University of Chicago Legal Forum
*215 TOWARDS A HYBRID REGULATORY SCHEME FOR THE INTERNET,
2001 U. Chi. Legal F. 215
Henry H. Perritt, Jr.
Copyright © 2001 University of Chicago; Henry H. Perritt, Jr.
Private regulation of the internet enjoys important advantages over traditional public regulation. Significant among them is reducing uncertainty regarding jurisdiction and choice of law for internet disputes that cross national boundaries. But private regulation also involves important disadvantages--failure to respect deeply held local or national values, insufficient protection of consumers, tendency to encourage havens for conduct reprehensible to political entities, and imposition of rules that are arbitrary or which inappropriately limit competition. Hybrid regulation--the combination of broad public law frameworks within which private regulatory regimes work out the details--is a promising way to realize the advantages of private regulation while mitigating the disadvantages.
It is time to synthesize from prototypes of hybrid regulation, such as the Internet Corporation For Assigned Names and Numbers ("ICANN"), credit card chargebacks, the European Commission/United States Privacy Safe Harbor Principles, and the Children's Online Privacy Protection Act of 1998 ("COPPA"), some general concepts for the relationship between public law frameworks and private regulatory regimes. Especially important are mechanisms for assuring accountability of private rulemaking in contexts where technology makes the rules self-enforcing.
In developing these concepts, one should distinguish among four situations in which private rulemaking and dispute resolution occur: situations in which public institutions delegate or defer to private institutions; situations in which all parties actually *216 consent and waive their power to resort to public institutions; situations in which affected parties are so satisfied with private rules and their applications, after the fact, that they do not seek involvement by public institutions; and situations in which private institutions control important assets.
In three of these situations, the public law framework to guide private regulation already exists. Delegating or deferring agencies can condition delegation or deferral on certain behavior by private entities. Consenting parties can channel private regulation through contract law. Parties acquiescing after the fact can withhold their acquiescence. The foremost challenge relates to the situation in which private entities have the power to make and enforce rules because they control important assets. Here the linkage between public and private law is obscure, but the arguments in favor of governmental abstention over private exercise of property rights are strongest. The law needs mechanisms of accountability to protect access to important resources, while also limiting intrusion into property owner prerogatives.
Criteria for private governance must include standards for determining real consent--and thus activating a contractual matrix for private regulation. When consent is not the legitimating engine of private governance, public legal institutions must specify criteria entitling private regulatory regimes to deference or immunity, and conversely apply standards for civil liability. For private regulatory regimes with direct effect--exercise of private power to exclude persons from desirable resources--private rights of action must allow challenges to impermissible privateregulatory decisions. The content of these rights of action should reflect public concerns.
This Article reviews, in Part I, the advantages of private regulation; considers the growing literature that raises questions about conflicts between private regulation and democratic values; suggests that private regulation occupies four distinct positions vis-a-vis overarching legal systems; and explores how overarching legal systems can limit private regulation, potentially making it more accountable, in conjunction with private rulemaking, adjudication, and enforcement. Then, in Part II, the Article examines private rights of action that might enable persons injured by private regulatory activity to obtain review in the courts, and considers the standards of accountability that those courts might impose on private regulators.
*217 The Article concludes that the greatest need for new legal doctrine to assure accountability of private regulators exists when the power to regulate privately arises from control of valuable resources, especially when private regulators use computer code to block access to major segments of the internet. In that situation, neither administrative law nor contract law provides a clear pathway to judicial review. An extension of traditional tort theories of public nuisance, intentional interference with contractual relations, or a relaxation of some of the limitations on antitrust scrutiny are necessary to assure accountability of private regulation in this context.
I. Private Regulation of the Internet Enjoys Some Important Advantages and Disadvantages over Traditional Regulation by Public Agencies
A. Benefits of Private Regulation
The advantages of private regulation of the internet have been reviewed in the literature. [FN1] David Post expresses enthusiasm for private regulation thus:
Fundamental values are indeed at stake in the construction of (c)yberspace, but those values can best be protected by allowing the widest possible scope for uncoordinated and uncoerced individual choice among different values and among different embodiments of those values. We *218 don't need "a plan" but a multitude of plans from among which individuals can choose, and "the market," and not action by the global collective, is most likely to bring that plenitude to us. [FN2]
Post and his sometime collaborator David R. Johnson are the most prominent advocates of self regulation. [FN3] But other advocates exist as well. The former Chairman of the Federal Trade Commission, Robert Pitofsky, enumerated the following benefits of industry self regulation in 1998: self-regulatory groups may establish product standards that assure safety; private standard setting can lower the cost of production; private regulation helps consumers evaluate products and services; self regulation may deter conduct that is universally considered undesirable but outside the purview of civil or criminal law; self regulation is more prompt, flexible and effective than government regulation. [FN4]
Neil Weinstock Netanel has classified the arguments for self regulation. [FN5] He explains that the arguments by supporters of private regulation fall into three categories: Cyberpopulism, Cybersyndicalism, and Cyberanarchy. Cyberpopulists argue that self governance through the internet more fully realizes the ideals *219 of liberal democracy than traditional government. [FN6] Cybersyndicalists argue that internet-based groups are more effective than public institutions in determining and applying norms of those affected by their application. [FN7] Cyberanarchists argue that traditional public institutions cannot be effective in regulating cyberspace. [FN8]
Important among the practical advantages of private regulation is reduced uncertainty regarding jurisdiction and choice of law for internet disputes that cross national boundaries. Conflict of law rules for contract disputes long have recognized that participants in a contractual relationship can anticipate and resolve jurisdictional issues through choice of law and forum selection clauses. [FN9] Thus, when consent forms the foundation of self regulation, *220 the consenting participants in the self-regulatory regime can choose their own forums, including forums of their own creation, and can prescribe their own law, including law developed by the private regulatory regime. [FN10]
Public institutions can anticipate and resolve jurisdictional problems by delegating power and deferring to private institutions. They do this all the time in America. Deferral and delegation to private institutions is the centerpiece of American labor law. [FN11] Delegation and deferral to self- regulatory organizations constituting stock exchanges is the centerpiece of American securities regulation. [FN12] When public institutions from different countries agree to delegate and defer to the same private institutions, they solve transnational jurisdictional problems. This is what happened with the European Commission/United States Department of Commerce Privacy Safe Harbor Agreement. American firms using data originating in Europe were potentially subject to the jurisdiction of European administrative agencies. By negotiating an agreement allowing compliance with private standards to substitute for direct compliance with European governmental standards, the jurisdictional problem was alleviated.
