An Israeli Magistrate’s Court ruled last week that the operation of a Gibraltar-based gambling website constitutes a criminal offence in Israel under Israeli law (Israeli Police v. Michael Carlton (in Hebrew)). The website, VictorChandler.com is based in Gibraltar, where gambling is legal. Judge Abraham Hyman reasoned that the website targeted Israeli customers by providing a Hebrew interface and advertising on billboards in Israel, and is therefore deemed to have operated in Israel, despite the foreign location of its web servers and corporate headquarters. Judge Hyman added, that in the context of online commerce the locus of the activity is the end user’s PC (country of destination rule), as opposed to the Website’s servers or corporate establishment (country of origin rule). Judge Hyman’s decision tackles the dense problem of personal jurisdiction in the online environment. The law usually allocates jurisdiction according to the geographical location of the activity or one of the parties (typically, the defendant). Yet, as Joel Reidenberg once explained, “the entire architecture of the Internet is based on the principle of geographic indeterminacy”. Determining where a particular action took place (between websites, advertisers, hosts, servers, routers, end users’ PC) is very difficult in cyberspace. Indeed, Michael Geist named his 2001 article on the subject “Is There a There There? Toward Greater Certainty Internet Jurisdiction” (BERKELEY TECH. L.J. 1345 (2001)), questioning whether any useful distinctions can be made based on geographical location in cyberspace. The Israeli court’s application of a country of destination rule is not surprising, particularly given this was a matter of consumer protection and criminal law, where the law of the forum typically prevails. Judge Hyman referred to the Yahoo v. LICRA affair, where Yahoo sought protection from an American court against enforcement of a French court’s judgment for violation of French laws prohibiting the sale of Nazi-era memorabilia. Judge Hyman effectively applied a “targeting test”, imposing jurisdiction due to the Website’s “purposeful availment” of its services in Israel. The targeting and purposeful availment tests are taken from US jurisprudence on the topic, namely the oft-cited Zippo test (Zippo Mfr. Co. v. Zippo Dot Com, Inc., 952 F. Supp. 1119 (W.D. Pa. 1997)), the Calder test (Calder v. Jones, 465 U.S. 783 (1984)), and Professor Geist’s own contractual and technological targeting tests. The problematic aspects of such extensions of jurisdictions are clear: criminalizing activities which may be legal where performed, issuing unenforceable decisions (e.g., the Yahoo case itself), and instigating potential diplomatic incidents.
November 21, 2007 at 6:46 am
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November 27, 2007 at 7:35 am
Great post.
December 27, 2007 at 9:05 am
It’s amazing how these governments want to punish gambling companies in foreign lands.
January 29, 2008 at 9:16 pm
[...] es un interesante caso publicado en el blog de Omer Tene sobre un juez israelí aplicando sus normas jurídicas que consideran delito la actividad de juegos de azar pero a un sitio de gambling localizado en [...]
February 1, 2008 at 9:56 am
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March 21, 2008 at 4:28 pm
very nice web site. My English is not so good, so I do not understandt it well, but it seems very good. Thanks
October 21, 2008 at 2:24 pm
[...] [Again, most court decisions lead to Hebrew links, sorry, originally posted in Hebrew] A Kentucky Court ordered, in a wrong and misunderstood decision, to forefeit one hundred and forty one domain which were somewhat involved in gambling into the hands of the State of Kentucky. In the decision, granted by the Kentucky Circuit Court, asserted that since the domains were accessible to Kentucky residents, they could be seen as operating illegal gambling in Kentucky (and therefore asserting jurisdiction) and they could be forfeited in order to stop the plague. (81-CI-1409 Commonwealth of the State of Kentucky v. 141 Internet Domain Names) (and see also the Carlton Case CR 90861/07 Michael Gary Carlton v. Israeli Police and Dr. Omer Tene’s explanation on Carlton) [...]
September 9, 2009 at 12:47 pm
All of this touches on a very complex issue, that applies to internet marketing and site activities, and goes beyond gambling specifically.
If a web site is offering services that are legal in the situs of corporate registration of the business that owns the web site, then it would seem to me that the web site is doing nothing wrong by marketing internationally, as long as it does not target market to jurisdictions where its activities are not legal. The mere fact that a resident of a country where that site’s activities are not legal “signs up” should not impose legal liability on the site owner, as long as reasonable due diligence is taken to avoid providing the offending service to that individual (such as restricting offending site services based on the applicant’s stated country of residence).
In the case cited, I tend to agree with the magistrate’s application of the country of destination concept, due to the site owner’s behavior in marketing the site to Israeli citizens. I’m referring here to the Hebrew mirror site, as well as the local advertising billboards. This shows a deliberate exercise of bad faith of the site owner with respect to Israeli law, and thus justifies legal action on the part of Israeli authorities.
While I am not familiar with the specifics of Israeli law, it seems Judge Hyman’s opinion is reasonable, using US law as a comparative basis. As an example, when an internet enabled transaction results in a civil dispute between two parties in different US states, there are actually two legal situses involved, that of the plaintiff and that of the defendant. The plaintiff can properly sue in his/her own jurisdiction, and if the defendant refuses to participate by not answering summons, the default judgment against the defendant can be domesticated to the defendant’s jurisdiction of residence. To the extent that Israeli law mirrors US law in this regard (I admit that I don’t know whether it does or doesn’t), Judge Hyman’s opinion would appear to be well founded.
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