How does a company, with a multinational presence, establish the correct Jurisdiction to work within?

Question

For the purpose of this question, let's assume an eCommerce company has the following profile:

• Registration Location: London;
• Distribution and Manufacturing: London;
• Domain Name: www.example.co.uk;
• Physical Location of Server: UK;
• Orders: This domain only accepts orders from within the UK.

Referring to the above profile, it would be fairly obvious that this eCommerce company would be required to abide by the Laws and Legislation set within the Jurisdiction of England and Wales.

Expansion

Then let's assume this same company decides to expand and reach out to an Australian audience for example. To do this, the company sets up a new www.example.au domain to accept orders from Australia.

What Jurisdiction would this Australian website fall under? Would it be required to follow the Laws and Legislation of England and Wales, since it is operating from such a location or would it need to be mindful of the Laws and Legislation of where the site visitor interacted with the website?

Further Complications

Assuming there is a simple answer to the above, what would happen if the company also had a www.example.com domain that would accept orders from the rest of the World? Again, this 'Rest of the World' domain being operated from the UK.

Let's make things a little more complicated. Keeping with the above scenario but this time, the company opens up an Office in Australia that deals with Customer Orders, Enquiries and manages the Manufacturing & Shipping operations. Same company just another Office in a different Geographical location. How would this impact matters concerning Jurisdiction?

My Assumptions

I have come across a lot of discussions online, often conflicting, but would appreciate feedback on my assumptions on such matters.

Although www.example.au is a domain that accepts orders from outside the UK, it is still run and operated by a UK Registered Company. Therefore, such a website should be Governed by the Jurisdiction of England and Wales. The company should make this clear in the website' Terms of Use, where the Terms of Use should be accepted by potential customers prior to any orders being submitted from Australia to the UK for processing; regardless of the ggTLD (.co.uk, .au etc) of the domain.

In the event that the Company is registered in the UK but the servers are physically located in Australia, I am assuming the company could not be penalised by the Jurisdiction of Australia but Australian authorities could request the server to be shut down in Australia if they feel any content or interactions etc do not comply with their Laws and Legislation. This then basically saying 'If you want to operate here, you will need to register and comply with our laws'.

Moving on to the issue of having an Office/Distribution Warehouse in Australia ...

Would I be right in thinking that the UK based Company would need to register the Offices/Distribution Warehouse in Australia? Effectively creating a separate Australian Company? Therefore, this Company being required to comply with the Laws and Legislation within Australia?

My thoughts being that if the company was not registered as a company in Australia, issues revolving employment, tax etc would arise not to mention relevant Insurances.

In the event that the company wanted to set its UK Registered Company as the 'Headquarters', they would need to set up a Contract between the UK and Australian Company. This would bring with it the issue of Jurisdiction between the countries but that is a whole other question.

I am getting a lot of conflicting information to date, including from Legal advisors, but I would appreciate any feedback on the experiences of others and/or any pointers into the direction I should per sue to establish facts on matters of Jurisdiction.

Answer 1

A company (or any other person) must comply with all relevant law

This is no different from the problem faced by a single jurisdiction operation (like your local coffee shop): what laws apply to me? It’s just multiplied by the number of jurisdictions they operate across: what laws apply to me here?

Your hypothetical UK company must copy with applicable UK law.

And applicable Australian law. And applicable French law. And applicable US law. And applicable Bangladeshi law. And applicable Brazilian law. And ...

Now, unless the company is engaging with those countries (and states/provinces) in some way, most of their law will not be applicable. While your UK company is only servicing UK customers, only employing in the UK and only sourcing goods and services from UK suppliers, they will only have to deal with UK law - which is actually 3 jurisdictions with different laws: England and Wales, Scotland, and Northern Ireland.

If they start dealing with Australian customers then Australian law becomes applicable. In their contract with their customers, they can specify that the law applicable to the contract will be the law of England and Wales. Australian courts will usually respect that; if an Australian brings a case then, while it may be heard in a New South Wales court, the law applied will be that of England and Wales.

However, there are some laws that cannot be excluded by contract - usually consumer protection laws. In this particular situation, Australian Consumer Law applies to all transactions in Australia. For example, the US company Valve (who owns the game distribution platform Steam) misled Australian consumers with an illegal "no refund" policy and was fined over $3 million.

Further, a contract only applies to the contracting parties. If your UK company negligently supplies a defective product which injures a third-party, that third-party can sue under the applicable law - usually the law where they were injured.

Taxation law also cannot be contracted out of. Your UK company would have to collect Australian Goods and Services Tax (GST) from their Australian customers and remit it to the Australian Tax Office. If they employ people in Australia they have to collect and remit their income tax. Australia doesn't have withholding taxes for foreign companies, but some countries like Malaysia do. Fortunately, Australia has a national based tax system - good luck in the USA where each state sets its own taxes.

Multi-national companies have teams of lawyers and accountants to deal with this.