*221 When private institutions control important assets, such as internet domain names, they easily can make and enforce rules across national boundaries because they do not need to rely on geographically defined state-based institutions to enforce their decisions.
Thus, private regulation represents one interesting solution to jurisdictional problems presented by the internet's indifference to geographic boundaries that historically have determined adjudicatory and prescriptive jurisdiction. It may be more efficient; it may promote compliance; it may adapt better to changing technologies and business practices.
B. Dangers of Private Regulation
But private regulation also involves important disadvantages. Many of its advantages are based on false premises. It can fail to protect democratic values; it can neglect important local values; it is usually less accountable than traditional government regulation. It is increasingly imposed through computer code, which bypasses political and legal institutions that protect due process and democratic values.
Netanel explains that private self-governance claims track associational self-governance claims that long have been made and that "hit a fault line in liberal democratic theory and practice." [FN13] At best, Netanel observes, "American law has been generally unaccommodating to strong self-rule claims." [FN14] Thus, "arguments for cyberspace self-governance fall closer to the category of weak self-rule claims," because citizens of cyberspace are also citizens of the real world. [FN15]
*222 1. False premises.
Several of the Cyberpopulist arguments are based on assumed ease of exit, but exit is not always easy. [FN16] "For the vast majority of us, in the vast majority of cases, user input will consist entirely of consumer purchasing behavior." [FN17] Meaningful choice probably is thin. Like Netanel, I have almost never chosen one web site over another because I preferred the former's conditions of use over the latter's. [FN18] Internet users, like participants in the traditional world, face significant information and collective action costs in responding to producers' standard terms by switching service providers. [FN19]
It is not only feelings of social attachment and fear of loneliness that represent barriers to exit in cyberspace. Indeed, now that the internet is relatively more important as a market than as a place for chatting, other switching costs are more relevant. Often, one's internet service provider owns one's domain name. To switch to another ISP would mean getting a new domain name and building public awareness of that domain name. Most e-mail addresses are linked to the domain name of the e-mail service provider. Switching means getting a completely new e-mail address, and there is no common practice to leave a forwarding address with the e-mail service provider unless one continues to pay for the abandoned service. Moreover, ease of exit is a mixed blessing. As game theory suggests, virtual communities are likely to unravel due to the ease of exit and entrance. [FN20]
2. Tyranny by the majority.
Cyberpopulism gives inadequate attention to possible tyranny by the majority. [FN21] A pure form of cyberanarchy would allow unhindered discrimination based on race, gender, sexual orientation, and other immutable personal characteristics. [FN22] Even if popular will is the correct measure, internet plebiscites are not *223 necessarily certain to reflect the popular will. Further, they do not necessarily promote civil discourse, which is a collective good. [FN23] To the extent that consumers rely on Cyberagents or intermediaries, they are not in fact exercising individual consent. [FN24] In addition, important economies of scale and scope provide centralization forces. [FN25]
3. Why rediscover the liberal state?
Netanel also is skeptical about the institutionalization of internet regulatory authority and a new Cyberregulatory authority:
From the viewpoint of the liberal state, there would be no advantage--and considerable disadvantage--in delegating authority to a cyberconstitutional authority to interpret and enforce liberal metanorms in cyberspace. The liberal state has existed for over 200 years. It has an established tradition of defining and applying liberal principles. The state's hallucination elucidation of those principles thus has considerable power in shaping social understandings and norms. State-centered law--both legislation and constitutional adjudication--carries considerable weight in legitimizing certain beliefs and practices and delegitimizing others. . . . A cyberauthority, in contrast, would have to start from scratch. [FN26]
4. Lack of accountability.
Professor Michael Froomkin has sharply criticized domain name regulation under ICANN as insufficiently accountable. [FN27] Even though Froomkin's target is ICANN, which exists in a hybrid *224 framework, his claims of insufficient accountability would apply a fortiori if ICANN were completely private.
His most basic objection is to the privatization of important policy decisions. While he acknowledges that the government's interest in domain name regulation is shaky, [FN28] the fact that it holds control over the domain name system "imposes legal obligations on the United States which it cannot evade . . . . (T)he government should not be allowed to bob and weave around the Constitution's imposition of duties of due process and equal protection through the creation of formally private intermediaries for policy making." [FN29]
5. Local values.
In addition to the tension between the way private regulation really works and democratic political values, explored by Netanel, critics of private regulation also express concern that its global character is likely to ignore deeply held local or national values. [FN30] They worry that most private regulatory regimes ignore asymmetries in information and bargaining power and thus fail to protect the interest of consumers. [FN31] This is at the heart of the debate between Europeans and Americans over special adjudicative jurisdiction rules in the Hague Judgments Convention allowing consumers to sue at home.
