Reproduced with permission of 6 Vindobona Journal of International Commercial Law & Arbitration (2002) 321-332.
Dr. Bruno Zeller [a1]
The Global communications technologies (GCT), 'technology's latest spatiotemporally transforming offering' has become a borderless information center, marketplace and channel for communication and payment and has extended exponentially the global reach of the business community. Such developments point to the need to put in place legal systems, which can fulfill the needs of the international and transnational business community.
The legal systems and professions of many countries have been slow to keep pace with the needs of the new economic reality. Indeed as far as the GCT and e-commerce in general is concerned international law principles relating to jurisdiction are rare. As a matter of fact it can be argued that this area is extremely underdeveloped internationally. This should not be interpreted as 'let's wait and see', but rather as an invitation proactively to investigate and consider possible solutions. The problem so far is what Marshall McLuhan calls 'rear view regulation.' Current [page 321] regulatory systems are being 'bent' to accommodate new technologies instead of devising new regulatory systems to accommodate current technologies.
The e-commerce issues most frequently discussed are questions of writing, signature and admissibility of evidence. In response to these Professor Eiselen has shown that:
'the [CISG] and its underlying principles are sufficiently robust and flexible to deal with these changes and challenges posed by the new form of communication and that virtually no change needs to be made to the Convention.'
An issue often overlooked is the determination of the applicable forum and choice of law in contract law. This is the area, which requires careful consideration, as the forum will determine the applicable law in the absence of a contractual choice of law.
This paper will only examine whether the United Nations Convention on Contracts for the International Sale of Goods ('CISG') is managing GCT. It is acknowledged that questions of tort, intellectual property or consumer contracts require different solutions to the one advocated for the contract of sales of goods.
2. THE PROBLEM
National and international legislators feel that the current systems of law are unable to handle the GCT. It is true that the UNCITRAL sponsored Model Law on Legal aspects of Electronic Data Interchange and related Matters of Communication has not specifically addressed the issue of jurisdiction and choice of law.
Because there is a lack of 'ready made' case law or legislation a 'wild west approach' to solve GCT problems is not the likely outcome either. Basic underlying principles of international law are of a wide enough scope to: [page 322]
'contribute with other elements [such as] international custom and practice ... to constitute [a] criterion for the internationalization of a contract.'
Therefore the change is only in the move from paper based physical modes of communication to ones without dependence on, or relationship with, a particular space.
Consider the offer to the world at large as explained in Carlill v Carbolic Smoke Ball Co  in 2002. Assume that the London paper containing the advertisement is available worldwide and the company exports its products. A person in Vienna reads the paper and purchases the product. Would the outcome today be any different than 1894? It would not, assuming of course that the forum would be London and hence common law would be the governing law.
What is needed is a 'leap' from one space to the next. What has been achieved is the move from geographic national boundaries into international space. The CISG is an example of the application of an autonomous international law of contract. What remains to be done is the move from physical geographic space into Cyberspace, which is truly international.
Because of the developments of international uniform instruments what appeared to be a 'leap' is now only a 'step'. A consensus about or vehicle by which the forum will be selected is now needed. Once such a vehicle has been chosen a link to international uniform laws can be achieved. After all, whatever medium we choose in contract the parties and their location must become identifiable. A place of performance must be established, hence 'cyberspace' is reduced to 'geographically' identifiable boundaries. It is curious to observe that once a party wishes to litigate the plaintiff always find a defendant and always know where to find that particular defendant. The only argument is where and under whose laws such a dispute is to be resolved. In other words, how do we step from cyberspace back to 'real space'? [page 323]
Has the GCT broadened the power of courts to exercise jurisdiction over a foreign defendant? The answer is yes, as individuals 'can incur liability in places and countries they never dreamed possible.' A good example is when the Georgia Institute of Technology devised a web-site in English for its Metz campus in France. The Institute was prosecuted for violating Art. 2 of the Toubon Law requiring French language purity on the GCT. However courts are also of the view that:
'once published on the GCT material can be received anywhere, and it does not lie within the competence of the publisher to restrict the reach of the publication.'
If the publisher would be made responsible a publication using GCT could be prohibited anywhere in the world.
