Chapter 5 The Solution: Only the Country of Origin?

Abstract

This chapter explores why States have been so reluctant to accept the argument made by online service providers that only the State in which the online service originates should regulate the activitiy. Whilst this position has generally been rejected, the exclusive country-of-origin approach has been acceptable under certain minimum conditions which are: relative harmonisation of substantive standards, reciprocity and regulatory committment by the country-of-origin State, and satisfied in the EU, as illustrated by the E-Commerce Directive.

This chapter goes towards answering key questions of the "Jurisdiction and the Internet" book which has become a classic in the field: Which state has and should have the right and power to regulate sites and online events? Who can apply their defamation or contract law, obscenity standards, gambling or banking regulation, pharmaceutical licensing requirements or hate speech prohibitions to any particular Internet activity? Traditionally, transnational activity has been 'shared out' between national sovereigns with the aid of location-centric rules which can be adjusted to the transnational Internet. But can these allocation rules be stretched indefinitely, and what are the costs for online actors and for states themselves of squeezing global online activity into nation-state law? Does the future of online regulation lie in global legal harmonisation or is it a cyberspace that increasingly mirrors the national borders of the offline world? This book offers some uncomfortable insights into one of the most important debates on Internet governance.

Keywords: internet jurisdiction, country of origin, E-Commerce Directive