Tacit Choice of Law in the Metaverse: What Law Applies?

This research discusses the reality of the metaverse with emphasis placed on the need for a rule of law for certain activities within it that is related to Private International Law. This research observes what the metaverse is, its prevalent structure and the recent dialectics on the place of international law as a comprehensive and much needed legal regime within its system. This article utilises a normative legal research methodology and uses qualitative data such as legal theories and related research to arrives at a certain conclusion on the place of Private International Law in the Metaverse. The first part of this research elaborates on the relationship between the Metaverse and Law and the importance of a clear rule of law in the Metaverse. The second part provides an overview of Private International Law in regards to the notions that exist within it to determine a prescriptive jurisdiction. The third section discusses tacit choice of law as an alternative answer to the current uncertainty in the commercial world of the Metaverse. While the last part talks about the incorporation of metaverse regulations in the domestic and regional scenes. The article finds that the need for a clear legal framework not only in regards to choice of law but also for all aspects of the Metaverse is direly needed. While tacit choice can provide legal certainty in the world of commercial contracts, a comprehensive cybersecurity regime is needed for a Metaverse that is truly based in rule of law.


A. Introduction
Metaverse, a compound word derived from "meta" (from the Greek language which means beyond) and "universe," describes a hypothetical and synthetic environment that has a relationship with the real world.Metaverse can be defined as a virtual universe created by computer technology that 3 Metaverse actually has been a topic of discussion since the late 90s and early 2000s by various scientific articles 5 which already discussed the reality of law and the rule of law in communities and virtual worlds with new dilemmas that were not previously covered in codified legal products and may be more applicable to real objects.One of the initial discussions regarding the location and function of law in virtual world cases is related to privacy 6 , ownership rights and rights to law enforcement 7 , the legal status of avatars, and even extends to identity theft and intellectual property rights from products used in private virtual spaces such as music and so on.
These initial cases still seem to be of a general nature, with various kinds of interactions between account owners that are only social in nature and have not yet penetrated economic transactions and real legal actions.But along with the development of technology and virtual interaction vehicles which initiates the players to buy and sell certain in-5 For Example being F. Gregory Lastowka and Dan Hunter, "The Laws of the Virtual Worlds," California Law Review 92, no. 1 (2004): 1-73, https://doi.org/10.4324/9781315089645-13and several others in 2004 and 2010.
6 Ronald Leenes, "Privacy in the Metaverse: Regulating a Complex Social Construct in a Virtual World," in The Future of Identity in the Information Society, vol.262 (IFIP International Summer School on the Future of Identity in the Information Society, 2008), 95-112, https://doi.org/10.1007/978-0-387-79026-8_7.
Tacit Choice of Law in the Metaverse.. Uti Possidetis: Journal of International Law, Vol. 5, No. 1 (2024)  4 game products between fellow players and even accounts, it is necessary to examine the legal concepts that are embedded in such interactions.
Early topics concerning the Metaverse, such as privacy, accountability, and cyber security, prompted legal experts to pay attention to the security of various cyberspace platforms, and thus encompass the metaverse, for the benefit of the people on them.The initial aim of these discussions seems to be towards personal rights and responsibilities and has not yet penetrated into the need for a legal product that refers to the economic and legal interaction of two or more people.In the early stages of development of various kinds of metaverse products, it is correct to say that when an economic transaction and legal action occurs, they are carried out "freely and responsibly," moreover considering that activities that can be carried out in cyberspace were not as expansive as it is now.
However, as time went on, and with the emergence of platforms such as Roblox, Fortnite, Second Life, and so on that allow players to barter or purchase intangible products easily and on an increasingly massive scale, the need for legal regulations that can be applied to it becomes even more real.
Moreover, when looking at the reality, many companies are promoting Metaverse products and their economic value is getting higher with more and more consumers.

