Description

The arrangement that allocates domains on the Internet may serve as an illustrative example. Although it is a unique phenomenon without precedent or equivalent, some, more general, conclusions on the evolution of law in world society may be drawn inductively from this model. The complex entity had not been systematically designed, but emerged rather accidentally and only consolidated in the course of its operation.^{Footnote 12}

In 1998, after a controversial debate between different interest groups ranging from private stakeholders to state governments, the Internet Corporation for Assigned Names and Numbers (ICANN) was founded as the institutional centre of the arrangement.^{Footnote 13} ICANN is a non-profit association pursuant to Californian law, incorporated in Los Angeles.^{Footnote 14} According to its bylaws, it is in charge of ensuring the stable and secure operation of the unique identifier systems of the Internet. Its board of directors includes representatives from all geographical regions of the world, but not from state governments, which have access only to its advisory committees.^{Footnote 15} The organisation thus occurred as an unparalleled compromise: While an international Internet organisation would have required membership of all states in the world, the unilateral regulation of the Internet by a single state, even if it were technically possible, appeared undesirable.^{Footnote 16}

Legally, ICANN acts upon the basis of multiple bilateral contracts.^{Footnote 17} On the one hand, it maintains contractual relations with several public and private institutions that administer the data files in which the top-level domains such as ‘.com’ are inscribed.^{Footnote 18} On the other hand, ICANN was originally subject to a memorandum of understanding with the government of the United States of America, which had supported early research on the Internet for military purposes and therefore long claimed supreme authority over its infrastructure.^{Footnote 19} Nevertheless, the US government had always remained on a latent position in this regard. Most recently, it has withdrawn its commitment altogether.^{Footnote 20} As a result, ICANN may take all decisions of current administration independently. Second-level domains such as ‘google.com’ are allocated to individuals via numerous registrars, also under contract with ICANN, according to a ‘first come, first served’ principle.^{Footnote 21}

As each domain may only be registered once for reasons of unambiguous identification, disputes over their allocation soon began to arise.^{Footnote 22} In particular, the domain names that correspond to the names of celebrities and well-known trademarks became highly contested. In the so-called ‘cybersquatting’^{Footnote 23} cases, some Internet users registered for a large number of such domains intending to sell them at a profit to the persons and corporations concerned. In order to solve these disputes, ICANN finally established a special dispute settlement mechanism,^{Footnote 24} based upon the Uniform Domain Name Dispute Resolution Policy (UDRP).^{Footnote 25} The accreditation agreements require the registrars to include the UDRP as general terms and conditions in each domain registration contract.^{Footnote 26} According to Paragraph 4(a) UDRP, a complaint will succeed when three conditions are met:

ICANN has recognised five different institutions in their capacity as dispute resolution service providers.^{Footnote 28} The group includes not only private organisations, such as the National Arbitration Forum based in Minneapolis,^{Footnote 29} but also the Arbitration and Mediation Centre of the World Intellectual Property Organization, an international organisation.^{Footnote 30} According to Paragraph 15(a) of the Rules for Uniform Domain Name Dispute Resolution Policy (UDRP-Rules), each panel appointed to decide a domain dispute must comply with the provisions of the UDRP, while it may autonomously complement its rules if necessary:

Because of its access to the registers, ICANN may even electronically enforce its own law. According to Paragraph 3(c) UDRP, it will cancel, transfer or modify a domain name upon receipt of a panel decision that requires such action.^{Footnote 32} Some commentators regard this sanction as an ‘electronic equivalent of the death penalty’.^{Footnote 33} Yet, ICANN cannot prevent subsequent lawsuits before national courts. Paragraph 4(k) UDRP expressly provides for such a remedy:

Hence, although a single state could neither comprehensively nor effectively regulate cross-border affairs, such as the infrastructure of the Internet, national courts may occasionally intervene in processes of transnational governance.

Interpretation

Transnational governance arrangements such as the one that allocates domains on the Internet hold a peculiar legal status. They escape from the thought patterns fixated on the nation-state. In particular, they transcend the conventional dichotomies that have long dominated this tradition.

Firstly, transnational governance arrangements undermine the distinction between international and national law.^{Footnote 35} On the one hand, they cannot be qualified as international law, since they are neither created by inter-state treaties nor do they regulate inter-state relations. ICANN is a corporation according to Californian private law, and the rules issuing from the arrangement primarily address individual Internet users. Nevertheless, the World Intellectual Property Organization, as an international organisation, serves as a dispute resolution service provider under the UDRP. On the other hand, these arrangements cannot be classified as national law, since they neither emanate from national legislation nor do they exclusively address national affairs. Although ICANN was subject to a contract with the US government and defers to national courts in domain disputes, it autonomously regulates the allocation of Internet domains across the globe.

