Slide 5 of 9
Internet regulation based on place of provision of services
The second reason for claiming regulatory competence is that services are provided in the jurisdiction. Again, the Internet poses the difficult question whether services are provided at the customerís access point (his PC) or the organisationís server. The EU documents referred to earlier suggest that the correct test should be the place where the service is performed, i.e. where its intended result is achieved. This would give different answers for different services:
- For account transaction services, the end result is a change in the account data. This service will be performed where the account is located. It would seem sensible to take the logical, not the physical location, as the relevant place, i.e. the jurisdiction from which the account is controlled, not the physical location of the server which may change fortuitously. This is the approach already adopted by data protection legislation
- For asset purchases the question is more complex. If the end result is the transfer of ownership to the customer, that would normally occur in his home jurisdiction. However, if the asset is to be held in a nominee account, the account location should apply.
- For advice, the relevant location must be where the advice is received. ďAdviceĒ is likely to be interpreted broadly - in the UK case In re Market Wizard Systems (UK) Ltd. (1988) The Times 31 July the court held that a computer program which enabled users to analyse historical share price data constituted the provision of advice.
Again, we can see that this approach will in some cases lead to multiple regulation, and in the long term needs to be amended.