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Issues
Contribution from the European Publishers Council to the Commission
Consultation on a preliminary draft proposal for a Council Regulation
on the law applicable to non contractual obligations
13th September 2002
The European Publishers’ Council (EPC) is a high level group of
Chairmen and Chief Executives of leading European media corporations actively
involved in multimedia markets spanning newspaper, magazine, Internet
and on-line database publishing. Many EPC members also have significant
interests in private television and radio. A list of our members is attached.
A. Summary
The European Publishers Council welcomes this preliminary consultation
by the European Commission on the “Rome II” proposal[1]. The
text has been under discussion internally for at least two years now and
we are pleased that those who may potentially be affected by such a proposal
have now been invited to comment.
Although we welcome this opportunity, we would like to make it clear
that we remain strongly opposed to such a Regulation. The Commission has
not presented any accompanying studies demonstrating the need for such a
proposal nor has it given any instances where a lack of a Community
instrument has posed a problem. We would wish to see a thorough impact
assessment and presentation of objective research before the Commission
took any further steps towards producing a concrete proposal.
One of the basic problems with the proposed Rome II regulation is that
the traditional Private International Law (PIL) approach is fundamentally
inconsistent with, and can never improve the proper functioning of the
Internal Market. This proposal neither eliminates nor decreases the problems
raised by a potential application of various, differing national laws
on the same economic activity. Internal Market problems can only be resolved
by Internal Market instruments, which work on the basis of country of
origin control and mutual recognition.
The EU is committed to the creation of an internal market which benefits
both suppliers and consumers alike. In addition, there is a considerable
body of European and national consumer protection laws which the Commission
is committed to updating with a general framework directive aimed at eliminating
unfair and dishonest trading practices[2]. Furthermore, given that a consumer
has the right to go to Court in his/her country of residence under the
terms of the Brussels Convention on Jurisdiction and Enforcement of Judgments
in Civil and Commercial Matters, we can see no justifiable argument in
favour of imposing county of residence as the natural choice of law for
claims involving offline publication. While a consumer is only occasionally
involved in an action before a Court against a supplier in another country,
so only rarely has to examine a foreign law, under a country of habitual
residence regime a publisher would have to apply all foreign bodies of
law to every publication as a matter of general practice. This in our
view is grossly disproportionate, will not deliver increased consumer
protection and may constitute a violation of the fundamental right to
the freedom of expression.
We wish to question the proposed legal base of Article 65 for 2 reasons:
Firstly the proposals as presented so far do not attempt to improve the
proper functioning of the internal market and secondly because Article
65 allows for only a limited consultation of the European Parliament.
The Commission will remember the legitimate objections from the European
Parliament caused by the lack of consultation of MEPs on the Brussels
Regulation on Jurisdiction, a situation that we would not wish to see
repeated particularly given the impending implementation of the Nice Treaty.
The most important areas in the consultation document for publishers are
the provisions dealing with:
* The applicable law for unfair competition and unfair practices (Art.
6) and
* Defamation and violation of the right to privacy (Art. 7). As regards
unfair competition and practices the draft regulation points to the law
of the country where the unfair competition affects competitive relationships
or the collective interests of consumers, and for defamation and violation
of privacy the applicable law is the one of the country in which the victim
is habitually resident. Both of these are contrary to internal market
principles which aim instead to subject a service and a service provider
to only one law, his own; a country of residence or destination approach
will merely maintain, or worse increase a fragmentation of the market,
rather than providing further integration of benefit to business and consumers
alike.
In the case of defamation specifically we reject the assertion by the
Commission that the proposed harmonisation on choice of law merely regularises
the status quo, in applying country of residence principle in all 15 Member
States, with the exception of the dual actionability rule in the UK[3].
The victim is usually free to chose the law of the place where the damage
was sustained and PIL generally points to the law of the country where
the tort was committed which is not always the country of residence of
the victim.
* If the European Commission insists on proceeding with a Rome II Regulation
we would request the removal of clauses dealing with defamation and privacy
from the scope of the directive unless subject only to the country of
origin for both online and offline publication.