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In light of these developments, and due to the obvious

Aurora Jillena Meliala
Uti Possidetis: Journal of International Law, Vol. 5, No. 1 (2024)   9 autonomy not only to establish contractual relations with each other, but also to determine the contents of the agreement as well.This free determination materialized into a choice of law clause in the contract, wherein law applicable to the contract can be decided by the parties so as to ensure that the contract in general can be governed by the law intended by the parties14 .Choice of Law basically pinpoints which country's legal arrangements are to be used if there is a cross-border civil dispute that occurs as a result of legal actions both in the real world and in the Metaverse.In elaborative contracts, choice of law clauses are usually accompanied with a choice of court clause which expresses the parties' intention that the courts chosen by them will decide disputes between the parties 15 and, in some cases, serve as an implicit choice of law when a choice of law clause does not exist 16 .
Tacit Choice of Law in the Metaverse.. Uti Possidetis: Journal of International Law, Vol. 5, No. 1 (2024)  10 However, the current understanding of such clauses are territorial in nature, which cannot be directly used in the Metaverse, due to its non-territorial nature.The international and quasi-anonymous structure of the Metaverse, reinforced by the use of blockchain technology, cryptocurrencies, and borderless cloud economies 17 , is very much divorced from the traditional notions of Private International Law, wherein the locus is pivotal in determining the dimensions of a case before a court.This facet of the metaverse institutes the fundamental reason why applicable law and jurisdiction of courts in contractual disputes need an urgent reformulation so as to accommodate the expanding Metaverse.Thus, if such a vital issue can be given a solution, then there will be a definitive conclusion to the question of appropriate legal arrangements regarding the settlement of international civil disputes in the Metaverse.
From the abovementioned elaboration on the Metaverse and its current issues, especially related to Private International Law, the principal emerging question that this article set to answer is: how the choice of law and choice of court in contractual disputes in the metaverse is to be regulated by Private International Law?

Aurora Jillena Meliala
Uti Possidetis: Journal of International Law, Vol. 5, No. 1 (2024)   11 As have been elaborated above, while previous research acknowledges the need for the rule of law in the metaverse18 , such studies were more focused on the safeguarding of metaverse users and the need for international and national legal products in general.Research was focused on the public dimensions of issues in the Metaverse, while those that portrayed private law issues have done so non-elaboratively.Thus, a more in-depth and specific exposition of issues, especially one on choice of law and jurisdiction of courts over disputes, are urgenty needed so as to provide a more pragmatic and comprehensive picture of the Private International Law dimension of the metaverse needed as an adequate impetus for future rule-making.
In providing an answer to the research question above, this article utilises a qualitative research method.Qualitative research is an approach used for exploring and understanding the meaning individuals or groups ascribe to a social or human problem.The process of research involves emerging questions and procedures with data typically collected in the participant's setting with the researcher making interpretations based of said data 19 .Essentially, This method of research, in its process, hypothesis, analysis, and conclusion Tacit Choice of Law in the Metaverse.. Law, Vol. 5, No. 1 (2024)  12

Uti Possidetis: Journal of International
among others up to its writing utilizes aspects that are nonnumerical, descriptive-situational, and analytical 20 .
More specifically used as a form of qualitative approach in legal studies is the normative legal research method which utilised written materials such as legislations, agreements and doctrines along with other established sources such as articles, books, and theses, to analyse a specific legal issue 21 .
Through its methodology and analysis, this research seeks to

Metaverse and its Relation to Law
During the Internet's development, all the pertinent questions regarding the metaverse were raised, and as a result, multiple tort definitions and sanctions were created as well as updates to national laws.The meta-universe and the Internet are not all that dissimilar.Those who are interested in the history of the Internet will be familiar with the cyber utopians of the 1990s, who proclaimed the Internet to be a place free from legal restrictions and governmental control.
However, the metaverse is neither new nor lawless, nor is it above the laws of the real world.Understanding how law can operate at many layers to control various components of an online experience as technology advances is a difficulty22 .
It is crucial to remember that the metaverse's regulations are not exempt from the rule of law.The metaverse order is already subject to laws that already exist in areas like anti-money laundering, contracts, data protection, defamation, tort, gaming and gambling, intellectual property, tax, and financial regulation.The laws of the real world and the existing internet will be heavily regulated in the metaverse 23 .This is also the case with contractual relations in the Metaverse.The fact is, the overt-independence that the Metaverse can actually have will threaten the certainty of law that revolves around certain actions such as contractual relationships in the Metaverse.Concluding the narrative of the introduction above, the main problem with contractual relations in the Metaverse is that a multilayered issue is more than actual in the Metaverse.One aspect is the identity of the contracting parties which in light of the blockchain technology and anonymity mechanisms that platforms have offered in the past has introduced the greatest degree of namelessness in the virtual worlds.This aspect alone, for example, will give rise to other problems in regards to contracts such as the certainty of legal imputation of rights between the parties, obligations, and other effects that arise from a contract.
The usual method of accessing the metaverse is via an avatar.When moving and engaging in relationships with other subjects, who will then enter that metaverse through an avatar of their own, the avatar ultimately becomes the virtual persona one assumes.The practice of metaverse users today explains that outside of the performance of business or economic activities that users carried out professionally, users may not be equipped with an unambiguous guarantee to be given information of the physical identity associated with their another user's Aurora Jillena Meliala Uti Possidetis: Journal of International Law, Vol. 5, No. 1 (2024)   15 avatar.However, certain policies adopted by metaverse platforms can give legal certainty when, for example,a transfer of a virtual property of a sales contract is to be done.Company policies may require the purchaser to verify that they are actually the buying party of that sales contract so the property in question will not be misgiven.
Bearing in mind this certain example, it is then apparent that an exact legal regime is not only needed but also

