<nettime> [love@cptech.org: Hague Convention: what you should know]

[t byfield <tbyfield@panix.com>]

more on the hague convention, which really ought to be on more
nettimers' radar map, imo.

cheers,
t

----- Forwarded 

From: James Love <love@cptech.org>
Organization: http://www.cptech.org
To: info-policy-notes <info-policy-notes@venice.essential.org>
Subject: [IPN] Hague Convention: what you should know
Date: Sat, 02 Jun 2001 19:17:09 -0700

                   What you should know about
The Hague Conference on Private International Law's Proposed
Convention on Jurisdiction and Foreign Judgments in Civil and
                     Commercial Matters
                              
                     James Love Consumer
                    Project on Technology
                    http://www.cptech.org
                      <love@cptech.org>
                              
                         Version 1.0
                        June 2, 2001

I.  INTRODUCTION.

This note addresses concerns over the negotiations for a new
treaty that seeks to strengthen the global enforcement of
private judgments and injunctive relief in commercial
litigation.  While the convention would clearly have some
benefits, in terms of stricter enforcement of civil
judgments, it would also greatly undermine national
sovereignty and inflict far-reaching and profound harm on the
public in a wide range of issues.

The treaty is called the Hague Convention on Jurisdiction and
Foreign Judgments in Civil and Commercial Matters, and is
being negotiated under the little known Hague Conference on
Private International Law.  The treaty is complex and far
reaching, but is effectively unknown to the general public.

In this paper, I examine the following issues.

-   How does the Convention work?
-   What are the consequences of global enforcement of non-
harmonized laws?
-   What is the significance of the Article 4 choice of
forum clause in the Hague Convention?
-   What is the significance of mandatory enforcement of all
sui generis intellectual property laws on markets for data,
music, movies, pharmaceuticals and biotechnology?
-   Why does the Article 28f public policy exception fail to
protect the public, and how does the Convention undermine
common carrier protections for ISPs?
-   What can people do?


II. HOW DOES THE TREATY WORK?

The general framework for the convention is as follows.

1.  Countries which sign the convention agree to follow a
set of rules regarding jurisdiction for cross-border
litigation.  Nearly all civil and commercial litigation is
included.

2.  So long as these jurisdiction rules are followed, every
country agrees to enforce nearly all of the member country
judgments and injunctive orders, subject only to a narrow
exception for judgments that are  "manifestly incompatible
with public policy," or to specific treaty exceptions, such
as the one for certain antitrust claims.

3.  A judgment in one country is enforced in all Hague
convention member countries, even if the country has no
connection to a particular dispute.

4.  There are no requirements to harmonize national laws on
any topic, except for jurisdiction rules, and save the narrow
Article 28(f) public policy exception, there are no
restrictions on the types of national laws that to be
enforced.

5.  All "business to business" choice of forum contracts are
enforced under the convention.  This is true even for non-
negotiated mass-market contracts.  Under the most recent
drafts of the convention, many consumer transactions, such as
the purchase of a work related airline ticket from a web
site, the sale of software to a school or the sale of a book
to a library, is defined as a business to business
transaction, which means that vendors of goods or services or
publishers can eliminate the right to sue or be sued in the
country where a person lives, and often engage in extensive
forum shopping for the rules most favorable to the seller or
publisher.

6.  There are currently 49 members of the Hague Conference,
and it is growing.  They include: Argentina,  Australia,
Austria, Belgium,  Bulgaria,  Canada,  Chile,  China,
Croatia,  Cyprus,  Czech Republic,  Denmark,  Egypt,
Estonia,  Finland,  Former Yugoslav Republic of Macedonia,
France,  Germany,  Greece,  Hungary,  Ireland,  Israel,
Italy,  Japan,  Republic of Korea,  Latvia,  Luxembourg,
Malta,  Mexico,  Monaco,  Morocco,  Netherlands,  Norway,
Peru, Poland,  Portugal,  Romania,  Slovakia,  Slovenia,
Spain,  Suriname,  Sweden,  Switzerland,  Turkey,  United
Kingdom of Great Britain and Northern  Ireland,  United
States of America,  Uruguay and Venezuela
 


III.THE CONSEQUENCES OF GLOBAL ENFORCEMENT OF NON-HARMONIZED
LAWS.

