Court Imposes Israeli Law on Gibraltar Gambling Website

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.