Cross-border legal dispute proposals spark fierce battle

Date: 13/01/2000

By Peter Chapman

JUSTICE and Home Affairs Commissioner Antonio Vitorino faces an uphill struggle to get agreement on proposed new rules to govern cross-border legal disputes, amid warnings that they would drive a stake through the EU's single market for goods and services and hamper the Union's fledgling e-commerce sector.

The proposals, which are currently being studied by other Commissioners' departments, would govern the 'non-contractual obligations' on firms and individuals in cross-border legal disputes. "In a car accident abroad, for example, you have certain obligations to the person you have crashed into even though there is no contract. You would not have a contact because you obviously would not expect to crash into them," explained one senior official.

Under the 'Rome II' proposals, which build on an existing international treaty known as the Rome Convention, the law in the country where the dispute arose - known as the country of destination - would determine which obligations applied in such cases.

However, critics both inside and outside the Commission claim the move hides other more sinister plans which could severely disrupt the EU's single market by forcing firms to comply with swathes of foreign rules and regulations.

Under internal market rules, firms can generally sell their products legally in another member state as long as their operations are deemed legal in their home market or 'country of origin'. Critics say the new proposals would overturn this principle by allowing governments to force foreign firms to comply with rules such as domestic laws designed to prevent 'unfair' competition.

"No one is arguing about cases such as car accidents," said Mike Pullen of UK law firm Dibb Lupton Allsop. "But the Commission is also trying to dress up rules which regulate the market place as 'private international law' which governs cross-border relations between people and firms. These proposals are country-of-destination through the back door."

Pullen claims this would scare off the hundreds of small businesses anxious to take advantage of the Internet because of fears that their activities would be deemed illegal overseas. "The proposals were drawn up by officials who do not understand how business works. It is like having celibate priests advising on sexual technique," he said.

The row over 'Rome II' comes as MEPs debated proposals this week for an EU regulation incorporating changes to another international treaty known as the Brussels Convention.

Industry is bitterly opposed to aspects of the plan, which would allow consumers to take firms to their local courts in disputes over goods bought via the Internet.

This issue sparked fierce clashes between industry and consumer groups at hearings in Brussels in the autumn, with firms warning of the enormous cost of facing law suits in court rooms across the Union while consumer groups insisted shoppers should have the right to sue close to home.

British Liberal Group MEP Diana Wallis, the Parliament's rapporteur on the issue, said this week that the proposals would still leave consumers struggling to seek effective legal redress. She argued it was usually too costly for consumers to take legal action using the Brussels convention and said the Commission should propose new out-of-court dispute settlement systems and small-claims procedures.

Justice and Home Affairs Commissioner Antonio Vitorino faces an uphill struggle to get agreement on proposed new rules to govern cross-border legal disputes, amid warnings that they would drive a stake through the EU's single market for goods and services and hamper the Union's fledgling e-commerce sector.