October 5, 2000 (corrected Oct 9)
Meeting of E-Commerce Roundtable on Hague Treaty
Held at American Library Association Offices
These are my notes from our October 5 meeting on the Hague
Convention Jurisdiction and Foreign Judgements.
Participants:
USG:
Jeff Kovar, State Department
Hugh Stevenson, FTC
Maneesha Mithal, FTC
NGO/unions:
Sarah Andrews, Electronic Privacy Information Center
Thiru Balasubramanian, Consumer Project on Technology (CPT)
Alan Bushnell, CPT
Jamie Love, CPT
Rick Weingarten, ALA (chair of meeting)
Miriam Nisbet, American Library Association (ALA)
Carrie Russell, ALA
Manon Ress, Debs, Jones, Douglass Institute
Rob Weisman, Essential Action
Joel Yudken, AFL-CIO
Press:
Dugie Standeford, Washington Internet Daily
Will Rodger, USA Today
Documents:
Jeff Kovar provide copies of a 10 page letter from him to UK
official Alasdair Wallace, dated September 10, 2000, that
discussed specific issues in the negotiations, and his June 29,
2000 testimony on the treaty to the House Subcommittee on Courts
and Intellectual Property. We asked that these documents be put
on the USDOS web page. US-DOS was also asked to provide details
of the various Hague meeting dates and agendas on its web pages.
Basic rationale for treaty and dates of meetings
The treaty was described at a litigation convention. The basic
rationale for the USG pushing the treaty goes something like
this:
1. The USA is the most receptive country to recognizing foreign
judgments.
2. Foreign judgments are already regularly enforced in US
courts.
3. Few countries recognize US judgments.
4. Better foreign recognition of judgments would allow US
citizens to collect US judgements abroad.
Why then would foreign countries want to have the treaty?
Apparently there is some foreign resistance to the treaty, in
part, for example, over the big US judgments, and resentment over
the fact that the US system which allows jury verdicts in many
civil trials. There is also foreign opposition to the US
practice of permitting extensive off shore discovery, and other
aspects of the US assertion of "long arm" jurisdiction. Some
governments would like to force the USA into a more consistent
framework regarding jurisdiction, cutting back of the current
"long arm" approach to jurisdiction.
This is a simplified version of things, of course, and it was
mentioned, for example, that currently in France any French
citizen can sue anyone, anywhere in the world, for anything, in a
French court.
The push for the treaty by the US was described as coming from
"middle class" litigants -- apparently relatively small parties
(not giant corporations), who had claims against foreign parties
that would not pay. "It's a plaintiffs treaty," USG says.
Apparently some plaintiff lawyers emphasized cases such as
foreign sales of unsafe children cribs or other goods, where they
are seeking to make US judgements collectable abroad.
Europe is now also dealing with changes in the Brussels
convention, which addresses the same issues regarding judgements
and jurisdiction.
The talks on the treaty began in 1992, but the first drafts did
not appear until 1998, and the first complete drafts were made
available in June and then October 1999. The treaty was supposed
to be finished this month (Oct 2000).
Of course, when people started talking about the treaty, no one
was thinking about the Internet, and how the treaty would affect
the Internet, where the amount of cross border transactions has
skyrocketed.
In October 1999, the US government opposed many aspects of the
Draft the treaty, registering opposition, for example, to
articles 7 and 8 of the October 1999 text, and raising a number
of other issues, as outlined in Mr. Kovar's September 10, 2000
letter to Alasdair Wallace. The U.S., along with a several other
countries, pressed for the negotiating schedule to be revised and
for additional negotiating sessions to be held.
The current schedule for discussions on the treaty are:
October 30- November 1, international negotiations on the
text, held at the US Department of State in Washington, DC
December 11-12, ICC/OECD/Hague meeting in the Hague on ADR,
with discussion of relationship between ADR and Hague.
December 13-15, Basel, Switzerland, government negotiations
on the treaty text
January 30-31, Geneva WIPO meeting on jurisdiction and
choice of Law for intellectual property disputes
Last week in February (3 to 5 day meeting), in Ottawa, on E-
Commerce
June 2001, the first session of a two-part diplomatic
conference to complete the treaty
Date unknown, the second part of the diplomatic conference,
which may be the end of 2001, or the beginning of 2002.
The rules are different for each meeting. NGOs can seek to have
a Representative become a member of the US delegation at several
of these meetings. Indeed, business groups already have
requested. The October Washington, DC meeting will be closed,
except to members of the country delegations. The December 11-12
Hague meeting will be restricted to 250 participants, worldwide.
The Basel meeting will be closed, unless you can get on a country
delegation. The WIPO meeting is open, according to WIPO. It is
possible to be invited as an expert to the Ottawa meeting.
International NGOs can also ask to participate (business NGOs
do), and there will be private citizens on the US delegation.
