Select Committee on European Union Minutes of Evidence

Examination of Witness (Questions 1100 - 1111)



  1100. Of course it is not unique to e-commerce.
  (Mr Wilderspin) No.

  1101. It has nothing to do with how it was ordered, whether it was ordered in a written letter.
  (Mr Wilderspin) That is quite correct. None of these provisions in the regulation are e-commerce specific.


  1102. Coming back to this point of this Article 15, what a large company does about that, Barclaycard says, who have given evidence to us, is they gradually spread their business across Europe so they go to France and Germany and they do it bit by bit because they are big enough to find out what laws apply. For a small business wanting to extend its business it simply does not have the resources to do that. Is it or could it be any part of the role of the EU in some form to be able to make that information easily available to small businesses so they could more easily extend their business across Europe? If it is not an EU role how does a small business tackle this problem?
  (Mr Wilderspin) Certainly I would agree that there is a need for information, whether this is the role of the Commission I am not entirely certain. It might be argued that it should be a role for professional bodies, for example. It is a kind of professional risk if one wants to sell abroad. That is certainly without prejudice to recognising that there is a need for information. If we take the case of, say, a small trader wanting to set up a website and to sell abroad, they have got to do a certain amount of risk assessment, it is part of the paperwork in a sense. In any cross-border contract one or other of the parties has to run the risk of litigation in a foreign forum, it is something which cannot be avoided. It has either got to be the seller or the purchaser. In the case of a small trader even wanting to engage in business to business contracts the risk is that they could be sued abroad by virtue of this provision, Article 5(1). In fact, in business to business contracts they can minimise or exclude this risk by inserting a jurisdiction clause in their conditions of business. That would solve the problem with regard to business to business contracts unless, of course, they received a large order, say, from a foreign firm which said "we like your product but we do not like your jurisdiction clause. We will buy the product but if there is any dispute the matter will be litigated in our forum". Again, that is a question of risk which they would have to consider.

  1103. I am really thinking of B2C where there is an element of risk and it is a question of what would minimise it because, as I understand it, at the moment a European small business would be put at a disadvantage against a US small business doing business in this way which clearly is an EU issue that it would somehow want to deal with.
  (Mr Wilderspin) How would—

  1104. Because the US business, or not from the US necessarily but from China or anywhere else, will not have to conform to EU codes.
  (Mr Wilderspin) For example, an American firm doing business within the United States is liable to be sued in any one of the 50 states according to the Zippo theory.

  1105. Really it is a little bit unfair, this analogy all the time with the States. They speak the same language, they have a dollar that runs everywhere.
  (Mr Wilderspin) It is just my first point. If an American firm wishes to do business in Europe then the provisions of the Brussels Convention do not apply to it, the provisions of national law apply. So each Member State is free to apply its own provisions of jurisdiction to that American company. In France, for example, there is the privilege of nationality, that a French plaintiff can sue in France a company, or indeed any person, resident anywhere in the world on the basis of that jurisdiction. In those circumstances it would be difficult to get the judgment enforced in America but if the American company had assets not only in France but anywhere within the territory of the Brussels Convention states, that judgment could be enforced against that American company. So, for example, if you had an American company which had assets not in France but in the United Kingdom—not at all unlikely—you could be sued in France on the basis of the plaintiff's nationality alone, the judgment could then be enforced by virtue of the Brussels Convention, by virtue of the regulation in the United Kingdom, against those assets. It is not really at all accurate to say that such a company would be at an advantage in comparison with a European company.

  1106. That is France though, that does not apply to the United Kingdom.
  (Mr Wilderspin) In the United Kingdom you can sue on the basis of Rules of Supreme Court Order 11. There are all sorts of heads. Every country in Europe, with the exception of Spain, has what is called a head of exorbitant jurisdiction which allows firms abroad to be sued in that country if there is some connection. So, for example, under United Kingdom law, if a contract is governed by English law, it was made in England, there are a number of different heads which would give an English court jurisdiction.

  Lord Paul: If there was not, the lawyers would find it.


