Insights The rules of the game – Jurisdiction in the metaverse

Cross-border disputes are complicated enough in the real world: determining which rules take priority and which courts can exercise jurisdiction requires a navigation of myriad inter-national conventions and arcane national law. The prospect of those disputes arising in a virtual, borderless world, occupied by users from across the globe has the potential to bring a whole new level of complexity – one which current legal frameworks may be ill-equipped to resolve. Which laws will apply? Whose courts will have jurisdiction to hear any dispute? And how do we resolve any conflict between competing legal systems?

While the concept of the metaverse may be new, this isn’t the first time a technological development has prompted these sorts of questions. The same was asked when the internet was first introduced, and with it the formation of legal relationships moving into the virtual world. Just as then, there’s no reason to suggest that the introduction of the metaverse means we are bound to enter an entirely new legal landscape complete with “meta-laws” and “meta-courts”. The law has proved itself particularly nimble when encountering the brave new world of technology.

Ultimately, the only way to know if current laws will be able coherently to map onto the metaverse is to consider the types of interactions that will take place upon the platform.

First, there’s the relationship between the platform provider and its user. Analytically, would entering the metaverse be all that different from logging into existing social media platforms? After all, the metaverse is, like other platforms, an environment created and controlled by the provider of the platform and populated by fellow users. And, perhaps crucially, to gain entry, you will have to agree to the platform’s terms of service. There will no doubt be a great deal of argument about how permissive these terms of service should be – we’re talking about one provider potentially being the gatekeeper for an entire world in virtual form – but the question of resolving disputes between platform and user will be relatively straightforward: it will be whatever is stated in the terms of service. If you don’t like the terms of service, don’t enter.

Second, there’s the relationship between those setting up their virtual ‘stalls’ and the users, with whom they seek to transact. These are the virtual shops, concert halls, and sports arenas. Take, for example, a purchase made in the metaverse from a virtual shop – is this situation so outside the realms of what our laws currently encounter that we need to go back to the drawing board? Or, in fact, is it broadly similar to how we transact online at the moment? Online shops will have their terms and conditions setting out the governing law and jurisdiction should any problems arise, and the user transacts on those terms. Companies will have to be careful to ensure that their choice of law and jurisdiction clauses leave no room for doubt and be alert to the applicability of local laws which may intervene in such areas for example on the grounds of consumer protection. And by “local” we mean the place in which the user is physically located: it’s easy to get carried away with the idea that a metaverse user has no physical location such that current norms of international law have no application. Again, given the wealth of laws and conventions governing jurisdiction and choice of law, it’s hard to see states abandoning all of this in favour of an entirely new system simply because someone is virtually (but not physically) located somewhere else.

So far, so (relatively) straightforward. A third category, however, becomes more problematic.

Contractual relationships give rise to fewer difficulties: parties will be at liberty to choose the terms under which they contract. There may be problems of evidence and enforceability should any dispute arise (potentially meaning that the platform will have to become engaged) but otherwise the problems should not be beyond the capabilities of existing legal frameworks. Self-determination of jurisdiction should be encouraged.

If no agreement is reached as to the terms of a contract between the users, or a dispute arises that has nothing to do with contract law, problems begin to emerge. Suppose, for example, a user is defamed in the metaverse. What country’s defamation laws apply? Where has the damage occurred? Suppose that defamation mutates into harassment. Is it criminal? According to whose law? To whom should the potential victim turn? The answer cannot be that these situations can all be dealt with by the platform’s terms of service, demanding that people comply or else are removed from the platform. “meta-justice” enforced by “meta-police” is not the answer.

Instead, a choice will have to be made. Either a whole new set of international laws and conventions will have to be created to govern these new situations, something that would require unprecedented levels of international consensus (leave aside an appetite to engage in these questions in the first place). Or “meta-torts” and “meta-crimes” will need to be analysed in similar terms to how the law currently addresses online activity – we do not have conceptual difficulties dealing with harassment and defamation in the online world. Yes, existing legal concepts of “nationality and “territory” might at times be an awkward fit with the language and ideas underpinning the metaverse, but if the alternative is years of international deliberation during which a wild west is allowed to develop, it’s likely that many would prefer to stick with what they know.

It is a feature of emerging technologies that legislators are continually having to play catch-up to ensure that adequate legal protections are place. This is right and proper. The law cannot – and should not – seek to outrun the pace of technological advance. To do so would have a chilling and stifling impact on the progress of technology. Critically, however, it is incumbent on lawyers and legislators to ensure that the delta between technology innovation and the relevant applicable legal regime does not grow too wide.

This requires early engagement with nascent technologies – such as the metaverse – to understand and frame the legal questions in a transparent and correct manner. In this regard, the recent project of the UK Law Commission, “Digital assets: which law, which court?” is an important and welcomed part of the debate. It also calls for a dexterity of legal thought and reasoning to allow existing legal concepts to evolve to support the development of new technologies for wider, societal benefit.

Cross-border disputes have always posed tricky questions of jurisdiction. Whilst the metaverse has the potential to be a game changer, we should not overcomplicate the jurisdictional rules of the game.