The early discussions on the current convention began in
1992, largely in the context of judgments where businesses
would be the defendants, for disputes involving physical
goods or traditional services.  Only recently has there been
recognition of the far-reaching consequences of using the
treaty framework for address disputes involving the Internet,
or litigation involving intellectual property claims or
information in general.

The Internet issues deserve special attention.  The treaty
gives nearly every member country jurisdiction over anything
that is published on or distributed over the Internet.  If
the treaty (as written) is widely adopted, it will cripple
the Internet.  The reason is fairly straightforward.  The
Hague framework begins with the notion that there will not be
harmonization of substantive law, only harmonization of rules
regarding jurisdiction and enforcement of laws.  So it is a
fundamental part of the Hague treaty that laws that are very
different from each other will be enforced, across borders.

For example, under the treaty, different national laws
concerning libel or slander will give rise to judgments and
injunctions, as will different national laws regarding
copyright, patents, trademarks, trade secrets, unsolicited
email, unfair competition, comparative advertising, parallel
imports of goods, and countless other items.  As a
consequence, people will find that activities that are legal
where they live are considered illegal in a different country
and that under the treaty, the foreign country will likely
have jurisdiction, and their laws will be enforceable in all
Hague member countries.

To be more concrete, note that under different national
copyright laws, authors can liberally use quotations from
other authors in some countries, but not in others.  Software
engineers can decompile or use other reverse engineering
techniques to find out how to make software programs work
together (be interoperable) in some countries, but not in
others.  In some countries school teachers can distribute
newspaper stories and other copyrighted materials in class
rooms as a fair use, but such distribution would be illegal
in other countries.  Some countries allow the use of parody
as an exception to copyright or trademark laws, while other
countries do not.  In some countries it is permissible to
disparage products or publish comparative price
advertisements, while in other countries it is not.  In some
countries it is permitted to publish leaked memorandums and
documents that embarrass governments or corporations, but in
other countries this would be considered a violation of
copyright laws (as in the UK David Shayler case), or a
wrongful disclosure of proprietary business information.  Rap
music that legally uses "sampling" of music under US law will
violate certain European copyright regimes where this is
illegal.  In some countries a failure to obtain permission to
hyper-link to a web page or use a meta-tag with the name of a
business is considered an infringement of intellectual
property, while in other countries it is not.  This list of
examples could go on and on.

There are fundamental problems with enforcing every country's
national trademark laws on the Internet, because different
firms sometimes claim the same mark in different countries,
and what may be a generic term in one country is a
proprietary mark in another country.  These are important and
difficult conflicts and it is useful for policy makers to
seek solutions to these jurisdictional disputes, but a
"solution" that simply enforces everyone's laws on everyone
is really no solution at all.

In the patent area, the Hague convention would force European
governments to begin enforcing judgments and injunctive
relief from US software and business methods patents, even
though software and business methods cannot be patented in
many European countries.  As the rest of the world is forced
to pay for US software and business methods patents, they
will enact their own anti-competitive and poorly managed
software and business method patent systems, and US citizens
will have to pay for those too.

The Internet related cases are the most obvious areas where
the Hague Convention will cause problems, but hardly the only
cases.

IV. WHAT IS THE SIGNIFICANCE OF THE ARTICLE 4 CHOICE OF
FORUM CLAUSE IN THE HAGUE CONVENTION?

As noted above, under all current drafts of the convention,
"business to business" choice of court clauses must be
enforced, even those involving mass marketed non-negotiated
contracts.  In the Edinburgh drafts, business to business
contracts are defined as everything that does not involve
personal household use, and so every library, every
university and school, and every work related purchase, will
be considered business to business transactions, and even
click on or shrink wrapped licenses with choice of court
clauses must be honored.  This is spelled out in Article 4 of
the proposed Convention.