* Furthermore as these provisions could heavily impede commercial activities,
the scope of any future Rome II regulation should be focused solely on
the relationship between individuals outside any commercial context. If
the Commission insists in pursuing a Regulation in this field, we call
on the Commission to restrict the scope of application to claims between
individuals in their private capacity and to exclude non-contractual obligations
which arise in connection with commercial activities.
B. Article 23 – internal market directives
The draft text includes a “carve-out” (Art. 23 section 2)
for the existing Internal Market Directives which contain a Country of
Origin clause. We understand this to mean that the general rule contained
in Article 3 - country where loss is sustained - may be overridden by
existing Community rules on choice of law such as the eCommerce and the
Television Without Frontiers Directives.
Notwithstanding our overall objection to the proposed Rome II Regulation
in principle, and the possible objections of the Member States to this
carve out, the EPC welcomes the inclusion of this article in recognition
of the fact that such internal market Directives have contributed directly
to increased cross-border trade and business confidence in Europe.
If the Commission continues with a Rome II proposal we request that this
article be placed more prominently in the text and amended to make it
clear that the conflict of law rules in the Rome II Regulation are subject
to the internal market clauses in the eCommerce and Television without
Frontiers Directives with regard to matters falling within the full coordinated
field of these directives. This is essential in order to make it clear
to the Member States that such a carve out forms an integral part of such
a Regulation and that the wording is unambiguous with regard to its future
applicability. Specifically we request the removal of the wording “in
relation to particular matters” as this exposes publishers to widely
differing interpretations by the Member States which ultimately cause
distortions of the internal market.
C. Article 7 – Defamation and Privacy
Naturally the articles on defamation and privacy are of great significance
to publishers. The law of libel was written in the world of newspapers
but newspaper, periodical and book publishers can all be exposed to defamation
liability arising from print and now online publication. In the case of
newspapers, articles are typically written by newspaper employees (journalists),
but this liability exists even for letters to the editor, or paid-for
advertisements. Publishers employ editors and lawyers whose responsibility
it is to read through everything before publication and to check that
the content is accurate and complies with laws governing the content,
both editorial and advertising in the country of establishment. The publisher
therefore exercises, or can exercise, some control over what it publishes,
and because it exercises control, it makes some sense to hold it liable,
but only according the laws of the country of publication. The same is
true for web pages originated by publishers where country of origin is
determined by the eCommerce Directive as the country of establishment
of the Information Society Service Provider (which includes online publishing
and advertising).
The proposed Rome II regulation however, infers a distinction between
how the rules apply to online and offline publication through the proposed
“carve out” for European Directives based on mutual recognition
and the country of origin principle in Article 23(2). At the meeting of
the Rome2Group on 9th July 2002 the Commission confirmed that online and
offline liability would be handled differently, stating that online defamation
and privacy violations would be dealt with according to the rules of the
country of origin. Such a distinction, although welcome for online publishing,
is we suggest impossible to justify as more and more content is published
simultaneously on web pages and in printed versions.
*
Unless a Rome II regulation can introduce parity of treatment for material
published offline as well as online - according to the rules of the country
of origin, we request the removal of defamation liability and privacy
clauses completely from the scope of the proposal. It is impossible for
an editor to check all the laws on defamation and privacy in such a great
number of countries. This situation can only be made worse by the enlargement
of the European Union up to 28 Member States. At the Rome2Group meeting
(9th July 2002) the Commission stated that for defamation, current Private
International Law applies the country of residence principle in all 15
member states; the exception being the dual actionability rules which
apply in the UK.
With the exception of the proposed removal of the dual actionability rules
in the UK, the Commission said that the Regulation would merely codify
an existing situation. In reality, the situation is much more complicated
than the Commission suggested. In cases of cross-border press liability
the loss cannot automatically be said to be sustained in the victim’s
country of residence, especially if the number of copies of the publication
available in the country of residence is very low or non existent. Generally,
the victim is free to chose the law of the place where the damage was
sustained and PIL generally points to the law of the country where the
tort was committed which is not always the country of residence of the
victim. Furthermore the Commission should note that defamation is, at
least in some countries, subject to the criminal law therefore creating
exceptional regimes within the EU and fragmenting the single market.
Laws on defamation and privacy vary significantly between member states.
For example the French law on privacy is much stricter than UK law which
could lead to injunctions being imposed from France on newspapers, books
and periodicals published in the UK to prevent publication in printed
form, whereas online publication would be judged according to the laws
of the country of origin.