The proposed Hague Convention on Jurisdiction and Foreign Judgments as well as U.S. forum decisions where the GCT was the vehicle of communication are attempts to solve jurisdictional issues. Of importance is the recent replacement of the Brussels Convention with the Brussels (I) Regulations. The old Art. 5(1) has been enlarged. Two important changes are of interest. First, a special rule for sales of goods has been introduced. Secondly, the 'place of performance' as the determinant factor in forum selection has been defined. In effect Art. 5(1)(b) defines the 'place of performance' as being 'the place in a Member State where, under the contract the goods were delivered or should have been delivered'.
3. THE BRUSSELS REGULATIONS AND THE CISG
The CISG determines the scope of its applicability in Art. 1. Article 2, which clarifies the definition of goods, is also used as an 'excluder', supported by Art. 6, the principle of party autonomy. Furthermore, if Art. 1(a) is applicable the CISG applies without recourse to a choice of law. In effect the CISG can be used as a [page 324] 'short cut' to determine the relevant forum. Arts. 57(1) or 31 are the most relevant articles assisting the courts to determine the relevant forum.
The rules of private international law are only applicable if one of the parties to the contract has its place of business in a non-contracting State. The CISG is the governing law if the choice of law leads to the application of the law of a Contracting State.  In these circumstances the competency of a court needs to be determined under the rules of private international law, which in our case is governed by the Brussels Regulations.
A German decision is a good example to illustrate the interplay between the Brussels convention and the CISG. A Spanish firm negotiated a contract with a legally independent company based in Madrid, which had a connection with a German firm. The members of the board of both firms were partially identical. The initial order was sent to the Spanish 'seller' but all other communications took place with the German manufacturer who sent the goods directly to the Spanish buyer. The question was whether the German court had jurisdiction according to Art. 5(1) of the Brussels Convention. To determine whether this was an international contract the court examined the CISG and found that the German manufacturer's place of business had the closest relationship to the contract pursuant to Art. 10(a) of the CISG. The buyer knew this fact. Accordingly, the German court had jurisdiction to determine the dispute.
The above ruling is not an isolated one. The Oberlandesgericht Celle was called to answer the same question under Art. 5(1) of the Brussels Convention. In this instance at issue was whether an assignment changed the place of payment. Under the CISG pursuant to Art. 57(1) the buyer has to pay the purchase price at the seller's place of business. An assignment in itself is not governed by the CISG and therefore an external gap exists. The question however is not whether the assignment is valid but where the place of payment is. The place of payment is governed by the CISG and through analogy it is extended to the assignment, which changed from the seller's place to the place of the assignee. [page 325]
The conclusion is that the CISG can assist in determining the forum in so far as the place of business or the closest connection to the contract needs to be determined.
4. HAGUE CONFERENCE ON PRIVATE INTERNATIONAL LAW
No agreement has been reached so far in the development of uniform laws on the jurisdiction and enforcement of judgments. The difficulty is that through the use of GCT various branches of law cannot be reconciled any more into one uniform rule. In contract law the two parties at one stage must be able to identify each other in order to create any legal liabilities. Whereas in other areas (such as tort or intellectual property) liabilities can arise without one party being aware of the other's existence. Not surprisingly most international case law where the mode of communication was the GCT deal with breaches of intellectual property rights or questions of tort.
Of interest to this paper is only Chapter II Jurisdiction and specifically Art. 6(a)  of the proposed Hague Convention. It must be noted that Art. 6 does not define the forum as the place with which a transaction has the closest connection or a place of business but rather where the goods were supplied.
The earlier debates in the special Commission concluded that private international jurisdictional rules as a whole do not need to be revised to deal with electronic commerce issues. However the Commission subsequently conceded and identified provisions, which may need adjustments to deal with the problems of the GCT. Article 6 is such a provision.
In the nineteenth session two alternatives were tabled in relation to the forum determination as no consensus on jurisdiction was achieved. The two options can be distinguished: one alternative refers to activity and the other focuses on the place of performance. Such distinction appears to be the result of the discussion on [page 326] Electronic Commerce and International Jurisdiction held in Ottawa in 2000. A distinction was made between two types of contracts. First, one which is concluded on-line but performed off-line. Such contracts in general are contracts for the sale of goods. Second, contracts concluded and performed on-line which appear primarily to exchange information and hence are of service. The Ottawa proceeding identified another issue of importance, namely the identification and location of the parties to the contract.
