March 2003 - Insurance issues no longer black and white
The eyes of the international legal world turned to Australia recently with the High Court's decision in Dow Jones v Gutnick.
It concerned a defamation action by high-profile Melbourne businessman Joseph Gutnick against Dow Jones, publisher of the Wall Street Journal and the website, WSJ.com.
The site published an article critical of Mr Gutnick and he sued for defamation. The crucial point was that he sued in Victoria. He claimed publication of the material had occurred there, since the article had been accessed by Victorian users. Dow Jones argued the case should be heard in the United States, specifically New Jersey, where the servers on which the material was held were located. While not stated specifically, Dow Jones' argument was no doubt made with a view to allowing it to argue defences under the US Constitution's First Amendment.
However the High Court found the material had been published in Victoria and allowed Mr Gutnick to sue there.
It is worth noting that publication also probably occurred in the United Kingdom, France, Germany, Canada, Argentina and Kyrgyzstan. The result is that, theoretically, Mr Gutnick could have chosen virtually any jurisdiction in the world in which to sue.
For insurers, the case confirms that the rapid advance of technology means what was once thought to be "black and white" is no longer so. Where a business may be exposed to liability is no longer certain and the development of technology, particularly the internet, means rigid ideas about national boundaries are no longer applicable.
If the reverse had occurred and an Australian website, insured by an Australian insurer, had allegedly defamed, say, Bill Gates, the potential for a lawsuit in the US would no doubt fill the relevant claims manager with dread.
The changes wrought by technology do not simply apply to insurers providing defamation cover. The internet allows much greater visibility for products and services and, in most cases, much easier access to them. Computer software, for example, is regularly downloaded by users all over the world. We no longer need a passport to buy Belgian chocolate, Egyptian cotton or Japanese sake. Trucks, shares, legal advice, televisions and even real estate can be bought and sold via the internet.
The new, fluid world economy makes assessing risks and setting premiums all the more important. The insurance industry and its advisers need to be cognisant of the changed environment in which we all now operate.
Mr Gutnick's case, however, may not be the final word on the legal environment in which the new economy operates, with other cases pending in the US and Europe. If those decisions are inconsistent with Dow Jones v Gutnick, we can expect to see the issues revisited, either by the courts or possibly by international treaty, in the not too distant future.