Judgment in X reveals the limits of Australia's eSafety Commissioner’s Powers

The judgment was a further intermediate step in the dispute between the Australian eSafety Commissioner (“Commissioner”) (a role created by the Online Safety Act 2021 (Cth) (“Online Safety Act”)) and X regarding the issuance of and compliance with a removal notice under s 109 of the Online Safety Act.

While the Court did not determine the final outcome of the matter (i.e. (i) whether X has failed to comply with the removal notice, (ii) whether to grant a final performance injunction under s 121(2), and (iii) whether to order a pecuniary penalty against X under s 82), its reasons for the refusal provide significant insight into the extent and limits of the Commissioner’s powers to require offshore entities to remove URLs which contains materials that the Commissioner is satisfied are “class 1 materials.”

While the Court canvassed multiple issues in its reasoning for not extending the interim statutory injunction, two stood out:

“All reasonable steps” does not include overseas removal

Based on the arguments and evidence at this stage, the Commissioner's request for X to entirely remove the specified URLs was held to extend beyond the statutory requirements. Section 109 of the Online Safety Act requires the provider who receives a removal notice to “take all reasonable steps to ensure the removal of the material from the service.” “Removal” is defined in section 12 such that material is removed if it is “neither accessible to, nor delivered to, any of the end-users in Australia using the service.” What is “reasonable,” as the Court held, should be “understood as limiting what must be done in response to a notice to the steps that it is reasonable to expect or require the provider to undertake.” Although the Court acknowledged the fact that many users in Australia may use VPNs to access the Internet, the Court held that X's geo-blocking (i.e., restricting the access of users with IP addresses in Australia), the video links met the requirements of the statute. Requiring X to remove the links in their entirety, as opposed to what X had done (i.e., geo-blocking), was not reasonable.

The Court noted that the removal notice issued by the Commissioner would govern the activities of a foreign corporation in the United States (where X is based), and every country where its servers are located, as well as X’s relationships with its users everywhere in the world. This would result in Australia’s national law applying to entities headquartered and incorporated in other sovereign states and requiring actions to be undertaken outside of Australia. Such an approach would fundamentally clash with the principle of the “comity of nations” - a notion that gives rise to the presumption against the extraterritorial operation of statutes, even where the statute expressly states that it has extraterritorial application (as found in s 23 of the Online Safety Act). Essentially, the Court held that the principle of comity applied in determining what “all reasonable steps” includes, notwithstanding the inclusion of extraterritoriality in the statute.

Effectiveness of the remedy, including overseas enforcement is relevant in determining whether to grant the injunction

As part of the determination of the (non-)extension of the interim statutory injunction, the Court also noticed that those who want to see the videos and have access to the Internet will not be prevented by a global removal of the specified URLs by X because such videos can still be viewed on Internet platforms other than X. Further, it is highly unlikely that a US court would enforce a final injunction of the kind sought by the Commissioner. While the Court acknowledged it is unlikely a US court would enforce the final injunction, it held that this should not be a reason to fail to hold X accountable. The court further noted that an injunction may not be a sensible way to hold X into account and courts do not rush to make orders that cannot be enforced or are not effective in dealing with the issue at hand. Effectiveness of the remedy being sought remains a valid consideration when considering the application of interlocutory injunctions.

Analysis and Next Steps

From a technical perspective, geo-blocking such content is likely a more cost-effective and efficient manner for platforms to comply with removal notices, as opposed to removing internationally hosted links. Platforms subject to the Online Safety Act will have to balance utilising this approach against the potential reputational harm that may be incurred, especially given the highly charged political environment such issues are often exposed to.

It remains to be seen whether the Commissioner accepts the restriction of all reasonable steps to remove as formulated by the Court or seeks further clarity in this regard. This holding may still be appealed by the Commissioner as this will allow the appeal court to consider further arguments and issues, such as whether the educative or deterrent effect of the injunction (an important part of any regulator’s approach to effective regulation), is relevant and persuasive to the Court in deciding whether to grant a final injunction and other remedies. In delivering this judgment, the Court has also not decided what constitutes “all reasonable steps," which is a more challenging task. Nonetheless, despite the Online Safety Act’s objective to promote and improve “online safety for Australians” and its extraterritorial operation, based on this interim decision, online safety legislation in Australia has reached a roadblock. The Court has determined that the eSafety Commissioner does not have the power to require removal on a global scale, materials that were filmed in Australia and meet the statutory test for removal, but are hosted by foreign entities.