UK: Privacy Protection In Electronic Communications

From March 2002 a new regime dealing with questions of jurisdiction shall come into force throughout Europe replacing the Brussels Convention. In short form it is known as the ‘Brussels 1 Regulation’, the long form of which is ‘Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters’ (‘Brussels 1’). Among other things, Brussels 1 will deal with the question of jurisdiction for electronic consumer contracts.

Brussels 1 provides for the ‘free movement’ of judgments in civil and commercial matters in the EU. Its policy is to ensure that rules of jurisdiction and enforcement of judgments are dealt with consistently in the EU.

Put simply, jurisdiction refers to the court of a country in which an action can be brought. This is an important question to ponder even before matters get to the stage of litigation, because even if a litigant has a strong case and the ‘law’ is favourable to him, if the court to which he turns does not have jurisdiction to hear the case, all is lost!

In respect of contracts in general, Brussels 1 provides that a person domiciled in a member state can be sued in the courts of the place of performance of the obligation. And place of performance, significantly, is stated to be in the case of sale of goods, the place in a member state where, under the contract, the goods were delivered or should have been delivered. In the case of services, however, the place of performance is defined as ‘the place in a Member State where, under the contract, the services were provided or should have been provided’.

The one comment that can be made here is that while the place of performance for a ‘real’ contract may be easy to ascertain, it may not be so in the case of on-line sales.

In the case of on-line consumer contracts - in addition to the rules that apply to contracts in general as dealt with above – Articles 15 and 16 of Brussels 1 state that if (1) it is a contract for the sale of goods on instalment credit terms; or (2) for a loan repayable by instalments or any other form of credit, made to finance the sale of goods; or (3) the contract has been concluded with an on-line seller who carries out business in the consumer’s domicile state or targets the consumer’s state; the consumer can sue the seller either in the courts of the seller’s or consumer’s domicile at his option.

However, proceedings may be brought against a consumer by an on-line seller only in the courts of the consumer’s domicile.

So, the major significance of this is that targeting the domicile member state of a consumer (i.e., the whole of the EU) over the web is sufficient to bring an on-line business within the jurisdiction of a European member state court, even if the seller is based outside the EU.

Where there is a dispute about the operation of a branch, agency or other establishment, if that branch, agency or establishment is situated in a member state, jurisdiction can be found there, even if the principal place of the on-line seller is elsewhere. An important question that arises in this context and has yet to be answered is whether the location of a web server or host server fixes the location of a branch, agency or establishment under Brussels 1. Although the question is not answered in Brussels 1, it may have already been obliquely answered in the negative by the Electronic Commerce Directive which provides that the place of establishment of a company providing services via an Internet website is not the place at which the technology supporting its website is located.

It is possible to contract out of these provisions by an agreement (1) which is entered into after the dispute arose; or (2) which allows the consumer to bring proceedings in courts other than his/her own domicile or the seller’s domicile; or (3) which is entered into by the consumer and the seller both of whom were at the time of the conclusion of the contract ‘domiciled or habitually resident’ in the same member state, provided that such an agreement is not contrary to the law of that member state.

On the basis that European consumers can only be sued in their home member state and that they can also sue on-line sellers in that same place under Brussels 1, all on-line businesses that ‘target’ the European market via the web must now make a commercial decision as to whether it is going to be worth doing on-line business in Europe. On the question of "targeting", however, attention needs to be drawn to the distinction between an ‘active’ and a ‘passive’ website. It seems that only ‘active’ websites can be said to "target" a particular market, if US jurisprudential development is anything to go by.