From the perspective of international law, the starting point in any legal evaluation of military computer network operations is the question of the regime applicable thereto. What all computer network operations have in common is their underlying technology, which in most cases will in one way or another utilise the public Internet, the technical background of which has been outlined above. Based on these findings, the intention is to analyse to what extent a legal regime has been developed that applies to conduct on the Internet.

Such a regime need not necessarily be introduced specifically for the Internet as from the outset it is clear that there is no such thing as an ‘International Convention on the Internet’. However, also in the case of the law of the sea or space law, both of which have more or less widely ratified treaty regimes and a considerable amount of established customary international law, the territorial sovereignty of States has even from the outset diminished the geographical scope of the area available for regulation. General international law therefore might already have carved out certain core elements of an Internet regime.

JURISDICTION IN CYBERSPACE

In order to be able to qualify the legality of computer network operations by States it must first be analysed in what way the jurisdiction of States is manifested in cyberspace as a fundamental feature of sovereignty. This is of particular concern as until now the question has not been settled comprehensively.

CYBERSPACE AS A JURISDICTION SUI GENERIS

Especially at the start of the Internet's spread in the 1990s, it was a widespread view that cyberspace constitutes a sphere sui generis, outside both of State authority and legal regulations. This view is exemplified by statements describing cyberspace as an intangible virtual world or ‘an abstract reality of ideas, information, and logic’. ‘Netiquette’ was widely claimed to be able to provide a high level of self-government for this space by the Internet users themselves. Others put forward propositions aimed at adopting an international framework for cyberspace including the establishment of a corresponding international organisation. This somewhat idealistic understanding of the Internet was nonetheless quickly recognised to be a myth as soon as Internet use spread beyond its beginnings as a military and academic undertaking and into everyday life.

INTRODUCTION

In relation to the history of warfare the codification of humanitarian law is still a rather new phenomenon. However, the sources of international humanitarian law reach far back into religion, philosophy or chivalry of many cultures, emphasising that humanitarian law is a common theme of all humankind. Although these instruments show that this body of law is highly codified, customary international law still plays a major role therein. This is emphasised by the fact that most of the major States recently participating in international armed conflicts have not ratified the Additional Protocol I to the Geneva Conventions of 1949, although it has otherwise gained a high ratification record of 170 States.

The applicability of humanitarian law – or ius in bello – is activated by the factual existence of an armed conflict, as stated in common Article 2 Geneva Conventions of 1949, which due to their ratification by practically all States are universally binding. In renunciation of the just-war theory, the ius ad bellum does not have an effect on the ius in bello. Both frameworks must rather be treated completely separately, providing for the full equality of both sides during an armed conflict, whatever the reason or justifications put forward for the outbreak. Actions taken in self-defence under recourse to Article 51 UN Charter can thus nevertheless still qualify as illegal under humanitarian law. Naturally, the question arises as to what scope the term ‘armed conflict’ has. This question was and still is highly disputed regarding traditional warfare. When it comes to conflicts solely confined to computer network operations exclusive of kinetic weapons, the existence of an armed conflict – cyber warfare – will be even more difficult to establish.

The term ‘armed conflict’ was intentionally substituted for the term ‘war’ in international instruments since the 1949 Geneva Conventions. This was done in order to prevent States from claiming that a forceful action would not qualify as a war in the sense until then accepted. The wider definition of armed conflict makes any situation formerly termed ‘war’ a fortiori qualify as an armed conflict. Oppenheim defined war as a ‘contention between two or more States through their armed forces, for the purpose of overpowering each other and imposing such conditions of peace as the victor pleases’.