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transaction.The Hague Principles are designed to promote party autonomy that is aimed at enhancing predictability and legal certainty.By acknowledging that parties as persons in charge who can determine the most suitable legal norms for their transaction, it is hoped that the refinement of effective cross-border trade and commerce can be achieved.
Party autonomy can really make a difference in the practical application of those legal rules.Each jurisdiction is legitimately entitled to determine where the choice of law in international contracts makes sense or not.It welcomes any variations however it also has minor weakness for legal uncertainty in international commercial transactions, especially in the absence of a choice of law.
The fact that in different regions of the world, party autonomy receives more or less endorsement.That itself should not be a problem because each jurisdiction is of course very legitimately entitled to determine where the choice of law in international contracts makes sense or not.
The principle of party autonomy will much more relevant if we referred to the contractual relationship that might be generated from metaverse or other digital space.
Tacit Choice of Law in the Metaverse.. Law, Vol. 5, No. 1 (2024)  20 But in the context of international commercial transactions, this raises the degree of legal uncertainty and as such the transactional costs of that international operation.The Hague Convention itself is a set of nonbinding international standards.In order to be able to regulate the transaction on metaverse, a more operationalized set of regulations are needed.

The Application of the Tacit Choice of Law Theory in the Metaverse
Commercial relations in the Metaverse are not always preceded by a written contract.As the Metaverse attempted to replicate the physical world's experience, it also attempted to replicate the socioeconomic interactions that take place in physical communities where

Aurora Jillena Meliala
Uti Possidetis: Journal of International Law, Vol. 5, No. 1 (2024)   21 transactions are of a more flexible nature, such as when a bank customer withdraws money from an ATM or when a contract is assumed to have been entered when a sale is giving effect to at the fall of a hammer in an auction sale.
Such commercial interactions can be sufficiently called a In order to recoup costs and damages, this latter company ultimately filed a case against the Italian company.The problem with the law controlling the contract is that the parties did not explicitly choose the law that would apply to it.While the Italian corporation claimed that Italian law should be used to decide the merits of the disagreement, the client's arguments in the complaint were based on Swiss law26 .
Based on the case above, it was obvious that to determine the law applicable to the merits of this dispute, the three main questions that should be answered were: 1. Does the contract contain a choice-of-law clause?
2. If not, have the parties tacitly chosen the law governing the contract?