As far as the identification and location of parties is concerned the Ottawa discussion favoured an approach focusing on the concept of presumption. Presumption is based on statements made by the parties, hence Art. 8 CISG would indicate and give meaning to such statements.
Arguably Art. 8 in conjunction with Arts. 31 or 57 will become imperative to flesh out the location and identification of parties and hence the choice of forum. Importantly Art. 8 could deal adequately with situation where a party made a statement, which does not correspond to the facts in order to confer jurisdiction to a particular favorable State. Article 7 specifically the principle of good faith will assist Art. 8 to overcome situations where under the Hague Conference Art. 22 would be invoked. Under that rule a court can decline jurisdiction under exceptional circumstances.
As far as the influence on the CISG is concerned, it must be noted that on-line contracts in most circumstances would be beyond the ruling contained in Art. 3 and hence are excluded. However off-line performed contracts are within the jurisdiction of the CISG.
The Hague Convention proposes that a plaintiff may bring an action in the court of a State in which 'the goods were supplied'. Again, Art. 31 CISG will assist as this article specifically determines the place where the goods need to be supplied. Should the place of business require determination, Art. 10 CISG will rule on that particular point. [page 327]
5. U.S. FORUM DECISIONS
With the introduction of uniform international laws such as the CISG the important question is not which law will apply. Of importance is the question: In which forum will the dispute be settled? Once that is established it can be determined whether that particular forum State is a contracting party to the CISG. With the increasing use of GCT, the notion of 'minimum contact' has been viewed with increased interest in the United States.
In International Shoe Co v Washington  the Court noted that a foreign party could be sued in the plaintiff's forum if:
'the defendant has certain minimum contacts with [the state] such that maintenance of the suit does not offend traditional notions of fair play and substantial justice.'
However the Court did not expand on the notion of 'minimum contact', but noted that:
'It is evident that the criteria by which we mark the boundary line between those activities which justify the subjection of a [nonresident defendant] to suit, and those which do not, cannot be simply mechanical or quantitative.'
The problem courts are faced with is the question: At what stage does GCT activity give rise to the application of a specific jurisdiction? As an example, publications of information on the GCT may lead to potential acceptances in over a hundred countries simultaneously. Such outcomes are not unique to GCT as the placing of an advertisement into an international paper achieves the same results.
Courts  have developed models dividing web sites into categories. The first category is where the defendant conducts business via the GCT ('Active site'). In such a case the rules of forum and choice of law are determined and do not pose any [page 328] significant problems. In the second category the defendant posts information on a web site, which is accessible to worldwide users ('Passive site'). In this instance such conduct is merely providing information and in common law could be termed as an invitation to treat. This situation is covered by the CISG through Art. 14(2).
The third possible category is the middle ground where some activity can take place ('Interactive site'). This category poses the real problems as courts need to examine the conduct or cause of action to determine whether contractual obligations have flown from GCT exchanges.
In State v Granite Gate Resorts, Inc. the Court determined the forum by examining the conduct of the defendant. They noted that the defendant intended to advertise its services to an intended market. Under the CISG such conduct is governed by Art. 8. The Court followed the argument in Maritz Inc. v CyberGold Inc. where the Court argued that:
'each time a Missouri user accesses the defendant's web site ... it was conversely a transmission of information into the State of Missouri.'
The conclusion is that a web-site is an intent to solicit business from anybody accessing the site. In general, taking the U.S. jurisprudence into consideration, there are basically three positions a court can take. First, that a web-site is sufficient to create minimum contact which could mean that a forum could be anywhere in the world depending who accesses the web-site. Secondly, the opposite view is also defensible where the defendant can only be sued in his own forum therefore denying justice to plaintiffs who cannot afford the extra expense. Thirdly, there is a middle path, which looks at a case-by-case assessment. It appears that 'this is the path that respects existing precedent but incorporates the changing notions of fairness to the defendant.'
