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Draft position paper on of the European Publishers Council on the draft Council Regulation on jurisdiction and the enforcement of judgements in civil and commercial matters

Introduction
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 publishers; many EPC members also have significant interests in commercial 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 though 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. The development of electronic commerce, particularly 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.

International, private law is not a satisfactory mechanism for dealing with consumer conflicts. 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.

As regards the issue 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 country a company 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 militate against the continued rapid expansion of on-line services. This amendment raises a number of concerns:

in an on-line world, the seller's relationship with the consumer is no longer an active one; the seller does not attract the consumer by establishing an operation in his country or advertising in that country; the internet is accessible globally and is not dependent on any physical link between the consumer and the seller;

the seller relies on the consumer taking the initiative and choosing whether or not to conclude a contract with the seller; 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 seller 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 country a company 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 (ie: the right of contracting parties to choose which court is competent 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; this risks renationalising key aspects of on-line regulation.

The business dimension
The declared aim of the draft Regulation is to introduce "rapid procedures and legal certainty ". 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 parituclar 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 incurr 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; the draft Regulation therefore risks reducing levels of investment in the development of on-line serices and thus foreclosing, rather than expanding, on-line markets in the EU;

as a general rule, the jurisdiction 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 apply a single regulatory framework to the on-line operations of EU business – i.e: 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 the 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 busines 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-fulfillment 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:

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;

Service providers to establish effective out-of-court dispute resolution mechanisms with binding enforcement systems;

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-fulfillment 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 incurr 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 but 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 ". Talks are continuing along these lines in the OECD and similar initiatives are already underway at EU level . 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 move 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 publications 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 speech;

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 Rome II.

see European Commission press release IP/99/510 of 14 July 2023 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) 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