A decision by the High Court of Australia (Tuesday Dec 10, 2002) has cleared the way for the Victorian Supreme Court to decide if Melbourne businessman Joseph Gutnick was defamed by U.S. publisher Dow Jones via a US-based website.

The alleged defamatory article entitled Unholy Gains appeared in Barron’s magazine, a Dow Jones publication in the United States. The article was also placed on the Barron’s website, located in New Jersey and accessible around the world, including in the Australian State of Victoria.

John Swinson, IT Partner with Mallesons Stephen Jaques, said today the issue the High Court had to decide was whether the Victorian Supreme Court had jurisdiction (i.e. authority) to decide a case involving a foreign defendant where the defendant's only contact with Victoria was allowing people in Victoria to access the defendant's foreign website.

He said, “Australian defamation law is more favourable to Gutnick than U.S. defamation law, because there is no First Amendment free speech rights in Australia.

“The High Court decision means that anyone who places information on a website must take into account the laws of all the places where the website is accessible.”

Mr Swinson said there is no single legal system that applies to websites and foreign publishers must take into account Australian laws if their websites are accessible in Australia.

“Australia may become the centre-point for all defamation actions involving the Internet, provided that the person defamed is known in Australia. For example, if Mick Jagger is defamed on a Dutch publisher's website, he may now choose to sue the publisher for defamation in Australia rather than England or the Netherlands.”

According to Mr Swinson, the High Court's decision is not consistent with recent U.S. decisions on the same topic.

He said if the High Court had applied United States law (rather than Australian law), then it would have thrown out Gutnick's case. This is because a U.S. court would have required that Dow Jones expressly aimed the defamatory article at Victoria. According to Mr Swinson, a U.S. court would have stated: The fact that Internet websites can be read in Victoria, just as they can be read anywhere in the world, should not be sufficient to establish Victoria as the place where the court case should take place.

Mr Swinson said the High Court clearly did not wish to follow United States law, concerned that the U.S. dominance on the Internet may lead to U.S. dominance in legal principles.

However, if Joseph Gutnick succeeds in his case against Dow Jones in Victoria, and tries to enforce his judgment in the United States, it is likely that a United States court will not recognise the Victorian judgment or allow it to be enforced in the United States. Guntick will only be able to enforce his judgment to the extent that Dow Jones has assets in Australia.

By bringing the case in Victoria, Gutnick is limiting the amount of his damages. He can not claim damage to his reputation in the United States. He will only be awarded damages to the extent that his reputation is tarnished in Victoria.

If the reverse scenario had occurred, and an Australian publisher defamed a U.S. citizen on an Australian website, and the U.S. citizen sued the Australian publisher in a United States court, then the United States court would likely have the case thrown out.

If Gutnick succeeds in his case against Dow Jones in Victoria, and tries to enforce his judgment in the United States, it is likely that a United States court will not recognise the Victorian judgment or allow it to be enforced in the United States.

But according to Mr Swinson, the decision was consistent with English Decisions.

“The High Court's decision is consistent with the decision of the U.K. Court of Appeal last week in the case of Menashe Business Mercantile v. William Hill. In that case, involving patent infringement, the court ruled that it did not matter where the website was located. An English court had authority to hear a patent infringement case involving an Internet gaming system because what was relevant was where the users were located, not where the website was located.”

John Swinson, IT Partner with Mallesons Stephen Jaques, is both a New York attorney and Australian solicitor. He represented Australia in the American Bar Association’s study of Internet Jurisdiction.