Secondly, transnational governance arrangements subvert the distinction between public and private law.^{Footnote 36} On the one hand, regarding their source, they result from the co-operation of various actors, both state and non-state. ICANN had long acted in agreement with the US government, which, at global level, recedes to a representative of particular interests for its part. At the same time, the advisory committees of ICANN comprise stakeholders from numerous other states and interest groups. On the other hand, regarding their subject matter, these arrangements touch not only upon the relationships of individual Internet users, but also upon concerns of society at large. Thus, the regulation of the Internet in general, and the allocation of domains in particular, are regarded as services of general interest because of their significance for enabling global information and communication.^{Footnote 37} The European Commission therefore concluded that ICANN takes ‘decisions of a kind that governments would, in other contexts, expect to take themselves in the framework of international organisations’.^{Footnote 38}

Finally, regarding their medium, transnational governance arrangements break the distinction between statute and contract.^{Footnote 39} On the one hand, they are unable to enact rules that are generally binding. For this reason, ICANN, which was itself created by contract, allocates domains to individual Internet users via several registrars through bilateral agreements. On the other hand, all registration agreements indirectly impose a collective orientation by incorporating the dispute resolution mechanism of the UDRP as general terms and conditions. From this symbiosis, or ‘network’,^{Footnote 40} of contracts thus emerges a new form of collective order.

Transnational governance arrangements gain a relative autonomy by exclusively following their own ‘secondary rules’^{Footnote 41} as defined by HLA Hart.^{Footnote 42} These secondary rules include not only rules of recognition, which allow for identifying the primary rules of obligation to be applied, but also rules of adjudication, which empower dispute resolution service providers to ascertain whether a primary rule of obligation has been violated on a particular occasion. Thus, Paragraph 15(a) UDRP-Rules prescribes all dispute resolution service providers recognised by ICANN to resolve disputes over domain names in accordance with the UDRP and all other rules and principles of law that they deem applicable.^{Footnote 43} In this way, the arrangement may operate self-referentially, similarly to the European Union, whose Court of Justice exclusively decides according to ‘the law stemming from the treaty’, which is hence considered as ‘its own legal system’.^{Footnote 44}

Legitimacy

Since transnational governance arrangements such as the one that allocates domains on the Internet are based on contracts and, therefore, are unable to enact rules that are generally binding, they do not raise a problem of legitimacy in the traditional sense of the term. On the contrary, contract by definition requires the approval of the parties so that it is regarded as ‘the quintessential form of government with the consent of the governed’.^{Footnote 45} Within the national legal orders, such arrangements would be regarded as expressions of private autonomy and protected by constitutional rights, in particular freedom of contract and freedom of association. At the same time, however, national private law usually contains certain provisions of mandatory private law that implement private autonomy and thus fulfil a constitutional function in the horizontal relations between individuals.^{Footnote 46} These provisions ensure that the parties have entered freely into a contract and protect the liberties of third parties from interference.^{Footnote 47}

Infringements on the freedom of contract and interference with the liberties of outsiders may also appear in the transnational context. On the one hand, unequal bargaining powers may considerably reduce party autonomy. Thus, the arrangement that allocates domains on the Internet holds a monopoly position in providing a service of general interest that is indispensable for the realisation of freedom of information and speech under conditions of digital communication. It may therefore unilaterally impose the contractual terms for the registration of domains. On the other hand, such arrangements may significantly affect the liberties of third parties. Thus, the allocation of certain domain names may violate rights in names and trademarks.

Reformulated in this way, the issue may be addressed by a new approach to the ‘horizontal effect’^{Footnote 48} of constitutional rights. According to this understanding, animated by systems theory of law,^{Footnote 49} constitutional rights are to be regarded as a social ‘institution’^{Footnote 50} that upholds the differentiation of society and thereby indirectly generates collective order. Constitutional rights hence serve to enable and support the autonomous organisation of different social spheres, such as economics, religion, technology, arts and sciences, while, at the same time, preventing a single rationality from dominating society. Initially, the argument was advanced only with regard to the relationship between the political and the other social spheres within the state,^{Footnote 51} but its scope may be generalised, especially in the transnational context, which lacks a central political legislator.^{Footnote 52}

Such a conception reverses the supposedly ‘classical’^{Footnote 53} function of constitutional rights as negative, or defensive, rights of the individual against the state in a double sense. On the one hand, it extends the circle of rights holders, including not only individuals, but also other social systems and institutions, in particular processes of societal self-regulation. Nevertheless, it does not abandon the protection of the individual and the system of remedies based on subjective rights. On the other hand, this conception broadens the group of those obliged to respect constitutional rights, binding not only the state, but also other social systems and institutions that could develop totalitarian tendencies.