The Commission should be aware that newspapers and magazines are produced
for national markets – often aimed only at regional or local markets
and are subject to the laws of these countries. Some of these titles are
contemporaneously produced in more than one country but each edition,
in each country, complies with the laws of the country of publication.
There are very few exceptions to this and we would ask the Commission
to take this aspect of publishing into consideration.
It is now technologically possible to produce more than one edition each
day, in several different languages, for several different markets. It
is true that some newspapers and magazines physically cross borders in
their original form – mainly for citizens of that country who find
themselves outside their home country, but the percentage of these by
comparison to their national circulation in their intended market, is
so miniscule (on average between 1 and 2 % of newspapers are sold
outside their home country).
Additionally the different rules for offline and online content will create
the possibility for a choice of law for the complainant, but not the publisher.
This acts against the policy of the European Union to be technologically
neutral. As said above we welcome the carve-out in Article 23 for Internal
Market Directives and in particular the country of origin rules contained
in the eCommerce Directive for online content. However, allowing a plaintiff
to claim a different applicable law depending on whether they read the
document online or offline is ludicrous and the general rule of country
of editorial control should always apply.
D. Unfair Competition
Article 6 relates to unfair competition and applies the law of the country
where it is claimed that the unfair competition exists. At present the
laws in EU member states vary widely particularly with regard to business
claims. Until recently the German law stated that loyalty cards were an
unfair business practice and thus banned non-German companies from using
them in Germany. Such rulings go against the principle of mutual recognition
as laid down in the Cassis de Dijon case (1979) and all subsequent cases
in this regard, thereby eroding 23 years of European law and legal practice.
Additionally we note that an open debate about defining what constitutes
fair trade has been launched by the Green Paper on Consumer Protection
(COM(2001) 531 final) and is thus still under consideration following
the launch of a follow-up consultation and so should not be pre-empted
by an additional regulation at this stage (See Follow-up Communication
to the Green Paper on EU Consumer Protection). We thus call on the Commission
to withdraw this section as it introduces legal uncertainty for business.
E. Legal Basis – no role for the European Parliament
Until the Treaty of Nice comes into force, this proposal comes under Article
65 and demands unanimity in Council and the consultation, but not co-decision,
of the European Parliament. This is regrettable as many MEPs are interested
this proposal and would wish to make a greater contribution to the decision
making process. We ask that the Commission takes note of the Parliament’s
concerns which are the same as those expressed by MEPs when the Commission
produced the draft Brussels Regulation on Jurisdiction.
F. Conclusion
* The European Publishers Council has severe reservations about the need
for a Community instrument on applicable law and believes the proposed
legal basis is unsafe.
* The Commission has not presented any accompanying studies demonstrating
a need nor has it given any instances where a lack of a Community instrument
has posed a problem.
* This proposal neither eliminates nor decreases the problems raised by
a potential application of various, differing national laws on the same
economic activity.
* The Commission should restrict the scope of application to claims between
individuals in their private capacity and to exclude non-contractual obligations
which arise in connection with commercial activities.
* Under a country of habitual residence regime a publisher would have
to apply all EU bodies of law to every publication as a matter of general
practice. This in our view is grossly disproportionate, will not deliver
increased consumer protection and constitutes a violation of the fundamental
right to the freedom of expression.
* We have highlighted the damaging and contradictory situation which
may result from the application of different rules online and off-line for
defamation and violations of privacy.
* It is imperative that the Commission produces concrete research into
existing cases and the potential impact of a new regulation before proceeding.
Such guidelines for better regulation have recently been laid out in a
series of Communications (COM(2002) 276 final) which we recommend should
be followed before any future proposal is finalised. 13 September 2002
------------------------------------------------------------------------
[1] Commission consultation on a preliminary draft proposal for a Council
Regulation on the law applicable to non contractual obligations issued
by the Directorate General for Justice and Home Affairs on 3rd May 2002.
http://www.europa.eu.int/comm/justice_home/unit/civil/consultation/index_en.htm.
[2] Follow-up Communication to the Green Paper on EU Consumer Protection.
