As more and more business and personal transactions go online, disputes in cyberspace are likewise on the rise. Max Ng takes us through the challenges brought about by these technological disputes and the possible solutions to these new challenges.
Disputes are a daily occurrence, and being in the legal profession, most of us see more than our fair share of it everyday. As lawyers, we also have a duty to help our clients resolve these disputes, whether it be a business dispute or a personal one, in the most efficient and cost-effective manner while obtaining the most favourable results for them. This is what dispute resolution lawyers are paid to do; and we do our best for our clients.
The dispute resolution processes can, however, be rather complex and complicated. Added to that, disputes are arising fast and furious in a new forum - in cyberspace. Such disputes pose greater challenges than the traditional disputes between brick-and-mortar entities, thus, this article seeks to explore the possible solutions to these 'new' challenges.
Dispute Avoidance
In the first place, it would be remiss of me not to mention that, more often than not, it is by far better to avoid a dispute than to engage in one, and the following are some pointers as to how lawyers can help their clients avoid or manage a dispute.
In the event that disputes do occur, notwithstanding our best efforts, the next question we ask, is whether there is a difference between disputes that occur in the real physical world and those occurring in cyberspace?
Distinction between Disputes that Occur in Cyberspace and those in the World of Brick-and-Mortar Institutions
Cyberspace, what exactly is it? There are many definitions of it today, but did you know that William Gibson first coined the term 'cyberspace' in 1984 in his book Neuromancer? For the purpose of this article, we may say that cyberspace refers to a virtual online reality which is today best manifested in the internet, a worldwide network of computer networks using the TCP/IP network protocols to facilitate data transmission and exchange.
Commensurate with its popularity, there are many applications of the internet today. The World Wide Web ('www') for instance, functions like a huge reservoir of information and knowledge, but from which one should partake at one's own risk for its contents are often unverifiable for accuracy or truth. The www has also been often referred to as the 'Wild Wild West', given its open and often uncontrolled nature, permitting all sorts of illegal ventures and manner of pornography to propagate in a pervasive manner, cutting through all geographical boundaries.
Given the ease of duplication through digital technology, intellectual property rights such as copyright, are blatantly being infringed on the www, consequently representing one of the 'hot' areas of disputes that are brought to the forefront in cyberspace.
In the case against Napster for example, Napster Inc had effectively utilised the power of the internet to allow millions of users around the world to swap their MP3 (a digital compression format) music files online via a 'Peer-to-Peer' networking technology. This was a tremendously popular service, with at least 51 million registered users worldwide (and probably many more that were unregistered). However, it was alleged that most of the swapping involved an infringement of the copyrights of the respective music owners.
It was only a matter of time before someone would come down hard on Napster. In this case, the Recording Industry Association of America ('RIAA') commenced an action to obtain a court order to prevent Napster from facilitating such a macro-scale infringement of the copyrights of the music owners they represented. Final judgment on the matter has yet to be delivered, but the District Court has granted a preliminary injunction against Napster to stop it from engaging in or facilitating others to copy, download, upload, transmit or distribute copyrighted music. The Ninth US Circuit Court of Appeals has since upheld this preliminary injunction provided that, in each case, the plaintiffs provide Napster with a list of the copyrighted music so that it can identify the infringing music files.
In another case, a major legal battle is now taking place in the States where the Motion Picture Association of America ('MPAA') is leading some major Hollywood studios against a hacker publication '2600' Magazine and its publisher, Eric Corley. The studios say that Corley and his magazine have contravened the United States Digital Millennium Copyright Act ('DMCA') when his website mirrored download pages for a DVD-cracking software known as 'DeCSS'. The US Courts therefore have to decide if helping to distribute software capable of decrypting the DVD Industry's Content Scrambling System ('CSS') controls would amount to copyright infringement.
It is therefore apparent that there is a fine line between successfully exploiting the internet and infringing someone else's intellectual property rights. However, not many people are aware of what intellectual property rights are, and even less take active steps to seek the help of professionals in this field. Therefore, such disputes are bound to become more commonplace in the future.
