing for such support), this method achieves a result of “very low” for cost. The result for the credit card method of ICT redress in terms of difficulty of enforcement, as an evaluation criterion, is not high – even using the best case scenario (Citibank). This method does not involve the coercion of the vendor party to the failed/disputed ICT, and it does not involve credit card suppliers providing complete redress for non/wrong delivery of goods. Furthermore, what redress it does offer, generally speaking, is up to the discretion of the card issuer (in the terms noted above) – which the consumer would be unlikely to want to sue upon, on economic grounds. This method, therefore, achieves a result of “very high” for difficulty of enforcement. Finally, as far as the credit card method of ICT redress does provide redress, it is relatively simple (but not without some effort) to contact a card issuer, lodge a complaint, provide further details of the transaction in question and of the nature of the complaint, and expect the card issuer to conduct the handling of the matter from then onward. This method, therefore, achieves a result of “low” for complexity. Redress of ICTs, by credit card terms, for non/wrong delivery of goods, is not cost-effective. Tabulated, the overall result for credit cards are as follows.



Methods
Cost
Difficulty of enforcement
Complexity
Cost-effective?
2 – Credit card terms
Very Low
Very High
Low
No


B Foreign lawyers



Description



Appointment of foreign lawyers (i.e. those who reside in the vendor’s country) is considered here as a means by which a consumer might respond to a non-delivery or wrong-delivery in an ICT where such response covers (mostly) all manner of negotiations with the vendor – but extending to litigation in the vendor’s country, should that be required.



In respect of retaining foreign lawyers, a lawyer in one country who wished to acquire the assistance of a lawyer in a foreign country, would probably start by enquiring through their local Law Society (or equivalent) to see if they had the contact details of the equivalent body in the relevant country – who would then be contacted for a recommendation based on various suitability criteria. Alternately, the lawyer could conduct a search for such contact details on the Internet. The first method would probably not even occur to the average consumer and, while the second method would necessarily be technically available to the Internet-using consumer, once again, it would probably not even occur to them to look for such a body. The average consumer is unlikely to know about the existence of various foreign law societies. A third method (perhaps the more likely scenario) would be for the consumer (or their local lawyer) to approach a local law firm with foreign agents or affiliates.



Assessment



Such appointments, apart from cost, language and private international law issues is potentially an excellent solution to problems associated with ICTs. Furthermore, such appointments won’t alter the fact that the ICT itself has transborder-related difficulties, but it may make the subsequent handling of the matter easier through use of the lawyer’s local knowledge and skill (e.g. it may be more effective for a lawyer in the vendor’s country to negotiate with the vendor than for the consumer’s local lawyer to attempt the same). The possibility of appointing lawyers in the country of the offending supplier might potentially reduce the complexity of such situations down to the level found in the situation facing a consumer involved in a dispute with their local supplier pursuing the usual methods of redress. Unfortunately, however, cost, language[375] and private international law issues are potentially inherent in situations involving foreign lawyers, and such issues may create serious difficulties for the average consumer. Furthermore, the mere act of finding appropriate foreign legal counsel is another potential difficulty for the average consumer in its own right, as is the issue of not just finding a lawyer in a foreign country but finding the “right” lawyer. The associated problems don’t necessarily stop there. According to Black



Consider the obstacles faced by a consumer contemplating litigation in a distant forum. That prospect entails considerable expenses for travel (both for the consumer litigator and for witnesses) and communication, expenses that are unlikely to be recouped in any award of costs. The already formidable step of retaining a lawyer is doubly daunting where the lawyer resides in a distant jurisdiction. Foreign counsel will not infrequently be retained on the consumer’s behalf by the local lawyer whom the consumer has first contacted, which means that the consumer is faced with bills from two lawyers, one of whom is an unknown quantity. And since the lawyers may have different incentives when it comes to the question of whether to settle or sue, a proceeding may be dragged out in an inefficient fashion. In addition, there will be emotional hurdles. A consumer who must litigate in a faraway forum will feel psychologically vulnerable and exposed, while the stay-at-home (corporate) party will feel correspondingly grounded and assured.[376]



Furthermore, it is through the process of attempting to retain foreign lawyers that costs could begin to accumulate.



In any event, there does remain the potential problem of cost, language and private international law issues. In the best case (but unlikely) scenario, the cost problems would be no worse than those in connection with the appointment of lawyers in the consumer’s own country of residence in a straightforward consumer redress action against a local supplier (probably expensive enough as it is). The more likely scenario is that because costs would probably be increased by distance and language issues (and possibly also by private international law issues[377]), costs are likely to be more expensive for the plaintiff consumer as compared with costs generated in a purely domestic action.



Apart from such difficulties, there may also be problems inherent within a foreign jurisdiction anyway because of local cultural peculiarities. A survey was conducted by this candidate in April 2003 of nine law firms in Brisbane and Sydney that have branch offices or affiliates outside Australia. According to one firm:



[Firm name] operates 10 Asian offices ... apart from the common law jurisdictions in Singapore, Malaysia and Hong Kong, it is difficult to operate in the civil courts in other South-East Asia countries. This is caused by inadequacies of the court structure and concern about corruption so far as judicial officers are concerned ...



In a country like Indonesia, it would be very unusual for an individual consumer to even contemplate an action in the courts, due to the expense and uncertainty of the process and a perceived bias in favour of Government or large corporations.



Our firm certainly has the capacity in each jurisdiction to engage in litigation but it is generally not recommended to clients because of the uncertainty of being able to provide a favourable outcome.[378]



In any event, even with no problems with foreign lawyers, such foreign lawyers guarantee nothing (with or without litigation). That is, the least that retention of foreign lawyers will mean, generally speaking, is expense, without any assurance of desirable results.



Assessed in terms of cost, the “foreign lawyers” redress method may be no better than litigation, and possibly even marginally worse. In other words, if the use of this method is taken to include litigation costs, the cost of this method would clearly be comparable with the cost of litigation. Furthermore, if litigation involved any extra costs for foreign lawyers, this method could be worse than straightforward litigation. If the foreign lawyer method is used without resort to actual litigation, the relative cost would be better than the cost of litigation, being exclusive of the costs of litigation.



Assessed in terms of enforceability, and continuing to assume that the foreign lawyer method is being used without resort to actual litigation, the method is not especially effective as it is basically concerned with negotiation (and the threat of litigation) and, as such, has very little actual coercive force, while retaining, arguably, a degree of psychological coercive power through the involvement of court officers.



Assessed in terms of complexity, and continuing to assume that the foreign lawyer method is being used without resort to actual litigation, the method is simple compared with actual litigation. It would be fairly straightforward, once the initial step of retaining the foreign lawyer was achieved and assuming potential language difficulties can be avoided, for the consumer to supply the foreign lawyers with whatever statement and evidence was required.



Conclusion



An overall result of “no” for the foreign lawyers redress method is calculated as follows. This method achieves a result of “acceptable” for cost; being cheaper than the cost of litigation but still expensive. This method (without litigation) does not involve actual coercive power but may have some persuasive power; its result for difficulty of enforcement is therefore “high”. Finally, the foreign lawyers method of redress for complexity results in “acceptable”. It is likely then that appointment of foreign lawyers would not be cost-effective as a means of solving problems with low-value ICTs. Tabulated, the overall result for foreign lawyers is as follows.



Methods
Cost
Difficulty of enforcement
Complexity
Cost-effective?
3 – Foreign lawyers
Acceptable
High
Acceptable
No


C Foreign public consumer protection authorities



Description



Obtaining help from “foreign public consumer protection authorities” refers to a scenario where the consumer approaches the consumer protection authorities in the country of the foreign vendor (if any) either directly or through a local consumer protection authority, hoping that their local authority has a co-operation agreement with an equivalent institution in the vendor’s country. While this is a promising development,



Enforcement agencies do not typically co-operate in support of consumers bringing actions for civil remedies ... [and] ... domestic law may pose barriers to enforcement agencies entering into co-operation agreements. For instance, the wording of domestic laws may explicitly link enforcement powers to a specific law. Depending on how narrowly these powers are drawn, this may preclude enforcement agencies from providing assistance in respect of matters which do not come within their jurisdiction.[379]



In 2002, APEC (Asia-Pacific Economic Cooperation) countries with co-operation agreements were Australia, China, Japan, Korea, Mexico, New Zealand, Russia and the United States of America.[380] The possibility is that regardless of how proceedings were initiated the authority in the vendor’s country may act to seek redress from the vendor on behalf of the consumer.



Assessment



Depending on the exact nature of the powers held by such bodies, they are likely to be in no better position than the consumer’s local authority to resolve the problem. The Australian authority for example – the Australian Competition and Consumer Commission (ACCC) – may act against a local offender at the request of a foreign consumer in relation to serious offences (not low-value ICTs), usually referring problems with ICTs to “econsumer.gov”.



The econsumer.gov website (launched in April 2001) collects into a single place a collection of information resources. A consumer facing a stubborn vendor in a foreign jurisdiction however, would be hard-pressed to find anything in there which would lead to a cost-effective enforceable remedy. The “remedy” options there are not practically helpful. For example, the site allows consumers to “report your complaint” but advises that “you should not necessarily expect any country to pursue your complaint on your behalf”[381] and suggests “ways to resolve your complaint”, but these are limited to “links [that] may offer a quick and inexpensive way for you to resolve your complaint without having to initiate a formal legal action”. An example of this is a link to information about Alternative/Online Dispute Resolution (ADR/ODR), an ultimately unenforceable option in the vast majority of cases, and depending for success on the benevolence (or otherwise) of the vendor. The website, while better than nothing, amounts to little more than an exercise in consumer education, plus a complaints registry which guarantees nothing at all (although, as indicated by Michael Donohue, OECD's Consumer Policy Analyst then responsible for the OECD Guidelines, in a personal interview in June 2003, it may be too early to criticise such efforts, as no trend data is available yet). As of late 2005 such trend data is still unavailable although it is being collected.



The ACCC is also a member of the International Consumer Protection and Enforcement Protection Network (ICPEN), which is



a membership organisation consisting of the trade practices law enforcement authorities from more than two dozen countries. The mandate of the Network is to share information about cross-border commercial activities that may affect consumer interests, and to encourage international cooperation among law enforcement agencies.[382]



Bodies like the ACCC and its equivalents in other countries, “econsumer.gov” and “ICPEN” appear to have a long way to go to provide dependable and cost-effective remedies for low-value ICTs.



Assessed by the cost criterion, the “foreign public consumer protection authorities” redress method is excellent as it is normally completely free of charge, all costs of pursuing a remedy being borne by the public authority. This, however, is a generalisation, a full survey of public consumer protection authorities around the world being beyond the scope of this thesis. Typically however, such public authorities provide complaint handling and investigation without charge to members of the public. The only cost involved for the consumer would be the incidental costs (if any) of submitting complaints with copies or originals of relevant evidence.



Assessed in terms of enforceability, the method is not especially effective. As noted above, the ACCC, for example, may act against a local offender at the request of a foreign consumer in relation to offences other than low-value ICTs, usually referring problems with ICTs to “econsumer.gov” which, itself, is likely to refer such matters onwards to ODR providers. In the best case scenario, however, where the public authority decided, for example, to take on an offender in order to set an example, it could conceivably litigate. In that case, costs would be low (being borne by the authority), and the enforceability would be as high as the foreign enforcement powers would allow – and as effective as they could be, given the amount of assets of the vendor remaining in the jurisdiction. “Taking on an offender in order to set an example” would, however, occur only in exceptional circumstances and would not be available to consumers as of right.



Assessed in terms of complexity, the method would be comparatively simple. It would be fairly straightforward, once the initial step of locating the foreign authority was achieved (assuming language issues, if present, were not insurmountable) for the consumer to supply that authority with whatever statement and evidence was required.



Conclusion



An overall result of “no” for the “foreign public consumer protection authorities” redress method is calculated as follows. This method achieves a result of “low” for cost: quite cheap but still not without some expense. This method does not normally involve actual coercive power but may have a little persuasive power; its result for difficulty of enforcement is therefore “very high”. Finally, the method, for complexity, results in an “acceptable”. It is likely then that the “foreign public consumer protection authorities” redress method would not be cost-effective as a means of solving problems with low-value ICTs. Tabulated, the overall result for foreign lawyers is as follows.



Methods
Cost
Difficulty of enforcement
Complexity
Cost-effective?
4 – Foreign public consumer protection authorities
Low
Very High
Acceptable
No


D ADR/ODR, Arbitration, IBCDRSs



This section is an assessment of the cost-effectiveness of the following ICT redress methods: ADR/ODR, arbitration and industry-based consumer dispute resolution schemes (IBCDRSs).



1 ADR/ODR



Description



ADR (alternative dispute resolution)[383] is a broad term for a range of methods by which dispute resolution is attempted without resort to litigation and thus without direct appeal to judicial enforcement powers.



As a preliminary point it should be noted here that ODR ( online dispute resolution, or online ADR) is not substantially different to ADR; it is merely a technological means of facilitating ADR by allowing some/all efforts by parties to ADR to be made online instead of face-to-face. Also, ICTs, being international in nature, will necessarily require the ODR variant of ADR rather than traditional ADR: rational disputants to low value ICTs, being in separate countries, will not normally physically travel across international boundaries to attempt to settle.



ADR may or may not entail the involvement of a neutral third party, but usually will do so. ADR has also been defined as



The decision making process by which matters are resolved outside the usual court-based litigation model. The aim of ADR is to encourage parties in conflict to arrive at compromise solutions with the assistance of a neutral person. ADR includes processes such as assisted negotiation, expert appraisal, mediation, conciliation, evaluation, and arbitration.[384]



When a third party is involved in ADR, they can bring varying degrees of expertise to the process, they can have varying degrees of involvement in the process, and their final opinion may be more or less “binding”[385] on the parties, depending on the rules and standards applicable in each case. Other terms, such as “mediation”, “conciliation”, “negotiation”, etc., are understood here as forms of ADR, although it can be noted that the spectrum of third-party involvement, from lesser to greater, arguably runs: negotiation, mediation, conciliation, arbitration.



The OECD's paper on ADR commences with a useful summary of the topic, starting with ways of avoiding the need to resort to ADR in the first place: complain to the vendor, get your credit card issuer to help, contact your local consumer protection agency. [386] Specifically, the paper says that “usually, the best first step is to contact the business directly. Businesses often have excellent complaint handling systems that will help solve your problem quickly and efficiently”.[387] This is reasonable advice but it will not help the consumer if the consumer wishes or needs to pursue a matter with an uncooperative foreign vendor. The paper then suggests that “if you paid for goods or services using a credit or debit card ... read your payment card statements for information on contesting charges” (see section above, on Credit Card Terms, as regards the effectiveness of this), and further recommends that the consumer could “check with your local consumer protection agency to see whether any special protections apply in your country”.[388] Local consumer protection agencies however, will almost certainly have very limited leverage against foreign vendors.



The paper then states “online ADR involves a process through which you can contact an ADR provider,[389] file your complaint online, have the other party respond online, and resolve the entire dispute from the comfort of your own home with no need to travel at minimal cost”, but urges consumers to “check with your local consumer protection agency to see if ‘mandatory’ or ‘binding’ ADR clauses are legal in your country”.[390] In other words, if a consumer has agreed to a clause in the relevant contract that he/she cannot go to court either without having gone through ADR first, or at all, or the “rulings” which may result from ADR are “final”, and the consumer’s local law either allows that, or prohibits it, the consumer should be aware of that – it could make an important difference. For example, the vendor may be trying to mislead the consumer into believing the consumer is bound by a certain provision, where that may not be the case because of local law.



As regards the methods of ADR providers and the effectiveness of such methods, consider the well-known example of “SquareTrade”.



SquareTrade's methodology is simple. Any buyer or seller with a complaint contacts SquareTrade and files a complaint. They are asked certain questions about the nature of their dispute, and common solutions to frequent dispute types are presented to the complainant along with an inquiry into whether the complainant would be amenable to any of the suggested resolutions. Then the other party to the dispute is contacted and provided with some information about the nature of the SquareTrade process. They, too, are presented with some common resolutions and asked if they would be amenable to any of the resolutions. If each side selects the same suggested resolution, the SquareTrade system recommends that the parties resolve the dispute in that manner.



If an agreed-upon resolution is not forthcoming, the two parties are put into a negotiation environment where they can discuss their problem without the assistance of a mediator. This environment is made available to the parties at no cost. If the parties cannot reach agreement on their own in the negotiation environment, they can request the assistance of a mediator for a nominal fee. If a mediator is brought in, the mediator then works with the parties to resolve the issue at hand. If they are unable to resolve the dispute, then the mediator can make a suggestion to the parties as to how they think the dispute should be resolved, in sort of an expert evaluation role. However, the suggestion is not binding.[391]



The absence of compulsion/enforceability in every stage of this process is self-evident.



Assessment



There are some potential advantages and disadvantages of ADR. ADR can offer cost advantages: it is currently expensive to litigate internationally (see chapter three), especially since there are no guaranteed outcomes, and a means of achieving the same result at relatively low cost could be extremely beneficial. A potential problem with ADR, however, is that there can be irremediable “service” (vendor unresponsiveness to calls to attend ADR) and “enforcement” problems. While this criticism can also be true of international litigation, enforcement is potentially a far more serious problem with ADR as it all depends upon the cooperation of the parties involved, even where “binding” ADR clauses are present in an ICT. If a potential “defendant” in a transnational ADR matter simply chooses to ignore the ADR equivalent of “service of process” or “judgment”, there is little the ADR provider could do about it, even if mandatory or binding ADR clauses are legal in the country of whichever party has the decision against them, apart from recommending litigation to the “plaintiff” (should they succeed).



In respect of judgement, the OECD paper states that where mediation is used “it's up to you and the other party to reach an agreement”.[392] This advice will be of little help to a consumer with a legitimate grievance in the face of an unrepentant vendor beyond the reach of a body with real enforcement power.



The OECD concludes that “if you have tried ADR unsuccessfully ... your last resort may be legal action”.[393] Thus the OECD recommends that the consumer avoids ADR if they can,[394] but if the consumer must resort to ADR that ADR does not guarantee a remedy and aggrieved consumers may still have to resort to litigation eventually to pursue their claims.[395]



This raises the following argument: if a consumer believes there is any chance at all of wasting their energy, time and money by fruitlessly pursuing their claim through ADR (either because no satisfactory decision will be reached, or because a good decision can be reached but the merchant won’t comply with it, thereby requiring litigation anyway to obtain enforcement), then omitting ADR and going straight to court must be better. This requires a consideration of two further issues. Firstly, when is there a chance of a consumer wasting their energy, time and money by fruitlessly pursuing their claim through ADR? Secondly, are there any further advantages to ADR (other than the cost advantage already noted above) which will more-strongly justifying a consumer taking a chance and risking it?



Regarding the first question, there could be many indications that the character of the foreign online merchant is such that ADR could be risked. The merchant could in fact have a good consumer relations reputation. The merchant could have a convincing consumer disputes policy that suggests they wish to maintain a good public reputation and therefore they will take ADR seriously in a manner sympathetic to the reasonable claims of consumers. They could be a well-known brand-name and wish to avoid adverse publicity even if it costs them something to buy “good PR”. The amount at issue could be trivial or non-trivial and ADR is therefore simply worthwhile (depending on the subjective perceptions of the consumer). Therefore, the consumer may decide that they would be wasting their time on ADR if any or all of these factors are either objectively absent, or absent because the consumer may feel the merchant either just won’t come to ADR,[396] won’t take it seriously or won’t abide by the decisions made there. This imputes non-rational motives to consumers, but consumers (humans) are motivated in such ways.



The second question was whether there any further advantages to ADR (other than potential cost advantages) which will more-strongly justify a consumer taking a chance and attempting ADR before resorting to international litigation. Twelve potential extra (but overlapping) advantages of the ODR variant of ADR for consumers (over international litigation) noted by Rule[397] may be summarised as follows:

  1. Speed: Scheduling meetings and planning for travel and finding space are not necessary to convening and beginning an online process. A virtual meeting room can be opened instantaneously and a neutral can be engaged from anywhere around the world.
  2. Asynchronous interaction: Online participants have the possibility of asynchronous (non-simultaneous) interaction where their response is not expected immediately. Disputants can defer their response until after they've had time to consult or just contemplate the situation.
  3. Power differentials: People in relationships based on past/present power differentials (e.g. expert trader and consumer) can communicate on a more-level playing field when online communication options are engaged.
  4. Research: In an ODR process it’s a simple matter for participants to conduct research in the middle of the process.
  5. Cooling distance: As compared to face-to-face communications, ODR is less likely to escalate to accusations, name calling and violence.
  6. More-reflective communication: In written communications people have a tendency to explain why they are saying what they're saying, whereas in face-to-face communications people often just state their position and cross their arms, refusing to elaborate further.
  7. Self-disclosure – Race, Sex, and Age: Different people are biased by different things. Some people are biased by race, others by age or gender, etc., but on the Internet no-one knows who you are.
  8. Anonymous communication: Applicable to ICTs if the consumer has not already disclosed their identity in the contractual formation stage.
  9. Convenience: In face-to-face communications there is usually a “convening penalty” consisting of the time, money and energy required to merely get the parties to sit down at the table. With ODR, this is almost eliminated.
  10. Access to better neutrals with more subject-area expertise: An advantage of ODR is that geography, schedule, and expertise are no longer major concerns. The parties can choose any neutral they like to help them resolve their dispute, regardless of where that neutral is in the world, their time zone, or even their other commitments.
  11. Text-based communication: Text-based communication has the advantage that people are forced to translate their preferences into text from the beginning of the process. When the time comes to draft an agreement, the mediator can lift actual language from past postings to ensure that the parties will approve of the phrasing.
  12. Efficient automated negotiation processes: When online, an automated tool such as blind-bidding software[398] can be used, when the parties reach that particular stage, in order to more efficiently find the amount in question, without the time-consuming back and forth negotiation that characterizes most procedures where one side and then the other make monetary bids in an attempt to agree on an acceptable number.

To that list one further potential advantage could be added:



  1. No actual law need be involved: In ODR the legal location of the dispute doesn't matter because the resolution is crafted based on either the preferences of the parties [e.g. an industry code of conduct] or some other standard administered by an arbitrator. It's not necessary to get legal counsel in the other country, because the decision isn't going to be based on the law.[399]

The question arises now as to whether any of these “extra advantages” guarantee (or at least more-strongly justify) an acceptable outcome for an average consumer involved with an ICT, such that ODR should be used instead of international litigation and, making the cost of ODR worthwhile.



“Asynchronous interaction”, “research” and “more-reflective communication” are arguably a single advantage type being so related. That is, it is asynchronous interaction which makes research and more-reflective communication possible. Of the “twelve” (apart from “anonymous communication” which may be inapplicable to ICTs, and where “access to better neutrals” may be improbable due to the implication that “any neutral they like” will always be willing and available), they are probably all highly attractive to a consumer, in theory, especially where the alternative is international litigation. The final advantage noted by Rule (“no actual law need be involved”), would appear quite attractive because it means the problems with national legal systems could just be ignored. Reconsider the nature of those problems:



The law surrounding these transboundary transactions is complex. Just figuring out which law applies to a transaction can cost a lot of money. Getting legal representation or even just advice from another country can be frustrating and expensive. Legal systems don't really know how to handle disputes that straddle borders very well. Paying lawyers to put the time into figuring it all out really doesn't make that much sense, especially if the transaction is less than a couple of thousand dollars.[400]



At this point, ODR sounds like an appealing alternative means of redress for consumers involved with ICTs. This would be even more true if the cost of ODR were cheap relative to any particular amount in dispute. Rule says that



Online dispute resolution is still a very new phenomenon, so there is a lot of confusion about how ODR services should be priced ...



While pricing models vary between ODR providers, there are some common trends. In auction or e-commerce disputes there is usually a one-time filing fee paid by the initiator of the case. This filing fee is usually between $15 and $25, depending on which site the case came from and the value of the dispute. This filing fee is often not enough to even pay the mediator for the services rendered.



If the rates are too high for these low-end services then the parties will never elect to use them. B2C e-commerce disputes are frequently worth less than $500, and many of them are between $50 and $75 ...



It might make more sense in the long run to require the [vendor] website to pay up front for dispute resolution services ...



... the confusion over how best to price ODR services will likely continue for some time.[401]



If this view is accepted, cost is not necessarily an automatic disincentive to ODR for ICTs. If the amount in dispute is low enough, then an inability to find ODR at a cheap enough price will not be a major problem as the highest loss in the event of no resolution is not all that high to begin with. Likewise, as the amount in dispute climbs, the chance of finding cheap enough ODR climbs also. As regards “requiring” websites to pay for ODR services up front – presumably this could result from law requiring this as an express obligation of merchants who are parties to ICTs (and this could provide a desirable overall stimulus to international B2C e-commerce, of benefit to all ) – the question arises as to which current law or law-maker could be capable of requiring this in respect of ICTs. In any event, this is not a major problem for consumers at present. Therefore, cost is not currently an automatic disincentive to ODR for ICTs.



There is a question about the success rates of ODR-type schemes, that is, about whether they suggest cost-effectiveness as compared to international litigation for ICTs. Unsurprisingly, there appears to be no data on the success-rates of international litigation for low value ICTs (no doubt because of the inherent difficulties), but there is some data suggestive of how successful ODR-type schemes for low value ICTs might be:



For 1989/1990, the Queensland Consumer Affairs Bureau reported results [for ADR] as follows: 38.1 per cent full redress; 15.4 per cent partial redress and 22.3 per cent incapable of resolution. For 1990/1991, the same bureau reported that less than 17 per cent of complaints were not satisfactorily resolved, and a further proportion of those achieved satisfactory results in Small Claims Tribunal hearings. Other States report similar high success rates.[402]



It is up to the consumer however, as to whether such data shows ODR-type schemes for ICTs would be worth the risk in terms of time, effort and monetary cost. Likewise with the following data:



The United States Postal Service, which has one of the most sophisticated and widely used employment ADR programs in the federal government, found that 81 percent of mediated cases are eventually closed without a formal complaint being filed. Satisfaction was also extremely high, with exit surveys completed anonymously by 26,000 participants indicating that 88 percent of employees are highly satisfied or satisfied with the amount of control, respect, and fairness in the ADR process ...



The Air Force also found ADR very effective in the government contracts area, where it used ADR in more than 100 cases, of which more than 93 percent have settled.[403]



Such results are encouraging but a fundamental problem remains. Effective redress for low value ICTs is not available from ADR/ODR. ODR is conducted without the possibility of appeal to judicial enforcement powers: stubborn merchants can simply ignore “binding” decisions of ODR-provider. Harris says of “private mediation services” that “in relation to consumer disputes, the service is of limited value as it is dependent upon the amenability of the respondent to the process”;[404] in respect of “community justice centres” she says that “one weakness of this service as an effective dispute mechanism is its inability to ensure compliance, because any agreement reached in mediation is not enforceable in any court”;[405] and in respect of “consumer affairs bureaux” she says that “the agencies do not have power to enforce an agreement reached through intervention”.[406]



At best then, ADR/ODR can be seen as a valuable contribution to the range of options available to consumers, with merely some probability of providing a successful outcome for them in the event of a favourable decision, remembering that consumers seek more than just a decision, however favourable.



It is said that there can be ADR/ODR with “binding” decisions. Without judicial enforcement powers (powers of compulsion using the enforcement apparatus of the state), the best that an ODR-provider can do for a consumer is to provide a favourable decision which would result in an actual valid binding enforceable contract between the consumer and the merchant[407] (or, perhaps place some sort of cyberspace authority, such as ICANN,[408] in a position where the merchant could be disciplined or punished somehow). So the question arises as to whether a favourable ODR decision, which results in an enforceable contract, would amount to a real victory for the consumer. Put this way, the answer should be obvious: absolutely not. Courts around the world hear hundreds of contract disputes daily. The mere existence of a valid binding contract (resulting from ODR) is the best the consumer may have,[409] there being no guarantee at all that parties to such contracts will comply with them. Therefore, there will always be recalcitrant online merchants who simply will not comply with the “binding” decisions of ODR-providers. In fact the mere presence of a merchant in a situation which could warrant the use of ADR/ODR, could mean that the merchant will not honour the decision of the ODR-provider anyway. Having gone through the difficulties of ODR, the consumer would then have to start again – but this time through the international litigation route.



There is also an issue about “cyberspace authorities” like ICANN.



One of the biggest challenges of ODR is its enforceability. Sometimes enforceability in ODR is readily achievable. ICANN is an excellent example of this. When a panellist in a UDRP process transfers a domain name, ICANN can easily enforce that decision because they have absolute control over the database that assigns domain names to their owners. In B2C e-commerce disputes, this type of absolute enforceability is not possible. If [for example] a product is shipped to a purchaser and the wrong amount of money is charged, the shipper [or the ODR-provider] cannot compel the purchaser to return the item or to pay more money.[410]



This is an example of the self-regulatory regime of so-called “code” (software controls) as the libertarian regulator of cyberspace proposed by Lessig. Unlike realspace where the state tries to convince citizens to adopt norms of behaviour (obey the law), in cyberspace because of the unavoidability of “code”, the state doesn't need to “convince” anyone of anything: it’s either obey or stay out; there simply won't be any opportunity to do otherwise.[411] Such code may seem to regulate Internet presence (existence and activity within cyberspace), but simply will not regulate subsequent offline contractual performance of Internet retailers in realspace. Furthermore, stand-alone retail websites cannot be regulated by network “code” in the same way that ISPs (Internet service providers) can regulate their “chat room” subscribers, for example.



Thus it would appear that none of those “extra advantages” of ADR would guarantee an acceptable outcome for an average consumer involved with an ICT, such that ODR should be used instead of international litigation. At this point then, the two alternatives are the problems of decisions made through ODR potentially being truly enforceable only through subsequent litigation, or the problems of international litigation as they currently stand.