[3] Meeting of the Rome2Group 9th July 2002. (NB: English common law required
that a tort action could be brought in England in respect of wrongs committed
abroad only if the act complained of was wrong both in England and in
the place where the wrong was committed. This common law rule has now
been abrogated for all actions, except defamation actions, by the Private
International Law (Miscellaneous Provisions) Act 1995. The effect of this
is that courts in the United Kingdom will now be able to exercise jurisdiction,
inter alia, to the full extent permitted by the Brussels Convention on
Jurisdiction and Enforcement of Judgments in Civil and Commercial Matters.
This convention, which is effective between members of the EU, sets out
as a basic rule that EU defendants should be sued in the country of their
domicile unless some other jurisdiction is specifically permitted. In
the case of actions for tort or delict, an additional possible forum is
permitted, namely, the courts of the location where the harmful event
occurred. The convention also gives all EU courts the right to grant provisional
relief even if they would not otherwise have jurisdiction).
Position paper of the European Publishers Council
on the draft Council Regulation on jurisdiction and the enforcement of
judgements
in civil and commercial matters
The European Publishers Council (EPC) is a high level group of Chairmen
and CEOs of European media corporations actively involved in multimedia
markets spanning newspaper, magazine, Internet and on-line database
publishing; many EPC members also have significant interests in private
television and radio.
Summary statement
We welcome this opportunity to comment although we regret that the
Commission did not consult the business community before publishing its
formal proposals. Major questions relating to international private law
are, we feel, being unduly hurried through without proper reference to
parallel regulatory and self-regulatory initiatives.
It is important that the regulatory framework provides for a balance
between enhancing consumer confidence in electronic commerce and
encouraging European businesses to invest in the development and promotion
of on-line services. This should include the freedom to contract and to
choose the applicable law between parties.
The development of on-line publishing in Europe is of fundamental
importance to the future viability of the members of the EPC. We are
concerned that the draft Regulation could, inadvertently, undermine the
whole basis of on-line content provision in the European Community and
damage the fundamental right to the freedom of expression.
The threat of litigation in each and every EU Member State will inhibit
the development of electronic publishing and related e-commerce services
within the internal market thereby denying consumers access to a choice of
content, goods and services from a wide range of publishers and suppliers
established in the European Union. The use of disclaimers to limit the
applicability of offers to particular jurisdictions would stifle consumer
choice and contravene internal market principles.
International, private law is not a satisfactory mechanism for dealing
with consumer conflicts. Court action is time consuming, the cost of which
far exceeds the value of most on-line transactions. Instead, the EPC
supports effective out of court on-line dispute resolution mechanisms,
based on binding, self-regulatory codes of practice to ensure compliance
and redress to provide fast and low cost access to justice for consumers.
As regards the question of applicable law, the EPC wishes to express
strong support for the treaty principles of mutual recognition and country
of origin control; and that they should be enshrined into an EU
legislative framework for electronic commerce as a matter of urgency. This
is entirely consistent with the legal framework for broadcasting services
and must logically form the cornerstone of electronic commerce for
companies throughout Europe and eventually globally.
Current Consultation
We welcome the Commission's invitation to comment on the draft Council
Regulation on jurisdiction and the enforcement of judgements in civil and
commercial matters. We also note the questionnaire which accompanied the
publication of the draft text. With these questions in mind, we have the
following comments to make on the Commission's proposal:
Jurisdiction & applicable law:
Article 15 of the draft Regulation constitutes a significant departure
from the spirit of the original Brussels Convention. The original article,
Article 13, accorded the consumer the right to sue in his own country a
company which is established in another under certain, highly restricted
criteria only. These were:
only if the conclusion of the contract was preceded by a specific
invitation addressed to the consumer or by advertising in the country of
residence of the consumer and;
if the consumer took the necessary steps to conclude the contract also in
that country.
The draft Regulation, however, removes these criteria and applies the
general rule to cases where "the contract has been concluded with a person
who pursues commercial or professional activities in the Member State of
the consumer's domicile or, by any means, directs such activities to that
Member State or to several countries including that Member State, and the
contract falls within the scope of such activities".
Thus, the draft Regulation significantly changes the balance achieved in
the Brussels Convention between the consumer and the seller which would,
in our view, militate against the continued rapid expansion of on-line
services.
