Legal Risk Management in Electronic Commerce

In the previous chapter, it was established that cross-border law enforcement carried out by public entities is difficult. This is mainly due to the lack of international agreements on the subject and because of the dual criminality principle. The 2005 Framework Decision on Financial Penalties opens for recognition of fines, but with some significant exceptions, leaving it possible for EU Member States to refuse recognition in situations dealt with in the thesis.

The purpose of this chapter is to identify and discuss possibilities in cross-border law enforcement carried out by private entities, i.e. entities not exercising public powers. The focus is, like the previous chapter, only on enforcement through the judiciary. As for public law enforcement, traditional, private law enforcement can be carried out in two ways, i.e. when the state in which the Business is established applies foreign law or when that state recognises a foreign judgment where foreign law is applied. The Business may also suffer substantial inconvenience of litigating before a foreign court even though the law of the Business is applied.

This chapter is based on the assumption that the Business and the User have not entered an agreement on neither forum or applicable law. Agreements on choice of forum and applicable law is dealt with in the following chapter. The situations dealt with in this chapter may for example arise when a competitor or an organisation is suing for damages or in order to issue an injunction. The situation may also arise in connection to a contract entered between the Business and another business or a consumer.

The legal area dealt with in this chapter is private international and procedural law, where the former comprises the choice of law and the latter other procedural aspect such as, in particular, jurisdiction and recognition and enforcement of judgments. Private international and procedural law is build upon the idea of sovereign states. Private international and procedural law has its source in national law, but has been further developed in international fora which has lead to a number of conventions voluntarily joined by states. As accounted for below, a number of activities in the European Union have lead to obligations, which are now derived from mandatory EU legislation. According to standards of international law regarding the treatment of aliens, states are normally required to provide a system of courts empowered to decide civil cases and private international law should be appropriately applied.¹

The Hague Conference on Private International Law,² the European Union,³ the Council of Europe⁴ and the European Free Trade Association⁵ have been the primary providers of conventions and other legal instruments for European cooperation on private international and procedural law. The contracting parties to the Treaty Establishing the European Economic Community have elaborated a fundamental convention on international procedural law in civil and commercial matters, the 1968 Brussels Convention,⁶ which concerns jurisdiction and enforcement of judgments in civil and commercial matters.

The 1988 Lugano Convention⁷ is a parallel convention to the 1968 Brussels Convention which is also open to other states, including in particular members of the European Free Trade Association.⁸ The primary convention on private international law in Europe is the 1980 Rome Convention⁹ on the law applicable to contractual obligations. The convention may pursuant to article 28 be signed (only) by states which are party to the Treaty establishing the European Economic Community. Since private international law is a part of national law, any state may freely choose to adopt rules similar to those of the 1980 Rome Convention.

The Treaty of the European Community as amended by the 1997 Amsterdam Treaty and the 2001 Nice Treaty opens for closer judicial cooperation in the European Union and by utilising the legal instruments hereof.¹⁰ This cooperation relates to judicial cooperation within both private and public law.¹¹ Within private international private and procedural law, the main focus has been on enhancing the judicial cooperation between the EU Member States by transforming existing convention into EU secondary legislation (directives and regulations). This transformation was done with the 1968 Brussels Convention, which to a large extent is replaced by the 2000 Brussels Regulation.¹² This regulation is adopted by all EU Member States but Denmark.¹³ The 1968 Brussels Convention and the 1988 Lugano Convention still applies between Denmark and the respective contracting states. Some of the newer EU Member States have, however, not acceded to neither of the conventions.¹⁴ A similar transformation process is going on concerning the 1980 Rome Convention.¹⁵

4.1. Private International Law

When the Business is being sued, the court seized will apply its own national choice of law rules in order to determine the law applicable to the case. In connection to this thesis, it is important to determine in which situations the Business may expect foreign law to apply. Most states allow for the application of foreign law in certain private law suits and under certain conditions. The starting point of private international law is the contacts approach,¹⁶ which provides that the law with the closest connection to the matter should be applied. Most states also accept the contracting parties’ freedom to choose the applicable law (parties' autonomy).¹⁷

In Europe, the main provisions for choice of law in contract are found in the 1980 Rome Convention.¹⁸ Besides laying down the parties' autonomy and the contacts approach as key principles, the convention contains choice of law rules for inter alia certain consumer contracts and contracts on sale of goods and services. A protocol concerning interpretation of the convention was elaborated by the European Court of Justice;¹⁹ this became effective on 1 August 2004.²⁰ The European Court of Justice has not yet had the opportunity to provide any case law on the convention.

The 1980 Rome Convention does not apply to tort cases and there is no other general, international agreement on the choice of law in such cases.²¹ There is, however, in the European Union an ongoing work on a Rome II regulation, which seeks to approximate the choice of law in tort.²²

4.1.1. Contractual Obligations

The starting point of the 1980 Rome Convention is according to article 3 that a contract shall be governed by the law chosen by the parties. It is, however, in this chapter assumed that the parties have not entered an agreement on the applicable law. In the following chapter it will be examined to which extent and under which circumstances the Business can mitigate legal risks by choosing the applicable law.²³

In the absence of a choice of applicable law, a contract must, according to article 4(1), be governed by the law of the country with which it is most closely connected (the contacts approach / closest link). This starting point is supplemented with a number of presumption rules which notably are rebuttable presumptions.²⁴ A contract is presumed to be most closely connected with the country where the party who is to effect the characteristic performance of the contract, has his habitual residence or central administration at the time of conclusion of the contract.²⁵

If the contract, like in the test set-up of this thesis, is entered into in the course of that party's trade or profession, the closest connection is presumed to be the country in which the principal place of business is situated. It is assumed in this thesis that the Business is to perform the characteristic performance of the contract. This means that if the Business is sued in a state which has acceded to the 1980 Rome Convention, the applicable law to that contract will most likely be the law of the state in which the Business is established. It should for good measure be mentioned that foreign states may not necessarily apply the law of the state in which the Business is established correctly. And as demonstrated below, there are only limited possibilities of refusing recognition under the Brussels/Lugano System as dealt with below.²⁶

The characteristic performance is normally easy to establish in the sale of goods or service, where the consideration is payment of a monetary nature which is assumed to be the case in this thesis. The habitual residence, the central administration or the place of business is easily determined in the case examined in this thesis, assuming that an electronic presence on the Internet cannot constitute such place. It is clear from the Giuliano-Lagarde Report that the intention of the presumption rule in article 4(2) is only to focus on the place of establishment rather than the place where the contract is entered and where the inherent obligations are to be performed because these concepts usually are more difficult to determine. This solution was chosen because the concept of characteristic performance links the contract to the social and economic environment of which it will form a part.²⁷

If the characteristic performance cannot be determined or if it appears from the circumstances as a whole that the contract is more closely connected with another country, article 4(2) does not apply,²⁸ and the choice of law has to be determined by applying the contacts approach. In this thesis, it is assumed that the characteristic performance is the obligation which lay on the Business to perform. It cannot, however, be excluded that given the circumstances and with the margin of discretion left in article 4(5) that a court may determine the contract to have a closer connection to that foreign country, where the User is established. The possibility of disregarding the presumptions in article 4(2-4) can be invoked when all the circumstances show the contract to have closer connections with another country.²⁹

There are considerable differences between how much the courts of different states require to depart from the presumption rules.³⁰ The Giuliano-Lagarde Report does not provide examples of relevant factors or situations, which would weigh in favour of departing the presumption rule in article 4(2). As mentioned above, it is clear that the intention of article 4(2) is that in particular the places where the contract is entered and obligations are to be performed should not in itself lead to a departure from the main rule. For the situations examined in this thesis, it could be argued that extensive marketing in a foreign state, performance in that state and in particular the nature of electronic commerce should lead to a closer connection to a foreign state.

In general, there has been detected a homeward trend which entails that national courts have a tendency to apply the law of the forum (lex fori).³¹ This could lead to a higher risk of the application of foreign law, when the Business is being sued in a foreign court. It should be noted that the EC Treaty and the 2000 E-Commerce Directive may limit such departure from the main rule.³² Article 4(2) of the 1980 Rome Convention does not apply to all contracts. Consumer contracts are for example dealt with separately in article 5, as elaborated on below.

The 1980 Rome Convention is without prejudice to the application of international conventions to which a contracting state is, or becomes, a party.³³ Of particular relevance in this context, is the 1955 Hague Convention³⁴ which concerns the choice of law in international sales of goods. In default of a law declared applicable by the parties, a sale must according to article 3 be governed by the domestic law of the country in which the vendor has his habitual residence at the time when he receives the order. This convention has the same starting point concerning sales of goods as the 1980 Rome Convention, but notably without providing the more flexible presumption-approach.³⁵ The only mean of departure from this rule is for public policy reasons.³⁶

A sale must be governed by the law of the country in which the purchaser has his habitual residence or establishment, if the order is received in that country, whether by the vendor or by his representative, agent or commercial traveller. It should be obvious that this exception should not apply to a situation where the vendor receives the order through a website available in the country of the purchaser.³⁷ The 1955 Hague Convention also applies, in principle, to consumer contracts, but the Hague Conference has declared³⁸ that the convention does not prevent contracting states from applying special rules on the law applicable to consumer sales. The majority of states which are part of both the 1980 Rome Convention and 1955 Hague Convention have chosen to do so.³⁹

4.1.1.1. Mandatory Rules

Article 7(1) of the 1980 Rome Convention provides that when applying the law of a country, effect may be given to the mandatory rules of the law of another country with which the situation has a close connection. This provision reflects the generally accepted principle that national courts, under certain conditions, can give effect to mandatory provisions other than those applicable to the contract by virtue of the choice of the parties or by virtue of a subsidiary connecting factor.⁴⁰ It should be emphasised that article 7(1) is not itself a mandatory rule.⁴¹

A close (genuine) connection to the law of another country may exist when the contract is to be performed in that other country or when one party is resident or has his main place of business in that other country.⁴² The connection must exist between the contract as a whole and the law of a country other than that to which the contract is submitted, and effect may be given to both legislative provisions and common law rules.⁴³ When effect is given to mandatory rules, it does not as such alter the law applicable to the contract, but it imposes on the court the extremely delicate task of combining the mandatory provisions with the law normally applicable to the contract in the particular situation in question.⁴⁴ It is further provided in article 7(1) that this applies if and in so far as, under the law of the other country, those rules must be applied whatever the law applicable to the contract. In considering whether to give effect to these mandatory rules, regard shall be had to their nature and purpose and to the consequences of their application or non-application.⁴⁵

It is emphasised in article 7(2) that nothing restricts the application of the rules of the law of the forum in a situation where they are mandatory irrespective of the law otherwise applicable to the contract. The origin of this paragraph is found in the concern to safeguard the rules of the law of the forum (notably rules on cartels, competition and restrictive practices, consumer protection and certain rules concerning carriage), which are mandatory in the situation, whatever the law applicable to the contract may be.⁴⁶

This provision is of particular importance in connection with an agreement on choice of law which is dealt with in the following chapter.⁴⁷ It is mentioned in this context because it also applies in situations where the applicable law is found by virtue of subsidiary connecting factors. In relation to this thesis, the provision may be relevant when a contract has a close connection to another state. In such situations specific (mandatory) provisions of that law may be given effect even though the contract as such is governed by the law of the state in which the Business is established. To the extent the Business is carrying out a commercial activity in another state, in particular through trade, it is likely to have a close connection to that state. Under such circumstances, it is not unlikely that foreign law on unfair competition may be invoked under a civil procedure.⁴⁸

4.1.1.2. Certain Consumer Contracts

Consumers often benefit from certain legal protection. In the 1980 Rome Convention, consumers are granted protection through a mandatory rule which designates the consumer’s substantive law in 'certain consumer contracts'. The text of the 1980 Rome Convention consumer provisions raises a number of uncertainties. Case law on this part is limited, possible due to preventively high litigation cost compared to the subject matter normally dealt with in consumer contract.⁴⁹ It should be emphasised that the consumer rules in the 1980 Rome Convention apply regardless of the magnitude of the amount in question. It is a prerequisite for designating the consumer’s law under article 5 of the 1980 Rome Convention that the contract concerns the supply of goods or services to a person ('the consumer') for a purpose which can be regarded as being outside his trade or profession, or a contract for the provision of credit for that object and:

The requirements listed are identical to the corresponding requirements in article 13(1)(3) of the 1968 Brussels convention. It is clear from the Schlosser Report on the 1968 Brussels Convention that the identical wording is intended.⁵⁰ It should for good measure be mentioned that article 5 of the 1980 Rome Convention does not apply to a contract of carriage or a contract for the supply of services where the services are to be supplied to the consumer exclusively in a country other than that in which he has his habitual residence. Article 5 applies, however, to contracts concerning package tours.⁵¹

It follows from the 1980 Rome Convention that while maintaining the parties freedom to choose the applicable law, the choice of law may not have the result of depriving the consumer of the protection afforded to him by the mandatory rules of the law of the state in which the consumer resides, provided the requirements above are satisfied.⁵² Only the first indent mentioned above will be subject to further scrutiny in this thesis. The first indent is intended to cover inter alia orders where the trader has carried out certain acts such as advertising in the press, on radio or television, in cinemas or by catalogue aimed specifically at that country. Business proposals made by canvassing are also comprised.⁵³

Normally, it will be straightforward to establish that a specific invitation was addressed to a certain consumer. Even though e-mail was not commonly available at the time of conclusion of the 1980 Rome Convention, such an approach to a consumer must be a 'specific invitation' to a consumer. It is more uncertain whether an offer on a website will be considered a specific invitation. It does not make a difference whether such a website is considered a 'specific invitation' or 'advertising [in that country]'. An important question and a common theme for this thesis is how to determine when advertising on a website can be said to be carried out in a certain state.⁵⁴ There is no basis in the Giuliano-Lagarde Report or the convention text itself for establishing that the required advertising cannot be carried out via a website or other electronic means.

It is a prerequisite that the advertising was aimed at the state in which the consumer is domiciled. The word 'aim' may be interpreted as purposefully directing advertising at a specific state. The Giuliano-Lagarde Report uses the example of advertising in a German publication versus an American publication which is also sold in Germany. The first situation is included whereas the latter requires that the advertisement appears in special editions intended for the European countries.⁵⁵ This distinction may also be applied to a website. In that context it is noteworthy that special editions intended for the European countries are included, which provides that a website does not necessarily have to be targeted exclusively at a specific state, but may also be directed to a number of states, including the state in which the consumer is domiciled.

Another requirement is that the consumer took the steps necessary for the conclusion of the contract in which he has his habitual residence. The word 'steps' includes inter alia writing or any action taken in consequence of an offer or advertisement.⁵⁶ The wording 'steps' was chosen to avoid confusion with the problem of determining the place where the contract is concluded.⁵⁷ Applied on a typical Internet transaction, it means that the consumer must physically be in his state of habitual residence when operating the computer to conclude to contract.

Due to the link to the corresponding consumer protection rules of the 1968 Brussels Convention, the discussion and case law presented below on that convention should also be included in the construction of the consumer protection rules in the 1980 Rome Convention. This is all the more important in the light of the ratification of the interpretation protocol, which empowers the European Court of Justice to interpret the convention.⁵⁸

4.1.1.3. Possible Objections

It follows from article 2 of the 1980 Rome Convention that any law specified by the convention must be applied whether or not it is the law of a contracting state. It is possible to object to the choice of law by questioning the material or formal validity of the contract or if the choice of law is manifestly incompatible with the public policy (‘ordre public’) of the forum.