Assessed in terms of cost, the ADR/ODR redress method would be better than litigation: cheaper but still not without cost as ODR is run by private for-profit organisations. Assessed in terms of enforceability, the method is not especially effective as it is basically concerned with mediation and the potential threat of litigation and, as such, has no actual coercive force. Assessed in terms of complexity, the method is more simple than litigation. It would be relatively straightforward, in many cases, for the consumer to supply the ODR service provider with whatever statements and evidence was required but to properly prepare for ODR (as indicated by Rule) could involve almost as much time and effort as preparation for litigation.



Conclusion



The question arises now as to whether cost-effective redress for low value ICTs is available from ADR/ODR. ADR/ODR can be a valuable contribution to the range of options available to international consumers, but with only some probability of providing a successful outcome for them in the event of a favourable decision concerning a disputed ICT. That would not be good enough. That is, for an average consumer who had paid for goods from a foreign source that were delivered but were not what was actually ordered, who had evidence to prove their case and whose only option was ODR, ODR would not be good enough.



The effectiveness of ADR/ODR in the future depends, to some extent, on increased cost advantages but, primarily, upon an improvement in enforcement powers. The prospects for this, however, seem unlikely.



An overall result for the ADR/ODR redress method is determined as follows. This method achieves a result of “acceptable” for cost: cheaper than litigation but still not cheap. This method does not involve actual coercive power but has some persuasive power; its result for difficulty of enforcement is therefore “high”. Finally, the result for complexity is “high”: to properly prepare for ODR (as indicated by Rule) could involve almost as much time and effort as preparation for litigation. ADR/ODR is not cost-effective as a means of solving problems with low-value ICTs. Tabulated, the overall result for the ADR/ODR redress method is as follows.



Methods
Cost
Difficulty of enforcement
Complexity
Cost-effective?
5 – ADR/ODR
Acceptable
High
High
No


2 Arbitration



Description



The term “arbitration” can possess at least two distinct meanings: “the system of determining disputes by a private tribunal constituted for that purpose by the agreement of the disputants”[412] with non-binding decisions because tribunals do not exercise judicial power; or “the system of permanent public arbitral tribunals constituted not by the choice of the parties but by public authority”,[413] not empowered to make binding decisions and not bound to administer the rules of evidence strictly. It is the first meaning which is of interest here as the public variety is inapplicable to ICTs.



Noting that the dictionary definition of “arbitration” alludes to the idea of a difference between public and private tribunals, “tribunal” has been defined as:



A person or body of persons, other than a court ... who is required by law to act in a judicial manner to the extent of observing one or more of the rules of procedural fairness in arriving at decisions: for example, Administrative Law Act (1978) s2 (State of Victoria, Australia) ... an [Executive/quasi-Judicial] body which usually reviews “administrative” action ... a tribunal may not exercise the judicial power of the Commonwealth (that is, make enforceable determinations of legal rights and obligations) due to the doctrine of separation of powers.[414]



That is taken here to be a definition of public tribunals. Having a definition of public tribunals assists with distinguishing between public and private tribunals.



A private tribunal might thus be defined as a person or body of persons, usually with a commercial interest, empowered by agreement between private disputants to act on an ad hoc basis for the purpose of dispute resolution, and which is required to act in a judicial manner to the extent of observing one or more rules of procedural fairness in arriving at decisions, but without judicial power to make enforceable determinations of legal rights and obligations.



The major distinction then between the two types of tribunal is that in the former (public) case the body is permanently established by a government mostly to review the decisions of the Executive branch of that government, while the latter is either established by request of the parties to a private contractual dispute, or is resorted to by them, to resolve a private contractual dispute. Thus there are some fundamental similarities (aims, methods and absence of enforcement powers) and some fundamental differences (motivation, identity of the clients and permanency) between public and private tribunals. Further, the activities of the former are governed by Administrative Law, while the latter may be governed by the rules of procedural fairness and the Law of Contract.



In considering the relationship between “ADR” and “private tribunals,” a private tribunal could correspond to a process by which ADR could be achieved (e.g. “unenforceable dispute resolution involving a neutral third party, observing rules of procedural fairness ...”); a private tribunal could correspond to a type of ADR (e.g. mediation, conciliation); and both “ADR” and “private tribunals” can exist for the same purpose (dispute resolution). “Private tribunal” may also be understood as a name for one type of commercial ADR-provider. Consequently there is much overlap between the two terms (and thus between the terms “ADR” and “arbitration” as used here), but they are not interchangeable terms and therefore each must be used deliberately and precisely.



Assessment



Assessed in terms of cost, the arbitration redress method is better than litigation but still not without monetary cost. It would, generally speaking in relation to matters like low value ICTs, be conducted by commercial dispute resolution providers[415] and thus would involve no court costs and fewer (legal or other advisory) fees as compared with litigation. Assessed in terms of enforceability, the method is not especially effective as it is basically concerned with negotiation (and, in some cases, the threat of litigation through binding outcomes) and, as such, has very little actual coercive force, while retaining, arguably, a degree of psychological coercive power through the involvement of potentially binding court–like procedures.



Assessed in terms of complexity, the method is comparatively simple as compared with litigation. It would be relatively straightforward, in many cases, for the consumer to supply the arbitration service provider with whatever statements and evidence was required, but to properly prepare for arbitration could involve almost as much time and effort as preparation for litigation.



Conclusion



The arbitration redress method may now be given an overall result. For cost, the method achieves a result of “acceptable”; cheaper than litigation but still not cheap.[416] As this method does not involve judicial power but would have some persuasive power; its result for difficulty of enforcement is therefore an “acceptable”. Finally, the method’s result for complexity is “high”; arbitration would not be as simple as, for example, the credit card redress method. Arbitration is therefore not cost-effective as a means of solving problems with low-value ICTs. Tabulated, the overall result for arbitration is as follows.



Methods
Cost
Difficulty of enforcement
Complexity
Cost-effective?
6 – Arbitration
Acceptable
Acceptable
High
No


3 Industry-based consumer dispute resolution schemes



Description



An “industry-based consumer dispute resolution scheme” is understood here to mean a form of tribunal in the sense that it has been established as a tribunal in relation to any particular industry sector (e.g. telecommunications, banking, finance, insurance, timeshare holiday ownership, etc.), primarily with respect to the hearing of complaints against such bodies by private consumers. Such schemes seem to be positioned roughly mid-way along a continuum between public and private tribunals because they can exhibit some of the properties of both, but are probably positioned closer to the private end of that continuum because of the involvement with private consumers. An industry-based consumer dispute resolution scheme could therefore simply qualify as a variety of ADR scheme, or they could perhaps be understood as a “dedicated” ADR scheme.



Assessment



In any event, whether “ADR” or “tribunal”, from the perspective of ICTs, an industry-based consumer dispute resolution scheme suffers the same major weakness of both: lack of enforceability.



Assessed by the cost criterion, the industry-based consumer dispute resolution scheme redress method is far better than litigation and better even than the arbitration method as the “tribunals” involved are already established and are likely to be not-for-profit organisations. It would, generally speaking, involve no court costs and fewer (legal or other advisory) fees as compared with litigation. Assessed by the enforceability criterion, the method is not especially effective as it is basically concerned with negotiation (and, in some cases, the threat of litigation through binding outcomes) and, as such, has very little actual coercive force, while retaining, a degree of psychological coercive power through the involvement of court–like procedures. It may however, have less psychological coercive power than arbitration as, being industry based, it may be seen by the “losing” vendor as being more-protective of itself as an industry member (positive bias). Alternately, an industry-based consumer dispute resolution scheme may have more psychological coercive power over a losing vendor as the industry-based consumer dispute resolution scheme may wish to preserve the public image of its industry and treat its own industry members quite strictly (negative bias).



Assessed by the simplicity criterion, the method is comparatively simple. Supplying an industry-based consumer dispute resolution scheme with information would be simple, although it could involve almost as much time and effort as preparation for litigation.



Conclusion



An overall result for this redress method is as follows. This method achieves a result of “low” for cost; cheaper than litigation and possibly cheaper than arbitration also. This method does not involve actual coercive power but probably has some persuasive power; its result for degree of enforcement is therefore “high”. Finally, the complexity result for this method is “high”. Therefore industry-based consumer dispute resolution schemes are not cost-effective as a means of solving problems with low-value ICTs. Tabulated, the overall result for industry-based consumer dispute resolution schemes is as follows.



Methods
Cost
Difficulty of enforcement
Complexity
Cost-effective?
7 – Industry-based consumer dispute resolution schemes
Low
High
High
No


E Industry codes of conduct[417]



Description



As already noted, industry codes of conduct – also known as “voluntary codes of practice” – are bodies of rules which purport to regulate industries from within[418] in the sense that an industry establishes its own rules, rather than having them imposed from outside by a government.



The codes are the basis of industry self-regulation and, while they do come in a “statutory” variety, the non-statutory variety is the norm. An example of the former, in Australia, is the Franchising Code of Conduct, found in the Trade Practices (Industry Codes – Franchising) Regulations 1998 (Commonwealth). Statutory codes, however, are by far the exception to the general rule – that codes of conduct are non-governmental in origin – and, in any event, they still form part of national law, normally having no applicability to ICTs except in the unlikely event that a relevant code – if one could be found – was agreed upon through a contractual choice of law clause.



Assessment



Non-statutory codes of practice are voluntary codes enforced by trade associations and the like. Whilst these codes are to be commended and encouraged, they only apply (so far) to country of location and not to transborder transactions, and they set up industry and suppliers as judges in their own cause (they are also unsupported by state-backed sanctions). One can more-readily imagine, for example, bias or undue sympathy to industry members being a problem in the event of complaint by consumers, in respect of non-statutory codes being applied.



The Internet-using business community has a clear incentive to help establish an environment which gives consumers the confidence to consume, and vendors who voluntarily complied with a code of conduct could encourage such confidence by displaying a kind of trust mark (defined below) – to indicate the availability of such features as mediation of minor disputes, the provision of various kinds of consumer information (such as the identity and location of vendors, refund policy, relevant law, delivery costs and times, and information about the relevant goods) – but, as with the trust marks issues examined later, the mere possession of a trust mark does not solve the potential problem that a supplier may operate as a judge in their own cause. There is no state-backed adjudication and enforcement mechanism in relation to industry codes generally and the consumer is still ultimately at the mercy of the vendor in the event of dispute or, at best, the best efforts of a sympathetic industry association.



There has been a recent attempt to improve this situation, but it serves only to reinforce the criticism. In mid-2003, the Australian Competition and Consumer Commission (ACCC) introduced a system of endorsement for “high quality” industry codes of conduct, which would be hard to obtain, easy to lose, and provide the consumer “with some reassurance that the business they are dealing with operates in a fair, ethical and lawful manner”.[419] This measure was described by the ACCC’s chairman as “co-regulation” – being a mid-point between self-regulation and heavy handed regulation by government – which contains an implied admission that self-regulation is less than completely effective. It also raises, perhaps, the more fundamental issues as to how effective such endorsement would be for foreign online consumers who know nothing of such national bodies, and of what help dis-endorsement would be after a failed ICT.



Furthermore, it will be the code of conduct – of either statutory or non-statutory variety – of the vendor’s country that may apply, which means the consumer would still be reliant on accessing a foreign quasi-judicial system, thus raising the problems noted in the section on foreign public consumer protection authorities, above. Industry self-regulation through codes of practice therefore appears to be only a minor means of consumer redress for failed ICTs.



Assessed by the cost criterion, a great advantage of the (non-statutory) industry codes of conduct redress method (as with some other methods), is that the potential redress is provided to the consumer completely free of charge. Assessed by the enforceability criterion however, the method is completely ineffective in respect of post-transaction problems with ICTs: the method has no coercive force at all and a minimum of persuasive force. Assessed by the complexity criterion, the method is comparatively uncomplicated (as compared with litigation). It would be relatively straightforward, in most cases, for the consumer to supply the body administering the code with whatever was required, but to properly prepare for could involve almost as much time and effort as preparation for litigation.



Conclusion



The overall result for the industry codes of conduct redress method is as follows. This method achieves a result of “very low” for cost. It does not involve actual coercive power but may have some persuasive power, its result for difficulty of enforcement is therefore “very high”. Finally, for complexity, the method is “acceptable”. Industry codes of conduct would not be cost-effective as a means of solving problems with low-value ICTs. Tabulated, the overall result is as follows.



Methods
Cost
Difficulty of enforcement
Complexity
Cost-effective?
8 – Industry codes of conduct
Very Low
Very High
Acceptable
No


F Escrow Services



Description



Escrow services refer to circumstances where, for a fee, a consumer’s payment to a vendor is withheld by a neutral third party until goods are delivered to the consumer’s approval. A typical escrow service, Escrow.com, describes the system as follows:



Escrow.com reduces the potential risk of fraud by acting as a trusted third party that collects, holds and disburses funds according to Buyer and Seller instructions. Escrow services are provided by a licensed and regulated escrow agent.



Escrow is well-suited for items purchased on auction sites, automobiles, motorcycles, domain names, jewellery, specialized computer equipment, and other high-ticket items.



Buyers receive and inspect the merchandise before the Seller is paid.



Sellers receive their money if the Buyer accepts the merchandise. [420]



Put as simply as that, escrow services appear to represent a simple and complete solution to problems associated with ICTs. A consumer can simply avoid them altogether by using a trusted third party to hold off delivery of payment to the vendor until the consumer is happy.



Assessment



Unfortunately, however, there are potential problems (both objective and subjective), including the following:

  1. Basic cost: Escrow.com charges a minimum of US$25, a relatively high price to pay in the context of many low value ICTs.[421]
  2. Complexity in the form of negotiations between vendor and consumer as to who will pay what costs, which will simply be unacceptable for many consumers engaging in low value ICTs who still desire to purchase internationally.[422] There is also potentially much complexity in the form of multiple party dispute resolution.
  3. Inapplicability: some escrow services may not cover international sales/purchases.
  4. Unavailability: there may not be enough suitable escrow service providers available globally (and vendors/consumers may prefer such providers to operate in specific countries).
  5. Consumer resistance: consumers may resist handing over money to unknown third parties because of trust or reputation issues.
  6. Consumer naivety: consumers may simply forget to use an escrow service and be left with the need for a remedy which is then unavailable (too late).[423]
  7. Vendor resistance to consumer payment being held by foreign escrow service provider (due to anticipated transborder problems in the event of litigation).
  8. Fraud: there is a considerable risk of fraud from the many fake escrow sites on the Internet.[424]
  9. Instability: escrow service providers are private organisations and may come in and out of existence at any time. Thus such a service could go into liquidation while holding a consumer’s payment before delivery of the goods.

Escrow systems, especially if they remain unregulated, do little to significantly improve the cost-effectiveness from a consumer’s perspective of low value ICTs.



Assessed by the cost criterion, the escrow redress method is not nearly as expensive as litigation but still involves monetary cost, unlike some other methods, especially so relative to lower value ICTs. Assessed by the enforceability criterion, the method is relatively effective as it will generally be a case of payment not being handed over without a satisfactory inspection by the consumer, beforehand. Due to all the negative factors listed above (except basic cost) however, this method does not achieve a perfect result for difficulty of enforcement. Assessed by the complexity criterion, the escrow method has some problems in relation to the complexity, inapplicability, unavailability and instability factors mentioned above, which can all serve to complicate use of this method for a consumer.



Conclusion



The overall result for the escrow redress method then, is as follows. This method achieves an “acceptable” for cost; cheaper than litigation but still not cheap. This method does not normally need the involvement of coercive power (unless coercion of the escrow service itself is required); its result for difficulty of enforcement is therefore “low”. Finally, the method achieves a “high” for complexity. It is likely then escrow services would not be cost-effective as a means of solving problems with low-value ICTs. Tabulated, the overall result for escrow services is as follows.



Methods
Cost
Difficulty of enforcement
Complexity
Cost-effective?
9 – Escrow services
Acceptable
Low
High
No


III POTENTIAL NON- LITIGATION BASED REDRESS



The three criteria used to evaluate the various ICT redress methods (cost, enforceability and simplicity) do not include “effectiveness” as such, since methods 1 to 9 were on the list of redress methods because they were already potentially effective to some extent but needed to be evaluated for their degree of cost-effectiveness.[425] The following methods, however, are considered here because they are either not currently effective at all but could become effective (transaction insurance), or they might be thought of as being possible remedies but, in fact, will never be capable of assisting with post-transaction realspace non/wrong-delivery problems with ICTs. They are considered here merely to explain what they are, and to clarify possible misconceptions with respect to their potential as remedies. The term “potential”, in the heading to this section, is thus used broadly.[426]



A Transaction insurance



Description



This solution would, in theory, involve a type of traditional insurance coverage for protection against risks associated with ICTs. Such coverage could be for individual transactions or it could cover any number of transactions over a given time period for a single policyholder. The coverage would be analogous to the “Purchase Cover Insurance” provided by the Visa credit card (underwritten in Australia by Zurich Australian Insurance Limited), but would be sold directly to consumers as an insurance industry product and not as a credit card industry product. In fact this solution could also be (but at present is not) provided by being sold as an extended feature of credit card products.



Of the following insurers approached by this candidate in 2005 in regard to this question through telephone conversations with manager or assistant-manager level officers – Allianz, AAMI, Australian Better Business Insurers, Zurich, QBE Mercantile Mutual, ING, East West Insurance Brokers, AXA and Aradlay – not a single insurer provided coverage for ICTs or knew of anyone who did. Zurich, was aware of their connection with Visa, but advised that it did not provide such coverage direct to consumers.



There may be a niche in the insurance market waiting to be filled but, as yet, there is no solution here for consumers. In any event, if there is an ICT insurance provider in the market place, the degree of difficulty in finding them is surely a problem for consumers in itself, and so far transaction insurance is no solution at all.



Assessment



Assessed by the cost criterion, the transaction insurance redress method would be relatively effective. It would be far cheaper than the cost of litigation (if it was available) but may still be expensive relative to the transaction values concerned.



Assessed by the enforceability criterion, this method would not involve or require coercive power. The consumer would not compel the vendor in any way as the remedy comes from a third party. Insurers, however, pay on insurance claims at their discretion, and they could be compelled to do so through litigation.



Assessed by the complexity criterion, the transaction insurance redress method is comparatively uncomplicated, as compared with litigation. It would be fairly straightforward, for consumers to engage insurers to protect their intended ICTs if suitable insurers were sufficiently available.



Conclusion



The transaction insurance redress method achieves an overall result as follows. It achieves a “low” result for cost; cheaper than the cost of litigation but may still be expensive relative to the transaction values concerned. This method does not involve or require coercive power over the vendor but insurers might be coerced; its result for difficulty of enforcement is “low”. Finally, the method achieves a “low” for complexity. It is likely then that transaction insurance, if any were available, would probably be cost-effective as a means of solving problems with low-value ICTs. Tabulated, the overall result for transaction insurance is as follows.



Methods
Cost
Difficulty of enforcement
Complexity
Cost-effective?
10 – Transaction insurance
Low
Low
Low
Yes


This method deserves some final observations. When it is considered how easily credit-card transaction-security terms could be extended, to better cover non/wrong delivery problems with ICTs, but have not been so extended, the prospects for insurance becoming available for ICTs seem remote. In any event, even if transaction insurance became available, it would not necessarily be seen as a complete or permanent or fully satisfactory solution. Paying on an insurance claim will remain discretionary, and private insurance providers can come and go.



B Trust Marks [427]



Description



Broadly speaking, there are two types of trust mark. There is the “merchant credibility endorsement”,[428] and there are trust marks which relate to the trustworthiness of data being communicated via digital transmission channels. It is the trust mark of the former variety that is examined here.



A “trust mark” is a mark, sign or symbol displayed by a website to certify that the party granting use of the mark is notifying the public that the website that displays the trust mark is one that complies with minimum standards in respect of some particular attribute, such as conformity with specified privacy principles or conformity with specified dispute resolution procedures. A trust mark is thus, as noted, a “merchant credibility endorsement”, and visitors to the website can verify whether or not the website is so certified by contacting the purported granter of the trust mark. The website thus bears the “seal of approval” of the party granting use of the mark, hence, in respect of the relevant attribute, the website may be trusted by the consumer as being reliable. Examples of trust marks are those issued by TrustE,[429] CPAWebTrust[430] and Pricewaterhouse Cooper’s “BetterWeb”.[431] These type of marks may be distinguished from the second type of mark, mentioned above, issued by bodies such as VeriSign,[432] which are concerned more with encryption, communications security or data security.[433] The “TrustE” trust mark however, is limited to providing an endorsement concerning a website’s privacy policies only (Digital Enterprise[434]), and is therefore of limited interest here.



The CPAWebTrust seal claims that any site displaying its “WebTrust” seal has “been certified by a specially trained and licensed public accounting firm, [has] disclosed its business practices, [has] been audited to prove the site actually follows those practices, [and has] met international WebTrust Standards for e-Commerce”.[435] Examples of websites that bear the WebTrust seal are those for Ammbit.com, Comodogroup.com, and Ariba.com.



The “BetterWeb” seal was launched in 1999, and claims to be a



Web standards program that addresses the areas where consumers perceive the most risk in online transactions: sales terms, privacy, security and customer complaint policies. Through a simple, but rigorous process, online organisations such as retailers and service providers can obtain a license to display the ... seal. More than 30 Web sites have already applied for the BetterWebSM Seal, including leading travel and consumer goods sites, financial services and technology sites.[436]



The general nature of a trust mark is that of an endorsement from a specialist, independent third party whose continued existence depends itself on being a source of reliability. Thus trust mark issuers are displaced “vertically” from those receiving marks, and these issuers may be further distinguished from “horizontal” endorsement such as may be found in such systems as employed by Ebay.com,[437] where trustworthiness is conferred by consumers themselves (by the process of consumers rating the trading system or the sellers of goods for trustworthiness).[438]



In respect of trust marks awarded “vertically” (the sub-variety of trustmark of interest here), industry commentators have noted that “these top-down accreditation systems have done their job very well, it must be said”,[439] while of the “horizontal” variety it was noted that “the peer accreditation system works well on the internet because there is in existence a loose and highly democratic community of people who have the same interests.”[440] In respect of such comments (namely “done their job very well” and “works well”), which are undoubtedly true in some sense, it should be noted that these were not only subjective assessments (made without supportive or explanatory data), but were probably also relativistic, in that they were made as comments on phenomenon evaluated in comparison to a situation where trust marks didn’t exist at all.



Furthermore,



the results of our research have convinced us that Trustmarks are beneficial to e-consumers and e-vendors alike. The e-consumer's protection is undoubtedly enhanced ... [and] it is also likely that a certified e-vendor will experience an increase in sales. With a suitable incorporation of the e-commerce trustmark ... into legislation ... b2c e-commerce could find a firm foundation for further development.[441]



In other words, the method needs the coercive force of law but does not have it.



Assessment



The “emphasis added” in respect of the previous quote is also to suggest the conclusion that the problem with trust marks as they currently stand, of either vertical or horizontal variety (and irrespective of how many practical examples of the use of trust marks that may be considered), is the same. While the chances of consumer satisfaction is increased by dealing with “endorsed” vendors, the mere possession of a trust mark does not preclude the possibility of a consumer suffering non/wrong delivery problems (in relation to any particular endorsed supplier). Furthermore, the mere possession of a trust mark does not solve the potential for a supplier to operate as a judge in their own cause. There is no inbuilt adjudication and enforcement mechanism in relation to the possession of a trust mark, and while the trust mark undoubtedly improves the situation for consumers, the bottom line is that the consumer is still ultimately at the mercy of the vendor’s benevolence (or lack of) in the event of dispute.



A question for the future, then, is whether developments in trust mark technology could improve problems with the kind of transaction-security offered by trust marks.



Assessed by the cost criterion, a great advantage of the trust mark redress method (as with credit cards), is that the potential protection is provided to the consumer completely free of charge. Assessed by the enforceability criterion however, the method is completely ineffective in respect of post-transaction problems with ICTs – the method is exclusively concerned with pre-contractual representations and thus have no coercive force at all (unless a consumer was willing to contemplate suing the vendor or the trust mark issuer for negligent misrepresentation or similar).



Assessed by the complexity criterion, the method is completely without complexity. The method involves nothing more than the display of the trust mark issuer’s seal upon the vendor’s website.



Conclusion



The overall result for trust marks is as follows. This method achieves a result of “very low” for cost as the method is completely free of charge. As regards difficulty of enforcement, this method does not involve any significant post-transaction coercive power beyond a possibility of suing for misrepresentation. Its result for difficulty of enforcement is therefore “very high”. Finally, the method achieves a “very low” for complexity. Trust marks would not be cost-effective as a means of solving problems with low-value ICTs.[442] Tabulated, the overall result is as follows.



Methods
Cost
Difficulty of enforcement
Complexity
Cost-effective?
11 – Trust marks
Very Low
Very High
Very Low
No


C Consumer education programs



Description



Consumers can be educated in recognising fraudulent offers and what particular “scams” there are and how they work. They can be educated on specific considerations relevant to the purchasing of goods such as privacy issues, applicable law, properly identifying the vendor and the contractual subject-matter, keeping records of transactions, vendor refund policies and warranties, delivery time, costs and currencies, on risks inherent to cross-border purchases, on what consumers can do if difficulties arise, and on consumer information sources available on the Internet itself. Consumer education websites already exist to assist with these objectives[443] and consumers can be referred to them by vendors’ websites, which could be required to be linked to such websites.



Assessment



As a means of protection, consumer education is to be commended and promoted, but only as a secondary means, it is useless after an ICT has gone wrong. Consumer education is a means of preventing the failure of an ICT, but it is inapplicable to the pursuit of remedies after an ICT has failed.



Assessed by the cost criterion, a great advantage of the consumer education protection method (as with some other methods), is that the potential protection is provided to the consumer completely free of charge. Assessed by the enforceability criterion however, the method is completely ineffective in respect of post-transaction problems with ICTs – the method is exclusively concerned with pre-contractual consumer advice and has no coercive force at all.



Assessed by the simplicity criterion, the method is completely without complexity. The method involves nothing more than the offering of consumer advice, typically through various websites.



Conclusion



Consumer education achieves an overall result as follows. The method achieves a “very low” for cost. It involve neither coercive nor persuasive power, its result for difficulty of enforcement is therefore “very high” but the method achieves a result of “very low” for complexity.



Consumer education is therefore not cost-effective as means of solving post-transaction problems with low-value ICTs. Tabulated, the overall result is as follows.



Methods
Cost
Difficulty of enforcement
Complexity
Cost-effective?
12 – Consumer education
Very Low
Very High
Very High
No


D Consumer complaints bulletin boards



Description



A consumer complaints bulletin board is a website that allows for the posting of consumer complaints notices by anyone, for access by others, via the Internet. They are analogous to physical notice boards to which complaints, warnings or other notices may be attached. The first system that was used as a consumer complaints bulletin board was created in 1978.[444] According to Maggs:



By posting their complaints on the Internet, consumers can publicise their grievances to thousands of other consumers. This lawful and simple method affords consumers increased leverage in resolving disputes. Consumers have already established more than one hundred web sites in which they air complaints about major businesses.[445]



Some examples of consumer complaints bulletin boards are www.notgoodenough.org, www.complaints.com, www.thecomplaintstation, www.netcheck.com and www.ripoffreport.com.



A typical description of how a consumer complaints bulletin board works is as follows:



Each Monday, NGE publishes a “Top 10” list of complaints received on their site. The complaints chosen reflect the seriousness of all complaints, the ludicrousness of the processes involved and, in many cases, the simplicity of the fix ... Companies are then contacted, and ... [complaint] details are forwarded directly to the company. This speeds up the resolution process. When the Top 10 list is published ...the company responses are included. “No Reply at Time of Press” is published if a company chooses not to respond.[446]



The method described then, is one way that a consumer complaints bulletin board exposes offenders.



Assessment



As may be readily inferred from Maggs’ comments on consumer complaints bulletin boards, the usefulness of a consumer complaints bulletin board is limited to “increased leverage” through the public notification of a consumer’s complaints. Certainly an online vendor will not appreciate negative public commentary, may be deeply embarrassed or shamed by it, and may even provide the answer the consumer is looking for as a result, but that remains a long way from the situation a vendor would face following an unfavourable judgment from a court with effective enforcement powers. A shamed vendor will still be acting voluntarily if they provide the solution the consumer is seeking. Furthermore, a consumer complaints bulletin board user “cannot determine from those [consumer complaints bulletin board] websites the likelihood of a [future] negative interaction with a particular trader. They can only discover the [prior] existence of such an interaction”,[447] thus consumer complaints bulletin boards are merely indicators of how vendors might behave in the future.



Therefore, as with other potential solutions examined in relation to the failure of ICTs, there is no complete solution here, as there are no legal sanctions involved should they be needed. Furthermore, a shamed vendor, if things get really bad for them, can simply close up and re-open elsewhere, with a different name. This “solution” then is helpful – by adding to the range of options consumers have – but it is all but useless as an effective remedy.



Assessed by the cost criterion, a great advantage of the consumer complaints bulletin boards redress method (as with some other methods), is that the potential redress is provided to the consumer completely free of charge. Assessed by the enforceability criterion however, the method is completely ineffective in respect of post-transaction problems with ICTs – the method is exclusively concerned with pre-contractual consumer commentary, has no coercive force at all but may have some premature force.



Assessed by the complexity criterion, the method is completely without complexity. The method involves nothing more than the offering of consumer commentary.



Conclusion



Consumer complaints bulletin boards achieves an overall result as follows. The method achieves a “very low” for cost as it is effectively free of charge. This method does not involve any coercive power. There may be some small amount of persuasive power in the threat of consumer shaming of rogue vendors. Its result for difficulty of enforcement is therefore “very high”. The method results in a “low” for complexity (but not a “very low”) as there may be some degree of difficulty learning how to access and post complaints to consumer complaints bulletin boards.



Consumer complaints bulletin boards are not cost-effective as means of solving post-transaction problems with low-value ICTs. Tabulated, the overall result is as follows.



