Can laws in foreign lands limit free speech rights of Americans or American companies? Can foreign courts fine American companies for listing items for sale in American catalogs if those items are illegal to buy in the foreign countries?
The obvious answer to both those questions is, no. But what if the “catalog” where the prohibited items are listed happens to be on the Internet where residents of those foreign countries can easily purchase them and have them shipped overseas?
Again, the obvious answer still should be no. But a French court four years ago fined Yahoo.com, a U.S. company, for listing and selling Nazi memorabilia on its American-based Web site because people in France are able to access it.
Yahoo’s French-based subsidiary, Yahoo.fr, complies with France’s laws. In fact all its foreign subsidiaries comply with the laws of each country in which they are based. So where does a Paris judge get the gall to levy a fine against an American company for exercising its free speech rights from American soil?
A San Jose federal judge ruled in 2002 that the French court was out of bounds and that Yahoo owed nothing. But on appeal, the French human rights groups who originally filed the suit won. A three-judge appeals court panel said that the lower court judge ruled prematurely, since the plaintiffs had not yet sought to collect the fine, which has now grown to $15 million.
Now, Yahoo wants the full court to re-hear the case, and it has agreed to do so. At issue is whether or not Yahoo will ever be liable for the fine, if the plaintiffs should decide to collect. A ruling will also let other companies in a similar situation to Yahoo’s know what they may face from foreign court intervention in American capitalism.
Yahoo executives claim they are caught in a Catch-22 situation, not knowing whether to abide by the judges order, meaning they would be caving in to foreign censorship, or just let the fines continue to mount. The fine grows by $15,000 for each day that the Nazi merchandise remains on Yahoo’s American site.
Attorney’s for the plaintiffs say they do not intend to collect the fines. But they could. And, besides, Yahoo and other companies need to know if American courts will allow such invasion of free speech rights by foreign laws.
The Internet, with its worldwide access, is forcing lawmakers to rewrite the books on many points of law that were once clear-cut. And if they haven’t started to adapt yet, as the French apparently have not, then maybe it’s time they did.
What if, for example, a nation like Saudi Arabia filed suit against an American Web site for promoting women’s rights? It’s kind of scary to think about.
As long as Yahoo’s foreign-based subsidiaries obey the laws of the lands in which they are based, the courts in those countries have no basis to rule against the American-based parent company. To do so is the epitome of arrogance.
And if U.S. courts allow the foreign courts to abridge the First Amendment rights of U.S. companies, they have surely not given the matter enough thought. That’s why I fully expect the appeals court to reverse its former ruling and clarify things for Yahoo and other Internet-based companies that sell things abroad.