This amendment raises a number of concerns for members of the European
Publishers Council:
in an on-line world, the service provider’s relationship with the consumer
is no longer an active one; the service provider does not attract the
consumer by establishing an operation in his country or advertising
directly in that country; the internet is accessible globally and is not
dependent on any physical link between the consumer and the provider; the
provider relies on the consumer taking the initiative and choosing whether
or not to conclude a contract with the provider;
the proposal would trigger jurisdiction merely by virtue of the fact that
the service is accessible in the country of residence of the consumer;
this is clearly unacceptable;
the service provider does not necessarily know if the consumer has
concluded all the necessary steps to conclude the contract in his country
of residence; yet the consumer could still invoke jurisdiction in his
country of residence;
the notion of "directing" activities to a Member State is an ambiguous
term in an on-line world; it would be extremely difficult to make a legal
distinction between a passive or active website;
the right for the consumer to sue in his own country a company which is
established in another is inconsistent with the spirit of the single
market;
the draft Regulation risks inviting a similar approach at an international
level which would not be desirable for the development of electronic
commerce as a global means of conducting transactions;
the draft Regulation should not restrict the freedom of contract (i.e. the
right of contracting parties to choose which court is competent and which
law is applicable in case of litigation) which is enshrined in the
existing Brussels Convention;
applicable law is relevant; it is not unreasonable to suppose that, once
awarded jurisdiction, a judge in the country of residence of the consumer
would apply his national law which may not be the nominated applicable law
in the original offer or conclusion of contract; this would
re-characterise a contract in a completely different way to the intention
of the original contracting parties raising the problem of defeated
expectations as well as undermining the process of harmonisation at EU
level.
The business dimension
The declared aim of the draft Regulation is to introduce "rapid procedures
and legal certainty[1]". We believe that this cannot be achieved within
the framework proposed by the Commission.
The Commission's questionnaire asks the following questions in this
respect:
Is there reason to depart from the specific regime for contracts agreed by
the consumers provided for in the Brussels Convention in the case of
contracts signed with firms doing business at a distance using electronic
means or should such contracts be governed only by the other provisions,
in particular the general rules whereby the courts of the Member State of
the defendant's domicile have jurisdiction, the parties having the option
of agreeing in advance on a court in another Member State?
What are the consequences for the actors involved in electronic commerce
of considering that goods and services offered for sale by electronic
means accessible in a Member State is an activity directed towards that
Member State? Do technical means exist of preventing the possibility of
entering into contracts in particular Member States? If so, what would be
the cost of such means and what would be the implications for the
development of e-commerce?
What will be the economic impact on the development of e-commerce and
investments in this area of applying the specific rules on consumer
contracts proposed by the Commission? On the other hand, what is the
impact on e-commerce of applying the existing rules on consumer contracts
contained in the current Brussels Convention?
We would highlight the following difficulties which businesses would
encounter as a result of the draft Regulation:
the right of a consumer to sue in his/her country a company established in
another does not create legal certainty; it exposes businesses to the
potential of litigation in any of the 15 EU Member States merely on the
grounds that their respective websites can be accessed by consumers in the
receiving Member State;
the fact that the seller may not know if the consumer concluded the
on-line contract in his/her country of residence would only add to this
legal uncertainty;
this legal uncertainty constitutes a barrier to new market entrants from
starting on-line operations especially for SMEs; electronic commerce
represents an unprecedented means of expanding business beyond national
frontiers but SMEs are unlikely to risk taking this opportunity if there
is a danger that their contracts can potentially be challenged in 15
difference jurisdictions;
all businesses would incur considerable additional costs even before they
establish an on-line operation in order to assess the legal risk of being
sued by consumers in a Member State other than the one where the business
is established;
the expansion of electronic commerce is a declared priority of the EU; the
draft Regulation has the potential to punish business for taking advantage
of new technologies to both improve competitiveness and to exploit the
full benefits of the single market by offering services beyond national
boundaries which cannot be the intention;
the draft Regulation therefore risks reducing levels of investment in the
development of on-line services and thus foreclosing, rather than
expanding, on-line markets in the EU;
as a general rule, the jurisdiction and applicable law of the supplier's
country of establishment should prevail but the draft Regulation should
not restrict the freedom of contract;
the freedom of a company to "target" its activities towards other Member
States is a key element of the single market and is implicit in all EU
legislation; the notion that a mechanism could be used to prevent a
service being accessible in a certain Member State is clearly contrary to
the principles of non-discrimination and freedom to provide services
across internal borders in the EU and should be resisted.
