Private Ordering

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Private Ordering Principles, February 2004

PRINCIPLE OF PRIVATE ORDERING

This document was written by Dr. ichael !irnhac", o# the $ai#a %enter o# &aw '

Technology at the Faculty o# &aw, $ai#a (niversity, #or the wor"ing group on private

ordering, o# the )sraeli )nternet *ssociation +)O%-)&.

The document re#lects the views o# the members o# the wor"ing group/ r. oni !ass, Dr.

*mir 1tioni, *dv. eyTal 3reiver-chwart, s. haula $aitner, *dv. $aim avia, r.

Daniel osenne, r. ehoshua aor.

* comment #or the non-)sraeli reader/

The following document is the initial phase of the private initiative of the Israeli

branch of ISOC. Other than administering the .il domain names, ISOC is involved in

several public activities, such as bridging the digital divide, assisting people with

disabilities to access the Internet etc.

The Israeli legal system is one of common law, and is heavily influenced by US law.

Thus far, no specific Internet laws have been enacted (i.e., no C!, CO"!, CI"!

laws, and no #C!, CO""! ones either$. %owever, several Israeli courts had little

difficulty declaring that the law applies to the digital environment, and turned to the

&uestion of how to enforce such laws. In this course, there is an emerging body of law

regarding various issues, such as IS" liability, copyright, 'urisdiction etc.

!t the same time, there are attempts by private entities to create codes of conduct

for various activities. #ost notably, is the Israeli "ress Council)s (a private, non*

statutory entity$ decision to impose its Code of +thics on to Online ewspapers, a

term deliberately left undefined, even if these do not accept the Council)s authority todo so.

On this bac-ground, ISOC attempted to create a set of general principles for private

ordering. It was made public in ebruary /001, and a call for comments was

simultaneously issued (http233www.isoc.org.il$.

The members of the forum which discussed these principles are from various fields2

!ass and $aitner are members of ISOC)s 4oard5 1tioni is the chairman and 3reiver-chwart is ISOC)s legal advisor. avia is a prominent attorney who speciali6es in Internet

law5 osenne is a former general director of the #inistry of Communications, and aor is the

former C+O of I4#*Israel. !irnhac" teaches law at the University of %aifa, and is the co*director of the %aifa Center of 7aw 8 Technology.

** #ichael 4irnhac-, #arch /001.

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http://www.isoc.org.il/http://www.isoc.org.il/


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PRINCIPLE OF PRIVATE ORDERING

Executive Summary

Private Ordering is the process of setting up of social norms by parties

involved in the regulated activity (in some manner$, and not by the State.

Private Ordering aims to achieve public goals, such as efficiency, enhancingthe mar-et, and protecting rights.

Private Ordering has the advantage over public ordering in that it is set by

active players in the mar-et, including citi6ens and consumers, and in that in

some cases, it can preempt intrusive and populist legislation. Thus, Private

Ordering may protect human rights.

Private Ordering is especially suitable for the dynamic digital environment, in

which most activities relate to information. Private Ordering reduces the

constraints imposed on freedom of speech, while protecting privacy, and

fulfilling the democratic potential of a distributed networ-.

Private Ordering must adhere to the principle of voluntary acceptance. It can

be imposed only on those who have agreed to subordinate his or her activity

thereto. on*voluntary imposition of Private Ordering will bring about the

failure of the entire Private Ordering s scheme.

Private Ordering aims to e:press a wide consensus, and hence its details

should be agreed upon in an open, public, transparent process, in which as

many relevant players as possible participate, including commercial parties

and citi6ens3consumers. The procedures of Private Ordering should includemechanisms to prevent abuse, and mechanisms to identify consent among

participants.

Private Ordering should be composed with a full awareness of the possibilities

created by technology, its positive as well as negative features, and only after a

clear identification of the goal to be achieved. The social and technological

conte:t of each sector of the activity to be regulated should be pre*e:amined,

and there should be an attempt to identify possible negative conse&uences in

advance. Special attention should be given to users) rights, such as their

freedom of choice, free speech rights, the freedom to access free information,

use it and share it with others, protection of privacy and the li-e.

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A. General Principles9. De#inition2 Private Ordering is the process of setting of social norms by

parties involved in the regulated activity (in some manner$, and not by the

State. ;egulation, whether public ordering or private ordering, aims to achieve

certain public goals, such as efficiency, enhancing the mar-et, and protection

of human rights.

/. Public Ordering 2 ;egulation which stems from the State is public ordering ,

since its authority derives from the public, which acts through official state

organs, such as the legislature, the e:ecutive and the 'udiciary.


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B. Private Ordering in a Digital Environment 9. The digital environment has several uni&ue characteristics, which differentiate

it from other mar-ets. #ost of these features strengthen the preference of

Private Ordering over public ordering.

/. The )mportance o# Public Ordering 2 It should be emphasi6ed that "ublicOrdering is not wrong per se and is not irrelevant. On the contrary. In many

fields of human activity, the most effective way to achieve a desired public

goal (economic, social or other$ is still legislation or another form of public

ordering. urthermore, in some circumstances, Private Ordering is not the best

approach. It may suffer from various wea-nesses.

. )nterests and $uman ights2 Social interests, worthy of protection, are also

relevant in the intermediate period, in which the mar-ets evolve. These

include, but are not limited to, free speech, privacy, consumer protection,

protection of minors etc. urthermore, even according to supporters of the free

mar-et, there might be mar-et failures which 'ustify interference, such as anti*

competitive behavior. Therefore, the social interests at sta-e should be

identified and protected.

