The European Union and Electronic Commerce

• Author: Saul Litvinoff
• Position: Boyd Professor of Law and Oliver P. Stockwell Professor of Law, LSU Law Center

Boyd Professor of Law and Oliver P. Stockwell Professor of Law, LSU Law Center, Director of the Center of Civil Law Studies.

Preliminary Remarks

The European Union is extremely sensitive to the advantages and problems that derive from the digital age. Although the European Community recognizes legal problems arising from the information based economy, it is also aware of the opportunities that electronic commerce creates for economic growth. This growth is prompted by the advent of new goods and services and results in greater competitiveness, as well as additional new jobs. However, this information based economy seems to ignore national borders and presents a challenge to the legal systems of the member states thereby bringing to the fore the need for harmonization of rules across the community.¹

I The Directive On Electronic Commerce

In pursuit of elusive harmonization, in the year 2000, the European Parliament and the Council of the European Union issued the Electronic Commerce Directive (the "Directive"). The Directive is like an order addressed to the member states with binding effects and establishes the parameters within which the members states are to adjust their domestic legislation to obtain a desired harmonization, if not uniformity.² The Directive is regarded as a landmark and is aimed at promoting the enactment of rules that will allow easy prediction of the outcome of possible disputes and will inspire confidence in businesses and consumers. These results are achieved by making the perpetration of fraud more difficult, and by creating instrumentalities for the widest possible divulgation of information on the rights and obligations of parties who trade in electronic commerce.³

The Directive is a comprehensive document that contemplates many matters. Only a few of the provisions will be highlighted. These provisions were selected based upon their connection with the endeavor of finding alternative means to reach the objectives that traditional law finds increasingly difficult to attain in the dazzling, but also puzzling, sphere of cyberspace.

II Preventing Discrimination

The European Court has emphasized several times the free movement of services may easily fall pray to restrictions contained in domestic regimes governing sales. Therefore, one clear goal of the Directive is to prevent the member states from discriminating in their own domestic law against service providers of other states. Examples of restrictions the drafters of the Directive likely had in mind include the French requirement that electronic contracts entered into by French consumers be drafted in the French language, as well as provisions of the German consumer law that restrict the use of certain special offers, such as "we will give you two for the price of one," as promotional devices.⁴ Restrictions of the latter kind recently prompted complaints to the Commission by Land's End, the well known American mail order retailer, American Express, the financial services provider, and also by the Dutch music company Polygram. The complaints were based on the clear grounds that such restrictions are an obstacle to the sale of services across borders within the internal market of the European Community. To alleviate the problem one section of the Directive provides member states will not be allowed to impose requirements of their own on services providers from other member states when the requirements exceed those of the Community law. Accordingly, the German prohibition of "two for one" offers will not be applicable to web-sites based, for example, in Belgium.⁵

Concerning the law that should govern business organizations that operate across borders, the Commission contemplated the alternative that such enterprises be required to comply with the requirements of the systems of the different states in which they operate. The Commission regarded that alternative as unworkable. Instead, the Directive provides that it suffices for those enterprises to comply with the requirements of the law of the state where they are established. The Directive further defines the place of establishment as the one where a company, for example, is engaged in business activities from a fixed site, regardless of the situation of the pertinent web-site or service.⁶ For companies or providers registered in several states, the place of establishment is the one where the Company's activities for a particular service are centered. Thus, providers whose services are offered in more than one member state only subject themselves to the legal requirements of one country.⁷

Provisions regarding location also have an important impact upon conflict of laws questions. In particular...