6. Havens for misconduct.
Concerns also exist that private regulation, at least in some areas such as gambling and indecent content, is likely to encourage *225 havens for conduct reprehensible to democratic political entities who will have difficulty erecting border controls. [FN32]
7. Tyranny of code.
In his important book, Code and Other Laws of Cyberspace, Larry Lessig explains that rules amounting to de facto law can be embodied in computer code. [FN33] When that occurs, persons affected by the code are compelled to comply with this "law" more completely than traditional enforcers like sheriffs might ever compel them to comply with conventional legal rules. [FN34]
The rules embedded in code are developed not by politically accountable public officials, but by private persons, usually far removed from public scrutiny. Lessig raises, in general terms, the question of whether a shift of regulatory power to such a private, self-enforcing regime may undermine important constitutional values. [FN35] Ultimately, he implies, conventional states are the best regulatory mechanism for the internet. [FN36]
Saying that the state must "back" regulation of the internet, however, does not mean that state institutions must regulate the internet directly. Netanel, for example, leaves room for hybrid regulation. If one accepts some or all of Netanel's critique and advocacy of a role for public institutions, the question remains: How should mutual roles for governmental and private regulation be structured?
*226 8. Limitations of the critiques.
Most of the critiques of private regulation expose its shortcomings, especially its lack of accountability, and challenge many of the assumptions on which its defenders premise their advocacy. But the critiques do not offer much in the way of new mechanisms of accountability. Implicitly, any criticism of private regulation suggests that regulation by public entities would be better. Regulation by public entities makes its easier to hold the decision makers politically accountable through the traditional techniques of administrative and constitutional law. But criticisms of public agency regulation abound as well. There is nothing about the internet that makes it more suitable for traditional regulation than airlines, railroads, motor carriage, occupational health and safety, or television broadcasting, all of which are subject to persistent calls for deregulation.
So the hard question is whether regulatory mechanisms for the internet can be constructed that offer some of the advantages of both private and public regulation. Moreover, the respective roles of nation states and other, more private, institutions in shaping and applying law are evolving. [FN37] Developing appropriate hybrid regulatory mechanisms for the internet is a part of this phenomenon.
II. Design of Public Law Frameworks: Giving Meaning to the "Hybrid"
It is time to attempt to synthesize from these experiments some general concepts for the relationship between public law frameworks and private regulatory regimes.
All modern legal systems proceed from the foundational premise that only entities possessing sovereignty can make, apply, *249 and enforce law. [FN140] Despite the association of sovereignty with national governments, the reality of governance is dispersed among a rich variety of public and private institutions. Most people in industrialized society work for employers who administer private systems of workplace governance. Most money moves in complex clearinghouse systems set up and administered by private banks. Most industrial production and commerce takes place in private contractual webs. Much social and religious life transpires in private associations. The increased importance of international human rights, trade, and environmental law has drawn upon the energy and expertise of thousands of non-governmental organizations ("NGOs"), such as Amnesty International and Greenpeace, to provide information and analysis to treaty based institutions.
In theory, however, these private governments derive their power from the regular sovereigns and are subject always to the sovereign imposing new regulations and enforcing them. [FN141] The relationship between private governments and traditional sovereigns is determined by regular laws or regulations enacted by regular sovereigns, by constitutions defining the power of regular sovereigns, or by international treaty or customary law.
Ultimately, the relationships between any governments regardless of their character is determined by the practical ability to assert coercive power and by the willingness to do so, usually limited by conceptions of legitimacy. If a domain name server is located in Country X, the governmental regime applicable to that name server ultimately will be determined by the practical ability of Country X to have its police or army seize the domain name server and by the willingness of the police or army to do that under the rule of law they obey.
*250 Hybrid regulation signifies regulatory regimes in which broad public law frameworks allow private regulatory regimes to work out the details. Within this conceptual framework, Klaus Grewlich says that self regulation can be realized in three forms:
1. Partial (selective) immunity of enforcement powers of traditional legal institutions;
2. Immunity from the imposition of neighboring standards of behavior; or
3. Recognition of rule-based adjudicatory acts of the autonomous community. [FN142]
Hybrid regulation and other contractual solutions to jurisdictional uncertainty rely on intermediaries to develop and enforce rules. [FN143] Private regulatory regimes are a form of government. As such, they must have legislators, judges, and sheriffs. [FN144] Private legislators make the rules, private judges apply them to concrete situations, and private sheriffs enforce the rules against violators. Each type of institution, in the private regulatory regime as a whole, must be accountable. Hybrid regulation can be understood as providing public law frameworks to assure accountability. [FN145]
* * *
1. Primacy of enforcement.
Enforcement is the ultimate governmental decision. Dean Krent refers to backing private regulatory efforts with "coercive force." [FN169] Klaus Grewlich observes:
Legal theory proceeds from the basic premise that ultimately only sovereign entities endowed with coercive *256 power can make, apply and enforce legal norms, i.e. law. Hans Kelsen defines "law" a coercive order. It provides for socially organized sanctions, and these can be clearly distinguished from a religious order on the one hand and a merely moral order on the other hand. As a coercive order, the law is that specific social technique which consists in the attempt to bring about the desired social conduct of men through the threat of a measure of coercion which is to be taken in case of . . . legally wrong conduct. [FN170]
Although Professor Grewlich refers to coercive power to make, apply, and enforce, coercion actually comes into play only in the enforcement function. The state does not really enjoy a monopoly on rulemaking; private property owners often make rules that condition their consent for others to be on the property. Violation of the rules makes the violator a trespasser. The state also does not really enjoy a monopoly on adjudication; disputes often are submitted to private arbitration or other forms of private dispute resolution.