?. De#ining the 3oal o# egulation2 The above statements provide us with some

instructions (guidelines$ as to the content of the regulation (whether public or

private ordering$2 clear identification of the goal or interest to be protected, is

of supreme importance. The means should be tailored to fit the goal. There is

an advantage for technology*neutral rules, since the alternate$ choice would

soon render the rules irrelevant. In other words, there is an advantage to state

the regulation as general principles or standards, rather than as particular rules.

There is of course a price of ambiguity in such a choice.

@. )n#ormation2 The main resource in the digital environment is information.

Information is the core of the Internet in at least two ways. irstly, the flow of information is essential for the successful functioning of the mar-et, and

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especially of e*commerce. The transparency of information minimi6es

situations of abuse of power and enables greater competition. Secondly, much

of the online activity is that of transferring information2 browsing, uploading

and downloading files, sharing files of various sorts, e*mail etc.

A. The 1conomic and Democratic 7alue o# )n#ormation2 The meaning of the previous section is that almost any online activity affects the functioning of the

mar-et. Supporters of the free mar-et are in favor of the free flow of

information. !nother central aspect, is that almost any communicative activity,

i.e., transfer of information, raises fundamental constitutional issues.

Transferring information is a matter of freedom of speech. ree speech is a

basic human right in liberal democracies. The principle of free speech has

many aspects, and it is meant to assure, inter alia, the right of every person to

e:press him3herself freely (where the e:pression can be literal, te:tual or in

the form of writing code$, the right to access information, and the right to

-now about the government)s actions (i.e., OI!$.

90. The &imits o# Free peech2 It is important to recall that the e:istence of a

principle of free speech, and the very e:istence of speech, does not imply that

the activity cannot be regulated. reedom of speech, as the Supreme Court

dictated, is not absolute Boriginally, this was written in regard to the Israeli

Supreme Court, but applies to many other courts in liberal democracies,

including the US * #4. The e:act ways in which these limitations can survive

scrutiny was carved in the case law, and need not be rehearsed here. %owever,

the very e:istence of speech in the regulated arena re&uires e:tra caution in

any -ind and form of regulation. The speech at sta-e should first be

recogni6ed, a tas- which is not always that easy.9

99. The )mportance o# Free peech2 Civil libertarians) observation of the presence

of speech in the digital environment, and hence of the principle of free speech

is yet another reason to -eep the State out of the digital sphere. Dhen the State

regulates activities that also have speech elements, this is often viewed as

censorship. %ere lies yet another advantage of Private Ordering 2 since it does

not stem from the State, there is no governmental abridgment of free speech.

9/. The Threats to Free peech2 It is crucial to reali6e that threats to free speech

stem not only from the State, but from the private sector as well. This threat

has been identified in close conte:ts and addressed. 7imitations on cross*ownerships of media outlets serve as an e:ample. The concern here is that

mar-et powers will harm free speech. The advantage of Private Ordering is

that it reflects a wide consensus of the various players. %ence, the importance

of voluntary acceptance of Private Ordering (see in#ra, section .9$, and

hence we should be aware of the notion of non*governmental harm to free

speech. This latter insight should guide the process of accepting particular

Private Ordering (see in#ra, section ./$.

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See e.g., the #C!, which limits the development of certain -inds of technology (anti*circumvention$. If we accept the argument that code is speech, than the #C! is a limitation of speech.

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v. &eading the Process2 In any field chosen as a candidate for Private

Ordering , a public figure or figures should be chosen to lead the

process, by setting the agenda, preventing abuse, encouraging

participation, and setting the mechanism of consent. Private

Ordering suffers a wea-ness at this point, as without public

legitimacy for the leaders of each process, it is doomed to fail before it begins.


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v. From Private Ordering to Public Ordering 2 It should be

remembered that it often happens that an ethical rule becomes a

legal rule. Courts occasionally adopt the ethical standard as an

indication for the social norm in the relevant field (such as in

the case of interpreting the concepts of negligence, public

good, bona fide and the li-e$. !ccordingly, one should becareful when creating Private Ordering , and especially those

who wish to thwart governmental interference.

=. The *ptness o# Private Ordering to the egulated Field or *ctivity2 The

utmost fle:ibility should be maintained in regulating each field or activity.

+ach topic has its uni&ue considerations, which re&uire specific attention.

i. tandard or ules2 Standards enable fle:ibility and easy

adaptation to changing circumstances, but suffer from

vagueness. In some cases specific, accurate rules should be

adopted, even though they might be infle:ible.

ii. *chieving the 3oals2 ifferent topics re&uire different means to

achieve the goals. In some cases an investigation will suffice, in

others a public condemnation or another sanction will suffice.

There is no room for a singular method of achieving the goals.

iii. eals2> One of the means to achieve the goals of Private

Ordering can be the creation of a seal program. The seal should

be simple (and can also serve as an image lin- to another web

site$. The seal will indicate that the web site chose to sub'ect

itself to a particular set of the Private Ordering scheme. Thus

for e:ample, in the case of accessibility to people with

disabilities2 a web site which follows the rules of Private

Ordering in this field will be able to present the seal. The seal is

a simple manner to address all parties) interests2 the site will be

a sign of e:cellence5 able to users will be able to easily identify

the web site)s policy. The seal also enables a relatively easy

way to e:amine whether the site fulfills its commitment to the

Private Ordering scheme. ! site which does not fulfill its

commitment will not be allowed to present the seal, and

trademar- law will provide enforcement. The seal will belimited to the particular rules of Private Ordering , and will not

be an approval of the content or of the service provided.

iv. The particular rules of Private Ordering in each regulated field

should include rules as to the relationship between the body

that initiates the rules and the parties that accept them

voluntarily. These should include, inter alia, immunity of the

private regulatory body, ways of 'oining and e:iting the

scheme, details regarding a seal where it is used etc.

> This method is roughly based on the privacy seal programs in use in the US, such as Trust+. F #4.

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