According to article 9(2), a contract concluded between persons, who are in different countries, is formally valid if it satisfies the formal requirements laid down by the law of one of those countries or of the law governing the substance of the contract.⁵⁹ This means that the Business will have to observe the formal contracting rules of the state where the User has his habitual residence. There is in article 9(5) an exception for certain consumer contracts as defined above. The formal validity of such a contract is governed by the law of the country in which the consumer has his habitual residence. This means that the Business may not rely on its own contracting law. Article 9 applies to both contracts and unilateral acts intended to have legal effect, such as for example notice of termination, remission of debt, declaration of recession or repudiation.⁶⁰

The existence and material validity of a contract is to be determined by the law which would govern the contract under the convention, if the contract was valid.⁶¹ This principle applies also to the determination of the existence and validity of terms of a contract, including the existence and validity of the parties consent as to choice of the applicable law.⁶² A party may, however, rely upon the law of the state in which he has his habitual residence to establish that he did not consent to a term (existence, not material validity) if it appears from (all) the circumstances that it would not be reasonable to determine the effect of his conduct in accordance with the law which would govern the contract under the convention if the contract were valid. This exception is designed inter alia to solve the problem of the implications of silence by one party as to the formation of the contract.⁶³ This objection may also be invoked if the contract does not fall within the scope of the rules concerning certain consumer contracts. Even if the contract is comprised by these specific consumer rules, the material validity may be relevant.

Article 16 of the 1980 Rome Convention contains a restrictively worded reservation concerning public policy. The reservation covers situations where the application of certain provisions of the law specified by the convention would lead to consequences contrary to the public policy of the forum. The result must be 'manifestly' incompatible with the public policy of the forum which provides that the court must find special grounds for upholding an objection. The expression in the 1980 Rome Convention also comprises EU public policy.⁶⁴ 'Ordre public' usually implies a narrow exception to a general rule, and the 'manifestly incompatible' emphasises the requirement of a clear-cut case.⁶⁵

4.1.2. Tort

Tort cases arise when a private party claims damages from or wants to put an end to a certain activities which do not relate to a contractual relationship between the parties. Tort claims may arise from a number of different legal areas, such as unfair competition, defamation and infringement of intellectual property rights. The claims will usually consist of demand for compensation (damages) and/or an injunction. Neither the 1980 Rome Convention nor the 1955 Hague Convention apply to tort cases. Unfair competition law is formulated differently according to the country and the structure of the protection conferred by national legislation against unfair competition shows divergences. The protection may be ensured either through a special law or specific provisions inserted into legislation of general scope or through general rules on civil liability.⁶⁶ Only a few Member States have codified their conflict of law rules concerning tort.⁶⁷

The dominant approach in Europe concerning choice of law in tort is the 'lex loci delicti commissi', which favours the law of the place where the act was committed.⁶⁸ This solution raises difficulties when the wrongful act is committed in a different state than the state in which the damage was suffered (distance torts). The situations dealt with in this thesis concern distance torts. It falls outside the scope of this thesis to provide a complete analysis of the approaches applied in different states. The majority of states prefer, in unfair competition, the place where the damage becomes apparent rather than the place where the competitive acts were committed. When determining the concrete criteria, according to which the place of the damage must be localised, most writers tend to favour seeking out the market which is affected by the unfair practices (lex injuriae).⁶⁹ This is where the wrongdoer and his competitors meet and where potential customers are mislead.⁷⁰

The approach determining the law of the market affected by the acts of unfair competition corresponds with a resolution of the Institute of International Law⁷¹ and has also been adopted by several national legislatures.⁷² Article II of the mentioned resolution provides that 'where injury is caused to a competitor's business in a particular market by conduct which could reasonably have been expected to have that effect, the internal law of the state in which that market is situated should apply to determine the rights and liabilities of the parties, whether such conduct occurs in that state or in some other state or states'. This rule may be departed from in exceptional situations where the appointed law does not have a sufficiently significant relationship with the parties, their conduct and the injury⁷³ or the application hereof would be manifestly incompatible with the public policy (ordre public) of the forum.⁷⁴

The concept of market is not limited to the territory of a single country, and linkage to the market affected pinpoints the state, in which the person whose interests are damaged (competitor, consumer and/or the public in general), is directly affected or threatened by a malfunctioning of the interplay of competition. It is thus only the direct and substantial effects of a restriction on competition that are to be taken into consideration, whereas subsidiary effects are not taken into account. The effect needs not to be realised in concrete form, but may also be behaviour which threatens objectively to have a prejudicial effect on competition.⁷⁵ At least the Netherlands, Germany, Austria and Switzerland applies the 'market rule' which means that the law of the country of the market where the relations between the competitors are troubled applies.⁷⁶

An act of unfair competition carried out through a website will usually be likely to affect the markets of several states. The question is, however, whether such situation will lead to the application of the law with the closest connection or lead to a multiplication of applicable laws. It seems reasonable to assume that the party disseminating advertising must make sure that it is in conformity with the law of all the states in which it is received.⁷⁷ It is argued that such territorial partitioning is impracticable, particularly within the framework of unfair competition committed on the Internet, because such advertising is available to any computer connected to the network.⁷⁸ This argument may be opposed by emphasising that only substantial effects of a restriction of competition may lead to a linkage with the effects on a particular market and that simple spill-over may be ignored.⁷⁹ If the unlawful act is directed exclusively against the operational interests of a specific competitor, it may be reasonable to apply the law of the country in which the injured establishment is located.⁸⁰ Thus, the law of the market affected seems to be a reasonable approach from a conflicts of law perspective. The linkage to a market is further dealt with in the following chapter and below the country of origin principle, which may affect the applicable law in unfair competition disputes, is discussed.⁸¹

It is provided in article 1 of the ICC Guidelines on Advertising and Marketing on the Internet⁸² that advertising and marketing messages should be legal in their country of origin. Conversely, it is given in article II of the OECD Guidelines for Consumer Protection in the Context of Electronic Commerce⁸³ that businesses should take into account the global nature of electronic commerce and, wherever possible, should consider the various regulatory characteristics of the markets they target. Due to the nature of the guidelines, they are not likely to have substantial bearing on the choice of law.

There is in the European Union an ongoing work on a Rome II regulation, which is to approximate the choice of law in tort.⁸⁴ The proposed regulation confirms, with some exceptions, the lex loci delicti commissi for most non-contractual obligations. Article 3(1) provides that the law of the place where the direct damage arises or is likely to arise shall apply. This will in most cases correspond to the law of the injured party's country of residence.⁸⁵ The proposed regulation comprises, in article 5, a specific clause on non-contractual obligations arising out of an act of unfair competition. In such cases the law of the country where competitive relations or the collective interests of consumers are directly and substantially affected shall, as a starting point, apply. Any law specified by the proposed regulation must be applied whether or not it is the law of a Member State.⁸⁶

4.1.3. Community Law and Private International Law

As established in chapter 2,⁸⁷ the concept of 'restriction' within the meaning of article 28 and 49 of the EC Treaty is constructed broadly by the European Court of Justice. There is no case law where the European Court of Justice establishes that a national rule on private international constitutes a restriction of the freedom to provide goods or services.⁸⁸ On the other hand, it is clear from the existing case law that the concept is so broad that private international law, which in fact hinders these freedoms, must be considered a restriction. The fact that judicial cooperation was not introduced to the European Union before the 1997 Amsterdam Treaty, does not make a difference, since it is seen in a number of cases that for example taxation may constitute a hindrance, even though direct taxation does not as such fall within the purview of the European Community. Powers retained by Member States must also be exercised consistently with Community law.⁸⁹ As established in chapter 2,⁹⁰ it does not make a difference whether the restriction is imposed through legislation or is derived from a practice exercised by national courts.

Private international law may lead to imposing a restriction, within the meaning of article 28 and 49 of the EC Treaty, when the Business, in a private dispute, is met with legal requirements under the law of another Member State by virtue of national choice of law rules. Foreign law is in particular likely to be appointed in tort cases under the lex loci delicti commissi doctrine and in cases concerning certain consumer contracts. Foreign law may also, under certain circumstances, be imposed in other contracts.⁹¹ In general, foreign law may also be applied under article 7 concerning mandatory rules or as a matter of the contacts approach.

National choice of law rules must be applied by the courts in accordance with Community law. This does not preclude situations where such restrictions are justified. National choice of law rules may not in themselves be inconsistent with Community law, but their application can nonetheless entail restrictions which may not be justified under Community law.

The situation can be illustrated by the Saeger-case,⁹² which concerned a German business's (Manfred Saeger) request for an injunction against a UK-based business (Dennemeyer & Co) which offered its patent renewal services in Germany without proper German license. The European Court of Justice recognised that the German courts had international jurisdiction and that, in the main proceedings, German law was applicable, on the ground that Dennemeyer was pursuing its activity in Germany.⁹³

The national court asked the European Court of Justice to ascertain whether article 49 of the EC Treaty precludes judgment being given on the basis of the applicable provisions of national law. The court reformulated the question as to whether article 49 is opposed to such national legislation.⁹⁴ The court hereby changed focus from the procedural part of the underlying case to the effect of the application of the national provision. It was thus neither the jurisdiction or the choice of law which was a problem, but the national, substantial provision itself.⁹⁵

The European Court of Justice has acknowledged consumer protection and unfair competition as mandatory requirements.⁹⁶ This does not mean that any requirement can be justified, and in its assessment of proportionality, the court must be assumed to include the state's legitimate interest in applying its own law and the consequences entailed for the Business, which is providing goods and services over the Internet. As accounted for in chapter 2,⁹⁷ the free movement of services also includes restrictions imposed in the country of origin, and under this provision, it may also constitute an unlawful restriction if a foreign law is appointed by the national choice of law rules. The situation seem to have become more complicated in the wake of the 2000 E-Commerce Directive, as discussed immediately below.

Jurisdiction, as dealt with below,⁹⁸ is not likely to constitute a restriction to the free movement of goods and services, firstly because the rules are harmonised in the European Union and secondly because of the procedural nature of jurisdiction. It may be argued that (the risk of) defending itself in a foreign court (for example in a tort-case) may be a burden to the Business, but the application of foreign law is what would make the situation a real problem, since the Business is already assumed to comply with the law of the state in which it is established. It should be emphasised that it may be a problem for the Business if it is sued in a foreign court which apply the law of the Business wrongly, since possible objections to recognition and enforcement is very limited under the Brussels/Lugano System as discussed below.⁹⁹

4.1.3.1. The 2000 E-Commerce Directive and Applicable Law

The 2000 E-Commerce Directive introduced a country of origin principle,¹⁰⁰ which provides that information society services within the Internal Market, as a starting point, only needs to comply with the legal requirements of the state in which the provider is established. As described above, it is possible that a Member State will apply foreign law in a number of cases. This conflicts with the idea of the country of origin principle. The situation could be that a tort action for infringement of unfair competition is instituted against the Business in a foreign court. According to the lex loci delicti principle, the foreign court is likely to apply foreign law (lex loci delicti), but according to article 3(2) of the 2000 E-Commerce Directive, Member States may not, for reasons falling within the coordinated field, restrict the freedom to provide information society services from another Member State. The 2000 E-Commerce Directive is not unambiguous in dealing with this conflict and an interpretation by the European Court of Justice is desirable.

Recital 23 of the directive provides that the directive does not aim to establish additional rules on private international law relating to conflicts of law. This is in accordance with article 1(4), which provides that the directive does not establish additional rules on private international law. This apparently clear reading does not necessarily mean that the 2000 E-Commerce Directive does not have any influence on private international law. Further reading of recital 23 gives that 'provisions of the applicable law designated by rules of private international law must not restrict the freedom to provide information society services as established in this Directive', and recital 25 provides that national courts, including civil courts, dealing with private law disputes can take measures to derogate from the freedom to provide information society services in conformity with conditions established in the directive.

This apparent contradiction between a directive article and its corresponding recital would normally be resolved in favour of the directive article.¹⁰¹ That solution is troublesome because it would mean that for example a business established in Denmark should comply with Danish law with regards to public law enforcement, whereas the business should comply with the law of the country of destination (lex loci delicti) in connection with private law enforcement. In for example the field of unfair competition, similar legal requirements may be enforced by both public and private parties. According to the country of origin principle, the Business must comply with the law of the state in which it is established, but if the country of origin principle does not have any bearing on private international law, the Business may be met with requirements under foreign law in the same legal sphere (unfair competition law) in civil law suits, where for example a competitor or a consumer organisation is suing the Business in another Member State.

It has been argued that the rules within the coordinated field of the country of origin principle must be regarded as internationally mandatory.¹⁰² This means that the national rules of the country of origin must be applied regardless of which state's law would otherwise have been designated. This solution corresponds with both article 1(4) and recital 22, because the country of origin principle will affect only the territorial applicability of substantive law which will not make it a choice of law rule as such.¹⁰³ It is generally recognised that national courts under certain circumstances may give effect to mandatory provisions other than those applicable to a contract by virtue of the choice of the parties or by virtue of a subsidiary connecting factor.¹⁰⁴ Article 12(1) of the draft Rome II regulation,¹⁰⁵ on overriding mandatory rules, provides that effect may be given to international mandatory rules of another country with which the situation is closely connected. It is further emphasised in article 12(2) that nothing in the regulation is to restrict the application of the rules of the law of the forum in a situation where they are mandatory irrespective of the law otherwise applicable to the non-contractual obligation.

In a case concerning an agency contract, the European Court of Justice found that articles 17 and 18 of the directive on self-employed commercial agents¹⁰⁶ are internationally mandatory.¹⁰⁷ Article 19 of that directive provides that the parties may not derogate from those articles to the detriment of the commercial agent before the agency contract expires. The court emphasised that the purpose of the regime, established in articles 17 to 19 of the directive, is to protect both freedom of establishment and the operation of undistorted competition in the Internal Market and that those provisions therefore must be observed throughout the community if those treaty objectives are to be attained.¹⁰⁸ It can be argued that the 2000 E-Commerce Directive has similar objectives as the agency directive.¹⁰⁹ This would mean that if the Business is sued in the country of origin, the law of that state should be applied not as a matter of choice of law, but as a matter of applying international mandatory rules. It may be more questionable whether a foreign court would be obliged to apply the law of the country of origin as a matter of international mandatory rules.¹¹⁰ Such a solution cannot at the current stage be completely rejected, but one could argue that this solution would in fact lead to 'additional rules on private international law'.

Another approach to dealing with this question is to construct 'establishment of additional rules' in article 1(4) of the directive, in the sense that the directive does not establish new statutory law in the area, but rather introduces a limitation on the application of existing principles of private international law.¹¹¹ This approach corresponds with the effect on choice of law rules of the EC Treaty provisions on freedom to provide goods and services as discussed above.¹¹² This approach is also supported by the recommendation of the Parliament's second reading of the draft directive,¹¹³ which provides that 'the Council's common position puts an end to any doubt as to the primacy of the directive over international private law by stipulating that, although the directive does not as such constitute an additional set of rules of international private law, the effect of applying that law must not be such as to restrict the free movement of information society services as provided for in the directive. Article 3 is applicable in all areas of national law, including private law (with the exception of the questions referred to in the annex)'.¹¹⁴ This approach does not as such change private international law, but provides, as illustrated above,¹¹⁵ that the application of national law may not, without proper justification, hamper the idea of the Internal Market.

