Territoriality and the Governance of Cyberspace

The issue of how to regulate transactions in cyberspace is central to the future of international electronic commerce. This paper is based on four assumptions: (1) the Internet and e-commerce cannot exist apart from the social order; (2) attempts to regulate and tax activities on the Internet through existing territorial jurisdiction will be problematic; (3) cyberspace and e-commerce are inherently international, thus any successful governance regime will involve significant and substantial international cooperation; and (4) effective governance of cyberspace will require public-private sector cooperation, i.e., hybrid or integrative schemes combining self-regulation with government oversight and enforcement capabilities. The paper discusses the first three of these assumptions, then explores taxation in more detail as a case study that typifies the issues raised by e-commerce in a global context. Next, I develop a framework for understanding the governance of cyberspace as an evolving process involving growing formalization and an increase in the number of actors involved over time. The paper concludes with a discussion of several issues that require further research.