A recent decision in the Belgian courts may have a significant impact on the legal responsibilities and duties of Internet Service Providers ("ISPs") worldwide and has been claimed as an important precedent in the fight against piracy internationally. In this case which involved Scarlet Extended Ltd (formerly part of well-known ISP Tiscali) and an action raised against them by the Belgian Society of Authors, Composers and Publishers ("SABAM"), Scarlet has been forced to monitor traffic by adopting technical measures to prevent illegal file-sharing on its network. This article seeks to analyse whether this decision will set the trend for government policy and for courts in other countries in Europe and worldwide.

As a result of advances in technology the music industry is increasingly a victim of piracy. Estimates suggest that over twenty million illegal files were shared on Peer-to-Peer ("P2P") networks in 2006. P2P describes applications in which users can use the Internet to exchange files with each other directly or through a mediating server and is often how users unlawfully share music or other copyright protected material.

European legislation provides that there is no general obligation for ISPs to monitor third party content and they have a general immunity from liability by reason of acting as a mere conduit. Therefore up until now ISPs have not been required to police the content of their networks with limited exceptions.

Owners of copyright material do however have the ability to obtain a court order against intermediaries such as ISPs whose services are used for piracy. SABAM obtained a judgement acknowledging that Scarlet customers were committing copyright infringement and the court considered various technical measures which Scarlet could implement to bring the infringements to an end. Scarlett has been given six months to install technology to prevent its customers from sharing pirated music and video files. Failure to do this will result in a significant per day financial penalty. The technical measures include various solutions for blocking or filtering P2P systems, but the court said that the decision did not impose general obligations on Scarlet to monitor its network.

The reasoning for liability being imposed on ISPs, despite their general immunity, is that they have the technical means to block or filter copyright infringing material on P2P networks. Many people would argue that it should be the individual offenders and not the ISPs who assume responsibility. However technology available to ISPs can be very effective and because they are often the only identifiable party to sue (and tend to have deeper pockets than offenders) it seems the courts are saying they have to take some responsibility.

This approach by the Belgian courts raises several issues. In particular, ambiguity exists as to how an ISP will turn these P2P networks off. Further to this there are concerns as to the ability of ISPs to distinguish between legitimate legal packets of data from ones that infringe copyright. This could potentially have an adverse impact on free speech if ISPs block legitimate material as well as illegitimate material, due to fears of penalties. It is also unclear whether data can be examined on route. In addition to this, concerns have been raised about increased cost and reduced speed in services provided by ISPs.

Whether this decision will have an important overall impact remains to be seen. As this judgement is the first of its kind in Europe, there is speculation that it will be followed by other courts and set the mould for government policy, but it may just be a one off. An appeal by Scarlett could still be successful. Many are urging the music industry to exploit the Internet rather than police it. There is hope that if it is possible to download properly licensed, good quality versions at an affordable cost, illegal file sharing may become less attractive.