Support for this approach may also be found in the exceptions to the country of origin principle listed in the annex. Some of the exceptions seem to be introduced in order not to change the existing private international law regime on these counts. These exceptions include 'the freedom of the parties to choose the law applicable to their contract' and 'contractual obligations concerning consumer contacts'. Consumer contracts is likely to have become exempt from the scope of the country of origin principle in order not to conflict with the choice of law rules of the 1980 Rome Convention as presented above.¹¹⁶

A similar exception has not been made for choice of law in tort and it is fair to expect that the principle of lex loci delicti only can be applied to the extent that it does not restrict the freedom to provide information society services as established in the 2000 E-Commerce Directive and expressed in recital 23 and 25 of the directive.

It has been emphasised that the derogations listed in the annex concern areas which cannot benefit from the country of origin principle because it is impossible to apply the principle of mutual recognition or it is an area where there is insufficient harmonisation to guarantee an equivalent level of protection between Member States.¹¹⁷ It is thus not expressly stated that these exceptions are introduced to avoid a conflict with private international law.

The draft Rome II regulation suggests that the regulation is not to prejudice the application of Community instruments which, in relation to particular matters and in areas coordinated by such instruments, subject services to the laws of the Member State where the service provider is established and, in the area coordinated, allow restrictions on freedom to provide services originating in another Member State only in limited circumstances.¹¹⁸ A business established in the Internal Market can thus reasonably argue that applying the (more burdensome) tort law of another Member State is in contravention of the free movement of information society services as defined in the country of origin principle of the 2000 E-Commerce Directive.

At this stage, it cannot clearly be determined what influence the country of origin principle has on private international law. There seems to be reasonable arguments to establish that private international law is influenced in areas which are not exempt in the annex, provided that the measure is not justified by the general exemption clause. There seem to be some consensus of opinion that the choice of law is not altered by 2000 E-Commerce Directive, but that the country of origin may limit the application of the appointed law. It may either be so that the law of the country of origin must be applied as a matter of international mandatory rules or that the apply (foreign) law must not impose a restriction on the free movement of information society services. In practice the difference between these approaches is rather limited.

It is also clear that 'restrictions' to the free movements as established in the EC Treaty applies to the law applicable under private international law.¹¹⁹ This means that the choice of law must be compatible with the fundamental freedoms of the Internal Market, including its requirements for justifiable restrictions.

4.2. Recognition and Enforcement of Foreign Judgments

As a matter of public law, states are not obliged to recognise or enforce foreign judgments, but may choose to enter mutual treaties on the subject or choose to recognise and enforce foreign judgments as a matter of comity ('mutual respect').¹²⁰ A judgment is normally recognised and enforced in the state in which the judgment was rendered. Cooperation between states has led to agreements on recognition of some foreign judgments. Recognition of foreign judgments is more widely accepted within private law than the recognition and enforcement of public law judgment as dealt with in the previous chapter.¹²¹

The Brussels/Lugano System, as discussed below,¹²² provides a principle of free movement of judgments. Outside the Brussels/Lugano System, or other international agreements, it is up to each state to decide whether to recognise or enforce foreign judgments.¹²³ The states' decision varies from no recognition over recognition on a reciprocity basis to recognition in respect of cooperation among sovereign nations based on certain procedural and substantive standards.¹²⁴ Civil law states are generally more reluctant to recognise foreign judgment than common law states.¹²⁵ Most courts in the United States recognise foreign judgments (non-US) as a matter of mutual respect and cooperation among sovereign nations (‘comity’), provided that the recognising state finds the judgment state to have proper jurisdiction and that fair procedures have been employed.¹²⁶

There are a number of bilateral and unilateral conventions between Member States on recognition and enforcement of foreign judgments which are superseded by the Brussels/Lugano system.¹²⁷ The Hague Conference has adopted a convention on recognition and enforcement of foreign judgments in civil and commercial matters,¹²⁸ which has only been ratified by Cyprus, the Netherlands, Portugal and Kuwait. There is under the Hague Conference an ongoing work on a global convention on jurisdiction, recognition and enforcement of foreign judgments in civil and commercial matters.¹²⁹ None of the Hague Conference initiatives will be elaborated further on due to limited the limited number of ratifying states and lack of adoption respectively. It also falls outside the scope of this thesis to elaborate on national law concerning the recognition of foreign judgments outside the Brussels/Lugano System.

Recognition of a judgment means treating the claim, which was adjudicated, as having been determined once and for all. The matter is then res judicata, and the loosing party will be estopped from contradicting it in subsequent proceedings.¹³⁰ If a successful claimant wants to execute the judgment (for example by claiming money or executing an injunction), the claimant must bring proceedings for the enforcement of the judgment. When enforcement is ordered, the judgment may be executed as if the courts of the enforcing state have entered it.¹³¹

Cross-border law enforcement as dealt with in this thesis is about imposing sanctions, under foreign law, on the Business. A law enforcer may take legal action either in the home court of the Business or in a foreign court. As dealt with above, the applicable law has to be determined in accordance with the private international law of the forum state. In relation to international procedural law, the focus is on the situations where the Business may be sued in a foreign court, and the obligations for the state of the Business to recognise and enforce such judgments. It should be mentioned that even when the foreign court is applying the law of the state, in which the Business is established, it may do so wrongly, but the judgment must still be enforced in the state of the Business. This constitutes a risk to the Business since a foreign law enforcer is most likely to prefer to sue in his own home court, provided the judgment entered there can be enforced in the state of the Business.

4.2.1. The Brussels/Lugano System

The main acts on recognition and enforcement of foreign judgments in Europe are the 2000 Brussels Regulation,¹³² the 1988 Lugano Convention¹³³ and the 1968 Brussels Convention.¹³⁴ These acts regulate both jurisdiction (choice of forum) and mutual recognition and enforcement of judgments.¹³⁵ They provide a system for free circulation of judgments in civil and commercial matters within EU Member States plus Iceland, Norway and Switzerland. The 2000 Brussels Regulation is a revised version of the 1968 Brussels Convention brought into EU legislation.¹³⁶ The 1988 Lugano Convention is a parallel convention to the 1968 Brussels Convention and it contains identical rules on jurisdiction, recognition and enforcement.¹³⁷ Denmark is due to a legal reservation not part of the 2000 Brussels Regulation.¹³⁸ The 1968 Brussels Convention and the 1988 Lugano Convention still apply.

The European free circulation of judgments is only applicable to judgments in civil or commercial matters entered by courts in one of the above-mentioned states. The free circulation of judgments is combined with a harmonisation of jurisdiction rules applicable when suing a person domiciled in another state, which is part of the Brussels/Lugano System. The acts, which constitute the Brussels/Lugano System, specify a number of rules of national jurisdiction ('exorbitant jurisdiction') which may not be applied against a defendant in another state within the Brussels/Lugano System.¹³⁹ A plaintiff, who is not domiciled in a contracting state, may also choose to sue the defendant in a contracting state in accordance with the jurisdiction rules set out in the Brussels/Lugano System.¹⁴⁰ If the defendant is not domiciled in one of these states, the jurisdiction is to be determined in accordance with the national procedural rules of the forum state.

A judgment given in one of the above-mentioned states must be recognised in another state within the Brussels/Lugano System without any special procedure being required and the judgment is to be enforced in another state within the Brussels/Lugano System when, on the application of any interested party it has been declared enforceable there. A declaration of enforceability is to be granted on completion of certain formalities. Recognition and hence enforcement may be refused on certain procedural grounds or if enforcement is manifestly contrary to the public policy of the recognising state.¹⁴¹ These issues are dealt with below.¹⁴² This thesis does not deal with questions concerning litis pendens because it concerns competing competence in the same dispute. It is assumed that the Business is only being sued by one party in one court.

The European Court of Justice has been granted jurisdiction to interpret the 1968 Brussels Convention.¹⁴³ The parties to the 1988 Lugano Convention have agreed to pursue a uniform interpretation of the provisions which are found in both conventions.¹⁴⁴ The principles laid down in judgments relating to the 1968 Brussels Convention will to a far extent be applicable also to the 2000 Brussels Regulation.¹⁴⁵ So far, the European Court of Justice has not ruled on a case concerning the 2000 Brussels Regulation. To both the 1968 Brussels Convention and to the 1988 Lugano Convention, interpretive reports have been drawn up, including instance the Jenard Report and Schlosser Report (1968 Brussels Convention)¹⁴⁶ and Jenard-Möller Report (1988 Lugano Convention).¹⁴⁷ In the examination of the Brussels/Lugano System, focus will be on preparatory works and case law concerning in particular the 1968 Brussels Convention. Unless otherwise stated, that case law is also applicable to the other acts constituting the Brussels/Lugano System.

The European Court of Justice has established that, in the absence of any reason for interpreting the two provisions in question differently, consistency requires that article 5(3) of the 1968 Brussels Convention to be given a scope identical to that of the equivalent provision of the 2000 Brussels Regulation which is all the more necessary given that that regulation is intended to replace the 1968 Brussels Convention in relations between Member States with the exception of the Kingdom of Denmark.¹⁴⁸ This shows that the European Court of Justice is likely to find inspiration in the 2000 Brussels Regulation when interpreting the 1968 Brussels Convention. This principle may apply generally and in particular have consequences in connection with the articles corresponding to those which were amended in the 2000 Brussels Regulation to ensure that the convention also applies to electronic commerce.¹⁴⁹ Such an approach may be problematic in the light of the legal certainty which the 1968 Brussels Convention is supposed to promote. It is therefore not evident that the European Court of Justice will depart from principles already established in case law when the actual wording of the article in question does not leave room for an identical interpretation.

The purpose of the 2000 Brussels Regulation is to promote the free movement of judgments.¹⁵⁰ The European Court of Justice has established that the essential aim of the 1968 Brussels Convention is to strengthen the legal protection of persons established in the European Community. For that purpose, the convention provides a collection of rules which are designed inter alia to avoid the occurrence, in civil and commercial matters, of concurrent litigation in two or more contracting states and which, in the interests of legal certainty and for the benefit of the parties, confer jurisdiction upon the national court territorially best qualified to determine a dispute.¹⁵¹

4.2.1.1. Civil and Commercial Matters

The Brussels/Lugano System concerns 'civil and commercial matters', and does not extent, in particular, to revenue, customs or administrative matters ('public matters').¹⁵² Civil and commercial matters are classified according to their nature and not to the nature of the actual court or tribunal, and include for example civil proceedings before a criminal court or an administrative tribunal.¹⁵³ In most cases it will be clear whether a specific matter is of civil or public nature or which parts of a case is a civil or commercial matter. Due to the effectiveness in cross-border law enforcement under the Brussels/Lugano System, it is relevant to examine the borders of the scope of application and thus the distinction between private and public law enforcement as applied in this thesis.

The working party in connection to the 1968 Brussels Convention found it to be obvious that criminal proceedings and criminal judgments of all kinds were excluded from the scope of the convention, including other proceedings imposing sanctions for breaches of orders or prohibitions intended to safeguard the public interest. Possible difficulties was recognised in connection to classifying private penalties known to some legal systems. It was emphasised that 'since in many legal systems criminal proceedings may be brought by a private plaintiff, a distinction cannot be made by reference to the party which instituted the proceedings. The decisive factor is whether the penalty is for the benefit of the private plaintiff or some other private individual'.¹⁵⁴

'Civil and commercial matters' is an independent concept which is interpreted by reference, firstly, to the objectives and scheme of the convention and, secondly, to the general principles which stem from the corpus of the national legal systems. Certain judgments given in actions between a public authority and a person governed by private law may fall within the area of application of the convention, but not in cases where the public authority acts in the exercise of its powers.¹⁵⁵ The key criterion is the nature of the legal relationships between the parties to the action or of the subject matter of the action.¹⁵⁶ In a case concerning an action brought by an agent responsible for administering public waterways against a person having liability in law in order to recover the costs incurred in the removal of a wreck, the European Court of Justice established that the (private) agent was exercising public authority. The court emphasised that the fact that the agent acted pursuant to a debt which arose from an act of public authority was sufficient for its action, whatever the nature of the proceedings afforded by national law for that purpose, to be treated as being outside the ambit of the 1968 Brussels convention.¹⁵⁷

It was established by the European Court of Justice that a civil servant is not always exercising public powers even though he acts on behalf of a state. This is the case when the conduct does not entail the exercise of any powers going beyond those existing under the rules applicable to relations between private individuals. The court has emphasised that even if the activity in question (supervising pupils) was characterised in the state of origin as an exercise of public powers, that would not affect the characterisation of the dispute as being covered by the term 'civil matters' within the meaning of the 1968 Brussels Convention.¹⁵⁸ Certain types of dispute are thus excluded from the scope of the 1968 Brussels Convention, by reason either of the legal relationships between the parties to the action or of the subject matter of the action.¹⁵⁹

The Karl Heinz Henkel case¹⁶⁰ concerned an action seeking injunction against a German business to prevent it from using certain terms in contracts concluded with Austrian clients. The action was brought before an Austrian court by an Austrian consumer association. The UK government argued that the consumer protection organisation must be regarded as a public authority and its right to obtain an injunction to prevent the use of unfair terms in contracts constitutes a public law power. The court established, however, that not only was the consumer protection organisation in question a private body, but in addition, the subject matter of the main proceedings was not an exercise of public powers, since the proceedings did not in any way concern the exercise of powers derogating from the rules of law applicable to relations between private individuals. On the contrary, the action pending before the national court concerned the prohibition on traders using unfair terms in their contracts with consumers and thus sought to make relationships governed by private law subject to review by the courts.¹⁶¹ Hence, the court concluded that an action of that kind was a civil matter within the meaning of the 1968 Brussels Convention.

It should be noted that article 7 of the 1993 Directive on Unfair Contract Terms¹⁶² provides that Member States are to ensure that, in the interests of consumers and of competitors, adequate and effective means exist to prevent the continued use of unfair terms in contracts concluded with consumers by sellers or suppliers. The means is to include provisions whereby persons or organisations, having a legitimate interest under national law in protecting consumers, may take action according to the national law concerned before the courts or before competent administrative bodies for a decision as to whether contractual terms drawn up for general use are unfair, so that they can apply appropriate and effective means to prevent the continued use of such terms.

4.2.1.2. Defendants Domicile and Special Jurisdiction

The starting point in private law enforcement is that the plaintiff must have the inconvenience of suing the defendant at the defendants domicile,¹⁶³ which is reflected in the traditionally accepted maxim 'actor sequitur forum rei'.¹⁶⁴ That is also the main rule within the Brussels/Lugano System.¹⁶⁵ This situation, where the Business is sued in its home court, is dealt with above under private international law, since it in those situations is assumed that the Business is being sued in the state where the Business is domiciled. This part of the thesis deals with the situation where the Business is being sued in a foreign court. The rules of of jurisdiction in matters relating to branches, contracts, tort and civil claims under criminal proceedings are dealt with below.

In order to apply the special jurisdiction there must be a close connecting factor between the dispute and the court with jurisdiction to resolve it.¹⁶⁶ The European Court of Justice has established that the special jurisdiction must be restrictively interpreted and cannot give rise to an interpretation going beyond the cases expressly envisaged by the Convention.¹⁶⁷ The special jurisdictions are based on a particular close connecting factor between the dispute and the court in certain clearly defined situations which is in accordance with the objective of the convention, i.e. to avoid a wide and multifarious interpretation of the exception to the general rule contained in article 2 (actor sequitur forum rei).¹⁶⁸

The plaintiff may normally choose to use either the special jurisdiction, provided the requirements are satisfied, or to sue at the defendant domicile. The analysis below includes also specific provisions on jurisdiction over consumer contracts which may not, as a starting point, be departed by agreement.