The principle of neutrality obliges States not involved in an armed conflict to maintain impartiality and non-discrimination towards the conflict parties, while in turn ensuring that neutral States will kept out of the conflict. In the relations between belligerents and neutral States a courant normal – the continuance of the commercial relations existing before the armed conflict – shall be observed. As a result, the law applicable between the conflict parties and the neutral State is not that of armed conflict but of general international law, modified by certain regulations arising from the laws of neutrality. The neutral status of a State is considered to emerge ipso iure at the outbreak of armed conflict, whereas the degree of armed force necessary to reach the threshold of an armed conflict under the laws of neutrality remains disputed. The two 1907 Hague Conventions (V and XIII) relating to the rights and duties of neutrals in case of war on land and naval warfare, respectively, are the latest codifications on the topic, though further provisions dealing with neutrality are included in the more recent Geneva Conventions of 1949 and Additional Protocol I thereto. Given the small number of ratifications of the Hague Conventions and subsequent State practice, this hardly supports the thesis that the Conventions state current customary international law on the issue of neutrality. The essential aspects of the laws of neutrality have rather been developed through State practice, while under certain circumstances both the UN Charter and UN Security Council decisions may provide for modifications. Studies attempting to restate customary international law of naval and aerial warfare likewise include rules on neutrality in the respective frameworks, and the Tallinn Manual has also incorporated relevant rules. Obviously the Hague Conventions could not take into account the revolution in communications technology in the past decades and thus do not expressly include computer network operations. Their specific regulations are thus not directly applicable to CNAs, but as they depict particularities of the general principles of neutrality law they can be drawn upon in a subsidiary manner when addressing new forms of warfare. In any case it is undisputed that the duty to respect the integrity of neutral States during armed conflict exists for all kinds of warfare, hence also cyber warfare.

The legal appraisal of military computer network operations under international law serves several purposes, depending on the relevant regime applicable. When considering military operations a division will naturally be drawn between the regimes applicable during and outside of armed conflict. During armed conflict the legal qualification of military computer network operations is necessary in order to be able to fulfil humanitarian law obligations. Outside of armed conflict, under the ius ad bellum paradigm, the necessity lies in being able to justify the use of force directed against another State as a means of self-defence. More cardinally, the qualification of a computer network operation as an internationally wrongful act of a State invokes its responsibility. The first step in any claim to restitution and reparation or ultimately any justification of countermeasures will thus lie in the legal appraisal of the relevant operation.

In the following, a legal qualification of computer network operations will be undertaken in ascending order, dependent on the level of harm expected to be inflicted. This firstly concerns those operations that are taken outside of armed conflict and which do not reach the quality of armed force in the sense of the UN Charter, followed by those which do transgress this threshold and ultimately those taken during international armed conflict.

As with other forms of military operations, the possibility of computer network operations not amounting to armed force in the sense of the prohibition of Article 2(4) UN Charter is a given. After all, taking into consideration the aforementioned case studies it is conceivable that the lion's share of CNOs lies in this area, and will likely remain so also in the future. This does not mean that such activities will automatically be in conformity with international law. If CNOs for example qualify as coercion but not as armed force, the overall principle of non-intervention, of which the rules on the use of armed force are a specific application, might be affected. But depending on the relevant regimes or bilateral treaties applicable, the conduct of military operations in cyberspace may be identified as an unlawful act from many different angles.

THE MEDIUM OF COMPUTER NETWORK OPERATIONS: THE INTERNET

According to the premise that any application of law requires the knowledge of the circumstances of the case, a short introduction into the technical fundamentals both of the Internet and the methods of computer network operations is necessary as a first step in order to understand the legal challenges connected therewith.

As a second step the relevance of the Internet for post-industrial societies, the State and its armed forces will be identified in order to illustrate the possible objectives of military computer network operations.

THE INTERNET AS A NETWORK OF NETWORKS: TECHNICAL FUNDAMENTALS

While there exist numerous definitions of the term ‘Internet’, in the following reference shall be made to a definition stemming from the United States Code which describes it as:

From this definition becomes apparent one of the fundamental characteristics of the Internet, namely that it is not a physically genuine data network, but an overarching concept of a loose network, the construction of which is based on decentralisation and interconnectedness of smaller networks and singular host and server computer systems. A unified network architecture with generally accepted protocols enables the individual systems to communicate with each other. This communication is achieved by sending messages over the communication links, thereby using a standard network operating protocol suite – the most important protocols thereof being the Transmission Control Protocol and the Internet Protocol, or TCP/IP – which specifies the data formats and rules of transmission.

The Internet is a so-called packet-switched network, meaning that data to be transmitted via the Internet will be split into several packets – inter alia depending on the size of the data – which contain the actual data to be sent, the destination and source address and other information that supports its reliable transmission.