The ordinary Hague Conference rules will be for the diplomatic
convention in June: government delegations (which may include
private advisers) and international NGO's accredited to the Hague
Conference. Mr. Kovar said to contact him for specific guidance
on attendance at any of these meetings. He also asked whether
consumer NGO's wished to put forward one person to be considered
as a member of the U.S. delegation. He noted that this would
entail some loss of independence to the individual while serving
as a member of the delegation but offered the opportunity for
direct input.
Substantive Issues
The USG will be provide written answers to the two letters I sent
on September 29, 2000, regarding questions about the Hague
treaty. Here are some notes from discussions about some of these
issues.
Libel and Slander
Foreign libel or slander judgments that raise US first amendment
issues are currently difficult to collect in the US.
Under the proposed treaty, there are specific "Grounds for
refusal of recognition or enforcement of judgments." These are
set out in Article 28. Apparently the relevant 1st amendment
provision is Article 28 (f), which is:
28(f) recognition or enforcement would be manifestly
incompatible with the public policy of the state
addressed.
There was some question about broad the 28(f) provision would be.
The USG seemed to think the 1st amendment would fit here, but it
also seemed to be the case that many intellectual property
concerns would likely not qualify. The American Library
Association asked that Article 28 be expanded to include specific
reference for US concepts on fair use.
(Not discussed in the meeting was the controversy over Article
10.4, which concerns limits on damages for torts where injuries
are alleged in more than one county, a section said to be
relevant to defamation suits.)
Default judgments
There was discussion about cases where someone could not afford
to be represented in foreign litigation. According to Article
27(2), the draft treaty says:
Article 27 Verification of jurisdiction
2. In verifying the jurisdiction of the court of
origin, the court addressed shall be bound by the
findings of fact on which the court of origin based its
jurisdiction, unless the judgment was given by default.
Thus, if you are subject to the judgement by default, the US
court is not bound by the foreign findings of fact. However, you
can still be liable for the foreign judgment, even if it involves
laws which are different from the US laws.
Intellectual Property
On the issue of intellectual property, both CPT and the American
Library Association expressed interest in an exclusion for all
intellectual property issues from the treaty. I suggested the
exclusions could be based upon the rights defined under the WTO
TRIPS accord. (This may not be broad enough). One argument for
the exclusion is that there exists separate mechanisms for global
harmonization of minimum rights (WIPO and WTO). But more
generally, there was a concern that the public's rights would be
extremely narrow if everyone was subject to claims from all Hague
member countries. The examples of this were the fact that the EU
has restrictive laws on fair use under copyright and trademark,
while the US has very aggressive expansions of patents to
business methods, and some countries have very poor examination
processes, and issue very broad patents. With foreign judgement
recognition, one could imagine a very small sub-set of public
rights.
The issue of which laws will apply for intellectual property is
not addressed directly in the treaty -- it addresses choice of
court rather than choice of law, but often the choice of court
will have consequences in terms of the choice of law.
Article 12 of the treaty deals with special cases of exclusive
jurisdiction. Paragraphs 12.4 and 12.5 of the draft deal with
intellectual property issues. In 12.4, there is bracketed
language that would provide for exclusive jurisdiction based upon
country of registration for matters involving infringement of
patents, trademarks and "similar" rights. This would not apply
to copyrights. In 12.5, there is bracketed language that would
seem to permit broader jurisdiction in patent cases.
There was talk that IPR issues could sink the whole treaty,
because lots of people did not want to be subject to all of these
IPR laws, and lose rights under national laws. And, it was also
discussed that IPR laws are in a state of flux, and that we
didn't even know what the laws would be in the future, and that
it was important to retain the right to obtain national
protection from foreign judgements that do not reflect national
policy values, for example on the scope of rights, fair use or
other matters.
The treaty does in fact have carve-outs. In Article 1.1 the
treaty begins with a statement on scope:
"The Convention applies to civil and commercial
matters. It shall not extend in particular to revenue,
customs or administrative matters."
Then, in Article 1.2, there are several exceptions, including
such things as wills, social security, insolvency proceedings,
matrimonial property disputes, and admiralty or maritime matters.
(Interestingly, in Article 1.3 a dispute is not excluded solely
because a government or agent is involved.)
It would seem that there could be a campaign for an exclusion for
intellectual property, and indeed, apparently the maritime
exclusion came about after it was clear that the US maritime
industry could not reach consensus on its position under the
treaty. (See too excerpts from Kovar to Loon letter, below)
Contracts of Adhesion
For contracts concluded by consumers, Article 7.3 of the current
draft of the treaty excludes contractual provisions that
determine the choice of court. And, Article 7.2 would require a
business to sue a consumer in the courts where the consumer
lives. However, both of these provisions have been opposed by the
US negotiators as (they said) being too broad and therefore
inconsistent with U.S. law.