In an earlier attempt to negotiate a treaty on jurisdiction,
this choice of court provision was not mandatory in all
contracts, and in particular, there was good language to
exempt contracts that were abusive or unfair.  The 1965 text,
which has *NOT* been used in the current treaty negotiations,
read:

          "The agreement on the choice of court
          shall be void or voidable if it has been
          obtained by an abuse of economic power or
          other unfair means."

With the elimination of the safeguards against unfair and
abusive contracts, you now have a mandatory choice of court
clause in Article 4.  This will have a huge effect on
national sovereignty, because any publisher or seller of any
product can simply shift jurisdiction, by contract, to a
different country.

One effect will be in the area of books or videos, where
publishers can use contracts to shift jurisdiction to
countries (there are many in Europe) that do not recognize
the "first sale" doctrine which permits zero royalty lending
by libraries or video stories.  The South Africa victory over
the pharmaceutical companies for parallel imports of
medicines could be undermined by choice of forum contracts
that select courts that did not recognize the first sale
doctrine.  Airlines, banks and any number of institutions can
use these choice of court agreements to change the country
where disputes are heard. Any seller can use Article 4 to
shop for favorable national laws, and also to deny the public
the opportunity to seek redress or defend actions in the
countries where they live, which is a huge burden for most
people and small businesses and non-profit organizations.

The contracts can also shift jurisdiction on software to
countries that do not permit reverse engineering.  Web pages
that have terms of service agreements on such issues as
hypertext linking or use of company or brand names in meta-
tags, or that require prior approval for reviews of products,
or any number of other clauses, all of which exist today,
would be much stronger because companies could simply point
the choice of court to the jurisdiction most likely to
actually enforce these provisions.  The free software
movement would be particularly vulnerable to these
provisions, as well as the expanded reach of overly broad
national laws on software patents and trade secrets.

V.  THE SIGNIFICANCE OF MANDATORY ENFORCEMENT OF ALL SUI
GENERIS INTELLECTUAL PROPERTY LAWS ON MARKETS FOR DATA,
MUSIC, MOVIES, PHARMACEUTICALS AND BIOTECHNOLOGY.

Sui generis systems for protecting intellectual property are
those that are special systems -- one of a kind -- that fall
outside of traditional IPR regimes like copyright, patents or
trademarks.  For example, the US has a sui-generis regime to
protect data from clinical trials on pharmaceutical drugs,
Europe is implementing national sui generis legislation on
databases, and several African, Asian and Latin American
countries have sui generis regimes on traditional learning
and culture, and a there are quite a few efforts to create
sui generis regimes on genetic and biological resources, to
mention only a few areas where sui generis regimes are being
discussed.

There is no doubt about the status of sui-generis IPR regimes
in the Hague convention -- they are all enforceable,
regardless of what they are.  At present these laws are often
controversial, because they push protections into new areas,
that would otherwise be in the public domain.  But under the
convention, countries could get enforcement of judgments
globally, even if no other country had a similar regime.

For example, if Cuba enacted a sui generis regime and
declared that the Cuban "beat" was intellectual property, it
could get a judgment in Cuba against US record companies that
were engaged in cultural "piracy," and demand for example, 5
percent of the revenues from global sales of music that use
the Cuban beat.  Other countries could do the same thing.
These judgments would be enforceable globally, under the
Convention.   So too would bio-piracy judgments against US
and European biotechnology and pharmaceutical companies, for
"stealing" traditional knowledge, or exploiting without
benefit sharing a variety of biological and genetic
resources.  The motion picture industry could be hit with new
sui generis IPR liabilities by countries that give rights in
history.   Countries like China, which is a member of the
Hague Conference, could use this to limit who could actually
make films about China.  The Hague convention would instantly
create a legal framework to legitimatize all of these new IPR
claims, and it would not even matter if the "infringing"
party did business in the country at all, since the judgments
would be enforceable globally, in any Hague member country,
and the claims could be based upon shares to global (rather
than local) revenues of products.