Indeed, the state does not enjoy a complete monopoly over enforcement. Creditors may use self-help repossession, [FN171] and property owners may expel trespassers so long as a breach of the peace does not result. [FN172] It is more correct to say that the state has a monopoly over coercive enforcement. Sovereignty is associated with nation-states that have practical ability to assert physical power to coerce compliance with their law within defined borders and with respect to a defined class of persons. [FN173]
*257 Enforcement ripens legal issues that may exist with respect to the other two functions. Suppose you have software that permits you to eavesdrop on a neighbor's cable modem communication. Various public or private institutions may make "rules" that purport to prohibit your possession or use of the software. If, say, the Internet Law and Policy Forum or the American Bar Association adopts a resolution prohibiting the use of such software, you are unlikely to pay much attention. If the Russian Duma adopts a statute outlawing the software, you will not be moved (assuming your conduct occurs entirely in the United States). Even if a tribunal associated with one of these institutions applies the "rule" to you after an adversarial trial, you still will not change your conduct, unless you believe the decision will be enforced. In other words, what matters to you is the enforcement decision, which necessarily embodies the antecedent rule and adjudicatory decisions. You don't really pay attention to the acts of governance until you think someone is going to come and seize your software, fine you, or put you in jail.
Most, but not all, private regulatory decisions rely on the possibility of enforcement actions in the public courts. In any governance system, there will be some people who break the rules, and who will not comply voluntarily with decisions of adjudicatory bodies prescribing penalties or other remedial action. To those people, there must be some means of coercive enforcement. That may be kicking them out of, or excluding them from, the community--for example through an action for trespass. [FN174] It may be taking their property. It may be incarcerating them. In virtually every legal system, the state has a monopoly on incarceration and legally taking property. When coercive enforcement is necessary, state enforcers must be willing to enforce decisions of private institutions.
To be sure, you may anticipate enforcement of the hypothetical rule against "sniffer" software. Most people change their conduct to conform to new rules adopted by legislative institutions with undisputed authority. They do that because they anticipate *258 that adjudicatory institutions will apply the rule to their nonconforming conduct, and that enforcement officers such as the sheriff will enforce the decisions of adjudicatory institutions. Most people pay civil judgments because they anticipate that the sheriff will enforce the judgments by seizing and selling their property. But they comply voluntarily because they know that coercive enforcement is a realistic possibility. [FN175]
Because enforcement is the function that embodies the coercive power of the state, accountability most often focuses on enforcement. In administrative law, for example, pre-enforcement judicial review of agency rules is limited: an adversely affected party ordinarily must wait until the agency takes some coercive action, usually through the courts. [FN176] When one seeks to challenge the constitutionality of a statute, one usually must wait until the statute is enforced. [FN177]
Thus, when private rulemaking depends for its effect on adjudication and enforcement by public institutions, [FN178] or when private adjudication depends on enforcement by public institutions, [FN179] the involvement of public institutions provides some leverage *259 to assure accountability by the private rulemakers or adjudicators.
But suppose the state never has occasion to assert its coercive power? Suppose a private entity or system possesses the practical power to enforce its own decisions? Seizure, expulsion or exclusion are remedies that may not require reliance on coercive measures as to which the state has a monopoly. This is the case with self-help repossession of chattels, as in Flagg Brothers, [FN180] with excluding new ranchers from the roundup on the cattle range in the Wild West, and with blacklisting ISPs on RBL when they handle UCE not conforming to MAPS rules.
To the extent that internet governance is adequately backed up by the power of expulsion or exclusion, [FN181] its private governance institutions do not need the enforcement assistance of the state. [FN182] Then, the only public mechanism for assuring accountability by private rulemakers, adjudicators, and enforcers is a civil action that might produce an injunction or damages award against the private actors. [FN183]
Anyone can make rules. The question is whether anyone else will obey them. The English King Canute issued rules prohibiting the surf from wetting his ankles, but the water did not obey him. [FN184] Conversely, some rules are obeyed as a matter of social convention. No legislature adopted, no court applies, and no sheriff enforces, the widely observed rule to go to the back of a queue.
Often, however, mere social convention is not enough and the law must reinforce rule compliance. When that is necessary, the efficacy of rules depends on whether they are (a) applied by adjudicatory institutions and (b) enforced by someone with coercive power.
It takes considerable synthesis to infer procedural or substantive requirements for private rules from these cases. It is reasonable to conclude that the following factors are important:
1. The greater the degree of competitor influence and decision making, the more vulnerable the rule; and
2. The less notice to persons adversely affected by the rule, the greater the vulnerability; and
3. The less objective factual support for the rule, the more vulnerable the rule; and
* * *
On October 8, 1997, a number of internet stakeholders met in Washington to define the boundary between internet self-governance and the governments of sovereign countries. This author convened the meeting in response to declarations by the United States and European governments that called for private sector leadership and self regulation of the internet. Participants recognized that no system of self-governance can exist independently of national systems of law and that the degree of connection between private regulatory bodies and traditional legal institutions varies by issue. In any system of self regulation, it is necessary to ask what can be done to heighten confidence that a particular *306 issue will be handled in a way that will be fair, legitimate, and efficient.
Self-regulatory systems meeting certain criteria can inspire that confidence. The participants in the October 8 meeting reached agreement in principle on five such criteria, set forth fully elsewhere. [FN430] The criteria included transparency; [FN431] due process; [FN432] accountability; [FN433] openness; [FN434] and protection of public policy. [FN435] Not every participant on October 8 agreed with every word of the principles and the explanatory notes, but the published statement fairly reflected the judgment of the group taken as a whole. [FN436]
These criteria were intended for use by the designers of self-regulatory systems, by government policymakers, and by judges who must determine the degree of deference to accord the decisions of private self-regulatory bodies for the internet. When a self-regulatory system meets all the criteria, its private decisions made consistent with its constitutional documents are entitled to judicial deference and to some insulation from antitrust and tort law.
* * *
Even as the benefits of private regulation of the internet have been recognized more broadly, concerns have increased that purely private regulation may undermine democratic values and the rule of law. The best way to achieve the benefits of private regulation while also assuring public accountability traditionally associated with regulation by traditional governmental entities is to develop hybrid systems of regulation in which public law provides broad frameworks within which private regulation can work out the details. The most ambitious hybrid regulatory framework is ICANN, which has come under increasing criticism for insufficient accountability.