Philosophical and historical enquiries confirm that such a conception of constitutional rights only restores their original function. From a philosophical point of view, the understanding of constitutional rights as the defensive rights of the individual against the state reduces Immanuel Kant’s notion of right, which had a decisive influence on modern constitutionalism. It does not reconcile the freedom of one with the other, in general, according to a universal law of freedom, but only that of the citizen with that of the state.^{Footnote 54} From a historical point of view, referring back to the French Revolution, constitutional rights had initially served as guiding principles for transforming the social order in accordance with the principles of freedom and equality. Only afterwards did they fall back to their function as rights of defence against the state.^{Footnote 55}

Foundation and limitation

In this view, constitutional rights serve both as a foundation and as a limitation of constitutional governance arrangements such as the one that allocates domains on the Internet.

On the one hand, they enable and protect these arrangements not only because they make use of their private liberties, but also because they contribute to creating an order that benefits the entire society and is not available elsewhere.^{Footnote 56} As a matter of fact, there is no consensus on creating an international organisation that could assume the task of allocating domains on the Internet. At the same time, the regulation of the Internet by a single state, such as the United States of America, would not be acceptable from a normative point of view, even if it were technically feasible. From an epistemological perspective, finally, societal self-regulation of the Internet may appear even superior to regulation by either national legislation or international treaty-making. In complex subject matters, political regulators sometimes lack the knowledge required in order to take fully informed decisions.^{Footnote 57} Especially in the field of technology, which is subject to rapid evolution, they may encounter insurmountable cognitive limits. By contrast, transnational governance arrangements, which are deeply embedded within the respective social spheres, may instantly absorb the implicit knowledge dispersed there. For example, ICANN evolved from an initiative around the computer scientists and technicians who invented the Internet domain system.^{Footnote 58} As this development demonstrates, societal interaction in transnational governance arrangements may not only, and even not primarily, serve selfish ends, but enable movements of research and processes of innovation, the findings of which others may profit from as well. In its regulatory activity, the arrangement that allocates domains on the Internet is therefore protected by the constitutional rights to freedom of information and speech.^{Footnote 59}

On the other hand, however, horizontal constitutional rights as proposed here also constrain transnational governance arrangements, notably to avoid their self-destruction and excessive expansion. To this purpose, they not only comprise a negative, that is defensive, but also a positive component.

In a negative sense, they provide protection for both shareholders and outsiders against transnational governance arrangements.^{Footnote 60} For example, in the so-called ‘cybergriping’^{Footnote 61} cases, in which domain names reproduce the names of persons or brands supplemented by pejorative suffixes, such as ‘sucks’, in order to express criticism, ICANN must respect not only personality and intellectual property rights, but also the right to freedom of speech.

In a positive sense, horizontal constitutional rights as proposed here allow for equal participation and consideration in transnational governance arrangements when they hold a monopoly in providing a service that is indispensable for realising freedom.^{Footnote 62} Since there is no central legislator in the transnational context, the positive component is particularly important. It would be inadequate, however, to speak of ‘democratisation’^{Footnote 63} in this regard. More precisely, the issue is to render transnational governance arrangements ‘responsive’^{Footnote 64} towards their societal environment. In this way, they are required to take into account the conflicting interests of the institutions and persons affected by their activities.^{Footnote 65} For example, as ICANN holds a monopoly in allocating domains on the Internet and communication on the Internet is impossible without a domain, the rights to freedom of information and speech, as well as the right to equality, ensure that applications for second-level domains that have not yet been registered are not arbitrarily rejected. Moreover, when ICANN intends to create new top-level domains, such as ‘.xxx’ for pornographic sites, it must equally consider the conflicting rights to freedom of speech, freedom of profession and concerns of youth protection.^{Footnote 66}

Such a conception of constitutional rights may provoke a double objection. A critique from an internal point of view may reveal a self-contradiction. Apparently, this conception aims at both differentiation and integration of society simultaneously. At times, it calls for protection of social systems and institutions in order to maintain a variegated order. At other times, it allows for intervention so as to improve participation in social systems and institutions.^{Footnote 67} A critique from an external point of view may further detect a category error. Allegedly, this conception tries to solve problems of collective self-determination by employing means of individual self-determination. In this way, it seems to overstretch the capacities of constitutional rights.^{Footnote 68}

In the transnational context, which lacks a central political legislator, however, these objections lose significance. When both states and international organisations fail, society must necessarily regulate itself. Collective order may then only result accidentally from societal interaction.^{Footnote 69} Intentional design is only possible by means of contract.^{Footnote 70} Under these conditions, the internal relationship between democracy and constitutional rights needs to be reformulated. It must be adapted to the changing circumstances in order to ensure a constant protection of freedom.