4.2.1.3. Branch, Agency or Other Establishment

Article 5(5) of the acts constituting the Brussels/Lugano System provides for special jurisdiction in the courts for the place in which the branch, agency or other establishment is situated, for disputes arising out of the operations of that branch, agency or other establishment.¹⁶⁹ The concept of branch, agency or other establishment implies a place of business, which has the appearance of permanency, such as the extension of a parent body, has a management and is materially equipped to negotiate business with third parties.¹⁷⁰ Article 5(5) applies also to cases in which a legal person, established in a contracting state, does not operate any dependent branch, agency or other establishment in another contracting state, but nevertheless pursues its activities there by means of an independent undertaking which has the same name and identical management which negotiates and conducts business in its name and which it uses as an extension of itself.¹⁷¹

It has been argued that a website under certain conditions can be considered a branch as defined by article 5(5).¹⁷² In particular if the site is inter-active, programmed to 'negotiate' with customers. It is mentioned that the use of a particular country-code ('top level domain'),¹⁷³ may create a legitimate expectation on the side of the customer that he is dealing with an establishment situated in a particular country.¹⁷⁴

The European Court of Justice has in connection to article 5(5) of the 1968 Brussels Convention established that the concept of article 5(5) must be interpreted independently and that the option granted to the plaintiff, by definition, is a question of factors concerning two entities established in different contracting states.¹⁷⁵ From the two cases mentioned above,¹⁷⁶ it seems clear that article 5(5) is meant for situations where the defendant has a physical presence.¹⁷⁷ This approach should be considered in the light of the principle that the special jurisdiction must be restrictively interpreted and cannot give rise to an interpretation going beyond the cases expressly envisaged by the convention.

One aim of the 2000 Brussels Regulation was to update the rules of the 1968 Brussels Convention to suit electronic commerce. There were no changes or comments on the branch forum, and it could be argued that if the drafters envisaged the branch forum to include a website, such consideration would appear in the proposal.¹⁷⁸

It seems difficult, especially in the light of the strict construction of the special jurisdiction, to consider a website to be independently established in any state.¹⁷⁹ This conclusion seems to correspond with the definition of established service provider in article 2(c) of the 2000 E-Commerce Directive which provides that the presence and use of the technical means and technologies required to provide the service do not, in themselves, constitute an establishment of the provider.¹⁸⁰

The concern regarding an 'implied establishment' seems reasonable, in particular in situations where the Business gives the User a reasonable expectations of dealing with a business established in the state of the User. It seems, however, to be stretching the provision beyond its scope, to use the branch forum in that situation. For good measure, it should be mentioned that the 2000 E-Commerce Directive in article 5, introduces a requirement under which providers of information society services must render easily, directly and permanently accessible the name and geographic address at which the service provider is established to the recipients of the service and competent authorities.¹⁸¹

4.2.1.4. Matters Relating to a Contract (Performance Forum)

A person may, in matters relating to a contract, be sued in the courts for the place of performance of the obligation in question.¹⁸² The obligation to be taken into consideration is the contractual obligation which forms the actual basis of the legal proceedings.¹⁸³ This means that the court firstly will have to apply national choice-of-law rules to determine the applicable law in order to establish the place of performance of the obligation in question and whether the court has jurisdiction to hear the case.¹⁸⁴

The concept of 'matters relating to a contract' is an independent concept which is not simply referring to the national law of one or other of the states concerned.¹⁸⁵ Article 5(1) does not require a contract to have been concluded, but it is nevertheless essential, for that provision to apply, to identify an obligation, since the jurisdiction of the national court is determined, in matters relating to a contract, by the place of performance of the obligation in question.¹⁸⁶ Accordingly, the application of the rule of special jurisdiction provided for matters relating to a contract in article 5(1) presupposes the establishment of a legal obligation freely consented to by one person towards another and on which the claimant’s action is based.¹⁸⁷

It has been established by the European Court of Justice that a letter sent to a consumer’s domicile, without any request by her, a letter designating her by name as the winner of a prize may constitute an obligation ‘freely assumed'.¹⁸⁸ The court emphasised that the addressee of the letter at issue expressly accepted the prize notification made out in her favour by requesting payment of the prize she had ostensibly won, and at least from that moment, the intentional act of a professional vendor must be regarded as an act capable of constituting an obligation which binds its author as in a matter relating to a contract.¹⁸⁹

The national court's jurisdiction to determine questions relating to a contract includes the power to consider the existence of the constituent parts of the contract itself, since that is indispensable in order to enable the national court in which proceedings are brought to examine whether it has jurisdiction under the convention.¹⁹⁰ The concept of 'matters relating to contract' referred to in article 5(1) of the Brussels Convention is not interpreted narrowly by the European Court of Justice.¹⁹¹

This concept of matters relating to a contract in the 1968 Brussels Convention and the 1988 Lugano Convention does also include the place of performance of payment or compensation (in matters relating to a contract).¹⁹² It has been established that article 5(1) must be interpreted as meaning that, in the case of a demand for payment made by a supplier to his customer under a contract of manufacture and supply, the place of performance of the obligation to pay the price is to be determined pursuant to the substantive law governing the obligation in dispute under the conflicts rules of the court seized.¹⁹³ In the 2000 Brussels Regulation it is specified that unless otherwise agreed, the place of performance of the obligation in question is where, under the contract, the goods/services were delivered/provided or should have been delivered/provided in a Member State for the sale of goods and provision of services respectively.

As provided above under private international law,¹⁹⁴ the applicable law in contracts will normally be the law of the Business. Even though it is determined that the place of performance is in a foreign state and that the Business may be sued there, it is still most likely that the private international law of that state will favour the law of the Business. This means that cross-border law enforcement under this forum will be possible only in those cases where a foreign court will find both that the case is closer connected to another law than the vendor's and that the obligation in question has to be performed in the country where the court is residing. The Business may, however, experience the inconvenience of litigating before a foreign court which may make errors in interpreting the law of the Business.

4.2.1.4.1. Electronically Delivered 'Goods' or Services

Normally, it is easy to establish the place of performance of goods, services and payment. When dealing with electronic commerce it may be difficult to determine the place of performance of an obligation to provide 'digital goods' or services electronically. The situation may for example be that the Business provides a piece of music or a weather report either by e-mail or by making it available for downloading on a website.

It may be argued that a contract concerning digital goods delivered online should not be perceived as a sales contract, but rather as a license which deals with the usage (rights) of the digital good rather than the delivery hereof. It may also seem reasonable to consider the online delivery of digital goods as a service.¹⁹⁵ Delivery can basically be where the Business uploads the product or where the User downloads it. An appealing approach will be to focus on the passing of the risk, which would have to be determined by national law. Such a solution would probably favour the state where the downloading is carried out. It seems, however, difficult to reach a clear conclusion on the matter.¹⁹⁶

The European Court of Justice has established that the performance forum, as a special jurisdiction, is not applicable where the place of performance of the obligation in question cannot be determined because it consists in an undertaking not to do something, which is not subject to any geographical limit and is therefore characterised by a multiplicity of places for its performance.¹⁹⁷ In such cases the proper jurisdiction is the courts of the defendant's domicile. It can be argued that the uncertainty of article 5(1) in connection with electronically delivered products similarly should render this special jurisdiction inapplicable. Such a solution would also be in accord with the overall purpose of encouraging legal certainty.

It has been established that jurisdictional rules, which derogate from the general principle, must be interpreted in such a way as to enable a normally well-informed defendant reasonably to predict before which courts, other than those of the state in which he is domiciled, he may be sued.¹⁹⁸

4.2.1.5. Certain Consumer Contracts¹⁹⁹

The 2000 Brussels Regulation provides for the consumer forum in matters relating to a contract concluded by a person ('the consumer') for a purpose which can be regarded as being outside his trade or profession if the contract concerns a sale on credit or if the contract was concluded with a person who pursues commercial or professional activities in the state of the consumer’s domicile or, by any means, directs such activities to that state, and the contract falls within the scope of such activities. The consumer definition and the inclusion of contract concerning sale on credit is the same as in the 1968 Brussels Convention and the 1988 Lugano Convention. These conventions furthermore include by article 13(1)(3) contracts which 1) in the state of the consumer’s domicile were preceded by a specific invitation addressed to him or by advertising and 2) provided the consumer took the steps necessary for the conclusion of the contract in that state.

The similarities in the scope of the jurisdiction rules on consumer contracts in both the 1968 Brussels Convention and the 1988 Lugano Convention compared to the scope of the choice of law rules regarding consumer contract in the 1980 Rome Convention is, as described above, intentional.²⁰⁰ The scope of the corresponding jurisdiction rules in the 2000 Brussels Regulation is somewhat modified as accounted for above.

When the requirements of the jurisdiction rules regarding certain consumer contracts are met, the consumer can choose to sue the defendant in the courts where he is domiciled and the business may only sue him in these courts. The parties can as a starting point not agree to reduce the protection afforded by these jurisdiction rules.²⁰¹ The system is inspired by the concern to protect the consumer as the party deemed to be economically weaker and less experienced in legal matters than his professional co-contractor, and the consumer must not therefore be discouraged from suing by being compelled to bring his action before the courts in the contracting state in which the other party to the contract is domiciled.²⁰²

It has been argued that a vendor may refrain from entering into contracts with consumers in a specific jurisdiction if they do not wish to become subject to the jurisdiction of the consumer's state.²⁰³ It should, however, be mentioned, that this will not be true, where for example the website presents a binding offer²⁰⁴ under the law of the consumer.²⁰⁵ Under such circumstances, the Business is bound when the consumer legally accepts the offer.

Article 13 of the 1968 Brussels Convention must be interpreted independently, by reference principally to the system and objectives of the convention, in order to ensure that it is fully effective.²⁰⁶ The specific rules of jurisdiction provided for in articles 13 to 15 are interpreted strictly and the interpretation must not go beyond the cases envisaged by the convention.²⁰⁷ Article 13 to 15 are applicable only in so far as the action relates generally to a contract concluded by a consumer for a purpose outside his trade or profession. The provision applies only in so far as, firstly, the claimant is a private final consumer not engaged in trade or professional activities, secondly, the legal proceedings relate to a concluded contract, between that consumer and the professional vendor for the sale of goods or services, which has given rise to reciprocal and interdependent obligations between the two parties and, thirdly, that the two conditions specifically set out in article 13(1), point 3(a) and 3(b) are fulfilled.²⁰⁸

In situations where a contract is concluded with a customer for a purpose which is only partly outside his trade or profession, the customer cannot rely on the protection afforded by the consumer forum, unless the part which concerns his professional sphere is insignificant.²⁰⁹ In accordance with normal principles concerning burden of proof, it is for the customer to prove that the commercial part is insignificant.²¹⁰ The national court must take all relevant factors into consideration in order to examine whether the vendor had reason to believe that the transaction was mainly commercial. For example whether the customer is using a commercial letterhead, a business-address for delivery or mention the possibility of deducting VAT.²¹¹ The use of a commercial e-mail signature may also incur in such an examination. A customer who concludes a contract with a view to pursuing a trade or profession, not at the present time but in the future, may also not be regarded as a consumer.²¹²

Another difference between the two jurisdiction regimes is that the reference to 'contracts concerning goods or services' in the 1968 Brussels Convention and the 1988 Lugano Convention was changed to 'in all other cases' in the 2000 Brussels Regulation. Presumably to emphasise that digital products are comprised which is questionable concerning the two older conventions.²¹³ The use of general terms makes it clear that the consumer forum applies to all contracts, whether they relate to goods or to services, as long as they are consumer contracts.²¹⁴ It seems reasonable to assume that digital goods may also be included under the conventions.

It has been argued that a number of reasons, including in particular the amount usually at stake,²¹⁵ may prevent consumer from taking legal actions, even though the consumer have access to sue at his home court.²¹⁶ A common European small claims procedure is proposed by the European Parliament and Council.²¹⁷ According to the proposal, the intention is to simplify and speed up litigation concerning small claims, and reduce costs. The 'European Small Claims Procedure' is intended to be an alternative to procedures existing under national laws.²¹⁸ The proposed regulation applies to civil and commercial matters,²¹⁹ where the total value of a monetary or non-monetary claim excluding interests, expenses and outlays does not exceed 2000 Euro at the time the procedure is commenced. The procedure is not confined to consumer disputes.²²⁰ There are also possibilities in Alternative Dispute Resolution,²²¹ which is not dealt with in this thesis.

4.2.1.5.1. Advertising and Specific Invitation

Both the conventions and the regulation require commercial activities directed toward the state in which the consumer is domiciled. The main difference, as of interest for this thesis, between the two sets of rules is that the 2000 Brussels Regulation requires the contract to be concluded in connection with these commercial activities, whereas the 1968 Brussels Convention and 1988 Lugano Convention requires that the contract is concluded by steps taken in the state where the consumer is domiciled.

The concept of advertising and specific invitation common to the 1968 Brussels Convention and 1980 Rome Convention covers all forms of advertising carried out in the contracting state in which the consumer is domiciled, whether disseminated generally by the press, radio, television, cinema or any other medium, or addressed directly, for example by means of catalogues sent specifically to that State, as well as commercial offers made to the consumer in person, in particular by an agent or door-to-door salesman.²²² There seems to be no reason to exclude that also advertising on a website is to be included in this list.²²³

In the initial proposal for the 2000 Brussels Regulation, it is stated that 'the material scope of the provisions governing consumer contracts has been extended so as to offer consumers better protection, notably in the context of electronic commerce'.²²⁴ It is noticed in the proposal that the concept of activities pursued in or directed towards a Member State is designed to clarify that it 'applies to consumer contracts concluded via an interactive website accessible in the state of the consumer’s domicile'.²²⁵ The notion 'interactive website' is not further defined, but the proposal states that 'the fact that a consumer simply had knowledge of a service or possibility of buying goods via a passive website accessible in his country of domicile will not trigger the protective jurisdiction'.²²⁶

In the amended proposal of the 2000 Brussels Regulation it is stated that 'the very existence of a consumer contract would seem to be a clear indication that the supplier of the goods or services has directed his activities towards the state where the consumer is domiciled'.²²⁷ The Council and the Commission have stressed that the mere fact that an Internet site is accessible is not sufficient for article 15 of the 2000 Brussels Regulation to be applicable, although a factor will be that this Internet site solicits the conclusion of distance contracts and that a contract has actually been concluded at a distance, by whatever means.²²⁸

It is argued that it is circular to state that 1) a consumer contract is a clear indication for direction of commercial activity and 2) that direction of commercial activity is a necessary condition for the existence of a consumer contract covered by article 15.²²⁹ As mentioned above, the existence of a consumer contract is a prerequisite for applying the consumer forum. It does not seem problematic to consider the conclusion of a contract, within the scope of a website activity, to indicate that the commercial activity was in fact directed to that state. It is solely an indication, which presumable may be overruled in cases where a contract is entered without the website being directed towards the state of the consumer.

