Participation in virtual communities is said to be governed by the contractual documents written by the proprietors and 'agreed' to by the participants. In a system where governance is controlled by contract, then the limits of contract are essentially constitutional principles. Where, then, can we find the limits that we will impose on contractual governance?

This question marks the beginning of the next chapter of my PhD thesis. I am still working my way through these concepts, but my starting point is Brian Fitzgerald's argument that

[t]raditionally, constitutionalism (which means the regulation of power) has focused on regulating or limiting the vertical exercise of government or public power over the citizen. On the other hand, the horizontal exercise of power between citizens has occurred in the private sphere and has been rarely analyzed in terms of power or constitutionalism, although the (largely common) law has played a mediating role.”¹⁾

Fitzgerald concludes that “[p]ower relations in the private sphere […] are fundamental constitutional issues that should be informed by fundamental constitutional principles”.²⁾

Coming back to the question of interpretation and enforcement of standard form contracts, Fitzgerald's argument echoes the point made by Sir Anthony Mason and S J Gageler in a 1987 article in P D Finn's collection Essays on Contract, where the authors argued that the limits of contract were fundamentally important questions of public policy:

The role of public policy in the formulation and application of contract rules has also tended to be understated. At root, public policy is inherent in the notion of legal adjudication. A court order for the enforcement of a contract does not simply allow the parties to pursue their own freely chosen course of conduct. It brings the full power of the state to bear against one party in the service of another. When and how this should be done are necessarily important questions of public policy.³⁾

Margaret Jane Radin argues that the rise in contractual governance has led to the public law of the state being replaced by the private law of powerful corporations.⁴⁾ In virtual communities, this is largely true; as virtual communities become more important as the places where individuals live their lives, their lives are essentially governed by the terms of the proprietors of those platforms. In these circumstances, it may be appropriate to impose limits on the exercise of power by those proprietors in line with our fundamental constitutional values.

Radin and Wagner, in a separate article, suggest that there is an urgent question of legitimacy in the trend towards private governance:

The ideal of “private ordering” in cyberspace excites many people. Because the commercial environment is now global, but legal sovereignties are still territorial, it is unclear how (or if) cyberspace will be structured and governed. In these circumstances, because of the continued force of laissez-faire ideology, some people hope to finesse the question of territorial jurisdiction – sovereignty – with global “private ordering.” If private ordering means legally enforceable contract, this hope is chimerical. The hope flourishes because the legal realist insight has been suppressed. But once the legal realist insight is revived, we can see there is an urgent question of how the institutions of contract and property in cyberspace will be shaped and patrolled. There is an urgent question of sovereignty: who will do the shaping and patrolling?⁵⁾

Radin and Wagner go on to suggest that the limitations we require in governance “such as duress, fraud, and due process – have to come from somewhere and be enforced somehow. By now we know (or should know) that they do not come from self-enforcing natural law.”⁶⁾

Radin and Wagner are concerned about the increasing lack of legitimacy in relationships governed by private contract, and the corresponding risk to vulnerable citizens.1 Essentially, the concern seems to be that governance by private institutions, which increasingly resembles law, is not subject to the rule of law. Radin and Wagner conclude that

Internet proponents' best hope is for a process of evolution toward a regime in which there is enough harmony about the minimal standards of background due process and public policy limits so that all players, on and off the Internet, will understand and accept them. If such harmony could emerge, it would allow stable self-enforcement on the Internet, in the shadow of possible appeal to territorial sovereigns. We certainly have not reached such harmony yet. The needed background baseline of due process and public policy limits has a better chance of developing if participants do not obscure the understanding that contractual ordering cannot exist without it.⁷⁾

If we believe this argument, it becomes important to determine where the 'baseline of due process and public policy limits' comes from. To an extent, I think it comes partly from the rule of law. Lon Fuller, in the Morality of Law, provided eight principles that he believed were necessary for a society aspiring to the rule of law, including that the rules be clear and consistently enforced.

One of the greatest problems I see with governance of virtual communities is that the rules are not clear and consistent – they fail the procedural requirements for a morally legitimate system. I don't think that this means that virtual communities necessarily ought to be held to the same standards as legal systems – I am always reminded of Richard Bartle's warning that we need to allow completely arbitrary games. But for some communities, we may expect some degree of procedural fairness, of clarity and consistency. Justice Heydon described the rule of law as tightly linked with preventing private coercion – “as a bar to untrammelled discretionary power”:

Under the ‘rule of law’ as the expression is used below, it is not possible, at least without explicit parliamentary legislation to the contrary, for most important material or personal interests of one citizen to be radically damaged against that citizen’s wishes by another citizen, a corporation, or an arm of government unless some independent person holds that that is right. The rule of law prevents citizens being exposed to the uncontrolled decisions of others in conflict with them. Powerful citizens are not permitted to use self-help against other citizens so far as their arbitrary might permits. […] The rule of law operates as a bar to untrammelled discretionary power. It does so by introducing a third factor to temper the exposure of particular citizens to the unrestrained sense of self-interest or partisan duty of other citizens or institutions — an independent arbiter not affected by self-interest or partisan duty, applying a set of principles, rules and procedures having objective existence and operating in paramountcy to any other organ of State and to any other source of power, and possessing a measure of independence from the wrath of disgruntled governments or other groups. These independent arbiters are usually judges. The rule of law preserves for citizens an area of liberty in which they can live their lives free from the raw and direct application of power. It creates a framework within which the creative aspects of human life can thrive. The rule of law dilutes power; it diffuses it; and yet it also makes it more efficient.

[…]

The more ineffective a State’s laws are against private coercion or anarchy or government power, the less they can be described as representing the rule of law.⁸⁾

I think that this is correct. I agree with Radin and Wagner that the diverse rulesets of virtual communities can be empowering and useful if they are backed by limitations based upon our best judgments as to when we need to act to prevent harm to participants. I think that, at least to an extent, and at least for some communities, those limitations can be inspired by our understanding of what is required by the rule of law, in order to ensure that participants are not exploited by stronger proprietors.

I think it is very interesting that sites like Facebook are now finding themselves constrained in the imposition of terms of service by the will of their subscribers. I think that this is heartening – it certainly shows that participants do have power in aggregate. I don't think that this, however, proves the cyber-libertarian assumption that regulation is unnecessary because proprietors will be forced to be responsive to the demands of their users or that the users will be able to find other, more suitable communities. There will always be cases where the community is not sufficiently offended by the terms to force a policy change – particularly when terms are only enforced against minority groups or weaker individuals, for example. For these cases, for legitimate governance, we need some limits. I'm not sure that our conceptions of the rule of law is the best source for those limits, as it is obviously not directly transposable, but it provides an interesting starting point. What do you think?