Internal constitutionalisation

Systems theory of law claims that transnational governance arrangements are able to establish their own constitutions.^{Footnote 71} As its proponents explain, these societal constitutions do not result from any visible act of constituent power. Rather, they emerge incrementally and pass through several stages of evolution, similar to the common law. Purportedly, each process of juridification presupposes latent constitutional norms that are created at the very time of their application and hence remain inseparable from the ordinary norms.^{Footnote 72} Constitutional norms of this kind include not only rules of recognition, such as Paragraph 15(a) UDRP-Rules, but also fundamental rights.

Indeed, some panels appointed to decide domain disputes invoke the right to freedom of speech, although the UDRP does not explicitly provide for such a right. They notably proceed in this way when they deal with issues of ‘cybergriping’. In an early case, a dispute resolution panel appointed by the Arbitration and Mediation Center of the World Intellectual Property Organization proclaimed in a principled manner:

Several other panels share this view. Yet, they employ different methods in order to reach their aim. Some of them refer to the right to freedom of speech guaranteed by the First Amendment to the Constitution of the United States of America.^{Footnote 74} Others determine the applicable law according to the rules of private international law of the competent national jurisidiction.^{Footnote 75} Still others refuse to apply national law in these transnational disputes as a matter of principle. Instead, they rely on the Universal Declaration of Human Rights of the United Nations,^{Footnote 76} international treaties, such as the International Covenant on Civil and Political Rights^{Footnote 77} or the European Convention on Human Rights,^{Footnote 78} as well as general principles of law.^{Footnote 79} Finally, some panels apply national and international law sources simultaneously.^{Footnote 80}

More recently, many panels simply follow the large number of precedents rendered on the same issue.^{Footnote 81} A noteworthy decision not only identifies a specific right of the UDRP that allows using a trademark as a domain name in order to express criticism, but also extracts the precise content of this right from previous decisions:

Nevertheless, the dispute resolution practice is still unclear regarding both the foundation and the content of the right to freedom of speech under the UDRP. Regarding the foundation, some panels expressly speak of a fundamental right proper to the UDRP.^{Footnote 83} Others merely recognise a counter-right or a legitimate interest according to Paragraph 4(a)(ii) UDRP.^{Footnote 84} Yet others categorically deny their competence to take a decision of constitutional significance:

Regarding the content of the right to freedom of speech under the UDRP, there is disagreement in two respects. On the one hand, opinions differ on the preliminary question of whether the use of a trademark with a pejorative suffix such as ‘sucks’ can cause a risk of confusion in the sense of Paragraph 4(a)(i) UDRP that would require justification.^{Footnote 86} On the other hand, decisions contradict each other on the question of whether the use of a trademark without a pejorative suffix is protected by the right to freedom of speech when the website thus designated contains criticism.^{Footnote 87}

The internal constitutionalisation of transnational governance arrangements such as the one that allocates domains on the Internet hence remains uncertain. Dispute resolution service providers may not only take divergent decisions, but also refuse to provide fundamental rights protection at all, especially since there is no obligation to follow precedents under the UDRP. There is only hope that external pressure might induce a self-restraint of transnational governance arrangements.

External constitutionalisation

As long as transnational governance arrangements do not guarantee adequate protection of constitutional rights, they must therefore be complemented by the national legal orders. In the arrangement that allocates domains on the Internet this is possible as Paragraph 4(k) UDRP explicitly allows for actions to be brought before national courts. Such kind of containment might be called ‘external constitutionalisation’^{Footnote 88} and follow a model that is already established for the relationship between national legal orders and international organisations as well as several international organisations including the same member states among each other. According to this model, the various legal orders may, by means of mutual judicial assistance, compensate the gaps in the protection of constitutional rights that exist elsewhere.^{Footnote 89}