There has in general been discussions on the notions 'interactive website', 'passive website' and 'active website'. The use of the term 'interactive websites' and the distinction between active and passive websites may evoke associations to the American jurisdiction approach concerning website activities.²³⁰

US courts have roughly speaking grouped websites into 'active websites' (allowing for online contracting and distribution of the product purchased), 'interactive websites' (online contracting without online delivery) and 'passive websites' (providing solely information about the business, its products etc.).²³¹

A number of technical arguments can be made against importing the American concept into the interpretation of the consumer forum,²³² and such an approach seems to be rejected by the Commission in connection to a proposal made by the Parliament in the legislative process. The Commission found that such an 'essentially American concept' is 'quite foreign to the approach taken by the Regulation'.²³³

Being aware of the different contexts,²³⁴ the Commission's guidelines on vertical restraints,²³⁵ within the area of competition law, may provide guidance for determining whether a website is active or passive in this context. The guidelines provide that the Internet should not in general be considered a form of active sales since it is a reasonable way to reach every customer. If, for example, a customer visits the web site of a distributor and contacts the distributor and if such contact leads to a sale, including delivery, then it is considered passive selling. It is further noted that 'the language used on the website or in the communication plays normally no role in that respect. Insofar as a website is not specifically targeted at customers primarily inside the territory or customer group exclusively allocated to another distributor, for instance with the use of banners or links in pages of providers specifically available to these exclusively allocated customers, the website is not considered a form of active selling'.²³⁶

It seems reasonable to assume that the notion of active and passive websites, in this context, means whether a commercial website activity is actively directed towards a state²³⁷ or whether it is solely (passively) available in the state in question.²³⁸ The use of 'interactive website' must be understood as whether it is possible to interact, via the website, with the entity behind the website. This does not necessarily have a bearing on whether the website is active or passive. This interpretation is not only in line with the use of active and passive websites in the guidelines on vertical restraints, but does also eliminate any confusion between the different preparatory works and official comments on article 15 of the 2000 Brussels Regulation.

It has been questioned whether there on this subject has been a substantive change between the two jurisdiction regimes, provided it is assumed that a website activity may be regarded as advertising under art. 13(1)(3) of the 1968 Brussels Convention (and similar for the 1988 Lugano Convention.²³⁹ In this situation, both jurisdiction regimes leave an unsolved and maybe slightly dissimilar construction of when the marketing material of a website can be considered to be directed toward a specific state.

4.2.1.5.2. Steps Necessary for the Conclusion of the Contract

The 1968 Brussels Convention and the 1988 Lugano Convention have a further requirement that is removed from the 2000 Brussels Regulation. In the two conventions, it is a requirement that 'the consumer took in that State the steps necessary for the conclusion of the contract'.²⁴⁰ The expression refers to any document written or any other step whatever taken by the consumer in the state in which he is domiciled and which expresses his wish to take up the invitation made by the professional.²⁴¹ The word 'steps' includes inter alia writting or any action taken in consequence of an offer or advertisement.²⁴² This requirement is to be understood literally in the sense that the consumer physically must be present in his own country when taking those steps.²⁴³ By removing the requirement in the 2000 Brussels Regulation the scope of application also concerns consumer contracts entered by consumers who are outside the state in which they are domiciled as far as the purchase is within the scope of the commercial activities directed towards the state in which the consumer is domiciled.²⁴⁴

4.2.1.5.3. Contracts, Consumer Contract or Tort?

The relationship between the consumer forum and those of tort (article 5(3)) and contracts in general (article 5(1)) was discussed in two cases, Gabriel and Engler,²⁴⁵ in connection to an Austrian rule which provides that undertakings which send prize notifications or other similar communications to specific consumers, and by the wording of those communications give the impression that a consumer has won a particular prize, must give that prize to the consumer.²⁴⁶ The particular prize may also be claimed in legal proceedings. This rule is an illustrative example of unfair competition (misleading advertising) which is sanctioned by establishing a rights for private persons. Such a practice could also be sanctioned through pecuniary penalties or damages.

In the first case (Gabriel), the European Court of Justice established that judicial proceedings by which a consumer seeks an order in his home court, requiring a mail order company, established in another contracting state, to send to him a prize which he has apparently won, must be capable of being brought before the same court as that which has jurisdiction to deal with the contract concluded by that consumer.²⁴⁷ In this case, the consumer made a purchase with the business as required by it in order to claim the alleged prize. The court emphasised that the consumer and the professional vendor were indubitably linked contractually once the consumer had ordered goods offered by the business, thereby demonstrating his acceptance of the offer, and therefore the intention between the two parties gave rise to reciprocal and interdependent obligations within the framework of a contract which has specifically one of the objects described in article 13(1)(3).²⁴⁸

The court emphasised that requirement to carry out a purchase made an indissociable link between the promised financial benefit and the purchase, so that a different treatment of those to relations could not be accepted.²⁴⁹ The European Court of Justice finds it essential to avoid, so far as possible, creating a situation in which a number of courts have jurisdiction in respect of one and the same contract.²⁵⁰ That need is all the more compelling in cases concerning a party deemed to be weak, such as a consumer.²⁵¹

In the second case (Engler), the consumer did not, and was not required to, make any purchase, but he solely claimed the prize. The misleading statement from the business was sent together with a catalogue of goods sold by the business, whereby pre-contractual relations were established between the business and the consumer. The European Court of Justice firstly examined the applicability of article 13, since this article constitutes lex specialis in relation to article 5(1) and because the tort forum concerns actions which are defined as not being related to a contract within the meaning of article 5(1).²⁵² Since the business's initiative was not followed by the conclusion of a contract between the consumer and the business, which has given rise to reciprocal and interdependent obligations between the two parties, the action could not be regarded as being contractual in nature for the purposes of article 13(1)(3) of the 1968 Brussels Convention, since it requires a contract to be concluded.²⁵³

The court found that even though the legal action brought in the main proceedings was not contractual in nature for the purposes of article 13(1), it does not in itself prevent that action from relating to a contract for the purposes of article 5(1),²⁵⁴ since the concept 'matters relating to a contract' as described above, does not require the conclusion of a contract and may be applied to hear disputes concerning the existence of a contractual obligation. The court found the arrangement to be a matter relating to a contract within the meaning of article 5(1). The mere fact that the professional vendor did not genuinely intend to award the prize announced to the addressee of his letter was found to be irrelevant in that respect.²⁵⁵

It is clear from the two mentioned cases, that the consumer forum can be invoked by the consumer in proceedings concerning civil enforcement of unfair competition law, insofar as a contract was concluded between a consumer and the Business. Article 5(1) may apply even if a contract has not been concluded provided that the unfair competition activity can be regarded as a matter relating to a contract. Under these circumstances, the consumer can sue in the courts for the place of performance of the obligation in question which is not unlikely to be in the consumer's forum.

It does, however, make a significant difference whether the forum is based on article 13 or 5(1), since the consumer is not likely to benefit from article 5 of the 1980 Rome Convention, which designates the consumer’s substantive law, and which is worded similarly to article 13 of the 1968 Brussels Convention. It cannot be excluded that the contacts approach under such circumstances, keeping in mind the consumer's weak position, would be applied to designate the consumer's law. In Engler, the court emphasised that the business exploited a loophole to prevent the application of the consumer forum without drawing the attention of the customer to this.²⁵⁶ Another difference between the two jurisdiction rules is that the access for the parties to choose a forum is substantially wider under article 5(1).²⁵⁷

4.2.1.6. Tort²⁵⁸

Article 5(3) of the 2000 Brussels Regulation, the 1968 Brussels Convention and the 1988 Lugano Convention provides that a person domiciled in a Member State / contracting state may be sued in matters relating to tort, delict or quasi-delict in another Member State / contracting state in the courts for the place where the harmful event occurred [or may occur].²⁵⁹ As a special jurisdiction, the plaintiff may opt to choose this forum, which is introduced with regard to the existence, in certain clearly defined situations, of a particularly close connecting factor between a dispute and the court which may be called upon to hear it, with a view to the efficacious conduct of the proceedings.²⁶⁰

4.2.1.6.1. Matters Relating to Tort, Delict or Quasi-Delict

The concept of 'matters relating to tort, delict or quasi-delict' is an autonomous concept that covers all actions which seek to establish the liability of a defendant and which is not 'a matter related a contract' as defined by article 5(1).²⁶¹ The concept is thus not be interpreted simply as referring to the national law of one or other of the states concerned. The expression 'matters relating to contract' within the meaning of article 5(1) does not cover a situation in which there is no obligation freely assumed by one party towards another.²⁶² This means that, for example, claims based upon rules on good faith in pre-contractual negotiations is a matter relating to tort, delict or quasi-delict within the meaning of article 5(3).²⁶³

Article 5(3) applies also to jurisdiction in matters relating to unfair commercial practices ('unfair competition').²⁶⁴ In the Karl Heinz Henkel case,²⁶⁵ it was established that a non-profit-making, Austrian-based consumer organisation, Verein für Konsumenteninformation, could use article 5(3) of the 1968 Brussels Convention to seek an injunction against a German national’s business activity carried out from Germany on the Austrian market. The court established that a preventive action brought by a consumer protection organisation for the purpose of preventing a trader from using terms considered to be unfair in contracts with private individuals must be interpreted as a matter relating to tort, delict or quasi-delict within the meaning of article 5(3) of the 1968 Brussels Convention. This is made clear in the 2000 Brussels Regulation by the insertion of 'or may occur' in article 5(3). In its ruling, the court emphasised that the 2000 Brussels Regulation, while not applicable to the main proceedings, is such as to confirm the interpretation that article 5(3) of the 1968 Brussels Convention does not presuppose the existence of damage.

4.2.1.6.2. Distance Delicts

It was established by the European court of Justice in connection with the 1968 Brussels Convention that in situations where the place of the happening of the event which may give rise to liability in tort, delict or quasi-delict and the place where that event results in damage are not identical,²⁶⁶ the expression 'place where the harmful event occurred', in article 5(3) must be understood as being intended to cover both 'the place where the damage occurred' and 'the place of the event giving rise to the damage' (the two-headed 'Bier Doctrine').²⁶⁷ This means that the defendant may be sued in either place, at the option of the plaintiff.

The place of 'the event giving rise to the damage' does not necessarily coincide with the domicile of the person liable,²⁶⁸ and the 'place where the harmful event occurred' does not refer to the place where the claimant is domiciled or where his assets are concentrated by reason only of the fact that he has suffered financial damage there resulting from the loss of part of his assets which arose and was incurred in another contracting state.²⁶⁹

The tort forum cannot be applied in cases concerning indirect economic loss. The term 'place where the harmful event occurred' is not to be construed so extensively as to encompass any place where the adverse consequences can be felt of an event which has already caused damage actually arising elsewhere,²⁷⁰ and it does not cover the place where the victim claims to have suffered financial damage following upon initial damage arising and suffered by him in another contracting state.²⁷¹ The court has established that article 5(3) cannot be interpreted as permitting a plaintiff pleading damage which he claims to be the consequence of the harm suffered by other persons who were direct victims of the harmful act to bring proceedings against the perpetrator of that act in the courts of the place in which he himself ascertained the damage to his assets.²⁷² It does thus not matter whether the indirect economic loss concerns a plaintiff suing at his domicile for (direct) loss suffered (only) in another state or in situations where the plaintiff is suing in the courts of his domicile for harm indirectly arising from damages suffered by a third party in another state.

In the Fiona Shevill case,²⁷³ it was established that the Bier doctrine not only applies in the case of loss or damage relating to physical or pecuniary harm, but also to injury to the reputation and good name of a natural or legal person due to a defamatory publication. The court established in that case that the place of the event giving rise to the damage, in the case of a libel by a newspaper article distributed in several contracting states, can only be the place where the publisher of the newspaper in question is established, since that is the place where the harmful event originated and from which the libel was issued and put into circulation.²⁷⁴ The court thus seems to attach crucial importance to the domicile of the natural or legal person responsible for the harmful act, without excluding the possibility that the place of the event giving rise to the damage can be different from that domicile.²⁷⁵

This observation suggests that the place of technical equipment and other facilities necessary for carrying out the harmful act should be disregarded. This is also in accordance with article 2(c) of the 2000 E-Commerce Directive which in the definition of ‘established service provider’ provides that the presence and use of the technical means and technologies required to provide the service do not, in themselves, constitute an establishment of the provider. It can, however, not be excluded that the place of the event giving rise to the damage may be different from the domicile especially in situations where a private person uploads harmful material to the Internet from another place than his or hers domicile.

With regard to the first head of the Bier Doctrine, the court established in the Fiona Shevill case that the place where the damage occurred is the place where the event giving rise to the damage, entailing tortious, delictual or quasi-delictual liability, produced its harmful effects upon the victim. This place is notably not necessarily the domicile of the victim.²⁷⁶ In the case of an international libel through the press, the injury caused by a defamatory publication to the honour, reputation and good name of a natural or legal person occurs in the places where the publication is distributed, when the victim is known in those places.²⁷⁷ Applying these observations generally to harmful content on the Internet, it is natural to assume that the place where the damage occurred is where the information is being received and/or promoted to the extent the information is causing harm there. The court further established that the criteria for assessing whether the event in question is harmful and the evidence required of the existence and extent of the harm alleged by the victim of the defamation is not governed by the convention but by the substantive law determined by the national conflict of laws rules of the court seized, provided that the effectiveness of the convention is not thereby impaired.²⁷⁸

The court confined in the Fiona Shevill case the Bier doctrine so as to establish that the court of the place where the publisher of the defamatory publication is established has jurisdiction to hear the action for damages for all the harm caused by the unlawful act, whereas the courts of each contracting state in which the defamatory publication was distributed and in which the victim claims to have suffered injury to her reputation have jurisdiction to rule on the injury to the victim's reputation caused in that state.

The court emphasised that the courts of each contracting state in which the victim claims to have suffered injury to her reputation are territorially the best place to assess the libel committed in that State and to determine the extent of the corresponding damage. Recognising the disadvantages of having different courts ruling on various aspects of the same dispute, the court reminded of the plaintiff's option of bringing his entire claim before the courts either of the defendant's domicile or of the place where the publisher of the defamatory publication is established.²⁷⁹

The advocate general seems in his opinion on the Fiona Shevill case to attach importance to the risk of forum shopping and emphasises that the generosity of English courts could make English courts the natural choice of forum in such matters. The advocate general noted that the need to prevent any risk of forum shopping is particularly great when the subject matter of the dispute is an area in which the substantive law applying in the contracting states is not harmonised and gives rise to solutions which are markedly divergent between states which in particularly is the case of defamation laws. The advocate general also noted that the solution later adopted by the court confers competence on the courts which are best qualified to assess the damage arising in their locality.²⁸⁰

It is not clear to what extent the Fiona Shevill ruling applies to other media and to other claims. The ruling offers no grounds for assuming that the situation should be treated differently if the libel was published on the Internet. It is more uncertain whether the limitation on the court, in the state in which the victim claims to have suffered injury to her reputation, only applies to libel.²⁸¹ It may be argued that courts of each contracting state in many other situations are territorially the best place to assess the harmful act and the corresponding damage.²⁸² The special Human Rights features (freedom of expression) connected to libel (and defamation in general) are not mentioned in the ruling. The advocate general noted that the special nature of non-material or non-pecuniary damage is difficult to identify, assess and compensate. The advocate general further mentioned that similar damage is recognised in certain areas of intellectual property law, such as for example trademark law.²⁸³ Possible considerations concerning forum shopping or the protection against damages under common law would not suggest that the Shevill delimitation should not apply to other claims (harmonised or not).