We believe that it is necessary to move away from the regime set out in
the 1968 Brussels Convention and instead apply a single regulatory
framework to the on-line operations of EU business. Recourse to legal
proceedings in the case of non-fulfilment of a contract should become a
last resort if there effective out of court, on-line dispute resolution
mechanisms are available. In cases where a consumer wants to sue an
e-commerce service provider, this service provider should be bound by the
jurisdiction and the law of the country where it is established (except
where alternative contractual arrangements have been made). This would
give business the legal certainty to realise the full benefits of
electronic commerce. Failure by the EU to recognise the dangers outlined
above would risk limiting the development of electronic commerce in the
single market.
The consumer dimension
Both the European Commission and the EU consumer lobby claim that the
draft Regulation will benefit consumers by enabling them to pursue legal
redress in their country of residence in a more cost-effective way. They
also claim that consumers would be subject to a lower level of protection
if the jurisdiction of the country of residence of the supplier were
applied. This ignores the fact that there is already high level of
consumer protection throughout the European Union through regulation. The
threat of litigation in each and every EU Member State will inhibit the
development of electronic publishing and related e-commerce services
within the internal market thereby denying consumers access to a choice of
content, goods and services from a wide range of publishers and suppliers
established in the European Union.
The EPC believes that consumers will not receive any additional protection
from exercising the right to sue in their EU country of residence a
company established in another. Instead, effective out of court on-line
dispute resolution mechanisms, based on binding codes of practice to
ensure compliance and redress should be established by industry as a
matter of urgency to provide fast and low cost access to justice for
consumers.
The Commission's questionnaire asks the following questions in this
respect:
In the event of a dispute concerning a cross-border contract in the
European Union between a consumer and a defendant firm which does business
by electronic commerce, what are the costs (legal proceedings,
translation, time spent etc.) which the consumer must bear to obtain a
judgement and its enforcement (taking in to account all the procedural
steps from the time that the action is brought to effective enforcement)
in the event of proceedings before a court in the Member State of (a) in
the consumer's domicile and (b) in the defendant's domicile?
The European Commission's Communication on an "Action Plan on consumer
access to justice and the settlement of consumer disputes in the internal
market" (COM(96)12 final) cited research showing that the average cost of
in-court settlement of a simple inter-Community dispute amounted to
approximately EUR 2,500 for the plaintiff. Do you have any information or
experience in this area, and what effect do you think the growth of
electronic commerce will have on the cost of cross-border disputes?
What would be the impact on the actors involved in e-commerce if, as
envisaged in Article 15 of the proposal for a Regulation, it were possible
for the consumer to bring an action before the courts in the State of his
domicile without having completed the steps necessary for the conclusion
of the contract in that State? At the time of concluding the contract, how
can it be established that one of the parties to the contract is a
consumer and in which Member State he is domiciled?
We support the principle that consumers should have access to remedies in
the event of non-fulfilment of a contract. We believe that this should be
available to consumers at the lowest possible cost with certainty of
enforcement of any decision in their favour. We call upon the Commission
to find a solution which is consistent with its current e-commerce and
single market policy which allows for:
a) service providers to offer goods and services to consumers throughout
the European Union according to only one set of rules: i.e. those of the
country in which the service provider is established.
b) service providers to establish effective out-of-court dispute
resolution mechanisms with binding enforcement systems;
c) consumers to benefit from assistance (e.g. payment of translation
costs) in their country of residence in order to seek redress against the
supplier in the event of non-fulfilment of a contract.
The draft e-commerce directive requires total transparency of operation:
i.e. that e-commerce service providers must ensure that their customers
have the requisite information in the event that they wish to make contact
directly. The first port of call, therefore, of a customer with a
complaint must be directly with the supplier. We believe that the business
community should establish a self-regulatory response to trans-border
consumer complaints. Firstly to agree a code of practice for dealing with
trans-border complaints and secondly to establish a mechanism for passing
complaints back to the country of origin of the e-commerce service.