Methods
Cost
Difficulty of enforcement
Complexity
Cost-effective?
13 – Consumer complaints bulletin boards
Very Low
Very high
Low
No


E National deregistration



Description



“National deregistration” refers to the possibility of some sort of scheme by which “accredited” websites could be allowed to operate within national boundaries, and by which all others are denied the right to do so.[448]



Assessment



In terms of government regulation in this area, while concerned with online content regulation (e.g. pornography), an example of how effective this could be can be seen in Australia’s Broadcasting Services Amendment (Online Services) Act 1999. This attempt at government cyberspace regulation was described in August 1999, by Professor Nadine Strossen – then President of the American Civil Liberties Union – as making Australia a “global village idiot”.[449] Apart from the censorship issues, Strossen argued this because of the alleged technical impossibility of regulating cyberspace this way, when website operators could simply relocate sites wherever they wanted.



Thus, the idea of deregistration will have limited effect where rogue vendors can play a cyberspace version of the “shell game” – now you see me, now you don’t – and the issue is really whether or not cost-effective redress can be obtained after the fact (i.e. after non/wrong delivery of goods). “Deregistration” is, in a sense, after all, just a form of pre-emptive consumer education, and provides no remedy of itself for non/wrong delivery problems with ICTs, which could still be caused by “accredited” online vendors.



Assessed by the cost criterion, the national deregistration redress method is likely to be free of charge to the consumer but may involve some cost of submitting evidence to authorities in support of a request to deregister an offending website. Assessed by the enforceability criterion, the method is not effective as it does not involve actual coercive power in respect of obtaining a remedy for a breached ICT involving post-transaction realspace non/wrong delivery, but it may have some prospective deterrent power if enough rogue websites are deregistered for such offences. Assessed by the complexity criterion, the method is comparatively simple; all that would be involved would be the submission of a request for a deregistration with supporting documentation.



Conclusion



The overall result for the national deregistration redress method is as follows. This method achieves a result of “low” for cost; likely to be free of charge but may involve some cost of submitting evidence to authorities. This method does not involve actual coercive power in respect of obtaining a remedy for a breached ICT but may have some prospective deterrent power; its result for difficulty of enforcement is therefore “very high”. Finally, the national deregistration method of redress result for complexity is a “low”. National deregistration then, would not be cost-effective as a means of solving problems with low-value ICTs. Tabulated, the overall result for national deregistration is as follows.



Methods
Cost
Difficulty of enforcement
Complexity
Cost-effective?
14 – National deregistration
Low
Very High
Low
No


IV CONCLUSION



This chapter commenced by noting a concern with analysis of practical issues and alternative scenarios associated with ICTs. It further noted the concern with scenarios which result specifically in non/wrong-delivery of goods in the context of existing non-litigation-based redress mechanisms.



In terms of the methodology established in the chapter two – the methodology expressed as a table – results were assigned to the forms of redress for ICTs considered in this chapter, as follows. As a preliminary however, note that there is a difference between “current” methods (2 to 9) and “potential” methods (10 to 14). Methods 2 to 9 were on the list of redress methods because they were already potentially effective to some extent but needed to be evaluated for their degree of cost-effectiveness. Methods 10 to 14 were either not currently effective at all but could become effective (transaction insurance), or they (the remaining methods) might be thought of as being possible remedies but, in fact, will never be capable of assisting with post-transaction realspace non/wrong-delivery problems with ICTs but needed to be considered anyway in order that they may be dispensed with.



Evaluation of ICT redress methods

Methods
Cost
Difficulty of enforcement
Complexity
Cost-effective?


Current non-litigation based redress

2 – Credit card terms
Very Low
Very High
Low
No
3 – Foreign lawyers
Acceptable
High
Acceptable
No
4 – Foreign public consumer protection authorities
Low
Very High
Acceptable
No
5 – ADR/ODR
Acceptable
High
High
No
6 – Arbitration
Acceptable
Acceptable
High
No
7 – IBCDRSs
Low
High
High
No
8 – Industry codes of conduct
Very Low
Very High
Acceptable
No
9 – Escrow services
Acceptable
Low
High
No


Potential non-litigation based redress

10 – Transaction insurance
Low
Low
Low
Yes
11 – Trust marks
Very Low
Very High
Very Low
No
12 – Consumer education
Very Low
Very High
Very Low
No
13 – CCBBs
Very Low
Very High
Low
No
14 – National deregistration of vendor websites
Low
Very High
Low
No


So, in examining these issues, current and potential remedies for these problems in the form of credit card ownership or transaction insurance have been considered, through appointment of lawyers and appeal to consumer agencies in the country of the vendor, through the potential of ADR, escrow and trust marks, through the potential benefits of consumer education schemes and consumer complaints bulletin board systems, and through the potential benefits of industry codes of conduct and national schemes of registration and de-registration of websites. All these things were considered and, in every case, were found to be ineffective as a remedy for non-delivery or wrong-delivery in low-value ICTs.



Given the ineffectiveness of non-litigation-based methods then, perhaps answers may be sought in hypothetical legal remedies: perhaps the only source of cost-effective remedies for non-delivery or wrong-delivery in ICTs may be either of two possibilities. Firstly, problems associated with national private international law rules might be reduced or eliminated so that jurisdiction issues become irrelevant.[450] A second approach could be to side-step such problems altogether, through the creation of a international consumer redress/protection solution to provide some sort of globally harmonised and accepted scheme of litigation for low-value ICTs.[451] A model for this approach could be the 1980 Vienna Sales Convention, which is currently inapplicable to ICTs as it was created to regulate only international commercial transactions. Hopefully bodies such as UNIDROIT or UNCITRAL will lead the way in respect of this important policy issue, which, if resolved, may benefit all concerned. This possibility is considered in the next chapter.

CHAPTER FIVE: THE VIENNA SALES CONVENTION



I INTRODUCTION



The previous two chapters concluded, respectively, that litigation-based and non-litigation-based redress methods for ICTs are not cost-effective, and that perhaps the only achievable source of a cost-effective remedy for non-delivery or wrong-delivery in low-value ICTs would be some sort of globally harmonised and accepted scheme of litigation, provided through inter-governmental cooperative intervention. A real world example upon which such an approach might be based is the 1980 Vienna Sales Convention,[452] a multi-lateral convention which regulates the rights and obligations of parties to international commercial (business to business) sales of goods contracts.



This chapter examines the Vienna Sales Convention (the Convention) as an example of a model law which may either purport to provide a solution to the problem of lack of cost-effective redress for ICTs or could be seen as something analogous to a potential future solution. The issue here then is whether an examination of the Convention would help, in any way, with efforts to address problems with lack of cost-effectiveness in redress for ICTs.[453]



After an overview of the structure and content of the Convention, the chapter looks at the history of the Convention in terms of the factors which lead to its creation, its fundamental objectives and the problems it sought to solve, the extent to which the Convention is applicable or inapplicable to ICTs, and possible reasons why the Convention may be inapplicable to ICTs.



The chapter then takes a look at how the Convention was implemented, or why it was not implemented, in three countries: Australia, the USA and the UK. This is done to see if there is a diversity of approaches taken by signatories or potential signatories to implementation and adoption of the Convention, perhaps providing some indication of how an instrument protecting ICTs modelled upon the Convention might also be received by the countries of the world.



The chapter then examines literature concerning the effectiveness of the Convention as a form of protection for international commercial transactions, and concludes by examining whether it would be reasonable or appropriate to consider amending the Convention to provide protection for ICTs generally, and specifically in relation to the problem of litigation-based redress for low-value ICTs.



II VIENNA SALES CONVENTION – STRUCTURE AND CONTENT



The Convention is divided into four Parts. Part I defines the Convention’s scope of application (Articles 1-6) and contains general provisions regarding interpretations, usages and requirements regarding contractual form (Articles 7-13). Part II (Articles 14-24) deals with basic contractual formation issues, while Part III (Articles 25-88) contains rules regarding transborder sale of goods and is split into five chapters. The first of those chapters contains general provisions[454] (Articles 25-29) and the subsequent chapters being concerned with the obligations of the seller (Articles 30-52), the obligations of the buyer (Articles 53-65), the passing of risk (Articles 66-70), and obligations common to both seller and buyer (Articles 71-88). The final part, Part IV (Articles 89-101), contains general provisions on the public international framework concerning such administrative issues as who is the depositary of the Convention. Of some interest in this Part are Articles 91(2) and 96 – which allows flexibility to be had by contracting states through the registration of “reservations” and “declarations”, so that any contracting state can sign on to the Convention without being bound by any particular named provision of the Convention.



Therefore, except where indicated, the main provisions of the Convention of potential relevance to breach of contract by a seller in an ICT are Articles 30 to 52, in the chapter concerned with obligations of the seller with reference to delivery and conformity of goods (Articles 31-34 and 35-44 respectively), and the remedies available to the buyer for non-delivery and lack of contractual conformity by the seller (Articles 45-52). Whether such provisions are actually relevant, or could be made relevant to ICT redress problems is discussed below.



III BRIEF HISTORY OF THE VIENNA SALES CONVENTION



What was eventually to become the Convention originated in the 1920s[455] through efforts by the Hague Conference on Private International Law and UNIDROIT (the International Institute for the Unification of Private Law) to develop an internationally-accepted commercial code to govern transnational sales of goods[456] to “assist to smooth the process of international sales”.[457] The basic idea was to have some sort of code to facilitate commercial trade between nations by minimizing or eliminating uncertainty in the minds of international traders; to “reduce the misunderstandings and controversies that can arise when one law governs the seller and a different law the buyer ... among the laws of the countries of the world”.[458] This was to be achieved by the provision of a set of standardised international rules to govern international sale contracts, to stand above national sale of goods laws. As the preamble to the Convention says: “the adoption of uniform rules which govern contracts for the international sale of goods ... promote[s] the development of international trade”. [459]



After World War Two three draft conventions were created for these purposes. These covered jurisdictional matters in the international sale of goods, applicable law in the international sale of goods, and transfer of title in the international sale of goods.[460] Unsurprisingly then, because of excessive complexity and a perceived Eurocentric bias in the approach taken,[461] those draft conventions were not well received and UNCITRAL (the United Nations Commission on International Trade Law – established 1965) developed the Convention by integrating and internationalising the prior draft conventions[462] into a single instrument. The Convention was unanimously adopted on the 10th April, 1980, by all of the 62 states participating in the United Nations Conference on Contracts for the International Sale of Goods, held in Vienna. [463]



Article 2(a) of the Convention provides that



this Convention does not apply to sales of goods bought for personal, family or household use, unless the seller, at any time before or at the conclusion of the contract, neither knew nor ought to have known that the goods were brought for any such use.



Therefore the Convention is generally not applicable to ICTs, but prima facie leaves the door open to applicability to ICTs in the exceptional circumstances defined in Article 2(a).[464]



That question remains open, but it could arise, for example, where a consumer was buying goods for personal use in commercial quantities, thereby creating the appearance of being a commercial buyer.



It will therefore be understood here that the Convention is never applicable to ICTs (as others[465] also understand it), and this view is supported by the attitude of a working group of UNCITRAL reported in March 2004. The working group was developing a legal framework for the use of electronic communications in connection with international contracts, and specifically on the application of that framework to contracts governed by other conventions, including the Convention. A major policy change appears to involve a blanket exclusion of consumer contracts through the elimination of the “unless” exception in Article 2(a)-type provisions (see above) noting that



consumer advocates wanted this exclusion because the convention was not itself going to provide what they consider adequate protections ...[and] ... no one wanted to have to draft a consumer protection convention.[466]



Thus parties interested in consumer protection do not themselves see enough protection in the Convention (if it were simply without Article 2(a)), and the working party saw the task, perhaps, of adding an entire consumer protection layer to the Convention as too problematic in some way.



Thus the issue as to whether or not the Convention applies to consumers in special cases appears to be all but officially settled.



IV IMPLEMENTATION OF THE VIENNA SALES CONVENTION IN AUSTRALIA, THE USA AND THE UK



The question now is to whether there is a diversity of approaches taken by signatories or potential signatories to adoption and implementation of the Convention and, if so, whether that would be an advantage for a Convention-based ICT redress/protection convention.



A Implementation by Australia and the USA



The Convention was given the force of law in the Australian state of Queensland by the Sale of Goods (Vienna Convention) Act 1986 (Queensland). The Convention is a schedule to, and forms the bulk of that Act. The Convention became collectively part of the law of each Australian state and territory on 1st of April 1989 under a uniform scheme agreed upon by the federal government and all state and territory governments, with an Article 93 (territorial) reservation indicating which parts of Australia the Convention does and does not apply to.



With respect to Australian federal law, section 66A of the Trade Practices Act 1974 provides that the Convention overrules the Product Safety and Product Information division of the Trade Practices Act (Division 1A) to the extent of any inconsistency.[467] Steinwall’s annotated Trade Practices Act however notes that section 66A provides that in the event of any inconsistency between the Trade Practices Act generally and the Convention, the Convention provisions apply;[468] and that the Convention “itself will extend to every international sale unless specifically excluded in whole or in part”.[469] In any event, Article 2(a) of the Convention expressly excludes its application to consumer transactions.



The Convention entered into force in the USA on the 1st of January 1988, with an Article 95 declaration restricting the role of private international law rules in determining the application of the Convention.



The role played by the registration of declarations in the implementation of the Convention illustrates the appealing flexibility the Convention offers to countries contemplating adoption. Such flexibility may be imitated.



B Non-implementation by the United Kingdom



As of late 2005 the United Kingdom was not a signatory to the Convention [470] “perhaps because of pride in its longstanding common law legal imperialism or in its long-treasured feeling of the superiority of English law ... despite the fact that major and influential trading nations ... are parties to the CISG”.[471] In fact 65[472] countries are currently signatories and, despite Maniruzzaman’s speculation, the United Kingdom may still accede. The United Kingdom’s Department of Trade and Industry has noted that “the [Convention] should be brought into national law when there is time available in the legislative programme”.[473]



V EFFECTIVENESS OF THE CONVENTION



As potential signatories are sovereign nations, each is free to choose whether and how they shall become a party to the Convention. Likewise, a wide diversity of approaches would probably be taken by potential signatories to an instrument protecting ICTs modelled upon the Convention, at least so long as such an instrument was not so “flexible” as to lose its effectiveness. Such a possibility, however, could be avoided through good drafting.



The question arises now as to how effective the Convention is as a form of protection for international commercial transactions, and whether the Convention is a good model upon which to base a convention to protect ICTs.



Answering that question depends upon how the word “effective” is understood. Furthermore, apart from the meaning given in chapter two, the definition of “effective” here may be expanded by consideration of extra (secondary) criteria. Popularity – as measured by volume of acceptance of the Convention by numbers of states internationally (65 so far[474]) or by proportion of international trade in goods moved being covered by contracts involving Convention-signatory countries (two-thirds globally[475]) – could also be an indicator of how effective the Convention is. After all, popularity, of itself, is strongly suggestive that the Convention may be effective.



Beyond that, effectiveness could also be measured by degree of attainment of internally-stated objectives, or the extent to which the Convention assists aggrieved parties to Convention-governed/related contracts. It could also be measured hypothetically by how effective the Convention might be if it actually did cover ICTs.



Commencing with the secondary criteria, if the Convention did actually cover ICTs – by being amended to make it “applicable” to ICTs by simply deleting or modifying Article 2(a) – the Convention as it currently stands is still not designed for cost-effectively obtaining and enforcing judgments with respect to non-delivery or wrong-delivery in low-value ICTs,. This is because the Convention does not contain consumer protection provisions, it does not address, much less solve, the potential jurisdiction (choice of court) and recognition and enforcement problems associated with ICTs,[476] nor is it underpinned by or associated with any kind of judicial infrastructure to achieve cost-effectiveness in respect of low-value ICTs such as might be found in a small claims tribunal, cyber-jurisdiction, or some combination of both. Furthermore, amending the Convention to achieve all of such functionalities may be almost unthinkable given the 50 years it took to get where it is without them, and the fact that such amendments would probably ruin its popular simplicity. On this view however, the value of the Convention to this thesis is as a model for the part of a potential general ICT solution which would cover such issues as contract formation, party obligations, and remedies. So to that extent, the Convention is a useful model here.



There is also the question regarding effectiveness as measured by the extent to which the Convention assists aggrieved parties to Convention-governed/related contracts. This is a factor which would be virtually impossible to gauge without conducting either some kind of direct “user satisfaction” survey to obtain express statements of attitude, or by indirectly trying to do the same thing through analysis of judicial rulings regarding disputed Convention-related contractual disputes. Unfortunately, neither is possible within the scope of the present research. The indications however – implied by the volume of Convention-related litigation (low: “the number of reported cases [since 1980] in which the Convention’s provisions have been considered or applied exceeds 1,000”[477]) as a miniscule proportion of global popularity of the Convention (high: the proportion of international trade in goods moved being covered by contracts involving Convention-signatory countries is two-thirds globally[478]) – suggest that “user satisfaction” with the Convention may be very high. This is a scenario that drafters of some international conventions may aspire to. On this basis too, the Convention may be of some value as a model.



There is also the question about effectiveness as measured by degree of attainment of internally-stated objectives. Sono says that the criteria driving the development of the Convention out of the previous draft Hague Conventions were that they were “not suitable for worldwide acceptance ... [being] too dogmatic, complex, predominantly of the European civil law tradition and lacked clarity even for lawyers” [479] and what resulted was “simplicity, practicality and clarity [and was] free of legal short hand, free of complicated legal theory and easy for businessmen to understand.” [480] As noted above, “the Convention was unanimously adopted on the 10th April, 1980, by all of the 62 states participating in the United Nations Conference on Contracts for the International Sale of Goods, held in Vienna.”[481] Unanimous adoption by 62 countries “representing quite different legal systems”[482] and with “relatively few amendments to the draft UNCITRAL text”[483] is strongly suggestive that there was a high degree of attainment of internally-stated objectives. This is another basis for viewing the Convention as a good model, to some extent.



There is also an issue about effectiveness as measured by popularity or acceptance. Arguably this may be a good criteria of measuring effectiveness because, while there may be good arguments for why the Convention is or is not “effective”, the simple fact is that if people like it and use it, then it may be effective enough. As noted above, popularity, of itself, is suggestive that the Convention may be effective. Furthermore, if providing a mechanism like the Convention to do the same thing for ICTs could be as popular, perhaps that might be enough for a start.



What commentators may think are the strengths and weaknesses of the Convention should now be considered. As for favourable commentary, Sono says that



the essential characteristics of the [Convention] are simplicity, practicality and clarity. It is free of legal short hand, free of complicated legal theory and easy for businessmen to understand ... and [the Convention itself] admits that some matters are not covered and are left to be resolved by the law applicable under the traditional rules of private international law.[484]



This view, and direct consideration of the Convention itself, suggests the drafters achieved their aim of having a text comprehensible to lay persons, with contractual flexibility.



Sloan says that the Convention’s provisions are



well-drafted and logically arranged [and that lawyers see the Convention as] good law that promotes fair solutions without affording any obvious or hidden advantages to either side [and that the Convention] represents reasonable compromises on difficult commercial issues acceptable to most.[485]



This is consistent with Sono’s view that the Convention is easy to use, while lacking in bias towards sellers or buyers, a view supported by McNamara who says that the Convention is “fair ... well drafted ... [and] to the extent that the parties have equal bargaining strength [the Convention is] neutral ... good law.” [486]



As for criticism, Sloan claims that



some practitioners feel that there is too much uncertainty and unpredictability associated with the Convention. Courts, practitioners and merchants alike have not yet developed a full understanding of the Convention and for this reason there has not been uniformity in its application, [487]



while McNamara says that “after sixteen years, the CISG is only now graduating from obscurity”[488] – which may not be especially negative points at all as such instruments take time to acquire general acceptance.



In respect of “some matters [not covered by the Convention]” that Sono refers to, McNamara says that “the CISG has a number of ‘gaps’ that, by design or otherwise, simply were not addressed”.[489] Such gaps include trade terms, applicable interest rate, burden of proof, validity of penalty clauses, transfer of title, existence of agency relationship, forum selection clauses, limitations period, currency of payment, lacking a competent international tribunal for conflict resolution, and allowance for too many “reservations” by potential signatories. [490] Such alleged “gaps” may arguably be excused on the grounds of allowing flexibility – for allowing the adoptability and usability of the Convention, while being curable through user-defined terms – and especially so as “gaps” in an instrument that is no more than a model for a like instrument (in other words, the gaps need not be duplicated in the development of an instrument for ICTs, based upon the Convention). As to gaps in the Convention being curable through user-defined terms, Article 6 allows parties to “derogate from or vary the effect of any of its provisions”. Thus the parties may enjoy “freedom of contract” to define their contract by use of particular terms to suit their own specific agreement, while using the Convention as a “default setting” to provide general contextual provisions.[491] Ironically however, it is “freedom of contract”, among other things, which (to that extent) may spoil the Convention as a model for an international consumer protection law (as was seen in chapter three).



VI AMENDING THE CONVENTION



A question may now be asked as to whether the Convention should be amended to handle redress for ICTs. Implicit within that question are the following associated questions. Is there an essential difference between the business-to-business (B2B) and business-to-consumer (B2C) transactions such that a regulatory regime for B2C transactions, completely additional to that for B2B transactions, needs to exist; and can B2B laws simply be modified to regulate B2C transactions?



As to the first associated question, the views of Vaughan and Martin, mentioned in the section in chapter two concerning the “Regulation of B2B and B2C transactions”, should be noted. Vaughan thought that consumers are different to corporations, and Martin thought that corporations possess sophistication which consumers do not.



Thus, because individual consumers are relatively un-sophisticated, the analysis would fall back on whether or not consumers should be protected by law at all. As developed societies do say that consumers need special protection by law[492] (as they can be abused by information asymmetry and inequality of bargaining power as between vendor and consumer), a regulatory regime for B2C transactions, additional to that for B2B transactions, does need to exist. Interestingly it is not just the potentially excessive freedom given to sellers by Article 6 (in respect of the formulation of contractual terms) that may be a problem, it is also that a consequence of Article 6 is that the Convention has no mandatory force, meaning that the Convention need not regulate any kind of international sales contracts at all.[493]



As to the second associated question (can B2B laws simply be modified to regulate B2C transactions?), the Convention and the Hague Convention on Private International Law, both of which purport in some way to regulate international B2B transactions but could have been made to apply to consumer transactions, both make themselves expressly inapplicable to ICTs.



With respect to the Convention, because of a narrow reading of Article 2(a) of the Convention, as already noted, the Convention is never applicable to ICTs (as others understand it likewise[494]), a position supported by the attitude of the working group of UNCITRAL reported in March 2004 as expressed by their proposed elimination of the “unless” exception in Article 2(a).[495]



With respect to the Hague Convention, a document entitled “A preliminary result of the work of the informal working group on the judgments project”, dated March 2003, may be viewed at http://www.cptech.org/ecom/jurisdiction/Prel_Doc08(e).doc. This document, in its preamble, shows that the working group is concerned with matters concerning “parties to commercial transactions”, and in its draft Article 1 clause 2, states, “this Convention shall not apply to agreements between a consumer and another party.” The reason for this is apparently that



the initial scope of the [draft] project was very wide and encompassed jurisdiction rules for all kinds of commercial transactions (B2B, B2C and C2C) and torts, etc. ... [and when that] draft was sent out for consultation to the Member States of the Conference, it was seen as too ambitious by many stakeholders ... consensus could not be reached ... [which has now] led to Member States to take a different approach for the time being and start with an uncontroversial core convention, which is Choice of Court in B2B cases.[496]



It does seem then, by weight of reason and empirical evidence, that while the Convention might hypothetically be substantially amended to handle low-value ICTs, it probably never will be nor should be. The conclusion then is that if a Convention-type instrument to protect or, at least, provide redress for ICTs was required, it would have to be a separate instrument and not a modified version of the Convention itself.



VII CONCLUSION



The Convention contains provisions regarding contract formation, party obligations and party remedies, and provisions which effectively amount, to some extent, to harmonised private international law rules (e.g. the Convention as the governing law); and, to handle ICTs, it needed specific consumer redress provisions, and provisions for a judicial infrastructure appropriate for low value ICTs. An ICT law, based on such findings from consideration of the Convention, would not be expensive to use, as compared with the current cost of transnational litigation (depending upon the best meaning of “provisions for a judicial infrastructure appropriate for low value ICTs” – a cheap, international “small claims court” perhaps).



The Convention appears to be well-received, world-wide, with respect to simplicity, practicality and clarity, and if the low level of Convention-related litigation in the past 25 years is any indication, it may be so well-constructed as to obviate the potential for evasive litigation through differing regional laws and drafting ambiguities – thus amounting to a high level of effective enforceability.



This chapter has shown that in terms of redress, the nature of the difference between legal redress for B2B and B2C transactions is so great that the Convention could not, in practical terms, be considered as modifiable for the purposes of non-delivery or wrong-delivery in ICTs. While chapters two, three and four show that an internationally-coordinated approach is desirable, this chapter has shown that an internationally-coordinated approach – similar to that employed by the Convention for international B2B transactions – coupled with technology to obtain efficiencies for low-value disputes, is achievable to handle the problem of litigation-based redress for low-value ICTs, but that modifying the Convention itself to achieve such aim is probably inappropriate. As noted above, amending the Convention to achieve all of such (consumer protection) functionalities would be almost unthinkable given the 50 years it took to get where it is, and the fact that such amendments would probably ruin its popular simplicity. This is because the Convention does not contain consumer protection provisions such as appear in Part V of Australia’s Trade Practices Act, it does not address the potential jurisdiction (choice of court), recognition and enforcement problems associated with ICTs, nor is it underpinned by or associated with any kind of efficient judicial infrastructure to achieve “cost-effectiveness” in respect of low-value ICTs.



The advantage of the Convention however, to those contemplating it as a model for an ICT convention, is that its qualities, including simplicity, practicality, clarity, flexibility and neutrality, could be imitated.



Whether there are any better or further models upon which an ICT solution could be based is the subject matter of the next chapter.

CHAPTER SIX: OTHER MODEL LAWS FOR THE REDRESS OF INTERNATIONAL CONSUMER TRANSACTIONS



I INTRODUCTION



The previous chapters showed that an internationally-coordinated approach to the problem of non-delivery or wrong-delivery in ICTs along the lines of the Vienna Sales Convention (the Convention) is not only desirable but is also achievable – i.e. they showed that an attempt could be made to provide a solution to the lack of cost-effective redress for ICTs using the same kind of internationally-coordinated approach that was taken in the creation of the Convention. Furthermore, the previous chapter concluded that the advantage of the Convention to those contemplating it as a model for an ICT solution is that its' qualities of simplicity, practicality, clarity, flexibility and neutrality could be imitated. However, it also raised the question as to whether there were any models apart from the Convention upon which an ICT redress solution could be based.



This chapter considers commentary from academic, judicial and other sources concerning the specific redress and enforcement provisions of the model[497] consumer redress/protection laws proposed by Australia, the United Nations,[498] the Organisation for Economic Cooperation and Development (OECD),[499] the European Union (EU)[500] and the United States, especially in respect of transnational enforcement, and in terms of the importance of the lack of harmonisation[501] of such model laws in contributing to the lack of cost-effectiveness in ICT redress problems. The model laws are considered in both descriptive and prescriptive terms, i.e. the objective characteristics of the models, and how those characteristics might be used, if at all, in the formulation of a solution to the redress/protection problems of ICTs, in the context of the theoretical framework and methodology described in chapter two, are both considered. This chapter concludes, additionally, with consideration of commentary relevant to potential harmonisation of the general content of these model or other laws.



The consideration given here then, is intended to be useful to the process of constructing a single international consumer redress or protection law from the models examined, if such solution were to be adopted. As this thesis demonstrates, an international consumer redress/protection law is needed because all current forms of redress for non-delivery or wrong-delivery in low-value ICTs are either ineffective or not cost-effective. A secondary aim of this chapter therefore, is to briefly consider the basic kinds of international consumer law that might be inspired by the model laws examined in this thesis. Indicative labels which could be given to the two basic kinds are the “minimal” version, and the “comprehensive” version. We shall consider the minimal version first.



The most basic distinction between any current national consumer protection law and a workable international consumer protection law[502] is the practical inability of national consumer protection laws to allow for redress and enforcement across international boundaries, for the reasons considered in chapter three and, to a lesser extent, in chapter four. While there are plenty of examples of relatively effective national consumer protection laws worldwide – at least within the territorial reach of such laws – there are, as yet, no truly international (global) consumer protection laws. This will become increasingly problematic for transnational retailers and consumers alike.



As already noted, if it is not possible to fully harmonise national consumer redress laws generally into a single international consumer redress law, a minimal solution would be to internationalise[503] at least the enforcement provisions of national consumer protection laws,[504] a solution which will still require national governments to work in concert, since only they can enforce the individual and collective authority of nation states to provide the enforcement powers necessary for workable ICT redress.



Thus the minimal form of an international consumer “protection” (redress) law would be an international law providing only for effective transnational enforcement of judgments based on existing national law: a basic set of redress provisions that work across international borders by making international public law out of the relevant private law aspects involved in the current regime. In other words, the signatory states would bind themselves to do their part to improve the transnational enforcement problems in the current regime. Such a solution would not go very far towards providing cost-effectiveness for ICTs generally. A comprehensive international consumer law, however, would be that minimal international consumer redress law with the following extra features[505] to make it a full-scale international consumer protection law: its enforcement provisions would be made cost-effective for low-value ICTs through the provision of an appropriately efficient infrastructure (perhaps a cyber-jurisdiction), it would not have nor need to have any private international law content (harmonised or otherwise), and it would have substantive consumer protection provisions of the type found, for example, in Part V of Australia’s Trade Practice Act. There could, however, be versions of these “international consumer laws” that fall between the “minimal” and “comprehensive” extremes. It is likely that the least that would be needed would be something mid way between those two extremes – say, the minimal version plus harmonised private international law rules, plus efficient infrastructure. Such a version, interestingly, may be actually harder to create than the comprehensive version, which would have nothing to harmonise as between multiple nations. That prospect only makes the comprehensive version more appealing.