It cannot be excluded that the court purposely kept this question open in order to retain the possibility to depart from the principles and in order to pursue sound administration of justice and efficacious conduct of proceedings. At the current stage, it must be assumed that the Fiona Shevill principles may be applied in other situations, but that a clear answer to the scope of the limitations on the second head of the Bier Doctrine cannot be derived from the case itself.

4.2.1.7. Civil Claims Under Criminal Proceedings

Under ancillary proceedings, it is possible to include civil claims under criminal proceedings. According to article 5(4) of the acts constituting the Brussels/Lugano System, a person may be sued, in civil claims for damages or restitution, in the court seized of criminal proceedings which are based on an act giving rise to criminal proceedings and provided that the court has jurisdiction under its own law to entertain civil proceedings. A civil claim can thus always be brought, whatever the domicile of the defendant, in the criminal court having jurisdiction to entertain the criminal proceedings even if the place where the court sits is not the same as where the harmful event occurred.²⁸⁴ This is of particular interest in connection to tort claims added under criminal proceedings in connection to the infringement of for example unfair competition law.

It follows from article II of the protocol annexed to the 1968 Brussels Convention that persons domiciled in a contracting state who are being prosecuted in the criminal courts of another contracting state of which they are not nationals, for an offence which was not intentionally committed may be defended by persons qualified to do so, even if they do not appear in person. The court seized of the matter may, however, order appearance in person, but a judgment given in such civil action where the defendant does not appear in court and without having had the opportunity to arrange for his defence need not be recognised or enforced in other contracting states.²⁸⁵

An 'offence which was not intentionally committed' is an independent concept which means any offence which does not require, either expressly or as appears from the nature of the offence defined, the existence of intent on the part of the accused to commit the punishable act or omission. The accused's right to be defended without appearing in person applies in all criminal proceedings concerning offences which were not intentionally committed, in which the accused's liability at civil law, arising from the elements of the offence for which he is being prosecuted, is in question or on which such liability might subsequently be based.²⁸⁶

As provided in the previous chapter,²⁸⁷ the requirements to jurisdiction in international criminal cases are relatively vague. This is not a problem in practice since there, in general, is a lack of international recognition of criminal judgments, except for situations covered by the 2005 Framework Decision on Financial Penalties. This forum for civil claims under criminal proceedings does provide an opportunity to get the outcome of the civil part of an ancillary procedure enforced in another state. It may be argued that the national jurisdiction in criminal law may not depart significantly from what can be expected from the tort forum as presented above.²⁸⁸

In the Krombach case,²⁸⁹ a German national was, before a French court, found guilty of violence resulting in involuntary manslaughter. The act had taken place in Germany, but the French courts declared that it had jurisdiction by virtue of the fact that the victim was a French national. The European Court of Justice established in connection with the enforcement in Germany of the civil compensation awarded to the bereaved, that the court of the state in which enforcement is sought cannot take account for the purposes of the public policy clause in article 27 of the 1968 Brussels Convention, of the fact that jurisdiction was based on the nationality of the victim of an offence.²⁹⁰ This makes it clear that the access to objection is limited, even though the (criminal) jurisdiction is based on a principle, which would be deemed exorbitant if used in civil proceedings.

4.2.1.8. Recognition and Enforcement²⁹¹

Chapter/title III of the relevant acts of the Brussels/Lugano System deals with recognition and enforcement of judgments given by a court or tribunal of a Member State / contracting state. For the purposes of the Brussels/Lugano System, a 'judgment' means any judgment given by a court or tribunal of a contracting state, whatever the judgment may be called, including a decree, order, decision or writ of execution, as well as the determination of costs or expenses by an officer of the court.²⁹²

The focus in this part is to discuss the principle of recognition and enforcement within the Brussels/Lugano System, but not on the more practical measures to be taken in order to achieve recognition and enforcement. The examination does not provide an exhaustive overview of possible objections, including in particular those relating to competing cases and the serving of documents.²⁹³

A judgment rendered in a Member State / contracting state is to be recognised in the other Member States / contracting states without any special procedure being required.²⁹⁴ A judgment given in a contracting state and enforceable in that state must be enforced in another contracting state when, on the application of any interested party, it has been declared enforceable there.²⁹⁵ The foreign judgment may under no circumstances be reviewed as to its substance.²⁹⁶

Recognition of a judgment may be refused if recognition is [manifestly] contrary to public policy in the state in which recognition is sought.²⁹⁷ There are other possible grounds for refusal than public policy.²⁹⁸ A judgment is not to be recognised if it was entered in conflict with the jurisdiction provisions set out in title/chapter II of the respective acts. In its examination of the grounds of jurisdiction, the court or authority applied to is bound by the findings of fact on which the court of the state of origin based its jurisdiction, and the court of the state in which enforcement is sought cannot review the accuracy of the findings of law or fact made by the court of the state of origin.²⁹⁹

The application for a declaration of enforceability must be submitted to the court or competent authority in the state where enforcement is sought.³⁰⁰ Under the 2000 Brussels Regulation, the judgment must be declared enforceable immediately on completion of certain formalities³⁰¹ and without any review. The party against whom enforcement is sought may not at this stage of the proceedings be entitled to make any submissions on the application.³⁰² Under the 1968 Brussels Convention and the 1988 Lugano Convention, the court applied to must give its decision without delay, and the application may be refused (only) for one of the reasons specified above under recognition.³⁰³

Under the 2000 Brussels Regulation, either party may appeal the decision on the application for a declaration of enforceability,³⁰⁴ and under the 1968 Brussels Convention and the 1988 Lugano Convention, the party against whom enforcement is sought may appeal against the decision provided enforcement is authorised.³⁰⁵ The court, with which an appeal is lodged, is to refuse or revoke a declaration of enforceability only on one of the grounds specified above under recognition.³⁰⁶

4.2.1.8.1. Public Policy

The European Court of Justice has established that article 27 of the 1968 Brussels Convention must be interpreted strictly inasmuch as it constitutes an obstacle to the attainment of one of the fundamental objectives of the convention and the clause on public policy may be relied on only in exceptional cases.³⁰⁷ The clause may notably not be used as a means of refusing recognition on the ground that the rendering court have made an international choice of law, which is different from the choice of law that the recognising court would have applied if it was seized to hear the case.³⁰⁸

The court of the state in which enforcement is sought cannot refuse recognition of a foreign judgment solely on the ground that it considers that national or Community law was misapplied in that decision unless it constitutes a manifest breach of a rule of law regarded as essential in the legal order of the State in which enforcement is sought.³⁰⁹ In a particular case, it was found by the European Court of Justice that preventing traders from certain business activities, on grounds of intellectual property right to body parts for cars, cannot be considered to be contrary to public policy.³¹⁰ The test of public policy may not be applied to the rules relating to jurisdiction, which means that the public policy of the state in which enforcement is sought cannot be raised as a bar to recognition or enforcement of a judgment given in another contracting state solely on the ground that the court of origin failed to comply with the rules of the convention which relate to jurisdiction.³¹¹

Public policy may, for example, be invoked if a judgment has been obtained by fraud.³¹² Recourse to the public policy clause is possible where the guarantees laid down in the legislation of the state of origin and in the convention itself have been insufficient to protect the defendant from a manifest breach of his right to defend himself before the court of origin, as recognised by the European Court of Human Rights.³¹³

Human rights and fundamental freedoms form an integral part of the general principles of law whose observance the European Court of Justice ensures. The court draws inspiration from the constitutional traditions common to the Member States and from the guidelines supplied by international treaties for the protection of human rights on which the Member States have collaborated or of which they are signatories.³¹⁴ The 1950 European Convention on Human Rights is of fundamental importance.³¹⁵ This convention comprises inter alia provisions of fair trial, which will not be elaborated on further in this thesis. A state is entitled to hold that a refusal to hear the defence of an accused person who is not present at the hearing constitutes a manifest breach of a fundamental right.³¹⁶ But also the provision on freedom of expression as discussed in chapter 2³¹⁷ may be applied as to refuse recognition on grounds of public policy.

It was established by the European Court of Justice that the contracting states remain free in principle to determine according to their own conception what public policy requires, subject to review by the European Court of Justice.³¹⁸ Recourse to the public policy clause can be envisaged only where recognition or enforcement of the foreign judgment would be at variance to an unacceptable degree with the legal order of the state in which enforcement is sought, inasmuch as it infringes a fundamental principle. In order to observe the prohibition of any review of the foreign judgment as to its substance, the infringement must constitute a manifest breach of a rule of law regarded as essential in the legal order of the state in which enforcement is sought.³¹⁹

4.3. Conclusion

It is clear from the examination above that the possibilities in traditional cross-border law enforcement is much better in civil and commercial matters than in criminal and administrative matters. This is mainly due to willingness to apply foreign law in the Business's home court and the system of mutual recognition of judgments inherent in the Brussels/Lugano System.

By suing the Business in its home court, there are no problems with enforcement of the judgment, but it requires that that court is willing to apply foreign law in the dispute. This is most likely to happen in cases relating to tort and consumer contracts, whereas other contracts, under normal circumstances, will be treated under the law of the state in which the Business is established. In order to apply foreign law, the case must be linked to a foreign jurisdiction. That can be the case if the Business is actively pursuing marketing activities in other states and is entering contracts with users in those states. The most important choice of law rules in this context is the choice of lex loci delicti in tort and the law of the consumer in certain consumer contracts. As regards other contracts, the starting point is that the law of the Business is applied. This starting point may, however, be departed from if the contract is closer connected to another law.

If the Business is sued in a foreign court, enforcement is possible if the court is part of the Brussels/Lugano System or the state in which the Business is established recognises foreign judgment under national law. The possibility of denying recognition, including relying on public policy concerns, is rather limited under the Brussels/Lugano System. The Brussels/Lugano System provides the plaintiff with the possibility, in certain situations, to sue the Business in the plaintiff's home court and thus take advantage of the easier access to justice by suing 'at home'. The Business may be sued in a foreign court in particular in connection with tort cases and cases concerning contracts, including consumer contracts. Cross-border law enforcement requires that the foreign court also applies foreign law, as accounted for immediately above, which is most likely to happen in cases concerning tort and consumer contracts. It may also happen in situations where the Business is sued in the state where the obligation in question is to be performed, provided that specific circumstances support the departure from the main rule which makes the law of the Business applicable.

The system of jurisdiction also means that even though the law of the Business is applied by the foreign court, the Business may have the disadvantage of defending itself at a foreign court, including the risk involved in a wrong interpretation of the substantive law of the state in which the Business is established.

Another forum which may be important to the Business is the forum in ancillary proceedings, where civil claims may be included under criminal proceedings. It is possible that the Business is being sued under the broad palette of extraterritorial jurisdictions accepted under international law, as discussed in the previous chapter. Under such proceedings, civil claims may be added and the Brussels/Lugano System provides easy access to enforcement, in the state of the Business, of the civil part of the judgment.

6Convention of 27 September 1968 on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters (Brussels). Acceded to by Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, Sweden and United Kingdom.

7Convention of 16 September 1988 on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters (Lugano). Acceded to by Austria, Belgium, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway, Poland, Portugal, Spain, Sweden, Switzerland and United Kingdom.

8See for example Bogdan, Michael, The "Common Market" for judgments: The extension of the EEC Jurisdiction and Enforcement Treaty to Non-Member Countries, Saint Louis University Public Law Review, 1990, Vol. 9, p. 113.

9Convention on the Law Applicable to Contractual Obligations (consolidated version), opened for signature in Rome on 19 June 1980. Official Journal C 027, 26/01/1998 p. 0034 - 0046. See also www.rome-convention.org. The convention is acceded to by Austria, Belgium, Denmark, Germany, Greece, Finland, France, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, Sweden and the United Kingdom.

11See also conclusions from the Council meeting in Tampere, Finland in October 1999 which was devoted issues regarding justice and home affair. http://ue.eu.int/ueDocs/cms_Data/docs/pressData/en/ec/00200-r1.en9.htm.

14Cyprus, Czech Republic, Estonia, Latvia, Lithuania, Hungary, Malta, Slovenia and Slovakia (i.e. all but Poland). See also Lookofsky, Joseph, International Privatret på Formuerettens Område, 3. udgave, Jurist- og Økonomforbundets Forlag, 2004, p. 21f.

15See Green Paper on the Conversion of the Rome Convention of 1980 on the Law Applicable to Contractual Obligations into a Community Instrument and its Modernisation, COM(2002)654 (14 January 2003). See also López-Rodríguez, Ana M., The Revision of the Rome Convention of 1980 on the Law Applicable to Contractual Obligations - A Crucial Role within the European Contract Law Project?, Nordic Journal of International Law, Volume 72, Number 3, 2003, p. 341.

16Also known as 'center of gravity'. See Lookofsky, Joseph and Hertz, Ketilbjørn, Transnational Litigation and Commercial Arbitration, second edition, Juris Publishing and DJØF Publications Copenhagen, 2004, p. 392f.

17Lookofsky, Joseph and Hertz, Ketilbjørn, Transnational Litigation and Commercial Arbitration, second edition, Juris Publishing and DJØF Publications Copenhagen, 2004, p. 393ff.

18See in general Lookofsky, Joseph and Hertz, Ketilbjørn, Transnational Litigation and Commercial Arbitration, second edition, Juris Publishing and DJØF Publications Copenhagen, 2004, p. 395ff. See also Giuliano-Lagarde Report, Official Journal of the European Communities, no. C 282/1, 31 October 1980.

21See, however, Hague Convention no 22 (2 October 1973) on the Law Applicable to Products Liability and Hague Convention no. 19 (4 May 1971) on the Law Applicable to Traffic Accidents.

22Proposal for a regulation of the European Parliament and the Council on the law applicable to non-contractual obligations ('Rome II'), COM(2003)427 final (22. July 2003).

24Giuliano-Lagarde Report, p. 23. See also various examples of application in national law in Lookofsky, Joseph and Hertz, Ketilbjørn, Transnational Litigation and Commercial Arbitration, second edition, Juris Publishing and DJØF Publications Copenhagen, 2004, p. 426ff.

29Giuliano-Lagarde Report, p. 22. See also Lookofsky, Joseph, International Privatret på Formuerettens Område, 3. udgave, Jurist- og Økonomforbundets Forlag, 2004, p. 71ff.

31See for example López-Rodriguez, Ana, Lex Mercatoria, Retsvidenskabeligt Tidsskrift, 2002, p. 46, at p. 51, Lookofsky, Joseph, International Privatret på Formuerettens Område, 3. udgave, Jurist- og Økonomforbundets Forlag, 2004, p. 13f. and Nielsen, Peter Arnt, International Privat- og Procesret, Jurist- og Økonomforbundets forlag, 1997, p. 96 ('the lex fori tendency'). See also International Law Association, Transnational Enforcement of Environmental Law, Second Report, Berlin Conference (2004), Dr Christophe Bernasconi and Dr Gerrit Betlem (Rapporteurs), p. 13 with reference to Sutherland v. Kennington Truck Segice Ltd, decided in 1997 (562 N.W. 2d 466, 467-470 (Mich. 1997)).

34Convention of 15 June 1955 on the law applicable to international sales of goods (The Hague). Acceded by Denmark, Finland, France, Italy, Norway, Sweden, Switzerland and Niger. See also Lookofsky, Joseph and Hertz, Ketilbjørn, Transnational Litigation and Commercial Arbitration, second edition, Juris Publishing and DJØF Publications Copenhagen, 2004, p. 462f. and Hague Convention no. 31 (22 December 1986) on the Law Applicable to Contracts for the International Sale of Goods which has, however, not entered into force.

