Friday, March 21, 2008

Who let YOU in? International Hosting Law.

As Liam noted in his blog, I’m at Webhostingday.  This is my first hosting event outside the U.S.  As the title above suggests  - the question I’m getting the most is “why are you here?” or with a bit more meat:  “what use are you to hosts and other internet infrastructure providers who are outside of the U.S.?”

Sidestepping the jurisdictional issues (I’m a member of the bars of the District of Columbia and State of New Mexico), this question goes to the fundamental issue facing all hosts, and the Internet in general:  who’s law applies?

Let me answer that in a typical lawyer fashion:  it depends.  Let’s say I’m representing a company in Ohio.  They have a disgruntled customer in Maine.  I’m going to argue that Ohio law applies, since that’s where my client is based.  Let’s say there’s the same set of facts, however the customer in Maine has money in a bank we’re trying to get.  I’m going to argue that Maine law applies.  U.S. law supports both arguments, particularly in the business to consumer context.

In the international context, the arguments are relatively similar, except it’s much more difficult to get courts of one nation to apply the laws of another.  This is VERY true of U.S. courts, who will almost never apply the laws of a foreign jurisdiction, or, for that matter, even cede that a foreign court may have come to a more reasonable decision.

However the Internet is global, and my clients, and the attendees at Webhostingday, have clients all over the world.  So, to make the example above more complicated, how does a datacenter in Cologne leasing space to my client in Ohio, deal with my client’s problem customer in Maine?

The answer that applies 75% of the time is by using a common contract.  In the hosting industry, along with many other Internet industries, a consensus has developed about what is, and what isn’t, acceptable in contracts.  Except in their extreme forms, most hosting contracts (at least those that I’ve written) can be distilled down to very basic principles.  These principles have wide application in almost every country that has accepted the principle of doing business by contract.  By creating contracts that hew to these principles, it is much more likely that they will be enforced by courts from the U.S. to Uruguay.

So what about the other 25%.  The other 25% tends to involve issues, such as privacy, reseller and redistribution rights, and price floors, on which many countries disagree.  As companies move up the value chain, and create more varied products and services, their ability to sell over the internet with a standard contract that applies to all customers regardless of country, decreases.  In that case, typically my clients will engage me to prepare a standard contract, and we’ll work with attorneys in targeted countries, or geographic areas, to create a specific contract.

So that, I think, is the general answer to “what can you do for non-U.S.” hosts.  As to other reasons why I’m here:  I’ve done several transactions in the past year where, thanks to the weak dollar, my clients were either acquiring a company in the U.S., or being acquired by a company in the E.U.;  I have clients in the E.U. who have encouraged me to come; and finally, to Liam’s point in a recent blog entry, I’ve always wanted to ride roller coasters as much as I desired without waiting in line.  Just don’t tell my daughter.