W3C home > Mailing lists > Public > public-webpayments@w3.org > May 2015

Re: The Payments Architecture within which a Web Payments Architecture occurs

From: Joseph Potvin <jpotvin@opman.ca>
Date: Fri, 15 May 2015 09:49:49 -0400
Message-ID: <CAKcXiSq8YwcnrLfb7QipSzKV1H4qve7FWVuFP2n4DVi1cEdBFA@mail.gmail.com>
To: Manu Sporny <msporny@digitalbazaar.com>
Cc: Web Payments CG <public-webpayments@w3.org>
A few clarifications:

RE: "Melvin raised the point that the laws as they stand today aren't clear
in some of these areas and it's very difficult to get a regulator to
provide an opinion on a software system that's not in production."
and
RE: "we've tried to get the regulators to say how they'd regulate some of
the new payment systems that are being created. In most every case I've
personally experienced (and we've written to 50+ regulatory bodies asking
for a formal opinion on some of these systems) they've refused to provide
anything that even closely resembles a binding opinion"

Corrrect. Regulators enforce the rules, they don't make them. They even
have very little latitude to interpret them -- generally the courts do
that. But the particular WG I've been pointing at *does* do exactly that.
They are very forward looking. Do they also have members who are
resume-stuffers? Of course. What significant organization or group
doesn't?  But that community's good work is driven by many very bright
dynamic hard working law/commerce/IT geeks.

Asking "regulators" to do what you're asking is like asking somebody on a
software tech support line to discuss ideas for a potential new feature for
an app. That's just a problem of calling the wrong number. You need to talk
with people whose role it is to evolve the law amongst all jurisdictions
(like the BIS and like UNICTRAL WG IV, etc.). Now, please forgive my next
step into legal <forgive>theory</forgive>, but it seems to me the problem
central to this part of our converation is rooted in the differences
between the "case law" tradition (i.e. based on a cumulative series of
court decisions) of the US, versus the "statute law" tradition (i.e. each
case on its own merits, assessed against the intent of the legal
principles) of much of the rest of the world. Here's a directly relevant
abstract from an article entitled "Statute Law or Case Law?" written by
authors at US, UK and French universities. This particular article is
interesting because it specfically explains the impact of these two
approaches on what you're complaining about, and what you would prefer.


* <forgive>Abstract: In a Case Law regime Courts have more flexibility than
in a Statute Law regime. Since Statutes are inevitably incomplete, this
confers an advantage to the Case Law regime over the Statute Law one.
However, all Courts rule ex-post, after most economic decisions are already
taken. Therefore, the advantage of flexibility for Case Law is unavoidably
paired with the potential for time-inconsistency. Under Case Law, Courts
may be tempted to behave myopically and neglect ex-ante welfare because,
ex-post, this may afford extra gains from trade for the parties currently
in Court.   The temptation to behave myopically is traded off against the
effect of a Court's ruling, as a precedent, on the rulings of future
Courts. When Case Law matures this temptation prevails and Case Law Courts
succumb to the time-inconsistency problem. Statute Law, on the other hand
pairs the lack of flexibility with the ability to commit in advance to a
given (forward looking) rule. This solves the time-inconsistency problem
afflicting the Case Law Courts. We conclude that when the nature of the
legal environment is sufficiently heterogeneous and/or changes sufficiently
often, the Case Law regime is superior: flexibility is the prevailing
concern. By the same token, when the legal environment is sufficiently
homogeneous and/or does not change very often, the Statute Law regime
dominates: the ability to overcome the time-inconsistency problem is the
dominant consideration.*</forgive>
Source: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1168662

RE: "However, the best answer we can get back is "No, we don't think so,
but that doesn't mean you won't see litigation."

That's true anywhere, on any topic. But its just much worse in the famously
hyper-litigious US system. There are, however, several legitimate ways of
getting things done, so when a global body like the W3C gets stuck due to
US concepts, well, go and explore concepts from elsewhere. Here in Canada,
having Quebec inside the federation turns out to be very useful for finding
solutions to "wicked problems" in law (if one has the agility) because the
British and French legal traditions can both be drawn upon. A quick
illustration: "Copyright" is originally a UK idea that spreaks of anyone's
right to the copying and usage of works. But "Droit d'auteur" is originally
a French idea that spreaks of the author's right to control copying and
usage of works. Very generally, many people consider this duality in Canada
a complication, but in my experience, it does have some very practical
advantages.

I notice this reply getting a bit long...  better leave it there.

Joseph




On Fri, May 15, 2015 at 1:50 AM, Manu Sporny <msporny@digitalbazaar.com>
wrote:

