My past two blog entries, and my next three, are based on my presentation at WebHostingDay in March.
Right now, I’m in Prague, at the Cloud Computing Expo, and here, like at WHD, the most questions I got dealt with “whose law applies?” This is a topic that lawyers and scholars can debate until even the worst insomniac gives into sleep.
At base, in a contract, the parties are given a great deal of latitude in choosing law. This applies, in a general fashion, to U.S. contracts, as well as contracts with most of the industrialized world. There are a number of exceptions, for example issues related to human resources, private data, anti-competitive activity, and other areas of particular political interest. As a general matter however, courts and governments treat contracting businesses as “big boys” and let them choose a law to govern their contract.
Here, though, I need to make a distinction. There is the law that governs a contract, and disputes related to it, and in the Internet world, the law that governs the data. Often times you can agree on the first, but not on the second. Its these distinctions that make for vigorous legal debate. However, the vast majority of disputes relate to contract terms, so for the most part, choice of law can be fixed.
So what considerations come into play? Here’s what I recommend you think about:
1. Where your servers are located.
2. Where most of your contracts require.
3. Where you do business.
4. Where you are incorporated.
Here are things you should put out of your mind:
1. Where you’d like to visit.
2. Where there are cheap plane tickets.
3. Where “everybody else says.”
4. California.
Once you start thinking about these factors, you’ll get a good base to begin to narrow your choices.
I’m often asked “why not California?” There are a number of reasons. The first is that California has some very specific laws that relate to technology, notice and disputes. If you haven’t anticipated these in your contract, they will be imposed by the court. This may change decisions you’ve made. Also, California is a very expensive legal environment. Pursuing litigation there involves some of the most expensive lawyers, cities and consultants in the country. Finally, despite the fact that a lot of technology companies reside in California, its courts, and juries, are no more “tech savvy” than courts in other large states.
