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A. General Principles
1. Definition: Private Ordering is the process of setting of social norms by
parties involved in the regulated activity (in some manner), and not by the
State. Regulation, whether public ordering or private ordering, aims to achieve
certain public goals, such as efficiency, enhancing the market, and protection
of human rights.
2. Public Ordering: Regulation which stems from the State is public ordering,
since its authority derives from the public, which acts through official state
organs, such as the legislature, the executive and the judiciary.
3. Types of Public Ordering: Public Ordering can be in the form of
Parliamentary legislation, executive regulations, executive orders, and judicial
precedents. The common feature is that the State sets the legal norm, and
usually backs it with criminal sanctions or it creates a system of civil
enforcement.
4. Private Ordering vs. Public Ordering: Private Ordering differs from Public
Ordering in that it develops in the form of "bottom-up", and is not imposed in
a "top-down" manner. Private Ordering is an expression of the Civil Society,
therefore, its source of legitimacy does not stem from the government, and can
be viable only when the subordinated players so agree.
5. The Advantages of Private Ordering over Legislation: One of the main
advantages of Private Ordering is that it can better represent and reflect the
needs of the relevant players, their difficulties and possible avenues of
response than legislation. Furthermore, Private Ordering avoids many of the
failures which often characterizes law making in democratic states, like the
excessive interference of interest groups (i.e., public choice theory), political
compromises and the like. However, Private Ordering is subject to other
constraints (see infra, section C.)
6. Limiting Governmental Involvement in the Market: Another advantage of
Private Ordering is that it minimizes the State's interference in the regulated
field. This fact is considered an advantage by two main groups: One group is
the Libertarians, who support the free market and wish to limit the State's
interference with the market only to situations of market failure. The other
group is that of Civil Libertarians, who believe that State interference often
violates human rights. According to the latter view, human rights protect the
minority from the majority, where the majority often operates through the
State. Hence, public ordering should be minimized.
7. The Flexibility of Private Ordering: Another advantage of Private Ordering is
that it is much more flexible than Public Ordering, and can be changed in a
relatively easy manner. This feature is especially crucial in the digital
environment (see infra, section B.4).
8. A Conceptual Comment: This document applies the term Private Ordering,
rather than Civil Ordering or Self-Help, since these alternative terms have
different legal connotations.
3
See e.g., the DMCA, which limits the development of certain kinds of technology (anticircumvention). If we accept the argument that code is speech, than the DMCA is a limitation of
speech.
13. Code is Law: Behavior and social norms in the digital environment are
determined not only by various legal rules, but by technology itself. This is the
argument that has gained much attention as phrased by Professor Lawrence
Lessig: that Code is Law. The argument is that our behavioral leeway is often
marked by the opportunities embedded in technology, both the positive and the
negative, whether intended by the code designer or not. The practical
implication of this insight is that while designing law (either Public Ordering
or Private Ordering) technology should be acknowledged.
14. Law and Technology: Experience in the past decade teaches that there is a
constant dialogue between technology and law. Sometimes the technology fills
a legal lacuna. This is how most of the Net's components evolved. In some
cases, regulation responds to a specific technology,2 and in other cases,
technology responds to the legal rule either by attempting to bypass 3 or assist
it.4
be intrusive no less than public ordering, and abridge free speech no less than
governmental regulation.
There is no simple solution to this difficulty. It seems that the solution is to
articulate the best possible Private Ordering scheme, which will reflect as
wide a consensus as possible, that reflects the interests of all participants,
while protecting the rights of others and observing due procedures.
ii.
iii.
iv.
Antitrust law might raise additional questions, regarding the initial decision to create Private
Ordering. We do not address these issues here.
v.
3. Choice of Topics for Private Ordering: Not any field is suitable for Private
Ordering. When choosing the fields to be regulated by Private Ordering, the
current legal situation should be taken into account (see infra, section D.4), the
ripeness of the relevant market and the stage of technological development. As
a preliminary stage, technology should be examined, to see whether there is
any point to regulation. For example, the use of some technologies is global
and universal, and other technologies are more local "by nature." In addition,
the goal of the regulation should be clearly identified. The "race" to regulate
too soon should be avoided. Such regulation will cause more harm than good.
Furthermore, the various interests and rights which might be affected should
be surveyed, especially that of free speech.
4. The relationship between Private Ordering and Public Ordering: In any field,
prior to regulation, the current legal situation should be examined. The
interrelationship between Private Ordering and Public Ordering is complex.
For example:
i. The law is silent. In some cases, the law does not specifically
address the relevant field. This silence should be investigated.
It might be a result of the innovative technology, but it might
also be the result of a deliberate choice, based on substantive
justifications, such as a wish to avoid interference with the
market. In the latter situation, it might be that regulation (of any
type) should be avoided.
ii. The Law regulates the field: In such a situation there is usually
no reason to add Private Ordering. There is no point in
repeating the principles and rules set by the law, and obviously,
a rule which contradicts the law will be void.
iii. Public Ordering and Enforcement Failures: Sometimes, the
field or activity at stake is regulated by the law, but for various
reasons it is not properly enforced (obsolete law, built-in
difficulties, budgetary constraints etc.) Privacy laws are a clear
example [at least in Israel MB]. In such situations, Private
Ordering can repeat Public Ordering.
iv. Supplementing Public Ordering: In some cases, Public
Ordering sets an inadequate level of behavior. Some issues of
Privacy protection or consumer protection serve as examples.
In such circumstances, Private Ordering can add to the Public
Ordering and supplement it.
This method is roughly based on the privacy seal programs in use in the US, such as TrustE. MB.