No doubt, there will also be commercial disputes in cyberspace that are similar to that which we encounter in the real world and in the course of traditional modes of commerce. These may be disputes over the quality of goods purchased online, errors in taking orders and failures to pay and deliver. The mere fact that the trading takes place over the internet does not preclude such disputes from arising. However, unique to cyberspace transactions are further issues, such as the difficulty in verifying the identity of the contracting parties and integrity of an online transmission and security issues relating to online payment mechanisms.
The Electronic Transactions Act (Cap 88) has therefore been enacted in Singapore to facilitate online commercial transactions by minimising the areas of ambiguities. However, it cannot, and does not, entirely eliminate such disputes. In addition, there are other difficulties that are unique to cyberspace disputes, such as the misappropriation of domain names, spamming, unauthorised linking and the use of misleading metatags. In addition, other disputes are given a new twist when it comes to the internet, such as defamatory postings on the internet or the conflict between trade marks and domain names.
The 'transnational' nature of the internet has also placed a severe strain on our current conflict rules, which are a set of legal rules that attempt to ascertain the national laws and govern the conduct and relations of individuals in any given case involving foreign elements. The main conflict issues can be categorised as follows:
While these are issues that also apply to 'brick-and-mortar' disputes, it is in the realm of cyberspace that these issues are accentuated. In the physical world, businesses are often conducted within defined geographical boundaries. It is therefore easier, in such a situation, to determine the 'connecting factors' which will link a case to a particular jurisdiction. Where a court is able to discern these connecting factors, it can clearly determine whether it has jurisdiction in a given case or ascertain the applicable law. The rules of conflict of laws were conceived and evolved to assist in determining which connecting factors are to take precedence, and hence whether a court has jurisdiction in dealing with a cross-border dispute or whether the laws of a particular jurisdiction should apply. However, these rules are still based on disputes that arise in the physical world.
For example, in the case of a normal dispute, it would be easy to determine the place of business of the parties, even if the parties were based in different jurisdictions. In the case of a cyberspace dispute, the place of dispute may not be determined so easily. Is it supposed to be where the server is located (and what if there are more than one involved)? Is it the place where the money is being sent or where the parties are registered in or are nationals of? The conflict rules which have evolved to deal with brick-and-mortar disputes are often unsatisfactory means of resolving such problems.
In addition, the nature of the internet is such that it often entails the involvement of numerous parties in any one transmission over its networks. Are all these parties then to be liable for their respective roles in the transmission?
This difficulty can be illustrated by referring to two US cases. In Cubby v CompuServe Inc ([1991] 776 F Supp 135), the defendant provided a discussion forum which was accessible to its subscribers from around the world. An agreement was entered into by the defendant with Cameron Communications Inc, to manage the discussion forum in accordance with its editorial and technical standards. By an agreement with Cameron, the publisher of a magazine called 'Rumorville USA' was allowed to upload their publication onto the defendant's discussion forum. The plaintiff alleged that Rumorville contained defamatory statements and sued CompuServe as the publisher of the statements. CompuServe's defence was that it was merely an innocent distributor. The evidence was that CompuServe had no opportunity to review the contents of the magazine before it was placed online. Judge Leisure, having applied the laws of New York and the First Amendment, held that CompuServe was indeed a distributor and was subject to the same standards of liability as a traditional public library, bookstore or news-stand.
However, in the case of Stratton Oakmont Inc v Prodigy Services ((NY 1995) 23 Media L Rep 1794), a totally different result was reached. In this case, an unidentified individual uploaded certain defamatory statements onto Prodigy's discussion forum. As in the earlier case, Prodigy had contracted the task of management of the forum to a third party. The argument by the plaintiff was that Prodigy was the publisher of the defamatory statements and that the 'board editor' or 'board leader' (third party) had in this case acted as Prodigy's agent. Judge Ain in this case, however, granted the plaintiff's motion for partial summary judgment on the basis that Prodigy was the publisher of the defamatory statements and that the board leader was its agent as Prodigy had held itself out to the public as controlling the contents of its discussion forum. There is also evidence to indicate that Prodigy had, in certain instances, screened postings for offensive material and material in bad taste. The factors which formed the basis of the court's decision leads us to the ironical conclusion that the best way to minimise the risk of being held liable is to not exercise control over the content of the discussion forum at all, as in the case of CompuServe.
