Arbitration Clauses May Cure Internet Jurisdiction Woes - Chapter 11 - AAA Handbook on Commercial Arbitration - 2nd Edition
Steven C. Bennett is a partner in the New York City office of Jones Day where he is chair of the firm's E-Discovery Committee. Bennett earned a summa cum laude B.A. from Macalester College and a cum laude J.D. from New York University. He is the author of Arbitration: Essential Concepts (ALM 2002). He writes a continuing column, "Arbitration" with Professor Samuel Estreicher, which has appeared in the NEW YORK LAW JOURNAL since 2004. The views expressed are solely those of the author and should not be attributed to the author's firm or its clients.
The law of personal jurisdiction based on Internet activities is developing rapidly, as the use of the Internet becomes an ever more common part of the commercial world. At present, some courts have distinguished between “passive” and “interactive” Web sites for purposes of determining the existence of personal jurisdiction.1 A passive Web site is one that essentially provides information to the user (generally, information about the products, services and opportunities of the business). Some courts have concluded that the offering of this kind of information on a Web site is not sufficient by itself to subject a business to personal jurisdiction in the state or country where the user is located.
An interactive Web site, by contrast, is one that permits a user to become engaged with the business in some significant way. For example, the user may be able to order goods and services from the business. In essence, in such a circumstance, the parties are forming a contract through the Internet. Some courts have held that a business that uses this type of Web site has involved itself enough in the state or country where the user is located that it may be subject to the personal jurisdiction of the courts there.
Because the law in this area is developing so rapidly, there may be substantial variations in treatment of this issue from court to court. But it is fair to say that there is at least a risk that a business operating a Web site (especially, an interactive site) may find itself being sued in jurisdictions where it does not otherwise operate.