A question arises here as to how a “minimal” international consumer redress law could be an international consumer law at all. It could simply be an international agreement only for the mutual enforceability of ICTs involving parties in signatory states who have chosen a particular national consumer protection law under a contractual choice of law clause. Consider, for example, a scenario where the USA and Australia are signatories to such an agreement, the parties to an ICT are an American consumer and an Australian online vendor, and the ICT is subject to a clause agreeing that US consumer law is the law governing that ICT. Should the ICT fail through non-performance by the vendor, the Australian government would agree, under this version of the law, to exercise all power necessary to prosecute the local vendor under that US law or to be responsible for enforcing the judgment of a US court which had decided on the case. Interestingly, the present legal regime applicable to such scenarios is not that different to this proposal, which would really be just adding the “mutual enforceability” aspect as a formalised arrangement between two or more countries: a Foreign Judgments Act for ICTs. The problem, however, with this “minimal” version is that it is too similar to the present legal regime and its fundamental problem: lack of cost-effectiveness.



Alternatively, a dedicated single online cyber-jurisdiction for ICTs could achieve a better result with the consent and the backing of all signatory states, especially if there were (effectively) “fully harmonised” consumer protection provisions involved – i.e. internationally approved original legislation and not, in fact, any actual harmonised Private International Law at all. This “comprehensive” international consumer protection law, if one could be agreed to, is also tidier as it would avoid the need for physical duplication of judiciaries and the potential for divergent judicial practices.



By way of general introduction to and summary of the differences between the model laws proposed by the UN (the UN Guidelines), the EU (the Distance Sales Directive and the E-Commerce Directive) and the OECD (the OECD Guidelines), it is to be noted that whilst overlapping in their purposes to some extent, they do address different fields. While the UN Guidelines is concerned with the broad principles of global consumer protection, however conducted, the Distance Sales Directive is concerned with the regulation of consumer contracts formed by using any means of distance communication for the benefit of citizens of the EU Member States. The E-Commerce Directive, by comparison, is concerned with general principles for the conduct of e-commerce for the benefit of EU citizens, whether they are participating in e-commerce as consumers or not. Finally, the OECD Guidelines is concerned with the broad principles of consumer protection specifically where consumer transactions are concluded by means of e-commerce technology.



Of those four model laws, the most readily applicable for the purposes of deriving a minimal international consumer protection law is the Distance Sales Directive. While both the EU models are enacted laws, the Distance Sales Directive is formulated more as practical rules, whereas the E-Commerce Directive more closely resembles the abstract principles found in the two Guidelines.



Australian and US consumer protection law, while neither guidelines like the UN and OECD guidelines nor supra-national law like the EU directives, are considered here to broaden the scope of enquiry and to include examples of laws which, incidentally, contain substantive consumer protection provisions. The sources of such provisions would be of interest to any future efforts at creating an ideal international consumer protection solution.



II AUSTRALIAN LAW



The principal consumer protection law in Australia is the Trade Practices Act 1974 (Cth). It is a commonwealth law (i.e. federal), as opposed to being a law of one of the states of Australia, such as Victoria or Queensland. While internationally the Trade Practices Act has little status, it is useful to consider here as it provides an example of how a law can be successfully created and put into force over the divergent laws of separate geographical law areas.[506] Its utility here is therefore its usefulness as a principle or example, and not in its status.



The Trade Practices Act (the Act) came into force on 1st October 1974. It was introduced to provide uniformity of business rules for fair trade in relation to both business-to-business trade and business-to-consumer trade. Thus the Act regulates both anti-competitive trade practices and misleading or deceptive trade practices throughout the entirety of Australia. Our interest here with the Act lies with its federalist “transborder” nature.



The Act applies to the activities of corporations and the commercial activities of non-corporations who engage in interstate or overseas trade or commerce in Australia. Section 109 of Australia's Commonwealth Constitution provides that “when a law of a State is inconsistent with a law of the Commonwealth, the latter shall prevail, and the former shall, to the extent of the inconsistency, be invalid.” The Act therefore applies to matters involving more than one State, and it overrides prior inconsistent State consumer protection-related laws. The Act was introduced to cure the divergence of consumer protection law as between the States, such as the Misrepresentation Act 1972 (South Australia) and the Contracts Review Act 1980 (New South Wales) which had no close equivalents in the law of other States. The Act is therefore a successful attempt at ensuring the universal recognition and enforcement of judgments within a multi-state environment, and at harmonisation of substantive content; and is thus a good example, for present purposes.



In addition to concerning itself with Australian interstate matters, the Act also applies to overseas trade or commerce, and thus purports to reserve for itself an extra-territorial application. For example, section 4(1) refers to trade and commerce “between Australia and places outside Australia”, section 6(2) refers to the Act having effect in respect of contracts relating to trade or commerce “between Australia and places outside Australia”, and section 67(b) provides that where a contract for the supply of goods to a consumer purports to substitute the law of some other country for the provisions of the Act, the Act applies regardless.[507] Once again, this may be effective if enforcement is sought against assets of a foreign vendor within the jurisdiction, if there are any. This is the basic problem with domestic consumer protection laws which purport to exercise full extra-territoriality: such claims are necessarily hypothetical when it comes to the enforcement of judgments (based on such law) over assets outside the geographical scope of that law.



In respect of ICTs where the foreign vendor has no assets within the Australian consumer’s jurisdiction, the Act provides a remedy no better than the litigation redress method described in chapter three. So, domestic consumer protection laws, such as the Act considered here, cannot be effective in connection with failed ICTs where they cannot be cost-effectively applied against the foreign assets of uncooperative non-performing foreign vendors. This is true even if the foreign vendor in question adopts the domestic consumer protection law through a choice of law clause. The merits of the extra-territoriality provisions of the Act specifically then, in terms of the purposes of this thesis, are virtually nil.



It may be useful to conclude here by noting the contribution of Jardine. Jardine has proposed



a bilateral agreement which provides a system for co-operation, consultation and notification in trade practices [B2B] matters between [Australia and the EU]. It could also provide a framework for consultation in case either party decided to apply its trade practices laws extraterritorially.[508]



Such an agreement, Jardine argues,[509] would make a useful compliment to the similar agreement which already exists between Australia and the US. It is not difficult to imagine an extension of that proposal to one calling for multi-party agreement in respect of ICTs.



III THE UN GUIDELINES



The United Nations Guidelines for Consumer Protection[510] (the UN Guidelines) were released on 9 April 1985 by resolution 39/248 of the United Nations General Assembly. The UN Guidelines were re-released in an amended and expanded form by the UN’s Economic and Social Council resolution 1999/7 of 26 July 1999, and were adopted by the General Assembly in late 1999.

Since the differences between the original version, which contained 46 clauses, and the new version, containing 69 clauses, are not relevant here, a detailed comparison between them is not made. Examination of the UN Guidelines here is restricted to the current version.



The structure of the UN Guidelines is as follows:



I. Objectives (cl 1)

II. General Principles (cll 2-8)

III. Guidelines (cll 9-10)

A Physical Safety (cll 11-14)

B Promotion and Protection of Consumers’ Economic Interests (cll 15-27)

C Standards for the Safety and Quality of consumer Goods and Services (cll 28-30)

D Distribution Facilities for Essential Consumer Goods and Services (cl 31)

E Measures Enabling Consumers to Obtain Redress (cll 32-34)

F Education and Information Programs (cll 35-41)

G Promotion of Sustainable Consumption (cll 42-55)

H Measures Relating to Specific Areas (cll 56-62)

IV. International Co-operation (cll 63-69)

The redress-related provisions of the UN Guidelines are clauses 32 to 34 which provide that governments should establish legal and administrative measures to enable consumers to obtain redress through procedures that are expeditious, fair, inexpensive and accessible (clause 32); that governments should encourage all enterprises to resolve consumer disputes in a fair, expeditious and informal manner, and to establish mechanisms which can provide assistance to consumers (clause 33); and that information on available redress should be made available to consumers (clause 34). The clause of greatest interest here is clause 32.



The UN Guidelines are only guidelines for assisting countries with their efforts to protect consumers. This is recognised in what little commentary is available on the UN Guidelines. However, the UN Guidelines have been attacked for being “vague” and “overblown”[511] almost to the point of uselessness. For example, the UN Guidelines objectives to “promote just, equitable and sustainable economic and social development” (clause 1) and to “encourage high levels of ethical conduct” (clause 1(c)) have been criticised for being “high-minded” and “fuzzy”.[512] Weidenbaum asked “who will set the standards of ‘ethical conduct’?”[513] “Consider how substantially a totalitarian interpretation of ethical conduct would differ from that of various free societies”.[514]



Another criticism by Weidenbaum is that the UN Guidelines seems to be “a blueprint for a centrally directed society”, [515] and that “we need only consult the dismal record of any of the world's centrally planned economies ... to know that taking this objective would hurt rather than help the developing nations”.[516] Peterson says the US Constitution, which she says Weidenbaum swore to uphold and defend, is a blueprint for a central government, while the UN Guidelines binds no country to anything, but merely set out goals and objectives for all nations to aspire to in protecting their own people.[517] Peterson also argues[518] that without effective governmental regulation, the worst practices of the worst competitors often set the norm in the marketplace. Peterson concludes by arguing that



legitimate business throughout the world needs the kind of consumer protections which the Guidelines erect as a goal. No honest business person wants to profit from harming the customer ... the Guidelines ... will make for ... an atmosphere in which legitimate business can indeed prosper.[519]



At this point, an aggrieved consumer could sympathise with Weidenbaum and Peterson – there being little of practical effect in the well-meaning UN Guidelines.



The UN Guidelines were also attacked by Weidenbaum on the grounds that “no convincing case has been made for the participation of international agencies in such a basic domestic consideration as the protection of consumers”. [520] From such a perspective, it is unsurprising that he saw no particular vagueness in the redress aspects of the UN Guidelines found in clauses 32 to 34. To his credit however, Weidenbaum did think that the UN Guidelines might solve international consumer problems, possibly without knowing, in 1987, what such problems could be.[521] In the Internet Age, the nature of such problems is now evident.



In response to the UN Guidelines’ redress recommendations (clauses 32 to 34), countries such as Australia, Canada, Hong Kong, New Zealand, Singapore and the USA established various mechanisms for consumers to obtain redress with respect to national consumer transactions, including the introduction of special procedures into previously-existing lower courts, and the creation of new courts and tribunals which specialize in small consumer claims.[522] In some cases procedural rules were simplified, hearings were sometimes held with the presence of lawyers being disallowed, night and weekend hearings were allowed, and parties were assisted in preparation of their case, with limited right of appeal.[523] Despite these advances however, the persistent problem of the high cost of litigation remains an obstacle to the achievement of clause 32’s goal of “inexpensive redress” in respect of ICTs.



The impact of the Internet was yet to be fully appreciated in 1991 and there was no consideration then of the special difficulties associated with transborder consumer disputes. This continued to be true for academic commentators as late as 1997.[524] In 2007 the promise of clause 32 for ICTs is still unrealized, and this criticism is even more true of transborder disputes in 2007 than it was for intra-national disputes in 1991.



As of June 2003, by interview with Mr Ralph Chipman (UN Administrator of the UN Guidelines at that time), no UN member state had implemented the redress provisions of the UN Guidelines with respect to situations involving ICTs. This is still the case as of early 2007. Despite this state of affairs, however, the value of the UN Guidelines, as guidelines, should still be acknowledged. That is to say, while remaining abstract, it is more beneficial to have commonly-accepted principles than to not have them at all.



IV THE OECD GUIDELINES



The OECD (the Organization for Economic Cooperation and Development), is a Paris-based



international body composed of 25 countries participating in a permanent cooperation designed to coordinate the policies of the member nations. The OECD makes available all information relevant to the formulation of national policy in every major field of economic activity. Its principal goals are (1) to promote employment, economic growth, and a rising standard of living in member countries, while maintaining stability; (2) to contribute to sound economic expansion of both member and non-member nations in the process of development; and (3) to further the expansion of world trade on a multilateral, non-discriminatory basis in accord with international obligations. Policies are formulated and ideas shared at meetings held throughout the year.



This form of cooperation, rooted in the growing interdependence of national economies, began in April 1948, when a group of 16 European countries founded the Organization for European Economic Cooperation (OEEC) to administer the Marshall Plan and to work together for post-war recovery. The OECD, succeeding the OEEC, was established on September 30, 1961, in order to broaden the scope of cooperation.[525]



Upon consideration of this, both the status of the OECD, in terms of its heritage, aims and purposes, and its relevance to the phenomenon and potential of ICTs, is apparent.



The OECD's Recommendation of the OECD Council Concerning Guidelines for Consumer Protection in the Context of Electronic Commerce[526] – that is, “the OECD Guidelines” – was released on 9th April 1999.



The OECD Guidelines were “designed to help ensure that consumers are no less protected shopping on-line than they are when they buy from their local store or order from a catalogue.”[527] The OECD Guidelines however, are “non-binding” and “the overarching principle of the Guidelines is that consumers shopping on-line should enjoy transparent and effective protection that is not less than the level of protection that they have in other areas of commerce.” [528]



The OECD Guidelines commence with a brief preamble, followed by an “annex” containing the guidelines in the following structure:

Part One - Scope

Part Two - General Principles

  1. Transparent and Effective Protection
  2. Fair Business, Advertising and Marketing Practices
  3. Online Disclosures
    1. Information about the business
    2. Information about the goods and services
    1. Information about the transaction
  4. Confirmation Process
  5. Payment
  6. Dispute Resolution and Redress
    1. Applicable law and jurisdiction
    2. Alternative dispute resolution and redress
  7. Privacy
  8. Education and Awareness

Part Three - Implementation

Part Four - Global Co-Operation



In terms of redress provisions, Part VIA of the OECD Guidelines (Applicable Law and Jurisdiction) states that



Business-to-consumer cross-border transactions ... are subject to the existing framework on [and thus the existing problems associated with] applicable law and jurisdiction [such as divergent conflict of laws rules, uncertainty, expense, complexity, lengthy delays in obtaining judgment and potential language difficulties].



E-commerce poses challenges to this existing framework [and] therefore consideration should be given to whether the existing framework ... should be modified ... [and] in considering whether to modify the existing framework, governments should seek to ensure that, while facilitating e-commerce, the framework provides fairness to consumers and business ... not less than that afforded in other forms of commerce [while providing] consumers with ... redress without undue cost or burden.[529]



While, once again, the OECD Guidelines is only a set of guidelines, they indicate and reinforce the view that the existing situation with respect to ICTs is replete with difficulties and that governments should be responsible for providing a solution – a position which supports the positive preference for interventionism in this thesis.



Part VIB (Alternative Dispute Resolution and Redress) states that consumers should be provided meaningful access to fair redress without undue cost or burden, and that governments should develop policies to resolve consumer disputes arising from business-to-consumer transborder transactions. Furthermore, in implementing these policies, governments should employ information technologies innovatively, but further study (presumably to be conducted by governments at national and international level, and by academics and others) will be required to meet these objectives at an international level.[530]



While these are commendable principles, in practice little is being achieved through the OECD Guidelines, at an international level. The OECD's first major report on the implementation of the OECD Guidelines,[531] provided that



the Guidelines ... recognise the need for Member countries to ... adopt and adapt laws to ensure consumers are protected in the online environment. To this end, in the European Union, member states have been taking steps to introduce ... Directives related to the Guidelines.[532]



This kind of regional law-making is not as consistent with the OECD Guidelines’ Part VIB – which provides that “governments should develop policies to resolve consumer disputes arising from business-to-consumer cross-border transactions” – as the full effect of the Internet on world-wide consumerism demands. This criticism is borne out by further points made in the report, such as “in Canada, the national and provincial governments have agreed to work towards harmonised and modernised consumer protection laws related to electronic commerce”,[533] “in Mexico, the Federal Consumer Protection Law ... was modified in May 2000”, [534] and “in Australia, the development of legislative amendments ... continues”.[535] All of these are regional and regionally-focussed initiatives and therefore doomed to irrelevance where international cooperation is required to provide a unified solution to the problem of cost-effective justice for low-value ICTs.



Other initiatives inspired by the OECD Guidelines and noted in the report are that “Japan and Korea agreed to co-operate ... through various efforts, including a project aimed at mutual recognition of Internet trustmarks”,[536] and the evaluation of websites in “sweep days”. The criticism here is not of the OECD Guidelines as such, but of the fact that those purporting to be guided by it are persisting with parochial mind-sets: the initiatives are all regional and, in some cases, even legally insignificant. For example, a trustmark would not practically assist with a breached ICT except in extremely limited circumstances.[537]



Further support for this criticism may be found in the OECD’s “One year later” report of 2001.[538] In the report on “Session Five: Global Co-operation and Utilising International Co-operation to Extend the Reach of the Guidelines”, it was noted that “global co-operation must mean a global understanding of different legal systems and cultures”. [539] This is appropriate as a pre-cursor for steps towards the creation of “redress mechanisms [for breached ICTs] without undue cost or burden” upon consumers (OECD Guidelines Part VIA), but this definition of “global co-operation” does not go far enough and, worse, it does not envisage going any further. The second report also noted that practical examples of global co-operation were still limited to the signing of international co-operation agreements between law enforcement authorities (not especially helpful without the pre-existence of the judgment of a court recognisable in foreign jurisdictions), more inter-governmental information exchanges, and sweep days.



In 2003 the OECD produced its Consumers in the Online Marketplace: The OECD Guidelines Three Years later.[540] There was little progress towards addressing the above criticisms. The section headed “Global co-operation”[541] noted the launching of a new website “econsumer.gov”[542] in April 2001, and the section headed “Cross-border enforcement co-operation”[543] noted the report of the proceedings of the Committee on Consumer Policies’ meeting of March 2000, concerning international (i.e. US and Canadian) cooperation regarding cross-border fraud and deception.



The new website commendably collects into a single place a collection of information resources for consumers engaging in ICTs.[544] A consumer facing a stubborn vendor in a foreign jurisdiction however, would be hard-pressed to find anything in the new website which would lead to a cost-effective enforceable remedy. Thus the “remedy” options there are not practically helpful. For example, the site allows a consumer to “report your complaint”, but advises that “you should not necessarily expect any country to pursue your complaint on your behalf”.[545] It also suggests “ways to resolve your complaint”, but these are limited to “links [that] may offer a quick and inexpensive way for you to resolve your complaint without having to initiate a formal legal action”. An example of this is a link to information about Alternative/Online Dispute Resolution (ADR/ODR), an ultimately unenforceable option in the vast majority of cases, and depending for success on the benevolence (or otherwise) of the vendor. As noted in chapter four, the new website amounts to little more than an exercise in consumer education plus a complaints registry.



In respect of the “Cross-border enforcement co-operation”, many cases of non/wrong delivery of goods will not involve “fraud” as such, but could still trigger an otherwise irresolvable dispute; international cooperation is needed beyond that between the US and Canada only; the most recent proceedings along these lines were in March 2000; and as already noted, enforcement cooperation is of little assistance without the pre-existence of judgments for low-value consumer transactions that are recognisable across borders. Therefore, what is needed is wide international cooperation on cost-effective and simple access to internationally recognized redress procedures and, for a comprehensive solution, the harmonisation of the substantive content of consumer protection laws, internationally.



Michael Donohue, OECD's Consumer Policy Analyst then responsible for the OECD Guidelines, in a personal interview in June 2003, has indicated that there would be sympathy at a national level for an international treaty as a solution to the problem of cost-effective redress for disputed ICTs were such a treaty to actually provide a cost-effective solution. He said that ADR/ODR systems may provide the model for the mechanism – with added “teeth”, for enforcement – but warned that treaties are hard to get in the first place, and become very hard to change thereafter, especially if they carve consumer protection rules in stone for an environment that's changing rapidly. It is interesting that a person occupying such a position should be willing to acknowledge that a solution, by means of an international treaty, would be viewed sympathetically, without arguing any other case at all for a better solution. Furthermore, perhaps his warning regarding the degree of difficulty in obtaining and maintaining a treaty solution could be circumvented through promotion of understanding of the economic advantages to be gained by the provision of a technology-neutral solution sooner rather than later.



V THE EUROPEAN MODELS



In common with both Australia and the USA, the European Union (EU), at least economically, is an example of a federal system of government. Bogdanor says that



The EU certainly [satisfies] the federal principle. There is a constitutionally guaranteed division of legal sovereignty between two layers of government divided territorially. Sovereignty is divided between the EU itself and the member states. The component units, the member states, retain, of course, very significant, if not preponderant, law-making powers, but these powers are limited by the Treaty of Rome and the amending treaties.[546]



The EU models laws examined here then, may reasonably be understood as laws of Europe (as if they were the laws of a sovereign nation), and amount to a second example of what may be achieved cooperatively between separate states, after Australia’s Trade Practices Act .



The assessment in this section of the two EU model laws – the Distance Sales Directive and the E-Commerce Directive – necessarily includes some preliminary description and analysis of two associated but independent bodies of private international law: the Rome Convention[547] and the Brussels Regulation.[548]



The Distance Sales Directive[549] came into force in May 1997. It aims to protect consumers engaging in “distance contracts” (Article 2), and applies to all companies engaging in on-line transactions with EU consumers (Article 6). Notably, the Distance Sales Directive includes a right of withdrawal in favour of consumers that cannot be waived by contract. The structure of the Distance Sales Directive is set out in Appendix A to this thesis.



The E-Commerce Directive[550] came into force in July 2000. It provides a general legal framework for the conduct of e-commerce within the EU and by the EU Member States with outside parties. It commences with a lengthy preamble (65 clauses), and is contained in 24 Articles in the structure set out in Appendix B to this thesis.



The redress provisions of the Distance Sales Directive and the E-Commerce Directive are Articles 11 and 18 respectively. Article 11 of the Distance Sales Directive provides that Member States must ensure compliance with the Distance Sales Directive in the interests of consumers, by allowing appropriate bodies with standing to take action before competent judicial or administrative bodies, or by direct enforcement measures.[551] The exact scope of the Member States' responsibilities in relation to the phrase “must ensure compliance” is unknown, but hopefully it will be whatever is needed unless the directive will be seen as ineffectual. As to whether or not individual consumers can act directly under this provision, the phrase “appropriate bodies with standing” has been interpreted[552] to include aggrieved private individual consumers. Article 11 then, may offer an avenue of redress for EU consumers. Future research will decide whether this is the case or not.



In similar terms, Article 18 of the E-Commerce Directive provides that Member States must ensure that available court actions allow for the rapid adoption of measures designed to terminate any alleged infringement of the information society[553] service interests involved.[554] In other words, for circumstances within the EU to which the E-Commerce Directive applies,[555] court actions must be available to deal inter alia with cross-border disputes.



Article 11 of the Distance Sales Directive and Article 18 of the E-Commerce Directive are enacted law, as opposed to the abstract “guidelines” found in the UN Guidelines and the OECD Guidelines. As such they are subject to specific existing private international law rules such as those found in the Rome Convention and the Brussels Regulation.



It can be seen that the general criticisms of private international law made in chapter three (for example, lack of harmonisation) – even from the perspective of a lawyer in general practice, and especially from the perspective of the average consumer – are understandable. While this view could be challenged however, as being “merely subjective” and grounded in lack of expertise, the more-objective problems with private international law are less difficult to ignore. For example, some consumers may want to understand how to run their own actions, and complex private international law rules will often prevent this; private international law rules are subject to unforeseeable and unilateral alteration, virtually necessitating a constantly-updated specialist legal skill; and private international law rules, from one country to the next, are just as likely to be inconsistent, as they are to be in agreement with each other, requiring skill with multiple sets of private international law rules in many cases. The issue now is whether these problems could be alleviated.



As noted in the conclusion to chapter four, there are two methods by which the complexity of private international law problems might be reduced or at least confronted:

  1. By harmonisation, i.e. international agreement on uniform private international law rules,[556] so that, for example, jurisdiction issues are irrelevant; or
  2. By international convention, side-stepping private international law altogether,[557] such as, for example, the Vienna Sales Convention on the Sale of Goods 1980,[558] or the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958.[559]

  3. Reducing private international law problems by harmonisation

According to Reich, “Article 5 of the Rome Convention is the fundamental law of consumer protection in cross-border situations not only within the European Union, but for consumers residing in the EU also with third countries”.[560] This view is to be understood on the basis that the Rome Convention is concerned only with rules for the determination of applicable law and not with rules concerning jurisdiction or enforcement of judgments: “the private international law of most Western European countries has come to be located in, or derived from, multilateral conventions [such as] the 1980 Rome Convention ... [which] applies to contractual obligations in any situation involving a choice between the laws of different countries”.[561] Since 1st May 2002, the Brussels Regulation has become the major set of private international law rules within the EU for the regulation of ICTs concerning jurisdiction, recognition and enforcement. As regards the E-Commerce Directive specifically, the E-Commerce Directive “does not attempt to establish additional rules [on private international law], nor does it affect questions of jurisdiction (Article 1(4)). The Conventions dealing with these rules [i.e. the Rome Convention and the Brussels Regulation] will continue to apply”.[562] The basic subject matter, therefore, of an examination of Articles 11 and 18 is an examination of issues associated with the relevant private international law under the Rome Convention and the Brussels Regulation.



Under Article 5 of the Rome Convention, there are two circumstances to which the Distance Sales Directive and the E-Commerce Directive apply. Recalling Reich’s comment, above, on Article 5, the two circumstances are therefore (1) where the vendor and the consumer are both within the territory of one or more of the Member States of the EU, and (2) where the consumer is within the EU and the vendor is outside the EU.[563]



Article 5(2) Rome Convention provides that “a choice of law made by the parties shall not have the effect of depriving the consumer of the protection afforded him by the mandatory rules of the law of the country in which he has his habitual residence”.[564] Thus, in either of the two circumstances noted above, the law applicable to the contract relating to an ICT involving EU territory might always be the national consumer protection law of the country of the consumer. This raises three questions. The first question is whether the national consumer protection law of the country of any particular consumer will necessarily be better than the national consumer protection law of the country of any particular vendor. In some cases, it may be just the opposite: there is no necessary relationship between a party and the quality of law of their country, from their perspective. The second question is whether, in any event, the consumer would still want his or her local national consumer protection law to apply because of the convenience of using their local forum instead of travelling to the vendor's country. The question is whether a local forum would necessarily provide a better outcome for the consumer, not to mention necessarily serve the interests of justice for all concerned. The question will typically be answered in the negative because there is still the potential enforcement issue in respect of the decision of that court in the vendor's country. Thirdly, a choice of law clause made pursuant to Article 5 of the Rome Convention may not automatically be effective in all cases. While not strictly a consumer sale of goods contract case, the French case of Rousseau c/ Commerzbank may be instructive. In that case the court held that



Notwithstanding a choice of law clause in favour of German law, French consumer law must be applied under Article 5 of the Rome convention, since the offer of loan has been made in France and the steps leading to the conclusion of the contract were accomplished in France, this country being the place of the consumer's habitual residence. The choice of Germany as the effective place of signature for the loan offer being fraudulent since it intended to avoid the application of a few provisions of French law, it should not be taken into account. Under Article 7 of the Rome convention, a compulsory provision of French consumer law is applicable as a forum's imperative rule, since the real estate, the purchase of which was the purpose of the loan, is located in France. A French legal provision relating to consumer protection must apply to a contract since the parties by way of incorporation into the contract have chosen it. Under Article 9 of the Rome convention, French law should apply to the form of a contract since it is the law of the country wherein is located the consumer's habitual residence. [565]



Thus the “harmonisation” solution in the EU (through international agreement on private international law rules) is limited in that there is really only harmonisation of EU private international law rules (in respect of choice of law issues) and no actual harmonisation of the national consumer protection laws of EU member states.



The Brussels Regulation (the Regulation) is the major set of private international law for most member states of the EU in respect of jurisdiction (Articles 15-17), and recognition and enforcement issues (Articles 32-56).[566] The Regulation superseded the Brussels Convention on 1st March 2002.[567] The Convention contained a special consumer protection regime whereby consumers resident in EU Member States could choose to avoid having to bring proceedings against corporations in the state in which the corporation was domiciled. The particular provisions in the Regulation of interest here are Article 15(1)(c), which preserved the Convention's special consumer protection regime, with an important modification which makes it easier to apply to online contracts, and Article 16(1). Article 15(1)(c) provides that:



In matters relating to a contract concluded by a person, the consumer, for a purpose which can be regarded as being outside his trade or profession, jurisdiction shall be determined by this Section [Section 4] if the contract has been concluded with a person who pursues commercial or professional activities in the Member State of the consumer's domicile or, by any means [such as by the Internet], directs such activities to that Member State or to several States including that Member State, and the contract falls within the scope of such activities;[568]



and Article 16(1) in Section 4 then provides that:



A consumer may bring proceedings against the other party, either in the courts of the Member State in which that other party is domiciled, or in the courts for the place where the consumer is domiciled.



In summary, the difference here between the Convention and Regulation is that the Convention provides that the consumer may bring proceedings in the court of their own country if the conclusion of the contract was preceded “by a specific invitation addressed to him [sic] or by advertising”, whereas the Regulation provides that the consumer can sue in their own country if the seller pursues commercial activities there “by any means”. Further, the Convention requires the consumer to “have taken the steps to conclude the contract in their home state” whereas there is no equivalent requirement in the Regulation.



The outcome is that under the Regulation, the consumer is sovereign in disputes, and may now choose to sue in their country or in the country of the vendor. This will have cost and simplicity advantages for the EU consumer. Furthermore, under Article 16(2), if the vendor sues, they must sue in the country of the consumer. Both of these points are viewed as an impediment to the growth of e-commerce by online businesses.[569]



The Rome Convention and the Regulation establish and perpetuate a situation where website businesses have to comply with the consumer protection laws of 15 different member states, i.e. they may have to comply with the laws of any EU country from which their sites are accessible. No doubt this will be so confusing and such a threat to some businesses that many will actually stay out of e-commerce altogether. While this thesis is focused on the consumer, there remains a desire to improve things for all players in the field, otherwise there may end up not being any field and everyone will lose, including governments and therefore society in general.



