Jurisdiction and Applicable Law on the Internet

Abstract: The Internet has revolutionised the global market place. Internet shopping is now accessible to an increasing numbers of people. In theory, this new form of media offers convenience, speed and choice to the consumer, but the question is whether it works in practice? Business-to-consumer cross-border transactions, whether carried out electronically or otherwise, are subject to the existing framework on jurisdiction and applicable law. Jurisdiction, applicable law and recognition and enforcement of judgements are seen as matters of Private International Law. Private International Law is not a universal set of rules, but a part of each countries national legislation. Physical presence within a State is the traditional ground for jurisdiction and applicable law. The technology and nature of the Internet makes it close to impossible to recognise the location of a user. Therefore, consideration should be given to whether the existent framework for applicable law and jurisdiction should be modified, or applied differently, to ensure effective and transparent consumer protection in the context of the continued growth of electronic commerce. The main body for establishing jurisdiction in Europe is the Brussels Convention on Jurisdiction, Recognition and Enforcement of Civil and Commercial Matters and for establishing applicable law the Rome Convention on Law Applicable to Contractual Obligations. The Commission has presented a proposal to amend the Brussels Convention and one of the reasons is the consideration of the new form of commerce. One of the most important changes, in the proposal, concerns the consumer legislation. The new criterion for applying the consumer protective legislation is proposed to be that the consumers counterpart has directed his activities towards the consumers country of residence. However, as can be seen from e.g., U.S. case law, the criterion of directed activities is not easy to apply. The Commission does not clarify the difference between a passive and an interactive Web site, and it is uncertain whether you can draw any clear principles from either the proposal or U.S. case law concerning directed activities. The consumer protection was also one of the aims behind the Distance Selling Directive. The Directive contains some important rules for consumers such as the minimum clause establishing that Member States may have a higher level of consumer protection as long as they are compatible with the Directive, and the binding rule stating that a consumer may not lose the protection of the Directive by virtue of a choice of law clause stating that a non-member state's law is applicable to the contract. The impact of the Directive might be questionable since some of the most common items that consumers shop over the Internet are excluded from the application of the Directive. Worth consideration is also whether consumers are really in need of protective legislation when using the Internet. Is it reasonable to expect merchants to be familiar with the laws of every jurisdiction where a consumer may reside? Is it possible to establish certain principles that apply in certain situations or is there a possibility that the technique itself may solve any of the problems that it has created? The questions are many and the answers are few and meanwhile the Internet and electronic commerce is evolving in an enormous speed. A global dialogue is important to create a functional and predictable framework.