  1107. The issue only applies if there are assets there. If I am running a website out of Costa Rica and I am summonsed to appear at Kensington Magistrate's Court, I am going to say words that I cannot say in front of the shorthand writers.
  (Mr Wilderspin) This brings me to the third point which is this danger of lawless oases being set up. Efforts are going on at worldwide level to try to avoid this problem. There are presently negotiations going on in The Hague, The Hague Conference, with a view to concluding a Convention on worldwide jurisdiction in the enforcement of judgments, the idea being that it would cover not only Europe but also the main commercial partners including the United States, Canada, Australia, China, Japan, Korea and so forth, the idea being—without going too much into details—it would, on the one hand, limit the possibility of invoking exorbitant heads of jurisdiction and, on the other hand, it would allow for easier recognition and enforcement of judgments granted on the basis of permitted heads of jurisdiction. One last point on this whole question of exorbitant jurisdiction. In regard to the question in relation to Europeans exercising exorbitant jurisdiction, the Americans exercising exorbitant jurisdiction against European firms in this context is an enormous problem and it has been recognised that for the Europeans the main interest of the Worldwide Enforcement Convention is actually to cut down the use by American courts of their extremely wide heads of exorbitant jurisdiction.
  (Ms Rouchaud) You are right in pointing out that The Hague draft Convention is very important because it is important that we try to have consistency as far as possible between the European rules and the worldwide rules. That is why it is very important that the Community defends in The Hague the Community positions and tries to have some rules which are making the competition the same so that everybody is submitted to the same set of rules. It is very important that the Community is present and is very active in The Hague trying to defend this draft. Work is still going on. It is planned to have this Convention finalised at the beginning of 2002. There is another point I would like to add. You have talked about the burden of risk for SMEs and so on, and I do appreciate this risk, but I think that here again we have to find a balance between the burden of risk on the consumer, which is always weaker than the burden of risk on the business. Business, even small business, is always stronger than the consumer. If the consumer is running a risk which is much higher when he makes a consumer contract via a website rather than via a telephone or paper advertisements, any contract concluded at a distance or any face to face contract, the risk is much greater for him to have to sue because in e-commerce as the payment has been done in any case it is always for the consumer to sue, to take the initiative and that is why they are in a very weak position, because they are never defendants, they always have to litigate and they run a risk. From that point of view it is unbalanced. If we put the burden of risk on the head of the consumers to allow these SMEs to develop there will not be any e-commerce because consumers will not go through e-commerce. If you see the figures so far, very few consumers are using e-commerce because they feel it is too risky because of hackers, because of credit cards and so on and so on. If tomorrow they hear that they have to sue in Greece because they have bought two gallons of olive oil they would not do it. I think we have to take that into consideration too and I think the best way is to put the risk on the provider. In most cases it is a very limited risk. In my view it is purely theoretical in many cases because in practice it does not occur because consumers will not go to the courts because what they buy by e-commerce is generally of low value and they will not go to the court. They will go to ADR if there are ADR schemes. It is up to SMEs and big business to put through some very clear schemes which are fair and efficient and the customer will use it. That is why Brussels I and ADR are linked altogether because the more ADR is used the less the Brussels rules will be used. We need to have this jurisdiction as a safeguard in most cases.

Viscount Brookeborough

  1108. Just to follow up on that very quickly, does this whole conversation not bring out really a key factor for the expansion of e-commerce and e-retailing? Earlier I think Mr Wilderspin said that he did not feel it was necessarily the EU or the Commission's job to provide information on the public relations' side of confidence. It is all really based, is it not, on lack of knowledge in the consumer organisation and the SMEs. It is very difficult to reach the SMEs because they do not often have time to come to you to get the information, and for individual consumers it is even more difficult. Who is going to provide the information which in most cases is a matter of supplying information which will give confidence to people that the system can work?
  (Ms Rouchaud) My feeling, as Michael said, is maybe for the businesses and organisations to make some information available through their website and have conditions which are very clear and user-friendly. It is up to the Member States to organise the information, it is up to the business and consumer organisations and maybe the Commission can do something more. We all know that the Tampere Conclusion indicated that legal information should be more easily available, in order to improve access to justice and access to law.

  1109. Yes, it is very basic facts, is it not?
  (Ms Rouchaud) Yes. We are working on possibly making available, among others, the Brussels and Rome instruments altogether, in a website which maybe in the future would be available for any citizen. There is still a lot of work to be done.
  (Mr Wilderspin) With perhaps some explanation written in there in a clearer language.

  1110. Fools' guide.
  (Mr Wilderspin) Once it is on the Web then in principle it is available for anyone who is likely to conclude a contract via electronic commerce.


  1111. Thank you very much indeed. You have made very clear indeed what was a major issue on our agenda this morning. It is a big one for you as well I think. Let us hope a satisfactory solution can be found during the rest of the year and in time for 2001, is it?
  (Ms Rouchaud) For the Brussels I regulation we expect an early adoption of the Regulation, before the end of the year, depending on the adoption of the European Parliament's opinion. Then there will be a deadline for entry into force, presumably nine months or one year, which will give more time for the ideas on ADR to develop.

  Chairman: Anyway. Thank you, all of you, for your helpful contribution.

previous page contents next page

House of Lords home page Parliament home page House of Commons home page search page enquiries index

© Parliamentary copyright 2000