In between those computer network operations taken outside of armed conflict evaluated above, and those taken within, which will be examined later on, there remain those operations which may be qualified as legitimate uses of force under the ius ad bellum paradigm. This is the case for those operations that are taken within the ambit of the right of self-defence as enshrined in Article 51 UN Charter, which together with enforcement actions decided upon by the UN Security Council under Chapter VII UN Charter and the – now generally considered obsolete – enemy State clauses, form the only generally accepted exceptions to the prohibition of the use of force.

The following section will first determine the possibility of computer network operations giving rise to the right of self-defence by the victim State, followed by an evaluation of them as enforcement measures authorised by the UN Security Council under Chapter VII UN Charter.

THE RIGHT OF SELF-DEFENCE

The history of the right of self-defence has to be read together with the prohibition on the use of force. As the freedom of States to wage war was for a long time seen as an essential right, there was no need for a right of self-defence. It was only when the prohibition of war and later of the use of force was recognised, that a right of States to defend themselves against armed attacks in breach of the aforementioned principles was regarded as a necessary exception to the general prohibition on the use of force. In order to abide by the prohibition on the use of force, States needed to justify the use of forceful military countermeasures. But even before the need to legally justify the use of force in the 20th century, States used the argument of self-defence – either for political reasons, or in order to justify acts in situations short of war, such as in the Caroline Case. As the concept of self-defence has long been known under national laws, especially criminal law, international law could have recourse to a considerable foundation of the underlying principles developed in the national fora.

RESEARCH QUESTION

The last two decades have witnessed the spread of the Internet into manifold fields of daily life, both obvious and unnoticed. On the one hand the growing pervasiveness of networked information and communications technology has been a driving force of global economic growth and as a result Internet access is today seen as an enabling factor for human development. On the other hand the ability of any networked device to receive communications requests has introduced in many fields new vulnerabilities and possibilities for the exploitation of those vulnerabilities.

By adopting methods initially created by individual hackers, militaries now regard the Internet as a new domain of warfare and devices linked therewith as potential military objectives. The ability to also project military strength via the Internet has therefore become a goal for most militaries and led ever more States to establish special units within their armed forces tasked with defensive and offensive computer network operations.

From the outset it is clear that the relevant rules of international law applicable both during armed conflict and in peacetime could not anticipate the emergence of this novel form of operation. This holds true both for the Charter of the United Nations as well as for the most recent noteworthy codifications of humanitarian law – the 1977 Additional Protocols I and II to the Geneva Conventions of 1949. The main question of this study is therefore whether these frameworks also apply to military computer network operations and if so, whether they provide a sufficient basis to regulate and limit these operations in order to safeguard the rules’ protective purposes. It might even be the case that there have already been rules on this established under customary international law.

Both the literature and governmental statements or media reports reflect a high level of uncertainty when confronted with a legal appraisal of the novelty of computer network operations. Many share the view that the UN Charter is an outdated instrument unable to cope with this new type of military operation, claiming that these operations take place in a legal vacuum, and thereby calling for a complete ban thereof or at least the drafting of a specific cyber warfare convention.

This chapter looks at the process of legal change in the area of post-trading following the growth of intermediation in financial markets.

Section 1 analyses the meaning of the move from direct to indirect (book-entry) holdings, from the pattern of holding shares to the one of holding interests/entitlements in shares. It then discusses some of the most significant sources of legal risk arising from the evolution of financial practice by placing special emphasis on certain deficiencies and ambiguities in English law and argues for law reform. Given the interconnection between financial markets, it finds that it makes little sense to promote legal change merely at a national level and proposes that coordinated international action to address legal uncertainties is preferable.

Building on this, section 2 assesses the responses to legal uncertainty provided by two of the most important existing normative projects on the transfer of indirectly held securities: the Geneva Securities Convention and the EU Commission project on clearing and settlement. It is, in particular, by looking closely at the preparatory works and at certain issues of the final text of the Geneva Securities Convention that the pattern of growth of English law is examined and the process of hybridisation revealed.