The Global Business Dialogue, the International Chamber of
Commerce and a dozen other business groups say that Article 7
must be eliminated, and they are asking that the treaty take an
approach whereby rights and jurisdiction would be determined by
choice of forum clauses in contracts. They say that ecommerce
would otherwise be hampered by a system based upon a patchwork of
national laws.
This debate is very similar to the US debate over UCITA, and will
likely cover a lot more than consumer protection and privacy
issues. Today there are countless contractual provisions that
address issues such as restrictions on criticisms of products,
reverse engineering, rights to link web pages, rights to collect
prices (ebay), the redistribution of data, software, music and
other content, and a plethora of other issues (see
http://www.cptech.org/ecom/ucita/licenses/ for examples).
The US government has asked for the elimination of Article 7, in
part upon the grounds that it changes US law, a position
challenged by others in our meeting. There was discussion of a
US Supreme Court case, where the Court indicated that contracts
on jurisdiction could be considered unreasonable for remote
jurisdictions.
There is some difference of opinion, within the US government, on
this issue, and the FTC has expressed some concern about
contracts that would force US consumers to seek redress in
foreign jurisdictions. But there is also considerable concern by
NGOs that high level policy makers in the USG are pushing a "safe
harbor" private sector ADR approach as a way of privatizing
policy making and law enforcement for consumer protection and
privacy rules. (See the TACD statements on jurisdiction, safe
harbor and ADR).
There was also a discussion of Article 8, concerning individual
contracts of employment. In the current draft, Article 8 is very
favorable to the employee, and gives the employee the right to
bring an action against his employer in a court where he lives,
and requires the employer to sue the employee where the employee
lives. Again, the US has opposed Article 8 for similar reasons
to Article 7 on consumers. This Article is significant for many
reasons. An employer can include in contracts a wide variety of
issues concerning limits on speech, prohibitions on future
employment, disclosures of company information, the rights to
intellectual property, compensation, and countless other items.
Treatment of electronic commerce
I asked if it would be possible to exclude electronic commerce
from the treaty. The answer was no -- because the sense was that
this was the future of commerce and it was unclear to the US
government how You could separate ecommerce from other modes of
commerce.
Other topics
We did not really get much of an opportunity to further into
substantive issues at this meeting. It should be noted that
there are many areas of controversy, including such topics as the
treatment of antitrust and human rights litigation.
----------------------------
Excerpts from: Jeff Kovar letter of February 22, 2000 to J.H.A.
van Loon:
. . . the United States is opposed to scheduling a
diplomatic conference this year or next. We believe it
would be helpful to convene a stock-taking session
where delegations can discuss in a frank, informal, and
serious way whether there is the desire and political
will to depart from the current text and seek new
avenues for agreement. If there is such a will, then a
much more open-ended schedule of work may be possible
along with agreement on more consensus-based
negotiating methods. Indeed, the informal experts
sessions on electronic commerce and intellectual
property issues are examples of the kind of process
that should be given time to explore critical issues
before any decision can be made on a future diplomatic
conference.
. . .
. . . this would leave open the possibility that the
underlying views and dynamics could mature over time,
with the hope that achieving a viable Hague convention
would ultimately be possible. This would also be the
safer course in relation to the revolutionary changes
underway in our lives through the electronic medium,
which we have not even begun to assess as part of this
negotiation. During a suspension, technical
discussions could continue on specific issues, major
shifts in domestic and regional law and legal
institutions could be completed and consolidated, and
revolutionary changes in commercial practice in the
area of electronic commerce could have time to mature
and be evaluated.
* * * *
It is impossible to give an adequate point-by-point
assessment of the preliminary draft convention because
of the enormous scope and complexity of its provisions.
Nevertheless, a summary of some of our more pronounced
concerns is offered here as an illustration of the
obstacles facing the current text from a U.S.
perspective. It is important to stress, however, that
this list is not intended to be comprehensive or final.
The list does not, for example, attempt to address
crucial concerns related to electronic commerce and
intellectual property issues.
. . .
- Article 7 (Consumer Contracts): This article
repeats formulations from the Brussels Convention.
These formulations have raised a storm of
controversy in the electronic commerce world. It
is an important illustration of the broader
problems with electronic commerce mentioned above
to note the severe policy problems this article
raises.
- Article 8 (Employment Contracts): This article,
which is derived from the Brussels Convention,
seems to us to be out of touch with modern
employment practice, good economic policy, and
evolving practices. It does not permit even
sophisticated employees (e.g., senior and middle
management of major multinationals from all
Conference member states) to agree to a choice of
forum.
. . . In short, we believe serious discussions about
the future of the project are necessary. If those
discussions, and the experience of alternative work
methods in experts meetings on electronic commerce and
intellectual property issues, do not reveal an adequate
basis to be confident that a text representing a wide
global consensus can be negotiated, then we believe the
project should be suspended so that it can be resumed
at a more propitious time.