Another criticism is that despite provisions such as clause 52 of the E-Commerce Directive’s Preamble (which provides that “this Directive requests Member States to ensure that appropriate court actions are available” – see also Article 11 Distance Sales Directive),



[a] recent report prepared for the Commission on jurisdiction and applicable law in cross border complaints states that the procedure provided under the [Regulation] only has a positive economic effect for consumers where the value of the litigation is above ₤1,500. This means that the majority of consumer claims fall outside the scope of the protection granted by the [Regulation] as legal costs involved in gaining and enforcing judgment outweigh the loss suffered by the consumers. The fact that the majority of transactions conducted by e-commerce are for small amounts means that the Brussels Regulation will not in fact offer effective protection for consumers.[570]



Thus – assuming this is fair criticism – “appropriate court actions” (E-Commerce Directive) and “adequate and effective means [of judicial redress]” (Distance Sales Directive) are not available with respect to low value ICTs, and therefore cost-effective access to justice is not available in the majority of consumer disputes in the EU.



  1. Eliminating private international law problems through creation of international conventions

The redress provisions of the Distance Sales Directive and E-Commerce Directive remain bogged down by private international law issues such as cost-effective access to justice, and asymmetric issues rules concerning choice of law and judicial recognition and enforcement in that they are (at least perceived as being) in favour of the consumer at the expense of business interests. A way of resolving this could be to side-step it altogether. This could be done with some sort of enforceable, balanced and harmonised international consumer protection law. This has been recognised by a multitude of commentators (despite the development of the Distance Sales Directive and the E-Commerce Directive, and the recent updating of both the Rome and Brussels Conventions[571]). For example, according to Pearce



There is a growing recognition of the need for coordination between Member States in resolving cross-border disputes ... [there is a] need to establish clear rules on jurisdiction and to improve and speed up the recognition and enforcement of judgments.[572]



Despite these sentiments the solution is seen in “soft law” approaches such as ADR and “codes of conduct” for industry self-regulation.[573]



The E-Commerce Directive is effectively an international treaty.[574] This means that for citizens of the EU, consumers can expect to benefit from the protection of the Member State where a service provider is located, through the principle of mutual recognition of national (EU) laws.[575] Despite this, because the idea of self-regulation through industry “codes of conduct” is still promoted (Article 16), there may be a modicum of self-doubt in the effectiveness of provisions like Article 18 (the E-Commerce Directive’s redress provision being reviewed here). Codes of conduct are voluntary codes created by trade associations and the like. Whilst these codes are to be commended and encouraged, they only apply to country of location and not to cross-border transactions, and they set up suppliers as judges in their own cause, being unsupported by state-backed sanctions. Codes of conduct, apparently, are still considered to be effective though. According to Pearce, “the participation of trade ... in the drawing up of self-regulatory codes is regarded as crucial to the ... settlement of cross-border-disputes”.[576] This is reasonable if self-regulatory codes are there merely to contribute soft law to a menu of consumer redress options but, alone, industry self-regulation, improved or otherwise, does not appear to be a practical remedy.



It is the second of the two methods by which the problems of private international law can be confronted – i.e. by side-stepping them entirely via some sort of enforceable, balanced and harmonised international convention – which is clearly the superior approach.



VI US LAW



The most important federal[577] consumer protection law in the United States is the Uniform Commercial Code (the Code) of 1952.[578] The purpose of the Code is to “establish a uniform law to govern commercial transactions that often take place across state lines”.[579] It is Article 2 of the Code that regulates contracts for the sale of goods. Under Article 2 there is no express distinction made between B2B (business to business) and B2C (business to consumer) transactions. However, by defining “between merchants” as “any transaction with respect to which both parties are chargeable with the knowledge or skill of merchants” there is an implied difference in the treatment of B2B and B2C transactions under the Code, thus ensuring consumers are specifically protected. Further, the Code would be a good candidate for inclusion in an international consumer law harmonisation project, containing the usual range of “standard” consumer protection provisions such as provisions concerning implied warranties of title, merchantability and fitness for purpose, together with provisions concerning buyer’s rights to performance and remedies in the event of non-performance.



The relevant US private international law when the Code is the law governing ICTs is the so-called “long arm statute” laws. A “long arm statute” has been defined as “a law that allows one state to claim personal jurisdiction over someone living in another state”.[580] Each US state has its own long-arm statute(s), and an example of how easily US states may claim such jurisdiction was seen in the case of Bochan v La Fontaine considered in chapter three.[581]



In considering a matter with potential foreign elements, a US state court begins deliberations by examining whether jurisdiction over a foreign party is allowed under the forum state's long arm statute, and whether that jurisdiction would fall within the due process principle of the Fourteenth Amendment to the US Constitution.[582] It is the due process clause of the Fourteenth Amendment which enables a state to create a long-arm statute.



Under US law, a court in the state in which the consumer resides will have jurisdiction over a foreign defaulting Internet seller in relation to an ICT, when the minimum contacts of a non resident defendant with a forum are such that the exercise of jurisdiction does not offend “traditional notions of fair play and substantial justice”.[583]



Further, the defendant must have such a degree of “minimum contact” with the forum that “they might expect the necessity of litigating there ... [for example] by doing business within it ... however a defendant need not have physically entered a forum in order to be subject to its jurisdictional reach”.[584]



As noted in chapter three, for the purpose of further refining the resolution of jurisdictional questions, US courts have classified Internet cases into three categories along a three point sliding scale. At one end, is the case where jurisdiction over a foreign trader will be asserted because the defendant actively conducts business over the Internet with consumers in a specific jurisdiction. Then there is a mid point where users can correspond with interactive web sites. At the other end, there are the passive sites that offer information available to those searching for it.[585]



In US law, then, the focus is upon the activities of the supplier and not on the consumer as the US courts are required to conduct the “minimum contacts analysis” of the supplier’s activity referred to above. Furthermore, a minimum contacts analysis – which results in a court declaring itself competent to hear a matter in relation to foreign websites – must have established that three extra conditions have been satisfied: the defendant must have performed a transaction within the forum, the exercise of jurisdiction in the forum is reasonable (i.e. does not place an excessive burden upon the defendant), and the website in question must be sufficiently “active”, i.e. it must do more than passively make information available, it must also allow for the creation of contracts, take payment, and exhibit other indicators of interactivity.[586]



The mere act of a corporation selling goods across any US state boundary will often satisfy this requirement for US jurisdictions. The result is that, while approaching the same issue from a different perspective, US law often arrives at a similar point to the Europeans under the Brussels Regulation: the consumer gets to litigate in their local court. This will have cost and simplicity advantages for the US consumer, however the difference under US law is that the US consumer can be subject to contractual choice of forum (i.e. jurisdiction) clauses (which would have no effect in Europe unless they favour the consumer). In the case of Carnival Cruise Lines Inc. v Shute 499 U.S.585 (1991)[587] the US Supreme Court held that forum selection clauses in consumer contracts would be upheld where they were freely bargained for (i.e. given in exchange for consideration, without undue burden on the consumer) because of the cruise line's international character, which increased the likelihood and expense of being brought to court outside the US. By analogy, comparison of the borderless world of the Internet leads to a similar conclusion.



The US approach to redress for consumers in respect of disputed ICTs is both consumer-friendly and arguably fair to Internet business,[588] although one should question how cost-effective they would be in respect of low value ICTs. As to enforceability, however, it seems that the problem of actually enforcing the decision of a consumer’s local court where the defendant foreign Internet merchant has no assets in the forum jurisdiction (unlike under EU law, as noted above) still exists under present US law.



VII CONCLUSION



Every model examined in this chapter is beset by the problems of unharmonised consumer protection standards, unharmonised private international law rules, high cost and limited enforcement powers, leading to lack of consumer confidence in entering ICTs and in the enforcement of judgements regarding failed ICTs.



A comprehensive international consumer protection law is desirable. It may be an extraordinarily difficult business creating such a law, as evidenced by the comments of Donohue and Goldring, above – “it usually takes a couple of years to draft an internationally acceptable convention and requires diplomatic conferences with all the contracting states participating to introduce necessary changes because of its status as a treaty”[589] – but successful examples of such a process however, are numerous. “The Vienna Sales Convention ... is the most successful convention having regard to the number of contracting states and its acceptance in practice”.[590] This seems to suggest the need to reconsider a solution in the form of a Vienna Sales Convention-like convention.



In a world of increasing geographic neutrality, and with so many stakeholders having so much to gain, it is undoubted that efforts to create a Vienna Sales Convention-like regime for ICTs may be near at hand. It is hoped that the key objectives in the creation of such a regime will include cost-effectiveness for low-value ICTs, ease of use by consumers, and a balance of the interests of consumers and online vendors alike.



Finally, as it is a recurring theme, it may be useful to consider the idea of “harmonisation” a little more closely, in relation to the potential harmonisation of the model laws examined above, or indeed any other law. Harmonisation here means at least the blending of two or more national laws for the purpose of creating a single bi-lateral or multi-lateral enforceable international law, without disagreement between signatory states in respect of either substantive or procedural provisions.



Two aspects of harmonisation are analysed here. Firstly, consideration is given as to why harmonisation should be considered at all. Secondly, a possible process for achieving harmonisation is briefly outlined.



The Internet has internationalised consumerism and ICTs will continue to be commonplace. The use of national consumer protection laws in ICTs through choice of law clauses can involve complex private international law issues such as jurisdiction, recognition and enforcement, and dealings between consumers and online merchants regarding governing law would usually be slanted towards the merchant through use of standard form “take it or leave it” contracts. This is inappropriate for the average online consumer. Despite the advantages of a “minimal international consumer protection law” (i.e. a non-unified international consumer protection law with just cost-effective redress provisions) noted earlier, a full international consumer protection law would mean that the tangled problems of private international law (choice of law, adjudicatory jurisdiction, recognition and enforcement of foreign judgments, plus all the cost, uncertainty and complexity of these factors) could be neatly side-stepped with international agreement to submit to a single law. If the rules of international commerce, maritime law, criminal law, telecommunications and postal services law, etc. have become “geography-neutral” or globalised, the content for international consumer protection laws (possibly subject to some in-built flexibility for local or cultural differences) could also be agreed upon and made geography-neutral.



The second aspect of the harmonisation topic considered here relates to the mechanics of the harmonisation process and how the harmonisation of different laws and principles might be possible.



A three-stage technique by which international harmonisation may be achieved has been suggested by Goldring.[591] The first stage is the comparative law study of the relevant law of the prospective signatory states, “designed to reveal similarities, differences, and points likely to require specific attention”.[592] The “parallel text” method of documentary analysis and comparison, used in some academic disciplines, could be useful in this stage.



The second stage is formulation in which a proposed text is produced either in the more-common form of a draft international treaty/convention, or as a draft model law. As may be expected, Goldring warns that



because of the process of compromise and negotiation [that is often involved in this stage] the text is more commonly the lowest common denominator of national interests ... [but] even then, there may be irreconcilable differences ... [T]he Vienna Sales Convention of 1980 was the culmination of 50 years’ work on the text of the uniform law.[593]



Goldring calls the final stage “legislation or model law?” and advises that legislation in the form of the “Directives” used by the European Union are a form of international treaty which Member States are obliged (by the 1957 Treaty of Rome) to implement, meaning that the terms of the treaty become part of the national law of each signatory state. Conversely, with a model law, “there is no formal compulsion to adopt the whole [or any part of] the text. Local drafters are tempted to add their own embellishments and variations to provide for local circumstances.” The “model law” approach (in Goldring’s sense) is not recommended here, as such an approach may be forever likely to remain a mere curiosity for legal specialists.



As for the detailed content of a full international consumer protection law, its structure and substantive content beyond the mere principles and principle-like provisions found in the model laws examined here are outside the scope of this thesis concerned principally with the problem of cost-effective redress.



CHAPTER SEVEN: CONCLUSIONS



I INTRODUCTION



This chapter reviews and draws together the development of the various themes examined in chapters two to six in addressing the basic research issue: whether cost-effective redress for post-transaction problems with low-value ICTs is or can be made available by litigation or by any other legitimate non-litigation-based method, whether current or potential. The chapter then states the overall conclusions reached by this research project. The chapter closes by evaluating the relevance and importance of this thesis to the development of the law of international consumer protection, and suggests what further research might be done to extend the study.



II THE THEMES AND THE THESIS



Chapter two described and analysed the academic scholarship regarding the justifications for consumer protection – including protection for ICTs conducted in cyberspace – and described the tension between “libertarianism” and “interventionism”. The chapter also described and summarised the academic scholarship concerning four legal perspectives directly or indirectly relating to protection for consumer transactions: Consumer Protection Law, Contract Law, Private International Law and Cyberlaw. That is, the chapter established the theoretical and legal contexts for problems associated with redress for ICTs, especially but not exclusively those conducted in cyberspace, since most ICTs are transacted, to some extent, within cyberspace. The chapter also described the methodology used in evaluating the cost-effectiveness of the redress methods considered by this thesis.



Chapter two concluded that, for the purposes of regulation of low value ICTs, the most cost-effective remedy is likely to be an interventionist one – i.e. one which is associated with state-backed sanctions. An interventionist approach was demonstrated as inevitable since there are likely to be limitations to the effectiveness and legal certainty of cyberspace self-ordering, especially where some aspects of the performance of ICTs necessarily occur in realspace, and since libertarian remedies are ultimately unenforceable.



Chapter two also disclosed the beginnings of a convergence between the separate debates about interventionism and private international law. In Boss’s “universal system – developed cooperatively by different countries”, in Hardy's “statutory or judicial solution”, in Post's “promotion of the common welfare”, in Goldring's “multi-lateral international agreements” and “broadly-based effort to establish international consumer protection norms”, and in Tokeley's “cyber-jurisdiction which would regulate the internet independent of national laws”, the possible beginnings of a single unified resolution to both debates was noted. Such a resolution may also provide an answer to the problem of offline/post-transaction non-performance by cyberspace vendors.



Chapter two concluded with a general regulatory theory of ICTs reduced to a simple formulation: in the case of a non-delivery or wrong-delivery in but valid and binding ICT, concluded via the Internet or otherwise and where interventionist protection for the consumer party is justifiable, no form of redress will be acceptable unless that form of redress is at least cost-effective.



Chapter three examined, in the context of contractual terms for ICTs, court-based redress for ICTs. In doing so, it demonstrated that, according to the evaluation methodology established in chapter two, redress for non-delivery or wrong-delivery in low-value ICTs by means of litigation will not generally be cost-effective, wherever litigated, and noted that a significant contribution to this problem was the lack of harmony amongst various national private international law rules.



It was concluded that it was not litigation as such but litigation-based remedies as they currently exist which appear to be the problem. Whether modified litigation-based approaches may provide a solution remains to be seen, the biggest problem being the relative cost of litigation and enforcement as compared with the low values of ICT losses under consideration. Thus it was noted that if the cost of litigation and enforcement with respect to ICTs could somehow be dramatically reduced – perhaps through some form of “cybercourt” or “e-court” with an international jurisdiction – a form of the litigation method will be the only solution if other methods of redress, such as those considered in chapter four, remain ineffective.



Chapter four considered redress for non-delivery or wrong-delivery in ICTs by means other than litigation.[594] It demonstrated that such means, at least as they currently exist, are also generally not cost-effective.



The chapter concluded that given the ineffectiveness of non-litigation-based solutions, the only source of cost-effective remedies for non-delivery or wrong-delivery in ICTs will be either of two possibilities. The first is the reduction or elimination of the problems associated with national private international law rules[595] so that jurisdiction issues become irrelevant. The second possibility is the side-stepping of such problems altogether through the creation of an international consumer protection regime to provide a cost-effective scheme of internationally recognised and enforceable court-based litigation for low-value ICTs. It was noted in that chapter that a cyber-jurisdiction, as defined, was perhaps one means by which such a convention could be administered to provide access to justice cheaply enough for low-value ICTs. It was suggested that a possible partial model for this approach is the Vienna Sales Convention and the hope was expressed that bodies such as UNIDROIT and UNCITRAL might lead the way in the development of such a solution.



Chapter five examined the Vienna Sales Convention (the Convention) as an example of a model law which could be seen as analogous to a potential future solution. After an overview of the structure and content of the Convention, the chapter looked at the history of the Convention, its fundamental objectives and the problems it sought to solve, and the extent to which the Convention is applicable or inapplicable to ICTs.



The chapter also examined how the Convention was implemented, or why it was not implemented, in three countries: Australia, the USA and the UK. This was done in order to ascertain whether there is a diversity of approaches taken by signatories or potential signatories to implementation and adoption of the Convention, providing some indication of how a convention protecting ICTs modelled upon the Convention might also be received by the countries of the world.



The chapter then described and analysed literature concerning the effectiveness of the Convention as a form of protection for ICTs, and questioned whether it would be reasonable or appropriate to amend the Convention to provide redress for ICTs generally and litigation-based redress for low-value ICTs in particular.



The chapter concluded that the differences between B2B and B2C transactions are so great that the Convention could not practically be considered as modifiable for the redress of non-delivery or wrong-delivery in ICTs. Such a task would be unpopular with Convention users, destroying its simplicity and purity. Chapters two, three and four demonstrate that an internationally-coordinated approach is desirable. Chapter five concluded that an internationally-coordinated approach similar to that employed by the Convention for international B2B transactions, coupled with technology to achieve efficiencies for low-value disputes, is achievable to handle the problem of litigation-based redress for low-value ICTs, but that modifying the Convention itself to achieve such an outcome would be inappropriate. This is because the Convention does not contain consumer protection provisions such as those found in Part V of Australia’s Trade Practices Act; it does not address the potential jurisdiction, recognition and enforcement problems associated with ICTs, and it is not underpinned by or associated with any kind of judicial infrastructure to achieve cost-effectiveness in respect of low-value ICTs. It was conceded however that many of the positive qualities of the Convention – simplicity, practicality, clarity, flexibility and neutrality – could and should be imitated.



Chapter six considered commentary from academic and judicial sources concerning the specific redress and enforcement provisions of a range of model consumer protection-related laws proposed by Australia, the United Nations, the Organisation for Economic Cooperation and Development, the European Union and the United States, especially in respect of transnational enforcement. The model laws were considered in both descriptive and prescriptive terms, looking at the objective characteristics of the models, and how those characteristics might be used, if at all, in the formulation of a solution to the problems of ICTs. The chapter also considered commentary relevant to possible process of harmonising the general content of those model laws.



It was found that each of the models examined in the chapter is beset by the problems of unharmonised consumer protection standards and unharmonised private international law rules, leading to a lack of consumer confidence in entering ICTs and in the enforcement of judgements regarding failed ICTs. It was again concluded that an international consumer redress/protection law modelled on the Vienna Sales Convention and other model laws, will provide the solution. It was conceded that it might not be easy to create an international consumer redress/protection law, but successful examples of such a process were noted.



Finally, the chapter noted that in a world of increasing geographic neutrality, and with so many stakeholders having so much to gain, it is possible that efforts to create a Vienna Sales Convention-like regime for ICTs may be near at hand. It was hoped that the key objectives in the creation of such a regime would include the achievement of cost-effectiveness for low-value ICTs remedies, ease of use by consumers, and a balancing of the interests of consumers and online vendors.



III OVERALL CONCLUSION



In terms of the methodology established in chapter two – the methodology expressed as a table – the various results for the ICT redress methods numbered 1 to 9 can now be collectively tabulated as indicated below.



Evaluation of ICT redress methods

Methods
Cost
Difficulty of enforcement
Complexity
Cost-effective?


Litigation-based redress under current legal regime

1 – Litigation
High
Low
Very High
No


Current non-litigation-based redress

2 – Credit card terms
Very Low
Very High
Low
No
3 – Foreign lawyers
Acceptable
High
Acceptable
No
4 – Foreign public consumer protection authorities
Low
Very High
Acceptable
No
5 – ADR/ODR
Acceptable
High
High
No
6 – Arbitration
Acceptable
Acceptable
High
No
7 – Industry based consumer dispute resolution schemes
Low
High
High
No
8 – Industry codes of conduct
Very Low
Very High
Acceptable
No
9 – Escrow services
Acceptable
Low
High
No


From this final version of the table it is clear that there is no cost-effective redress for low-value ICTs available from any current redress method. This conclusion should be understood in the context of the point made in chapters two and five that the overall conclusion made here regarding the cost-effectiveness of the various redress methods is based upon the findings of chapters three and four only. The findings in chapters five and six however, are useful as indications as to the general nature of a potential solution – even if such indications are predominantly in negative terms, as problems to avoid.



Having examined a variety of actual current redress methods and alternative hypothetical solutions – such as international agreement on uniform conflicts rules and cyber-jurisdictions – in relation to the problem of low value ICTs, this thesis does not conclude simplistically that any one particular solution is the “correct” solution and that all other possibilities are “incorrect” or “ineffective”. On the contrary, the conclusion is that all current methods, model laws and hypothetical solutions are part of an array of potential solutions for any particular problematic ICT, but the solution which is explicitly recommended, as that with the greatest probability of achieving cost-effectiveness in redress for ICTs, is the development of an international consumer protection convention or, at least, a redress convention.



It would be instructive, at this point, to draw this thesis to a close by linking these conclusions to the theoretical framework established in chapter two.



The two fundamental conclusions of this thesis are that no cost-effective redress for non-delivery or wrong-delivery in ICTs is provided by any current redress method and that an international consumer law, in the form of an international convention, would provide the greatest probability of solving that problem. The theoretical framework described in chapter two consists of a range of elements. In summarised form those elements established that state-provided protection for consumer transactions is justified on the grounds of information asymmetry, inequality of bargaining power and, arguably, a general right to a remedy for actual abuses.



A single proposition can now be derived from all of that: consumers are entitled to be protected when they engage in ICTs but, in fact, they aren’t; and this is a social/legal anomaly which, on various grounds, invites correction.



From the debate, in chapter two, between the interventionist and libertarian schools of thought, it appears that only an interventionist solution could provide a remedy with the geographical reach and enforcement power required by this problem.



Chapter two concluded by considering a new regulatory theory to serve as a guiding principle for steering a path towards a clear and workable solution for problematic ICTs. The theory was expressed in a simple formulation as follows: in the case of a non-delivery or wrong-delivery in but valid and binding ICT, where interventionist protection, for the consumer party, is justifiable, no form of redress will be acceptable generally unless that form of redress is at least cost-effective. The question now is whether this thesis has achieved the goal of providing a solution which is clear and workable.



IV THE IMPACT OF THE STUDY



The impact of this study, in general terms, is that the study systematically describes what “law of international consumer redress” currently exists, evaluates the effectiveness of that law as a regime, and proposes improvements to such a regime based on evidence and reason. The study is thus a comprehensive and unified analysis and synthesis of an important single issue, conducted at both a broad and a detailed level.



More specifically, this study suggests a solution to problems with low value ICTs. A solution would allow increased confidence for consumers to purchase goods from foreign vendors. A major advantage of that will be to begin to achieve the potentially enormous economic benefits of workable international consumerism. Consumers will benefit because they could shop safely, at any time, in a global market, using intelligent and efficient search tools. Vendors will benefit because they will have customers who are more trusting and therefore more willing to engage with them, and they will be able to establish business operations within a legally certain environment. Society will benefit through an expanded tax base due to an increased volume of retail sales and through an increase in general economic stimulus.



Obtaining these benefits depends upon recognising the existing deficiencies in the present circumstances. This thesis has systematically documented and demonstrated those deficiencies.



Obtaining the benefits also depends upon indication of a solution based on good theoretical foundations, workable established precedent and realistic expectations. In the first case, consumers have a good theoretical foundation in the various justifications for social/legal intervention in non-delivery or wrong-delivery in ICTs considered in this thesis. In the second case, a combination of existing consumer protection law and model laws such as the Vienna Sales Convention and the relevant “directives” of the European Union do indeed provide precedents which are demonstrably workable. Furthermore, a negotiated assembly from the appropriate substantive and procedural provisions of such laws and perhaps other laws would result in a solution which would certainly be workable. As for expectations, it is evident that expectations of the success of a proposed solution based upon solid precedent, in terms of both existing law and existing technology, is realistic.



Finally, further extension of this study can occur in two ways. The study could be extended by empirical testing of the recommendations. Also, research could be conducted into the potential links between such information technology fields as Artificial Intelligence and Expert Systems, and judicial decision-making processes, in order to ascertain whether such processes could be automated and used by an electronic court for the purpose of reducing the cost of litigation for disputed low-value ICTs. Artificial Intelligence has been defined as “intelligence exhibited by an artificial entity. Such a system is generally assumed to be a computer”,[596] and “the use of computers to model the behavioural aspects of human reasoning and learning”.[597] Artificial Intelligence can be built into “Expert Systems” software. An “Expert System” has been described as



[a]n ... interactive system that responds to questions, asks for clarification, makes recommendations, and generally helps [and can replace] the user in the decision-making process ... the system mirrors the human thought process. It even uses information supplied by real experts in a particular field such as [law]. Expert systems are particularly good at making critical decisions that we might not be making because of [expense]. In many ways, expert systems re-create the decision process better than humans do. We tend to miss important considerations or alternatives – expert systems don’t.



An expert system applies IF-THEN rules to solve a particular problem ... [and] relies on factual knowledge [and] heuristic knowledge such as intuition, judgment, and inferences ... acquired from one or more real ... human experts in a particular field .. to model the human thought process within a particular area of expertise [such as] medical diagnosis ... nuclear power plant operation ... [and] interpreting government regulations, and many others.[598]



There is no apparent reason why an Expert System in the form of an electronic court could not be permanently on-line and accessible through the Internet to make low cost judgements based upon facts supplied by the parties to a disputed ICT, and rules of laws supplied by an international consumer redress/protection convention. Such a system could even handle circumstances without precedent, based upon certain pre-determined and up-dateable reasoning rules, and the system generally could be subject to appeals, at a price, just like the decisions of normal courts.



Artificial Intelligence and Expert Systems are issues to be explored in further research. In any event it is important that the protection of consumers engaging in ICTs remains a topic of both academic and governmental concern. While in most cases ICTs will probably be rewarding experiences for all concerned, the fact is that some disputes regarding ICTs are inevitable, law does intervene to regulate international events in other areas such as crime, telecommunications and B2B commerce, and there is much to be gained from the provision of cost-effective remedies for non-delivery or wrong-delivery in ICTs. Some of the advantages of globalisation are still waiting to be realised.



APPENDIX A

Distance Sales Directive – Structure and Contents



  1. Object
  2. Definitions
  3. Exemptions
  4. Prior information
  5. Written confirmation of information
  6. Right of withdrawal
  7. Performance
  8. Payment by card
  9. Inertia selling
  10. Restrictions on the use of certain means of distance communication
  11. Judicial or administrative redress
  12. Binding nature
  13. Community rules
  14. Minimal clause
  15. Implementation
  16. Consumer information
  17. Complaints system
  18. The Directive shall enter into force on the day of its publication in the Official Journal of the European Communities
  19. This Directive is addressed to the Member States.

APPENDIX B

Electronic Commerce Directive – Structure and Contents



CHAPTER I - GENERAL PROVISIONS

Article 1: Objective and scope

Article 2: Definitions

Article 3: Internal market



CHAPTER II - PRINCIPLES

Section 1: Establishment and information requirements

Article 4: Principle excluding prior authorisation

Article 5: General information to be provided



Section 2: Commercial communications

Article 6: Information to be provided

Article 7: Unsolicited commercial communication

Article 8: Regulated professions



Section 3: Contracts concluded by electronic means

Article 9: Treatment of contracts

Article 10: Information to be provided

Article 11: Placing of the order



Section 4: Liability of intermediary service providers

Article 12: 'Mere conduit'

Article 13: 'Caching'

Article 14: Hosting

Article 15: No general obligation to monitor



CHAPTER III - IMPLEMENTATION

Article 16: Codes of conduct

Article 17: Out-of-court dispute settlement

Article 18: Court actions

Article 19: Cooperation

Article 20: Sanctions



CHAPTER IV - FINAL PROVISIONS

Article 21: Re-examination

Article 22: Transposition

Article 23: Entry into force

Article 24: Addressees



Annex - Derogations from Article 3



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[1] This article equates to chapter 3 of this thesis.

[2] This article equates to chapter 4 of this thesis.

[3] Section 4B Trade Practices Act 1974 (Cth).

[4] This definition is adapted from the Concise Oxford Dictionary English of Current English (1980). The nature of cost-effectiveness however, is discussed in detail in chapter two.

[5] See chapter three on the cost of litigation.

[6] Low value ICTs are those valued in the lower range of zero to AUD$50,000.

[7] For example, where a consumer in country A submits an offer to purchase goods through a computer file server in B, received by a vendor in C, through a server in D operated by a company in E, that results in shipment from F via G, with payment being processed through banks of the consumer and vendor in countries H and I. Example based on J Rothchild, 'Protecting the Digital Consumer: The Limits of Cyberspace Utopianism' (1999) 74 Indiana Law Journal 893-989, 918.

[8] M Alexander, Net Security: Your Digital Doberman (1997), 7.

[9] Australian Government Treasury, The Internet and B2C E-Commerce (2005) <http://www.ecommerce.treasury.gov.au/bpmreview/content/discussionpaper/03_chapter2.asp> at 21 October 2005.

[10] L Smith, 'Global Online Shopping: How Well Protected Is the Australian Consumer?' (2004) 12 Competition and Consumer Law Journal 163-190, 164.

[11] ACCC, “Internet – New Territory for Enforcement”, May 2000, 6 ACCC <http://www.accc.gov.au/pubs/Publications/Journals/update6.pdf> at 20 August 2003, p.3

[12] OECD, Update of Official Statistics on Internet Consumer Transactions (2002) <http://www.oecd.org/EN/home/0,,EN-home-29-nodirectorate-no-no-no-29,00.htm> at 28 May 2002.