(The position in the US has since been altered with the enactment of the US Communications Decency Act 1996, which effectively immunised providers of interactive computer services in the US from civil liability in tort with respect to material disseminated by them but created by others.)
The above two cases illustrate the difficult issues that can arise from disputes in cyberspace, and cause us to wonder if the traditional dispute resolution processes are antiquated and inadequate in resolving these online difficulties today.
Alternative Dispute Resolution
Alternative Dispute Resolution ('ADR') was originally developed to sidestep the deficiencies (whether perceived or inherent) found in many traditional judicial systems around the world. Such deficiencies include the inefficiency of these systems, the high costs involved and the procedural complexity underlying the use of these systems.
ADR has been used for years to assist in resolving traditional disputes not involving cyberspace. While ADR encompasses a whole range of different dispute resolution methods, the most popular forms of ADR are arbitration, mediation and conciliation. These methods are generally perceived as being able to: (a) reduce the costs and time spent; (b) simplify the processes; and (c) do away with the endless motions and procedural wrangling that characterises the traditional litigation system in most countries.
However, to realise the above benefits of ADR, the parties would still have to choose the right form of ADR. The wrong choice of ADR can lead to the same problems that plague the traditional dispute resolution processes. What is the right choice for a given dispute would depend on the objectives of the parties to the dispute and what they are willing to do to achieve such objectives.
Many governments today, including the Singapore Government, have recognised that ADR can be a potent force - not in replacing the national court systems, but in assisting or complementing them by dealing with disputes which may not be appropriately or effectively dealt with by the courts. To this end, institutions such as the Singapore International Arbitration Centre ('SIAC') and the Singapore Mediation Centre ('SMC') have been set up.
It is the opinion of this writer and the main submission in this article that, by actively embracing ADR, potential cyberspace litigants will also be able to sidestep many of the difficulties which would surface where resolution of such disputes are sought in the traditional forums where antiquated conflict of rules would inevitably be applied.
One difficulty that can easily be dealt with is the issue of the over-reaching jurisdiction of many courts under the traditional systems. For example, where the parties have agreed in advance to have their disputes arbitrated upon by arbitrators who have been fixed, this problem of having to decide the jurisdiction would not arise. As another example, in the case where conciliation is the preferred mode of dispute resolution, the issue of applicable law may not even be an issue as the legal rights of the parties are not paramount in such instances.
The following are some of the reasons why it is thought that ADR will make greater inroads into cyberspace disputes in the future:
The Emergence of Online ADR
In addition to the normal forms of ADR, there is the emergence of online ADR today, to deal with cyberspace and other forms of terrestrial disputes. These online dispute resolution platforms have made their presence felt in cyberspace, with varying degrees of success. At the same time, they are also generating certain controversies. The following are examples of such online ADR models:
This project provides for online arbitration and fact-finding involving complaints submitted by electronic mail or via its Web page. Complaints that are submitted are related to the internet or online messages, postings and files. US$10 is charged for each dispute submitted.
An impartial magistrate is assigned to each complaint. Proceedings take place through electronic mail. The magistrate tries to reach a decision within 72 hours. When a decision is made, the information regarding the decided case would be available on the internet.
The VMP maintains a pool of neutral arbitrators with experience in the law and the use of computer networks to serve as magistrates. These magistrates are jointly selected by the AAA and CLI.
The VMP issued its first few decisions in May 1996. In one of them, the appointed arbitrator ruled that America Online should remove from its service a 'junk e-mail' advertisement offering, for sale, e-mail addresses. It was the finding of the arbitrator that the unsolicited e-mail, distributed to AOL members by E-mail America Corp, had violated AOL's service agreement with its subscribers.
However, this decision was subsequently criticised by some on the basis that the complainant was affiliated to the VMP, as its advisor on consumer fraud issues. In addition, one of the respondents, E-mail America, did not participate in the proceedings at all. The text of the decision can be obtained from the VM website.
GAMA offers arbitration and mediation services over the internet, allowing complainants to file and serve their complaints, affidavits and other related documents via the e-mail or the Internet Relay Chat ('IRC'), which involves communicating over the internet via real time text messages.