35It should be noted that the scope of the 1955 Hague Convention is more limited than the 1980 Rome Convention which may also be the reason for maintaining a stricter rule.

38See Declaration and Recommendation Relating to the Scope of the Convention on the Law Applicable to International Sales of Goods, Concluded June 15th, 1955, Fourteenth Session (1980).

39This counts at least for Denmark, Sweden and Finland (information concerning France and Italy has not been found). None of these states have, however, notified the Hague Conference as required in the mentioned declaration.

41Lookofsky, Joseph and Hertz, Ketilbjørn, Transnational Litigation and Commercial Arbitration, second edition, Juris Publishing and DJØF Publications Copenhagen, 2004, p. 449. See also article 22 of the 1980 Rome Convention.

49Vasiljeva, Ksenija, 1968 Brussels Convention and EU Council Regulation No 44/2001: Jurisdiction in Consumer Contracts Concluded Online, European Law Journal, Volume 10 (January 2004), Issue 1, p. 123, at page 136 with references.

50See Schlosser Report on the Convention on the Accession of the Kingdom of Denmark, Ireland and the United Kingdom of Great Britain and Northern Ireland to the Brussels Convention, OJ 1979 C 59, p. 71, p. 119. See also Rudolf Gabriel, case 96/00 (11 July 2002), paragraphs 42 and 43. When the 1980 Rome Convention may be transformed into an EU regulation, the text may be adjusted along the line of the corresponding requirements in the 2000 Brussels Regulation. See, however, Giuliano-Lagarde Report, p. 24 concerning differences between the provisions.

52The provision on consumer contracts does not apply to contract of carriage and contract for the supply of services where the services are to be supplied to the consumer exclusively in a country other than that in which he has his habitual residence, except for contracts which, for an inclusive price, provides for a combination of travel and accommodation.

65Lookofsky, Joseph and Hertz, Ketilbjørn, Transnational Litigation and Commercial Arbitration, second edition, Juris Publishing and DJØF Publications Copenhagen, 2004, p. 450.

67Proposal for a Regulation of the European Parliament and the Council on the law Applicable to Non-Contractual Obligations ('Rome II'), COM(2003) 427 (22 July 2003), p. 5.

68Lookofsky, Joseph and Hertz, Ketilbjørn, Transnational Litigation and Commercial Arbitration, second edition, Juris Publishing and DJØF Publications Copenhagen, 2004, p. 466f. See p. 471ff for a number of cases under European national law. See also Kronke, Herbert, Applicable Law in Torts and Contracts in Cyberspace, Internet Which Court Decides? Which Law Applies?, Law and Electronic Commerce, Volume 5, Kluwer Law International, 1998, p. 65 at p. 67ff.

69Note on Conflicts of Laws on the Question of Unfair Competition: Background and Updated, drawn up by the Permanent Bureau, Preliminary Document No. 5, April 2000, p. 21 with references.

70Kronke, Herbert, Applicable Law in Torts and Contracts in Cyberspace, Internet Which Court Decides? Which Law Applies?, Law and Electronic Commerce, Volume 5, Kluwer Law International, 1998, p. 65 at p. 71.

71The Institute of International Law, The Conflict-of-laws Rules on Unfair Competition, Session of Cambridge - 1983, Rapporteurs: Willis L.M. Reese and Frank Vischer.

72Note on Conflicts of Laws on the Question of Unfair Competition: Background and Updated, drawn up by the Permanent Bureau, Preliminary Document No. 5, April 2000, p. 23ff with references.

75Note on Conflicts of Laws on the Question of Unfair Competition: Background and Updated, drawn up by the Permanent Bureau, Preliminary Document No. 5, April 2000, p. 27 with references.

76Vermeer, Marike, Electronic Unfair Competition and Applicable Law: An Open Spot in the European Jungle, vol 7.5 Electronic Journal of Comparative Law, December 2003, p. 3.

79Note on Conflicts of Laws on the Question of Unfair Competition: Background and Updated, drawn up by the Permanent Bureau, Preliminary Document No. 5, April 2000, p. 32ff.

80See article 136(2) of the Swiss Private International Law Statute, cf. Note on Conflicts of Laws on the Question of Unfair Competition: Background and Updated, drawn up by the Permanent Bureau, Preliminary Document No. 5, April 2000, p. 30f.

84Proposal for a regulation of the European Parliament and the Council on the law applicable to non-contractual obligations ('Rome II'), COM(2003)427 (22. July 2003). See also Lookofsky, Joseph and Hertz, Ketilbjørn, Transnational Litigation and Commercial Arbitration, second edition, Juris Publishing and DJØF Publications Copenhagen, 2004, p. 463ff.

85Proposal for a Regulation of the European Parliament and the Council on the law Applicable to Non-Contractual Obligations ('Rome II'), COM(2003) 427 (22 July 2003), p. 11.

86Proposal for a Regulation of the European Parliament and the Council on the law Applicable to Non-Contractual Obligations ('Rome II'), COM(2003) 427 (22 July 2003), article 2.

88The reason is probably that conflict rules traditionally have regarded relations between private persons and thus not a barrier to the freedom to provide services. See Hörnle, Julia, The European Union Takes Initiative in the Field of E-Commerce, JILT 2000 (3), p. 333 at p. 353f.

102See Hellner, Michael, The Country of Origin Principle in the E-Commerce Directive - A Coflict with Conflict of Laws?, European Review of Private Law, 2004, p. 193. See in particular p. 206ff.

103See Hellner, Michael, The Country of Origin Principle in the E-Commerce Directive - A Coflict with Conflict of Laws?, European Review of Private Law, 2-2004, p. 193 at p. 209.

105Proposal for a regulation of the European Parliament and the Council on the law applicable to non-contractual obligations ('Rome II'), COM(2003)427 (22 July 2003). See comments to article 12 at page 24.

109Hellner, Michael, The Country of Origin Principle in the E-Commerce Directive - A Conflict with Conflict of Laws?, European Review of Private Law, 2004, p. 193 at p. 210.

110Hellner, Michael, The Country of Origin Principle in the E-Commerce Directive - A Conflict with Conflict of Laws?, European Review of Private Law, 2004, p. 193 at p. 211.

111See a similar conclusion in Mäntysaari, Petri, The Electronic Commerce Directive and the Conflict of Law - the Case of Investment Services, Tidskrift utgiven av Juridiska Föreningen i Finland, Häfte 3/2003, Helsingfors 2003, p. 340f. with reference to Mankowski, Peter, Das Herkunftlandprinzip als Internationales Privatrecht der e-commerce-rechlinie, Zeitschrift für vergleichende Rechtswissenschaft, 2001, p. 145. See also Heine, Kasper, Grønbæk, Martin von Haller and Trzaskowski, Jan, Internetjura, 2. udgave, Forlaget Thomson, 2002, p. 581.

113Recommendation for Second Reading on the Council common position for adopting a European Parliament and Council directive on certain legal aspects of Information Society services, in particular electronic commerce, in the Internal Market (Directive on electronic commerce (4263/1/1999, C5-0099/2000 - 1998/0325(COD)), Committee on Legal Affairs and the Internal Market, A5-0106/2000 (12 April 2000).

114See also Thunken, Alexander, Multi-State Advertising Over the Internet and the Private International Law of Unfair Competition, International and Comparative Law Quarterly, October 2002, p. 909 at p. 20, where it is argued that the country of origin principle should be looked at as a conflicts rule.

116See also recital 55 which provides that 'This Directive does not affect the law applicable to contractual obligations relating to consumer contracts; accordingly, this Directive cannot have the result of depriving the consumer of the protection afforded to him by the mandatory rules relating to contractual obligations of the law of the Member State in which he has his habitual residence'.

117Proposal for a European Parliament and Council directive on certain legal aspects of electronic commerce in the internal market, COM(1998)586 (18 November 1998), p. 32.

118Proposal for a regulation of the European Parliament and the Council on the law applicable to non-contractual obligations ("Rome II"), COM(2003)427 (22 July 2003), article 23(2).

119See in general Nielsen, Ruth, E-handelsret, 2. udgave, DJØF, 2004, p. 100ff. See also Hellner, Michael, The Country of Origin Principle in the E-Commerce Directive - A Conflict with Conflict of Laws?, European Review of Private Law, 2-2004, p. 193 at p. 205 with references.

120See in general Akehurst, Michael, Jurisdiction in International Law, The British Year Book of International Law 1972-73, University Press, Oxford, p. 145 at p. 214ff. and Hay, Peter, Weintrab, Russel J. and Borchers, Patrick J., Clonflict of Laws, Foundation Press, 2000, p. 206ff.

124See in general Lookofsky, Joseph and Hertz, Ketilbjørn, Transnational Litigation and Commercial Arbitration, second edition, Juris Publishing and DJØF Publications Copenhagen, 2004, p. 673ff. with references.

128Convention of 1 February 1971 on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters. See also Supplementary Protocol of 1 February 1971 to the Convention at www.hcch.net.

129See Preliminary Result of the Work of the Informal Working Group on the judgments Project which includes a draft Convention on Choice of Court Agreements. Preliminary Document No 8 of March 2003 (corrected) for the attention of the Special Commission of April 2003 on General Affairs and Policy of the Conference (http://hcch.e-vision.nl/upload/wop/genaff_pd08e.pdf).

132Council regulation No 44/2001 (22 December 2000) on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters. See also Lookofsky, Joseph and Hertz, Ketilbjørn, Transnational Litigation and Commercial Arbitration, second edition, Juris Publishing and DJØF Publications Copenhagen, 2004, p. 697ff.

134EC Convention on Jurisdiction and Enforcement of judgments in Civil and Commercial Matters (27 September 1968). See in general Hertz, Ketilbjørn, Jurisdiction in Contract and Tort under the Brussels Convention, DJØF Publishing, Copenhagen, 1998, p. 45ff.

136Article 68 of the 2000 Brussels Regulation provides that the Regulation shall, as between the Member States, supersede the Brussels Convention, and in so far as the regulation replaces the provisions of the 1968 Brussels Convention between Member States, any reference to that convention shall be understood as a reference to the Regulation.

137See for example Bogdan, Michael, The "Common Market" for judgments: The extension of the EEC Jurisdiction and Enforcement Treaty to Non-Member Countries, Saint Louis University Public Law Review, 1990, Vol. 9, p. 113.

138See recitals 21 and 22 of the 2000 Brussels Regulation. See also Recommendation for a Council Decision authorising the Commission to open negotiations for the conclusion of two agreements between the European Community and the Kingdom of Denmark, extending to Denmark the provisions of Regulation (EC) No 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, and the provisions of Regulation (EC) No 1348/2000 concerning the service in the Member States of judicial and extra-judicial documents in civil or commercial matters, 2504th Council meeting Justice and Home Affairs (8 May 2003), pt. A 6.

139See the annex of the 2000 Brussels regulation as referred to in article 3(2) and Lookofsky, Joseph and Hertz, Ketilbjørn, Transnational Litigation and Commercial Arbitration, second edition, Juris Publishing and DJØF Publications Copenhagen, 2004, p. 26ff.

142See in general on similarities between mutual recognition in civil and criminal matters Peers, Steve, Mutual recognition and criminal law in the European Union: Has the Council got it wrong?, Common Market Law Review 41, 2004, p. 5.

143See Protocol on the interpretation by the Court of Justice of the Convention of 27 September 1968 on jurisdiction and the enforcement of judgments in civil and commercial matters (3 June 1971).

145See recital 19 of the 2000 Brussels Regulation which provides that 'continuity between the Brussels Convention and this Regulation should be ensured, and transitional provisions should be laid down to that end. The same need for continuity applies as regards the interpretation of the Brussels Convention by the Court of Justice of the European Communities and the 1971 Protocol should remain applicable also to cases already pending when this Regulation enters into force'.

146Convention of 27 September 1968 on jurisdiction and enforcement of judgments in civil and commercial matters - Brussels Convention, 72/454 (27 September 1968), L 304 1978. - Jenard Report on Convention and Protocol, C 59 1979, Schlosser Report on Convention and Protocol, C 1979.

147Convention of 16th September 1988 on jurisdiction and the enforcement of judgments in civil and commercial matters. Lugano Convention, 88/592 (16 September 1988), L 319 1988 - Jenard-Möller Report on the Convention, Protocols and Declarations, C 189 1990.

150Lookofsky, Joseph and Hertz, Ketilbjørn, Transnational Litigation and Commercial Arbitration, second edition, Juris Publishing and DJØF Publications Copenhagen, 2004, p. 698.

153Jenard Report on Convention and Protocol, C59/1979, p. 9. See also Volker Sonntag v. Hans Waidmann, Elisabeth Waidmann and Stefan Waidmann. Case 172/91 (21 April 1993), paragraphs 16 and 19 with reference to article 5(4) of the 1968 Brussels Convention.

156Lookofsky, Joseph and Hertz, Ketilbjørn, Transnational Litigation and Commercial Arbitration, second edition, Juris Publishing and DJØF Publications Copenhagen, 2004, p. 32f with references.

163See in general Lookofsky, Joseph and Hertz, Ketilbjørn, Transnational Litigation and Commercial Arbitration, second edition, Juris Publishing and DJØF Publications Copenhagen, 2004, p. 19ff.

164Which provides that the defendant may be sued in the courts of the state of his domicile (defendant's home court), Jenard Report on Convention and Protocol, C59/1979, p. 19.

165It is provided in article 60 of the 2000 Brussels Regulation that a company, a legal person or association is domiciled at the place where it has its a) statutory seat, or b) central administration, or c) principal place of business.

169See in general Lookofsky, Joseph and Hertz, Ketilbjørn, Transnational Litigation and Commercial Arbitration, second edition, Juris Publishing and DJØF Publications Copenhagen, 2004, p. 160ff.

172Bogdan, Michael, Electronic Commerce: Problems of Jurisdiction and Applicable Law, Fejø, Jens, Nielsen, Ruth and Riis, Thomas (editors), Legal Aspects of Electronic Commerce, DJØF Publishing, 2001, p. 75 at p. 78f. with references.

174Bogdan, Michael, Electronic Commerce: Problems of Jurisdiction and Applicable Law, Fejø, Jens, Nielsen, Ruth and Riis, Thomas (editors), Legal Aspects of Electronic Commerce, DJØF Publishing, 2001, p. 75, p79.

177Lookofsky, Joseph and Hertz, Ketilbjørn, Transnational Litigation and Commercial Arbitration, second edition, Juris Publishing and DJØF Publications Copenhagen, 2004, p. 169.

178See Proposal for a regulation on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, COM(1999) 348 (14 July 1999). See also Gillies, Lorna, A Review of the New Jurisdiction Rules for Electronic Consumer Contracts Within the European Union, JILT 2001(1), under 2.2.1, where the author wonder why the drafters of the 2000 Brussels Regulation did not take the opportunity to clarify whether a server could constitute a branch within this article.

179See for a similar opinion, Nielsen, Ruth, E-handelsret, 2. reviderede udgave, DJØF 2004, p. 360f. It should for good measure be mentioned that the author recognise that his opinion is 'highly controversial'. See Bogdan, Michael, Electronic Commerce: Problems of Jurisdiction and Applicable Law, Fejø, Jens, Nielsen, Ruth and Riis, Thomas (editors), Legal Aspects of Electronic Commerce, DJØF Publishing, 2001, p. 75, p. 79.