[13] There is no national perspective in this thesis. Data on the growth of e-commerce in the US is used simply because it is available, from a reliable source. All data in this paragraph is seen as indicative of international trends within an international phenomenon (international consumerism), as indicated by circumstances in the US and elsewhere.

[14] OECD, Update of Official Statistics on Internet Consumer Transactions (2002) <http://www.oecd.org/EN/home/0,,EN-home-29-nodirectorate-no-no-no-29,00.htm> at 28 May 2002.

[15] UNCITRAL, United Nations Convention on Contracts for the International Sale of Goods (1980) <http://www.uncitral.org/english/texts/sales/CISG.htm> at 28th September 2004.

[16] The justification for regulation of ICTs is considered in chapter two, and justification for regulation of standard form contracts is considered in chapter three.

[17] “Harmonisation” here means the blending of two or more national/state laws for the purpose of creating a single bi-lateral or multi-lateral enforceable multi-state law, without disagreement between signatory states in respect of either substantive or procedural provisions. In this sense, “harmonisation” is interchangeable with “unification”, and takes place to eliminate inconsistencies between the national laws being harmonised.

[18] “Cyberspace” may be considered as the global but generally borderless space created by the Internet (as opposed to the actual physical world, referred to in this thesis as “realspace”), and within which some perhaps legally novel phenomena occur. For example, multiple cyberspace identities representing a single real world identity, or vice versa; or a person “existing” in cyberspace whose identity does not correspond with any physical or artificial identity in the real world (see D Johnson and D Post, 'Law and Borders - the Rise of Law in Cyberspace' (1996) Stanford Law Review 1367-1402, pp.1367.)

[19] As regards what is understood by an effective remedy in this thesis, see chapter two under the Methodology heading.

[20] Foreign Judgments Act 1991 (Australia). This is examined in chapter three.

[21] The USA, for example, is not a party to the scheme behind the Foreign Judgements Act 1991.

[22] That is, some non-litigation-based protection methods may be simply inapplicable to some varieties of consumer goods available for purchase online. For example, an industry code of conduct, is not as universally applicable as general litigation.

[23] See chapter four.

[24] UNCITRAL, United Nations Convention on Contracts for the International Sale of Goods (1980) <http://www.uncitral.org/english/texts/sales/CISG.htm> at 28th September 2004.; and United Nations, Guidelines for Consumer Protection (1999) <http://www.un.org/documents/ecosoc/res/1999/eres1999-7.htm> at 15 November 2005.

[25] European Union, Directive 97/7/EC on Protection of Consumers in Respect of Distance Contracts (1997) <http://europa.eu.int/ISPO/ecommerce/legal/documents/31997L0007/31997L0007_en.html> at 25 May 2005 – and European Union, Directive 2000/31/EC on Certain Legal Aspects of Information Society Services, in Particular Electronic Commerce (2000) <http://europa.eu.int/ISPO/ecommerce/legal/documents/2000_31ec/2000_31ec_en.pdf> at 31 August 2005.

[26] OECD, Recommendation of the OECD Council Concerning Guidelines for Consumer Protection in the Context of Electronic Commerce (1999) <http://www.oecd.org/document/51/0,2340,en_2649_34267_1824435_1_1_1_1,00.html> at 30 August 2005.

[27] Published as ‘Litigation for international online consumer transactions is not cost effective – A case for reform?’ (2007) 14 Murdoch University E-Law Journal.

[28] As opposed to alternatives including transaction insurance, pressure applied through foreign lawyers or consumer protection bodies, and ADR (alternative dispute resolution).

[29] Published as ‘Non litigation-based redress for international consumer transactions is not cost effective – A case for reform?’ [2006] MqJlBLaw 7; (2006) 3 Macquarie Journal of Business Law 115-150.

[30] UNCITRAL, United Nations Convention on Contracts for the International Sale of Goods (1980) <http://www.uncitral.org/english/texts/sales/CISG.htm> at 28th September 2004.

[31] United Nations, Guidelines for Consumer Protection (1999) <http://www.un.org/documents/ecosoc/res/1999/eres1999-7.htm> at 15 November 2005.

[32] OECD, Recommendation of the OECD Council Concerning Guidelines for Consumer Protection in the Context of Electronic Commerce (1999) <http://www.oecd.org/document/51/0,2340,en_2649_34267_1824435_1_1_1_1,00.html> at 30 August 2005.

[33] European Union, Directive 97/7/EC on Protection of Consumers in Respect of Distance Contracts (1997) <http://europa.eu.int/ISPO/ecommerce/legal/documents/31997L0007/31997L0007_en.html> at 25 May 2005. and European Union, Directive 2000/31/EC on Certain Legal Aspects of Information Society Services, in Particular Electronic Commerce (2000) <http://europa.eu.int/ISPO/ecommerce/legal/documents/2000_31ec/2000_31ec_en.pdf> at 31 August 2005.

[34] As to whether “complete” objectivity in this context is even possible, see the Methodology section.

[35] H Perritt, Testimony by Henry H. Perritt, Jr. Dean, Chicago-Kent College of Law (2000) <http://www.kentlaw.edu/cyberlaw/perritthtest.html> at 8 June 2005.

[36] Software used to search for something throughout the entire Internet (or a sub-set of it), according to set parameters such as price, and trust marks (see chapter four).

[37] D Oughton, Consumer Law - Cases and Materials (1991), 14-15.

[38] P Nygh and M Davies, Conflict of Laws in Australia (7th ed, 2002), 4.

[39] Beyond Law of Electronic Commerce, Cyberlaw may regulate issues such as "cyber-defamation" and domain name disputes. This chapter only looks at the international consumer protection law aspects of Cyberlaw.

[40] See generally for example, P Quirk and J Forder, Electronic Commerce and the Law (2003). Cyberlaw / Law of Electronic Commerce does not cover technology-specific issues relating, for example, to interactive TV, Skype and “G3” (broadband) mobile telephones.

[41] A single ICT may have Contract Law, Consumer Protection Law, Private International Law and Cyberlaw aspects to it.

[42] Butterworths, Business and Law Dictionary (2nd ed, 2002).

[43] Dictionary.com, Cyberspace (2005) <http://dictionary.reference.com/search?q=consumer>

[44] AskOxford.com, Http://Www.Askoxford.Com/Concise_Oed/Consumer?View=Uk (2005).

[45] D Oughton, Consumer Law - Cases and Materials (1991), pp.1.

[46] J Goldring et al., Consumer Protection Law (4th edition ed, 1993), 27.

[47] Note also that as at 1998, s.4B Trade Practices Act allows the amount of $40,000 to be exceeded if the goods or services purchased were of a kind ordinarily acquired for personal, domestic, or household consumption and the consumer did not hold himself out as acquiring the goods or services for the purpose of re-supply or to use in trade or commerce. Incidentally, the Act itself does not explain or differentiate the terms “domestic” and “household” but the court in Carpet Call Pty Ltd v Chan (1987) ATPR (Digest) 46-025 held them to be understood according to their everyday meanings.

[48] That is, a consumer, for legal purposes, is the ultimate end user of goods or services.

[49] This thesis incorporates the commonality of the definitions as well as incorporating and not distinguishing between the semantic differences – such as “one who uses a commodity or service” as opposed to “one who acquires goods or services”; and incorporates the various definitions which, in prescribed circumstances, allow businesses to act (and be treated) as consumers. The rationale for this broad approach to “consumer” is so that a remedy for a failed ICT should not be unavailable merely because of a trivial technical/semantic difference between definitions concerning what a consumer is.

[50] G Taperell et al., Trade Practices and Consumer Protection (1974), 168.

[51] J Goldring et al., Consumer Protection Law (4th edition ed, 1993), 1.

[52] Ibid, 8.

[53] D Oughton, Consumer Law - Cases and Materials (1991), 14-15.

[54] Ibid, 13.

[55] Ibid.

[56] Ibid.

[57] Ibid, xi-xii. This is probably because the parties have so much less chance of face to face negotiation. Online contracts are more likely to operate on a “take it or leave it” basis.

[58] Butterworths, Business and Law Dictionary (2nd ed, 2002).

[59] C Coteanu, Cyber Consumer Law and Unfair Trading Practices (2005), xi. Standard form contracts are considered further in chapter three.

[60] I Ramsay, Consumer Protection Text and Materials (1989), 57.

[61] J Goldring et. al., Consumer Protection Law (1993), 3.

[62] C Coteanu, Cyber Consumer Law and Unfair Trading Practices (2005), xi.

[63] Section 52 Sale of Goods Act (1896) (Queensland), as noted above, allows a consumer to sue for damages for non-delivery of goods, and section 53 of that Act allows a consumer to sue for specific performance of a contract for supply of goods.

[64] This comes from the French for “let things alone”.

[65] Encyclopaedia Columbia, Laissez Faire (2005) <http://www.bartleby.com/65/la/laissezf.html>

[66] Stanford University, Stanford University Encyclopedia of Philosophy, Libertarianism, 2007 <http://plato.stanford.edu/entries/libertarianism/> at 10 April 2007

[67] This is illustrated by Post, for example, at the end of this chapter.

[68] See, for example, I Ayres and J Braithwaite, Responsive Regulation (1992), 3, where we see the “inevitability of some sort of symbiosis between state regulation and self-regulation ... [for example through an attempt to] synthesize formal law and commercial usage”.

[69] J Goldring et al., 'Consumer Protection, the Nation-State, Globalisation, and Democracy' (1996) 2 Journal of computer-mediated communication, 11.

[70] Ibid, 8.

[71] D Vogel, Trading up - Consumer and Environmental Regulation in a Global Economy (1995), x.

[72] Ibid, 1.

[73] Ibid.

[74] The Vienna Sales Convention is discussed in detail in chapter six.

[75] The United Nations Commission on International Trade Law.

[76] Electronic Data Interchange – a relatively old technology – can be defined as the electronic exchange of computer screen versions of physical business pro forma (e.g. purchase orders).

[77] A Boss, 'The Emerging Law of International Electronic Commerce' (1992) 6 Temple International & Comparative Law Journal 293-309, 293. and J Ritter, 'Defining International Electronic Commerce' (1992) 13 NorthWestern Journal of Law and Business 3-30, 3-4.

[78] A Boss, 'The Emerging Law of International Electronic Commerce' (1992) 6 Temple International & Comparative Law Journal 293-309, 300-301.

[79] I Hardy, 'The Proper Legal Regime for 'Cyberspace'' (1994) 55 U.Pitt.L.Rev.993 Stanford Law Review 993-1055, 994.

[80] Ibid.

[81] Ibid, 996.

[82] Ibid, 998.

[83] Ibid, 995.

[84] Ibid.

[85] Ibid, 1053-1054.

[86] Ibid.

[87] D Johnson and D Post, 'Law and Borders - the Rise of Law in Cyberspace' (1996) Stanford Law Review 1367-1402, 1367-1368.

[88] Ibid, 1400-1401.

[89] Ibid, 1402.

[90] Ibid, 1387-1391.

[91] Ibid, 1388.

[92] Ibid, 1389.

[93] Ibid. Both (the medieval and the virtual approaches) involve the idea of peer adjudication rather than state adjudication.

[94] L Lessig, 'The Zones of Cyberspace' (1996) Stanford Law Review 1403-1412, 1403.

[95] Ibid, 1406.

[96] Union Des Etudiants Juifs De France C Yahoo! Inc, (2000).Union des Etudiants Juifs de France c Yahoo! Inc, Tribunal de Grande Instance de Paris, 20 November 2000 - where the French government objected successfully to the marketing of Nazi memorabilia on the American Yahoo! website accessible within France. See also, for example, Brookfield and Gutnick. Brookfield Communications v West Coast Entertainment Corp [1999] USCA9 225; 174 F.3d 1036 (9th Cir. 1999) - an intellectual property case about alleged infringement of trademark rights (where the court held that the plaintiff, Brookfield, was entitled to a preliminary injunction against defendant West Coast's use of its planned "moviebuff.com" web address); and Dow Jones & Company Inc v Gutnick [2002] HCA 56 (10 December 2002) where the High Court's ruling allowed defamation plaintiffs in Australia to sue for defamation occuring through the Internet, against any defendant irrespective of their location.

[97] L Lessig, 'The Zones of Cyberspace' (1996) Stanford Law Review 1403-1412, 1407-1408.

[98] Ibid, 1409.

[99] Editorial Harvard Law Review, 'Developments in the Law - the Law of Cyberspace' (1999) 112 Harvard Law Review 1574, 1583.

[100] B Gordon, "The Legal Challenge of Regulating the Internet. Fact or Fallacy?" (1998), ch.3, p.9. Internet Service Providers are controlled by the Singapore Broadcasting Authority and must abide by the agency’s strict guidelines regarding “objectionable content”. This could range from pornography to “areas which may undermine public morals, political stability or religious harmony”. Furthermore, each Internet Service Provider must be registered with the government, and can be held liable for any content it gives access to.

[101] Ibid, ch.3, p.8. Regulation of the Internet in China began in February 1996 when the government required Internet Service Providers to use only government-provided phone lines. Now users must register with the police, and sign a pledge not to harm China’s national interests.

[102] Editorial Harvard Law Review, 'Developments in the Law - the Law of Cyberspace' (1999) 112 Harvard Law Review 1574, 1686.

[103] This will be of interest if international government-level cooperation is contemplated as a possible solution.

[104] M Halpern and A Mehrotra, 'From International Treaties to Internet Norms: The Evolution of International Trademark Disputes in the Internet Age' (2000) 21 University of Pennsylvania Journal of International Economic Law 523-561, 523-524.

[105] Ibid, 524.

[106] Ibid, 535 – emphasis added.

[107] C Rule, Online Dispute Resolution for Business - B2B, E-Commerce, Consumer, Employment, Insurance, and Other Commercial Conflicts (2002), 292 – emphasis added.

[108] Also, it is well known that rogue website operators can simply change location if faced with regulation unacceptable to their activities.

[109] R Clarke and G Dempsey, 'The Feasibility of Regulating Gambling on the Internet' (2000) 22 Managerial and Decision Economics 125-132, 125-132.

[110] Editorial Harvard Law Review, 'Developments in the Law - the Law of Cyberspace' (1999) 112 Harvard Law Review 1574, 1686.

[111] The Vienna Sales Convention is discussed in detail in chapter six.

[112] The Trade Practices Act is considered in two significant passages in this thesis – once here, to assist with the establishment of the legal context for this thesis, and later, in chapter six, as one of several model laws whose redress provisions are analysed and compared.

[113] Trade Practices Bill, Second Reading Speech, vol 57.

[114] The two types of regulation are bundled together in the Trade Practices Act, presumably, because they are both concerned with consumer protection – e.g. prevention of anti-competitive practices protects consumers.

[115] Consumer Protection – the purpose of Part V is to eliminate unfair trade practices (such as misleading and deceptive conduct, and false representations): Parkdale Custom Built Furniture Pty Ltd V Puxu Pty Ltd, 40 ATPR 307 (1982) at 43-786.

[116] Unconscionable Conduct – that is, situations where unfair advantage is taken of a person under a “special disability” by another party, where that other party was aware, or ought to have been aware, of that special disability: Commercial Bank of Australia V Amadio, 151 CLR (1983) per Mason J point 2.

[117] Enforcement and Remedies – provisions (such as those concerning fines, injunctions, damages) to allow public and private enforcement of the Trade Practices Act.

[118] It is provisions of this type which would become part of the substantive content of a comprehensive harmonised ICT solution.

[119] A final point concerning this is made in the Conclusion, below.

[120] M Vaughan, 'Business or Consumer E-Commerce - What's the Difference?' (2000) 50 Telecommunications Journal of Australia 1-2, 1.

[121] M Martin, 'Keep It Online: The Hague Convention and the Need for Online Alternative Dispute Resolution in International Business to Consumer E-Commerce' (2002) 20 Boston University International Law Journal 125-159, 132. We shall re-visit this issue when we examine the topic of standard form contracts in the next chapter.

[122] UNCITRAL, United Nations Convention on Contracts for the International Sale of Goods (1980) <http://www.uncitral.org/english/texts/sales/CISG.htm> at 28 September 2004.

[123] On Private International Law Hague Conference, A Convention Aimed at Producing a New International Convention on Jurisdiction and Foreign Judgments in Civil and Commercial Matters (2003) <http://www.cptech.org/ecom/jurisdiction/Prel_Doc08(e).doc> at 14 July 2005.

[124] That is, this thesis is not concerned with whether a contract is enforceable in law, it presumes we are dealing with valid binding contracts which remain un-performed in fact.

[125] R Horning, 'The Enforceability of Contracts Negotiated in Cyberspace' (1997) 5 International Journal of Law and Information Technology 109-157, 109.

[126] Brown V the Butchers and Drovers' Bank, 41 755, 443 (1844).

[127] R Horning, 'The Enforceability of Contracts Negotiated in Cyberspace' (1997) 5 International Journal of Law and Information Technology 109-157, 136.

[128] This topic is examined briefly here to assist in establishing the legal context of ICTs and assist with the construction of a basis for a proposed solution, in the final chapter. It is examined more closely in chapter three, for a different reason.

[129] See generally P Nygh and M Davies, Conflict of Laws in Australia (7th ed, 2002), 3, and E Sykes and M Pryles, Australian Private International Law (3rd ed, 1991), 1.

[130] Private international law must be distinguished from Public International Law which is a supranational legal system that exists independently of the legal systems and legislatures of each nation, and which can be altered only by international convention, and is concerned mainly with relations between sovereign nations: P Nygh and M Davies, Conflict of Laws in Australia (7th ed, 2002), 4.

[131] Such as mandatory applicability of the consumer protection rules of the consumer's country of origin.

[132] R Schu, 'The Applicable Law to Consumer Contracts Made over the Internet: Consumer Protection through Private International Law?' (1997) 5 International Journal of Law and Information Technology 192-229, 194. and P Nygh, 'Talk on Jurisdiction and the Internet' (Unpublished), 2002, 1.

[133] R Schu, 'The Applicable Law to Consumer Contracts Made over the Internet: Consumer Protection through Private International Law?' (1997) 5 International Journal of Law and Information Technology 192-229, 227-228.

[134] Ibid, 228-229 - emphasis added.

[135] Within the geographic jurisdiction of the local court.

[136] J Rothchild, 'Protecting the Digital Consumer: The Limits of Cyberspace Utopianism' (1999) 74 Indiana Law Journal 893-989, 918.

[137] J Dickie, Internet and Electronic Commerce Law in the European Union (1999), 86-87. So a choice of law clause favouring the seller may be ineffective, and the law governing a contract will be that of the country of the consumer, where there is no choice of law clause in the contract.

[138] Ibid, 88.

[139] D Rice, 'Jurisdiction in Cyberspace: Which Law and Forum Apply to Securities Transactions on the Internet?' (2000) 21 University of Pennsylvania Journal of International Economic Law 585-657, 585.

[140] Ibid.

[141] Ibid, 596.

[142] Ibid.

[143] Ibid.

[144] J Dickie, Internet and Electronic Commerce Law in the European Union (1999), 88.

[145] P Nygh, 'Talk on Jurisdiction and the Internet' (Unpublished), 2002, 1.

[146] Ibid, 1-2.

[147] Ibid, 2-4.

[148] Ibid.

[149] Ibid, 4.

[150] Union Des Etudiants Juifs De France C Yahoo! Inc, (2000). – where the French government objected successfully to the marketing of Nazi memorabilia on the American Yahoo! website accessible within France.

[151] P Nygh, 'Talk on Jurisdiction and the Internet' (Unpublished), 2002, 4.

[152]Ibid, 5. and see On Private International Law Hague Conference, A Convention Aimed at Producing a New International Convention on Jurisdiction and Foreign Judgments in Civil and Commercial Matters (2003) <http://www.cptech.org/ecom/jurisdiction/Prel_Doc08(e).doc> at 14 July 2005.The Hague Conference on Private International Law of 1993 lead to a draft Convention on Jurisdiction and Recognition of Foreign Judgements in 1999, which is explicitly inapplicable to consumer transactions.

[153] Dictionary.com, Cyberspace (2005) <http://dictionary.reference.com/search?q=consumer> .

[154] Merriam-Webster Online Dictionary, Cyberspace (2005) <http://www.m-w.com/cgi-bin/dictionary?book=Dictionary & va=cyberspace & x=15 & y=15> at 23 September 2005.

[155] D Johnson and D Post, 'Law and Borders - the Rise of Law in Cyberspace' (1996) Stanford Law Review 1367-1402, 1367.

[156] Y Lim, Cyberspace Law: Commentaries and Materials (2002), 1.

[157] B Fitzgerald and A Fitzgerald, Cyberlaw (2002), xv.

[158] Through any means of transborder communication – but most commonly via the Internet.

[159] As foreshadowed by chapter one, these relate to the cost, difficulty of enforcement and complexity problems suffered, to some extent, by all protection methods considered in chapters three and four.

[160] This latter distinction is explained further, in chapter four, where the potential protection methods are considered in some detail.

[161] Butterworths, Business and Law Dictionary (2nd ed, 2002) under entry on “Arbitration”.

[162] Dictionary.com, Effective (2005) <http://dictionary.reference.com/search?q=effective> at 4 October 2005.

[163] Oxford University, Concise Oxford Dictionary English of Current English (1980).

[164] Merriam-Webster Online Dictionary, Effective (2005) <http://www.m-w.com/cgi-bin/dictionary?book=Dictionary & va=effective & x=13 & y=17> at 4 October 2005.

[165] Merriam-Webster Online Dictionary, Cost-Effective (2005) <http://www.m-w.com/cgi-bin/dictionary?book=Dictionary & va=cost-effective> at 4 October 2005.

[166] This does not mean that a “non cost-effective” result for a particular method could never work. It would just mean that the method would be unlikely to be cost-effective.

[167] Regulatory intervention of any or all kinds (“command and control”, “light touch” and “responsive”) are equally conceivable. Also, it should be remembered that because this thesis is concerned principally with problems and not solutions, an exploration at the level of what kind of regulation or of a theoretical question as to purpose (such as whether regulation should act as a proxy for the market or instead of it), is beyond its scope.

[168] It should be noted that in respect of all cost, difficulty of enforcement and complexity problems considered below, no actual quantification or exact description of the extent of such problems is possible due to the variable nature and proliferation of the source of such problems.

[169] The description that follows is a distillation of B Cairns, Australian Civil Procedure (2005), chapters 3 to 13.

[170] F Juenger, Choice of Law and Multistate Justice (1993), 1.

[171] For a glimpse of one extreme consequence of unharmonised private international law rules, see analysis of “renvoi”, below.

[172] Persons in different states can interact on the basis of differing types of legal obligations – for example, contract, tort, matrimony and succession – but this chapter is concerned exclusively with contractual obligations as far as its analysis of private international law is concerned.

[173] They may have such power if, for example, there is a connection between the court and the cause of action and, either the defendant submits to the court’s jurisdiction or if process can be served on the foreign defendant.

[174] F Juenger, Choice of Law and Multistate Justice (1993), 3.

[175] B Fitzgerald et. al., Jurisdiction and the Internet (2004), 4.

[176] B Jew, ‘Cyberjurisdiction - emerging issues and conflicts of law when overseas courts challenge your web’ (1998) Gilbert & Tobin Lawyers, <http://www.gtlaw.com.au/gt/site/articleIDs/37713994BFA233DBCA256D1F00042F58?open & ui=dom & template=domGT> at 23 August 2005

[177] Butterworths, Business and Law Dictionary. (2002).

[178] Ibid, and see, for example, http://www.justice.qld.gov.au/courts/factsht/C01QldCrts.htm.

[179] Ibid.

[180] B Fitzgerald et. al., Jurisdiction and the Internet (2004), 6.

[181] P Quirk et. al., Electronic Commerce and the Law (2003), 76.

[182] Ibid, 73.

[183] Ibid, 76.

[184] This case is discussed further below.

[185] thefreedictionary.com, Adhesion contract, (2005).

[186] thefreedictionary.com, Standard form contract, (2005). Emphasis added.

[187] P Quirk et. al., Electronic Commerce and the Law (2003), 72.

[188] (1975). McRobertson Miller Airline Services v Commissioner of State Taxation (WA). CLR, HCA. 133: 125. A case where an airline ticket issued by the appellant to an intending passenger, was allegedly dutiable as “a memorandum of a completed agreement”. The airline operator which issued the ticket argued that the ticket was not itself an agreement or a memorandum of an agreement. Its principal ground was that to proffer the ticket was to make an offer which was to be verbally accepted by its recipient.

[189] (1997). Hill v Gateway 2000 Inc. F.3d, 7th Cir. 105: 1147. In this case Hill purchased a computer from Gateway. A clause in the contract gave Hill 30 days to accept the goods or else the contractual terms would be triggered. The court upheld this view.

[190] P Quirk et. al., Electronic Commerce and the Law (2003), 72 and 81.

[191] Ibid, 72.

[192] Ibid.

[193] Basically, this is the ignorance consumers suffer relative to the knowledge vendors have about their own goods, services and business practices, and lack of information concerning consumer rights and remedies available in the event of legitimate grievance.

[194] This is where a consumer suffer an imbalance in negotiating power as between themself and vendors, either due to information asymmetry, or where consumer transactions are “forced” upon them through the use of standard form contracts presented on a “take it or leave it” basis, where negotiation is impossible.

[195] Hotmail Corporation v Van$ Money Pie Inc. (1998) WL, USPQ 2d ND Cal. 47: 38839. In this case, Hotmail Corporation provided a free email service. In order to access this service, the defendant had to become a subscriber which required the defendant to assent to the terms of a Service Agreement. The Terms of Service were presented in the form of a clickwrap agreement. The defendant was a spammer. Hotmail was inundated with hundreds of thousands of misdirected responses. Hotmail sought an injunction which was granted as the clickwrap terms had been presented with sufficient notice.

[196] P Quirk et. al., Electronic Commerce and the Law (2003), 75-76.

[197] R Korobkin, ‘Bounded Rationality, Standard Form Contracts, and Unconscionability’ (2003), 70 UCLA School of Law, 1203-1295, 1205.

[198] J Burke, Standard Form Contracts (2004), <http://www.lex2k.org/sfc/discussion.html> , 1.

[199] P Latimer, Australian Business Law (2003), 401.

[200] R Parish,in A Duggan et. al. Consumer Protection Law and Theory (1980), 236-237.

[201] Article 17(2) provides, inter alia, that “the provisions of this Section may be departed from only by an agreement ... which allows the consumer to bring proceedings in courts other than those indicated in this Section”. In other words, in relation to ICTs, an EU consumer can “agree” (to the extent possible where a vendor uses a standard form contract) that in the event of litigation, the forum shall be somewhere other than the domicile states of the consumer and the defendant.

[202] An example standard clause for specifying the jurisdiction which the parties agree disputes will be heard is: "The parties submit to the [non-exclusive/exclusive jurisdiction] of the courts of [ ] and any courts that may hear appeals from those courts in respect of any proceedings in connection with this Contract." In most circumstances, the parties will agree to submit to the non-exclusive jurisdiction of a particular jurisdiction. This means that there is at least one jurisdiction where the parties have agreed that disputes can be heard. Mallesons Stephen Jacques, Boilerplate clauses (2005).

[203] Butterworths, Business and Law Dictionary (2002).

[204] This term is considered further in Part III.

[205] These are also sometimes known as “proper law” or “governing law” issues.

[206] European Union. (1980). Convention on the Law Applicable to Contractual Obligations, OJ C 027 (498Y0126(03)) of 26/01/98.

[207] R Schu, ‘Consumer Protection and Private International Law in Internet Contracts’ (1996), <http://ruessmann.jura.uni-sb.de/rw20/people/rschu/public/essay.htm> , see text in relation to footnote 143.

[208] C Clarkson et. al., Jaffey on the Conflict of Laws (1997), 18 and 224.

[209] Ibid, 528.

[210] Ibid, 19.

[211] In other words, private international law rules of different nations which are not in agreement with each other.

[212] In respect of contractual disputes, renvoi has been outlawed, at least, by Article 15 of the Rome Convention: C Clarkson et. al., Jaffey on the Conflict of Laws (1997), 516; but in respect of choice of laws issues, “the English court treats the reference to a foreign law in the English choice of law rule as a reference to the conflicts of laws rules of the foreign law, and not merely to its domestic law” – thus renvoi, with respect to choice of law issues, is a problem raised at least under English law. Ibid at 512.

[213] Butterworths, Concise Australian Legal Dictionary (1998).

[214] F Juenger, Choice of Law and Multistate Justice (1993), 3-4 – emphasis added.

[215] A Bell, Responses to forum shopping in transnational litigation: Recent developments and new directions (1994), 2.

[216] Ibid, 3.

[217] It is neither possible to survey all the detailed meanings and rules of each of these proceedings as they will differ from place to place, nor is it necessary to do so. Thus a representative description is given only. The issue here is that such proceedings may be used by an evasive vendor, and not exactly how.

[218] None of which necessarily involve submission to the forum jurisdiction: B Fitzgerald et. al., Jurisdiction and the Internet (2004), 19.

[219] A Bell, Forum Shopping and Venue in Transnational Litigation (2003), 138-139.

[220] B Cairns, Australian Civil Procedure (2005), 150-151.

[221] B Fitzgerald et. al., Jurisdiction and the Internet (2004), 81.

[222] A Bell, Forum Shopping and Venue in Transnational Litigation (2003), 149.

[223] B Cairns, Australian Civil Procedure (2005), 418-419.

[224] A Bell, Forum Shopping and Venue in Transnational Litigation (2003), 170.

[225] “An interlocutory injunction is proper if there is a serious question to be tried and the balance of convenience between the parties favours an injunction”: B Cairns, Australian Civil Procedure (2005), 435.

[226] C Clarkson et. al., Jaffey on the Conflict of Laws (1997), 143.

[227] Ibid, 146.