Its charges vary according to the nature of the dispute. For claims less than $25,000, the filing fee is 10% of the total amount claimed.
In a typical case, the defendant initiates the process by logging onto the service's protected site. After uploading basic information on the claim, the defendant then proposes one or more settlement offers. The service then notifies the plaintiff's lawyer, giving him access to the site. The plaintiff can either accept or decline the invitation to participate in the brokered settlement. Where the plaintiff accepts, he simply has to log onto the website and post his settlement demands. If the offer and demand are within a prescribed range (typically 30% of the claim or $5,000), the parties are bound to settle the case at the median amount.
One of the benefits of these online services is that they can really speed up the dispute resolution process, as the services are often available 24 hours a day, seven days a week. This further improves the efficiency, normally associated with the usual forms of ADR.
However, there are some difficulties to embracing these online dispute resolution mechanisms. Chief amongst them, is the validity of the online ADR process used, and whether any decision issued or arrived at via these mechanisms, will subsequently carry any weight whatsoever. In the first place, there must be an agreement by the parties to use these services. Subsequently, there is no guarantee that any decision reached will be enforceable in the relevant jurisdiction(s).
Therefore, before these online dispute resolution mechanisms can really take off, it is the view of some that the international community must first start to recognise cyberspace as a distinct place in which distinct laws should apply. When this happens, the conflict rules for the purposes of determining applicable law and jurisdiction can be dispensed with altogether. Online and other forms of ADR can then be conducted within a cyber forum, with jurisdiction over all disputes that occur in cyberspace, and which has its own distinct set of rules and laws.
Another writer has actually suggested that an online international dispute resolution mechanism by a body like the International Chamber of Commerce ('ICC') should be set up and called the 'World Wide Court' (or 'WWC'). This is an ambitious suggestion involving arbitrators and mediators from many countries, hearing disputes online and rendering their decisions promptly. This suggestion is premised on the fact that by using the internet, these users have consented to submitting all their disputes to this forum. Suppliers who are not part of the system must also be required to post a warning notice to this effect. There must also be an agreement as to the governing law and legal principles to be adopted (perhaps the ICC and/or Model Law on Electronic Commerce, it was suggested). Finally, the WWC must be internationally recognised and there must be an agreed method of enforcement of its judgments. This is indeed a lofty ideal, and it remains to be seen how the international community will embrace this suggestion.
Conclusion
There are more and more disputes that are arising in cyberspace, or arising as a result of our endeavours in cyberspace, whether it is between brick-and-mortar companies fighting over cyber realty, such as domain names, or individuals who feel that their rights have been trespassed.
Within the confines of this reality, we must ask ourselves if the novel issues that arise are being adequately resolved by the current dispute resolution processes. I think not.
The emergence of online ADR is a response to the current inadequacies of the traditional dispute resolution processes. While it may be some time yet before any of these online ADR processes gain sufficient acceptance in the international community (given that each country constantly tries to assert its own sovereignty and laws over any disputes that may come before its courts), it is submitted that the inroads made by these processes to date are evidence of their growing popularity and the disenchantment of the general public with the out-dated mechanisms we currently employ.
The Uniform Domain Name Dispute Resolution Policy ('UDRP') is a shining example of a successful online ADR mechanism, used to combat the problem of 'cybersquatting' and other domain name disputes. The UDRP has been employed by a number of organisations from more than 75 countries and has the support of the World Intellectual Property Organisation ('WIPO') Arbitration and Mediation Centre, which has heard more than 1,850 cases since it commenced its services in December 1999.
We live in interesting times and the internet revolution is merely in its infancy. How it will impact this world in the coming years, and the extent to which it will affect our traditional dispute resolution processes, remains to be seen. It is nevertheless believed that disputes in cyberspace are, at the end of the day, better resolved by dispute mechanisms in cyberspace.
Max Ng Chee Weng
Rodyk & Davidson
This article is adapted from a talk that was originally given by the author to members of the public on 20 September 2000 at the Hotel Inter-Continental in Singapore. The author would also like to acknowledge the contributions of Stephane Lim and Han Lim Siew towards the preparation of this article.