Examination of Witness (Questions 1100
WEDNESDAY 7 JUNE 2000
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 Kingdomnot at all unlikelyyou
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
Lord Paul: If there was not, the lawyers would
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 beingwithout going too much into detailsit
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.
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.