[Hague-jur-commercial-law] Concerns over clickwrap

[Manon Ress]

ABA Journal

CONCERNS OVER CLICKWRAP
International Law May Affect U.S. Civil Suits, Groups Fear

BY JASON KRAUSE

An effort to settle international jurisdiction questions in disputes 
over business contracts has raised concerns that the result will add too 
much snap to so-called clickwrap agreements on computer software.

The U.S. State Department will negotiate new agreements as part of the 
Hague Convention on Exclusive Choice of Court Provisions. Negotiators 
are to meet this month with the Hague Conference on Private 
International Law to discuss the convention, which negotiators hope will 
settle the question of which courts will hear international disputes 
over business contracts.

However, an informal coalition of consumer interest groups, librarians 
and telecommunications companies has opposed language in the current 
draft. They say that, as drafted, the Hague convention could force 
companies or organizations involved in litigation with foreign entities 
to defend themselves in foreign jurisdictions.

Specifically, they believe that clickwrap agreements, which are 
contracts that buyers implicitly accept when they open a software 
package or download software, would be binding worldwide. Since few 
people read clickwrap agreements, foreign businesses may be able to slip 
choice-of-jurisdiction clauses into the agreements. The coalition argues 
companies would effectively be able to "venue shop" around the globe.

The central disagreement between the software industry and the consumer 
advocate groups, librarians and Internet companies opposing them is over 
the definition of a non-negotiated contract. However, the computer 
software industry argues it is impossible to even discuss the issue 
because no definition exists in U.S. law. Mark Bohannon, general counsel 
with the Washington, D.C.-based Software & Information Industry 
Association, says, "We’d have to create a definition out of whole 
cloth." The association represents the interests of software companies.

State Department negotiators say that the U.S. approach will be to try 
to create a document that is in line with American law. They say it 
would be nearly impossible to get anything ratified by the U.S. 
Congress—the next step after The Hague finishes its negotiations—if the 
document changes American law.

"My general approach is that in those issues that are not resolved under 
U.S. law, we will try to maintain the status quo," says Jeffrey Kovar, 
assistant legal adviser for private international law for the 
department. Kovar will be negotiating the agreement for the U.S. "This 
is not a workable forum to create new innovations in American law."

The coalition says the current draft is better than earlier attempts, 
but members still think the language would be dangerous for American 
software buyers. "We’re not as panicky as we were five years ago," says 
Manon Ress, director of information society projects with the Consumer 
Project on Technology, a Washington, D.C.-based consumer interest group. 
"The Hague convention was originally like the Brussels convention, which 
would have brought [European Union]-like regulations to the world. That 
would have been a disaster."

The quest for an international convention to create binding 
international judgments has been ongoing for several decades. A 1971 
Hague convention fell apart after parties failed to agree whether there 
ought to be separate bilateral agreements between individual countries 
to support the Hague Convention Treaty. By 1992, a new meeting was 
convened to settle the question, but the rise of the Internet at the end 
of that decade threw the convention into disarray. U.S. opposition and 
general confusion over how the Internet would affect business agreements 
effectively put negotiations on hiatus.

The current convention is very narrow in scope, addressing the rules of 
jurisdiction in international business contracts. However, opponents 
argue the treaty is uncannily similar to the Uniform Computer 
Information Transactions Act, a proposed uniform law that would have 
regulated the sale of software. Because of concerns that UCITA would 
give too much power to software companies in choosing which jurisdiction 
would hear legal disputes in contracts, the ABA declined to endorse the 
law, and it effectively died.

"This is a lot like a global UCITA," Ress says. "It’s bigger in reach, 
though smaller in scope. Who wants non-negotiated contracts around the 
world?"

The software industry argues that the current draft agreement is not 
like UCITA, and in fact allows parties to void any choice of court 
provisions in a contract if the contract is contrary to their nation’s 
principles or law. Besides, they say, clickwrap agreements are already 
binding under U.S. law. For example, in Mortgage Plus Inc. v. DocMagic 
Inc., No. 03-2582-GTV-DJW (D. Kan. 2004), the court held that by 
clicking on an icon on a computer screen, the plaintiff was bound to a 
forum selection clause in an online agreement, and the case was moved 
from Kansas to California.

In some regards, the U.S. delegation has been helped by the delay caused 
by the rise of the Internet. The U.S. has long been accommodating in 
enforcing judgments from international courts on American citizens and 
corporations, except for cases where a foreign court’s ruling impedes 
principles like due process or free speech. International courts have 
been less likely to enforce American judgments, and they had little 
incentive to change. But with the delays, negotiators have gradually 
agreed to a narrower focus, which is more favorable to the U.S. "We’d 
like to level the playing field," Kovar says. "But since we’ve been 
enforcing judgments here, we had no leverage."

Kovar says his hope is to create an agreement analogous to the New York 
Convention on Arbitration of 1958, which successfully created binding 
arbitration agreements between entities from almost every country on the 
globe.

"Our goal is to achieve something similar," he says. "It may be that 
parties would prefer to go to court, but today they can only be sure 
arbitration agreements are binding, and so they go that route."



©2005 ABA Journal
-- 
Manon Anne Ress
manon.ress@cptech.org,
www.cptech.org

Consumer Project on Technology in Washington, DC PO Box 19367, 
Washington, DC 20036, USA Tel.:  +1.202.387.8030, fax: +1.202.234.5176

Consumer Project on Technology in Geneva, 1 Route des  Morillons, CP 
2100, 1211 Geneva 2, Switzerland. Tel: +41 22 791 6727

Consumer Project on Technology in London, 24 Highbury Crescent, London, 
N5 1RX, UK. Tel:+44(0)207 226 6663 ex 252. Mob:+44(0)790 386 4642. Fax: 
+44(0)207 354 0607