[228] Ibid.

[229] An attempted extensive survey was made by the present writer, of law firms and legal costs consultants, to obtain anonymous actual costs from real cases and “scale” costs for hypothetical cases, yielded nil formal results. Only anecdotal evidence was obtained, on an “off the record” basis. Conversations with a number of legal practitioners indicated that an international legal proceeding would be unlikely to cost less than AUD$50,000 – with the highest figure mentioned being AUD$90,000.

[230] R Ackland, ‘Tackle the high cost of litigation, not the DIY brigade’ (9 January 2004), The Sydney Morning Herald, 1, <http://www.smh.com.au/articles/2004/01/08/1073437408556.html?from=storyrhs & oneclick=true> at 14 October 2005

[231] S Rubin, ‘Lack of Courtroom Experience Due to High Costs of Litigation’ ZSA Legal Recruitment (Canada) <http://www.zsa.ca/En/Articles/article.php?aid=739> at 14 October 2005

[232] M Hanks, ‘The Five Limits of Litigation’ (2005), <http://library.findlaw.com/2000/Aug/1/126087.html> at 14 October 2005.

[233] R Martin, ‘The Cost of Litigation’ (2005), <http://www.divorcenet.com/states/arizona/the_cost_of_litigation> at 14 October 2005

[234] V DiCarlo, ‘How to reduce the high cost of litigation’ (2005), <http://www.dicarlolaw.com/NetscapeHTRHCL.htm> at 14 October 2005

[235] S Berinato, ‘You sue, you lose: the high cost of litigation’ (2005), <http://www.cio.com/archive/020104/vendor.html> at 14 October 2005

[236] J Sullivan, ‘Lawmakers Should Help Businesses Combat Litigation Costs’ (2005), <http://www.legalreforminthenews.com/Op-Ed/Op-Ed_John-Sullivan_8-18-05.html> at 14 October 2005

[237] Jossey-Bass, ‘Alternatives to the High Cost of Litigation’ (2005), <http://www.josseybass.com/WileyCDA/WileyTitle/productCd-ALT.html> at 14 October 2005

[238] L Gamertsfelder, ‘Cross border litigation: Exploring the difficulties associated with enforcing Australian money judgements in Japan’ (1998), 2 Australian Bar Review 8.

[239] Ibid, 17.

[240] Ibid, 19.

[241] C Rule, Online dispute resolution for business - B2B, e-commerce, consumer, employment, insurance, and other commercial conflicts (2002), 94.

[242] The subject-matter of actions which may be entertained by a particular court B Fitzgerald et. al., Jurisdiction and the Internet (2004), 26.

[243] P Nygh and M Davies, Conflict of Laws in Australia (7th ed, 2002), 45.

[244] B Fitzgerald et. al., Jurisdiction and the Internet (2004), 18.

[245] Also known as forum selection or choice of court clauses.

[246] B Fitzgerald et. al., Jurisdiction and the Internet (2004), 7.

[247] Ibid.

[248] Ibid, 11-12.

[249] Ibid, 14-15.

[250] Service of process has been called the basis of a court’s jurisdiction: A Dicey and J Morris (1993), The Conflict of Laws (1993), 263-264; and State ‘Australian Practice - Note from the Australian Delegation in Relation to Forum Non Conveniens (2001), <http://www.state.gov/www/global/legal_affairs/australian_annex-a.html> at 14 October 2005

[251] For example, by the High Court, by one of the State Supreme Courts, etc..

[252] In the High Court, the Federal Court, the Supreme Court of Western Australia, and in the Supreme Court of the Australian Capital Territory.

[253] In the Supreme Courts of New South Wales, Queensland, Victoria, South Australia, Tasmania, and the Northern Territory.

[254] P Nygh and M Davies, Conflict of Laws in Australia (7th ed, 2002), 51.

[255] In the Supreme Courts of New South Wales, Queensland, Victoria, South Australia, Tasmania, and the Northern Territory.

[256] B Fitzgerald et. al., Jurisdiction and the Internet (2004), 10-11 – emphasis added.

[257] Ibid, 76.

[258] Doubtful: Spiliada Maritime Corp v Cansulex Ltd (1987) 1 AC 460.

[259] See analysis of judicial discretion, below.

[260] thefreedictionary.com, Forum non conveniens, (2005).

[261] Ibid

[262] Ibid

[263] P Nygh and M Davies, Conflict of Laws in Australia (7th ed, 2002), 128-129

[264] Spiliada Maritime Corp v Cansulex Ltd (1987) 1 AC 460

[265] Oceanic Sun Line Special Shipping Co Inc v Fay (1988) CLR 165 at 197

[266] Voth v Manildra Flour Mills Pty Ltd [1990] HCA 55; (1990) 171 CLR 538

[267] P Nygh and M Davies, Conflict of Laws in Australia (7th ed, 2002), 128.

[268] Presumably this is the case precisely because the Australian forum non conveniens test is more “plaintiff-friendly”.

[269] P Nygh and M Davies, Conflict of Laws in Australia (7th ed, 2002), 129-130.

[270] Oceanic Sun Line Special Shipping Co Inc v Fay [1988] HCA 32; (1988) 165 CLR 197

[271] Ibid, per Deane J at point 7

[272] Ibid

[273] Voth v Manildra Flour Mills Pty Ltd. [1990] HCA 55; (1990) 171 CLR 538

[274] University of North Carolina School of Law, ‘Personal jurisdiction’ (2005), <http://www.unc.edu/courses/pre2000fall/law357c/cyberprojects/spring01/Jurisdiction/pj/PersonalJurisdiction.html>

[275] B Fitzgerald et. al., Jurisdiction and the Internet (2004), 105

[276] International Shoe Co. v Washington [1945] USSC 158; (1945) 326 U.S. 310

[277] University of North Carolina School of Law, ‘Personal jurisdiction’ (2005), <http://www.unc.edu/courses/pre2000fall/law357c/cyberprojects/spring01/Jurisdiction/pj/PersonalJurisdiction.html>

[278] S Etienne-Cummings, ‘Vanishing Boundaries: Extending The Long-Arm Statute Into Cyberspace’ (1997) Southern Illinois University Law Journal 22(1): 217-241– quoting the court in International Shoe Co. v Washington [1945] USSC 158; (1945) 326 U.S. 310. See also University of North Carolina School of Law, ‘Personal jurisdiction’ (2005), <http://www.unc.edu/courses/pre2000fall/law357c/cyberprojects/spring01/Jurisdiction/pj/PersonalJurisdiction.html> .

[279] M Cordera, ‘E-consumer protection: a comparative analysis of EU and US consumer protection on the internet’ (2001), Rutgers Computer & Technology Law Journal 27(2): 232

[280] B Fitzgerald et. al., Jurisdiction and the Internet (2004), 106

[281] Zippo Manufacturing Co v Zippo Dot Com Inc. (1997) F Supp, W D Pa. 952: 1119

[282] R Hoegle and C Boam, ‘The Internet and Jurisdiction - International Principles Emerge but Confrontation Looms’ (2000), 3 The Journal of World Intellectual Property 2

[283] For a more-detailed analysis of the sliding scale, see University of North Carolina School of Law, ‘Personal jurisdiction’ (2005), <http://www.unc.edu/courses/pre2000fall/law357c/cyberprojects/spring01/Jurisdiction/pj/PersonalJurisdiction.html>

[284] Calder v Jones (1984) US. 465: 783

[285] B Fitzgerald et. al., Jurisdiction and the Internet (2004), 106.

[286] University of North Carolina School of Law, ‘Personal jurisdiction’ (2005), <http://www.unc.edu/courses/pre2000fall/law357c/cyberprojects/spring01/Jurisdiction/pj/PersonalJurisdiction.html> .

[287] County of Santa Cruz, ‘Long Arm Statute’ (2005).

[288] F Debussere, ‘International jurisdiction over e-consumer contracts in the European Union: quid novi sub sole?’ International Journal of Law and Information Technology 10(7): 345. The Fourteenth Amendment provides, inter alia, that “no State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws” Findlaw, US Constitution: Fourteenth Amendment (2005).

[289] S Etienne-Cummings, ‘Vanishing Boundaries: Extending The Long-Arm Statute Into Cyberspace’ (1997) Southern Illinois University Law Journal 22(1): 217-241, 217.

[290] B Fitzgerald et. al., Jurisdiction and the Internet (2004), 84-85

[291] Piper Aircraft Co v Reyno (1981) US 454: 235

[292] R Mortensen, ‘Duty free forum shopping :Disputing venue in the Pacific’ (2001), 32 Victoria University of Wellington 673-703, 679-680.

[293] After all, if private international law rules were harmonised/globalised, the idea of any kind of forum shopping would be pointless.

[294] Oceanic Sun Line Special Shipping Co Inc v Fay [1988] HCA 32; (1988) 165 CLR 197

[295] The Brussels Regulation applies to all EU member states except Denmark which continues to follow the older Brussels Convention. Switzerland, Iceland and Norway apply the rules of the 1988 Lugano Convention, which is similar to the Brussels Convention: DTI, ‘Cross border consumer contractual disputes within the European Union: which country has jurisdiction?’ (2005).

[296] European Union, Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, (the Brussels Regulation) which came into force on 1st May 2002: The regulation replaced the Brussels Convention (of 27 September 1968): European Union, Convention on jurisdiction and the enforcement of judgments in civil and commercial matters Brussels of 26/01/98, OJ C 027 (498Y0126(01)) (1968).

[297] European Union, Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, (the Brussels Regulation), 2001.

[298] Section 4 is headed “Jurisdiction over consumer contracts”.

[299] European Union, Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, (the Brussels Regulation), 2001 – emphasis added.

[300] B Fitzgerald et. al., Jurisdiction and the Internet (2004), 25.

[301] European Union, Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, (the Brussels Regulation), 2001 – emphasis added.

[302] Ibid.

[303] R Mortensen, ’Duty free forum shopping: Disputing venue in the Pacific’ (2001), 32 Victoria University of Wellington 673-703, 678.

[304] J Eisengraeber, ‘Lis alibi pendens under the Brussels I Regulation’ (2004), 16 Exeter Papers in European Law 1-63, 2.

[305] B Fitzgerald et. al., Jurisdiction and the Internet (2004), 80-81.

[306] B Jew, ‘Cyberjurisdiction - emerging issues and conflicts of law when overseas courts challenge your web’ (1998) Gilbert & Tobin Lawyers, <http://www.gtlaw.com.au/gt/site/articleIDs/37713994BFA233DBCA256D1F00042F58?open & ui=dom & template=domGT> at 23 August 2005.

[307] An adhesion contract is a standard form contract drafted by one of the parties without any opportunity for input from the other party: B Fitzgerald et. al., Jurisdiction and the Internet (2004), 86 footnote 291.

[308] Ibid, 86-87.

[309] A Bell, Forum Shopping and Venue in Transnational Litigation (2003), 315.

[310] B Fitzgerald et. al., Jurisdiction and the Internet (2004), 39.

[311] Ibid, 43.

[312] Ibid, 44.

[313] Ibid.

[314] Ibid, 47.

[315] Ibid, 47-48 – emphasis added.

[316] European Union, Convention on the Law Applicable to Contractual Obligations, OJ C 027 (498Y0126(03)) of 26/01/98 (1980).

[317] B Fitzgerald et. al., Jurisdiction and the Internet (2004), 52.

[318] Ibid.

[319] P Nygh and M Davies, Conflict of Laws in Australia (7th ed, 2002), 289-290, emphasis added.

[320] Ibid, 290.

[321] Ibid, 291.

[322] Ibid, 292.

[323] Neilson v Overseas Projects Corporation of Victoria Ltd. (2005) HCA 54

[324] B Jew, ‘Cyberjurisdiction - emerging issues and conflicts of law when overseas courts challenge your web’ (1998) Gilbert & Tobin Lawyers, <http://www.gtlaw.com.au/gt/site/articleIDs/37713994BFA233DBCA256D1F00042F58?open & ui=dom & template=domGT> at 23 August 2005..

[325] Even that may be unlikely as a court may consider it has no jurisdiction where any judgment it may make would be unenforceable in the vendor’s country. One reason for that may be that the defendant has obtained a negative declaration within their local jurisdiction.

[326] A Bell, Forum Shopping and Venue in Transnational Litigation (2003), 273.

[327] Ibid, 133.

[328] B Fitzgerald et. al., Jurisdiction and the Internet (2004), 19.

[329] These were challenging jurisdiction, stays of proceedings, anti-suit injunctions and applications for negative declaratory relief.

[330] A Bell, Forum Shopping and Venue in Transnational Litigation (2003), 133.

[331] Foreign Judgments Act 1991 (Australia)

[332] B Fitzgerald et. al., Jurisdiction and the Internet (2004), 91.

[333] “A judgment is not to be registered if at the date of the application: (a) it has been wholly satisfied; or (b) it could not be enforced in the country of the original court”: Foreign Judgments Act 1991 (Australia).

[334] B Fitzgerald et. al., Jurisdiction and the Internet (2004), 95 – citing Yahoo! Inc v La Ligue Contre Le Racisme Et L'Antisemitisme (2001). ND Cal, F Supp 2d. 145: 1168, as authority.

[335] Purely in relation to certain intrastate matters within the USA – B Fitzgerald et. al., Jurisdiction and the Internet (2004), 95-96.

[336] Ibid, 95.

[337] Ibid, 96.

[338] Yahoo! Inc v La Ligue Contre Le Racisme Et L'Antisemitisme (2001), ND Cal, F Supp 2d. 145: 1168.

[339] B Fitzgerald et. al., Jurisdiction and the Internet (2004), 97.

[340] The Brussels Regulation applies to all EU member states except Denmark which continues to follow the older Brussels Convention. Switzerland, Iceland and Norway apply the rules of the 1988 Lugano Convention, which is similar to the Brussels Convention. DTI (2005). Cross border consumer contractual disputes within the European Union: which country has jurisdiction?

[341] European Union, Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, (the Brussels Regulation), 2001.

[342] B Fitzgerald et. al., Jurisdiction and the Internet (2004), 97-98.

[343] As noted in the Introduction to this chapter, the concept of “enforcement” in the context of “difficulty of enforcement” here, was to have been initially understood in a very wide sense, applicable to all ICT redress methods, litigation-based or otherwise. At this point though, the “enforcement” of the terms of an ICT through court judgments can be understood in the sense of obtaining and enforcing such judgments (because the initial obtaining of a judgment is a necessary precondition to enforcement), or in the even narrower sense of literally just the enforcement of judgments, as the context requires.

[344] Chapter two in C Rickett et. al., International Perspectives on Consumers' Access to Justice (2003).

[345] Ibid at 34.

[346] Ibid.

[347] Ibid.

[348] Ibid at 35.

[349] Ibid.

[350] The table is expressed in the manner shown as if litigation were just one of a range of ICT redress methods that might be evaluated using a cost-effectiveness evaluation. In such a case, it would simply be a matter of adding more rows to construct a comparative cost-effectiveness evaluation of a range of different methods.

[351] This conclusion is relative - i.e. it is relative to the degree of difficulty of enforceability of other redress methods which have either nil or weak enforcement mechanisms (such as found in relation to credit card terms, industry codes of conduct, and so on) – and generalised – in the sense that there are often exceptions to general conclusions. For example, studies of small claims courts in England do indicate significant difficulties in enforcement of judgments. See for example J Baldwin et. al., ‘The Crisis in Enforcement of Civil Judgments in England and Wales’ (2004), Public Law, 305-328.

[352] “Redress” here includes both reactive and “proactive” redress methods (e.g. alternative dispute resolution (ADR) and transaction insurance, respectively).

[353] Actually a trust mark can fall into either category. At this stage it is merely illustrative of the varying perspectives that can be taken.

[354] That is, persuasion, perhaps with some threat of litigation.

[355] The focus on contractual protections in this chapter differs from that in the previous chapter which was concerned with contractual terms within any particular contract associated with an ICT of interest (and which could subsequently become the subject of litigation) – whereas the “contractual protections” in this chapter is a reference to contracts with third parties, to protect or guarantee an ICT, to some extent or other.

[356] The description of “chargeback” just given is entirely consistent with the discussion of credit cards in the balance of this chapter, and consistent accounts may also be found at: http://www.anz.com/australia/business/merchant.ChargeBack.asp , http://www.consumer.org.nz , http://www.oag.state.tx.us/AG_Publications/txts/credit.shtml , http://en.wikipedia.org/wiki/Chargeback and at J Conde, Credit Card Chargeback Primer (2005), <http://www.websitepublisher.net/scripts/article_print.php?ArtID=89> at 11 April 2007.

[357] Note that the various references to “fraud” in this section are included to demonstrate that the various credit card terms are limited to covering little more than fraud and thus the terms do little to address non/wrong-delivery of goods in the absence of fraud. Also, note that the currency of the effect of all credit card terms considered here was confirmed as of January 2006.

[358] “Charge cards” are slightly different to credit cards (generally, charge cards must be paid off in full within one month) but the difference is unimportant here because differing credit extension terms are not relevant to the post-transaction performance issues of non/wrong delivery of goods. For the purpose of this thesis then, charge cards are the same as credit cards.

[359] Note that “Mastercard” here means a card from a bank-level institution which issues a Mastercard – such as a Barclays Mastercard or a Westpac Mastercard. The term “Mastercard” is thus used here as a consumer would use it.

[360] It is important to note here that such terms are not directly offered by the card companies (Mastercard, etc.) themselves, in the sense that the transaction-security terms offered by Mastercard, for example, are not actually offered by Mastercard as such, but by the card-issuing financial institution (e.g. Westpac Bank) or their agents – whose terms may differ from those offered by another Mastercard-issuing institution (due to varying marketing policies and market forces). Thus there are Westpac Mastercards and National Bank Mastercards, and many others, each with their own, potentially different, transaction-security terms (if any). The references to “issuers” above then are references to bank-level institutions.

[361] Such as legislative consumer protection schemes (the Trade Practices Act and the Sale of Goods Act in Australia, for example), and the common law of contract or tort, where applicable.

[362] Only Visa, Mastercard, American Express and Diners Club are examined here (the “big four”). Less well-known card names are often just forms of one card or other of the big four (e.g. “Eurocard” is a form of Mastercard), or aren't generally available (e.g. Eurocard, Discover and JCB – Japanese Credit Bureau – cards), or are held by only a tiny percentage of the global card-holding community.

[363] Note that despite the difference between the terms of the four issuers, due to the general similarity of conclusions in respect of those terms, as will be seen, only a general assessment of the terms shall be given.

[364] Citibank, Citibank's Full Security Guarantee, brochure, undated.

[365] Not a card issuer.

[366] Westpac, Consumer Credit Cards Conditions of Use (2003), brochure.

[367] American Express, Online Fraud Guarantee (2003) <http://www10.americanexpress.com/sif/cda/page/0,1641,7021,00.asp#more_info> at 13 March 2003.

[368] American Express, American Express Credit Card Conditions (2002) – emphasis added <http://www.americanexpress.com/australia/personal/cards/more_info> at 7 February 2003.

[369] Diners Club, Diners Club Electronic Access Conditions of Use (2003) <http://www.dinersclub.com.au/s02_personal/default.asp?whichfile=p26_terms_and_conditions.asp> at 7 February 2003.

[370] OECD, Report on Consumer Protections for Payment Cardholders (2002) <http://www.olis.oecd.org/olis/2001doc.nsf/linkto/dsti-cp(2001)3-final> at 28 May 2002.

[371] Ibid.

[372] Ibid. A recent case in the UK – Office of Fair Trading v Lloyds TSB (2005) – has now confirmed that it does apply to overseas transactions. Thus difficulty of enforcement would not be as high in the UK as in Australia. Article 11 of the EU Consumer Credit Directive also supports this view.

[373] Ibid.

[374] A point examined more closely in chapter six.

[375] Foreign lawyers, being “foreign”, will not always speak the language most commonly spoken in the consumer’s country. There may therefore, at the very least, be communication problems as between the foreign lawyer and the consumer. Such problems may involve misunderstandings, delays, and increased expenses as both the direct and indirect result of the language barrier.

[376] V Black, 'Consumer Protection in the Conflict of Laws: Canada, the United States and Europe' in Iain Ramsay (ed) Consumer Law in the Global Economy - National and International Dimensions (1997), 207-208.

[377] Should it come to litigation, the preliminary process of adjudicating choice of court and choice of law issues can add a whole extra set of expensive problems that must be dealt with before the substantive issues of the original dispute are reached, especially if the private international law issues are themselves disputed.

[378] G Vickery, Letter, 4 April 2003.

[379] APEC, Approaches to Consumer Protection within the APEC Region - Report of the Electronic Commerce Steering Group, October 2002 (2002) <http://elib.fda.moph.go.th/kmfda/KmDoc/ApproachesToConsumerProtection.pdf> at 5 July 2005. at 7-8.

[380] Ibid 7. See footnote 13.

[381] The relevant text, in full, says: Government agencies may use this information [the consumer's complaint report] to investigate suspect companies and individuals, uncover new scams, and spot trends in fraud. However, you should not necessarily expect any country to pursue your complaint on your behalf. Although your complaint may be accessible to government agencies, it may or may not be accessed by them. Many government agencies bring law enforcement actions to protect the public-at-large, but do not intervene on behalf of individual consumers. Other agencies have an obligation to investigate each complaint.

[382] ACCC, What Does Econsumer.Gov Do? (2005) <http://www.accc.gov.au/content/index.phtml/itemId/255387/fromItemId/8135> at 5th July 2005.

[383] “ADR”, for these purposes, will be taken to incorporate the term “ODR” (online dispute resolution, or online ADR) except where ODR is treated separately.

[384] Butterworths, Business and Law Dictionary (2nd ed, 2002). It should be noted though that, for the purposes of this thesis, “arbitration” and “ADR” mean different things. Arbitration here is capable of being quasi-judicial (as will be considered below), whereas ADR is provided by commercial providers. This thesis thus treats “arbitration” and “ADR” separately – for clarity – because they are capable of being treated differently.

[385] The term “binding” (in respect of ADR decisions) is understood here as follows: The consumer contract contains a provision that says that in the event of dispute concerning the contract, the parties agree that any subsequent decision resulting from ADR, would be contractually binding on the parties. The problem however, is that to enforce that could involve resort to litigation, which could have been used in the first place.

[386] OECD, Resolving E-Commerce Disputes Online: Asking the Right Questions About ADR (2002) <http://www.olis.oecd.org/olis/2002doc.nsf/43bb6130e5e86e5fc12569fa005d004c/7f89b52192b7f8d5c1256bce00389cc6/$FILE/JT00127493.PDF> at 28 May 2002.

[387] Ibid.

[388] Ibid.

[389] See for example www.settleonline.com, www.onlineresolution.com, www.theclaimroom.com .

[390] OECD, Resolving E-Commerce Disputes Online: Asking the Right Questions About ADR (2002) <http://www.olis.oecd.org/olis/2002doc.nsf/43bb6130e5e86e5fc12569fa005d004c/7f89b52192b7f8d5c1256bce00389cc6/$FILE/JT00127493.PDF> at 28 May 2002.

[391] C Rule, Online Dispute Resolution for Business - B2B, E-Commerce, Consumer, Employment, Insurance, and Other Commercial Conflicts (2002), 103-104.

[392] OECD, Resolving E-Commerce Disputes Online: Asking the Right Questions About ADR (2002) <http://www.olis.oecd.org/olis/2002doc.nsf/43bb6130e5e86e5fc12569fa005d004c/7f89b52192b7f8d5c1256bce00389cc6/$FILE/JT00127493.PDF> at 28 May 2002.

[393] Ibid.

[394] Ibid.

[395] Ibid.

[396] “In Australia to date there are no reported cases where a court has enforced a pre-existing agreement to mediate” P Mead, 'ADR Agreements: Good Faith and Enforceability' (1999) Australian Dispute Resolution Journal 40-52, 49 – and thus the courts won’t help anyway.

[397] C Rule, Online Dispute Resolution for Business - B2B, E-Commerce, Consumer, Employment, Insurance, and Other Commercial Conflicts (2002), 62-70.

[398] Such software “evaluates bids from each party and if the two bids are within a prescribed range (for example, 30 percent) then the case settles for the median. If the cases are not within the prescribed amount, then the bids are destroyed and neither side knows what the other proposed. Both parties are fully informed as to the way the process works before it begins, and they agree to abide by the outcome if one is reached.” Ibid, 57.

[399] Ibid, 95. Three further advantages of ADR/ODR, noted by Smith, are “range of remedies”, “confidentiality” and “flexibility [of procedure] and informality” J Smith, 'Can the Advantages of ADR Procedures Be Transposed to a Judicial Forum?' (1993) Australian Dispute Resolution Journal 299-306, 300-301.

[400] C Rule, Online Dispute Resolution for Business - B2B, E-Commerce, Consumer, Employment, Insurance, and Other Commercial Conflicts (2002), 94.

[401] Ibid, 294-296.

[402] W Harris, 'Consumer Disputes and Alternative Dispute Resolution' (1993) Australian Dispute Resolution Journal 239-252, 243.

[403] C Rule, Online Dispute Resolution for Business - B2B, E-Commerce, Consumer, Employment, Insurance, and Other Commercial Conflicts (2002), 18-19.

[404] W Harris, 'Consumer Disputes and Alternative Dispute Resolution' (1993) Australian Dispute Resolution Journal 239-252, 242.

[405] Ibid.

[406] Ibid, 243.

[407] That is, the best that an ODR-provider can do, even in the event that such an agreement may “be given effect to” by the courts (see later discussion). And in any event, to what extent would such agreements be enforceable across international borders?

[408] Internet Corporation for Assigned Names and Numbers – the international body in charge of domain names – and the regulator of disputes over domain names, through its Uniform Dispute Resolution Policy (UDRP).

[409] At worst, they may be far less than that: ADR clauses in contracts have been held to be unenforceable “either on the basis that they were in reality agreements to negotiate or agreements to agree, were too vague or uncertain to be given effect to, or were an attempt to oust the jurisdiction of the courts”: P Mead, 'ADR Agreements: Good Faith and Enforceability' (1999) Australian Dispute Resolution Journal 40-52, 40.

[410] C Rule, Online Dispute Resolution for Business - B2B, E-Commerce, Consumer, Employment, Insurance, and Other Commercial Conflicts (2002), 292. – emphasis added. Furthermore, ODR is “not compatible with disputes in which one side is not participating in a good-faith effort to reach a resolution. This includes all fraud and criminal cases.” C Rule, Online Dispute Resolution for Business - B2B, E-Commerce, Consumer, Employment, Insurance, and Other Commercial Conflicts (2002), 284. Actually this would be true even without fraudulent intent: ODR may not help even where a merchant disputes a consumer’s complaint concerning mere non/wrong delivery of goods.

[411] Thus “law as code is a start to the perfect technology of justice.” L Lessig, 'The Zones of Cyberspace' (1996) Stanford Law Review 1403-1412, 1408.

[412] Butterworths, Business and Law Dictionary (2nd ed, 2002) – emphasis added.

[413] Ibid – emphasis added.

[414] Ibid.

[415] An example of a commercial dispute resolution provider is Positive Solutions, (2005) <http://www.positivesolutions.com.au/> at 7 November 2005.

[416] Ibid.

[417] The topic of industry-based consumer dispute resolution schemes, examined above, is concerned with infrastructure (tribunals), whereas this section is concerned with quasi-legislation/legislation. The two topics are related however.

[418] Which may also be used as the content of the “law” which an ADR-provider etc. may refer to in its deliberations.

[419] Findlaw, New System of Endorsement for Industry Codes of Conduct (2004) <http://www.findlaw.com.au/news/default.asp?task=read & id=16079> at 4th March 2004.

[420] Escrow.com, Why Use Escrow? (2005) <https://www.escrow.com/index.asp> at 17 June 2005.

[421] “EBay recommends purchases over $500 use an escrow” CarBuyingTips.com, CarBuyingTips.com Consumer Guide to Avoiding Ebay Fraud, Escrow Internet Fraud, Check Fraud, Auto Fraud, and Nigerian Scams (2005) <www.carbuyingtips.com/fraud.htm> at 2i June 2005 – which, if true (and there appears to be no reason to doubt this), means that escrow may be an expensive solution for many low value ICTs.

[422] Standard form escrow contracts for ICTs is no solution either.

[423] CNN.com, Three Jailed in Global Ebay Scam (2005) <http://edition.cnn.com/2005/WORLD/europe/10/28/ebay.scam.ap/index.html> at 29 October 2005.

[424] CarBuyingTips.com, CarBuyingTips.com Consumer Guide to Avoiding Ebay Fraud, Escrow Internet Fraud, Check Fraud, Auto Fraud, and Nigerian Scams (2005) <www.carbuyingtips.com/fraud.htm> at 21 June 2005.

[425] Effectiveness and cost-effectiveness are both defined in chapter two.

[426] Note also, as advised in chapter two, that the overall conclusions reached in chapter seven are based upon the findings in respect of methods 1 to 9 only.

[427] Trust marks may also be known as “web seals”.

[428] IDA Singapore, Building User Confidence in Electronic Commerce Transactions Via Trust Marks (2002) <http://www.ida.gov.sg/Website/IDAContent.nsf/dd1521f1e79ecf3bc825682f0045a340/457df2836309e02fc82569660010f4ae/$FILE/DeepKnowledge.pdf> at 19 August 2002.

[429] TrustE, TrustE Security Guidelines (2005) <http://www.truste.org/> at 7 November 2005.

[430] CPAWebTrust, (2005) <http://www.cpawebtrust.org/consumer.htm> at 7 November 2005.

[431] PWC, What is the BettterWeb Programme? (2002) <http://www.pwcglobal.com/extweb/ncpressrelease.nsf/DocID/44CA2D3D42CB0A0E8525685E006F3889> at 19 August 2002.

[432] VeriSign, SSL Certificates (2005) <http://www.verisign.com/products-services/security-services/ssl/index.html> at 7 November 2005.