3.
If not, what is the law applicable in the absence of choice by the parties?
By analysing the case above, it was obvious that the contract contained no choice of law clause, in other words, the parties had not expressly chosen the contract's governing law.Furthermore, in this case, The Federal Swiss Court concluded, based on a number of different considerations, that the parties had implicitly chosen Swiss law to regulate the transaction.Such considerations include: 1. First, the contract had been concluded in Switzerland; 2. Second, the contract was drafted in French; 3. Swiss francs were the currency adopted in the contract; 4. Fourth, the works were to be carried out in Switzerland; 5. Fifth, the contract contained a choice of forum clause in favour of the Swiss Courts, and finally; Now, how does tacit choice of law can be applied to the Metaverse?As has been mentioned before, the application of choice of law, that was constrained by physical properties of the laws of physical states, cannot be readily applied to the Metaverse as it is a borderless internet-based reality.A possible entry point for the application of choice of law in the Metaverse is through the internet platforms that provided consumers with virtual worlds of their making.As it is, metaverse platforms can be considered the governing entities in the metaverse world due to their part in providing security and order to users and their communities throughout the meta universe.As what has been said previously, the Metaverse that emulates the physical world results in the many commercial-related actions such as the sale and purchase of virtual cars and even virtual food that may not be preceded by a written contract between the parties.The role of the platforms therefore is to ensure that the virtual world they created and maintained is governable and secure.To do this, many platforms have introduced several policy tools to keep all of its users in line.For example, when a transfer of a virtual property or a sales contract is to be made, policies set by metaverse platforms can provide certainty by demanding the buyer to confirm that they are indeed the buying party to a particular sales contract before the virtual goods or properties in question can be transferred.
The most important of such policy tools are the Terms and Conditions/Terms of Use that platforms implement as the general guide of conduct for all its customers.The first argument that can be pointed towards their importance is that, many platforms consider that by accessing and playing in the metaverse server that a platform provides, a customer is bound and expected to abide by the rules set by the Terms of Use.The second argument is that, the Terms of Use may refer to a law of a state, usually the place where the platform is domiciled or incorporated, as its governing law that can Aurora Jillena Meliala Uti Possidetis: Journal of International Law, Vol. 5, No. 1 (2024)   27 assist in bringing legal certainty to a case.By entering and engaging in commercial acts in a particular platform, customers have therefore made their tacit choice to abide by a law of a particular state, even though their specific contracts may not include a tacit choice of law clause, by virtue of the platform's Terms of Use.
An example to this is the Terms of Use made by Sandbox, one of the biggest metaverse platforms to this very day.Sandbox firstly specified that its Terms of Use govern the access to, use of, and interaction with The Sandbox, including any content, functionality, and services offered on or through The Sandbox.Further, The Sandbox informed that by using its platform, one accepts and agrees to be bound and abide by its Terms of Use.The Sandbox regulates the sales and purchases of virtual assets as well as the ownership of virtual assets in its platform.However, most importantly, The Sandbox specified that the rights and obligations of the parties under its Terms of Use are governed by the laws of Malta.
Moreover, The Sandbox also regulates that if either party brings against the other party any proceeding arising out of these Terms, that party may bring proceedings only in the courts of Malta.In conclusion, if a party decided to enter into a contract with another party and the contract itself expresses no particular choice of law or even performing transactions without a written contract, the tacit choice of law becomes the law of Malta considering both parties' choice to abide Sandbox's Terms of Use including its governing law term as the prevailing circumstance surrounding the transaction or the contract itself.

The Incorporation of Metaverse Regulations
To conclude this research article, an elaboration of an incorporation of metaverse regulations to further assist the rise of rule of law in the Metaverse especially in the masters of Private International Law is needed.As mentioned on part B there's a weakness in the instrument of Private Law which is regulated under the Hague Convention characterised by being a non-binding instrument.This set of international standards is still in a cloud without direct relevance for the daily transactions especially when it comes to metaverse.Therefore, it is really important for the cloud to be operationalized.In order to make it relevant the term and condition of metaverse transaction has to be put in practice.It has to be implemented to make sure that these abstract international standards become real law.Become part of our legal realities.
The Hague Convention had characterised itself by producing a number, almost 40 international conventions, that then are ratified by States, and this is the traditional way how international law becomes binding in the national 29 legal systems.When we look around in the area of international business law, there are several stakeholders that are very active in narrating private international law, among others, UNIDROIT, the Rome based organisation and UNCITRAL, as an agency of the United several international organisations that had succeeded in developing soft law.Commentary.It is Recognised as international standards in relation to party autonomy in international commercial contracts.It also provides a comprehensive blueprint to guide users in the creation, reform, or interpretation of choice of law regimes at the national, regional, or international level.This road map can also be adapted in narrating metaverse regulations especially in determining the jurisdiction.
Tacit Choice of Law in the Metaverse.. Uti Possidetis: Journal of International Law, Vol. 5, No. 1 (2024)  30 metaverse must be resolved and narrated under a comprehensive and fluent transnational law.

