Hague Treaty May Pose Problems for Net Betting

The issues presented by the borderless nature of the Internet are nothing new to online casino operators, for whom the globe is a patchwork of areas where their business is either legal, illegal or in dispute.

But the borderless Web poses legal problems for almost every type of e-commerce industry. Lawsuits whose opposing parties come from different counties may result in judgments that are not enforceable and assets that are not collectible.

Some representatives to The Hague have a proposal that aims to quell some of these disputes. Unfortunately, it’s starting a few of its own. James Love, one of the most vocal opponents of the Convention on Jurisdiction and Foreign Judgments in Civil and Commercial Matters, said the convention could affect all types of civil, not criminal, litigation among gamblers and operators who live in different countries.

“Under the convention you could collect the judgment in any country even if you have no connection to the country at all,” said Love, the director of Ralph Nader’s Consumer Project on Technology.

The Convention on Jurisdiction and Foreign Judgments has been in the works for about ten years, although before this year not much was known about it. It aims to set new rules for online copyrights, free speech and e-commerce, if it is approved by the convention’s 52 member nations.

The proposal does not specify new laws; instead, it requires member nations—countries as diverse as Morocco, China, Peru and the United Kingdom—to enforce each other’s civil court judgments on a wide range of topics.

Under today’s international law, companies and individuals can win a suit in one country but have no guarantee the judgment will be enforced in the jurisdiction of the defendant.

“In a nutshell, it will strangle the Internet with a suffocating blanket of overlapping jurisdictional claims, expose every Web page publisher to liabilities for libel, defamation and other speech offenses from virtually every country, [and] effectively strip Internet service providers of protections from litigation over the content they carry,” wrote Love in a report after the convention’s drafters concluded a two-week session in June.

Michael Geist, a law professor at the University of Ottawa, explained that the convention could help multinational companies collect assets without having to try their cases in multiple jurisdictions.

“At the moment, having a Canadian judgment against a company with no assets in Canada does me very little practicable good,” he said. “What this treaty will do is make sure that that judgment can be enforced in the United States.”

The convention’s critics are primarily Americans who feel the it could cut into their constitutionally guaranteed free speech. The free speech issue is handily illustrated by a ruling a French court made last year that Yahoo must block French citizens from buying Nazi memorabilia on Internet auctions because the items break France’s hate-speech laws.

In response to the ruling, U.S.-based Yahoo pulled the items rather than pay a $14,000 per day fine, even though such sales are legal in the United States.

The proposal could be available for The Hague’s member states to vote on at the next diplomatic convention, which will be at the end of 2002. Love warns that if passed, the plan could “get complicated” for online gambling operators.

“In one sense they’ll probably use the convention to try and force gamblers to pay their debts, on the other hand they may find themselves exposed to liabilities that they may not really appreciate,” he said. “The interesting thing about the convention is that … any kind of litigation you can imagine is doable under the convention. Even if something is legal where you live, it may be illegal in some other country.”

Geist, the law professor, said the convention could cause problems for online casino operators because the laws of several countries—Australia specifically—would make it difficult to enforce online gambling debts.

However, he said, there are problems with the convention that need to be worked out before it can be adopted. At the moment, he doesn’t think the U.S. Senate would approve the treaty.

“I don’t know if there’s the political will to get this thing passed as is,” he said.