> On 05/15/2015 12:51 AM, Joseph Potvin wrote:
> > Some respectful challenges to Manu's comments:
>
> Some respectful responses follow. :P
>
> > RE: "Regulations and formal law are reactionary beasts."
> >
> > Litigation, generally yes. But there are indeed lawyers whose writing
> > of civil code is similar in context to writing source code. Your
> > under-estimate the realm of law.
>
> We're talking past each other.
>
> I said that in response to what you said here:
>
> > The W3C has no workable choice but to take as given what payment
> > systems are deemed to be in law, and how the governance of payment
> > systems are regulated in law.
>
> Melvin raised the point that the laws as they stand today aren't clear
> in some of these areas and it's very difficult to get a regulator to
> provide an opinion on a software system that's not in production.
>
> So, what you're saying doesn't cover us in the way you seem to be
> implying, but perhaps I'm misunderstanding.
>
> We know the regulatory stuff is difficult because we've tried to get the
> regulators to say how they'd regulate some of the new payment systems
> that are being created. In most every case I've personally experienced
> (and we've written to 50+ regulatory bodies asking for a formal opinion
> on some of these systems) they've refused to provide anything that even
> closely resembles a binding opinion even if the system didn't violate
> any law.
>
> It's not that I underestimate the realm of law. It's that we have real
> experience doing what you're saying we should do and the outcome in
> almost every case where there was no legal reason we couldn't do what we
> were trying to do was: "What you're doing /seems like/ it's legal and
> within regulatory parameters, but we still reserve the right to bring
> legal action against you later."
>
> My point is that even if we go through the pain of getting a legal
> opinion, it's not really worth much unless the legal opinion finds that
> we're clearly violating some law somewhere. We're already pursuing the
> "find out if we're clearly violating a law or regulation" route by
> engaging lawyers to tell us if they think we are. However, the best
> answer we can get back is "No, we don't think so, but that doesn't mean
> you won't see litigation."
>
> > RE: "To be clear, the WPIG in no way, shape, or form is going to do
> > something that willfully violates known regulations"
> >
> > But what of the obligation to make sure the WPIG is effectively
> > knowledgable of the underlying global-level foundations of the
> > relevant laws and regulations?  For example, has the WPIG assessed
> > its work in relation to the UNICTRAL Model Law on e-Commerce?
> > http://www.uncitral.org/pdf/english/texts/electcom/05-89450_Ebook.pdf
>
> No, we haven't done that yet as it would be premature - there is no
> solidified Web Payments Architecture yet.
>
> Can you recommend a lawyer that will do good pro-bono analysis of how
> that document relates to the Web Payments work? Better yet, do you think
> UNICTRAL would do an analysis of the Web Payments Architecture against
> all their relevant documents and provide a binding opinion?
>
> We'd happily take them up on that if they were willing.
>
> > (BTW -- that comes from 1996. I think you'll argree that it was
> > rather forward-thinking for its time, if we set aside the assumption
> >  or bias that IF it's a UN org, THEN it must be slow and
> > bureaucratic.)
>
> You can be forward thinking /and/ slow and bureaucratic. :)
>
> > RE: "Theoretical architectural concerns, legal theory, and
> > regulatory theory rarely enter the discussion unless it's clear that
> > not thinking about them is going to create a deployment problem."
> >
> > Manu, that's like saying to a bridge engineer: "Theoretical
> > mathematics concerns, physics theory, and systems theory rarely enter
> > the discussion unless it's clear that not thinking about them is
> > going to create a deployment problem." Uhh, ya well, good luck.
>
> That's not what I mean. Clearly, applying science when solving a problem
> is important. I prefaced the statement above with this:
>
> > In general, W3C Working Groups care about solving real problems, real
> > interoperability, technical excellence, and serving the needs of
> > everyone that uses the Web.
>
> The point being that W3C prioritizes solving real problems first and
> theoretical problems (aka non-existent) second. You seem to be raising a
> number of theoretical problems "what if regulators ding you?" rather
> than pointing out real problems like "you're violating BIS FPMI
> Principle #21, and that will result in X happening".
>
> Your point that we need to be more aware of the legal and regulatory
> landscape is taken. However, I think the group knows that and is
> counting on the lawyers in this group and the IG to point out when we go
> astray.
>
> Asking for us to analyze some 250 page legal document to become aware is
> not going to have the desired outcome because:
>
> 1. We are not lawyers.
> 2. It requires far more bandwidth than we have.
> 3. It has little to do with the technology being created, or if it does
>    have something to do with the technology being created, no one has
>    been able to clearly articulate exactly how and in what way.
>
> > RE: "We should be very careful about suggesting that we put something
> > in the critical path, like waiting on changes in UNCITRAL or ITU, to
> > make progress.
> >
> > As mentioned, AFAICT everything being sought under the W3C WP IG is
> > nicely accommodated the complementary standards, so this FUD about
> > "waiting on changes" is a red herring.
>
> You said this:
>
> > The thought I'm attempting to underline is that a Web Payments
> > Technical Architecture must point to an explicit external source
> > that provides a generic Payments Achitecture, preferably one provided
> > and maintained by a genuine global standards body, or something that
> > in effect serves that function.
>
> A generic Payments Architecture document does not exist. I don't count
> that BIS document you pointed to as a "generic Payments Architecture".
> Since that document doesn't exist and it's not in W3C's purview to
> create it, it seemed as if you were suggesting a 10 year initiative to
> create that document so that W3C could refer to it.
>
> > RE:  If the creation of the Web took that path
> >
> > Um, actually, it did as you well know. It's called the W3C.
>
> No, it didn't. One of the reasons the W3C specifically steered clear of
> ITU and ISO is because the standard cycles were so painfully long and
> the process was closed. The W3C Process is setup so that we can make
> rapid progress, in view of the public, driven by implementations, not
> lawyering. While it's important to liaise the UN, ITU, and ISO, let's
> not put them in the critical path. That's the point I was making.
>
> -- manu
>
> --
> Manu Sporny (skype: msporny, twitter: manusporny, G+: +Manu Sporny)
> Founder/CEO - Digital Bazaar, Inc.
> blog: The Marathonic Dawn of Web Payments
> http://manu.sporny.org/2014/dawn-of-web-payments/
>
>


-- 
Joseph Potvin
Operations Manager | Gestionnaire des opérations
The Opman Company | La compagnie Opman
jpotvin@opman.ca
Mobile: 819-593-5983
Received on Friday, 15 May 2015 13:50:45 UTC

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