180See to this end Mankowski, Peter, Jurisdiction and Enforcement in the Information Society, Nielsen, Ruth, Jakobsen, Søren Sandfeld and Trzaskowski, Jan (editors), EU Electronic Commerce Law, Djøf Publishing, 2004, p. 125 at p. 131.

181See in general Howells, Geraint and Nordhausen Annette, Information Obligations in EC E-Commerce Law, Nielsen, Ruth, Jacobsen, Søren Sandfeld and Trzaskowski, Jan (editors), EU Electronic Commerce Law, DJØF Publishing, 2004, p. 49.

1821968 Brussels Convention article 5(1), 1998 Lugano Convention article 5(1) and 2000 Brussels Regulation article 5(1)(a). See also Lookofsky, Joseph and Hertz, Ketilbjørn, Transnational Litigation and Commercial Arbitration, second edition, Juris Publishing and DJØF Publications Copenhagen, 2004, p. 36ff.

192See for example Hassan Shenavai v. Klaus Kreischer. Case 266/85 (15 January 1987) and SPRL Arcado v. SA Haviland, Case 9/87 (8 March 1988), paragraphs 12 and 13.

195Mankowski, Peter, Jurisdiction and Enforcement in the Information Society, Nielsen, Ruth, Jacobsen, Søren Sandfeld and Trzaskowski, Jan (editors), EU Electronic Commerce Law, DJØF Publishing, 2004, p. 124 at p. 127ff. with references.

196The question is touched upon in Bogdan, Michael, Electronic Commerce: Problems of Jurisdiction and Applicable Law, Fejø, Jens, Nielsen, Ruth and Riis, Thomas (editors), Legal Aspects of Electronic Commerce, DJØF Publishing, 2001, p. 75. The author seems to prefer the idea of categorizing downloading as sending which would mean that the place of performance is the place where the user is downloading the product (p. 78). A more thorough discussion is found in Mankowski, Peter, Jurisdiction and Enforcement in the Information Society, Nielsen, Ruth, Jakobsen, Søren Sandfeld and Trzaskowski, Jan (editors), EU Electronic Commerce Law, Djøf Publishing, 2004, p. 125 at p. 129ff. Notably without reaching a conclusion. The question is also mentioned in Kronke, Herbert, Applicable Law in Torts and Contracts in Cyberspace, Internet Which Court Decides? Which Law Applies?, Law and Electronic Commerce, Volume 5, Kluwer Law International, 1998, p. 65 at p. 79, however, without providing a usable solution.

197Besix SA v. Wasserreinigungsbau Alfred Kretzschmar GmbH & Co. KG (WABAG) and Planungs- und Forschungsgesellschaft Dipl. Ing. W. Kretzschmar GmbH & KG (Plafog). Case 256/00 (19 February 2002), paragraph 55.

199See in general Foss, Morten and Bygrave, Lee A., International Consumer Purchases through the Internet: Jurisdictional Issues pursuant to European Law, International Journal of Law and Information Technology, Vol. 8, No. 2, 2000, Øren, Joakim ST., International Jurisdiction over Consumer Contracts in e-Europe, ICLQ vol 52, July 2003, p. 665 and Debusseré, Frederic, International Jurisdiction over E-Consumer Contracts in the European Union: Quid Novi Sub Sole?, International Journal of Law and Information Technology, Vol. 10 No. 3, 2002.

201The parties may depart these provisions by an agreement 1) which is entered into after the dispute has arisen, 2) which allows the consumer to bring proceedings in courts other than those indicated in this Section or 3) which is entered into by the consumer and the other party to the contract, both of whom are at the time of conclusion of the contract domiciled or habitually resident in the same contracting state, and which confers jurisdiction on the courts of that State, provided that such an agreement is not contrary to the law of that State.

202Shearson Lehmann Hutton Inc v. TVB Treuhandgesellschaft für Vermögensverwaltung und Beteiligungen GmbH, Case 89/91 (19 January 1993), paragraph 18. See also Rudolf Gabriel, Case 96/00 (11 July 2002), paragraphs 38 and 39 with references. Recital 13 of the 2000 Brussels Regulation provides that in relation to insurance, consumer contracts and employment, the weaker party should be protected by rules of jurisdiction more favourable to his interests than the general rules provide for.

203See Hertz, Ketilbjørn, Jurisdiction in Contract and Tort under the Brussels Convention, DJØF Publishing, Copenhagen, 1998, p. 205f. and Foss, Morten and Bygrave, Lee A., International Consumer Purchases through the Internet: Jurisdictional Issues pursuant to European Law, International Journal of Law and Information Technology, Vol. 8, No. 2, 2000, p. 99 at p. 120f.

204See in general Ramberg, Christina Hultmark, The E-Commerce Directive and formation of contract in a comparative perspective, 26 European Law Review 429 (2001).

205See Trzaskowski, Jan, Forbrugeraftaler og Reklamering på Internettet – Internationale Privat- og Procesretlige Aspekter, Ugeskrift for Retsvæsen, 1998, p. 285 at p. 289. See similarly Mankowski, Peter, Jurisdiction and Enforcement in the Information Society, Nielsen, Ruth, Jacobsen, Søren Sandfeld and Trzaskowski, Jan (editors), EU Electronic Commerce Law, DJØF Publishing, 2004, p. 124 at p. 245ff.

213See for example Debusseré, Frederic, International Jurisdiction over E-Consumer Contracts in the European Union: Quid Novi Sub Sole?, International Journal of Law and Information Technology, Vol. 10 No. 3, 2002, p. 356f. The change in wording does, however, not necessarily mean that digital goods is not comprised in the 1968 Brussels Convention and the 1988 Lugano Convention.

214Proposal for a Council Regulation on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, COM(1999) 348 (15 July 1999), p. 16.

216Mankowski, Peter, Jurisdiction and Enforcement in the Information Society, Nielsen, Ruth, Jacobsen, Søren Sandfeld and Trzaskowski, Jan (editors), EU Electronic Commerce Law, DJØF Publishing, 2004, p. 124 at p. 142ff. See also proposal for a regulation establishing a European Small Claims Procedure, COM(2005) 87 (15 March 2005), p. 3.

219The scope of application (civil and commercial matters) coincides with that of the 2000 Brussels Regulation, however, excluding employment law. See Commission staff working document, Annex to the Regulation of the European Parliament and of the Council establishing a European Small Claims Procedure - Comments on the specific articles of the proposal COM(2005) 87 (15 March 2005).

221See for example Schiavetta, Susan, Does the Internet Occasion New Directions in Consumer Arbitration in the EU?, JILT 2004 (3) and Vasiljeva, Ksenija, 1968 Brussels Convention and EU Council Regulation No 44/2001: Jurisdiction in Consumer Contracts Concluded Online, European Law Journal, Volume 10 (January 2004), Issue 1, p. 123 at page 139ff.

224See proposal for a Council regulation on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, COM (1999) 348 (14 July 1999), p. 7.

225Proposal for a Council regulation on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, COM (1999) 348 (14 July 1999), p. 16.

226Proposal for a Council regulation on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, COM (1999) 348 (14 July 1999), p. 16.

227Amended proposal for a Council regulation on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, COM (2000) 689 final, 26 October 2000, p. 6.

229See Debusseré, Frederic, International Jurisdiction over E-Consumer Contracts in the European Union: Quid Novi Sub Sole?, International Journal of Law and Information Technology, Vol. 10 No. 3, 2002, p. 359ff. with references. The author argues that point of view of the Commission should not be supported.

230See Debusseré, Frederic, International Jurisdiction over E-Consumer Contracts in the European Union: Quid Novi Sub Sole?, International Journal of Law and Information Technology, Vol. 10 No. 3, 2002, p. 357f and Øren, Joakim S. T., International Jurisdiction over Consumer Contracts in e-Europe, ICLQ vol 52, July 2003, p. 665 at p. 684.

231Debusseré, Frederic, International Jurisdiction over E-Consumer Contracts in the European Union: Quid Novi Sub Sole?, International Journal of Law and Information Technology, Vol. 10 No. 3, 2002, p. 347 with references. See also 5.1.2.3.

232Mankowski, Peter, Jurisdiction and Enforcement in the Information Society, Nielsen, Ruth, Jakobsen, Søren Sandfeld and Trzaskowski, Jan (editors), EU Electronic Commerce Law, Djøf Publishing, 2004, p. 125 at p. 136ff.

233Amended proposal for a Council regulation on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, COM (2000) 689 final, 26 October 2000, p. 5f.

234Both contexts can be said to concern consumer protection, but where the consumer forum concerns the protection of a specific consumer in a specific case, the guidelines on vertical restraints concerns effective markets. In the former case the consumer protection will be improved by a more gentle construction of an 'active website', whereas consumer protection increases by a stricter construction in the latter context. See also Mankowski, Peter, Jurisdiction and Enforcement in the Information Society, Nielsen, Ruth, Jakobsen, Søren Sandfeld and Trzaskowski, Jan (editors), EU Electronic Commerce Law, Djøf Publishing, 2004, p. 125 at p. 135f.

236Commission Notice on Guidelines on Vertical Restraints (2000/C 291/01), recital 51. It is further stated that unsolicited e-mails sent to individual customers or specific customer groups are considered active selling.

237See also Bainbridge, David, Trademark Infringement, The Internet, and Jurisdiction, JILT 2003(1), under 2 where it is, notably in another context, said that whether a website goes beyond being merely passive, the question is whether the owner seeks business in a particular jurisdiction.

238See simlarly Mankowski, Peter, Jurisdiction and Enforcement in the Information Society, Nielsen, Ruth, Jakobsen, Søren Sandfeld and Trzaskowski, Jan (editors), EU Electronic Commerce Law, Djøf Publishing, 2004, p. 125 at p. 138f.

239Mankowski, Peter, Jurisdiction and Enforcement in the Information Society, Nielsen, Ruth, Jakobsen, Søren Sandfeld and Trzaskowski, Jan (editors), EU Electronic Commerce Law, Djøf Publishing, 2004, p. 125 at p. 135, 'no material changes have been implemented, but only slight alterations and clarifications in the wording'. See for a comparison Vasiljeva, Ksenija, 1968 Brussels Convention and EU Council Regulation No 44/2001: Jurisdiction in Consumer Contracts Concluded Online, European Law Journal, Volume 10 (January 2004), Issue 1, Page 123.

242Giuliano-Lagarde Report, p. 24. The Giuliano-Lagarde Report concerns the 1980 Rome Convention, but the consumer contract definition of this convention is purposefully worded similar to the definition in the 1968 Brussels Convention (see p. 23 of the Giuliano-Lagarde Report).

244'The philosophy of new Article 15 is that the co-contractor creates the necessary link when directing his activities towards the consumer's state’. See COM(1999) 348 final, 14. July 1999, p. 16.

250Besix SA v. Wasserreinigungsbau Alfred Kretzschmar GmbH & Co. KG (WABAG) and Planungs- und Forschungsgesellschaft Dipl. Ing. W. Kretzschmar GmbH & KG (Plafog), case 256/00 (19 February 2002), paragraph 27 with references.

259The text in brackets is only found in the 2000 Brussels Regulation, but the difference does only represent a codification of case law concerning the 1968 Brussels Convention. See for example Verein für Konsumenteninformation vs. Karl Heinz Henkel, ECJ Case 167/00 (1 October 2002). The case is examined below. See also Lookofsky, Joseph and Hertz, Ketilbjørn, Transnational Litigation and Commercial Arbitration, second edition, Juris Publishing and DJØF Publications Copenhagen, 2004, p. 117ff.

263Fonderie Officine Meccaniche Tacconi SpA v. Heinrich Wagner Sinto Maschinenfabrik GmbH (HWS). Case 334/00 (17 September 2002). Paragraph 22 and 23 and 27 with references.

264See Mankowski, Peter, Jurisdiction and Enforcement in the Information Society, Nielsen, Ruth, Jacobsen, Søren Sandfeld and Trzaskowski, Jan (editors), EU Electronic Commerce Law, DJØF Publishing, 2004, p. 124 at p. 153ff.

273See Fiona Shevill, Ixora Trading Inc., Chequepoint SARL and Chequepoint International Ltd v. Presse Alliance SA., Case 68/93 (7 March 1995), paragraphs 22 to 24 with references.

274The advocate general seem to focus on the place where the article was printed. See Opinion of Mr Advocate General Darmon delivered on 10 January 1995. Fiona Shevill, Ixora Trading Inc., Chequepoint SARL and Chequepoint International Ltd v. Presse Alliance SA, Case 68/93, paragraph 11.

276The advocate general also seems to focus on the place where the article was printed. See Opinion of Mr Advocate General Darmon delivered on 10 January 1995. Fiona Shevill, Ixora Trading Inc., Chequepoint SARL and Chequepoint International Ltd v. Presse Alliance SA, Case 68/93, paragraph 45 with references.

278See Fiona Shevill, Ixora Trading Inc., Chequepoint SARL and Chequepoint International Ltd v. Presse Alliance SA., Case 68/93 (7 March 1995), paragraph 41. Because of the general application of the lex loci delicti, the designated law would usually but not necessarily be lex fori.

279Fiona Shevill, Ixora Trading Inc., Chequepoint SARL and Chequepoint International Ltd v. Presse Alliance SA., Case 68/93 (7 March 1995), paragraphs 25 and 30 to 32.

280Opinion of Mr Advocate General Darmon delivered on 10 January 1995. Fiona Shevill, Ixora Trading Inc., Chequepoint SARL and Chequepoint International Ltd v. Presse Alliance SA, Case 68/93, paragraphs 17, 19, 56 and 57.

283Opinion of Mr Advocate General Darmon delivered on 10 January 1995. Fiona Shevill, Ixora Trading Inc., Chequepoint SARL and Chequepoint International Ltd v. Presse Alliance SA, Case 68/93, paragraph 9.

291See in general Lookofsky, Joseph and Hertz, Ketilbjørn, Transnational Litigation and Commercial Arbitration, second edition, Juris Publishing and DJØF Publications Copenhagen, 2004, p. 697ff.

297Article 34(1)(1) of the 2000 Brussels Regulation and article 27(1)(1) of the 1968 Brussels Convention / 1988 Lugano Convention. The text in brackets relates only to the 2000 Brussels Regulation.

298In particular 1) where the judgment is given in default of appearance, if the defendant was not properly served with the necessary documents, 2) if it is irreconcilable with a judgment given in a dispute between the same parties in the Member State in which recognition is sought and 3) if it is irreconcilable with an earlier judgment given in another Member State or in a third State involving the same cause of action and between the same parties.

3062000 Brussels Regulation, article 45(1). See also articles 34 and 35 of the 2000 Brussels Regulation and articles 27 and 28 of the 1968 Brussels Convention and the 1988 Lugano Convention.

307Régie nationale des usines Renault SA v. Maxicar SpA and Orazio Formento, Case 38/98 (11 May 2000), paragraph 26 with references. See also Lookofsky, Joseph and Hertz, Ketilbjørn, Transnational Litigation and Commercial Arbitration, second edition, Juris Publishing and DJØF Publications Copenhagen, 2004, p. 703.

314Opinion of the Court 2/94 (28 March 1996) on Accession by the Community to the European Convention for the Protection of Human Rights and Fundamental Freedoms. European Court reports 1996 Page I-01759.

315See Marguerite Johnston v. Chief Constable of the Royal Ulster Constabulary, Case 222/84 (15 May 1986), paragraph 18 with reference to declaration of 5 April 1997 (Official Journal, C 103, p.1). See also article 6(2) of the Treaty of the European Union.

4. Private Law Enforcement