C. Conclusion
In conclusion, the Metaverse as a part of the new global economic order, with its various kinds of complex economic activities, indicates a new model of economico-social life that cannot be easily defined and needs a comprehensive medium in International Law that can anticipate and regulate its everevolving mechanisms.In the field of International Private Law, this article posits that there is an urgent need to clearly define choice of law and, most importantly, jurisdiction of courts in the Metaverse, which have not been comprehensively treated and elaborated by previous studies as far as rule of law is concerned.
This article finds that a more elaborate concept of tacit choice of law can provide a unique solution to the issues of applicable law and jurisdiction of courts in metaverse contractual disputes.For example, the examination of an electronic Terms of Use Agreement, frequently made a mandatory compliance upon registrations by private persons and created by a service provider, can provide a clue on what jurisdiction and law applicable to a dispute due to the fact that all users within that provider's metaverse tacitly agree to abide completely by that agreement.
However, though the article can pinpoint the usage of tacit choice of law in providing a rule of law in these dimensions

Aurora Jillena Meliala
Uti Possidetis: Journal of International Law, Vol. 5, No. 1 (2024)   33 of Private International Law, the article realizes in the last part of the article that the Metaverse as a whole needs a comprehensive, fluent, and all-rounding transnational law.One which is operationalizable and can be universally accepted by all states.Though the operationalization of metaverse regulations can be achieved part by part in current bodies of international, regional, and local laws, the article now concludes by recommending that there should be a new specific regime of international cybersecurity with all its legal aspects under a separate legal umbrella regulated by a competent international organisation.Such a suggestion is made due to the fact that the application of one solution to a problem may not be adequate to cover all other interconnected dimensions of said problem without the need to reform the solution's field of study from end to end.Thus, the article deems a new dedicated field of an allrounding international cybersecurity law as a most perfect solution to minimise the legal conundra that can emerge in the Metaverse.
beneficial in giving certainty to all parts of the contracts regime in the metaverse.In regards to the contractual relations in the Metaverse itself, systematic points on current issues that need proper legal regime, especially in regards to Choice of Law, can be seen from the Report of the Permanent Bureau of the Hague Conference on Private International Law, where in their December 2021 report, Metaverse cases become an issue of discussion and an interesting dialectic in "Digital Economy."In particular implementation of law is direly needed for: 1. Jurisdiction and choice of court (e.g.how to determine a competent court to resolve disputes in relation to crypto assets (currencies assumed to be the wheels of the Metaverse and Digital Economy economy); 2. Applicable law and choice of law (for example, what is the best connecting factor that best defines the applicable law for transactions through blockchain Tacit Choice of Law in the Metaverse.. Uti Possidetis: Journal of International Law, Vol. 5, No. 1 (2024) 16 systems (blockchain is a digital transaction system that prioritises anonymity, especially in international transactions based on Metaverse); 3. Law Recognition and Enforcement (e.g.how to enforce foreign court decisions in relation to services governed by smart contracts); and 4. Mechanisms for cross-border and cross-platform cooperation (eg, what frameworks for cooperation are feasible and desirable to address the challenges facing the digital economy especially in this regard in relation to the Metaverse).The main context of this metaverse problem lies in what is known as the cloud economy and the structure of various metaverses that are full of non-integrated economies, or also known as decentralised economies or decentralised finance (DeFi).It is this decentralised systematics that is the main concern of Private International Law in adopting, designing, and enforcing arrangements that suit such Metaverse dynamics, because the implications of Metaverse systematics such as decentralised cloud services also mean that storage, computing, and databases of consumer data exist unlimitedly.It is this borderless nature of the metaverse economy that contradicts the traditional significance of geographic location in Private International Law so that the location (locus) of an international contract in the Metaverse cannot be found immediately, especially regarding the application of the concept of choice of law in Metaverse contracts.It is these facts and these dimensions that are expected to be studied and regulated in new International Private Law products.2. The Perspective of Classical and Modern Private International Law The field of Private International Law usually raises serious jurisdiction issues.The questions on what court and what national regulations should be referred to have become persistent questions plaguing the international lawyer.While classic theory requires state consent for the enforcement of international obligation, the modern theory grows disregard for it and a tendency toward the generation of rules along more autonomous lines of reasoning.Especially in the era of a fast growing technology, international law requires vast and diverse judicial systems to remain relevant.The divergence between civil and common law has resulted in challenges in terms of universality.It also impacts the complexity of transnational dispute settlement.It is very often that the dispute on private international law experienced delays, difficulties to measure just outcomes and high-costs procedures.
