When something goes wrong with contracts between parties in different countries, there is often confusion as to where a court action should be brought. Should it be in the country of the purchaser, for example? Or that of the seller or service provider? And how can you enforce a court ruling when each party is in a different country?
These questions are of great concern to companies when they are making business decisions, and the fear is that until there is an international agreement to clarify matters then business will be reluctant to take full advantage of the opportunities put forward by the internet.
Michael Hancock, co-chairman of the ICC task force on jurisdiction and applicable law, said:
"We expect the survey to be useful to governments as they draw up international treaties governing the internet. It will help them to make sure that the internet's enormous business potential is preserved."
The Global Internet Jurisdiction Survey was launched at the ABA annual meeting in San Francisco earlier this week. From 10th August it will be sent out to financial institutions, retailers and manufacturers, as well as internet software and hardware companies, in at least 25 countries.
"This is the largest and most comprehensive global survey ever conducted on internet jurisdiction issues," said Jonas Astrup, ICC policy manager.
The survey directs key questions at establishing whether companies view conducting business on-line as harder or easier from a legal perspective - and whether matters will get better or worse by the end of 2005.
It aims to establish the effect that jurisdictional confusion is having on business, and whether there is anything specific that has caused that concern, such as court action involving that business or the general effect of new regulations and red tape.
In a similar, but smaller survey carried out by the ICC in March this year, 41% of respondents admitted that significant business decisions had been determined by uncertainty regarding the court that would resolve disputes or the law that would apply to the contract.
The new survey will question whether these concerns relate to worldwide transactions, or whether they are EU or US based, and relate to the regulations for those particular areas.
The survey will also provide companies with a benchmark for gauging the risk of doing business on-line. In particular, the survey questions the methods by which companies have tried to use their web sites to influence the likely choice of court in any dispute. Making your web site country specific is one clear way to indicate this. Another is to block access to the site from certain jurisdictions.
Contracts made over the internet are based largely on the terms and conditions contained on the web site in question, and may frequently contain a 'choice of law' clause, which indicates the country in which a dispute will be decided. But an important consideration is whether or not the terms and conditions are actually brought to the attention of the potential customer. The survey aims to find out how, and how frequently, this is done.
Finally, questions of dispute resolution are highlighted by the survey, particularly the incidence of Alternative Dispute Resolution in on-line contracts.
The March survey found that 60% of companies prefer arbitration to court proceedings in disputes over international agreements, and 37% said all or virtually all their international contracts contain arbitration clauses; another 27% said more than half contain them.
Arbitration is popular because it can be faster and less expensive than court proceedings, the arbitrator can be chosen by the parties, and the result can be kept confidential. Like a court, the decision of the arbitrator is binding - unlike mediation, where the parties must agree to a solution.
According to John MacKenzie, senior associate at Masons, the law firm behind OUT-LAW.COM:
"In any dispute the choice of court can be critical. Naturally everyone wants to sue in their home court. That leads to jurisdictional disputes and uncertainty. International treaties, guided by this survey, will help to remove that uncertainty."
The survey will be conducted up to the end of September. Results are expected in late October or early November, timed to coincide with progress on the draft Hague convention on jurisdiction and enforcement of foreign judgments in civil and commercial matters.