The notion of minimum contact combined with the traditional notions of fair play and substantial justice is challenged. The GCT challenges courts to widen their traditional views as individuals can now communicate with anybody at any place in the world. Such immense power to business has created a challenge to courts, as [page 329] defendants can be 'everywhere and nowhere at once.' However it also poses a danger that in effect domestic law is 'superimposed [ ... ] on every other state, territory and country of the world.' This leaves only one option namely the use of the 'reasonableness' standard, which incidentally is also the standard required under the Restatement (third) of the Foreign Relations Law.
6. THE CISG AND THE GCT
Whether we look at the proposed Uniform Laws on Jurisdiction or the current U.S body on law in relation to GCT transactions one clear indication emerges, namely that a case by case determination must be made taking into consideration the intent of the parties. Of increasing importance is the intent of the parties and hence Art. 8 CISG must be consulted.
The CISG in Part II lays out the rules as to the formation of the contract. The question is can these rules be applied to the GCT? The answer is simply yes. The CISG clearly indicates that 'proposals' must be 'addressed' in Arts. 14(1) and (2). 'Addressed' can be interpreted as meaning 'bringing it to ones attention', which is exactly what the GCT site intends to do. Such intent can either be addressed to specific persons as in Art. 14(1) or to no one in particular as in Art. 14(2). Hence if the GCT site is a general one pursuant to Art. 14(2) the information must be treated as an invitation to treat. Invitations to treat do not constitute legal obligations and hence no minimum contact has been created. However such conclusions can change depending on the intention of the parties as expressed in Art. 8 or customary intentions pursuant to Art. 9. The CISG expresses the 'notion of fairness' to the defendant as it will not allow a forum to be dictated by anyone and anywhere in the world that accesses the web site and hence rely on a 'minimal contact' doctrine.
It has also been argued that a defendant can be 'everywhere and nowhere at once'. Such arguments contributed to the view that:
'If an offer is posted over the GCT, the offeror can be brought before the court in any jurisdiction where acceptance is made, even if the offeror is unaware of the wide expanse of jurisdiction being given the offer.' [page 330]
The above comment does not refer to all jurisdictional schemes and Audit's comments are pertinent. He pointed out that that the process of a choice of law varies from jurisdiction to jurisdiction. Therefore municipal laws are ill adapted to the regulatory needs of international trade. Under the CISG the place of acceptance is irrelevant to establish the relevant forum. It is the place of performance which is of importance. The CISG, and particularly Arts. 31 or 57, point to the place of performance as being the seller's place of business. In the CISG the general principle of formation of contract is linked to the place of business. Such a notion is contained in Art. 1 and reinforced in Art. 10 as well as Art. 24. Furthermore the place of performance is determined through the CISG. A forum therefore can be determined through general principles contained in the CISG.
7. CLOSING REMARKS
It is difficult to argue that the EU, given its economic and political power, would allow any Convention to contain legislation, which would be greatly different to the Brussels Regulations. The fact will be that a particular phrase such as 'place of performance' or 'minimal contact' will determine the forum. However to give meaning to these phrases a particular substantive law must be consulted such as the CISG. As seen in the cited examples above, the CISG can solve these problems and will continue to do so irrespective of the mode of communication. Simpson J in Macquarie Bank Limited put it succinctly when he argued that 'what I have said above expresses merely a technological update of a long standing line of authority [ ... ].'
The CISG perhaps fortuitously has been enacted in a 'timeless' fashion. What is meant by this is that, through the creation of contract principles, the CISG is not a document tied to functions which are products of a particular historical period or particular legal culture. Article 7 alerts us to general principles on which the CISG is based. The general principles are tools, which are capable of following general contract theory without being tied to particular technological or other events. The [page 331] Internet is such an example, which can in part be absorbed into the regime of the CISG as shown by Professor Eiselen. [page 332]
a1. Lecturer of Law, Victoria University of Technology, Melbourne, Australia.
1. Amissah, R., 'Revisiting the Autonomous Contracts', 2000 <http://www.jus.uio.no/lm/autonomous.contract.2000.amissah/doc.html> .
4. Rothman, M. S., 'It's a small World after all: Personal Jurisdiction, The Internet and the Global Marketplace', (1999) 23 The Maryland Journal of International Law and Trade, at pp. 127, 141.