Thus, the Federal Constitutional Court of Germany has declared in its famous ‘Solange’ decision that it will only relinquish its competence to decide on the applicability of European Union law in Germany as long as the European Union guarantees a protection of fundamental rights ‘which is to be regarded as substantially similar to the protection of fundamental rights required unconditionally by the Basic Law’.^{Footnote 90} Similarly, the European Court of Human Rights holds that state action taken in compliance with obligations resulting from the membership in an international organisation ‘is justified as long as the relevant organisation is considered to protect fundamental rights, as regards both the substantive guarantees offered and the mechanisms controlling their observance, in a manner which can be considered at least equivalent to that for which the Convention provides’.^{Footnote 91} In the same vein, the Court of Justice of the European Union scrutinises the regulations of the European Union that implement resolutions of the United Nations Security Council sanctioning persons suspected of terrorism as long as the review procedure offered by the United Nations ‘does not offer the guarantees of judicial protection’.^{Footnote 92}

The construction of a transnational dimension of constitutional rights is possible in all national legal orders across the Western tradition. It is particularly easy in Germany where the objective component of constitutional rights may serve as a gateway. The Federal Constitutional Court of Germany has already deduced several new dimensions from it, including an indirect horizontal effect in civil law,^{Footnote 93} a protective function of the state,^{Footnote 94} positive rights,^{Footnote 95} procedural guarantees^{Footnote 96} and organisational principles.^{Footnote 97} When other new dangers arise for fundamental rights in the transnational context, it becomes once more necessary to adapt the law to the changing circumstances. The constitutional principle of ‘open statehood’^{Footnote 98} enshrined in the Basic Law for the Federal Republic of Germany then calls for ensuring protection of constitutional rights also with regard to transnational governance arrangements. In this respect, the objective component of constitutional rights may yet again prove to be a dynamic principle that adapts the law to social change and safeguards freedom in the face of alternating conditions.^{Footnote 99}

To date, the German courts have only ruled on domain disputes relating to the country code top-level domain ‘.de’, for which the Deutsches Network Information Center eG (DENIC),^{Footnote 100} a private organisation authorised by ICANN and based in Frankfurt, Germany, distributes second-level domains. Here, they do not hesitate to invoke the right to freedom of speech guaranteed by Article 5(1) of the German Basic Law in ‘cybergriping’ cases. For example, the Higher Regional Court of Hamburg held, in a dispute concerning the domain ‘awd-aussteiger.de’, on which former clients criticised the business practices of a financial service provider:

The external constitutionalisation of transnational governance arrangements may equally be achieved through the means of civil law. Thus, the Regional Court of Bremen dismissed an action of the public transport company Bremer Straßenbahn AG (BSAG) against the use of the domain ‘bsagmeckerseite.de’ because it did not find any likelihood of confusion pursuant to Paragraph 15(2) of the German Trade Mark Act or a violation of interests pursuant to Paragraph 12 of the German Civil Code.^{Footnote 102}

Civil law institutions also lend themselves for the external constitutionalisation of transnational governance arrangements in national legal orders that do not know of any horizontal effect of constitutional rights.^{Footnote 103} In the Anglo-American jurisdictions, common law might likewise assume this task. Thanks to its flexibility, it is especially well suited for such an undertaking.^{Footnote 104} Apart from this, even the national legal orders that rely on a rigorous state-action doctrine might follow the German model when it comes to confining transnational governance arrangements. As one commentator points out for the Constitution of the United States of America:

Some American courts have already taken this path. For example, a Court of Appeal held, in a dispute over a domain name that added a critical suffix to the designation of a shopping centre:

It does not seem appropriate, however, to apply national constitutional rights exclusively in cases that imply a cross-border aspect. Especially with regard to disputes over Internet domains, such a choice of law would be random and undemocratic as far as foreigners are concerned. The transnational dimension of constitutional rights should therefore be considered as a conflict-of-laws rule dealing with the relationship between national legal orders and transnational governance arrangements.^{Footnote 107} This rule does not refer to any single foreign legal order, either. Instead, it requires the applicable law in these cases to be determined according to a method called the ‘substantive approach’^{Footnote 108} in conflict-of-laws scholarship. A new substantive norm that comprises elements of all the legal orders concerned should, hence, be formed.^{Footnote 109}

Such an approach may raise serious concerns for its part. From a methodological point of view, it is extremely challenging. Not only does it place a special responsibility on judges, but it also requires comparative knowledge and skills that would need to be acquired through some new form of ‘transnational legal education’.^{Footnote 110} Moreover, regarding democracy and separation of powers, the approach appears as highly problematic. It doubles the ‘counter-majoritarian difficulty’^{Footnote 111} since judges are allowed to make rules by a possibly even arbitrary resort to foreign law. The assessment turns out more favourably, though, if it is acknowledged that the issue here is not to invalidate statutes enacted by a democratically elected legislator, but self-given rules of transnational governance arrangements. In this respect, the judges ensure that the legitimate concerns of all those affected by the rules, but not heard elsewhere, are duly taken into account.^{Footnote 112}