Copyright by LexisNexis Malaysia Sdn Bhd.

Reproduced with permission of LexisNexis Malaysia Sdn Bhd.

By Richard WeeFatin Ismail and Kimberly Chan

INTRODUCTION

We have previously discussed the potential legal issues that could arise from the new digital phenomenon, theMetaverse, in an earlier article. This article shall focus mainly on legal jurisdiction in the Metaverse.

WHAT EXACTLY IS THE METAVERSE?

A brief explanation of the Metaverse is that it is a form of cyberspace — a network of multiple three-dimensional virtual spaces or worlds, linked together to form a virtual universe where users from all four corners of the globe can enter and navigate through it. Users can also interact with others with the use of digital avatars. The Metaverse is persistent and will continue to exist even when users are not logged in through their devices.

LEGAL JURISDICTION IN THE METAVERSE

One major issue to consider as the Metaverse gains popularity would be the issue of governance and legal jurisdiction that users of the Metaverse should submit to.

Being so widespread and accessible by users across the globe, if any legal issues arise within the Metaverse, what country’s laws would prevail? Which courts’ jurisdiction would the matter fall within?

Metaverse, although this would be challenging to implement. More often than not, companies would innovate and only deal with the legal issues once they arise.

Classic international law has provided for six traditional bases of prescriptive jurisdiction: territorial, nationality (also known as active personality), passive personality, effects, protective and universal.

However, our discussion on legal jurisdiction and governance of the Metaverse will be two pronged and focus mainly on the law governing simulation and territorial jurisdiction.

(1) Law governing simulation

Law governing simulation is fairly straight-forward and simple. Essentially, there would be real world laws that apply to the Metaverse. Users of the Metaverse would have to agree to these ‘terms of use’ for lack of a better albeit simpler term.

These ‘terms of use’ usually manifest in the form of end-user licence agreements (‘EULAs’) which are contracts between the users of the Metaverse and the simulation provider. Think of those lengthy terms of use that we scroll through and simply agree to without reading.

The main issue here is, that terms in EULAs can be one sided as there is a severe lack of bargaining power when the user enters into this contract with the simulation provider. You, either agree to the terms and are allowed access to the Metaverse, or disagree and are totally denied access. The advantage however, is that this would make governance over the Metaverse much easier.

Everyone that has access to the Metaverse, has expressly agreed to the terms and conditions of the use of the Metaverse. This makes it easier for the simulation provider to take action against those that commit any offence or breach any terms of the EULA. The user can then be suspended from accessing the Metaverse.

(2) Territorial jurisdiction

Territorial jurisdiction, as its name suggests, covers acts committed within the territorial area within a certain country. These states would have the jurisdiction to deal with any matters that arise within their country. For instance, any legal issue that arises in the Metaverse, but the offenders are physically located in Malaysia, then the Malaysian courts would have the jurisdiction to deal with the matter.

Another principle under territorial jurisdiction is the nationality principle. This covers any legal issues that are committed by nationals of that country, even if they are not physically situated in said country. The passive personality principle however operates in the opposite. Any legal issues that arise against any national of a certain country can be dealt with by that country’s legal jurisdiction. The country can then adopt laws that can be applied to the conduct of any foreign national. The effects doctrine has been developed historically by the United States courts and provides for jurisdiction over acts of foreign nationals committed abroad but having effects in the United States. This is interesting as nationals of any country can be protected even though they are not physically located within the physical borders of the country.

CONCLUSION

As the Metaverse is taking the world by storm, the legal issues surrounding the legal jurisdiction in the Metaverse should be tackled prior to its further development. Ideally, it would be great to have a single authoritative body governing the Metaverse however, we do recognise that this would be extremely challenging to implement among inter-continental governing bodies. Therefore, Metaverse users should be prepared for the legal issues that could arise ahead of them.

Published on 12 August 2022

PHOTO BY STEVE JOHNSON ON UNSPLASH

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