On the question of which laws apply, the E-commerce Directive,
which is meant to be adopted in all Member States before 17th
January 2002, requires EU businesses to comply only with the laws
of the country in which they are based when dealing with consumers,
an approach known as the country of origin principle.
However, the question of where actions can take place is proving
more difficult to answer.
A treaty known as the Brussels Convention, which has long
existed, governs jurisdiction when a party wishes to sue across a
border. In business to business (B2B) deals, the Convention says
that the relevant courts in any dispute are those of the country in
which the defending party is based. However, in business to
consumer (B2C) deals, where a business has made what the Convention
describes as a “specific invitation” to a consumer, then the
consumer can sue that business in the courts of his own country.
The justification for this is that a consumer may lack the
necessary resources to sue overseas.
A “specific invitation” to a consumer has been taken to mean
more than merely making the offer available to a consumer – it
required the business to tailor its offer in some way to consumers
in other countries, either by setting out the offer in another
language or quoting the price in a different currency or by some
other means. Under the Convention, a business could avoid giving
foreign consumers these rights by expressly stating that the offer
was only open to consumers in a particular country.
Controversy has arisen because the Brussels Convention will be
replaced by an EU Regulation, entitled “Enforcement of Civil and
Commercial Judgments,” which comes into force in all Member States
in March 2002.
This Regulation extends the protection for consumers because a
business need not make a “specific invitation” to be caught by the
exception – it need only “direct its activities” to consumers.
Although nobody yet knows the exact meaning of this phrase, it is
thought that it is wide enough to catch all on-line B2C
transactions and there is concern that this may discourage small
businesses from trading on-line for fear of becoming involved in
costly litigation in foreign countries.
The true effect of the Regulation remains to be seen. It will
depend, to a large extent, on the interpretation given to the
phrase “direct its activities.” According to a recent report in
Computer Weekly, legal experts are soon meeting with MEPs in an
effort to clarify this ambiguity.
