Jurisdiction on the Internet
European Convention
By Agne Lindberg and Abridged by Devashish Bharuka
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The author attempts to describe how different international conventions apply when introducing the Net as a new tool for international transactions. There are basically two jurisdictional issues regarding international transactions over the Net -- Jurisdiction to Prescribe and Jurisdiction to Adjudicate.
The following are the five most important Europe based international conventions concerning jurisdiction:
Jurisdiction to Prescribe - The Lugano Convention
Article 1 of the convention makes it applicable to civil and commercial
matters thus making it possible for the convention to be applied in electronic
commerce over the Net as well. The underlying principle of the convention
is that the state where the person is domiciled is entitled to assert jurisdiction
over that person. Whether the person in question is domiciled within the
member state or not will be decided upon according to the internal law
of the state where he is sued. There are several exceptions from this principle
like, in contracts cases, a person may be sued in the courts of the country
where the obligation should be performed. Consumer matters have been dealt
with very liberally. A consumer can sue in the state where he is domiciled.
Also, prorogatory agreements rule has been altered so that the consumer
provision cannot be departed by from by means of such agreements.
Choice-of-Law - The Rome Convention
The main principle of the convention is the parties freedom to choose
which law shall apply to the agreement entered between them. In the absence
of any valid agreement regarding choice of law, the law shall of that country
shall apply, which is most closely connected to the agreement. Which country
the agreement is most closely connected to will be assessed on the basis
of the where the characteristic performance of the agreement shall be effected
-- presumably the delivery being the characteristic performance. In case
of immovable property, the applicable law is that of the country where
the property is situated. In or contracts regarding the carriage of goods
law is that of the country where the carrier has his principal place of
business. There are no specific rules relating to electronic commerce.
Internet Trade Between Entrepreneurs
Right to Prescribe: The EC conventions on jurisdiction and choice-of-law
do not pose major difficulties to trade on the Internet as long as the
parties to the transaction are domiciled in the convention states. However,
a present problem with websites is that they seldom present the legal domicile
of the party. Therefore, the physical domicile of entrepreneurs acting
on the Internet will still be the determining factor when it comes to deciding
which are the competent courts and which is the applicable law within the
EC countries. We might encounter interpretative difficulties in areas like
performance of a contractual obligation, occurrence of a harmful event
causing damage and a branch being the basis of jurisdiction. The author
opines that these problems are merely of an interpretative nature. Consequently,
when it comes to trade between entrepreneurs the present conventions will
suffice when completed with interpretative answers by the European Court
of Justice. Still there is an obvious problem that the contracting parties
might not know where the counterpart is domiciled.
Choice-of-Law Issues: Similarly to the Lugano Convention, the
Rome Convention is well suited for dealing with Internet transactions.
Likewise interpretative problems might arise. The Rome Convention might
cause problems like characteristic performance of a contract which constitutes
the closest connection to the country in question. A problem posed by the
author is whether a server could constitute ‘another place of business’.
Consumer Internet Transactions
Furthermore when it comes to consumer Internet transactions within
the EU, Internet will not again give rise to any specific questions which
could not be solved on the basis of existing conventions. The consumers
do almost always have the possibility to claim their rights under the law
and in the courts of the country where they reside. Admittedly this causes
a problem for entrepreneurs marketing goods towards EC customers, since
they avail themselves to any national courts or laws of the member states,
but this is not either an exclusive Internet problem.
Conclusion
The existing conventions -- with interpretative problems -- suffice
as the basis of assessing Internet jurisdiction and choice-of-law due to
the simple fact that the conventions merely concern themselves with the
physical location of the contracting parties, which is not altered due
to the Internet but rather renders Internet shopping similarities to conventional
mail-order shopping.
Solutions
The author suggests certain solutions of jurisdictional problem on
the basis of domain name registration country, the IP-number, physical
location of the serve, and lastly, on the basis of International Conventions.
Self-Regulatory Measures have also been suggested by establishing an international
domain name administrative authority. Question of law can be solved by
making use of the UN Convention of the International Sale of Goods, disputes
can be solved by arbitration and the awards can be enforced under the New
York Convention. However, in the end, it is suggested that the only way
of solving these issues is to enter into an international convention regulating
the choice-of-law and the jurisdiction.