Underlying Themes

At the heart of the law reform debate on post-trading is the ubiquitous commercial practice of intermediation, the fact that investors do not physically hold investment securities any more. Today in capital markets it is customary for securities1 to be held and circulated through fi nancial intermediaries and to employ local sub-custodians in cross-border transactions. Investors purchase and sell, and provide collateral to secured lenders on their holdings by means of book-entries made in the securities account kept with the intermediary. Intermediated securities are intangibles evidenced in electronic records of the intermediary, usually on an unallocated basis, commingled with those of other investors. This holding pattern is operationally convenient as it reduces administration and allows transfers of securities from one customer to another to be effected through the books of the intermediary. It also allows for the smooth performance of complex brokerage and investment management services even when dealing with large securities portfolios.

Chapter 2 has shown that the idea of hybridity originating in postcolonial theory is applicable outside the boundaries of modern colonialism. It is a powerful tool to understanding the pattern of cultural change both under hegemonic and non-hegemonic contact situations. It may be of great relevance for social sciences in general. This chapter, by way of analogy with postcolonial discourse, argues for its employment in law. The process of hybridisation, it claims, is a formidable conceptual means to explain some of the complexities of the pattern of legal change, to refine and provide contents to the observation of the reception of law.

Analogy

Introduction

As discussed above, the significance of legal borrowing as one of the most fertile sources of the evolution of law in the western world is undeniable. Historical evidence leads to the conclusion that legal change often follows from the stimulus of foreign models. Borrowing, however, is not peculiar to law. It reflects a general phenomenon of any sociocultural system. Merely observing the episodes of borrowing in itself explains little about the characteristics of the process of development of law. It is a superficial achievement. While it is ‘an important corrective to provincialism in the writing of legal history which, like most other forms of history, has been primarily national history’, it does not provide, among other things, a satisfactory explanation for the phenomenon of assimilation and the interaction between legal cultures.

In this light, the rigid perception of legal change suggested by the theorisation of ‘legal transplants’ is not helpful. It tends to oversimplify the pattern of reception and the relationship between legal paradigms. Hybridisation instead recognises the complexities of cross-cultural exchange and gives meaning to the consequences of borrowing. The interaction between cultures proceeds with the illusion of transferable forms and transparent knowledge, ‘but leads increasingly into resistant, opaque and dissonant exchanges. It is in this tension that a “third space” emerges which can affect forms of political change that go beyond antagonistic binarisms between rulers and ruled’.

Colonialism and the Process of Legal Borrowing

Building on this general understanding of the process of culture contact, this study finds an interesting analogy between the dynamics at the basis of colonialism and the movement of law from one country to another.

This Part of the book considers the first leg of the case study on comparative jurisprudence according to the plan outlined at the end of Part I. It examines the historical evolution of the mechanisms by which shares in companies are transferred and refines Watson's thesis on legal transplants with arguments on cultural interaction originating in the postcolonial debate. In doing so, it shows that, contrary to certain preconceptions that claim the joint stock company and its structural elements of association to be ‘Britain's most influential invention’, there is little that is inherently indigenous in its original form. The joint stock company emerged in the sixteenth century with the growth of British trade when certain commercial models borrowed from abroad were progressively integrated into the pre-existing national legal framework. It is argued below that this amounted to a process of hybridisation.

The analysis in this Part has two chapters, Chapters 4 and 5. They explain the mechanism of legal borrowing and the process of reception at the root of the current pattern for the transfer of registered shares and share warrants to bearer, respectively. The reason for the separate inquiry is dictated by the fact that, even if registered shares and share warrants to bearer have the same economic function as units of the corporate capital, they are distinct in terms of their legal nature, regulation and modes of circulation. While in the case of registered shares (unless dematerialised) the certificate is mere evidence of the shares held by the member and title is acquired through entry in the register of shareholders, title to share warrants to bearer is inherent in the physical control of the warrant and passes by manual delivery. It will be shown below that these differences have a historical explanation. More precisely, it will be pointed out that the model for the circulation of registered shares has its origin in the evolution of the scheme of the medieval partnership, and the one for share warrants to bearer has its roots in certain peculiar developments of nineteenth century corporate finance. Even if the seeds of both instruments were not indigenous, they adapted and evolved with peculiar (hybrid) characteristics in the English legal framework.