Union governments close to clinching deal on e-commerce

Date: 02/12/1999

By Peter Chapman

EU SINGLE market ministers are on the brink of clinching a surprise deal on controversial new Union-wide rules to govern electronic commerce.

Diplomats predict that EU governments will reach 'political agreement' on the draft directive designed to bring some legal certainty to the Union's nascent electronic economy at a ministerial meeting next Tuesday (7 December).

"It looks rather positive. There is a new compromise text from the Finnish presidency, and many delegations say it looks fine," said one EU source, although he added that ministers would pore over the fine print of the proposals at their meeting.

Under the plan, Internet service providers and network operators would not be held liable for illegal content sent over the Net on the grounds that it would be impossible for them to keep track of data flows.

Ministers are also poised to agree to plans to ensure e-commerce is covered by the Union's single market rules. This would allow firms selling goods over the Internet to do so legally in any member state as long as they complied with the rules and regulations in their 'country of origin' - as opposed to 'country of destination' rules based on where the customer lives.

Companies prefer this 'one-stop' approach because it avoids the need to employ teams of lawyers to keep track of foreign rules. However, critics claim that certain exemptions from the proposed directive to be discussed by ministers next week could undermine the single market.

They fear the exemptions would allow member states to insist that foreign firms comply with certain national rules "on issues such as advertising content, unfair competition and defamation" when selling goods over the Net. "This is completely contrary to the ethos of the single market and would significantly undermine and frustrate development of e-commerce in the EU," said Mike Pullen, a lawyer with the UK firm Dibb, Lupton, Alsop.

Talks on the e-commerce directive have been overshadowed by a row over a separate international treaty governing consumer contracts which industry groups claim runs counter to the spirit of the planned EU directive.

Consumer contracts were specifically excluded from the terms of proposed legislation because Commission experts argued that the issue was already being dealt with through changes to this treaty, known as the Brussels Convention.

The updated treaty, which is set to be enshrined in EU law, would allow consumers and other parties to take firms to court in their own countries for breaches of contract in e-commerce sales.

Firms claim this would wreak havoc on the single market, especially when coupled with another treaty which allows national courts to insist that domestic consumer laws should take precedence in disputes if they are tougher than those in force in the country where the contract was drawn up.

They fear that this could leave companies open to costly legal claims from consumers across the Union and impose unnecessary bureaucratic burdens on firms because they would be forced to abide by different national laws in each of the EU's 15 member states.

EU single market ministers are on the brink of clinching a surprise deal on controversial new Union-wide rules to govern electronic commerce.