From next spring all EU sellers on-line will have to dance to the tune of new rules on which country’s courts they can sue or be sued in over on-line consumer contracts.
Topic: Dispute resolution
New Law: Council Regulation (EC) No. 44/2001 on recognition and enforcement of judgments (“the Brussels regulation”)
Background:
If a consumer has a claim in respect of a product ordered via a website or arising out of a product claim made on a website, or if the on-line supplier does not receive payment for any reason, in which country’s courts should they be able to sue? The position has been unclear up until now. This is because of a number of factors. First of all, the website operator can of course state in the site terms and conditions that its home state’s courts will have jurisdiction should there be any dispute. However, in a consumer contract context these are unlikely to be binding where the parties are resident in the EU. This is because of the so-called Brussels and Lugano Conventions. One of the types of contract these deal with is a contract for the supply of goods or services where the conclusion of the contract was preceded by a “specific invitation addressed to the consumer”, or by advertising, in the consumer’s home state and the consumer took the steps necessary for the conclusion of the contract in that state.
In these cases the consumer may only be sued in his home state’s courts. If the boot is on the other foot and consumer wishes to sue the supplier, it is for the consumer to decide whether to sue in his or her home state or in the home state of the supplier.
It has not been clear how these principles apply in an on-line context, where it could be said that the consumer concludes the contract partly by activity in the supplier’s home state, from where the website is uplinked.
What will change:
The Brussels regulation widens the categories of cases where consumers can sue in their home country’s courts. This will now apply to all cases where the supplier “directs activities” to that state. This could mean that wherever a consumer from one state can access and order goods or services from a company’s website in another state, that company can be said to be “directing its activities” at the consumer’s state and therefore liable to be sued in that state if anything goes wrong. This would apply regardless of any wording in terms and conditions of the supplier which suggested otherwise.
Consumer groups are understandably happy with the regulation, whilst businesses fear there will be differing interpretations of precisely what “directing activities” at a particular state means. The end result, they say, will not be significantly different to the position under existing law, with European on-line suppliers theoretically exposed to proceedings in 15 different countries. Separately of course, there is the question of which country’s laws apply to a consumer contract. But that, as they say, is another story, to be covered another time soon on marketinglaw.
What happens next:
Being an EU regulation, the Brussels regulation will have direct effect across Europe (except Denmark) from the appointed day, without the need for separate implementing legislation to be drawn up in each member state.
Timetable: The Brussels regulation will have direct effect from 1 March 2002.