Some would consider this a positive feature of the
Convention, because it would give the developing countries
opportunities to "tax" the rich countries, under new and
controversial IPR regimes.  But of course, the rich countries
could and will also enforce their own regimes, including, for
example, the European Union sui generis regime on database
protection.  The US and EU would probably modify their sui
generis regimes on pharmaceutical registration data to make
it illegal for developing countries to rely upon those data
for registration of generic products in poor countries, an
approach already included in the new US-Jordan "Free Trade"
agreement.  And in general, would one would observe is a new
dynamic of everyone trying to create their own "rights" in
everything, until the public domain shrinks if not disappears
altogether.

The Hague negotiators have never been willing to explore and
discuss the merits of including national sui-generis laws
regarding intellectual property in the Convention.


II. THE ARTICLE 28F PUBLIC POLICY EXCEPTION FAILS TO PROTECT
THE PUBLIC, AND THE CONVENTION UNDERMINES COMMON CARRIER
PROTECTIONS FOR ISPS.

In discussions regarding the treaty, we have brought to the
attention of the delegates all of the issues and many others
as well.  We have indicated the treaty will shrink the
public's rights to only those that exist in every country,
which of course is smaller than what exists in *any* country
-- a frightening outcome, and we have pushed to have
intellectual property or e-commerce removed from the
convention, and we have pushed for a variety of more minor
fixes, such as to improve Article 4 or Article 7 or to exempt
the first sale doctrine.   In these discussions, the Hague
Negotiators frequently refer to the so-called public policy
exception, which provides that judgments need not be enforced
if:

     28(f) recognition or enforcement
    would be manifestly incompatible
    with the public policy of the
    State addressed.

This provision is of course quite important, but it should
not be used to justify a convention that is fundamentally the
wrong approach.  Moreover, its usefulness is much undermined
by the fact that judgments will be enforced in *any* Hague
member country -- the so called "you can run but you can't
hide" provision.  Moreover, for Internet related disputes,
the ISP will typically be sued, both because it has deep
pockets and because it has assets in many countries.  In
those cases, the IPS will only escape the judgment if *every*
country finds the judgment "manifestly incompatible public
policy."  And the plaintiff need only find one country that
is willing to enforce the judgment.  Also, there are all
sorts of creative ways that suits can bring in parties that
are vulnerable to enforcement.  In addition to suing ISPs
like AT&T or Verizon that clearly have assets all over the
place, one could sue an IPS that had a peering relationship
with another ISP, and refused to block bits from an offending
site.  ICANN could be hit with cross border injunctive
requests to remove IP numbers or domains.  Lots of things are
possible.

Moreover, it is not at all clear that it will be easy to get
countries to refuse to enforce judgments under Article 28f,
because they will want their own judgments enforced,
particularly countries like the USA or in Europe, that are
anxious to have intellectual property infringement cases
enforced globally.

All of this the practical effect of undermining the common
carrier status of IPSs, because they will likely not be
considered a common carrier in all countries where they have
assets.  This will lead to content regulation by IPSs, who
will fear liability in countries with restrictive laws.  A
Chinese lawsuit against a US citizen who criticizes a Chinese
official, might be undertaken in China, but enforced against
AT&T in Korea, Romania or anywhere else, creating a
limitation on speech in the USA that would never involve a US
judge.  Indeed, this could happen even is the USA does not
sign the convention, if other countries do.

X.  WHAT CAN PEOPLE DO?

The most important thing people can do is to contact their
own national governments to find out who their negotiators
are, and to raise directly your concerns. If you don't know
where to start, look a this page for links to the agencies
that are representing countries in the Hague:

   http://www.hcch.net/e/members.html

   [should be?: http://www.hcch.net/e/members/index.html - mod]

Also be sure to ask your member of Congress or Parliament to
address your concerns.

The CPT web page on the Convention is here:

    http://www.cptech/ecom/jurisdiction/hague.html

    [should be: http://www.cptech.org/ecom/jurisdiction/hague.html - mod]

>From this web page you can check out the texts of the
Convention, and you can subscribe to a listserve about the
Hague convention.  You can also send documents and comments
about the Hague convention to Vergil Bushnell
<vbushnell@cptech.org>, and he can add them to the page.
-- 
James Love
Consumer Project on Technology
P.O. Box 19367, Washington, DC 20036
http://www.cptech.org
love@cptech.org
1.202.387.8030 fax 1.202.234.5176
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