But a greater threat exists. Private regulation can occur through the development of blacklists or filters embodied in computer code that enforces privately developed rules by blocking significant parts of the internet. There, traditional legal regimes to police delegated governmental power or to assure against abuse of contractual relationships does not exist. The law must evolve traditional tort theories of intentional interference with contractual relations and public nuisance and relax some of the *322 limitations imposed on antitrust liability to assure that these private rule makers are accountable to basic principles of democracy and rule of law. Despite the criticism of ICANN, at least ICANN attempts to provide a mechanism for representation of affected interests in making and revising its rules. Early deployment of private filters and blacklists involve no such attempt.
No one knows enough yet to write a good statute to assure accountability across such a broad spectrum of private regulatory action. Until everyone gains more experience, the common law can crystallize the issues and the alternatives. It should provide a more sympathetic safe harbor for private regulatory regimes that include assurances of rationality and fair process and scrutinize more closely those that lack such assurances.
[FN1]. See, for example, Henry H. Perritt, Jr., Cyberspace Self- Government: Town Hall Democracy or Rediscovered Royalism?, 12 Berkeley Tech L J 413, 420-24 (1997) (noting that private regulation of the internet is desirable because self governance may be more efficient, networks need different rules and procedures, open networks escape enforcement of conventional rules, and self governance promotes voluntary compliance); David G. Post, What Larry Doesn't Get: Code, Law, and Liberty in Cyberspace, 52 Stan L Rev 1439, 1458 (2000) (noting that some policies "best emerge not through politics and political processes, but as the aggregate outcome of uncoerced individual decisions"); David R. Johnson and David Post, Law and Borders--The Rise of Law in Cyberspace, 48 Stan L Rev 1367, 1367 (1996) (arguing that cyberspace needs its own law and legal institutions and that "established territorial authorities" may defer to the "self-regulatory efforts of Cyberspace participants" whose rules will "play the role of law by defining legal personhood and property, resolving disputes, and crystallizing a collective conversation about online participants core values"); Harold I. Abramson, A Fifth Branch of Government: The Private Regulators and their Constitutionality, 16 Hastings Const L Q 165, 196 n 70 (1989) (noting that private regulation may enable more democratic decisionmaking than comparable action by public regulators; private regulation may provide greater opportunity for affected parties to participate; private regulation enables Congress to expand resources for regulation; private regulation may enable "interim" regulation of aspects of the marketplace when insufficient consensus exists for public regulation).
[FN3]. See Johnson and Post, 48 Stan L Rev at 1397 (cited in note 1) ("Cyberspace may be an important forum for the development of new connections between individuals and mechanisms of self governance by which individuals attain a sense of community."). See also David R. Johnson and David G. Post, "Chaos Prevailing on Every Continent": Towards a New Theory of Decentralized Decision-Making in Complex Systems, 73 Chi Kent L Rev 1055, 1087 (1998) (suggesting that the internet calls for deference to rulemaking within "a-geographical, decentralized, voluntary associations").
[FN4]. Robert Pitofsky, Self Regulation and Antitrust, remarks prepared for Washington D.C. Bar Association Symposium (Feb 18, 1998), available online at < http://www.ftc.gov/opa/1998/9802/selfreg.htm> (visited Oct 30, 2001). And former General Counsel of the Federal Trade Commission, Debra A. Valentine, extolled self regulation as often being quicker, more flexible, less adversarial and therefore less burdensome than governmental regulation, enabling government to devote scarce resources to higher priority matters, capable of achieving rapidly a high degree of compliance because of the power of self-regulatory bodies to repudiate and reward, and the possibility of addressing a problem more capably than could a government agency because of "hands on" experience by self regulators. See Debra A. Valentine, Industry Self Regulation and Antitrust Enforcement: An Evolving Relationship, remarks prepared for the Arison School of Business and the Israeli Antitrust Authority Seminar on New Developments in Antitrust § II (May 24, 1998), available online at <http://www.ftc.gov/speeches/other/dvisraelspeech.htm> (visited Feb 3, 2001) (all internet materials cited in this note on file with U Chi Legal F).
[FN6]. See id at 414 (noting that cyberpopulists consider representative government a "second-rate democracy," and that internet users "are able to gain a far more informed understanding").
[FN7]. See id at 428 (noting that cybersyndicalists see the "local cultures" of the internet--epitomized by chat room and Usenet groups--as the "site of a political order highly reflective of consensual governance and individual liberty").
[FN8]. See id at 443 (pointing out that there "is little room for state created law" in cyberspace, where users can "determine and modify entitlements to suit their local needs").
[FN9]. See Restatement (Second) of Conflict of Laws § 186 (1971) ( "Applicable Law"). See also id at § 187 ("Law of the State Chosen by the Parties"); id at § 188 ("Law Governing in Absence of Effective Choice by Parties"); 1980 Rome Convention on the Law Applicable to Contractual Obligations (consolidated version), 498Y0126(03), Official Journal C 027 at 34- 46 (Jan 1, 1998), available online at <http://europa.eu.int/eur- lex/en/lif/dat/1998/en_498Y0126_03.html> (visited Feb 3, 2001) (on file with the U Chi Legal F) (European Union convention providing choice of law rules for contract disputes and preferring party choice-of-law clauses); Rome Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations Rome Convention Art II(2) ("Rome Convention") (Oct 26, 1961), available online at <http://www.wipo.org/treaties/ip/rome/rome.html> (visited Feb 23, 2001) (on file with the U Chi Legal F):
2. (1) If broadcasting was consented to by the performers, it shall be a matter for the domestic law of the Contracting State where protection is claimed to regulate the protection against rebroadcasting, fixation for broadcasting purposes and the reproduction of such fixation for broadcasting purposes. (2) The terms and conditions governing the use by broadcasting organisations of fixations made for broadcasting purposes shall be determined in accordance with the domestic law of the Contracting State where protection is claimed. (3) However, the domestic law referred to in sub-paragraphs (1) and (2) of this paragraph shall not operate to deprive performers of the ability to control, by contract, their relations with broadcasting organisations.