[433] For examples of trust marks, see www.truste.org, http://www.cpawebtrust.org/ and http://www.bbbonline.org/business/ . These types of marks may be distinguished from the “data security” type of mark, issued by bodies such as www.verisign.com.

[434] Digital Enterprise, Case Study: TrustE (2005) <http://digitalenterprise.org/cases/truste.html> at 7 November 2005.

[435] CPAWebTrust, (2005) <http://www.cpawebtrust.org/consumer.htm> at 7 November 2005.

[436] PWC, What is the BettterWeb Programme? (2002) <http://www.pwcglobal.com/extweb/ncpressrelease.nsf/DocID/44CA2D3D42CB0A0E8525685E006F3889> at 19 August 2002.

[437] EBay.com, (2005) <www.ebay.com> at 17 December 2005.

[438] Infocomm Development Authority IDA, Building User Confidence in Electronic Commerce Transactions Via Trust Marks (2002) <http://www.ida.gov.sg/Website/IDAContent.nsf/dd1521f1e79ecf3bc825682f0045a340/457df2836309e02fc82569660010f4ae/$FILE/DeepKnowledge.pdf> at 19 August 2002.

[439] Ibid.

[440] Ibid.

[441] 17th Annual Conference BILETA, 17th Annual Conference, 'Trusting the Trustmark?' (2002) <http://www.bileta.ac.uk/02/papers/nordquist.html> at 19 August 2002 – emphasis added.

[442] This is the case apart from the fact that trust marks are not cost-effective at all in respect of post-transaction problems with ICTs – as is the case with all of the remaining methods considered in this chapter.

[443] For example see ACCC, Internet Shopping (2005) <http://www.accc.gov.au/content/index.phtml/itemId/8135/fromItemId/3667> at 7 November 2005.

[444] Freewell.com, Basic Uses of Computer Bulletin Boards (2003) <http://www.freewell.com/freereports/business/63.html> at 24 February 2003.

[445] G Maggs, 'Internet Solutions to Consumer Protection Problems' (1998) 49 South Carolina Law Review 887-902, 898.

[446] Not Good Enough, Australia's Customer Complaints Website (2002) <http://www.notgoodenough.org/?page=21> at 3 September 2002 – emphasis added.

[447] C Gillette, 'Reputation and Intermediaries in Electronic Commerce' (2002) 62 Louisiana Law Review 1165-1197, 1167 footnote 1168.

[448] See for example http://fr.news.yahoo.com/050613/7/4glsc.html – French language news report (of 13th June 2005) headed “Les FAI contraints de bloquer l'accès au site révisionniste AAARGH” (Internet Providers forced to block access to AAARGH revisionist site). Not exactly the same as deregistration but a similar technique aimed at the same result, in relation to foreign controlled websites.

[449] Exn.ca, ACLU President's Internet Remarks Insulted Australia (1999) <http://exn.ca/Stories/1999/08/24/04.asp> at 8th October 2002.

[450] This could take place through international agreement on uniform conflicts rules – i.e. through harmonisation.. Such an approach however, could raise more problems than it solves, and take decades to settle – witness attempts by the Hague Conference on private international law, which is currently inapplicable to consumer transactions for reasons given in chapter five.

[451] A cyber-jurisdiction is perhaps one means by which such a convention could be administered to provide access to justice cheaply enough for low-value ICTs. For our purposes, a cyber-jurisdiction is a general term for a court whose processes and powers are available to litigants via the Internet, and implies the use of at least some of the following features: technology that allows litigants and related parties, and their representation, to be connected to the court via the Internet without their physical presence in any particular place, at any relevant time (pre-trial through to post-trial) in the processing of a matter before the court; the conduct of related court proceedings electronically; monitors for judges, counsellors, jurors and witnesses; video conferencing; and digital evidence presentations (for example, http://www.globalcourts.com/e_courts.htm) – in other words advanced ODR but with enforcement powers.

[452] UNCITRAL, United Nations Convention on Contracts for the International Sale of Goods (1980) <http://www.uncitral.org/english/texts/sales/CISG.htm> at 28th September 2004.

[453] As indicated in chapter two, the overall conclusions made in chapter seven are based upon the findings of chapters three and four on evaluation of redress methods 1 to 9 only, while the findings in chapters five and six are used only for extra indications as to the preferred attributes of a potential solution.

[454] For example, for the purposes of the Convention, what amounts to a fundamental breach of contract.

[455] T McNamara, Graduating from Obscurity: The U.N. International Sale of Goods Convention (2004) <http://www.dgslaw.com/articles/565324.pdf> at 31 July 2005.

[456] UNCITRAL, United Nations Convention on Contracts for the International Sale of Goods (1980) <http://www.uncitral.org/english/texts/sales/CISG.htm> at 28th September 2004.

[457] K Sono, The Vienna Sales Convention: History and Perspective (1986) <http://www.cisg.law.pace.edu/cisg/biblio/sono.html> at 11th September 2004.

[458] J Honnold, 'The Sales Convention: From Idea to Practice' (1998) 17 Journal of Law and Commerce 181-186, 181.

[459] UNCITRAL, United Nations Convention on Contracts for the International Sale of Goods (1980) <http://www.uncitral.org/english/texts/sales/CISG.htm> at 28th September 2004.

[460] T McNamara, Graduating from Obscurity: The U.N. International Sale of Goods Convention (2004) <http://www.dgslaw.com/articles/565324.pdf> at 31 July 2005.

[461] K Sono, The Vienna Sales Convention: History and Perspective (1986) <http://www.cisg.law.pace.edu/cisg/biblio/sono.html> at 11th September 2004.

[462] This was done without including jurisdiction provisions.

[463] K Sono, The Vienna Sales Convention: History and Perspective (1986) <http://www.cisg.law.pace.edu/cisg/biblio/sono.html> at 11th September 2004.

[464] Mo’s explanation for this is that the “unless” exception, which appears in the wording of Article 2(a), “is probably necessary for the purpose of maintaining the integrity of the consumer protection law of each member” J Mo, International Commercial Law (1997), 148. Such reasoning is hard to understand if the Convention alone is the choice of law of parties to a sales contract. In other words, if the Convention plus a national consumer protection law is mentioned in a contract, the “unless” exception is no longer applicable anyway as the seller would then be aware that the other party is a consumer.

[465] T McNamara, Graduating from Obscurity: The U.N. International Sale of Goods Convention (2004) <http://www.dgslaw.com/articles/565324.pdf> at 31 July 2005. and D Sloan, The United Nations Convention on Contracts for the International Sale of Goods - an Overview (2004) <http://www.johnstonbuchan.com/pubs/trade/UNConventionFebruary2004.pdf> at 2 August 2005.

[466] S Shartel, 'Working Group Clarifies Application Issues, Excludes Consumers, in Convention Revision.' (2004) 9 Electronic Commerce & Law 314-316, 316.

[467] Section 66A of the Trade Practices Act 1974 says “the provisions of the [Convention] adopted at Vienna, Austria, on 10 April 1980, prevail over the provisions of this Division to the extent of any inconsistency” – emphasis added.

[468] The better view however appears to be the narrower interpretation based on the actual wording “...prevail over the provisions of this Division ...”.

[469] R Steinwall, Annotated Trade Practices Act 1974 (2000), 259-260.

[470] Pace Law School, CISG: Table of Contracting States (2005) <http://www.cisg.law.pace.edu/cisg/countries/cntries.html> at 1 August 2005.

[471] Ibid – quoting A.F.M. Maniruzzaman.

[472] Ibid.

[473] A Azzouni, The Adoption of the 1980 Convention on the International Sale of Goods by the United Kingdom (2002) <http://www.cisg.law.pace.edu/cisg/biblio/azzouni.html> at 1 August 2005.

[474] Pace Law School, CISG: Table of Contracting States (2005) <http://www.cisg.law.pace.edu/cisg/countries/cntries.html> at 1 August 2005.

[475] T McNamara, Graduating from Obscurity: The U.N. International Sale of Goods Convention (2004) <http://www.dgslaw.com/articles/565324.pdf> at 31 July 2005.

[476] As the direct result of Article 6 (which allows parties to derogate from or vary the effect of any of the Convention’s provisions), or the indirect result of the fact that no Convention Article provides choice of court rules.

[477] T McNamara, Graduating from Obscurity: The U.N. International Sale of Goods Convention (2004) <http://www.dgslaw.com/articles/565324.pdf> at 31 July 2005.

[478] Ibid.

[479] K Sono, The Vienna Sales Convention: History and Perspective (1986) <http://www.cisg.law.pace.edu/cisg/biblio/sono.html> at 11th September 2004.

[480] Ibid.

[481] Ibid.

[482] T McNamara, Graduating from Obscurity: The U.N. International Sale of Goods Convention (2004) <http://www.dgslaw.com/articles/565324.pdf> at 31 July 2005.

[483] K Sono, The Vienna Sales Convention: History and Perspective (1986) <http://www.cisg.law.pace.edu/cisg/biblio/sono.html> at 11th September 2004.

[484] Ibid.

[485] D Sloan, The United Nations Convention on Contracts for the International Sale of Goods - an Overview (2004) <http://www.johnstonbuchan.com/pubs/trade/UNConventionFebruary2004.pdf> at 2 August 2005 – quoting, in part, V Cook, 'CISG: From the Perspective of the Practitioner' (1998) 17 Journal of Law and Commerce 343-353.

[486] T McNamara, Graduating from Obscurity: The U.N. International Sale of Goods Convention (2004) <http://www.dgslaw.com/articles/565324.pdf> at 31 July 2005.

[487] D Sloan, The United Nations Convention on Contracts for the International Sale of Goods - an Overview (2004) <http://www.johnstonbuchan.com/pubs/trade/UNConventionFebruary2004.pdf> at 2 August 2005.

[488] T McNamara, Graduating from Obscurity: The U.N. International Sale of Goods Convention (2004) <http://www.dgslaw.com/articles/565324.pdf> at 31 July 2005.

[489] Ibid.

[490] Ibid., and J Ziegel, 'The Future of the International Sales Convention from a Common Law Perspective' (2000) 6 New Zealand Business Law Quarterly 336-347, 345-346.

[491] D Sloan, The United Nations Convention on Contracts for the International Sale of Goods - an Overview (2004) <http://www.johnstonbuchan.com/pubs/trade/UNConventionFebruary2004.pdf> at 2 August 2005. and T McNamara, Graduating from Obscurity: The U.N. International Sale of Goods Convention (2004) <http://www.dgslaw.com/articles/565324.pdf> at 31 July 2005.

[492] See chapter two.

[493] R Burnett, Law of International Business Transactions (3rd ed, 2004), 4.

[494] T McNamara, Graduating from Obscurity: The U.N. International Sale of Goods Convention (2004) <http://www.dgslaw.com/articles/565324.pdf> at 31 July 2005. and D Sloan, The United Nations Convention on Contracts for the International Sale of Goods - an Overview (2004) <http://www.johnstonbuchan.com/pubs/trade/UNConventionFebruary2004.pdf> at 2 August 2005.

[495] S Shartel, 'Working Group Clarifies Application Issues, Excludes Consumers, in Convention Revision.' (2004) 9 Electronic Commerce & Law 314-316, 316.

[496] A Schulz, Email, 8th January 2004 – emphasis added.

[497] The word “model” is used here in the sense of something that can be emulated, whether legally in force in not.

[498] United Nations, Guidelines for Consumer Protection (1999) <http://www.un.org/documents/ecosoc/res/1999/eres1999-7.htm> at 15 November 2005.

[499] OECD, Recommendation of the OECD Council Concerning Guidelines for Consumer Protection in the Context of Electronic Commerce (1999) <http://www.oecd.org/document/51/0,2340,en_2649_34267_1824435_1_1_1_1,00.html> at 30 August 2005.

[500] European Union, Directive 97/7/EC on Protection of Consumers in Respect of Distance Contracts (1997) <http://europa.eu.int/ISPO/ecommerce/legal/documents/31997L0007/31997L0007_en.html> at 25 May 2005 – and European Union, Directive 2000/31/EC on Certain Legal Aspects of Information Society Services, in Particular Electronic Commerce (2000) <http://europa.eu.int/ISPO/ecommerce/legal/documents/2000_31ec/2000_31ec_en.pdf> at 31 August 2005.

[501] “Harmonisation”, as noted in chapter one, means the blending of two or more national/state laws for the purpose of creating a single bi-lateral or multi-lateral enforceable multi-state law, without disagreement between signatory states in respect of either substantive or procedural provisions. In this sense, “harmonisation” is interchangeable with “unification”, and takes place to eliminate inconsistencies between the national laws being harmonised.

[502] It is understood here that EU “directives” considered here concerning consumer protection are not truly international (i.e. operating within a relatively open system) but merely regional (operating within a relatively closed system).

[503] That is, to make internationally enforceable, through international treaty.

[504] This is the justification for the narrow focus on redress and enforcement provisions in this chapter.

[505] The details, generally, are beyond the scope of this thesis.

[506] “The States [of Australia] are separate countries in private international law and are to be so regarded in relation to one another” per Windeyer J in Peterson V Young, [1964] HCA 28; 110 CLR 162 at 170, 170 (1964).

[507] See also generally D Meltz, 'The Extraterritorial Operation of the Trade Practices Act' (1996) 4 Trade Practices Law Journal 185. Furthermore, Meltz says in his footnote 18 (p.187) that “there is protection [in s.66A Trade Practices Act] for international consumer sales for goods less than $40,000 if such sales are made pursuant to the Vienna [Sales] Convention” (the VSC). Section 66A says the VSC overrules just the Product Safety and Product Information division of the Trade Practices Act (Division 1A) to the extent of any inconsistency but, in any event, Article 2(a) of the VSC expressly excludes its application to consumer transactions.

[508] E Jardine, 'An Agreement between Australia and the European Union on Trade Practices: A Proposal' (1996) 4 Trade Practices Law Journal 67-76, 67.

[509] Ibid, 73.

[510] United Nations, Guidelines for Consumer Protection (1999) <http://www.un.org/documents/ecosoc/res/1999/eres1999-7.htm> at 15 November 2005.

[511] M Weidenbaum, 'The Case against the UN Guidelines for Consumer Protection' (1987) 10 Journal of Consumer Policy 425-432, 425.

[512] Ibid, 427.

[513] Ibid.

[514] Ibid. Peterson wrote that Weidenbaum would criticise the United States Constitution on the same grounds: E Peterson, 'The Case against 'the Case against the UN Guidelines for Consumer Protection'' (1987) 10 Journal of Consumer Policy 425-432, 434.

[515] M Weidenbaum, 'The Case against the UN Guidelines for Consumer Protection' (1987) 10 Journal of Consumer Policy 425-432, 425.

[516] Ibid, 425-426.

[517] E Peterson, 'The Case against 'the Case against the UN Guidelines for Consumer Protection'' (1987) 10 Journal of Consumer Policy 425-432, 434.

[518] Ibid.

[519] Ibid, 438.

[520] M Weidenbaum, 'The Case against the UN Guidelines for Consumer Protection' (1987) 10 Journal of Consumer Policy 425-432, 425. Emphasis added.

[521] “The UN Guidelines are justified in part because they would help solve ‘international problems,’ although a straightforward reading of the Guidelines fails to uncover any such global concerns” – Ibid.

[522] D Harland, 'Implementing the Principles of the United Nations Guidelines for Consumer Protection' (1991) 33 Journal of the Indian Law Institute 189-245, 216.

[523] Ibid, 219.

[524] See for example D Harland, 'The United Nations Guidelines for Consumer Protection: Their Impact in the First Decade' in Iain Ramsay (ed) Consumer Law in the Global Economy (1997).

[525] Organization for Economic Cooperation and Development, Microsoft Encarta Encyclopedia (1996).

[526] OECD, Recommendation of the OECD Council Concerning Guidelines for Consumer Protection in the Context of Electronic Commerce (1999) <http://www.oecd.org/document/51/0,2340,en_2649_34267_1824435_1_1_1_1,00.html> at 30 August 2005.

[527] OECD, News Release - OECD Governments Agree on Consumer Protection Guidelines for E-Commerce (1999) <http://oecdpublications.gfi-nb.com/cgi-bin/OECDBookShop.storefront/EN/product/932000023P1> at 11 April 2003.

[528] Ibid.

[529] OECD, Recommendation of the OECD Council Concerning Guidelines for Consumer Protection in the Context of Electronic Commerce (1999) <http://www.oecd.org/document/51/0,2340,en_2649_34267_1824435_1_1_1_1,00.html> at 30 August 2005 – emphasis added.

[530] Ibid.

[531] OECD, First Report: Government and Private Sector Initiatives to Promote and Implement the OECD Guidelines for Consumer Protection in the Context of Electronic Commerce (2001) <http://www.olis.oecd.org/olis/2000doc.nsf/4f7adc214b91a685c12569fa005d0ee7/c125692700623b74c1256a010059d1e9/$FILE/JT00103514.PDF> at 30 August 2005.

[532] Ibid.

[533] Ibid.

[534] Ibid.

[535] Ibid.

[536] Ibid.

[537] A trustmark provider could conceivably be sued for misrepresentation by an aggrieved consumer, but that is not likely to represent a general cost-effective solution for breached low-value ICTs.

[538] OECD, Consumers in the Online Marketplace OECD Workshop on the Guidelines - One Year Later - Report of the Workshop (2001) <http://www.oecd.org/document/19/0,2340,en_2649_201185_1864403_1_1_1_1,00.html> at 28 May 2002.

[539] Ibid.

[540] OECD, Consumers in the Online Marketplace: The OECD Guidelines Three Years Later - Report to the OECD Council on the Guidelines for Consumer Protection in the Context of Electronic Commerce (2003) <http://www.olis.oecd.org/olis/2002doc.nsf/43bb6130e5e86e5fc12569fa005d004c/af6ec39d8631ca3ac1256cc2005c0edf/$FILE/JT00138646.PDF> at 28 May 2002.

[541] Ibid.

[542] Econsumer.gov, Welcome to Econsumer.Gov! (2005) <http://www.econsumer.gov/english/index.html> at 18 August 2005.

[543] OECD, Consumers in the Online Marketplace: The OECD Guidelines Three Years Later - Report to the OECD Council on the Guidelines for Consumer Protection in the Context of Electronic Commerce (2003) <http://www.olis.oecd.org/olis/2002doc.nsf/43bb6130e5e86e5fc12569fa005d004c/af6ec39d8631ca3ac1256cc2005c0edf/$FILE/JT00138646.PDF> at 28 May 2002.

[544] The website was considered (in a different context) in chapter four under the “foreign public consumer protection authorities” heading.

[545] The relevant text, in full, says: “Government agencies may use this information [the consumer's complaint report] to investigate suspect companies and individuals, uncover new scams, and spot trends in fraud. However, you should not necessarily expect any country to pursue your complaint on your behalf. Although your complaint may be accessible to government agencies, it may or may not be accessed by them. Many government agencies bring law enforcement actions to protect the public-at-large, but do not intervene on behalf of individual consumers. Other agencies have an obligation to investigate each complaint.” – emphasis added.

[546] V Bogdanor, Federalism and the Nature of the European Union (2003) <http://www.riia.org/pdf/research/europe/Bogdanor_Final.pdf> at 19 December 2005.

[547] European Union, Convention on the Law Applicable to Contractual Obligations, OJ C 027 (498y0126(03)) of 26/01/98 (1980) <http://www.rome-convention.org/instruments/i_conv_cons_en.htm> at 26 November 2005.

[548] European Union, Council Regulation (EC) No 44/2001 of 22 December 2000 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters (2001) <http://europa.eu.int/smartapi/cgi/sga_doc?smartapi!celexapi!prod!CELEXnumdoc & numdoc=32001R0044 & model=guichett & lg=en> at 1 September 2005.. The Regulation replaced the Brussels Convention: European Union, Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters Brussels of 26/01/98, OJ C 027 (498y0126(01)) (1968) <http://www.curia.eu.int/common/recdoc/convention/en/c-textes/brux-idx.htm> at 1 September 2005.

[549] European Union, Directive 97/7/EC on Protection of Consumers in Respect of Distance Contracts (1997) <http://europa.eu.int/ISPO/ecommerce/legal/documents/31997L0007/31997L0007_en.html> at 25 May 2005.

[550] European Union, Directive 2000/31/EC on Certain Legal Aspects of Information Society Services, in Particular Electronic Commerce (2000) <http://europa.eu.int/ISPO/ecommerce/legal/documents/2000_31ec/2000_31ec_en.pdf> at 31 August 2005.

[551] European Union, Directive 97/7/EC on Protection of Consumers in Respect of Distance Contracts (1997) <http://europa.eu.int/ISPO/ecommerce/legal/documents/31997L0007/31997L0007_en.html> at 25 May 2005.

[552] From a personal interview in June 2003 with Mr. Jens Karsten, then Administrateur/Desk Officer at DG Sanco (EU body responsible for the Distance Sales Directive).

[553] No explanation is given in the E-Commerce Directive as to the meaning of “information society”. One explanation is that it is a concept based on “some notion of sharing of knowledge and information to achieve development goals” A Pyati, Whose Vision of an Information Society? (2005) <http://www.firstmonday.org/issues/issue10_5/pyati/> at 19 December 2005.

[554] European Union, Directive 2000/31/EC on Certain Legal Aspects of Information Society Services, in Particular Electronic Commerce (2000) <http://europa.eu.int/ISPO/ecommerce/legal/documents/2000_31ec/2000_31ec_en.pdf> at 31 August 2005.

[555] The term “e-commerce” is undefined by the E-Commerce Directive. The following quote is useful however: In a paper published by the European Commission in order to describe the nature of e-commerce and to identify several issues on this area, the definition used includes: any form of business transaction in which the parties interact electronically rather than by physical exchanges or direct physical contact” N Rosner, International Jurisdiction in European Union E-Commerce Contracts (2005) <http://www.llrx.com/features/eu_ecom.htm#b3> at 19 December 2005.

[556] Such as those found in the Rome Convention and the Brussels Regulation.

[557] “International treaties creating international uniform law via conventions are the ‘classical solution’ to achieve legal certainty in international transactions” – F Diedrich, 'A Law of the Internet? Attempts to Regulate Electronic Commerce' (2000) Journal of Information, Law & Technology, 5. Also, see relevant work done in this way by UNIDROIT and UNCITRAL.

[558] “In situations to which the Convention applies and in which it provides express rules, the need for conflicts law [private international law] is obviated” – P Nygh and M Davies, Conflict of Laws in Australia (7th ed, 2002), 384.

[559] UNCITRAL, Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958) <http://www.jus.uio.no/lm/un.arbitration.recognition.and.enforcement.convention.new.york.1958/doc.html> at 1 September 2005. The “New York Convention” – for the international enforcement of “arbitral awards” (non-judicial judgments), for signatory states, in relation to commercial disputes – perhaps a good model for a minimal international consumer protection law.

[560] N Reich, 'Consumerism and Citizenship in the Information Society - the Case of Electronic Contracting' (2000) 7 Competition and Consumer Law Journal 185-200, 188.

[561] V Black, 'Consumer Protection in the Conflict of Laws: Canada, the United States and Europe' in Iain Ramsay (ed) Consumer Law in the Global Economy - National and International Dimensions (1997), 199.

[562] G Pearce and N Platten, 'Promoting the Information Society: The EU Directive on Electronic Commerce' (2000) 6 European Law Journal 363-378, 375.

[563] In respect of situations where the seller is within the EU and the consumer is not, no international conventions currently apply. The law in this situation will thus be whatever the contractual choice of law clause, if any, says it is.

[564] This is a commendable policy, at least from the viewpoint of consumers, but these words are immediately followed by the words “if, in that country, the conclusion of the contract was preceded by a specific invitation addressed to him or by advertising” – which potentially raises the bizarre side issue of a distinction between “passive” and “active” consumers. If so, the argument could then be raised that if a consumer actively seeks out required goods via an Internet search engine etc., then they would not be afforded the protection of Article 5, but would have to fall back on the mercy of whatever choice of law clause applied to their contract. If so, does Article 5 only protect contracts for the purchase of goods where the consumer was not actively seeking those goods for purchase? If this reading is correct, it seems to lose sight of the original justification for consumer protection law: to adjust the knowledge and power imbalances between vendor and consumer. The “active” consumer is still a consumer, surely. Hopefully sanity will prevail and the view of the courts will be that any consumer will receive the protection of Article 5 if the seller’s website, and its’ offers of supply, are accessible in the consumer’s home country – especially if a choice of languages or currencies exists, and there are costs for different countries shown.

[565] Rousseau C/ Commerzbank (1998), 11-98-000244, July 1 Revue de jurisprudence de droit des affaires 1999 464.

[566] The general rule in the Regulation in respect of enforcement (Article 38), is that if a court in the consumer’s EU Member State gives a judgment against an online merchant in a different Member State, the judgment will then be enforced by the court in the country of the merchant (a commendable rule, if effective): DTI, Jurisdiction - FAQ (2005) <http://www.consumer.gov.uk/ccp/topics1/guide/jurisdiction_faq.htm> at 31 August 2005.

[567] The Brussels Convention now has a greatly reduced status, effectively applying only to Denmark.

[568] Article 15(1)(c) – emphasis added.

[569] See, for example, International Communications Round Table ICRT, Brussels Regulation: International Debate (2000) <http://www.icrt.org/pos_papers/2000/001025_EC.pdf> at 31 August 2005. which says that the Regulation will expose businesses who wish to sell online in Europe to the risk of litigation in 15 Member States and thus “many companies, particularly smaller ones, will choose not to sell across borders”. Incidentally, it should be noted that this criticism of the Regulation is not a factor included in the assessment of the cost effectiveness of consumer redress mechanisms undertaken in chapters three and four.

[570] Addasoc.org.Uk, Position Paper on the Proposal to Adopt the Amended Brussels Convention and the Draft Rome II Convention as EU Regulations Pursuant to Article 55 of the Amsterdam Treaty (2003) <http://www.adassoc.org.uk/position/convent.html> at 6 May 2003 – emphasis added.

[571] “At present there is little political appetite for the taking of rational steps towards the harmonising of EU consumer protection law ... the borderless nature of e-commerce may render traditional regulatory approaches [such as found even in the Distance Sales Directive and the E-Commerce Directive] increasingly unworkable” G Pearce and N Platten, 'Promoting the Information Society: The EU Directive on Electronic Commerce' (2000) 6 European Law Journal 363-378, 378.

[572] Ibid, 377.

[573] See chapter four.

[574] J Goldring, 'Globalization, National Sovereignty and the Harmonisation of Laws' (1998) 3 Uniform Law Review 435-451, 448.

[575] G Pearce and N Platten, 'Promoting the Information Society: The EU Directive on Electronic Commerce' (2000) 6 European Law Journal 363-378, 373-374.

[576] Ibid, 374.

[577] It is only “federal” in that it is available as a universal guideline for each US state – thus the actual Code for each US state is potentially different.

[578] See J Fullerton, Uniform Commercial Code (UCC) (1997) <http://www.fullertonlaw.com/chapt12.htm> at 31 August 2005 for a general overview of some value here.

[579] A Barnes et al., Uniform Commercial Code (2005) <http://highered.mcgraw-hill.com/sites/0072488263/student_view0/uniform_commercial_code.html> at 18 August 2005.

[580] County of Santa Cruz, Long Arm Statute (2005) <http://www.santacruzdcss.org/html/long_arm_statute.html> at 18 July 2005.

[581] This case was mentioned in chapter three in the section on assessment of US jurisdiction rules.

[582] F Debussere, 'International Jurisdiction over E-Consumer Contracts in the European Union: Quid Novi Sub Sole?' (2002) 10 International Journal of Law and Information Technology 344-366, 345. The Fourteenth Amendment provides, inter alia, that “no State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws” – emphasis added – Findlaw, US Constitution: Fourteenth Amendment (2005) <http://caselaw.lp.findlaw.com/data/constitution/amendment14/> at 16 August 2005..

[583] International Shoe Co. V. Washington, 326 310 (1945).

[584] M Cordera, 'E-Consumer Protection: A Comparative Analysis of EU and US Consumer Protection on the Internet' (2001) 27 Rutgers Computer & Technology Law Journal 231-264, 2.

[585] See discussion, for example, in R Hoegle and C Boam, 'The Internet and Jurisdiction - International Principles Emerge but Confrontation Looms' (2000) 3 The Journal of World Intellectual Property, 2.

[586] F Debussere, 'International Jurisdiction over E-Consumer Contracts in the European Union: Quid Novi Sub Sole?' (2002) 10 International Journal of Law and Information Technology 344-366, 346-347.

[587] Carnival Cruise Lines Inc. v Shute (1991) 499 U.S.585

[588] “Fair” in the sense that a foreign Internet business needs to have more than trivial contacts with the US consumer’s jurisdiction (and thus shouldn’t be surprised if they end up in court there) but, similar to EU law, Internet businesses may well complain that a negative consequence of US law is that it may force them to acquire some expertise with the different consumer protection laws of every US state they sell to – potentially fifty of them.

[589] F Diedrich, 'A Law of the Internet? Attempts to Regulate Electronic Commerce' (2000) Journal of Information, Law & Technology, 5.

[590] Ibid.

[591] J Goldring, 'Globalization, National Sovereignty and the Harmonisation of Laws' (1998) 3 Uniform Law Review 435-451.

[592] Ibid, 448.

[593] Ibid.

[594] Some examples of this are chargeback, transaction insurance, pressure applied through foreign lawyers or consumer protection bodies, and ADR.

[595] This might be achieved by international agreement on uniform conflicts rules (i.e. through harmonisation).

[596] Nationmaster.Com, Artificial Intelligence (2006) <http://www.nationmaster.com/encyclopedia/Artificial-intelligence> at 13 January 2006.

[597] Bartleby.Com, Artificial Intelligence (2006) <http://www.bartleby.com/65/ar/artifInt.html> at 13 January 2006.

[598] L Long and N Long, Computers - Information Technology in Perspective (9th ed, 2002), 427-428.