We would highlight the following shortcomings of the draft Regulation with
regard to consumer redress:
providing a mechanism for in-court legal redress in their country of
residence will not reduce the cost to consumers; the geographic location
of the proceedings does not remove the need to hire a lawyer, translate
documents and so on;
the consumer is unlikely to derive any benefits in terms of reduced costs
if forced to seek legal redress as a first port of call; even if a
judgement is reached expeditiously the supplier remains free to contest
the enforcement of that judgement in his country of residence;
current discussions both within the EU and internationally are examining
the potential benefits of self-regulatory cross-border resolution of
on-line disputes with the primary aim of minimising the cost to the
consumer;
the draft Regulation would undermine these discussions;
it is essential that “global” solutions are found to deal with e-commerce;
the value of damages sought by consumers is usually low; the costs of
pursuing in-court legal redress is most likely to far outweigh any
benefits accruing to the consumer;
as mentioned above, firms engaging in on-line contracts would incur an
increased risk of litigation and face additional legal costs in order to
assess this risk; by deterring operators from entering the on-line market,
the draft Regulation risks reducing consumer choice of goods and services
available for sale via the internet;
there is already a high degree of approximation of consumer protection law
in the EU offering similar levels of consumer protection throughout the EU;
as mentioned above, the seller is often not able to confirm in a
cost-effective way whether the consumer is in the territory of his country
of residence at the time of the conclusion of the contract yet consumers
would still be free to invoke their national courts.
We believe that the draft Regulation risks pre-empting the results of
talks taking place in several fora which are making good progress towards
establishing guidelines for an out-of-court settlement mechanism for
cross-border disputes arising from consumer contracts. The OECD
Ministerial Declaration, for example, has stated its support for "the
development of effective market-driven self-regulatory mechanisms that
include input from consumer representatives and contain specific,
substantive rules for dispute resolution and compliance mechanisms[2].
Talks are continuing along these lines in the OECD and similar initiatives
are already underway at EU level[3]. We support the development of on-line
dispute resolution as the primary means of settling consumer complaints
with the aim of providing swift, low-cost redress.
_____________________________________________
Applicable law and non-contractual and contractual obligations
The European Commission has also invited interested parties to comment on
plans to bring forward a new Regulation on the law applicable to
non-contractual obligations and an amendment to the Rome Convention on
contractual obligations. Again, we welcome the opportunity to comment on
the Commission's intention to propose these new initiatives.
Preliminary comments:
we regret that the Commission and Member States have decided to include
the new Regulation on non-contractual obligations and the amendment to the
Rome Convention in its work programme without first consulting interested
parties as to whether there is a need or demand for a new proposal;
we would recommend that such an assessment is carried out before further
steps are taken; an economic and legal analysis should also be undertaken.
The law applicable to non-contractual obligations
Since this new draft Regulation has a significant impact on the
functioning of the written press and other news media, the EPC feels that
a number of issues relating to the freedom of the press must form the
focal point of any discussions on any discussions on this new initiative.
The Commission asked the following questions in this respect:
Should non-contractual obligations arising from business concluded at a
distance by electronic commerce be within the scope of a community
instrument on non-contractual obligations? To what extent and within what
limits? Should such an instrument cover non-contractual obligations in all
areas, extending to defamation, unfair competition etc.?
Should the law applicable in the country of domicile of the electronic
supplier of goods or services by electronic means generally apply to
disputes relating to a non-contractual relationship, regardless of the
supplier's role in the dispute (defendant or plaintiff) or the status of
the other party (consumer of otherwise)? Or should some other law be
applicable, and if so which one?
What is the economic impact on the development of e-commerce of the
absence of harmonised conflict of law rules in respect of non-contractual
obligations? What would be the economic impact of a Regulation proposing
that the law applicable to such disputes should be the law of the Member
State where the harmful event causes damage?