See also European Communities Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters ("Brussels Convention"), 1972 OJ (L 229) 32, reprinted in 8 ILM 229 (1968), amended at 1990 OJ (C 189) 1, reprinted in 29 ILM 1413 (1990). The Brussels Convention binds the members of the European Union to rules for jurisdiction and enforcement of judgments. See Henry H. Perritt, Jr., Will the Judgment-Proof Own Cyberspace?, 32 Intl Law 1121, 1129 n 30 (1998), citing Paul R. Beaumont, Anton & Beaumont's Civil Jurisdiction in Scotland 90-94 (1995).
[FN10]. The permissible scope of choice of law clauses in contracts is traditionally more limited than the text suggests. Some commentators and courts would permit the parties to choose the law only of states that have a connection with their relationship. See Restatement (Second) of Conflict of Laws § 187(2)(a) & comment f (1971). Other commentators and courts would allow the choice of any state, but not of private sources of law. See id at § 187(1). Others would allow the choice of private rules as well as those entitled to the status of "law." See id at comments c, e.
[FN11]. "Deferral" refers to the practice of the National Labor Relations Board of refraining from deciding unfair labor practice charges that could be or have been resolved by collectively bargained arbitration. For a general discussion, see Calvin William Sharpe, NLRB Deferral to Grievance Arbitration: A General Theory, 48 Ohio St L J 595 (1987) (reviewing recent cases and recommending revisions in NLRB deferral policy). Labor law delegates at two levels. Congress delegates certain matters to the National Labor Relations Board. See Country Ford Trucks, Inc v NLRB, 229 F3d 1184, 1189 (DC Cir 2000) (characterizing relationship between board and statute in determining appropriate unit). Although not usually discussed as part of the "nondelegation doctrine," the national labor policy also delegates to the negotiators in a collective bargaining process the power to determine specific terms and conditions of employment. See New York Shipping Association, Inc v FMC, 854 F2d 1338, 1373 (DC Cir 1988) (discussing importance of courts and agencies allowing parties to reach their own agreement in collective bargaining process).
[FN12]. See generally Mitchell v Forsyth, 472 US 511, 553 n 8 (1985) (noting good faith immunity for self-regulatory organizations in 15 USC § 78 III(b)); Sparta Surgical Corp v National Association of Securities Dealers, Inc, 159 F3d 1209, 1212 (9th Cir 1998) (explaining that SROs must issue rules and bylaws in conformance with statute, subject to approval by SEC, and must comply with association rules); Donald & Co v American United Energy Corp, 746 F2d 666, 670 (10th Cir 1984) (referring to presumptions in favor of arbitration in disputes between members of self- regulatory organizations despite assertion of securities law violations).
[FN13]. See Netanel, 88 Cal L Rev at 447 (cited in note 5).
[FN14]. Id at 448.
[FN15]. Id (noting that "cyberians," as citizens in the real world, spend only a small fraction of their time online and therefore seek "autonomy for particular, discreet association, for rules governing the part of their lives and activity that concerns that association"). For a similar rationale see Lawrence Lessig, Code and Other Laws of Cyberspace 219-20 (Basic Books 1999) (acknowledging that Americans are skeptical of government but noting the necessity of making fundamental choices about what "life will be like in (cyber)space, and therefore life in real space" and that Americans may be "antigovernment, but for the most part ( ) believe that there are collective values that ought to regulate private action").
[FN16]. Netanel, 88 Cal L Rev at 429 (cited in note 5) ("Virtual communities, with their relative ease of exit (and, in many cases, entrance) present classic counter examples to the types of territoriality bound close- knit groups in which rule by social norms is possible.").
[FN17]. Id at 434.
[FN18]. Compare id at 435 (offering a similar confession).
[FN19]. See id at 437.
[FN20]. Netanel, 88 Cal L Rev at 437 (cited in note 5).
[FN21]. See id at 425 (arguing that exit is "far from costless" where users have developed "deep feelings of attachment and loyalty to virtual communities").
[FN22]. See id at 415 ("Cyberpopulism fails to provide a workable mechanism for protecting the liberties of minorities and dissenters."). See also id at 444-45.
[FN23]. See id at 430.
[FN24]. Netanel, 88 Cal L Rev at 440 (cited in note 5) (noting that many unsophisticated consumers must rely on sophisticated internet users as their "agents").
[FN25]. See id at 440-41 (arguing that the diversity of cyberspace is threatened by the concentration of service providers that follows from technology induced economies of scale and that, in this environment, the threat of "oligopolistic constraints on competition" is particularly troublesome).
[FN26]. Id at 484.
[FN27]. A. Michael Froomkin, Wrong Turn in Cyberspace: Using ICANN to Route Around the APA and the Constitution, 50 Duke L J 17, 26-27 (2000) (noting that the authority that ICANN has violates "fundamental U.S. policies that are designed to ensure democratic control over the use of government power").
[FN28]. Id at 165 (arguing that government's interest is not easily described as either a property interest or an intellectual property interest, but, rather, that its main legal interest may be as beneficiary of contracts with NSI and others who manage DNS).
[FN30]. For example, the National Research Council ("NRC") will convene two international symposia as part of their project, "Global Networks and Local Values." The stated goals of the project are to "discuss the tensions between (a) the global expansion of the Internet and other communications networks and services that traverse borders seamlessly and in many ways uncontrollably, and (b) the desires of nations and communities to protect indigenous values through policies that apply within their borders." See generally <http:// www4.nas.edu/webcr.nsf/ProjectScopeDisplay/CSTB-L-97-06-A> (visited Feb 5, 2001) (on file with U Chi Legal F).