Table 1.1 The Principle of Party Autonomy according The Hague Convention 2015 Each legal system is very much determined by the characteristics of the jurisdiction where it was developed.
tacit contract which refers to, as opposed to written or verbal agreements coincident statements of purpose, the actual conduct between the parties or its related circumstances.While not determined by a specific agreement of any kind, by agreeing to participate in such commercial transactions, parties tacitly agree and choose to be governed by an already specified law that regulates such activities.The Ganey Case is one well-known instance that might paint a more complete picture of the idea of tacit choice of law.In Paris, where they also resided, a Mr. and Mrs. Ganey were married.Later on, Mr. Ganey purchased real estate in Lyon.The 'Coutume de Paris', or Parisian customary law, states that property gained during a marriage becomes communal property.In contrast, Lyon's marital system was that of separate property and was governed by written law.Mrs. Ganey's heirs hired Dumoulin to have the Lyon property designated as a community property in accordance with Parisian customary law.He believed that the personal law of the spouse could not be used to extraterritorially apply to land Tacit Choice of Law in the Metaverse.. Uti Possidetis: Journal of International Law, Vol. 5, No. 1 (2024) 22 in Lyon.But he asserted that the parties had the authority to make a contract that would govern property rights in other legal systems.Dumoulin proposed that the Ganeys had made a tacit agreement to include all property acquired after the marriage in the community; in the community that was created where the marriage was celebrated, since they had not stipulated any matrimonial regime other than that required by Parisian law.Dumoulin stated that the Ganey pair has tacitly chosen to submit the marital property to the Paris Community Property Regime by getting married and residing in Paris 25 .A contract dispute that was brought before a Swiss court in the early 2000s is another pertinent instance in this regard.A commercial contract for the delivery and installation of external cladding for a rental home that the client was building in Pully, Switzerland, was signed between a client with Swiss residency and an Italian company on October 25, 1988.The parties agreed that the works would be completed by November 28th, 1988, and the penalty provision reflected that understanding.In its aftermath, there were several problems with the Italian company's ability to fulfil its obligations under the contract.The client ultimately chose to discontinue the agreement with the Italian company, signing over its rights and credit to another company that completed the project.
6.Both parties referred to the SIA standards, a Swiss Society of Engineers and Architects technical standards.Despite the fact that none of the factors alone may have been important, the court came to the conclusion that the parties' choice of Swiss law was implied.Both of the aforementioned instances led to a single, clear conclusion.When one does not explicitly state their agreement, tacit consent and, consequently, tacit choice of law are assumed and such a consent can be inferred from other circumstances, such as when one does not express an objection (verbally or in writing) to a particular course of action, or even by looking at what potential law a contract, despite not explicitly referencing it, referred to in its articles.Currently, the basic international instrument that regulates tacit choice of law is the 2015 The Hague Principles on Choice of Law in International Commercial Contracts, especially its article 4 which deals with express and tacit choice under this instrument.Considering tacit choice of law, the Principles regulated that the parties must have intended to choose the governing law and such intent must appear clearly from the provisions of the contract or the circumstances. 27 First soft-law instrument developed by HCCH (not Convention; not model law); approved by HCCH Members on 19 March 2015.A "package" consisting of Preamble and 12 Articles, with an Introduction and a Tacit Choice of Law in the Metaverse..

Table 1
However, it requires more universal parties in order to regulate the metaverse.Especially, if we take a look at the data of the metaverse market which implicated diverse states and regions.According to the data that we generated from Emergent Research, North America currently has a dominant share in the metaverse market, while the Asian market is expected to experience the fastest growth with Europe setting a steady pace in the forecast period.Seeing such results, the developing metaverse of the future will bring about vast and immense contributions not only from diverse investors but also global citizens.Thus, the urgent issue of regulations for Tacit Choice of Law in the Metaverse..