We would make the following comments regarding any new draft Regulation:
electronic publications should be excluded from the scope of a community
instrument on non-contractual obligations on the grounds that the
publication would be subject to the legal regime in the country of
reception; control of content by a regime other that that of the country
in which the publisher is established would be a limitation to freedom of
speech;
such an instrument would represent a retreat from established internal
market principles;
the task of ensuring compliance with the laws of each possible country in
which an on-line publication could create detrimental effect would
constitute a disproportionate and costly burden on publishers;
this burden would be particularly high for SMEs; electronic commerce
presents SMEs in the press sector with an unprecedented means of
expression beyond their national borders which should be encouraged;
the extension of pre-contractual provisions to include advertising would
be contrary to the Commission's current policy on commercial
communications which aims to ensure that regulation is based on country of
origin control and mutual recognition;
the legal regime in the country of residence of the publisher should
therefore be the applicable law as a general, common rule which gives
legal certainty to publishers; this is consistent with internal market
principles and the EU approach on e-commerce;
the question of what type of non-contractual obligations should be covered
should be subject to thorough consultation with the parties concerned in
advance of any further work on proposals for change.
The Rome Convention on contractual obligations
What economic impact does the current version of Article 5 of the Rome
Convention have on the development of e-commerce? What impact would this
provision have if it were adapted in line with Article 15 of the
Commission proposal for the revision of the Convention? Should the special
arrangements for contracts concluded with firms doing business at a
distance using electronic means?
If contracts with firms doing business at a distance using electronic
means were excluded from the special arrangements for consumer contracts
laid down in the instruments applicable within the European Community
which determine the applicable law, this would mean that the level of
consumer protection would vary according to whether or not the firm was
located inside the Union. What would the consequences be for the European
consumer and for the competitiveness of European firms in world trade?
We would have the following comments to make with regard to the Rome
Convention:
the amendment of Article 5 of the Rome Convention along the lines of the
proposal for Article 15 of the draft Regulation (above) should be avoided
on the grounds that the fear of legal action in any of the 15 EU Member
States would deter publishers from further developing their on-line
publicating operations;
the blocking of websites to consumers in certain countries to avoid
possible legal action outside the publishers country of residence should
not be introduced as an option as this would be contrary to the principle
of freedom of expression;
current variations in consumer protection among EU Member States cannot
justify recourse to country of reception control;
effective self-regulatory mechanisms to resolve disputes involving
consumers and publishers could be developed without a reduction in the
level of consumer protection; a system to deal with disputes within the EU
arising from cross-border advertising is already in operation and national
press complaints procedures could be adapted to the on-line world;
If electronic newspapers had to comply with all the different rules in
every country of the Community with regard to editorial as well as
advertising content, the administrative burden would be disproportionately
high and contrary to the Treaty principle of mutual recognition. If
publishers were subjected to a legal regime requiring control of content
in the country of reception of their services, the freedom of expression
would be severely curtailed, depriving consumers of the opportunity to
experience media from all over the European Union in its original form.
Such a regime would be incompatible with the EU Treaties as well as with
Article 10 of the European Convention on Human Rights.
Comments on the consultation procedure and next steps:
we regret that the Commission did not initiate this consultation with
interested parties before it formally tabled the draft Regulation;
we also regret that the public hearing scheduled for 4-5 November did not
precede the adoption of the draft Regulation;
we are concerned that there has not been an adequate assessment of the
need for the draft Regulation, nor a thorough economic and legal analysis
of its potential impact on electronic commerce;
we are also concerned that the period between the publication of the
Commission notice and the hearing itself will not allow sufficient time
for organisations to carry out a broad, internal consultation;
we hope that a genuine consultation can now take place and lead to
agreement on provisions which will genuinely help build consumer
confidence and the development of electronic commerce in the EU;
we urge the Commission to commit itself to following up the hearing and
giving full consideration to amending the draft Regulation in the light of
both comments from interested parties and the opinion of the European
Parliament; we also look for an assurance from the Commission that these
views will be taken fully into account during further negotiations within
the Council of Ministers; and
we request that the Commission consults fully with interested parties in
advance of any further work on international private law and in particular
on any revisions to Rome II.
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[1] see European Commission press release IP/99/510 of 14 July 1999
[2] see OECD Ministerial Declaration on consumer protection in the context
of electronic commerce, OECD conference on "A Borderless World: Realising
the Potential of Global Electronic Commerce" (Ottawa, Canada - 8-9 October
1998)
[3] reports on the workability of cross-border dispute resolution systems
are due to be submitted to the Commercial Communications expert group in
early-2000 on cross-border promotions services and to the Council of
Ministers and the European Parliament by end-1999 specifically on distance
selling
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