[FN31]. See Jeffrey N. Gordon, The Mandatory Structure of Corporate Law, 89 Colum L Rev 1549, 1564 n 51 (1989) (arguing that information asymmetry justifies mandatory regulation).
[FN32]. See Joel Michael Schwarz, The Internet Gambling Fallacy Craps Out, 14 Berkley Tech L J 1021, 1023-26 (1999) (reviewing concerns about offshore internet gambling havens); Keith J. Epstein and Bill Tancer, Enforcement of Use Limitations by Internet Service Providers: How to Stop that Hacker, Cracker, Spammer, Spoofer, Flamer, Bomber, 19 Hastings Commun & Enter L J 661, 679 (1997) (referring to concern that internet is becoming haven for stalkers, child molesters, and pornographers).
[FN33]. Lessig, Code at 6 (cited in note 15).
[FN34]. Id at 89-99 (suggesting that code acts as inherent regulator and enforcer).
[FN35]. Id at 206-07 (questioning whether the shift from lawmakers to code writers should proceed "unchecked").
[FN36]. Id at 488:
First, the liberal state would likely be a more effective guarantor of liberal rights, both online and off, than would a new, independent cyberspace authority. Second, cyberconstitutionalism would likely resemble the "top-down" rule and interest group politics of the territorial liberal state, not the "bottom-up" ordering cyberians envision. Third, given insurmountable collective action problems, a cyberauthority is highly unlikely to emerge without the backing of the territorial liberal state.
[FN37]. For a general discussion, see Henry H. Perritt, Jr., The Internet is Changing the Public International Legal System, 88 Ky L J 885, 893-94 (2000) (explaining and citing other authorities on the increasing role of nongovernmental organizations in making law, sometimes at the expense of the nation state).
[FN141]. David Johnson, in reviewing an earlier draft of this article, objected to its implied embrace of hierarchy. While he accepts the need for governments and laws to enforce congruence, (see Part II F 6), he thinks that we are moving over the long term from hierarchical legal topologies to networked ones, citing the shift from monarchy and other absolutist forms of political rule to parliamentary democracy. He also could have cited the modern drift from traditional sovereignty to a "civil society" in which NGOs and other private organizations play roles formerly reserved to public authorities. See Perritt, 88 Ky L J at 900-03 (cited in note 37) (reviewing role of NGOs). It may be that the only way to control physical murder is to rely on state coercion, but when the threat is undesirable electronic messages, a richer set of horizontal and vertical relationships may be more effective and more just. There is no inherent reason that traditional governments are always more just than private ordering mechanisms.
[FN142]. See Klaus W. Grewlich, Governance in "Cyberspace": Access and Public Interest in Global Communications 323 (Klewer Law Intl 1999).
[FN143]. In the tax area, governments often use financial intermediaries-- employers, banks, and retailers--to collect taxes.
[FN144]. See Perritt, 12 Berkeley Tech L J at 426 (cited in note 1) ("The crucial elements of a self governing community are completeness, the availability of coercive power to enforce community decisions, and a contractual framework expressing the norms, procedures, and institutional competencies."). Part II B of this Article explores the three functions of government more fully.
[FN145]. Accountability is a central feature of rule of law and democracy. See Jacques DeLile, Lex Americana?: United States Legal Assistance, American Legal Models, and Legal Change in the Post-Communist World and Beyond, 20 U Pa J Intl Econ L 179, 186-87 (1999) (citing examples of insistence on accountability of governments receiving U.S. aid); Jane S. Schacter, MetaDemocracy: The Changing Structure of Legitimacy in Statutory Interpretation, 108 Harv L Rev 593, 594 (1995) ("Fidelity to the legislature is thought to satisfy the demands of democratic theory by allowing popularly elected officials, presumed to be accountable to their constituents, to make policy decisions."); Steven P. Croley, The Majoritarian Difficulty: Elective Judiciaries and the Rule of Law, 62 U Chi L Rev 689, 789 (1995) (exploring mechanisms for accountability of judges, consistent with traditions of Democracy and constitutionalism); Richard H. Fallon, Jr., How to Choose a Constitutional Theory, 87 Cal L Rev 535, 560 (1999) ("(I)n the first instance, the responsibility for developing effective governmental programs should almost always devolve on politically accountable institutions."); Froomkin, 50 Duke L J at 28 (cited in note 27) (noting that the purpose of shackling private parties through administrative procedure is to assure accountability); Netanel, 88 Cal L Rev at 451 (cited in note 5) ("social accountability" is part of the foundation of democratic culture); A. Michael Froomkin, Of Governments and Governance, 14 Berkeley Tech L J 617, 628-29 (1999) (entrusting major aspects of policymaking to elected officials ensures some form of accountability to the public at large); Perritt, International Administrative Law, 51 Admin L Rev at 896-900 (cited in note 40) (explaining how mechanisms of accountability in American administrative law can be extended conceptually to internet regulatory agencies that operate in the international arena).
[FN169]. Krent, 85 Nw U L Rev at 67 (cited in note 40) (referring to the scope of delegated power as any which "empowers those outside Congress" to implement a legislative objective and "backs those efforts with the coercive force of the federal government").
[FN170]. Grewlich, Governance in "Cyberspace" at 323 (cited in note 142) (citations omitted).
[FN171]. See Flagg Brothers, 436 US at 165 (noting that § 7-210 of the New York Uniform Commercial Code "permits but does not compel a private party to sell the goods of another party . . . in order to satisfy a debt owed"); UCC § 9-503 (1999) (defining a secured party's right to take possession after default).
