The European Court of Justice recently ruled that data stored on a server in one country is not "transferred abroad" when it is accessed by people in another country. The ruling came in a case in which a church worker was fined for processing personal data about colleagues online in contravention of data protection laws.

Paula Barrett, head of data protection at law firm Eversheds, said that the clarification of the data transfer law was important for UK-based firms that run web sites, intranets and extranets, because it places limits on the work required to comply with data protection law.

"There has been a debate about whether when you put personal data on a web site you could be transferring it abroad and as such would have to get approval from everyone concerned," said Barrett. "This [ruling] has taken the common sense view that this is not the case. As [data] is placed onto a server you are not physically transferring it."

George Gardiner, a partner at law firm Stephenson Harwood, agreed, "This is good news for businesses, to decide otherwise would have created many problems."

But Barrett warned firms not to get complacent about data protection. "People do not have carte blanche to put whatever they want on web sites," she added.

International law regarding data transfer and related matters can be tricky, and may vary from country to country. In a ruling last December, the Australian High Court said that online articles are "published" when they are read. This has important implications for online firms, because it means that they could potentially face libel actions for online material that is not considered contentious in its country of origin.

The Australian Court was ruling in a case brought by Australian businessman Joseph Gutnick, who claimed he was libelled in an article published by US publisher Dow Jones. Gutnick objected to an internet version of an article from Dow Jones's Barron's magazine. Dow Jones unsuccessfully argued that the case should be heard in the US, where libel is harder to prove.

According to the court report Dow Jones argued that "articles published on Barron's Online were published in South Brunswick, New Jersey, when they became available on the servers which it maintained at that place." The court, however, said it could see no reason why, "if a person has been defamed in more than one jurisdiction, he or she, if so advised might not litigate the case in each of those jurisdictions".

Although it has not yet been decided whether Gutnick was indeed libelled, the precedent regarding territorial jurisdiction might be followed in other countries. If this happens firms will have to be very careful when placing data on their web sites, in case they contravene libel laws in other countries.

Michael Clinch, partner and head of litigation at law firm Picton Howell, said that when companies want to publish articles about people or firms in other jurisdictions they should seek legal advice if there is a danger that they might libel them. "Companies have to be aware of the national law of the subject in question," he added.