5. Please see Benedetti P., DeHart N., (eds) 'Forward through the rearview mirror; Reflections on and by Marshall McLuhan, (1970) MIT Press.
6. Hill, R. and Walden, I. 'The Draft UNCITRAL Model Law for electronic commerce: issues and solutions' (1995) <http://www.batnet.com/oikoumene/arbunc.html> visited 5 November 2001
7. Eiselen, S., 'Electronic commerce and the UN Convention on Contracts for the International Sale of Goods (CISG) 1980' (1999) 6 EDI Law Review 21, at p. 38.
8. Beard, D., 'International Virtual Contract' (2000) 28 Australian Business Law Review 206, at p. 206
9. Ibid, at p. 207.
10. Ibid, at p. 207.
11. Texaco v Libyan Arab Republic in E. Lauterpacht (ed) International Law Reports Vol 53, (1976), at p. 452.
13. [1891-4] All E.R. Rep. 127
14. Scott Beatty of Victoria University, Melbourne argues that jurisdictional space (jurispace) deals with nexus and reach rather than assume geographical/citizenship boundaries. He also argues that contracts are an arbitrary nexus, which links jurispace networks in a different way.
15. Rothman, M., please see fn 3, at p. 127
16. Ibid at p. 133
17. Macquarie Bank Limited & Anor v Berg  NSWSC 526, no. 12.
18. See Playboy Enterprises Inc. v Chuckleberry Publishing Inc. 79 Civ 3525 (SAS) (1996). An injunction was granted covering paper based distribution in the United States. On Appeal, it was extended to cover dissemination of the EDI. It is suggested that this has created a faulty precedent as it enlarged the US jurisdiction to the whole of cyberspace.
19. Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, Official Journal L 012, 16 January 2001, at pp. 0001 - 0023.
20. CISG, Art. 1(1)(b).
21. Oberlandesgericht Stuttgart, 28 February 2000, 5 U 118/99 <http://cisgw3.law.pace.edu/cases/000228g1.html> update 23 March 2001.
23. Oberlandesgericht Celle, 11 November, 1998, 9 U 87/98 <http://cisgw3.law.pace.edu/cases/000228g1.html> update 12 January 2001.
24. Article 6 in brief stipulates that a plaintiff may bring action in the courts of a State in which the goods were supplied.
25. Issues Paper 3, Australian Attorney Generals Department, at p. 3, <http://law.gov.au/publications/hagueissues3.html> visited 1 February 2002.
27. Summary of the Outcome of the Discussion in Commission II of the First Part of the Diplomatic Conference 6 - 20 June 2001, fn 33 Art. 6 [interim text prepared by the Permanent Bureau and the Co-reporters].
28. Preliminary Document No 12 of August 2000 for the attention of the Nineteenth Session of June 2001, at p. 5 and fn 13 [Summary of Discussion prepared by Catherine Kessedjian]
30. Ibid at p. 5
31. 360 U.S. 310 (1945).
32. Rothman, M., please see fn 4, at p. 316.
33. Rothman, M., please see fn 4, at p. 316.
34. Ibid, at p. 319.
35. Beard, D., please see fn 9, at p. 206.
36. See as an example Zippo Mfg. Co. v Zippo Dot Com, Inc., 952 F. Supp. 1119, 1124 (W.D. Pa. 1996).
37. 568 N.W. 2nd 715, (Minn. Ct. App 1997).
38. Ibid, at p. 721.
39. 947 F. Supp. 1328 (1996).
40. Ibid, at p. 1333.
41. Rothman, M. S., please see fn 4, at p. 177.
42. Ibid, at p. 180.
43. Ibid, at p. 180.
44. Macquarie Bank Limited, please see fn 17.
45. Rothman, M., please see fn 4, at fn 5.
46. Beard, D., please see fn 8, at p. 213.
47. Audit, B., 'The Vienna Sales Convention and the Lex Mercatoria', in T.E. Carbonneau, (ed. rev. de.), Lex Mercatoria and Arbitration (1998), at p. 173.
48. Macquarie Bank Limited, please see fn 17, at fn 16.
49. See Eiselen, S., 'E-Commerce and the CISG: Formation, Formalities and Validity', (2002) 6 Vindobona Journal of International Commercial Law and Arbitration 302.