[FN172]. See, for example, Restatement (Second) of Torts § 185 (1979) (entry by landlord onto land to oust trespassers); id at § 187 (entry by landlord to demand rent); id at § § 198-99 (allowing entry onto land to reclaim goods to remove trespassing goods); id at § 201 (allowing entry onto land to abate private nuisance at reasonable time and in reasonable manner); id at § 203 (allowing abatement of public nuisance by private person threatened with special harm); id at § 272 (recapture of chattel); § 273 (distraint of chattels); § 260 (removal of trespassing chattels); William Blackstone, 3 Commentaries on the Laws of England 4-6 (Clarendon 1768) (describing as permissible recaption or reprisal of chattels, entry onto land to end trespass, abatement of nuisances, and distraint of chattels as remedy for nonpayment of rent or to end trespass, and noting that the only condition attached to these self-help remedies was that they could not result in a breach of the peace).
[FN173]. New nations, such as Bosnia-Herzegovina, are defined, and old nations, such as the Soviet Union, disappear, but the coming into being of a sovereign state is a momentous occasion in diplomacy and international law.
[FN174]. See, for example, America Online, Inc v IMS, 24 F Supp 2d 548, 550 (E D Va 1998) (holding that the sending of more than sixty million unsolicited e-mails ("spam") to America Online subscribers was an actionable trespass to chattels under Virginia common law); CompuServe Inc v Cyber Promotions, Inc, 962 F Supp 1015, 1022 (S D Ohio 1997) (holding that the sending of bulk e-mails by a promoter through Compuserve equipment "diminished" the value of the equipment to Compuserve and was a trespass to chattels warranting imposition of a temporary injunction). For a general discussion, see Dan L. Burk, The Trouble with Trespass, 4 J Small & Emerging Bus L 27, 39- 43 (2000) (discussing trespass in cyberspace).
[FN175]. See Tom R. Tyler, Compliance with Intellectual Property Laws: A Psychological Perspective, 29 NYU J Intl L & Polit 219, 222-24 (1996) (arguing that the threat of enforcement often is ineffective because of low probability of apprehension and sanctions; in other cases, higher probability makes coercive threat more effective; voluntary cooperation depends as much on creating culture that promotes compliance, and that depends on morality and legitimacy).
Without undertaking to survey the intricacies of the ripeness doctrine it is fair to say that its basic rationale is to prevent the courts, through avoidance of premature adjudication, from entangling themselves in abstract disagreements over administrative policies, and also to protect the agencies from judicial interference until an administrative decision has been formalized and its effects felt in a concrete way by the challenging parties.
Id (emphasis added).
[FN177]. Until a statute is enforced, potential plaintiffs lack standing unless they can demonstrate that the statute facially deters their constitutionally protected activity. Application of Martin, 447 A2d 1290, 1296 (NJ 1982). "A litigant may not . . . challenge the constitutionality of a state criminal statute merely because he desires to wipe it off the books or even because he may someday wish to act in a fashion that violates it." Kvue, Inc v Moore, 709 F2d 922, 928 (5th Cir 1983), citing Younger v Harris, 401 US 37, 42 (1971).
[FN178]. An example would be application and enforcement of private "trade practice" in courts constituted by federal or state government.
[FN179]. An example would be judicial enforcement of an arbitration award under the New York Convention. See United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards Art III ("New York Convention"), 1970 21 UST 2519, TIAS No 6997 (1958) ("Each contracting State shall recognize arbitral awards as binding and enforce them in accordance with the rules of procedure of the territory where the award is relied upon under the conditions laid down in the following Articles."). See also Federal Arbitration Act, 9 USC § 3 (1994) (requiring judicial deference to pre-established arbitration arrangements).
[FN180]. See discussion of Flagg Brothers in Part I C 4.
[FN181]. ICANN and MAPS are strong examples. Denial of a domain name, or placement on the blacklist, excludes the target from all or a significant part of the internet without reliance on any order from a court.
[FN182]. Of course, the power of expulsion may be limited in its coercive effect because someone may be expelled from one part of the internet only to be allowed into another. That is why the MAPS blacklist is so powerful; it reinforces the power of expulsion by making it potentially internet-wide.
[FN183]. Part II D 4 considers legal theories to support such civil actions.
[FN184]. See William J. Bennett, ed, The Book of Virtues: A Treasury of Great Moral Stories (Simon & Schuster 1993).
[FN430]. Perritt, 12 Berkeley Tech L J at 479-82 (cited in note 1) (setting forth in full in appendix the Criteria for Autonomy guidelines agreed to in the meeting of October 8, 1997).
[FN431]. Rules and agreements should be disseminated and published widely on the internet, in an understandable and complete form. The process for amending and setting rules should be fully disclosed. Rules should be able to be created and changed only after an adequate notice period. Initiation and results of adjudications should be fully disclosed, including the factual and legal basis for the decision. Enforcement procedures and decisions should be fully disclosed. Who is making decisions and how they were selected should be publicly disclosed. See id at 479-80.
[FN432]. Decisions on rules and adjudication should be preceded by notice. Adjudicatory decisions should be preceded by some form of hearing appropriate to the factual issues and to the magnitude of the interest at stake. Decisions should be expressed in writing, including electronic formats. Review of private decisions should be available, but should be confined to whether due process occurred; not to the correctness of the decision on the merits, although merits-based review was contemplated by the public policy criterion. See id at 480.
[FN433]. The accountability criterion relied to a considerable extent on market forces, and incentives for internet participants to cooperate with each other, as occurs with the basic standards and protocols. The accountability criterion also contemplated, however, governmental control over certain locally-associated activities, and constitution of nonprofit corporate entities to provide a mechanism for representative accountability. See id at 480-81.
[FN434]. Private governance mechanisms should be open to participation at several levels. Any intergovernmental agreement should be open to any nation state. Policy oversight entities should not exclude particular groups or views. Registrars should enjoy freedom of entry. Consumers should have choice, including portability and variety.